• Daryll Griffith

Adding to the Discussion: An Alternative Approach to Energy Efficiency in T&T


Adding to the Discussion: An Alternative Approach to Energy Efficiency in T&T


Energy Efficiency and Alternative Energy have been the key discussion points of several governments, civil society and private sector entities post the Paris Agreement in 2015, as the best mechanism to reduce global CO2 emissions and the dependency on fossil fuels. The level of uptake of Alternative Energy Products in Trinidad and Tobago (T&T) have been minimal compared to its Small Island counterparts such as Barbados (1). This challenge largely stems from the price differential between T&T and other Caribbean Countries for electricity (2). T&T, which produces oil and gas, therefore doesn’t face the problems associated with the importation of fuel and their associated high fuel prices and price fluctuations. Apart from the low price of electricity in T&T, our energy use compares to that of our North American counterparts, particularly the 43% of households that fall within the highest usage category of >1000kwh (3). Therefore, the question must be how do we in T&T get to a position where RE is a viable option given the low price of electricity from fossil fuel sources and the inefficient use of energy at our homes?


The Answer


The International Renewable Energy Agency (IRENA) published a working paper titled, "Synergies between Renewable Energy and Energy Efficiency" (4). The findings from this report state that energy efficiency can enable a more rapid shift to renewable energy in all countries while providing cost savings. Although, most energy efficiency measures are not directly connected with the renewable energy sector, and are often seen as separate policy measures, technical and economic synergies exist between efficiency improvements and renewable energy. Reducing overall energy consumption through efficiency improvements means that any given number of renewables can meet a larger share of overall energy use. Example of this include, efficient building envelopes, a reduction of energy demand for heating or cooling, making it easier and less costly to meet the remaining demand with renewable energy. Furthermore, in areas with low energy access, energy-efficient appliances combined with renewable energy are improving access to electricity for off-grid households (5). Therefore, for T&T To approach any 10 (6) or 100 percent renewable energy scenario, improved energy efficiency is needed in both energy-supply sectors and energy-consumption sectors.


Emphasis on Energy Efficient Homes


Placing emphasis on the residential energy-consumption sector as highlighted above, energy efficient homes can play a pivotal role in reducing residential energy consumption in T&T, making RE a reality in the distant future once efficiency goals are achieved. Given that T&T already has approximately 400,000 homes (7), a concerted effort to retrofit these homes with Energy Efficient building practices and appliances can impact our energy consumption. The benefits of which to the Economy have been discussed by EnergyNow (8) to be significant on the electricity subsidy and an argument can be made for additional revenue generation as T&T’s petrochemical sector can benefit from the additional natural gas, as there is currently a shortfall of supply (9).


The Consumer Decision




The above diagram is based on a residential study of households in the US in 2015 (10), of which in 2017 had an average energy electricity consumption of 867KWh/month (11), which according to CARILEC, 43% of T&T Nationals exceed on a monthly basis by 100KWh. Energy efficient practices have been advised by T&T’s Electricity authority (12), however, those practices focus on giving advice to consumers to use their existing appliances while the fiscal incentives by the GoRTT (13) are geared towards The importation of solar water heaters and the establishment of ESCOs (14). Fiscal measures geared towards the regulation of Household Appliances may or may not be on the political agenda, however, the development and increased awareness of national standards have contributed significantly to the drop in home energy use in the USA by 50 percent over a 30 year period (15). The IEA in its 2011 report on Energy Efficiency Policies also emphasizes the cost savings that can be attributed from mandatory requirements for appliances and electronics as it represents the fastest growing load due to the increases in standards of living internationally (16). The development, enforcement, and awareness of national standards may have been effective in the USA however hard policy elements absent of a market-driven approach or absent of information of its benefits may result in national confusion like the recent Vehicle Inspection Fiasco in T&T (17).


A Market-Driven Approach


Large traditional retail and distribution companies in T&T are experienced in the field of mass marketing, not Marketing 3.0 as described by Kotler, which defines a modern form of marketing; one that is embedded in social media, is based on many-to-many communication, and actively accepts the idea of social responsibility of corporations and integrates it into a marketing strategy (18). Energy Efficient Products, however, have a higher upfront cost and require high degrees of product awareness which may be prohibitive to consumers (19), particularly those with low electricity prices such as the T&T consumer. An example of this recently was the introduction of Electronic Ioniq Vehicles into the T&T market by Massy Motors Ltd, where the initial cost of the Electric Ioniq Vehicle was approximately 50 percent higher than its hybrid counterpart. Given the low price of electricity, there exists the potential of cost savings by using electricity instead of gasoline considering the recent revision and reduction of the gas subsidy (20), however, this information has not made its way to the company’s website (21) nor its Facebook page (22) and overall has largely disappeared from the national conversation. With regards to energy efficient appliances, the largest retailers such as Courts, Standards and PriceSmart currently have no marketing material on the benefits of energy efficient items at the home. This suggests a lack of understanding of the products themselves and the market for these goods by large retailers. In summary, efforts made to inform the consumer from the market leaders in retail and distribution regarding their products have been absent, therefore, investment in market research can impact the current fortunes of these products.


Who Should Marketers Target for Energy Efficient Products?


Large traditional brick and mortar retail and distribution companies are experienced in the field of mass marketing, not Marketing 3.0 as described by Kotler. However, companies such as Amazon (23), Netflix (24), and Google (25) rule the modern age and reach their customers using data, and segmentation practices which ultimately leads to personalization. Personalization leverages business data to make better decisions, ultimately locating what key customers can drive your marketing strategy. Using knowledge of segmentation, we can identify the major influencers of purchasing decisions at the home, i.e., appliances. Research from Inc. (26) states that “when it came to big-ticket electronics and appliances, 43 percent of women said they were the decision maker; 8 percent of men agreed”, The Houston Business Journal added that nearly 80 percent of the home-buying decisions are made by women (27), and Forbes indicated that, “Women drive 70-80% of all consumer purchasing, through a combination of their buying power and influence. Influence means that even when a woman isn’t paying for something herself, she is often the influence or veto vote behind someone else’s purchase” (28). The United Nations Framework Convention on Climate Change (UNFCCC) has also recognized the value that women bring to the development agenda for their ability to influence society and as a result brought the issue of Gender and Climate Change to the forefront (29). Recognizing women in households as the target consumer, forms the basis for future marketing strategies, which may contribute to the commercial success of these organizations as well as meeting national energy efficiency goals.


In conclusion, the need for Energy Efficiency practices has been identified by various stakeholders in T&T, for its various social, economic and environmental impacts, but notably as one of the key barriers to RE other than electricity pricing. There is no definitive answer to the puzzle that is Energy Efficiency in T&T however the combination of soft and hard fiscal incentives that focus on the household combined with a market-driven approach will at least have an impact as T&Ts average household energy consumption remains high. Most importantly, a multi-sectoral discussion must be had as this discourse can benefit from a variety of different perspectives, identifying the problem and crafting a solution will definitely take some creativity.


Digging Deeper in the future:

1) Best Arguments for RE in T&T with consideration to the alternative use cases of natural gas

2) Energy Efficiency Policy Measures for T&T

3) RE Marketing in T&T: A data approach

4) Residential Electricity Consumption Survey for T&T


Downloadable Version:

https://drive.google.com/open?id=1k4GpmgQvuJN0iu6UJpEDEUgtMRpNW3zi




Bibliography

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