Energy Efficiency – a typical German property

“Švaba napravio” translated literally from Serbian means “Swabian made it”. It is used in Serbia to express appreciation for the quality of a German product.

Energy efficiency is a term used frequently today. From an engineering perspective, it is part of basic education, which is used from the very beginning in engineering to express the quality of a process or machine. The altered fact is that the pure focus on technical or economic efficiency has been broadened to also include ecological and social aspects.

Efficiency is the largest near-term greenhouse gas (GHG) reduction opportunity. Globally, the industrial sector is responsible for around a quarter of total energy consumption. Industrial energy consumption in Serbia is up to 30%. Improving energy efficiency in the industrial sector is being prioritised in many countries. Investments to improve industrial energy efficiency can yield major energy savings, improved productivity and reduced environmental pollution. Moreover, significant investments in energy efficiency will reduce the total economic cost of emission pollution follow-up care.

Efficiency is also one of the three core targets of the climate and energy package of the European Union – 20% cut in greenhouse gas emissions, 20% of EU energy produced from renewables and 20% improvement in energy efficiency.

Serbia is among the European countries with the lowest industrial sector energy efficiency. This applies to all segments: energy generation, conversion, transmission/distribution, storage and consumption. In combination with a lignite-orientated generation portfolio, the impact of greenhouse gas pollution is very high.

The two main driving factors for improving energy efficiency in industrial enterprises are: a binding legal framework, on the one hand, and energy costs that have a major impact on production costs, on the other. Of course, there are also other factors, such as social responsibility. However, every company needs to consider market conditions. These factors often describe only the start position and thought provoking impulse. Dealing with the subject will fast lead an organisation to strategic issues like the company’s future development in fast-changing markets.

As Serbia is in the EU accession process, the aforementioned driving factors are under successive implementation in the Serbian regulatory framework and are currently rather weak.

Despite these weak driving factors, we believe there are possibilities to improve energy efficiency in Serbia’s industrial sector. Governments usually initiate such processes from their own buildings to public institutions and enterprises. Unfortunately, activities aimed at making energy savings are particularly slow in Serbia, due to several factors: very low electricity prices (compared to EU countries), poor investment opportunities, lack of awareness etc.

Nevertheless, it is obvious that the market framework in Serbia will change, or is currently undergoing changes:

Low energy prices – liberalisation of industrial electricity/energy consumer market (implemented); liberalisation of gas market (to be implemented)
Implementation of European Standards
Implementation of renewables and combined heat and power with feed-in tariffs
Investment in environmental protection technologies in power utilities, which will impact on the cost of energy generation
Shutdown of outdated power plants
Development of energy-related services: ESCO, distributed/embedded generation, virtual TPP.
Implementation of cogeneration, as well as tri-generation.

Increasing energy efficiency does not necessarily mean implementing an energy management system according to DIN EN 50001.

From experiences in Germany, we know that available resources are confined, particularly when it comes to SMEs, which does not allow them to deal sufficiently with additional issues alongside their day-to-day business. Staff members are often completely aware of the technical situation and performance problems, but it is difficult to achieve more than troubleshooting.

The first point of discussion for every organisation is always how to tackle such problems – “make or buy”? The answer has to be provided by the organisation itself. There are good arguments for both directions. However, experience shows that expertise in fields that are not part of the core business are frequently outsourced. IT services are such an example, even in bigger organisations.

Local companies that are affiliates of bigger foreign companies are generally smaller companies that have to deal with the unpredictable risks of local/regional markets. In those enterprises that apply energy intensive processes, energy efficiency can be an important tool for energy cost savings and improving competitiveness. These potentials may not be visible at present, due to the production cost structure in Serbia. Labour intensive production is often outsourced to Serbia, due to its lower labour costs, thus energy cost saving potential may not be a focal point. However, considering the aforementioned market changes, energy costs will become more important.

Bigger international companies have developed Energy Management Systems, but the technical implementation of energy efficiency measures must also consider local specificities and requirements, such as:

Requirements of local/regional energy markets
Requirements of local/regional products (demand, suppliers, cooperation partners etc.)
Regulatory framework.

Experienced local energy efficiency experts can often be the better choice than internal experts coming from the top of the parent company. Local professional support for improving energy efficiency is certainly more cost-effective compared to engaging a foreign technical expert, especially considering the previously noted framework conditions. This is particularly true for comprehensive projects that require the engagement of a larger number of experts in different disciplines.

VPC East – Sustainable Engineering & Consulting, as an affiliate of a German parent company, has good experience in using available energy best practises from Germany and combining and adapting that to local needs in Serbia.

Our proposal for the German industrial community in Serbia is to develop a robust Energy Efficiency Strategy, adapted to the needs of their respective sector – following principles that are good practise in Germany:

Leadership – A commitment to energy efficiency must start at the top. Strong leadership from senior managers – the future of the company.
Energy review – Collecting data and developing sector specific profiles (EPI’s)
Saving potential – General rule: every organisation has energy saving potential.
Supply potential – Saving potential in supply agreements (e.g. electricity purchase) are underestimated in Serbia.
Transparency – Reliable measurement, tracking and reporting systems, enabling management to monitor progress and identify potential problems.
Motivation – Establishing clear goals and objectives, then revising them over time as initial targets are met
Communication – Importance of energy efficiency as a core company value to both internal and external stakeholders.
Innovation – An emphasis on energy efficiency can lead to broader innovation and the improvement of processes within a company

Implementation of best practice from various industries: Petroleum, Chemical, Aluminium, Copper, Iron and steel, Cement, Lime, Glass, Brickmaking, Tiles Sanitary ware, Pulp and paper, Textile, Brewery, Food etc.

At first glance, Serbia’s market framework shows no potential to increase energy efficiency. However, only deep analysis can reveal if saving potentials can be raised. Good practise from Germany, applying the model of sharing energy savings between a plant operator and service provider (ESCO), is available and applicable with adaptation in Serbia.

Alternatively, several German development organisations, e.g. KfW Bank, offer financial support via various cooperation agreements.

Serbian companies will have to adapt to changing conditions if they want to succeed in the marketplace.

There is also a famous saying in Germany: “Wer zuletzt kommt, den bestraft das Leben”, which can be translated as – “life punishes those who come too late”.