A surge in demand for energy efficiency
Opportunity: All things energy efficient
Many Romanians have been insulating their apartments and buying new, more efficient refrigerators and other appliances. Some recent developments, however, will vastly expand the need for a variety of products and services related to energy efficiency.
With European Union accession just over two months away… Romania is required to begin reducing the electricity subsides with a full phase-out in five years. Even with the current subsidies in place, rising energy costs have encouraged individuals and firms to begin considering the full cost of appliances, industrial equipment, and other devices when making purchasing decisions. In addition, the enforcement of recent and upcoming energy efficiency requirements will require retailers to only stock those items that meet certain efficiency requirements.
The growing availability of consumer credit and micro-finance will also allow purchase of items with higher upfront costs but lower lifetime operative costs to a significantly larger portion of consumers. A trend towards the individual metering of electricity usage in the ubiquitous apartment blocs makes the decision to purchase new appliances easy when the yearly cost of energy of an old appliance is half the price of a new model that uses a fraction of the electricity.
In the industrial market, Energy Service Companies (ESCOs) will agree to fund an energy savings initiative at a factory where the factory agrees to pay the ESCO from the money saved on each month’s electricity bill. A previous non-customer of new equipment (i.e. Cash-strapped companies) can now receive design and engineering services, help with financing arrangements, and new equipment and service all funded from the differential of their prior and their new, substantially-reduced electricity bills.
An interesting related product for Romania (and the rest of the world) will be the new lighting based on the Light Emitting Diode (LED). New developments have made lights available which use far less energy than incandescent or florescent lighting, have an eight year lifespan, and offer more aesthetic solutions. Demand for the related consulting services for promoting, designing, financing and implementing these systems will also significantly increase across the industrial, commercial and residential segments.
Two interesting companies in Romania well-place to benefit from these trends are:
EnergoEco – a Romanian/Canadian joint venture busy in the ESCO field and…
Elba – A former state-run company producing LED products in partnership with electronics giant Philips of the Netherlands.
There is certainly more room for others to join the trend!
Written by Steve
August 31st, 2007 at 9:04 am
[...] Picking up from Steve’s blogpost on changes in demand for energy efficiency , Romania is clearly on a track toward changes in policy, politics, economics, and alignment with EU practices in general - including EU development practices. Already, the UK and Germany include aspects of green development, energy efficiency, and “passive-house” design as a standard feature of many new buildings. All of these trends, including Romania’s direction toward reduction in subsidies have one thing in common: energy efficiency. [...]