Christopher Heard
Lecturer/Researcher
Autonomous Metropolitan University of Mexico
/
Insight

Financial or Energy Efficiency?

Wed, 02/21/2018 - 19:22

It is worth remembering that, although it is important to have a strong clean energy generation mix, it is much faster to implement efficiency measures that decrease energy consumption, making emissions reduction targets easier to reach.

The “efficiency before clean generation” rule is wellknown in the industrial sector. Christopher Heard, Lecturer/Researcher at the Autonomous Metropolitan University of Mexico, points out that industrial companies require a lot of energy for their activities, fostering a strong understanding about how to use their resources efficiently. In industry, he says, “every 1 percent reduction in energy consumption and its related expenses translate into money companies can use to become more competitive on the global stage. Energy efficiency for them is already extremely important and they have implemented technologies in this area.”

It is in the residential sector where Heard sees a greater need for more work. Implementing energy efficiency projects is not only in the best interest of the householder’s everyday life, but also of the country, as the less energy a household consumes, the less energy the country must produce, directly helping to meet greenhouse gas emissions goals, he says. Although the way to go is clear, Heard says that it is not the technologies that are missing, but the incentives to promote more household energy efficiency. "A proper incentive that encourages energy efficiency would also regulate the residential sector further and direct subsidies toward a social benefit," he says.

Energy efficiency also has unexpected implications on a personal level. An efficient house is more comfortable because the proper insulation increases the available space that can be used for comfort, as well as allowing for a better night’s sleep.

Quantifying comfort levels into economic factors is possible, according to Heard. “Quality-of-life factors have a socio-economic impact that can be measured through economic studies. When added to studies that compare the implementation of subsidies on individual consumption to those on energy efficiency and residential buildings, the importance of having strong regulations and subsidies directed to more energyefficient construction is clear.”

While from an economic standpoint the benefits are clear, Heard also says there is a political implication that creates challenges. “An economic evaluation of the use of the public treasury makes it clear that a stronger regulation over the residential sector and subsidies directed toward investments in energy efficiency in housing create a much greater social and fiscal benefit than individual subsidies on energy consumption.”

Heard does not say that renewable energies should not be subsidized, as they could be beneficial, especially in the case of PV that is easy to install and maintain. But as renewables and storage technologies become smaller and more powerful just like smartphones, computers and tablets, Heard suggests that subsidies will become decreasingly necessary for their economic viability.

With its efficiency and clean energy goals, Mexico is heading toward a greener culture. But the country should be very careful about the long-term energy structure it wants to have, says Heard. “Distributed generation, smallscale production and energy storage are themes that are emerging, will not be stopped and will change the market. Futuristic ideas like tariff negotiation between households and utilities are closer than we can imagine,” he points out.