Towards a More Realistic Cost-Benefits Analysis - Attempting to Integrate Transaction Costs and Energy Efficiency Services

Abstract

In order to calculate the financial return of energy efficiency measures, a cost-benefit analysis (CBA) is a proven tool for investors. Although these calculations often show that the measures pay off after a few years, they are often not implemented. The reasons for this are summarised under the term - energy efficiency gap -, which shows that investment decisions in energy efficiency are often not only based on a simple consideration of direct costs (investments) and benefits (e.g. saved energy costs). An element of this energy efficiency gap are transaction costs (TAC), which include, inter alia, the time needed to acquire the necessary knowledge. TAC can be reduced by energy efficiency services (EES). We investigate upon a) TAC for taking up energy efficiency measures, b) costs of applicable energy efficiency services including Government funding and c) EES’ potential to reduce TAC. Quantifiable information on these three aspects will provide a more realistic picture for a cost-benefit analysis. Data is gathered by conducting a meta-analysis, which is complemented by expert interviews with energy advisors. We focus our results on the business sector by developing case studies on energy efficiency investments. The study finds TAC are a cost factor in CBA, but the factor does not rise proportionately with increasing investments. EES also increase costs; however, in Germany, Government funding minimises its relevance. Through our approach we were not able to identify data about the EES’s potential to reduce TAC. More research is needed to enhance CBAs in a realistic way also factoring in the quantification of benefits.