Improving energy efficiency in cities could save billions in energy costs

12 April 2017 6 min. read
A new study finds that the introduction of €11 billion in energy efficiency efforts across 15 of Spain's largest cities could see consumers save €3.2 billion per year in energy costs, while reducing fine particles released by up to 25%. Based on the analysis, the authors advise local councils to keep energy efficiency efforts high on their energy and well-being roadmap.
The transformation of the wider energy ecosystem towards more sustainable forms of energy production, as part of wider efforts to curb the global average temperature increase to less than 2.0 C, focuses on a range of international and national frameworks. The targets for transformation remain stringent, and will require increasing attention from key stakeholders to be reached.
One area in which considerable gains can be made, is becoming more energy efficient. Energy efficiency has a range of benefits, from pollution and cost reductions for consumers to a reduction in the wider externalities that come with the use of fossil energy resources.
In a new report from Arthur D. Little, titled ‘A radical change in the consumption of energy in cities – The case of Spain’, the consulting firm considers the impact that local administrations can have on key trends within the wider energy landscape, with particular focus on larger metropolitan areas. The report is based on 15 of the largest cities in Spain, and maps the energy use within the value chain of residential, services and transport sectors. The cities were analysed in terms of their performance along 11 key indicators related to energy efficiency.

Energy use and energy consumption by sector for 15 cities in Space

The study finds that on average an inhabitant uses 8.55 MWh of energy per year, across the three key categories. In total accumulated to 38.5 TWh, of which 17.6 TWh is electricity and 15.0 TWh is gas.

In terms of residential use per inhabitant, the largest portion of energy consumption goes towards heating, at 1.83 MWh, followed by home appliances and hot water, at 0.78 and 0.59 MWh respectively. In terms of services, inhabitants’ average use of small commerces is the largest contributor at 0.83 MWh per year, followed by other public services and small offices, at 0.51 and 0.29 MWh each. The largest contributor to energy use across the cities considered, however, is private transport, at 1.98 MWh, while public transport consumes 0.28 MWh.

The research found that average consumption differed somewhat across cities surveyed. In Malaga for instance, an average citizen uses 6.81 MWh of energy per year, considerably below the average, while in Gijon, Valladolid and Madrid consumption was more than a MWh per inhabitant per year above the average, at 9.88, 9.81 and 9.68 MWh per inhabitant per year respectively.

Comparative of city performance by indicator

In terms of the 11 key indicators, the research found a mixed bag in terms of performance among the 15 cities. The mixed bag results reflects the possibility for broad gains in some instances, although in others, reflects local geography – such as more severe winters.

When it comes to the energy efficiency index developed from the 11 indicators, Bilbao and Zaragoxa take the number one spots, on 85.1 and 81 respectively. Both have low transport energy consumption, largely due to not utilising private transport options, as well as low consumption per resident, both ranking in the top five.

The worst performers on the list are Valencia and Gijon, at 66.8 and 64.2 respectively. Both cities perform relatively well in transport consumption, at 2.2 MWh apiece, however, they perform relatively poorly in terms of consumption per resident, at 9.7 MWh and 9.4 MWh per year per home. Both cities spend considerably more energy on white appliances than others, as well as incurring higher heating energy expenditure.

Potential energy saving by sector and city

Towards energy efficiency

The research also sought to identify the potential energy saving from the introduction of energy saving measures into the wider economies of the 15 cities considered. The authors note that they envisage four key factors in determining the potential energy saving per sector, including “1) all improvements are based on volumes of activity per city and sub-sector, in 2015; (2) only currently available technologies are considered according to their existing improvement potential; (3) a decade is considered the time frame – long enough to allow for public policy to be defined and implemented, and short enough for forecasts to be meaningful; (4) we have considered profitable investments only, as defined by current energy prices and technological costs.”

Using the above criteria as a basis, the consulting firm calculates that an average saving of -37% is possible across the 15 cities surveyed, accounting for a drop from 8.55 MWh per inhabitant to 5.4 MWh per inhabitant. The biggest savings would occur in the residential segment, at -1.46 MWh, followed by the services segment at -1.08 MWh, while transport would see a -0.61 MWh drop.

The biggest savings would come from improving the housing stock across the 15 cities, many of which have relatively poor energy ratings. The move would include replacing inefficient heating systems with more advanced systems – such as low-temperature boilers – or by improving the insulation of households. The services sector too would benefit considerably from more efficient insulation and heating, as well as more efficient lighting systems. Electrification of public transport, and electrification of vehicles more widely, would reduce the energy consumption of the transport sector.

Investment needs by sector

The implementation of energy efficiency measures would have considerable environmental and social benefits. The study finds that energy efficiency measures resulting in the -37% drop in total energy consumption per inhabitant per year would “reduce CO2 emissions by 18.8 million tons, which, excluding the heavy industry, represents 30% of the reduction target for Spain in 2030.” A reduction in the use of fossil fuel in cities would have considerable public health benefits. The WHO estimates that air pollution is responsible for the deaths of 6,800 citizens every year in Spain, the saving set out by the firm would see a 25% drop in ppm concentration of fine particles, reducing yearly deaths. Finally, consumers would save up to €3.4 billion every year.

The investment cost for local authorities to bring about the changes across the 15 cities stands at around €11 billion. The biggest investments include €4 billion to upgrade and insulate the residential housing stock, and the electrification of the bus systems, at €3.2 billion. A further €2.3 billion would allow businesses to improve their overall performance in terms of energy consumption.