The Impact of Renewable Energy Technologies on Global Energy Efficiency

 

Despite growing energy use, for the first time in four decades, global carbon emissions associated with energy consumption remained stable in 2014 as the global economy grew. This stabilization has in part been attributed to increased penetration of renewable energy and to improvements in energy efficiency, both of which have experienced dramatic acceleration in recent years.

The evolution of renewable energy has exceeded all expectations. Global demand for renewables has steadily increased, as has energy consumption, particularly in developing countries. Global installed capacity and production from all renewable energy technologies have likewise increased, as most have seen significant cost reductions worldwide and have reached parity in some markets. As outlined in the REN21 Renewables 2015 Global Status Report, renewable energy targets and support policies have spread throughout the world, now appearing in at least 164 and 145 countries, respectively.[1]

Similarly, energy efficiency measures have increased worldwide. Global energy intensity has consequently decreased at a compounded annual rate averaging about 1.25 per cent between 1990 and 2013, and most world regions achieved improvements in aggregated energy intensity during this period. Energy efficiency targets are now in place at all levels of government. Standards and labelling programmes can be found in at least 81 countries, while standards for electric motors used in industrial applications are in place in at least 44 countries. Furthermore, vehicle fuel economy standards cover approximately 70 per cent of the global light-duty vehicle market.[2]

Just as some countries have been at the forefront of renewable energy deployment and development of renewables support policies, some countries use energy more efficiently than others, and potential savings vary greatly across countries and regions. Nevertheless, in all countries and economic sectors, increased synergies between renewables and energy efficiency measures are possible, and oftentimes strengthening one will, in turn, enhance strengthen the other. In both technical and policy contexts, renewable energy can have a positive effect on energy efficiency—and vice versa.

Technical synergies

In basic energy service delivery, potential losses occur at each stage of extraction, transformation, transportation, transmission and end-use. Each of these steps presents opportunities to strengthen the energy efficiency of the overall system. Although this phenomenon is beneficial regardless of the primary energy source, certain synergies exist between renewable energy sources and energy efficiency.[3]

Renewables can play a larger role in primary energy supply when the delivery of energy services is more efficient. As the renewables share increases, less primary energy is required for provision of the same level of energy services. The two work together to minimize system-wide environmental and economic costs. Renewables that do not require a fuel input—i.e. wind, solar and hydropower—inherently improve efficiency, as there is no need for thermal conversion. Distributed renewable energy coupled with energy efficiency improvements reduces peak electricity demand while simultaneously minimizing transmission losses and bottlenecks. Essentially, renewables and energy efficiency measures mutually support one another to enable energy applications that might not otherwise be technically or economically feasible, rendering a result that is greater than the sum of its parts.

As demonstrated in recent analysis by the International Energy Agency (IEA), renewable energy investments allow efficient buildings to be powered more easily, particularly when these renewables are not grid-connected.[4] Efficient buildings combined with on-site renewable energy generation reduce end-use demand, grid congestion and losses, and fuel transportation costs. As end-use energy requirements decrease, the opportunity for low-energy density renewable sources to meet energy needs increases; thus targets to increase the renewable share of total energy consumption can be achieved more expeditiously with added energy efficiency measures. With lower cost of end-use service delivery, money saved can be used to finance additional efficiency improvements and/or the deployment of renewables. This phenomenon is sector-indiscriminant, holding true for buildings, electrical services, transport and industry.

Technical synergies have been further analysed in a recent working paper by the International Renewable Energy Agency (IRENA) and the Copenhagen Centre on Energy Efficiency (C2E2) to demonstrate the effect renewables can have on energy efficiency.[5] The increased deployment of renewables could reduce energy intensity in some countries by 5 to 10 per cent by 2030, compared to business as usual. When energy efficiency and renewable energy potentials are considered in parallel, total global energy demand could be reduced by 25 per cent by 2030. These reductions would in part be achieved through the increased implementation of electrification technologies, increased deployment of modern, more efficient cookstoves (which increase conversion efficiency two to threefold), and an accelerated transition to solar and wind power, which are more efficient than technologies requiring thermal conversion. In many developing countries, there is also a need for efficiency measures in off-grid hybrid systems and distributed renewable energy.

Policy synergies

Energy efficiency and renewables can also have a mutually advantageous impact on policy development. A growing number of countries have established renewable energy and energy efficiency targets and support policies. However, a systematic linking of the two has yet to occur in most cases, and sometimes they are even placed in competition with one another. Nevertheless, policies are increasingly addressing renewable energy and energy efficiency in concert, mainly through incentives in the building sector as well as some economy-wide targets and regulations.[6] Linking of the two is occurring more readily at the local level, though there is growing evidence of policy coordination and improved communication and awareness among policymakers and stakeholders at the national level in an increasing number of countries.[7]

Three main policy approaches linking renewables and energy efficiency have emerged:

  1. Encouraging renewables and energy efficiency in parallel (e.g. parallel targets for both).
  2. Integrating renewable energy and energy efficiency (e.g. renewable energy and energy efficiency portfolio standards).
  3. Requiring joint implementation of renewable energy and energy efficiency (e.g. energy efficiency improvements together with renewables deployment).[8]

Combined renewable energy-energy efficiency targets have been adopted at all levels of government, including at the regional level in the case of the European Union. Policymakers are also using regulations and fiscal incentives to advance the two in combination, most notably in the building sector.[9] Additionally, organizations focusing on sustainable development are strategically using renewables along with energy efficiency. International organizations have also come together under the United Nations Sustainable Energy for All (SE4All) initiative with the threefold aim of universal energy access, improved energy efficiency rates and expanded renewable energy worldwide.[10] Accelerating renewable energy potential must be done in conjunction with energy efficiency measures in order to achieve SE4All energy access objectives—pursuing one without the other will not be sufficient.

Moreover, renewable energy targets and policies have the potential to stimulate more investment in energy efficiency measures. The more ambitious the renewables target, the more indispensable the focus on energy efficiency becomes. Reaching evermore ambitious renewables goals can be done more economically if energy efficiency improvements are implemented. Pursuing renewable energy and energy efficiency measures in parallel can render a country’s overall costs lower as they strive to reach these targets.[11] Similarly, in the IEA scenarios, energy efficiency would play the largest role in limiting the global temperature increase to 2°C by 2050, accounting for nearly 40 per cent of the reduction of greenhouse gas emissions in the energy sector, while renewables would account for 30 per cent.[12]

Moving forward together

Despite the past decade’s progress towards a global transition to clean energy, determined and sustained efforts are still needed. The potential for linking renewables and energy efficiency in both technical and policy contexts must be accelerated. In pursuing this linkage, certain strategies can be implemented to further the impact.

Policymakers can adopt long-term and stable policy frameworks, adaptable to a changing environment, in order to sustain and increase investment levels. They can establish and strengthen institutional, financial, legal and regulatory support mechanisms. In linking renewable energy and energy efficiency, greater attention must be placed on heating and cooling, transport and “energy system thinking.” Finally, improved information on and awareness of distributed renewable energy markets in developing countries and improved access to up-front finance should be used in conjunction with further energy efficiency measures in order to advance access to modern energy services.

To further accelerate the positive trends of recent years, the synergies between renewable energy and energy efficiency must be recognized if we are to ensure sustainable energy for all.

 

Notes

[1] Renewable Energy Policy Network for the 21st Century (REN21), Renewables 2015 Global Status Report. Annual Reporting on Renewables: Ten Years of Excellence (Paris, REN21 Secretariat, 2015), p. 18. Available from www.ren21.net/gsr.

[2] Ibid, p. 23.

[3]Ibid, p. 113.

[4] International Energy Agency (IEA), Medium Term Energy Efficiency Market Report (Paris, Organisation for Economic Co‑operation and Development (OECD) and IEA, (2015), p. 86. Available from http://www.iea.org/publications/freepublications/publication/MediumTermEnergyefficiencyMarketReport2015.pdf.

[5] International Renewable Energy Agency (IRENA) and Copenhagen Centre of Energy Efficiency (C2E2), Synergies between Renewable Energy and Energy Efficiency. A Working Paper (Abu Dhabi, IRENA, and Copenhagen, C2E2, 2015).

[6] REN21, Renewables 2015 Global Status Report, p.121.

[7] Renewable Energy Policy Network for the 21st Century (REN21), Renewables 2013 Global Status Report (Paris, REN21 Secretariat, 2013). Available from http://www.ren21.net/Portals/0/documents/Resources/GSR/2013/GSR2013_lowres.pdf.

[8] REN21, Renewables 2015 Global Status Report, p. 121.

[9] Ibid, pp. 119- 120.

[10] REN21, Renewables 2013 Global Status Report, p. 71.

[11] REN21, Renewables 2015 Global Status Report.

[12] REN21, Renewables 2015 Global Status Report.