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Planning versus implementation of energy-saving projects by industrial companies. Insights from the Dutch Long-Term Agreements

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Abstract

Companies participating in the Dutch voluntary agreements on energy efficiency are required to announce the energy-saving projects that they have planned for a specified reporting period in an Energy Efficiency Plan (EEP). All projects with a payback period less than 5 years should be implemented. The aim of this paper is to provide insight into the differences in planning and implementation of energy efficiency investments by companies. This analysis is based on the EEPs submitted in the period 2009–2012. By comparing the characteristics of projects that have been implemented with those that were planned, insight is gained in the adjustments that companies make in their energy efficiency investment plans. We look at external circumstances that could explain these adjustments. Our results show that over 12,000 projects have been planned by the 904 long-term agreement (LTA) participants, about half of which are planned ‘certain’, which means that companies are certain that these projects will be implemented. However, we find a large difference between the planned and realised savings of companies and a huge variation in the payback period of both planned and implemented projects. We do not find a correlation between implementation rate and payback period. This suggests that the payback period in the EEPs was not assessed properly or that other than economic motives are more decisive for investment decisions. Our results can be used to improve the effectiveness and efficiency of voluntary agreements.

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Notes

  1. PFE stands for Programmet för Energieffektivisering: Program for Improving Energy Efficiency

  2. Rijksdienst voor Ondernemend Nederland (RVO.nl) or Netherlands Enterprise Agency is the name of a new merger organisation. The former NL Agency is part of this organisation. NL Agency is itself a merger of a.o. SenterNovem.

  3. LEE companies used a shorter plan period, as the LEE agreement was not signed until 2010, when EEPs of LTA3 companies were already filed.

  4. The fact that plans without any projects are approved might puzzle the reader of this paper. However, companies without a saving target (i.e. without identified projects) will have to provide an additional explanation why they are not able to implement saving projects. The approval is based on the combination of past achievements, the level of ambition and the credibility of the explanation.

  5. Only the share of realised saving potential for ‘conditional’ supply chain efficiency projects is higher, because of one very large project.

  6. Examples of tools developed to help companies plan, implement and report supply chain efficiency projects can be found on http://www.rvo.nl/subsidies-regelingen/meerjarenafspraken-energie-efficiency/tools/berekenen-keteneffecten

  7. Providing a condition is obligatory. Of the 500 projects where a condition is not registered, most are provided in additional documents, email, etc.

  8. A project is called profitable if the net present value (NPV) is positive using an internal rate of return (IRR) of 15 %. Alternatively, a company can calculate the payback period: a PBP of 5 years or less (using the energy-only PBP method) is considered profitable.

  9. Although the IAC program is specifically focussed on SME’s and LTA is focused on larger, energy-intensive plants as well, there is a large overlap, as a majority of the companies in the LTA3 program fall under IAC’s definition of SME.

  10. Standard error 0.73, standard deviation 28.83)

  11. An IRR of 15 % is the same as a NPV of zero using a 15 % discount rate.

  12. Electricity price components for industrial consumers, from 2007 onwards on http://ec.europa.eu/eurostat/web/products-datasets/-/nrg_pc_205_c. Accessed 4-7-2014

  13. It would be interesting to delve deeper into the impact of the economic crisis on efficiency investments, but this falls out of the scope of this article.

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Authors and Affiliations

  1. Rijksdienst voor Ondernemend Nederland, Croeselaan 15, 3521 BJ, Utrecht, The Netherlands

    Christiaan Abeelen

  2. Copernicus Institute of Sustainable Development, Utrecht University, Heidelberglaan 2, 3584 CS, Utrecht, The Netherlands

    Robert Harmsen & Ernst Worrell

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  1. Christiaan Abeelen
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  2. Robert Harmsen
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  3. Ernst Worrell
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Correspondence to Christiaan Abeelen.

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Abeelen, C., Harmsen, R. & Worrell, E. Planning versus implementation of energy-saving projects by industrial companies. Insights from the Dutch Long-Term Agreements. Energy Efficiency 9, 153–169 (2016). https://doi.org/10.1007/s12053-015-9355-1

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