13 Mar 2023

Energy Efficiency, standing between myth and reality

Energy efficiency, what is it? And more importantly, what is not? At a time when large companies are counting down to implement the Energy Efficiency Law, it is time for a clear understanding of the scope of this new legal standard.

Although Chile is experiencing a boom in renewable energies and sustainable development is becoming an imperative, energy efficiency does not seem to have gained the same attention. The Energy Sustainability Agency itself recently warned that a low number of companies had reported their energy consumption under the new Energy Efficiency Law, as of March, a requirement that is a legal obligation, at least for the 1,200 largest companies in the country.

At the root of this phenomenon is perhaps a certain confusion of concepts. Because energy efficiency does not mean installing solar panels on the roofs of our factories, nor is it synonymous with sustainability.

Sustainable development is framed within the 17 goals defined by the United Nations (UN), including such broad and complex issues as the end of poverty, responsible production and consumption, decent work and economic development, affordable and non-polluting energy, etc. So, is there a pillar containing the concept of energy efficiency?

The truth is that energy efficiency is difficult to label. Effectively, we are talking about (1) a process of continuous improvement, (2) that has a global impact on all stakeholders, and (3) that occurs at all levels of society, so it contributes to the fulfillment of several of the Sustainable Development Goals (SDGs) and not just one. Energy efficiency is part of public policies, and its impact is transversal to the whole society: households, transportation, commerce, industry, and mining alike. But, what is energy efficiency?

Key Concept: Continual Improvement

Though there are different definitions, the best one for the author of this column is the one that characterizes energy efficiency as "a process of continual improvement in the use of the energy used to produce different goods and services, maintaining or improving their quality standards". Its advantage is that it is applicable to all the levels described above: at the residential level, the objective is to improve our heating comfort with less energy use (air conditioning) through improved design and construction of homes; at the industrial level, the goal is to reduce the specific energy consumption per unit of product, where energy costs, depending on the item, can represent between 8% to 20% of the total cost of production; and at the service level, using the example of a telecommunications company, the goal can be to reduce energy consumption per amount of data or voice transfer associated with the electronic systems of each telecommunications antenna. 

Therefore, we can all build objectives and goals around energy efficiency, with the purpose of not "saving/conserving energy" but improving our energy performance, improving our competitiveness and, finally, contributing to the improvement of the country's energy performance, decoupling the energy consumption curve from the GDP curve, as it happens in developed countries. Likewise, switching from fossil to renewable energy or promoting self-generation will not be considered energy efficiency unless they improve the energy performance (the relationship between the amount of energy and the generation of goods and services) of the site or company where they are implemented.

As major companies enter the countdown to implement the requirements of the Energy Efficiency Law, it is time to be clear about the scope, dimensions and standards imposed by this new legal framework, thus avoiding missteps and promoting the most cost-efficient measures possible.

Pablo Bustos, Gerente Energía Grandes Consumidores de Colbún Soluciones by Efizity.