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Here’s how energy demand can help tackle the energy and climate crises

Electrification and energy efficiency are quick wins. Let’s ensure we see both sides.

Electrification and energy efficiency are quick wins. Let’s ensure we see both sides. Image: Photo de CHUTTERSNAP sur Unsplash

Olivier Blum
Executive Vice-President, Energy Management Business, Schneider Electric
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Davos Agenda

This article is part of: World Economic Forum Annual Meeting

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  • 80% of CO2 emissions today come from energy. To date, the focus has been overwhelmingly on decarbonizing the supply side. Whist this is of course important, it’s only half of the solution
  • Tackling energy demand (the way we use it) will account for 55% of energy decarbonization by 2050, but its transformative potential remains largely overlooked
  • Electrification and energy efficiency are quick wins. Let’s ensure we see both sides.

Last year, a glistening new shopping centre opened in a burgeoning Helsinki metropolitan area. The development forms part of the 117,000-square-meter Lippulaiva complex, which also houses a library, fitness centre, kindergarten, office premises, residential apartment buildings, and a metro station and bus terminal.

A geothermal facility meets almost all of the heating and cooling needs of the complex, whilst solar panels on the roof and wall surfaces generate electricity for the shopping centre’s lifts, escalators, and the illumination of the centre’s public spaces. Smart energy management systems optimise consumption by, for example, temporarily reducing air conditioning when electricity consumption is at its peak.

The centre beautifully illustrates the many tools available to reduce greenhouse gas emissions and raise energy efficiency and resilience - two objectives that have never been more critical. And as we navigate the ongoing windfall of energy and climate crises, it is vital to deploy this entire toolkit to optimise energy supply and demand at scale and speed.

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The two sides of the energy coin

Policymakers across Europe, the United States, Japan, China, and India have significantly intensified climate commitments, partially galvanised by the geopolitical and climate upheavals of 2022.

To date, the focus has been overwhelmingly on the supply side - that is, on promoting and facilitating the generation of locally produced, clean energy from natural resources like the sun, wind, and sea. These efforts have significantly accelerated the growth of renewables in recent years, lowering their cost to the point where renewables are now the cheapest source of new bulk electricity for more than two-thirds of the world’s population.

Yet, efforts to step up clean energy and curb the use of fossil fuels – as vital as they are - take time and involve much political wrangling, as last November’s COP27 meeting in Egypt demonstrated.

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Tackling the supply side - energy generation - is not enough. As energy consumption collectively accounts for 55% of the solution to deliver net zero energy by 2050, we must address the demand side too.

Don’t underestimate the power of Electricity 4.0 in driving electrification and digital efficiency tools in newly-designed buildings, , and across neighbourhoods and cities.
Don’t underestimate the power of Electricity 4.0 in driving electrification and digital efficiency tools in newly-designed buildings, , and across neighbourhoods and cities.

The unsung hero - and quick win

In simple terms, energy efficiency and electrification coupled with the right digital tools, define the next energy revolution known as Electricity 4.0.

Energy demand and efficiency indeed grab fewer headlines and eyeballs in media and policymaking circles than energy generation and supply. Among corporate leaders, too, the massive transformative potential of electrification and demand-side efficiency technologies remains under-appreciated.

An independent survey which we commissioned last year of over 500 C-suite executives found that while sustainability considerations have risen to the top of the corporate agenda, only about half are fixing the basics. Moreover, according to the survey, most are not considering the total mix of decarbonization tools available today.

To some extent, it is understandable. After all, digitally optimised air conditioning and electric heating simply aren’t as alluring or visually inspiring as landscape-hugging solar farms and towering wind turbines. And because energy efficiency is distributed across millions of actions and sites – homes, factories, office blocks, transport systems, and shopping centres – it’s harder to notice their impact.

This means that, like much of the general public, the business and political world has yet to realise the many benefits of energy efficiency achieved through relatively cheap and easily deployable tools. They’re the unsung hero, if you will, in our quest for greater climate and energy security.

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For instance, digital building-management systems with real-time data analytics can instantly detect and address energy waste. Automation software can optimise maintenance, manufacturing and design processes and energy usage in factories and across corporate supply chains. Electric heat pumps and EVs are not only cleaner but far more energy-efficient than their fossil-fueled counterparts.

These are all technologies that exist in the here and now. They don’t require years of development, the re-shaping of entire industries, or the invention of entirely new technologies. They’re the fastest way forward to the energy transition the world urgently needs. More than 80% of CO2 savings through 2030 comes from deploying technologies already on the market.

They also come with a much quicker return on investment (ROI) than many realise. The integrated range of solutions in the Lippulaiva case, for example, will generate payback within five years. So too, when we work with customers to install digital energy-management solutions in existing buildings, we see an ROI of just 2-5 years. The solution to the energy crisis is staring us in the face – by adopting smart home energy management, the energy bill savings between the most efficient and least efficient homes can typically be as much as 40% and up to 75%.

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Energy efficiency and electrification: strategize, digitize, decarbonize

As we head into 2023 and beyond, one thing is clear: we must act now, with all the tools at our disposal, to stave off the worst effects of the climate and energy crises.

That means paying more attention to the still and often under-appreciated, cost-effective, and technically straightforward adaptations that can optimise energy consumption.

Our advice to businesses, developers, and households worldwide is to get acquainted with the range of technologies, frameworks and tools that allow you to reduce cost and carbon emissions. Ultimately, it will make you smarter buyers of clean energy. Finally, don’t underestimate the power of Electricity 4.0 in driving electrification and digital efficiency tools in newly-designed buildings, , and across neighbourhoods and cities.

Couple these with clean-energy-supply technologies – like developer Citycon did in the Lippulaiva complex and we did in our new IntenCity building in France – and your net zero goals can become a reality faster and cheaper than you might imagine.

Our recommendation for policymakers is not to limit their legislative initiatives to clean-energy generation. Provide more regulatory incentives to bolster consumer and end-user demand for digital energy efficiency and electrification with less cost to taxpayers. Remember that such demand-side interventions can, in turn, expedite the supply-side shift to clean-energy sources.

The matter is simple: electrification and energy efficiency are quick wins. Let’s not risk our futures on the flip of a coin, but embrace both sides.

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