Multiple benefits of energy efficiency at the firm level: a literature review

Abstract

The multiple benefits of energy efficiency for individual businesses have not received sufficient research attention. For firms, these non-energy benefits may be critically important to their investment decisions. This paper presents initial results from a project investigating the firm-level strategic benefits of energy efficiency. Using a rapid evidence assessment method, the literature on multiple benefits in firm-level energy efficiency decisions was reviewed. This encompassed academic, conference and grey literature, with thousands of items scanned, leading to 31 documents being read in detail. This process confirmed that relatively little has been published on the topic. Nevertheless, there is evidence that strategic non-energy benefits do exist, e.g. reduced production down-time, increased product quality or improved productivity. These benefits can positively and significantly influence the financial assessment of energy efficiency projects. However, such benefits are generally not reported, quantified or included in project assessment. Of the existing studies, most seek to monetise non-energy benefits in order to expand the scope of conventional cost-benefit analysis. However, some take a radically different approach, based on the observation that energy efficiency and energy payback are often not salient to firm-level decision-makers, who have other priorities and ways of evaluating project proposals. Instead of taking energy efficiency as the starting point (and cost-benefit as the assessment method), these studies seek to understand the priorities of investment decision-makers and to propose means by which energy efficiency can be integrated into their decisions in ways which are more salient. The work involved can be time-consuming and places a responsibility on researchers to understand topics and business practices that may be new or only partly understood by experts in energy efficiency. There is very little evidence and work done in support of the ‘salience approach’, but what there is suggest that it holds promise for increasing the take-up of energy efficiency at the point of firm-level investment decisions. There is a need for further research to take forward this idea, both in terms of providing more case-study evidence, but also in refining the idea itself.