Innovations in energy efficiency technology are leading to a more sustainable energy landscape.
Oftentimes, innovation is a response to a problem. One of the largest problems facing us today as a global society is that of energy consumption. Projected future global energy demand is unsustainable with our current capacity. Today’s global dependency on fossil fuels is a massive contributor to atmospheric carbon levels and climate change. It has been painfully clear for a long time that the adoption of sustainable energy efficient technology is critically important. While this process cannot happen quickly enough, the market is beginning to respond and innovative solutions to energy consumption problems are being increasingly adopted across the planet as the technology becomes more accessible, intuitive and integrated into our everyday lives.
As awareness of climate change and energy sustainability around the world grows, so to is the market for energy efficient technology. The market is expected to grow to $908.49 billion by 2022. As of 2015, North America was leading the market, but due to a push for green tech adoption by governments in countries like China, the Asia Pacific region is projected to have the highest compound annual growth rate in the energy efficient tech sector up to 2022.
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The good news is that we’re beginning to see the benefits of efficient tech adoption. Global energy intensity — the amount of energy needed to produce one unit of gross domestic product — declined by 1.8 percent in 2016, and has fallen by an average of 2.1 percent each year since 2010. While still at critical levels, energy-related greenhouse gas emissions have been leveling off in recent years.
These encouraging trends are due in no small part to increasing adoption of energy efficient tech in both the consumer and industrial spaces.
Incentives for adoption
In the industrial space, there is perhaps even more incentive for companies to invest in efficient tech than in the consumer space. Businesses, of course, have an ever present need to reduce operation costs wherever possible, and bringing energy consumption down goes a long way towards that goal. This is why the manufacturing sector has historically lead innovations in energy efficiency technology, as energy costs account for a large proportion of manufacturing expenditure. All over the world regulators are moving towards more strict regulations regarding energy consumption as well as incentives for energy reduction which include grants, tax rebates and reductions and more. Also significant is the pressure companies face from the communities in which they operate to be seen as a positive actor, and reducing a company’s carbon footprint is one of the most important ways a company can prove corporate responsibility.
Industrial adoption of efficient tech is clearly important, but the commercial sphere only accounts for 35 percent of energy usage in the United States according to data from the Environmental Protection Agency. The vast majority of energy usage in developed countries is by the private consumer. As such, families and individual consumers should be a main target for the energy efficiency industry. The main way to sell energy efficient tech to the average consumer is to emphasize it as a cost-saving investment. The average US household energy bill in 2017 was $111.67 each month for 867 kilowatt hours of consumption, so emphasizing that potential of efficient tech to reduce this significant expense is key to further growth in the consumer energy efficiency sector.
The benefits of energy efficiency are not limited to developed nations, and in fact technological innovations in energy efficiency solutions could prove even more important and useful in the developing world. Energy usage and greenhouse gas emissions are rising quickly in emerging economies and at the current rate, emerging economies could soon make up the majority of global energy consumption. At the same time, a key problem in these economies is a lack of access to reliable, affordable energy for many households. There’s a misconception that energy conservation could slow development progress in these nations. However, investment in energy efficient infrastructure in emerging economies presents an opportunity to effectively skip over the implementation of more energy taxing technologies that would otherwise be necessary to build infrastructure and drive economic growth. Adoption of the right technologies in emerging economies could allow these countries to ensure faster development.
Innovations in energy efficiency technology
Some of the more interesting examples of energy efficient technology in the commercial sector are in agricultural technology. The increasing adoption of LED lighting over more energy intensive light sources, for example, is something that is happening in nearly every industry but in agriculture, this type of lighting is helping to make vertical farming techniques more viable, allowing for food to be grown in any climate with less space and of course using less energy. Sensors and internet-of-things connected devices are being used to optimize and automate agriculture allowing for greater efficiency and fewer man hours.
In the consumer space, smart homes are taking the industry by storm. Smart homes are houses that are regulated by interconnected internet-of-things devices to control nearly every environmental aspect of the house. It’s that interconnectivity that makes smart devices a powerful tool for conservation, allowing a smart home to automatically shutdown devices when not needed, adjust heating and light levels based on environmental sensors, identify previously unknown power guzzlers in the house and more. Some smart homes even include their own solar panels on the roof to supplement outside energy sources. Smart homes are a rising trend and analysts project that US households will purchase nearly 55 million smart home devices in 2020.
Smart homes and green buildings work best when the interconnected devices are paired with specially designed efficient structures. A building designed especially for efficiency will be airtight in comparison to conventional construction and include advanced insulation techniques to limit heat loss. Ventilation is also designed to lose as little heat as possible. These and other methods allow efficient structures, also known as passive houses, to require as little as 15 kilowatts per hour per square meter each year to heat. EnerDynamic Hybrid Technologies (TSXV:EHT) is one company developing this type of ultra-efficient structure in Canada. The company combines energy efficient construction with other proprietary technology such as smart home devices and sensors, on-roof solar cells and more to build some of the most energy efficient homes possible.
These and many other innovations in the energy efficiency market are making a difference. According the the International Energy Agency, The households around the world saw nearly $300 billion in energy savings thanks to efficiency gains. As these savings become more apparent to businesses and to the average consumer, investment in innovations in energy efficiency technology will increase. This means only good things for the energy efficiency market.
This article was originally published on the Investing News Network in November 2018.