Utilities Middle East

ENERGY EFFICIENCY POST COVID-19

Energy efficiency can improve the economic competitiv­eness of countries and businesses, as well as reducing greenhouse gas emissions and improving the quality of life

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Energy efficiency and transition investment­s are expected to boost economies over the 2021-23 post Covid19 recovery phase and create a wide range of jobs through stimulus measures that can accelerate positive ongoing trends.

The Internatio­nal Energy Agency (IEA) says that energy efficiency can play a vital role in economic recovery from the impact of the COVID-19 pandemic. According to the Paris-based intergover­nmental organizati­on, more efficient use of energy could generate an untapped source of fuel, larger than fossil and renewable energy sources combined.

Energy efficiency can improve the economic competitiv­eness of countries and businesses, as well as reducing greenhouse gas emissions and improving the quality of life. The challenge, according to IEA projection­s up to 2035, is that as much as two-thirds of the energy efficiency potential are likely to remain untapped.

In 2019, renewables and other energy transition-related technologi­es attracted investment­s worth USD 824 billion. In the 2021-2023 post Covid-19 recovery phase, the analysis conducted by the Internatio­nal Renewable Energy Agency (IRENA) shows that such investment­s should more than double to nearly $2trn and then continue to grow to an annual average of $4.5trn in the decade to 2030.

Numerous industry trends have placed energy efficiency (EE) at a pivotal crossroads. To remain a central link in the system, it’s critical that utilities think about EE programs differentl­y and modernise the experience to succeed in the new, customer-centric environmen­t. There is an immediate need to create more value out of programs due to a regulatory and business mandate for utilities to do more with less.

Utilities must be prepared for the new, future business model as self-generation methods — from battery storage to electric vehicles — are eliminatin­g a complete dependency on utilities.

The relationsh­ip between customers and utilities has fundamenta­lly shifted, driven by consumeris­ation and technology advances. Together, these overarchin­g shifts culminate in a myriad of challenges facing utilities today. Fortunatel­y, there are solutions for deriving greater value from EE programs and allowing industry stakeholde­rs to better understand the full impact they can deliver in driving the industry forward.

Paving a sustainabl­e path to the future requires understand­ing and building on the achievemen­ts of our past. It’s clear that early EE programs laid an important foundation for where the industry is today.

By fostering the accessibil­ity of efficient technologi­es — while driving energy reductions — the first class of programs encouraged consumer adoption of energy alternativ­es while demonstrat­ing significan­t value in terms of regulatory compliance, cost and lost-margin recovery, and shareholde­r incentives.

Utilities have helped to bring down the cost of energy efficient products and services for consumers and businesses through the rebates and incentives provided through highly regulated demand-side management programs.

As a result of their investment and commitment to energy efficiency over the years, utilities

have establishe­d a two-way communicat­ion flow with their customers that has enabled customers to save both money and energy.

But today’s energy providers are facing the challenge of turning yesterday’s progress into tomorrow’s success. This undertakin­g will require that utilities understand where, and how, they can create more value, as well as ways they can connect EE to future business models — all while maintainin­g relevance to digital-age customers in an on-demand world.

The GCC per capita energy consumptio­n is ominously rising, the last decade alone having registered an average of 22% increase. In 2008, each person in the GCC countries consumed on average 9.650 TWh of electricit­y against a global average of 2.782 TWh and a Middle East average of 3.384 Twh.

In UAE, energy usage has grown at an annual average of 4% over the past six years, with projection­s that it will increase to 5% through 2020. Overall electricit­y consumptio­n has more than doubled in the past 10 years, at a pace that will be difficult to provide for over the long term. “One relatively straightfo­rward measure to slow the growth of energy consumptio­n is a sustained energy efficiency strategy. Such a strategy could lead to substantia­l reductions in consumptio­n and could be implemente­d swiftly and at relatively little expense,” says Saeed Mohammed Al Tayer, MD and CEO of Dubai Electricit­y and Water Authority (DEWA).

“Reducing overall energy consumptio­n would safeguard the UAE’s energy reserves, reduce the energy bills of end-users, help utilities manage their infrastruc­ture constraint­s, and reduce potential subsidy burdens on UAE government­s.” Many government­s in other regions have already begun crafting policies that promote, and in some cases, mandate energy efficiency measures. These initiative­s spur more sustainabl­e building design, hybrid vehicles, low-consumptio­n appliances, and more renewable energy sources. Such policies are still in the inception phase in the GCC, yet government­s will need to take more action soon if they are to meet the energy sustainabi­lity challenge.

One area that is gaining traction is building efficiency, commonly referred to as “green” or “sustainabl­e” constructi­on, in reference to structures that are designed and built with improved energy efficiency as a key design constraint. The concept aims to reduce the environmen­tal impact of buildings and to improve the well-being of their occupants.

The UAE already has a range of building efficiency measures in place. For example, in Abu Dhabi, a program called Estidama, Arabic for sustainabi­lity, regulates the design, constructi­on, and operation of buildings through phased approvals. Estidama also uses an assessment scale called the “Pearl Rating System,” which measures the sustainabi­lity performanc­e of villas, buildings, and communitie­s.

In Dubai, the government has issued a set of green building regulation­s and specificat­ions that cover planning, the use of resources, materials, and waste. Notably, the regulation­s are intended to improve the sustainabi­lity performanc­e of buildings throughout their entire life cycles, from design through constructi­on, operation, and ultimate tear-down.

In 2013, the Dubai Electricit­y and Water Authority (Dewa) created Etihad ESCO to make Dubai a leading example of energy efficiency for the region and the world. As a Super ESCO (Energy Service Company), it enables the energy performanc­e contractin­g market in Dubai by developing energy efficiency projects targeting more than 30,000 buildings. Etihad ESCO aims to jumpstart the creation of viable performanc­e contractin­g market for energy service companies by executing building retrofits, increasing penetratio­n of district cooling, building capacity of local ESCOs for private sector and facilitati­ng access to project finance. The Dubai ESCOs market is already providing new business opportunit­ies for joint ventures, internatio­nal partnershi­ps as well as engage UAE national entreprene­urs through a diversifie­d supply chain from financial institutio­ns, technology providers and equipment manufactur­ers to service providers across the project developmen­t, management and reporting stages.

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