Energy efficiency clusters / networks

The overall aim of energy efficiency clusters is to overcome the barriers of lack of knowledge and financial reluctance. Often, private or public building owners and companies do not know how to improve energy efficiency in their buildings, at their production sites, or of their products and are reluctant to invest into energy efficiency measures. Local networks on low-energy buildings and energy-efficient refurbishment serve as a local hub to make energy efficiency easy and more attractive for investors and supply-side actors. They achieve this through bundling knowledge on technology and policy support available to investors and other actors, and bringing together actors on the demand and supply side of energy-efficient buildings and technologies. They are also instrumental for co-ordinating marketing, information and motivation to building owners and other potential investors in energy efficiency, as well as professional training activities. Energy efficiency clusters in industry offer energy audits and show how improved energy efficiency can lead to economic benefits, offer the sharing of experiences, and offer support for R&D in order to drive energy efficiency innovations and to increase competitiveness of the sector or region.

Worldwide implementation status
Energy Efficiency Networks or Clusters are implemented in several countries. For example, there are the following networks and clusters:

• Baltic Energy Efficiency Network for the Building Stock
• Local clusters for energy efficiency in buildings in several German cities, such as SAGA in Düsseldorf
• The Industrial Energy Efficiency Network in Norway
• The Clúster d'Eficiència Energètica de Catalunya (Catalonia Energy Efficiency Cluster, CEEC)
• 30 Pilot Networks in Germany
• 70 networks operational in Switzerland since late 1980s
• The Industrial EE Network in the USA
• Berlin NetzwerkE in Germany
• Energiesparnetzwerk in Germany
• The Energy Management Action networK (EMAK) is an international network and aims at linking policy makers with industry practitioners. The possible role of EMAK is being a “network of networks”.

Governance level
Usually, it is a regional or local measure, in order to achieve regional / local energy saving targets and to strenghten regional / local competitiveness.

Related sectors

• residential
• industrial

In principle all design and technology concepts and options for energy-efficient buildings and refurbishment can be covered.

Concepts

• Low-Energy Buildings
• Ultra-Low-Energy Buildings
• Nearly-Zero-Energy / Plus-Energy Buildings

Options

Passive options

• Building envelope

Active options

• Cooling
• Heating
• Domestic Hot Water
• Lighting
• Building integrated renewable energy systems

Behaviour and Management

• User Behaviour
• Building Energy Management

Related target groups

• Consumer organisation: Such organisations can be active members of energy efficiency clusters or networks on buildings, providing for example information, advice, and communication.
• Architect: Local clusters or networks on low-energy buildings and energy-efficient refurbishment should involve architects as multipliers to address investors and offer training and publicity to architects
• Construction company: Local clusters or networks on low-energy buildings and energy-efficient refurbishment should involve construction companies as multipliers to sell energy efficiency to investors. They should also offer training, publicity, and tools to the construction companies
• Installation contractor: Local clusters or networks on low-energy buildings and energy-efficient refurbishment should involve installation contractors as multipliers to sell energy efficiency to investors. They should also offer training, publicity, and tools to the contractors
• Manufacturer: Manufacturers are the target group in case the energy efficiency network focuses on industrial companies
• Property development company: Local clusters or networks on low-energy buildings and energy-efficient refurbishment should involve such companies as multipliers to address investors. They should also offer to these companies publicity and non-commercial communication to investors on the benefits of energy-efficient buildings
• System supplier: Local clusters or networks on low-energy buildings and energy-efficient refurbishment should involve such suppliers as multipliers to sell energy efficiency to investors. They should also offer training, publicity, and tools to the the companies
• Investor: Energy efficiency clusters or networks on buildings target investors in order to make energy efficiency easy and more attractive.
• Investor-occupier: Energy efficiency clusters or networks on buildings target investors in order to make energy efficiency easy and more attractive.
• Bank: Energy efficiency clusters or networks on buildings can involve banks as multipliers to investors, offering the banks training on assessing benefits and costs of energy efficiency and on how to advise their customers.
• Energy agency: Energy agencies can be active members of energy efficiency clusters or networks on buildings, providing for example energy audits, advice, training to supply-side actors, and communication.
• Energy consultant: Local clusters or networks on low-energy buildings and energy-efficient refurbishment should involve energy consultants as multipliers to address investors, offering publicity to them.
• Energy company: Energy companies can be active members of energy efficiency clusters or networks on buildings, providing for example energy audits, advice, and communication.
• Engineering consultant: Local clusters or networks on low-energy buildings and energy-efficient refurbishment should involve energy consultants as multipliers to address investors, offering publicity and training to them.

Indirect beneficiaries
All kinds of suppliers of energy-efficient buildings, technologies, designs, and solutions will benefit from increased business, if the local networks and clusters on energy-efficient buildings or industry stimulate demand for energy efficiency. Banks will also benefit from increased lending opportunities and certainty on cost-effectiveness.

Regions, in which energy efficiency networks, especially industry energy efficiency networks exist, benefit indirectly through increased competitiveness of the region and/or through a concentration of energy efficiency technology companies and possibly through an increase of jobs.

Direct beneficiaries

• Architect

  Energy efficiency clusters and networks are instrumental for professional training activities for architects. They also enhance visibility of architects competent in energy efficiency among investors.

• Construction company

  Energy efficiency clusters and networks are instrumental for professional training activities for architects. They also enhance visibility of companies competent in energy efficiency among investors.

• Installation contractor

  Energy efficiency clusters and networks are instrumental for professional training activities for installation contractors. They also enhance visibility of contractors competent in energy efficiency among investors.

• Manufacturer

  Participants (either component or original equipment manufacturers) of the network benefit from exchange of experiences in regularly network meetings, from projects with other network members, and from support of the network management. Furthermore, energy efficiency networks are instrumental for coordinating marketing, information and motivation to building owners and other potential investors in energy efficiency.

• System supplier

  Participants of the network benefit from exchange of experiences in regularly network meetings, from projects with other network members, and from support of the network management. Furthermore, energy efficiency networks are instrumental for coordinating marketing, information and motivation to building owners and other potential investors in energy efficiency.

• Investor

  Local energy efficiency networks are a local hub to make energy efficiency easy and more attractive for investors. They achieve this through bundling knowledge on technology and policy support available to investors and other actors, and bringing together actors on the demand and supply side of energy-efficient buildings and technologies. Investors in buildings can thus benefit directly through improved energy efficiency in their buildings with increased value of the property and a better occupation rate.

• Investor-occupier

  Local energy efficiency networks are a local hub to make energy efficiency easy and more attractive for investors. Investors in buildings can thus benefit directly through improved energy efficiency in their buildings with increased value of the property and a better occupation rate.

• Energy consultant

  Energy efficiency clusters and networks are instrumental for professional training activities for energy consultants. They also enhance visibility of consultants competent in energy efficiency viz. investors.

• Engineering consultant

  Energy efficiency clusters and networks are instrumental for professional training activities for engineering consultants. They also enhance visibility of consultants competent in energy efficiency viz. investors.

Relevant barriers

• Knowledge and information barriers: Often, companies are not aware of possible energy efficiency improvements.
• Economic and financial barriers: Even if companies are aware of possible energy efficiency improvements, they often are reluctant due to expected high costs. The learning associated with the activities of the network will make investors more confident in the cost-effectiveness and benefits of energy efficiency and may bring down costs too.

Relevant incentives

• Saved energy costs: This is the main incentive, if the network aims at energy efficiency improvements within the network’s member companies or if the network includes investor-occupiers. A local cluster or network on building energy efficiency will also address this incentive of all local investors through its activities.
• Directly increasing earnings or profits for actors on the supply side: This is an incentive of the members, if the industrial cluster or network aims at technology improvements or innovations. It is an incentive also for supply-side actors to participate in a local cluster or network on building energy efficiency.
• Unique selling proposition for suppliers: This is an incentive, if an industrial cluster aims at technology improvements or innovations. It is an incentive also for supply-side actors to participate in a local cluster or network on building energy efficiency.
• Increased (re-sale) value of the property: This is a main incentive, if investors are among the network members. Increased building occupancy rates are a further incentive in this case.

Local clusters or networks on building energy efficiency are instrumental for co-ordinating marketing, information and motivation on nation-wide programmes, such as financial incentives, financing, individual advice and energy audits, to building owners and other potential investors in energy efficiency. They can greatly enhance participation to those programmes. The same goes for nation-wide training and certification schemes for supply-side actors such as architects, engineering consultants, installation contactors. And such clusters or networks may also be decisive in fostering compliance with minimum energy performance standards for buildings and equipment, as well as mandatory building energy performance certificates or building energy labels.
Industrial energy efficiency clusters / networks can also work hand in hand with education and training, and with RD&D and BAT promotion, as these are both issues that are targeted in energy efficiency clusters / networks.

The following pre-conditions are necessary to implement energy efficiency clusters and networks:

Agencies or other actors responsible for implementation
It can be a great advantage, if an independent agency is responsible for the design, implementation and ongoing organisation of the network, be it a local or national network. This is the case for many local clusters on building enrgy efficiency, and also in the Norwegian Industrial Energy Efficiency Network, where a new organisation (Enova) was established (Modig 2006). Another example is the German „Berliner NetzwerkE“, which is managed by Berlin Energy Agency.

Funding
Each network or cluster needs funding for managing the network and often for carrying out (demonstration) projects. The sources for such funding can be:

• National government (e.g., Norwegian Industrial Energy Efficiency Network) or local government (as for Berliner NetzwerkE) funding
• Then there are networks in which members have to pay annual fees (like the CEEC in Catalunya, Spain).

Steps in the creation of an energy efficiency cluster or network may include:

• The objectives, targets, activities, organisational setup, etc. of an energy efficiency cluster / network has to be developed (e.g., focus on sectoral or regional network / cluster?)
• Public funding for an initial phase must usually be made available
• Mandating or creating an organisation or agency will usually be necessary that coordinates the network / cluster

Quantified target
For a local cluster or network on building energy efficiency, it may be difficult to set an energy efficiency target. However, operational targets such as the number of media contacts, trainings, energy audits, etc.
The Norwegian Building Network was established in 1996, and participating building owners have agreed to reduce their energy consumption by at least 10 per cent in a period of two to two-and-a-half years. Since 2002 incentive agreements have been set up in order to relate the payment of support funds to the achievement of specific targets (Ettestøl 2005).
The CEEC has various targets, including the number of (new) network members, number of dissemination events, number of trainings, etc. (CEEC 2011).

International co-operations
For example, the BEEN network targets the Baltic region and therefore it is a cooperation between countries. Generally, it can be said that if the network / cluster includes a certain region that comprises several countries, cooperation between countries can make sense and improve the policy.
Another example for international cooperation is the Energy Management Action networK (EMAK), that aims to be a “network for networks”. Organized by the International Energy Agency (IEA) and the Institute of Energy Economics Japan (IEEJ) on behalf of the International Partnership of Energy Efficiency Cooperation (IPEEC) and the Government of Japan, workshops in different countries with international participants from industry and politics are held. In these workshops for example “insights into the energy management institutions and regulatory systems of various countries” or “learning experiences for all participants” are presented (Wescot 2012).

Monitoring
Both for local clusters or networks on building energy efficiency and for industrial energy efficiency networks, the network co-ordinator or moderator should take care of the monitoring and have the resources necessary for it. The data to be monitored will reflect the targets set (cf. Steps of design and implementation). A sample of investors who received advice from network members can be interviewed about the actions they took and their energy savings and investment. It is advisable to not only track energy savings but also investment stimulated in the markets and management costs for the network.
The German 30 Pilot Networks in industry, for example, has a monitoring system for each company and for the network as a whole. The monitoring system includes two steps: 1) The top-down result (on the basis of the development of production specific data) will be reflected to the bottom-up result (energy saving, sum of annually achieved efficiency gains) by the energy consultant. Possible deviations of the methods would be checked regarding plausbility. 2) If results differ, a) a second monitoring step after LEEN (management system, Learning Energy Efficiency Networks) can be installed: The energy consultant analyses the sum of measures in detail (detailed bottom-up monitoring, e.g., consideration of reciprocal impacts, annually changing weather conditions, changing output; b) an alternative would be a detailled top-down monitoring (step 2 of LEEN) under consideration of the mentioned impacts or production structure changes.
Bottom-up monitoring should be generally done by the energy consultant, especially when the energy consultant has been appointed with the tracking of measures. For the top-down analysis the moderator (especially for step 1) is responsible. According to the LEEN standard two independent persons have to be involved in the monitoring.

Evaluation
Evaluation too will reflect the targets set (cf. Steps of design and implementation). For a local cluster or network on building energy efficiency, this will include energy savings and investment stimulated. However, it can also concern indicators for achieving operational targets such as the number of media contacts, trainings, energy audits, etc.
For an industrial energy efficiency network, the energy savings and their cost-effectiveness can be calculated from monitoring data generated as in the example of the German 30 Pilot Networks.

Relevant individual dynamics and side-effects

• Dynamic market transformation and/or innovation: A local cluster or network on building energy efficiency should aim at improving both the number of energy-efficient buildings or renovations and the level of energy savings per building as well as quality of installations. This will create a dynamic towards transforming the local building market to Low-Energy, Ultra-Low-Energy and eventually Plus-Energy Building levels. Many industrial energy efficiency clusters / networks also offer support for R&D in order to drive energy efficiency innovations and to increase competitiveness of the sector or region.
• Avoiding lost opportunities: As local clusters or networks on building energy efficiency should aim at improving both the number of energy-efficient buildings or renovations and the level of energy savings per building as well as quality of installations, they will avoid that opportunities for improving energy efficiency are lost. Industrial energy efficiency clusters / network aim to avoid lost opportunities by offering energy audits and exchange of experiences between participating companies. They aim to overcome the barrier of companies not knowing how to improve energy efficiency (at their production sites or) of their products and being reluctant to invest into energy efficiency measures.
• Minimising rebound effects: For building energy efficiency, rebound effects are possible if building users increase their thermal or visual comfort levels. Local clusters or networks can address these effects through making information on the efficient use of energy-efficient buildings an integral part of their advice. In industry, such rebound effects are less relevant.
• Minimising free-rider effects: As for all policy instruments, it is possible that a fraction of building investors or industrial companies would have implemented an energy efficiency improvement action anyway but make use of the advice provided by energy efficiency clusters or networks. Even for these, the networks or cluster can aim at additional energy savings through advocating and improving investor confidence for action with higher energy efficiency levels and/or longer than usual paybacks. The networks may also stimulate further types of action the investor might not have considered before.
• Creating Spill-over effects: Due to training, exchange of experiences, etc. of the energy efficiency networks / clusters, building investors and industrial companies might see that energy efficiency measures will also reduce costs. Therefore, it would be plausible to invest into energy efficiency measures without further policy support. If a local building market gets transformed to making higher energy efficiency levels the standard, which reduces the need for advice and incentives, this will also create spill-over effects.

Design for sustainability aspects
Both local clusters or networks on building energy efficiency and industrial energy efficiency networks can include aspects of material efficiency, productivity and health in their activities of training and advice.

Co-benefits
Co-benefits may arise in the establishment of good contacts between enterprises, informative reports, or improved knowledge about energy management that may pave the way for more advanced savings projects in the future (Modig 2006, p. 13). Furthermore, jobs and business growth in the respective sectors and regions can be a co-benefit.

The following barriers are possible during the implementation of the policy
There may be a ‚hen-and-egg problem’ such that market actors are uncertain about the benefit of participating in energy efficiency networks or clusters, as long as these did not prove such benefits in their region or sector. This may be a particular problem, if the funding of the network relies on fees from participants. The benefits, however, will increase with the number of active participants.
Low effectiveness might be a problem for industrial energy efficiency networks, if network members just take in information, but do not actively participate in the network. The Norwegian Industrial Energy Efficiency Network carried out an ex-post analysis via questionnaires and came to the conclusion, that the share of such members can be estimated at 10% to 50%, depending on the interpretation of answers given (Modig 2006, p. 17).

The following measures can be undertaken to overcome the barriers
Public seed funding should be provided to the networks or clusters for a number of years, at least until they have demonstrated their usefulness to potential members and the willingness to pay a membership fee increases. A certain amount of public core funding is likely to be needed even then, for the central co-ordination role. It is also important to recruit strong and renowned members from the target group (be they building professionals for a local cluster on building energy efficiency or CEOs of industrial companies from the target sector) at an early phase. These would be instrumental in convincing their peers from the sector.
In addition, industrial energy efficiency network members need to have strong incentives to actively participate. Such incentives can also be provided by communicating the energy savings other members have achieved.

Observations in Switzerland, where industrial networks were established over 20 years ago, as well as the 30 pilot network project shows, that companies participating in such networks can increase their energy efficiency more than two to three times / decrease their energy costs at least two times faster than the German industrial average (30 Pilot Networks 2011, Fraunhofer ISI 2009).
The Norwegian Industrial Energy Efficiency Network estimates, that for the period 1996-2004 approximately 6 PJ/y has been saved through advisory and energy management system implementations (Modig 2006, p.16). This is around 2 % of the average annual total energy consumption of the Norwegian on-shore industry sector in this period. (Modig 2006, p.17).

The Norwegian Industrial Energy Efficiency Network is financed by the Energy Fund, that receives its budget from a levy on grid tariffs. In 2004, 7.8 Mio Euro was dedicated to the network. 1.3 Mio EUR was used for grants to SMEs for identifying energy savings and 6.5 Mio EUR was used for investment support to energy-intensive industries (Moder 2006, p. 11). In addition, there are annual financial costs for the government of EUR 1.62 million.
Members of the CEEC (Catalunian Energy Efficiency Cluster) have to pay fees (either annually or quarterly) like the following (http://www.clustereficiencia.org/apuntat_quotes.php):

Founding and Full Members:

• Annual Fee: EUR 2.700
• Quarterly Fee: 750

Collaborating Members:

• less than 50 MEUR in annual turnover:

• Annual Fee: 900 EUR
• Quarterly Fee: 250 EUR

• More than 50 MEUR in annual turnover:

• Annual Fee: 1.800 EUR
• Quarterly Fee: 500 EUR

Entrepreneurial Members:

• Annual Fee: 450 EUR
• Quarterly Fee: 125 EUR

The Norwegian Industrial Energy Efficiency Network for example leads to annual financial costs for the government of EUR 1.62 million. The ratio between the cost for the government and the energy savings is close to 0.03 EURcent/MJ (Modig 2006, p.17). For the network members, the ratio between costs and savings is 0.6 EUR million / 6 PJ, which is 0.01 EURcent/MJ (Modig 2006, p.18).