Reverse auction - how companies can improve energy efficiency

To meet Sweden's growing electricity needs and transition to a fossil-free society, companies and stakeholders need to think differently. Energy efficiency is one of the fastest and most cost-effective ways forward, but traditional support systems often make it difficult to prioritize the right measures.

Reverse auction is a new way of working where companies compete to present the most cost-effective energy efficiency solutions, now in November, West Swedish companies have the chance to participate in a pilot. 

Fossil Free Sweden's new strategy shows that energy efficiency is a powerful but underutilized measure with great potential for households, industry and the climate. With the right policy instruments, Sweden's total energy use could be reduced by almost a tenth by 2030 - while electricity prices fall. One study shows that a 10% reduction in electricity use could reduce electricity prices in southern Sweden by almost 40%, a clear example of the impact that smarter energy use can have. 

Successful approach being tested in Sweden 

This new approach could be key to meeting growing energy demand. Instead of distributing grants according to fixed templates, companies will be allowed to compete with their proposals for energy efficiency measures, with the aim of finding the solution that delivers the most energy savings per krona invested. The most cost-effective measure receives support* for implementation, an approach that is already used successfully in several other countries but is now being tested for the first time in Sweden. 

- Unlike traditional auctions, where buyers compete to pay the most for a good or service, here those who want to carry out measures compete to offer their solutions at the lowest possible cost per energy saving achieved," says Maria Olsson, project manager at Innovatum Science Park. 

The benefits are clear. Cost-effective investments where the support goes to the measures that provide the most savings per krona. Businesses decide for themselves what support they need, allowing for creative and effective solutions. Resources are used more efficiently and more measures can be implemented in a short time. 

How the pilot works 

Friday, November 28, 10-15, companies are invited to Gothenburg to participate in the pilot. Each participating company contributes with at least one, preferably several, concrete proposals including estimated energy savings and cost. The bids will then compete against each other to simulate a reverse auction. 

The results of the day will be used to further develop a model that can lead to faster and more accurate investments in energy efficiency, both for companies and society at large. The experiences from the pilot will also contribute to the knowledge that Fossil Free Sweden and other actors are gathering on how future policy instruments for energy efficiency can be designed. 

- By participating, companies will gain both new ideas and concrete tools to reduce energy use while contributing to a support system that works in practice," says Lisa Löfving, Business Development Manager Energy and Heat at RISE. 

Participating companies can:
- Present concrete proposals for energy efficiency measures.
- Participate in the pilot test and compete with other companies*.
- Influence how future support systems can be designed.
- Take part in knowledge, experience and new findings on energy efficiency.
- Lunch and coffee during the day. 

The pilot is part of the EnerAct project, a policy lab exploring new policy instruments and support systems in industrial energy efficiency. The project is funded by Vinnova and Göteborg Energi. Participating project partners are RISE, Region Västra Götaland, Göteborg Energi, City of Gothenburg, Fossil Free Sweden. The Swedish Energy Agency is also participating in the pilot. 

*In the pilot test, no funding will be awarded to winning entries.