U.S. DOE Identifies Barriers to Industrial Energy Efficiency

Manufacturing Energy Efficiency DOE report

The U.S. Department of Energy has prepared a report for Congress identifying barriers that impede the adoption of energy efficient technologies and practices in the industrial sector, and identifies successful examples and opportunities to overcome these barriers.  

Even though industry in the U.S. has made progress in implementing energy efficiency and conservation measures, studies suggest that acceleration of this implementation could result in a further reduction of energy consumed of 15 to 32 percent by 2025.  That is a big deal, since the industrial sector accounts for the largest share of energy consumption in the United States.

If barriers to investing in energy efficiency technologies and practices could be removed or reduced, the potential impact on the energy sector would be enormous.

Here are the report highlights:


  • Manufacturing contributed $2.08 trillion, or about 12.5 percent, to U.S. gross domestic product in 2013.
  • Manufacturers require too short of a payback period (one to three years) to make energy efficiency projects feasible.
  • U.S. tax policies, such as depreciation periods, the treatment of energy bills, and other provisions can be a deterrent
  • Companies often split costs and benefits for energy efficiency projects between business units, which complicates decision-making
  • Failure to recognize non-energy benefits of efficiency. Not considering non-energy or co-benefits of an end-use energy efficiency project weakens the business case.
  • Energy price trends. Volatile energy prices can create uncertainty in investment returns, leading to delayed decisions on energy efficiency projects.
  • The structure of utility cost recovery and lost revenue mechanisms can reduce a utility’s interest in promoting industrial energy efficiency projects.
  • Lack of knowledge of available Federal, state and utility incentives for end-use efficiency measures can lead to missed opportunities.
  • Lack of disaggregated energy consumption data, such as process unit and equipment-level energy consumption data, and tools to evaluate such data, can prevent identification and evaluation of opportunities.
  • . Lack of in-house technical expertise or the resources to hire outside staff for the development and operation of end-use efficiency projects can hinder deployment.

Possible solutions:

  •  Provide or support alternative financing structures, such as on-bill financing. Examples:  Minnesota Power provides industrial users in northeastern Minnesota with on-bill financing for energy efficiency projects.  Walmart Supplier Energy Efficiency Program – Walmart helps encourage end-use efficiency investments in their supply chain.  Cummins has an internal capital fund devoted to energy efficiency improvements.
  •  Include end-use efficiency as part of utility integrated resource plans and state planning.  Independent System Operators/Regional Transmission Organizations can work closely with states and utilities to ensure proper accounting for existing energy efficiency resources. Example: CHP/ WHP and other forms of end-use efficiency are included in Integrated Resource Plans in Massachusetts, Connecticut, and in a few other states.
  •  Expand technical assistance to industrial facilities through the Better Plants program, and other programs such as the Superior Energy Performance program and Industrial Assessment Centers.  Expand technical assistance to industrial companies through the ENERGY STAR Industrial program.  Expand technical assistance under the Manufacturing Extension Partnership.

The full report can be accessed here.

Tracey Smith About Tracey Smith
Tracey is an accountant and entrepreneur with a passion for nature. This passion is what spurred her interest in renewable energy, and the rest is history as they say. Tracey is a principal in Energy Think Group, the publisher of Solar Thermal Magazine and Tek-Think. She is also the principal at Women's Financial Help Desk. She spends her free time in the outdoors with her horses and dogs. She loves to travel.

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