Private sector struggles in embracing energy-efficient innovations

The Indian government has therefore chosen an ambitious energy transition pathway to reach net zero emissions by 2070. It has also unveiled the Strategic Plan for Advancing Energy Efficiency during its G20 Presidency, an action plan which intends to double the rate of improvement in energy efficiency by 2030 in G20 countries.

This policy path has created a significant market for energy efficiency technology, driving both investment and innovation. However, despite the clear benefits that energy-efficient innovations provide, the private sector is facing several challenges in adopting these technologies. These challenges include resistance to upfront investment, inaccurate energy measurement and analysis, and a lack of clarity on the correct path for unlocking the benefits of energy-efficient innovations.

These roadblocks not only hamper development but also obscure the significant potential for affordable energy and emission savings hidden inside the country. So, let's delve into some of the key challenges and explore ways in which organisations can overcome them, unlocking the enormous potential for cost and emission savings while contributing to a more sustainable future for all:

• Accurate energy measurement: Energy efficiency, our “First Fuel”, is an untapped resource that requires exploration and investment, much like traditional fossil fuels. One of the most fundamental difficulties in improving energy efficiency in industrial and commercial facilities is a lack of accurate energy measurement. Peter Drucker had famously stated that “What gets measured gets managed”. Lack of sub-metering of energy inside factories and buildings is hiding energy losses in plain sight. Moreover, traditional methods, such as manual data collection through operator log books that are digitised into Excel sheets, are outdated and prone to errors. Such techniques fail to provide the detailed, real-time data needed to make informed energy decisions. As a solution, businesses have started adopting digital energy monitoring systems that provide reliable and accurate energy measurements. This has helped uncover inefficiencies and potential savings, making energy management more transparent.
• Lack of awareness and expertise: Even with accurate data collection, the analysis of energy data presents its own set of challenges. Many facilities lack the training and specialised expertise required to analyse energy data effectively and drive energy conservation initiatives. Plant maintenance engineers, although responsible for this task, may need additional upskilling and education to contribute meaningfully to energy efficiency programs. As a result, it is crucial to bridge the talent gap to translate data into actionable insights.
• High upfront investment: Another significant obstacle to the adoption of energy-efficient innovations is the high upfront investment required for some projects, especially for replacement of machines in existing factories and buildings. However, innovative business models, such as Shared Savings Agreements offered by Energy Service Companies (ESCOs), provide a viable solution to this problem. With these models, customers can achieve energy efficiency without any initial investment, as the ESCO agrees to make the upfront investment in exchange for a share of the energy savings. This arrangement minimises financial risks and incentivises both parties to maximise and deliver energy efficiency.
• Monitoring and verification: The lack of monitoring and verification of energy savings post-implementation has created scepticism regarding the credibility of return on investment (ROI) claims. Without clear, verified evidence of energy and cost savings, businesses can hesitate to invest in or scale up energy efficiency projects across their facilities. This is where establishing robust mechanisms for tracking and validating energy savings is essential for building trust and demonstrating the tangible benefits of energy-efficient technologies.

Despite challenges, the global energy efficiency market is expected to grow at a compound annual growth rate (CAGR) of 12.6% from 2023 to 2028, with the Asia Pacific region being no exception, as per Global Market Estimates. In fact, the market has the potential to unlock over $150 billion in energy savings annually, which can significantly reduce emissions and contribute to 37% of the CO2 reductions needed to meet the Paris Goals. Additionally, it can also provide substantial financial and ESG benefits for businesses today without the need for any new breakthrough inventions or expensive rare earth minerals.

New technological advancements in digital measuring technology, the Internet of Things (IoT), and Artificial Intelligence (AI) are providing new tools to explore and discover "The First Fuel" with higher accuracy and at lower costs. These technologies enable precise, real-time monitoring of energy use, sophisticated data analysis, as well as monitoring and verification of energy conservation initiatives. By harnessing the power of digital technologies and embracing innovative business models, businesses can unlock the potential of 'The First Fuel', propelling us towards a more sustainable and efficient future.

This article is authored by Sookrit Malik, CEO, Energeia.