„A bird in the hand is worth two in the bush,“ or is it „nothing ventured, nothing gained“?
The more security-oriented people are, the more they devalue options that lie in the future (this phenomenon is called ‚temporal discounting‘)—they prefer short-term gains to the uncertainty of a greater success that lies further in the future. To alleviate such ‚fears about the future,‘ people need a sense of agency—the feeling that they can take control of their own happiness.
Energy efficiency measures are precisely the kind of short-term gains that are favored, and they continue to be the talk of the town in the implementation of the energy transition. However, in many industries, the progress we are making in energy efficiency is no longer significant, and the potential has been exhausted in many companies. To remain capable of taking action in implementing the energy transition, we therefore need a different tool that is no less effective—process flexibility.
Compensating for Forecast Errors Through Flexibility
Flexibility is one of the tools the system needs to offset forecasting errors related to renewables. So far, however, there has been a widespread lack of incentive structures for retrofitting, planning certainty for refinancing investments, and an appropriate regulatory framework for implementation. All of this has already been established for the tool of efficiency measures. The necessary regulatory frameworks for these two options may differ significantly, but lawmakers have already taken action in this area. To create planning and refinancing certainty for flexibility measures, however, one or more instruments from the field of energy efficiency promotion could certainly be adapted for flexibility initiatives.
Unfortunately, increased flexibility often runs counter to the desired efficiency goals. Most processes simply operate most efficiently when they do not deviate from their optimal operating point—that is, when they run at full capacity. From an individual perspective, the optimal operating point may even lead to faster success in terms of energy consumption and CO2 savings; however, the energy transition must be approached systemically, and from the system’s perspective, (fossil) energy consumption and CO2 emissions are lowest when renewable energy is used exactly when it is available. A process operating at a steady state simply does not take weather forecasts into account—yet these are becoming an increasingly decisive factor in our energy production.
Balancing Energy Efficiency and Flexibility Measures
To address this situation, energy efficiency measures and flexibility measures should be treated equally. The system needs both. However, where flexibility is possible, efficiency targets should not result in investments in flexibility being foregone; rather, efficiency improvement targets should be waived while load flexibility is provided. This resulting increased emphasis on flexibility projects has the potential to give many companies new capacity for action and open up new opportunities for them to participate in the energy transition.
