Skip to main content

Energy Efficiency: A game changer for business & the environment

Energy efficiency is a simple concept. Do more with less. Channeled through a wide array of industries and organizational departments in Latin America and the Caribbean and elsewhere, a serious approach to energy efficiency has many winners - consumers, private firms and governments.
MAY 08 2014

Energy Efficiency: A game changer for business & the environment

Energy EfficiencyEnergy efficiency can reduce operating costs, increase cash flows, enhance productivity, protect the environment and form a core component to a shared value business model. It also has contributed to the emergence of new career specialties in sectors like building management, consumer goods, manufacturing, transportation, transmission and water utilities. Smart meter maintenance, urban data systems, resilience engineering are a few examples of the human capital implications of the industry.

In the manufacturing sector, businesses deploy energy efficiency solutions. For example, material flow management tools ensure efficient resource use by analyzing and tracking energy and material utilization by specific processes. This allows product managers to make decisions that allow them to manufacture more products with less energy and materials.

Outside manufacturing, energy efficiency at data centers is generating momentum. Facebook, Google and IBM have all taken steps to reduce energy and operating costs through innovative technological investments. IBM’s LEED gold facility in San Bernardo, Chile, utilized low-carbon materials in construction, and new technologies optimize energy performance. Payback at energy efficient data centers like IBM's often happens in less than a year.

In the consumer goods sector, Unilever’s Jiutepec plant in Mexico, the star of its zero-waste sustainability program, collects rainwater, uses natural light from skylights and boasts a renowned recycling program.

A recent Schneider energy report highlighted the startling fact that if we deploy just the energy efficient technologies available today, cities could achieve 20% reduction in traffic delays, 20% reduction in water loss, 30% reduction in street crime and up to 30% energy savings.

Inspiring, yes, and it also tells me we can do more to get existing technology into the hands of those who will use it. According to recent IDB research, a key barrier to energy efficiency in Latin America and the Caribbean is local financing, especially that which is long-term. The IDB Group, along with other international financial institutions, has developed various financial and non-financial products to close this void, including loans, warehousing lines, partial credit guarantees for the securitization of pools of loans, risk-sharing mechanisms and technical assistance. With the appropriate financing structures, we can replicate successful and sustainable business models and scale up projects that offer the biggest energy savings with the smallest  environmental footprint.

With more private firms and public agencies increasingly realizing that energy efficiency isn’t just about climate change mitigation but also cost savings, we can begin to transform the energy sector. One more element remains on ensuring a collective, sustainable future for the region. More to come next week….



Related Posts

  • Building resilience to health risks in the private sector

    A Six-Step Roadmap to Enhance Private Sector Resilience to Health Risks

    An IDB Invest poll shows nearly 60% of projects have temporarily ceased work or faced major project delays because of COVID-19. Early lessons coupled with existing best practices in public health and safety principles provide a six-step action road map to build resilience against such risks.

    Read more
  • Can 'flotovoltaics' be a future partner for hydropower systems?

    Can 'flotovoltaics' be a future partner for hydropower systems?

    To address changing paradigms, a new technology has been proposed: hydropower plants that enable solar generation or hybrid hydro-solar systems.

    Read more
  • Solar energy: The revolution spurring development in Honduras

    Solar energy: The revolution spurring development in Honduras

    When Invema plant, the main plastic recycler in Honduras starts operating, a success formula resonates. It is one of the commercial companies that took advantage of the photovoltaic energy boom in the country. Its case demonstrates how the private sector’s investment in solar energy can facilitate greater economic and sustainable development for the country. Six years ago, the executives of the firm decided to install solar panels in the company, so it could generate its own power. This initiative promised a 20% reduction in energy consumption as well as a significant reduction in greenhouse gases emissions of polluting gases. And so it was. Today, Invema obtains energy savings up to 30% in electricity and reinvests in the focus of its business, recycling, so much so that it is now manufacturing the bottles that Coca-Cola uses in Central America. “We are very proud, because thanks to the solar panels, IDB Invest’s doors/channels opened up and allowed us to make the investments we dreamed,” says George Gatlin, the manager of Invema, which is located in the northern city of San Pedro Sula. Invema is part of many companies and private consortia that have opted for photovoltaic energy since Honduras decided to reform its electricity subsector to revert its electricity matrix from thermal to renewable. The reforms began in 2012, when generation using fossil fuels accounted for 70% compared to 30% for renewables. This thermal hegemony was reflected in increasing oil billing, carbon dioxide emissions, high tariffs up to US$0.30 per kilowatt (KW) produced, and frequent rationing. Following the reforms, led by the government with the advisory services of the Inter-American Development Bank (IDB), there was an upsurge in renewable energy until the energy matrix was completely reversed compared to 2012. The latest report from the Central Bank of Honduras (BCH) in 2018 records a 75% electricity generation based on renewable sources, and an 11% share of photovoltaic energy. This percentage translated into 433 megawatts (MW) of installed capacity at the end of 2016, placing Honduras in the lead of solar generation in Central America and third in Latin America, after Chile and Mexico. “We are witnessing a revolution in the electricity sector, not just in Honduras, but worldwide, because energy storage is changing the concept, points out Carlos Jácome, IDB energy specialist who has participated in the reforms process in Honduras. “The Bank support comprises studies and soft financing. Later, the savings make it possible to improve the productivity of these companies because they can use what they no longer pay in energy to expand their businesses,” comments Jácome. Since 2012, the IDB and IDB Invest have provided technical assistance to Honduran commercial, industrial, and institutional sectors to investigate the technical and financial feasibility of photovoltaic projects. To date, 22 studies have been completed for projects ranging from 40 kilowatts (kW) to nearly 3 MW of installed capacity. Official reports indicate that interest in photovoltaic projects have increased due to a reduction in about 40% of the installation costs over the last five years. Behind this innovation there are three combined components that have resulted in a successful formula: i) the impetus of government that created favorable conditions for investment; ii) the decisions made by entrepreneurial companies; and iii) the IDB’s ability to evaluate and finance the projects. The initial investments in photovoltaic development in Honduras involved a shared risk for IDB Invest and its clients. Nonetheless, what made the difference is the technical capabilities of the Bank for evaluating and support for this type of investments. The Honduran experience encourages entrepreneurship and new markets while demonstrating that IDB Invest is the partner of choice for innovative markets. Experiences of this kind should be replicated in the region. The first photovoltaic investments began in 2015, when 388 MW were installed, followed by 45 MV more in 2016, according to reports from the National Electrical Energy Company (ENEE). According to the ENEE, the Honduran commercial and industrial solar energy market is quite different from what it was in 2012, starting with changes in electricity billing (between 11 and 18 cents per kW per hour), installation costs for panels, legal regulations, and the availability of photovoltaic manpower in the region. In addition to this, national capacities have developed with the installation and administration of photovoltaic projects. “Before, if a Canadian, Spaniard or a Costa Rican person did not show up to supervise the project it didn’t move forward. Now the Hondurans themselves have been strengthening all these positions. There is a friendly environment for investment,” notes Elsia Paz, President of the Honduran Renewable Energy Association (EHER), one of the entities that emerged in the context of these reforms. Download the full story here: “Solar Energy: The Revolution Spurring Development in Honduras” Subscribe to receive more content like this! [mc4wp_form]

    Read more