Multiple studies have shown the economic growth potential and multiple benefits of energy efficiency investments. Furthermore, the EU, national and regional authorities have activated financing programmes and support facilities to incentivise uptake of energy efficiency investments. In spite of this, the demands for energy efficiency investments from households and other final energy users is still too low to sufficiently contribute to the Europe Green Deal and the EU’s commitments to the Paris climate agreement.
Against this background, the objectives of the Working Group are to:
- Identify and assess the main barriers and drivers to stimulate demands for energy efficiency investments from consumers and final users;
- Identify best practices, their key features and possible obstacles they have to face, assessing the potential to replicate them and under which circumstances;
- Establish a platform for dialogue on stimulating consumers’ demand for energy efficiency investments between financial institutions, property owners, homeowners' associations, civil society organisations, and real estate professions;
- Formulate both general and specific differentiated recommendations on what tools and policy instruments are likely to be most effective in increasing consumers and final users demand for energy efficiency investments;
- Identify possible ways to address split incentives, the fact that benefits of energy efficiency to consumers or society are not passed to investors and long-term payback periods for some energy efficiency investments.
Timeline of WG activities
- December 6, 2021Kick-off with 360 degree presentations around the demand activation issue by Energy agencies, Housing sector, FIs and NGOs
- March 1, 2022Thematic meeting on decision processes in households and enterprises
- June 22, 2022Thematic meeting on information and awareness raising
- October 2022Thematic meeting on value propositions for deep renovation of residential buildings
- January 2023Thematic meeting on demand activation for EE investments in enterprises
- April 2023Meeting on final report conclusions and recommendations
- November 2023Published final report
Energy efficiency is a socio economic optimal and a rational decision from the individual point of view. However, decision making in households and enterprises is complex and cannot be fully understood from traditional economics but must consider the insights of behavioural economics and psychology. Removing barriers to energy efficiency investment decisions therefore also requires targeting of interventions based on motivation, nudging strategies, etc.
Best practices for supporting investment decisions for buildings renovations include One-Stop Shops (OSS), financing mechanisms dedicated to the energy renovation of buildings, capacity building and qualifications of professionals (to improve the technical capacity to design, construct and maintain energy efficient buildings), area-based approaches (delivered by city councils with local delivery partners), and digital demand activation tools.
Successful OSSs provide independent, credible, readily available guidance on how to identify the right solution for the individual building, who to contact for reliable implementation, and how to access available support instruments. If the policy environment is clear and conducive for energy renovation, OSSs can be key actors in supporting the implementation.
The municipalities are key stakeholders in OSS models, but often have limited capacity and resources to contribute. Digital demand activation tools integrating with a public Energy performance Certificate (EPC) database can help national government drive transition in synergy with local governments by providing homeowners with personalised information and assisting municipal officers in developing targeted campaigns, while respecting privacy.
The key to investment decision making in enterprises is to better evidence and integrate multiple benefits of energy efficiency into the assessment of investing options. Further to this, companies increasingly want an integrated approach to broader decarbonisation including energy efficiency and renewable energy. For SMEs the push for decarbonisation and energy efficiency is increasingly coming through the supply chain and facilitators (energy auditors, energy efficiency networks, FIs, ESCOs) have an important role.
WG External Communications
Carsten has 30 years’ experience in management consultancy, as CFO for an energy company, and as investment fund manager. He has extensive experience in energy efficiency and renewable energy.
Rod has worked in the field of energy efficiency and renewable energy for over 30 years.