Better Energy Efficiency Policy With Digital Tools

Photo-illustration: Pixabay

The digitalisation of energy systems is transforming energy efficiency, introducing technologies and creating new sources of detailed data which are supporting new business models and revenue streams. As the market and technology landscape transform, policy makers are also increasingly taking advantage of digital tools for energy efficiency policy to deliver more secure, clean, and flexible energy systems. At the same time, the digital transformation also introduces important new risks in terms of cybersecurity and privacy that governments must navigate to ensure that the digital transition has the confidence of citizens and market participants.

This article describes how governments are turning to digital tools to strengthen the policy cycle of designing, implementing and monitoring energy efficiency policies. It highlights case studies of the main tools that are currently being used and identifies the main risks and constraints to their greater adoption.

Although its benefits are well known, tapping into the vast resource that is energy efficiency has always been difficult for policy makers, because energy efficiency is distributed across millions of homes, appliances, businesses and vehicles. Despite its overall economic benefits, the difficulty, and associated costs, of aggregating all of the potential energy savings from across the economy have made activating and managing energy efficiency investments challenging. Faced with gathering small parcels of cost-effective energy savings from thousands of hard-to-reach energy users versus building an expensive new power plant to deliver more energy services, policy makers might tend to support the latter, despite the higher cost, simply for ease.

Digitalisation offers great potential to change this and enhance energy efficiency policies by providing better information and much clearer vision on distributed energy resources. This can enable new policy design options which allow markets for energy efficiency to operate at a much greater scale. Digitalisation can also improve the implementation and monitoring of programme delivery through resources such as smartphone apps and online tools. The use of such tools can potentially benefit a wide range of stakeholders. Moreover, digital tools can be particularly valuable in fostering engagement more tailored to community needs, not only delivering the most cost-effective energy savings, but also helping address energy vulnerability and a range of health, social and gender equity considerations.

The digital transformation of energy efficiency policy will play a fundamental role in the transition towards net-zero CO2 emissions. For example, in the scenario explored in our recent special report Net Zero by 2050, global energy demand in 2050 is around 8 percent lower than today, but servicing an economy twice as large with 2 billion more people. To achieve this, annual improvements in energy intensity will need to triple over the next decade to deliver 13 gigatonnes (Gt) of CO2 reductions by 2030. As energy efficiency is one of the greatest actions required to achieve climate targets, digitalisation’s role will be vital by expanding the scope and scale of energy efficiency through electrification, fuel switching and behavioural change.

As part of its focus on the impacts of digitalisation on energy efficiency, the International Energy Agency (IEA) has been examining the uptake of digital solutions in the power system including how to best align energy efficiency with renewable energy production, energy efficiency’s role in supporting energy security and equitable access to digital services, and how digitalisation is helping overcome fundamental barriers to scaling up energy efficiency implementation.

The sharing of experiences and best practices is an important step to facilitate this next generation of energy efficiency policies. The highlighted case studies in this article demonstrate that, even if governments are accelerating their adoption of such tools, there is still much potential for growth. In fact, stronger policies are needed to make existing digital solutions more affordable and inclusive.

You can read the whole article here.

Source: IEA