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How to tackle these energy prices

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Norbert Vasen's picture
CEO Birdseye Energy Consulting GmbH

I am on a quest to bring more Energy Managers into industry. Energy Efficiency is behind on Renewable Energy and that is because it is less exciting (is it?) and labour intensive (each situation...

  • Member since 2021
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  • Jan 10, 2022

Many energy supply enterprises go bust in Germany nowadays: twice as much in 2021 as in the years before (and not only there). 

The reason is that they try to absorb the huge variations in the wholesale energy price for the supply contracts that these suppliers have committed at constant price to their customers. Someone has to pay the price increase and these suppliers took this responsibility. It is obvious that this is a kind of insurance activity and not sustainable. Now these customers must look for a new supplier and they can count on higher prices. So for them and all the other consumers, high prices are a fact of life.
There are only a few ways for an organisation to keep up the services or production with huge variations in energy prices:
    ⁃    Increase prices of the own services or products, so the customer will pay the increase
    ⁃    Lay off employees and organise that the remaining are working more efficiently or harder
    ⁃    Produce energy for the own consumption at a lower price than the market asks
    ⁃    Increase the Energy Efficiency
All these solutions make economic sense and all of them are adopted, more or less. The fact is, the latter option is in the background as I saw in many organisations and production processes. I saw so many opportunities to do the same or better with less energy in my different jobs as energy engineer that I can be sure that this is missed chance. 

The reason for neglecting it is that it is complicated because of the many ways that one can improve Energy Efficiency. Therefore, an Energy Manager is needed in many organisation to help in this situation. A good one will always look for Energy Conservation Opportunities (ECOs) with collateral benefits, which will create more value than only the savings on the bill, but I expect that these latter will become more convincing in coming times.

Tiago Figueiró's picture
Tiago Figueiró on Jan 10, 2022

You need to build a lot of trust between energy efficiency consultants, process engineers, maintenance engineers and managers. Accurate assessment of savings, investments and effects on reliability and productivity require significant upfront investment in engineering studies, which often no one that is interested has the authority to buy. A plant's engineering department may buy an "energy audit" but most of what will come out of such a broadly defined endeavour will be little more than topics for futher exploration. Then they'd have to buy more detailed studies for the most promising opportunities, but then many administrations will figure they've already paid for "an audit".
When everyone is on the same page this can be overcome. Investment in energy efficiency engineering almost always pays off, but the initial investment, however small considering the potential benefits, seems to require some faith. Not many managers seem to be ready for this. Contrary to renewables there is no KPI to present before even making a proposal.


Kind regards.

Norbert Vasen's picture
Thank Norbert for the Post!
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