WATTS SAVE KILOWATTS

Thanks to the strict control of electrical energy, Azerbaijanis have been gradually learning how to save on its use.  Meters which cannot be manipulated, periodic warnings about disconnection in case of non-payment and, finally, quite high tariffs, have forced many of the country's citizens to make it their habit to switch off the light when leaving the room, replace ordinary bulbs with lower-wattage ones, install autonomous natural-gas heating systems (where there are no central heating systems) and so forth.  Of course, public awareness campaigns by both the Azerenerji Joint Stock Company and distribution networks have helped.

However, while in the case of residential customers considerable progress has been made, the situation with legal entities - companies, organizations, government bodies - is much worse.  In the majority of energy-rich countries (including Azerbaijan) issues of energy efficiency (EE) have not traditionally been among the top priorities of companies and manufacturing facilities, especially smaller ones.  However, the global financial crisis has altered the situation considerably:  the gradual hike in tariffs has made a company's EE one of the key factors in its survival.  According to the International Financial Corpo-ration, Azerbaijan has much work to do to achieve full optimization on this issue.

International standards are contagious

Worldwide, most developed countries have long since made EE one of their top priorities.  Consistent policy and effective measures in the field of EE have helped many European countries to handle economic crises and to safeguard their energy security.

Quite a substantial part of crisis package funds are allocated to measures aimed at increasing energy and environmental efficiency - a Climate for Recovery report by HSBC analysts testifies to this.  Experts analyzed the stimulus packages of 20 nations, "weighing" in total $2.8 trillion: metering investment and renewable sources of energy, the measurement of greenhouse gases when hydrocarbons are burned at thermal power plants, improvements to the energy efficiency of buildings, the stimulation of the production of fuel-efficient cars, the development of railway transport (as an alternative to aviation), the development of electric  grids and the management of water resources and waste.

The average spending on energy effectiveness in stimulus packages amounted to 15.6%.  South Korea (80%) and the EU (almost 60%) led the way.

China is far ahead of the rest in terms of the absolute amount of investment in efficiency with $586 billion.  And the United States invests the most in the development of renewable sources of energy: $32.8 billion.

It is expected that demand for oil and gas will peak within the next 10-15 years, and fall thereafter.  The HSBC report makes it clear that, in parallel with support for the economy, the largest countries are trying to bolster their own energy security by broadening their use of internal resources, be they renewable or fossil fuels, and the United States and the EU are, at the same time, trying to avoid catastrophic climate change.

The point is that high energy consumption in the economy costs the country dear in terms of energy security, revenues to the national budget, the competitiveness of the economy and in public health and environmental issues; there is plenty of room to economize.

Because of the changing economic situation, companies (and mainly small ones) are forced to postpone the implementation of larger-scale, energy-efficient projects to a later date.  At the same time, the problem of cutting costs is as pressing as ever.  To address these issues, it would be appropriate to carry out energy efficiency measures which require little or no expense, that is to say, those which can be recouped within a year and which can be implemented using the company's internal resources, with minimum or no borrowing.  Among such measures are the thermal insulation of buildings, the upgrading of lighting and campaigns for the rational use of energy by staff.  Energy consumption can be cut by 5-10% in this way.

On the way to resolving problems

In the mean time, according to International Financial Corpo-ration research (IFC, a World Bank organization), which interviewed Azerbaijani companies about energy efficiency issues, Azerbaijan is now one of the most energy-consuming countries in the region.

However, the legal framework for safeguarding energy efficiency was put in place in 1996, when the law 'On consumption of energy resources' was adopted.  And in 2004, the president approved the State Programme for alternative and renewable sources of energy.  In the opinion of IFC analysts, the main reason hindering the country from taking steps towards energy saving is the oil factor, which, for now, eases concerns about the shortage of energy resources.  At the same time, the economic and environmental importance of EE programmes is unconditional, and it seems that Azerbaijani business realizes this very well.  For example, a number of EE measures have been implemented over the last three years, in particular to upgrade production machinery - and companies' own funds were invested here (companies in the food and machine building sectors were particularly active).  And, according to the poll, companies plan to increase their investment in EE improvement by a factor of seven in the next three years!

But not all company managers realize the importance of energy efficiency or are willing to invest, because they believe that expense can be cut by 10-15% at best.  However, the use of advanced technology makes it possible to achieve 20-30% savings, which naturally influences the cost of production and, therefore, competitiveness in the market.  Because of the lack of both information and desire to "waste money," our managers prefer to take a 'wait and see' position on this issue.  Furthermore, even auditing a facility's energy efficiency, which makes it impossible to get a full picture, is not conducted in the vast majority of cases.

In addition, in the opinion of the IFC researchers, Azerbaijani companies' hesitation to use external funds to carry out EE projects is also a problem, although 46% of the companies interviewed cited just this lack of funds as the main reason for not implementing measures in this area.  Only 15% of them have applied to international credit organizations; most of these were given credit on quite acceptable terms.

Given all these issues and the international trend towards increasing energy efficiency in the economy, the IFC proposed that Azerbaijan focus on this problem with programmes of education and a simple monitoring of electricity consumption by companies, upgrading the equipment in use and installing newer and more economical equipment.  Research shows that should investment in this field increase, the country's energy efficiency can be increased by 20% over the next three years, compared to 2007.

The experience of other countries shows that much greater effects can be achieved if this issue comes under government control and the state provides assistance to companies which are willing to make improvements in their operations.  After all, nationwide energy efficiency measures will considerably reduce oil dependence in the economy, which is the main goal of economic development of Azerbaijan in the years to come.