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Energy efficiency: how to change uses and habits

A speech by the HERA GROUP CHIEF EXECUTIVE OFFICER – Improving the use of energy, not only for homes but also for companies and the public administration, requires technological innovation and behavioral measures: initial resistance must be overcome. Useful incentives but must not conflict with other benefits. Industry 4.0 nodes

Energy efficiency: how to change uses and habits

A bit like the blade of grass, which does not grow from the ends but through its intermediate parts, the development of energy efficiency also requires a widespread commitment in which context, thanks to a holistic approach, all the actors - individual and collective , big and small – become protagonists of change. Only if certain behaviors are able to take root on a large scale, in fact, will it be possible to really contribute to containing the emissions of climate-altering gases.

"On the shelf", on the other hand, there are no technological products from whose mere adoption energy efficiency can directly be achieved with certainty and on a large scale. Technology can help, but it is not enough: at all levels, those who want to make a difference must above all change established practices and habits, creatively combining technological innovation and behavioral measures.

This is true within the home, where small attentions aimed at limiting water and energy consumption can generate benefits equal to those deriving from the installation of latest generation condensing boilers.

But it also applies to the industrial sector, where the concentration of points of consumption is higher than the traditional domestic and tertiary sectors. In Italy a lot has certainly been done, above all under the pressure of the high energy costs that historically characterize our production sector, however the unexplored potential is still very vast. In many cases, moreover, these are relatively contained interventions: although involving a minimum percentage of the company's total consumption, in fact, they manage to be significant in absolute value, favoring the achievement of important efficiency targets which, once achieved, would make an appreciable contribution to reducing CO emissions2 and the share of the greenhouse effect that depends on it. Suffice it to say that a medium-sized chemical company, capable of reducing its energy consumption by even just 2%, could save primary energy in quantities similar to the annual consumption of 130 homes. Better scheduling of production lines, elimination of production waste, reduction of idle operation, optimization of regulation are just some examples of behavioral measures that can bear fruit even with little physical equipment.

However, for this purpose transversal and multidisciplinary skills are needed, capable of building logics of modulation, digitization of production processes and strategic management of acquired data, also with the adoption of artificial intelligence models. The challenge is therefore complex and there are no shortcuts to overcome it, especially with respect to the time axis.

Consistent with the enabling role that multiutilities are called upon to carry out in favor of change, the Hera Group operates on various fronts, residential customers, businesses and the Public Administration. However, there is still a long way to go, also because not all players are embarking on the path of energy efficiency with the same conviction. There is, in hindsight, no single answer to explain these delays.

We can begin, I think, with a consideration of a psychological nature. In fact, especially if it is demanding and complex, an action is undertaken not so much for reasons of principle but rather, as demonstrated by Richard Thaler's studies (2014) on thebehavioral economics, on the basis of other factors, including attention to what others are doing and the so-called “loss aversion”, which in the case of energy efficiency leads to feeling sorry for the expense due to insufficiently efficient consumption. Thaler's hypotheses, confirmed by an experiment conducted in California on the energy consumption of 300 families, are based on assumptions similar to those which the European community system is suitably orienting itself which, already with Directive 2012/27/EU, has shown to have clear the potential deriving from the mere modification of energy consumption behaviour.

Unfortunately, only a few of the Member States have begun to translate all of this into coherent stimulus policies and to build what Thaler himself defines as the "architecture of choices", that is, that set of conditions that favor the adoption of behavioral measures functional to efficiency energy. From the latter point of view, a happy exception is represented by Italy, which expresses avant-garde positions on the subject. I am thinking of the massive installation of electronic meters for measuring domestic consumption, but I am also thinking – in industry – of the launch of the European energy audit programme, all essential measures to effectively stimulate changes in behaviour. Furthermore, with the decree of 11 January 2017, our country established that the adoption of behavioral measures aimed at energy efficiency is also one of the actions that can access the contributions provided for by the regulation of energy efficiency certificates (TEE).

Demonstrating great foresight, the legislator then avoided limiting the domain of behavioral measures to domestic users only, thus opening it up to its declination also towards other domains such as the industrial one, whose potential is still largely unexpressed. The intuition is correct, also because the architecture of the choices in which an entrepreneur is placed is more articulated than that in which the behavior of a domestic user develops, for which a few clear indications may be sufficient. At the moment, for many companies, investments in energy efficiency fall outside the so-called “path of least resistance” that corporate executives usually follow.

Again, there are several reasons. Certainly, the lack of transversal skills weighs heavily, thanks to which to identify and implement efficiency measures, which are mostly composite, non-standardizable and irreducible to the sole acquisition of a given device. Add to this that energy efficiency initiatives - in addition to not being able to drastically reduce operating costs on their own - are perceived as a potential source of disruption to production continuity and struggle to meet the required profitability thresholds, which are much higher than those accepted for the activities core, considered nice to have.

For these reasons, a structured and credible incentive remains essential, not only to overcome resistance at the start but also because these are interventions that only produce an acceptable return over time. However, it is essential that a conflict does not arise, through mutual exclusion, between incentives relating to complementary objectives: the tax breaks provided for by the Industry 4.0 programme, for example, push for a technological modernization which does not necessarily pursue efficiency objectives and indeed, in in some cases, it can also lead to an increase in energy intensity. In this sense, it would be appropriate to relaunch the subject of ISO 50001 certification, which today concerns only a small part of the Italian plants: by implementing the procedures required by this certification, in fact, architectures of choices are created which systematically favor actions aimed at the best possible use of energy.

Subjects like Hera will continue to be committed to energy efficiency, but it is essential that their action is supported by good "architects of choices", capable of building "paths of least resistance" within which energy efficiency initiatives will finally find a place , thus becoming decisive for the sustainable development to which we are all called.

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