Overcoming barriers to energy efficiency in SMEs

Last Updated on Thursday, 25 April, 2024 at 1:16 pm by Andre Camilleri

Timothy Alden is the Project Manager on sustainability initiatives within the Malta Business Bureau – Malta’s Business Gateway to the EU.

In the current business landscape where cost reduction is not merely beneficial but essential, the EnergyEfficiency4SME (EE4SME) project, funded by the LIFE21-CET-AUDITS programme, emerges as an opportunity for small and medium-sized enterprises (SMEs) aiming to enhance their energy efficiency. Commissioned by MBB, an economic study from Deloitte Malta, provides a thorough exploration of the energy efficiency landscape for the accommodation, agri-foods and metalworking sectors in the EU member states participating in the project. The report identifies significant opportunities for both policymakers and enterprises to move business closer to achieving the EU’s climate targets, while increasing competitiveness. This project incorporates data from EU member states including Austria, Bulgaria, Cyprus, Estonia, France, Germany, Italy, Malta, and Spain.

SMEs, which account for 99% of all European businesses, are at the forefront of the energy transition. Despite this, a surprising 39% of businesses targeted by the project had not undertaken an energy audit – a fundamental measure for pinpointing efficiency improvements. This oversight is most notable in the hospitality industry, where around half of the businesses had neglected to conduct energy audits. Nevertheless, the hospitality sector appears more inclined to initiate investments, likely motivated by the immediate benefits which are less prevalent in the manufacturing sectors.

The barriers to implementing energy efficiency must be tackled to ensure a successful transition which boosts competitiveness. The initial investment in energy-efficient technologies can pose a significant barrier, particularly for SMEs. To mitigate these upfront capital costs, several financial solutions are available such as grants, subsidies, and low-interest loans provided by governments and financial institutions. However, many businesses are put off by the bureaucratic hurdles to obtain funding, which is why the EE4SME project offers support at no cost for businesses who are interested in such funds. This support is available through personalised contact with HelpDesk officers, but also through the provision of a centralised list of financing instruments.

Another significant hurdle is the lack of awareness among SMEs about the potential energy-saving opportunities within their operations. To combat this, the consortium supports governments, industry associations, and energy consultants through disseminating information and offering guidance to enhance understanding and implementation of energy-efficient practices.

The complexity and uncertainty associated with energy efficiency projects, due to their technical and regulatory demands, further deter SMEs. This is why beginning any investment cycle with a comprehensive energy audit is recommended to streamline this process by clearly identifying opportunities and crafting a robust business case. Engaging with experienced consultants can simplify navigating these complexities. In Malta, energy audits in the relevant sectors are funded up to 5000 euros by the Energy & Water Agency, which forms part of the project consortium.

The focus on short-term financial returns often overshadows the long-term benefits of energy efficiency projects, which typically have longer payback periods. The Deloitte Malta study emphasises long-term cost savings and integrating energy efficiency into broader corporate sustainability and social responsibility strategies can shift this perspective. The rapid evolution of energy-efficient technologies introduces another layer of risk due to technological uncertainties. Conducting thorough assessments and staying informed about industry advancements can mitigate these risks. Pilot projects are particularly beneficial for testing new technologies on a smaller scale before broader implementation.

Despite these challenges, the report from the EE4SME project underscores the urgency of addressing these barriers through collaborative efforts among governments, industry stakeholders, and financial institutions. The report concludes with a strong call to action for businesses, financial entities, and the public sector to deepen their commitment to energy efficiency as a key strategy for sustainable growth. This preliminary study sets the stage for addressing financial gaps and implementation barriers. The EE4SME project is part of a broader initiative involving MBB, Energy & Water Agency, and Eurochambres, aimed at maximising the benefits of European funding programmes for Maltese SMEs.

The Malta Business Bureau is the EU Business Advisory organisation of The Malta Chamber and the MHRA, and a partner of the Enterprise Europe Network. For queries regarding its ongoing sustainability projects, contact talden@mbb.org.mt

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