1. Making “Step changes” in energy efficiency Building on experienced success. Hans Nilsson Chairman of the IEA DSM-Programme FourFact AB www.fourfact.com

2. Energy-use in the IEA-11 Source: 30 years of energy use in IEA countries Actual energy use 20 40 60 80 100 120 140 160 197319801985199019951998 Exajoules 49% Hypothetical energy use without savings 1975 AUS DEK FIN FRA GER ITA JAP NOR SWE UK US 20 % Additional energy use with 1973 intensity = Energy saving

3. The rise in welfare depends more on energy efficiency improvements than on growth in energy use!

4. Energy efficiency – The most important means to reduce GHG 1 2 3 4 5 Source: The IEA Energy Technology Perspectives, 2006

5. The best way to satisfy a growing need for energy services Time Demand System capacity + 1 kWh - 1 kWh Should be the cheaper of the two options: More supply or less demand A B

6. Difference in Electricity Investment in the Alternative vs. Reference Scenario 2003- 2030 Additional investments on the demand side are more than offset by lower investment on the supply side -2 000 -1 500 -1 000 - 500 0 500 1 000 billion dollars (2000) Difference Additional demand-side investment Efficiency measures Avoided supply-side investment Generation Transmis- sion Distribu- tion Source WEO 2004

7. Energy Efficiency is the cheapest resource Negative Costs!

8. The curse of the Energy Efficiency Energy Efficiency is invisible Energy Efficiency is not a Product, but a characteristic (with products in comparison) Energy Efficiency is delivered in many small packages …..and on different occasions

9. LARGE-SCALE ENERGY EFFICIENCY “Mandating”Market Acceptance Standards Agreed actions Delegated ActionsCommitments Price- responsive customers “Commoditise” for Non Price- responsive e.g. Voluntary Agreements; Technology Procurements e.g. Muni- cipalities Planning; FEMP e.g. White Certificates e.g. ESCO; Labels, Branding e.g. Taxes; DR (elasticity) e.g. MEPS; Top-runner; Energy Star But there are several means

11. Market Transformation Product Performance Market Penetration Base case Preferred Case NEW MORE LESS

12. Market Transformation Product Performance Market Penetration Base case Preferred Case Technology Procurement (TP) Aggregated proc. (AP) & Labels Standards & Directives

13. Means for accelerated diffusion Diffusion curve Time after introduction Technology Procurements, Demonstration Feed-in tariffs, Certificates, Campaigns Labelling, Training Comprehensive adaptable strategies Joint Research on a)Technologies b) Market response (Result = Potential * Acceptance)

14. The (textbook) market Flow of goods Relation Actor Influent User SUPPLIER Price Quantity

15. The (real) market Wholesale Retailer IInstaller Owner Service Consultant Subsupplier Flow of goods Relation Actor Influent Authority User SUPPLIER

16. Energy Efficiency has multiple dividends Employment Industrial development Poverty alleviation Holds back prices in supply Reduces pressure on supply reserves Cost Environment/Climate

17. Energy Efficiency is the first step on the road to sustainability

18. Thank you!

19. EXTRA MATERIAL

20. 1. The learning investments have to be covered and recovered Learning investments are not subsidies IF they can be anticipated to yield future profit Someone has to start the process It takes TIME to reach break even The investments might be HUGE Cumulative Sales Price Challenging New Technology A B C Learning investments …and ditto profit

21. 4. There is always someone to share the bill (I) Government and companies that have a “first-mover” interest (II) Private sector (users) who have a worse alternative (III) Private sector (users) who have an interest in showing leadership Cumulative Sales Price Challenging New Technology Willingness to pay on niche markets I II III

22. INDIA 150 GW Break-even 1$/W

23. General Market Segmentation Innovators (Enthusiasts) Early Adopters (Visionaries) THE CHASM THE CHASM Early Majority (Pragmatists) Late Majority (Conservatives) Laggards (Sceptics)

24. General Market Segmentation Diffusion curve Time after introduction Adoption of iinovation Innovators (2.5 %) Early adpoters (13.5%) Early Majority (34%) Late majority (34%) Laggards (16%) "Take-off" in the region 5%-15% of the market

25. Accelerated diffusion

26. Cumulative Sales Price Incumbent Technology Challenger Willingness-to-pay in Challenger Niche Markets A B C D Government and industry (R&D) A’ Positioning companies (capitalising) Customers with High alternative Costs (incumbent+) Lead users (capitalising) “Chasm-crossers”

27. New paradigms – Distributed Generation Source: Distributed Generation In Liberalised Electricity Markets. OECD/IEA 2002 Bypass congestion Reduce losses Enables use Stimulates competition

28. 28 Potential Market potential Economic Potential ( individual) Technical potential Economic Potential ( societal) Time 1.Reduce Transac- tion costs 2. Improve Credibility, Organise 3. Improve Suppliers learning 4.Improve technology Result (Efficiency) = Potential techn.;time. * Acceptance time; exposure

29. 29 TO MEASURE SUCCES

30. Electricity in Finland