[101] Measurement and information technology are lowering the efficiency barrier

The leader in energy management strategies has traditionally been the industrial sector. The good news is that the commercial sector is now also increasingly choosing to optimise the energy use of their facilities to realise the benefits of energy management.

A key reason is the increasing affordability of technology such as smart thermostats, lighting controls, and IoT-connected devices. Another is that these IoT devices and other energy management equipment for commercial businesses are now commonly included in utility automated demand response programs which offer incentives to reduce demand.

[92] The split incentive between suppliers and consumers

For energy users, energy efficiency investment saves energy, energy costs and greenhouse gas emissions. It produces multiple benefits for the economy. And it saves on infrastructure costs in the electricity system. While the relative costs of renewables versus energy efficiency are changing, efficiency remains a worthwhile pursuit.

[86] Could efficiency pay for the energy transition?

The reasons why EU citizens cannot invest in energy efficiency investment opportunities with a good financial return are similar to the reasons why the ESCO market does not develop as fast as expected [19].

This is another market failure since citizens will be highly interested to earn a 10% interest rate while society needs these energy savings for a cost-effective energy transition.

Metering technology is advancing fast [4, 61], energy management systems are being put in place and solutions for peer-to-peer transactions are emerging. This gives hope that the future may significantly differ from the past.

[85] Studies can prove almost anything

When comparing the cost of wind or solar electricity with conventional power generation, it doesn’t suffice to look at generation cost only. Rather one must look at the system cost of delivering energy to consumers at the time needed.

Here again we can observe the power of energy efficiency: a kWh saved does not require conventional, wind, water or solar electricity. And it does not need to be transported, distributed or balanced.

[81] The “Robin Hood” approach to energy efficiency

The term sounded fashionable and the approach made sense, but its second basic assumption – ‘the predicted yearly savings must be assessable in a reliable way’ – might often prove complex (see also [61] and [77]).

Instead of insisting on a fully reliable assessment of the return, such a ‘total concept’ would be truly visionary if it would provide an approach to deal with savings which are most probably there but very difficult to measure. A concept that, instead of insisting on ‘reliability’, finds a way to deal with the uncertainty in the measurement of the economic return without running irresponsible financial risks. Regulators and insurance companies have a role to play here.