One simple step to saving 12 billion in energy costs

June 16 marks a major milestone for European Union efforts to save energy. On this day, new measures come into force that will save as much electricity per year by 2020 as the current annual consumption of 32 million EU households.

One simple step to saving  12 billion in energy costs

These measures concern a device that is all around us, but which most of us never actually see. They are in hair dryers and dishwashers in the home, elevators and ventilation systems in the office, and they run machines, pumps, fans, conveyors and more in industry. I’m talking about electric motors, which are quite literally everywhere.

Electric motors are the single biggest consumer of electricity. They account for about 45 percent of global electricity consumption, according to a new analysis by the International Energy Agency, more than twice as much as the second-largest source of consumption, lighting.

This means that every second power plant – more or less – is producing electricity for the sole purpose of running motors. Put another way, if you took all the electricity produced in every corner of the world from New Year’s Day until June 16, you would just have enough to power the world’s electric motors for 12 months.

The new motor efficiency measures in the EU are expected to save 135 TWh of electricity per year by the end of the decade, which is equivalent to the annual output of 22 nuclear reactors. In financial terms, this represents a saving to industry in the EU of at least 12 billion euros per year at current electricity prices.

As Germany prepares to close down all its nuclear plants over the next decade, measures such as these that result in a more efficient use of energy will play an important role in helping Europe’s largest economy to continue growing without facing power shortages.

There’s also a lot more that can be done. The IEA study, which is the first global analysis of energy consumption in electric motors, says it is feasible as well as cost-effective to save about 20 to 30 percent of total motor power consumption, which is 9 to 14 percent of all global electricity consumption.

And this is just half of the reduction in electricity consumption that can be achieved by using modern technology at all stages of the generation, distribution and use of power. Technology is also evolving in a way that will enable us to create low-carbon power networks that achieve savings well beyond what individual products can manage. Such “smart grids” will take time to evolve, however, and we need to find big savings today.

The main challenge to realizing the large unfulfilled potential that could be achieved with today’s technology is a lack of awareness about the benefits of the available options.

This shows up clearly in a global survey of manufacturing executives conducted this year by the Economist Intelligence Unit on behalf of ABB. It found that 60 percent of manufacturers had not invested in improving the energy efficiency of their capital, plant and equipment over the past three years.

The executives cited a lack of a clear-cut financial case for energy efficiency investments, a lack of funds and a lack of information about energy efficiency options as the three main barriers to greater investment in energy efficiency in their companies.

This is a surprise, given that motors account for two-thirds of the electricity used in industry, and that the annual energy cost of running a motor in industry can be as much as seven times its purchase price.

The IEA report will go some way toward raising awareness, at least where motors are concerned. It fills an important gap in the energy and climate debate by putting some hard facts on the table about a topic on which independent measurement and analysis have been lacking. But it also clearly points to the central role of policy makers in realizing the potential savings.

The importance of motors is reflected in our language: When we refer to a country or industry being a “motor” of growth, we are highlighting its critical importance. The IEA report brings us back to the origin of that metaphor by showing us what a central role motors play in our economy. The new EU regulation shows us what a central role they can also play in addressing the energy challenge in countries such as Germany and in increasing the competitiveness of industry.

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