Unlocking the Energy Efficiency Opportunity June 2015 SIGNIFICANT ENERGY SAVINGS POTENTIAL • BUSINESS COMPETITIVENESS • SECURITY OF SUPPLY • HOUSEHOLDER SAVINGS • EMISSIONS REDUCTION • TARGET ACHIEVEMENT ELECTRICITY SAVINGS • FUEL SAVINGS • GOVERNMENT POLICY • EXCHEQUER SAVINGS INVESTMENT OPPORTUNITIES • ANALYSIS • ENERGY SAVINGS • EMPLOYMENT POTENTIAL • RETROFIT • MACROECONOMIC GAINS • SUPPLY CHAIN DEVELOPMENT CONSUMER CHOICES • POLICY • EFFICIENT ECONOMY • ANALYSIS • IMPLEMENTATION POLICIES • RETROFIT • SIGNIFICANT ENERGY SAVINGS POTENTIAL • BUSINESS COMPETITIVENESS • SECURITY OF SUPPLY • HOUSEHOLDER SAVINGS • EMISSIONS REDUCTION • TARGET ACHIEVEMENT • ELECTRICITY SAVINGS • FUEL SAVINGS GOVERNMENT POLICY • EXCHEQUER SAVINGS • INVESTMENT OPPORTUNITIES INVESTMENT • EMPLOYMENT POTENTIAL • RETROFIT • MACROECONOMIC GAINS SUPPLY CHAIN DEVELOPMENT • CONSUMER CHOICES • POLICIES • EFFICIENCY ANALYSIS • SUPPORT • CONSUMERS • POTENTIAL • SIGNIFICANT ENERGY SAVINGS POTENTIAL • BUSINESS COMPETITIVENESS • SECURITY OF SUPPLY • HOUSEHOLDER SAVINGS • EMISSIONS REDUCTION • TARGET ACHIEVEMENT • ELECTRICITY SAVINGS FUEL SAVINGS • GOVERNMENT POLICY • EXCHEQUER SAVINGS • INVESTMENT OPPORTUNITIES • ENERGY SAVINGS • EMPLOYMENT POTENTIAL • ANALYSIS MACROECONOMIC GAINS • SUPPLY CHAIN DEVELOPMENT • CONSUMER CHOICES Unlocking the Energy Efficiency Opportunity June 2015 Jim Scheer, SEAI Emrah Durusut, Element Energy Sam Foster, Element Energy 1 With thanks to Contents 1 Introduction .................................................................................................................. 1 1.1 Context and project objectives ................................................................................ 1 1.2 Project scope and methodology .............................................................................. 2 1.3 Progress on energy efficiency in Ireland ................................................................. 4 2 Energy savings potential by sector ............................................................................... 6 2.1 Energy efficiency cost curves .................................................................................. 6 2.2 Energy efficiency measures .................................................................................... 8 2.3 Energy efficiency packages .................................................................................... 8 2.4 Energy efficiency cost curve: Commercial buildings ................................................ 9 2.5 Energy efficiency cost curve: Public buildings ....................................................... 11 2.6 Energy efficiency cost curve: Public utilities .......................................................... 12 2.7 Energy efficiency cost curve: Residential buildings ............................................... 14 2.8 Energy efficiency cost curve: Transport ................................................................ 18 2.9 Energy efficiency cost curve: Industry ................................................................... 22 2.10 Energy efficiency cost curve: all sectors ............................................................... 24 3 Energy efficiency investment pathways to 2020 ......................................................... 27 3.1 Consumer decision-making process ..................................................................... 27 3.2 Sector-level scenarios ........................................................................................... 32 3.3 Economy-wide scenarios ...................................................................................... 42 4 Exchequer perspective and wider benefits of energy efficiency ................................. 45 4.1 Macroeconomic modelling approach ..................................................................... 46 4.2 Macroeconomic modelling results ......................................................................... 48 5 Remaining potential beyond 2020 .............................................................................. 56 5.1 Context: EU’s 30 % energy efficiency target for 2030 ............................................ 56 5.2 Potential energy efficiency savings beyond 2020 .................................................. 57 5.3 Remaining potential beyond 2020: Economic considerations ............................... 58 5.4 Savings to 2030 in the scenarios meeting the 2020 target .................................... 59 6 Conclusion and recommendations ............................................................................. 61 6.1 Key findings .......................................................................................................... 61 6.2 Policy recommendations for Ireland ...................................................................... 65 7 Appendix .................................................................................................................... 72 7.1 Appendix: Energy efficiency cost curve with legend .............................................. 72 7.2 Appendix: Lessons from other Member States ..................................................... 74 Figures Figure 2-1: Key aspects of project methodology ................................................................. 2 Figure 2-2: ‘Investment Pathways in Ireland’ model diagram .............................................. 3 Figure 2-3: Primary energy savings by sector achieved by end-20127 ............................... 4 Figure 2-4: Savings required between 2013 and 2020 to meet the 2020 target .................. 5 Figure 3-1: Illustrative energy efficiency cost curve............................................................. 7 Figure 3-2: Energy efficiency cost curve for the Commercial sector.................................. 10 Figure 3-3: Energy efficiency cost curve for the Commercial sector (packages) ............... 11 Figure 3-4: Energy efficiency cost curve for the Public buildings sector ............................ 11 Figure 3-5: Energy efficiency cost curve for the Public buildings sector (packages) ......... 12 Figure 3-6: Energy efficiency cost curve for the Public utilities sector ............................... 13 Figure 3-7: Energy efficiency cost curve for the Residential buildings sector .................... 14 Figure 3-8: Energy efficiency cost curve for the Residential sector (packages) ................ 17 Figure 3-9: Energy efficiency cost curve for the Transport sector ..................................... 20 Figure 3-10: Energy efficiency cost curve for the Industry sector ...................................... 22 Figure 3-11: Energy efficiency cost curve for the Industry sector (packages) ................... 23 Figure 3-12: Energy efficiency cost curve for Ireland ........................................................ 25 Figure 4-1: Consumer decision-making process in the Commercial, Public, Residential building and Industry sectors ............................................................................................ 28 Figure 4-2: Key survey results for consumer awareness and engagement ....................... 29 Figure 4-3: Worked example of decision-making process (illustrative) .............................. 31 Figure 4-4: Commercial sector scenarios ......................................................................... 34 Figure 4-5: Public sector scenarios ................................................................................... 36 Figure 4-6: Residential sector scenarios ........................................................................... 38 Figure 4-7: Transport sector scenarios ............................................................................. 40 Figure 4-8: Industry sector scenarios ................................................................................ 41 Figure 4-9: Shortfall in savings achieved with Central scenarios ...................................... 42 Figure 4-10: Summary of costs, benefits and NPV in each scenario (10 % discount rate) 44 Figure 5-1: Energy savings impacts .................................................................................. 45 Figure 5-2: Energy savings investment impacts ................................................................ 46 Figure 5-3: Net employment impacts over time, by broad sector ...................................... 51 Figure 5-4: Net impact on Government balances .............................................................. 54 Figure 6-1: Remaining potential by sub-sector in the Commercial sector ......................... 57 Figure 6-2: Remaining potential by sub-sector in the Public sector ................................... 57 Figure 6-3: Remaining potential in the Residential sector ................................................. 58 Figure 6-4: Remaining potential by sub-sector in the Industry sector ................................ 58 Figure 6-5: Savings achieved to 2030 in the Commercial, Public, Residential and Industry sectors for the scenarios meeting the 2020 target ............................................................ 60 Tables Table 1-1: Key policies in the National Energy Efficiency Action Plan 3 (NEEAP III) ........................... 5 Table 2-1: Measures contained in packages for the commercial and public buildings sectors .......... 10 Table 2-2: Measures contained in packages for the Residential buildings sector .............................. 17 Table 2-3: Measures contained in packages for the industry sector ..................................................