Cutting Costs

Private Sector Sees Profit Potential from Energy Saving Rules

energy 4 dpa
A wind and solar park located near each other in western Germany.
  • Why it matters

    Why it matters

    Germany is recognized as a world leader in renewable energy, but when it comes to implementing a key E.U. energy conservation directive, the country has dragged its feet. Still some firms see profit potential in the energy conservation sector.

  • Facts


    • The key provisions of the new E.U. Energy Efficiency Directive were supposed to be translated into national law by June 2014.
    • Industry players have balked at being forced to implement new mandatory energy efficiency rules.
    • E.U. governments are supposed to set the example, but that won’t come cheap. Making federal buildings more energy efficient comes with a €3 billion price tag.
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Saving isn’t an appealing subject for politicians – and the same applies to energy conservation. For years, experts have noted with concern that while a lot of money goes to building wind farms and solar plants, when it comes to promoting energy savings, policymakers’ efforts are mostly limited to providing low interest-rate KfW Bank loans to make buildings more energy-efficient.

But the tools for energy conservation are already available. They are listed in the European Union’s Energy Efficiency Directive, which the German government is struggling to implement. The key provisions of the directive were supposed to have been translated into national legislation in June. But even the previous administration in Berlin treated the subject gingerly, and the current government has also shown little evidence of progress.

Article 7 of the directive, which requires energy suppliers and producers to reduce the amount of energy they deliver to consumers by 1.5 percent a year, has been and remains especially controversial. But what some economic sectors criticize as a classic feature of a command economy other players see as a great opportunity. They want to turn the conservation requirement into a business by helping suppliers reach their reduction targets.

For instance Ista, an energy metering company, aims to increase transparency for tenants and landlords. It argues that consumers who at the very least receive a monthly statement, via email or an app, about their heating use will act accordingly.

“The monthly consumption information is provided without any government funding,” says Ista CEO Walter Schmidt. His company estimates the additional costs of billing at one to two euros a month will generate annual savings of €100 ($134).

“Modern billing systems for heating costs need to be mandatory. There is tremendous potential for savings.”

Stephan Kohler , Chief Executive of the German Energy Agency

“Transparency is critical to being able to act at all. Modern billing systems for heating costs need to be mandatory. There is tremendous potential for savings,” says Stephan Kohler, chief executive of the German Energy Agency or DENA by its German acronym. According to Mr. Kohler, policymakers have yet to recognize the respective opportunities.

The European Union wants to pave the way for other savings tools with its energy efficiency directive. For instance, it hopes to make regular energy audits mandatory for large industrial energy consumers. In an energy audit, energy use is systematically recorded and evaluated, providing information on ways to save energy. But the German government has not translated this article into national law yet, although there is draft legislation to which various organizations are now responding.

Another article of the directive requires E.U. countries to convert 3 percent of their government buildings annually to the highest efficiency standards. This can get expensive. German Environment Minister Barbara Hendricks, a member of the center-left Social Democratic Party, estimates the costs of making federal government buildings more energy-efficient at €3 billion. She is currently preparing a list of priorities.

To counter the accusation that the government is not doing enough, the German economy and environment ministries are now developing parallel concepts that will provide a roadmap for increasing energy efficiency. The economics ministry is preparing a national energy efficient action plan, which will summarize the goals, tools, funding and responsibilities of individual players this year.

In April, Environment Minister Hendricks unveiled a “Program of Action for Climate Protection,” which outlines the potential for conservation in individual sectors. The individual ministries are examining which measures they could employ to contribute additional CO2 savings. Ms. Hendricks plans to bring the issue before the cabinet in November.

Translated by Christopher Sultan

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