The PEMP

The development of full scale project started with identification of existing barriers then the mechanisms for overcoming these barriers were developed.

A range of barriers has prevented Poland from realizing the economic potential for energy efficiency in electric motor systems. The project team conducted a survey of manufacturers and end-users, which resulted in the following ranking of barriers.

The respondents regard the financing barriers as very important. The most important barriers within the group are the following:

• lack of company's financial means,
• lack of business partners/companies willing to take the risk and to finance the enter-prise or too high prices of such services,
• difficult acquiring financial means from outside,
• low profitability of the investment in comparison with the risk involved,
• legal or fiscal obstacles.

(2) Information

Lack of information was the second important barrier:

• insufficient information on possibilities of external co-financing of the investments,
• insufficient information about energy services companies,
• lack of information about verified examples of the effective use of the projects (demon-stration projects),
• lack of well-known standard methods of economical effectiveness estimation of the investments,
• lack of the profitability estimation of drives exchange for energy-efficient ones,
• insufficient information on available technologies and devices,
• lack of or insufficient knowledge about any possibilities of the electric drives energy cost reduction in a company.

(3) Low priority

The low priority of energy efficiency is also an important barrier. The electric energy costs as a part of the production and services costs are in Poland 2-10 per cent (on the average 4 per cent) of the overall costs.

• lack of or inefficient programmes of the production and services cost reduction in a company,
• restructuring the company (products, market position, new technologies, etc.) has a much higher priority,
• low share of the energy cost in the production or services costs, and their insignificant role within the general company's strategy and the company's actions,
• lack of either organizational or technological skills on how to manage the costs and to make the investment decisions.

(4) Market

Among market barriers (ranked as 3 in the 0-6 scale) the most important are the following ones:

• no offers concerning this particular area from financial services providers (no such spe-cialised financial service providers),
• no offers for the technical and financial risk estimation as well as for the insurance from such risk,
• no complete offer of the ESCO type: from a recognition to the investment realisation in a form of self-financing from costs' savings,
• no offer from energy processing companies, including energy suppliers,
• no offer from producers of the devices.

The survey showed also that a large majority of users/investors (approximately 75%) was prepared to invest in energy efficient motor systems if the simple payback period for the investment were less than 2 to 3 years (see Table 1).

Based on the above information, the project team identified two general categories of barriers:

1. Barriers to profitable investments. The economic potential of investments with a PBP of less than 2 to 3 years, which is the criterion applied by most investors, is not currently exploited. Nonetheless, there are a number of projects that have been identified with low pay back periods. For example, in district heating and water utility projects involv-ing the replacement of standard motors with energy efficient motors, pay back periods of between 2.2 and 2.8 years were possible with expected savings of between 520 and 566 MWh/year. However, the current market share of high efficient electric motors that would capture these savings is practically zero.
2. Barriers to investments with lower profitability. An even greater potential exists for in-vestments with a PBP of up to 6 years. However, these projects are not implemented because profitability is perceived as too low by potential investors.

PEMP address both barriers to profitable investments and barriers to investments with a lower profitability. The preliminary phase of the project assessed these barriers by focusing on sectors with the highest expectancy of full-scale implementation (i.e., in water, heat, electric energy, gas supply sectors, and in industry, mainly the chemical industry). The barriers were found to be the same across these specific sectors.