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The importance of additionality in evaluating the economic viability of motor-related energy efficiency measures

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Publication Rome, Italy: Energy Efficiency in Motor Driven Systems (EEMODS'17), 2017
Abstract The additionality of an energy efficiency (EE) measure is defined as the supplementary impact of a measure beyond standard practices and autonomous changes. The consideration of additionality and the manner of accounting for it may strongly influence the cost-effectiveness of the EE measures and consequently the decision by policy makers. Many studies on energy efficiency improvement potentials fail to provide transparency regarding the methodology and underlying data (discount rate, lifetime etc.) used in their respective cost-benefit analyses for evaluating EE measures. Against this backdrop, this paper discusses various approaches based on US Environmental Protection Agency (EPA) guidelines, using the example of a 45 kW electric motor. We compare the case of disregarding additionality with several other approaches, i.e. only accounting for age (as applied by the Energy Agency for the Swiss Private Sector - EnAW) and other approaches that consider the salvage value as well as differences in investment cost and electricity savings (as applied by the ProKilowatt program, operated by Swiss Federal Office of Energy - SFOE). This study concludes that the chosen method very strongly impacts the results, i.e. by factors and potentially even resulting in opposite findings concerning cost-effectiveness. Choosing full investment costs may lead to the conclusion that the measure is not cost-effective while all other approaches result in the opposite conclusion (economically viable). For slowly expanding manufacturing sectors in an industrialized country like Switzerland (limited growth, mature capital stock) it is found that the additionality approach based exclusively on age overestimates the cost-effectiveness. This study therefore recommends alternative approaches which allow to establish the uncertainty range of cost-effectiveness, while maintaining transparency.
Keywords Energy efficiencyAdditionalitySpecific costsIndustrial motor systemsSwitzerland
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Research group Energy efficiency
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ZUBERI, Muhammad Jibran Shahzad, PATEL, Martin Kumar. The importance of additionality in evaluating the economic viability of motor-related energy efficiency measures. Rome, Italy : Energy Efficiency in Motor Driven Systems (EEMODS'17), 2017. https://archive-ouverte.unige.ch/unige:97190

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Deposited on : 2017-10-02

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