Tuesday, June 16, 2015

Energy efficiency financing in Europe – governmental vs utility programs

Well known German economist Prof. Dr. Peter Hennicke, who 30 years ago co-authored the book "The Energy Revolution Is Possible", now is concerned about his country’s insufficient progress in energy efficiency, comparing to other EU countries. Germany, the continent's largest user of energy, ranks now 18th in terms of final energy intensity out of 28 E.U. countries. It has been overtaken by number of other European countries, including the United Kingdom, the Netherlands and France, and dropped down now even below the E.U. average level.

Despite German law provides more than 80 policy measures spread out over seven federal agencies, yet, over the past two decades, primary energy consumption in Germany has hardly declined. Facing threat of legal action because of noncompliance with the European Union's 2012 Energy Efficiency Directive, in 2014 German government adopted additional measures, including energy efficiency tax bonus.

Another program, very successful Danish approach, doesn’t rely on energy efficiency financing from the state budget. Rather, it puts energy efficiency obligation on energy distributors of electricity, gas, district heating and oil, who engage private companies to implement energy efficiency measures and finance them by adding the cost to distribution tariffs. This way Denmark fostered creation of the energy services industry involving specialized installers, construction companies, engineering firms and real estate managers. Usually they do not assist with financing or offer guaranteed energy savings, like traditional ESCOs, but, instead, they help energy consumers to implement the savings and qualify for the subsidy from the energy distributors. Since the program's inception in 2006, Denmark has tripled its energy savings to a 3 percent annual rate, Read more at