Energy
Efficiency and Renewables

International efforts to meet energy demand in a safe and reliable manner generally acknowledge the complementary nature of renewable energy deployment and energy efficiency measures.1 Both renewables and efficiency can contribute significant benefits including lower energy costs on a national, corporate or household level, increased grid reliability, reduced environmental and climate impacts, improved air quality and public health, and increased jobs and economic growth.2 The United Nations’ Sustainable Development Goal 7i (SDG 7) recognises that combining renewables and efficiency provides an integrated means towards achieving sustainable energy access for all.3

Energy production and use account for more than two-thirds of global greenhouse gas emissions.4 Taken together, renewable energy deployment and energy efficiency measures can potentially achieve most of the carbon reductions required to keep global temperature rise below 1.5 degrees Celsius.5 Moreover, renewables and efficiency maximise their emissions mitigation potential when pursued together.6

Coalitions of governments, corporations, institutions and non-governmental organisations have boosted global energy efficiency efforts, recognising the potential to greatly reduce greenhouse gas emissions.7 As of the end of 2019, 131 parties to the Paris Agreement mentioned renewable energy in their Nationally Determined Contributions (NDCs) to reduce emissions, while 112 parties mentioned energy efficiency, and 94 mentioned both.8 Energy efficiency was a main contributor to stabilising global greenhouse gas emissions in 2019, along with renewables.9 (→ See Box 1.)

BOX 1. Energy Efficiency and the Deployment of Renewables: Working Together with Limited Resources

BOX 1. Energy Efficiency and the Deployment of Renewables: Working Together with Limited Resources

Energy efficiency and renewables generally complement each other in an integrated approach to achieve common global goals. In some cases, however, trade-offs can occur between the two, due mainly to competing costs. Given that financial resources are inherently limited in most economies and for most actors, the relative prices for energy efficiency and renewable energy have the capacity to reduce the incentive to implement one or the other. This is not necessarily a negative phenomenon, as both efficiency and renewables serve largely the same objective.

The costs of generating electricity from renewable energy technologies continued to decline in 2019, with solar photovoltaic (PV), hydropower, onshore wind power, bioenergy and geothermal projects becoming increasingly competitive with fossil energy generation. (→ See Sidebar 5.) In some locations, however, renewable electricity prices for end-consumers remain higher than conventional electricity pricesi.

Meanwhile, plenty of no- or low-cost energy conservation and efficiency measures exist that can be implemented at a wide scale, such as turning off appliances that are not in use or activating “sleep” settings, switching to low-energy lighting and installing insulation films for windows. The public and private sectors are increasingly recognising how such “low-hanging fruit” can yield major energy cost savings.

Ultimately, the optimal combination of efficiency and renewables is both location- and sector-specific. Additionally, implementing efficiency measures facilitates the deployment of renewable energy either concurrently or subsequently. Integrated strategies for efficiency and renewables thus can be the most effective approach for maximising the potential of both. For example, in the Seychelles an Energy Efficiency and Renewable Energy Programme in place since 2017 aims to encourage residents to buy energy-efficient appliances and renewable energy, and Morocco’s Jiha Tinou programme seeks to stimulate renewables and efficiency initiatives in cities and regions. (→ See Policy Landscape chapter for additional developments in 2019.)

iSome of this price discrepancy can be attributed to ongoing adjustments to variable electricity supplies in power markets and to the diverse business models of energy utilities and infrastructure operators. Conventional electricity prices are those from fossil fuel and nuclear power plants.i

Source: See endnote 9 for this chapter.

Energy intensity, which represents primary energy supply per unit of economic outputii, plays an important role in evaluating developments in energy efficiency (for example, it is a key indicator for tracking efficiency improvements under SDG 7). Energy intensity is complemented by carbon intensity, which measures the amount of carbon dioxide emitted per unit of final energy consumediii.10 In general, interactions between the deployment of renewable energy technologies and improvements in energy efficiency are complementary, as efficiency reduces the overall primary energy needed, while the use of renewables minimises both the primary energy needed as well as the carbon intensity.11 (→ See Box 2.)

BOX 2. Energy Optimisation: Efficiency, Conservation and Structural Changes

BOX 2. Energy Optimisation: Efficiency, Conservation and Structural Changes

The term energy efficiency is often used as a proxy term for energy savings. Yet improvements in efficiency alone do not necessarily lead to energy savings. Energy reduction or optimisation is simultaneously influenced by:

energy efficiency improvements through technology and design;

energy conservation measures, which are related to the behaviours and habits of energy end-users; and

structural changes, or changes in the composition of sectors or within a sector (for example, a switch to less energy-intensive or more service-oriented industries), which can be achieved through policies, investments and planning processes.

Both energy efficiency improvements and the integration of behavioural measures are necessary within energy optimisation strategies, whereas structural changes generally are kept outside of the scope.

Energy efficiency measures without behavioural awareness can lead to a “rebound effect”, whereby the energy reductions generated by nominal efficiency improvements are either lower than expected or even negative. For example, in response to improved insulation in buildings, residents may opt to maintain warmer homes rather than to reduce their energy consumption – resulting in a direct rebound effect – or they may spend the cost savings on other goods and services that also require energy to provide (an indirect rebound effect).

Often, the benefits of efficiency are not “lost” but rather are redirected; thus, it is important to distinguish two types of impact of the rebound effect:

The reduction in energy expenditure due to energy efficiency leads to wasteful energy use with no appreciable increase in utility to the consumer. This could include, for example, leaving the lights on in a vacant room because lighting is cheap.

The reduction in energy expenditure due to energy efficiency leads to the opportunity to increase the consumer’s utility, by using some or all of the energy that is otherwise saved for new or improved energy services. This could include, for example, increasing space heating to a range of comfort from a previously unhealthy state, or efficient lighting allowing for more study time during non-daylight hours.

Source: See endnote 11 for this chapter.

Factors behind these reductions in primary energy demand and carbon emissions include:

Interactions between renewables and primary energy efficiency. Primary energy demand includes all of the energy contained in all the energy sources required to meet the final energy consumption of end-users, taking into account losses from transforming primary energy (such as oil, coal or natural gas) into secondary energy (such as electricity or oil distillates). Because the use of some sources of renewable power – particularly hydropower, solar PV and wind power technologies – reduces the overall transformation losses in generation, the uptake of renewables lessens the amount of primary energy needed to meet final energy needs, thus improving primary energy intensity.12 Increasing the share of electricity generation from renewables also helps to reduce overall carbon intensity.

Interactions between renewables and final energy efficiency. Energy efficiency measures are necessary for increasing the overall share of renewables in final energy consumption. By lowering final energy consumption, energy efficiency allows the same level of renewable energy uptake to meet a larger share of energy consumption, and also reduces the capital investment required to supply the demand through on-site and/or off-site renewables. This is particularly pertinent in light of rising energy use in developing and emerging economies, and in light of barriers that limit the speed of renewables deployment (such as land scarcity, potential opposition by local communities, etc.).13 (→ See Feature chapter.)

In addition, specific efficiency measures in end-use sectors, such as energy-efficient building codes, can be enablers for both energy efficiency and renewable energy. These efficiency measures often are coupled with measures to supply the remaining energy demand either directly with renewables (for example, bioenergy, solar thermal and geothermal heat) or indirectly with renewables-based electricity.14 The electrification of end-use sectors, such as heating, cooling and transport, is one pathway to achieving a double benefit: electrified systems can be more energy efficient than their fossil fuel-based counterparts, and electricity demand can be sourced more readily from a wide variety of renewables.15 (→See Systems Integration chapter.)