4 May 2021
EUR 104.6 million
By Patrik Marckert, Senior Manager, Origination at NIB
Energy efficiency is an often overlooked way of saving costs in the operation of buildings or in manufacturing processes. Measures for smart energy consumption are likely to increase competitiveness and allow for better use of natural resources. NIB is looking into untapped potential for reducing energy intensity in the Nordic–Baltic industries.
When Swedish bicycle manufacturer Skeppshult recently conducted a study of their energy use, they discovered that a vent valve that had erroneously been left open was sucking in cold air, which a heating unit later had to raise to room temperature. This mistake incurred additional costs equivalent of about EUR 10,000 in six months.
Furthermore, the study revealed that a timer controlling an oven for bicycle paint was turning on the equipment at midnight, which caused another loss of EUR 10,000 over six months. Naturally, Skeppshult would have been better off spending this money on other purposes, since generating and distributing this electricity was a waste of resources from society’s perspective.
Very often, however, the causes of wasted energy are neither evident nor easily addressed. While some of the potential savings can be realised with small investments or none at all, achieving a greater reduction often requires large investments in equipment or in building renovations. This creates a need for financing.
While energy efficiency has been a relevant topic since the oil crisis of 1973, there is still a lot of untapped potential according to recent studies – not least in the building sector, which accounts for one third of final energy demand in the Nordic countries. Savings opportunities can be found in other economic sectors with high energy use as well, such as industry and transport.
Unlike energy conservation, which reduces the amount of energy used, energy efficiency lowers the energy intensity, that is, the amount of energy used in operating a machine, propelling a vehicle, cooling and lighting an office building, or producing other operations, services or goods. Energy intensity is on a downward trend in most Nordic countries, which have increased their economic output, while keeping energy consumption at a constant level – or even decreasing it.
Measures to improve efficiency range from ‘soft’ tools to technological ones. ‘Soft’ may include better organisation of building management, improved planning in refurbishment projects or more considerate tenant behaviour. Technological tools can range from more advanced control equipment, including HVAC (heating, ventilation, air conditioning) and lighting systems, all the way to extensive changes in the building envelope, such as replacing windows, roofs and wall insulation.
Recent studies in Sweden show a large, unrealised potential in several sectors:
The situation may be similar in the other Nordic countries. Denmark is considered an early pioneer in refurbishing municipally owned buildings. In the Baltic countries, the greatest potential is in multi-apartment buildings, which also have the greatest need for funding.
NIB and energy efficiency
Investments in energy efficiency align well with NIB’s vision of a prosperous and sustainable Nordic–Baltic region. Energy efficiency often leads to improved use of natural resources. Furthermore, these investments diminish the adverse effects of energy generation, such as pollutant emissions. (A note to complicate things even further: a life-cycle analysis would discover an environmental burden caused by energy efficiency measures as well—just consider the construction phase.)
Companies applying energy efficiency measures may boost their competitiveness, particularly in the longer term. Anticipating changes in laws and regulations regarding energy and resource efficiency can acquire a competitive advantage on a regional or even a global scale. A company with low energy intensity is resilient to swings in energy prices and enjoys a higher degree of predictability. Furthermore, energy efficiency in buildings is often a win-win for all parties, including users and tenants, due to the improved comfort level.
Over the years, NIB has financed numerous projects. In Lithuania, we have financed the energy refurbishment of schools, public buildings, hospitals and libraries through two loans to the state. In Finland, we have financed energy-efficient street lighting in the city of Rovaniemi, energy improvements and insulation for housing companies through the intermediary credit institution Suomen Hypoteekkiyhdistys, as well as loans to the municipalities of Porvoo and Kajaani for better energy efficiency in schools.
In Sweden, loans from NIB have helped finance two energy-efficient buildings constructed for Vasakronan, as well as the development of car engines with enhanced fuel economy for Volvo. Furthermore, we have financed railways and collective transport solutions in Helsinki, Stockholm, Vilnius and Riga.
NIB’s loan to SKF in Sweden for the development of new ball bearings (2012) can also be seen as indirect financing of energy efficiency. The new generation of bearings developed by SKF decrease friction up to 30–50% compared to what is otherwise available on the market, which helps reduce energy losses and increase energy efficiency in millions of machines, appliances, wheels and engines that use bearings. A small gain in friction may translate into energy savings that are immense and hard to grasp.
NIB constantly assesses new opportunities to finance projects aimed at improving energy efficiency. There is still great untapped potential in the building sector in our Nordic and Baltic member countries, including in housing, commercial properties and service facilities.
A challenge may be that our potential clients not always group their building refurbishment efforts in a way NIB would consider a coherent project, and may not document them to the extent that we require. However, by exploiting these opportunities, we may not only reduce the need for energy generation or import of fuel, but also promote the use of innovative technology in smart buildings, or non-conventional building materials.
The most sustainable kilowatt-hour is the one that is not used. One kilowatt-hour saved is one kilowatt-hour less that needs to be generated, transmitted, distributed and transformed. To quote the International Energy Agency: energy efficiency is the world’s largest fuel, and it has been quite forgotten. Let us keep that in mind.
Senior Manager, Lending
Energy and Environment
Phone: +358 10 618 0266