How important are perceived barriers and drivers versus other contextual factors for the adoption of energy efficiency measures: An empirical investigation in manufacturing SMEs

This study examines determinants of adoption of energy-efficiency measures (EEMs) in small and medium-sized enterprises (SMEs) in the manufacturing sector, where the energy-efficiency gap is more likely to persist according to findings in previous literature. By simultaneously examining the relevance of multiple groups of perceived barriers and drivers and several other objectively measurable contextual factors, this research aims to fill the noted gap in econometric evidence. Discrete choice models are applied to a representative sample of 220 Slovenian manufacturing SMEs, comprising 10% of all manufacturing SMEs in the country to validate the relevance of barriers and drivers for both past adoptions of EEMs and firms' plans for adoption in the future. In line with previous empirical findings, results show that economic incentives, namely cost reductions for past investments and the potential for energy savings for future investments, are among the key drivers, while limited financial resources in more indebted firms blocked decisions to implement EEMs. Interestingly, energy-efficiency-related determinants play a more significant role than other self-perceived barriers and drivers. The importance firms place on energy efficiency, running energy-efficiency awareness programs for employees in the firms and obtaining information through external advice or energy audits triggered past company investments. Energy-intensive and innovative firms that are more aware of the importance of energy efficiency and those that have carried out investments in the past are more prone to adopt EEMs in the future, also confirming the path-dependency of energy efficiency activities. Lessons for policy-makers and managerial implications lie in spreading awareness about energy efficiency among managers and employees, building competence, and providing information on the potentials for energy efficiency improvements and on the availability of public and private funds.