June 2017

Cost of Investing in Energy Efficiency

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The Department for Business, Innovation and Skills, now Department for Business, Energy and Industrial Strategy (BEIS)) commissioned Eunomia to research the non-capital or ‘hidden’ costs associated with investment in energy efficiency and low carbon technology.

As there is a limited understanding of the scale of these costs, it was unclear to what extent costs inhibited businesses from investing in potentially viable energy efficiency measures. The study also focused on developing a greater understanding of business’ decision-making processes and the approaches to project risk considered as part of investment appraisals.

We interviewed 30 stakeholders representing both non-energy intensive and energy intensive organisations engaged in industrial processes, either face-to-face or by telephone. Those interviewed represented a range of industries, including the food & drink, automotive, chemicals and metals sectors. Alongside the interviews, we also asked participants to share any business case data available relating to their investments.

The report – not yet published – will make an important contribution to government understanding of how it can more effectively incentivise take-up of efficient and low carbon energy by businesses.

Senior Consultant Robert Reid said:

“In its Industrial Strategy Green Paper, the UK Government emphasised that it has prioritised lowering the cost of decarbonisation for businesses. Our research has contributed towards broadening the government’s understanding of the type and scale of costs considered by businesses and the investment frameworks used when appraising energy efficiency and low carbon projects. The government’s carbon emission reduction targets are ambitious, and as a result, it is all the more important that these are achieved in the most cost effective way possible.”

Photo ESPP meter by Centre for Neighbourhood Technology (CC-BY-S.A 2.0), via www.flickr.com