Exploring the Untapped Potential in Energy Efficiency Collaboration

in Debate, News

On 29th September 2016, Baltic Development Forum and the Council of the Baltic Sea States Baltic 2030 organized the seminar Energy Dialogue: Financing Energy Efficiency in Stockholm.  The purpose of the seminar was to provide a platform for a dialogue among business representatives, regional and local governments, cities, financing institutions and experts from the Baltic Sea Region on how to allocate existing funds to intensified investments in energy efficiency. With some 35-40 participants, the seminar provided a good opportunity for exchanging ideas and best practices, for acquiring knowledge and better overview of the state of play as regards the regional energy market, and what is needed in order to secure a sustainable low-carbon path and reaching ambitious climate targets.

The seminar confirmed the need for the countries in the Baltic Sea Region to be better connected in developing an integrated approach to tackle challenges with respect to energy efficiency investments. The Nordic countries’ accumulated knowledge and front-runner position in securing green transition should be even better utilized and transferred to the neighbouring countries. The well-established collaboration frameworks in the Region should be better promoted and more often used as platforms for an improved cross-level (central and local governments) and cross-sectoral (private and public sectors) dialogue.

Key Messages and Recommendations

Accelerating investments in energy efficiency is very important, if the Baltic Sea Region is to realise local, sub-regional, national and international climate targets.
As an integrated part of climate change mitigation, energy efficiency has an untapped potential that needs to be better exploited. Acceleration of investments in energy efficiency is crucial if the Baltic Sea Region is going to realise local, sub-regional, national and international climate targets. In order to intensify the application of energy efficient solutions, it is important to keep in mind that investments with return in terms of future savings prevail the costs needed today.

Platforms for regional cooperation in energy efficiency exist.
A number of platforms for regional energy cooperation in the Baltic Sea Region already exists, including the Council of the Baltic Sea States; the EU Strategy for the Baltic Sea Region (Policy Area Energy and Horizontal Action Climate); and not least the Baltic Energy Market Interconnection Plan (BEMIP). The need to increase investments in energy efficiency is among the top priorities within the abovementioned political frameworks.

Much is already going on in terms of sharing of knowledge and best practices but there is a real need to accelerate current efforts significantly.
A number of best and next practices were identified. A lot is going on as regards exchange of knowledge and competences, but much more needs to be done in order to realize common energy and climate targets.

Experiences from the Nordic countries should be better transferred to the neighbouring countries.
Being front-runners with regards to electricity decarbonisation and application of energy efficient solutions, the Nordic countries should be better connected to its neighbours who are eagerly searching for good practices and integrated frameworks. So far, the transfer of knowledge has not been dealt with in a systematic way leading to unnecessary waste of time and unreasonable resource allocation.

Plenty of funding earmarked for energy efficiency and technological solutions is available, but there is still a shortage of bankable investment projects.
There are lots of available funding sources for financing energy efficiency; European structural funds, cohesions funds, regional green investment programmes provided by various regional and European financial institutions, national funds as well as private financing solutions. The technological solutions are also available. Still there a shortfall of bankable investment projects due to a large number of bottlenecks, including: dedicated energy efficiency plans, human resource constraints, lack of energy audits, difficulties in bundling smaller investments, risk-sharing issues, reasonable pay-back period, the complexity of e.g. the ESCO model; and identification of best available technology solutions and business models.

Beyond ad hoc project cooperation activities, few efforts to roll out energy efficiency investments are ongoing.
In terms of joint efforts to practically roll out energy efficiency investments in the Baltic Sea Region, there are few initiatives going on beyond ad hoc project cooperation activities.

Political support and engagement needed.
Political support and focused approaches are among the crucial prerequisites in reaching the climate and energy targets. Policy-makers’ engagement in providing the right incentive schemes would provide the favourable frameworks to ease complexity and cut costs.

New opportunities from a transregional partnership between municipalities, regions and the private energy sector.
There are many mutually beneficial opportunities to be had if municipalities and regions in the Baltic Sea Region would form new trans-regional partnerships together with private energy efficiency product and service companies. Joint activities should aim at sharing transferable successful practices and building knowledge on the “do’s and don’ts”. The whole chain of interconnected activities should be the subject of cooperation: feasibility, audit, contracting, implementation and financing. It should be focused on energy renovation investments in municipal buildings, other municipal infrastructures and energy renovation of residential housing blocks, as these are often viewed as “low hanging fruits”.

Untapped potential for engaging SMEs in projects bundling energy efficiency investments.
It was also suggested to cooperate around engaging SMEs by developing suitable (investment) models bundling a large amount of smaller energy efficiency investments. There is a huge untapped potential in the SME segment as the current investment models available to SMEs either require much larger than normally needed investments and/or offer too long a return on investment periods. Bundling investments and combining them e.g. with different types of lease/serviced agreements could unlock this potential throughout the Baltic Sea Region.