Introduction to Demand-side Energy Solutions

Why is demand side energy efficiency important?

Demand side energy solutions facilitate a transformation in productivity without sacrificing growth. Over $3.5 trillion US dollars have been invested in renewables such as wind and solar in the last 20 years. Compared to the supply side, the demand side has been overlooked and it can unlock perhaps trillions in savings through energy efficiency. Around 70% of energy is used in buildings, industry and transport. Reducing demand by removing inefficiency provides investment returns, results in emissions reductions, productivity gains and increased energy security.

The opportunity exists because, although energy is worth trillions and everyone and everyone and everything depends on it, and nations are at war over it, and it represents some 80% of the human-made contribution to greenhouse gas emissions that cause climate change, we waste most of it.

In the USA around 70% of primary energy is lost before it gets to the final consumer. Many geopolitical, economic and climate challenges won’t be addressed without energy efficiency. Competition for resources and the excessive consumption of them is a cause of both climate change and conflict. Every unit of natural gas that we don’t use equates to 2.6 units of natural gas that we don’t need to buy. More than two thirds of the primary energy from the gas is lost before it gets to the point of use. 

What are the sources of energy inefficiencies?

• Conversion - Around 10% is lost converting extracted resources like oil and gas into refined, pipeline grade or usable form.
• Generation - Primary energy is converted into useful energy or "exergy" for performing work and services.
• Heat - Gas-fueled power plants, for example, have limits in terms of efficiency, known as Carnot efficiency, with more than half of the energy used in the conversion of fossil fuels to electricity lost as heat. While some of this heat can be recycled, the typical efficiency range is between 50-60%.
• Transmission and distribution process - An additional 5-10% of energy lost.
• Transport - The "well-to-wheel" efficiency of a car is estimated to be between 15-30%, compared to the "wind-to-wheel" efficiency of electric vehicles (between 75-80%). Increasing energy efficiency or transitioning to renewable and electric alternatives in transportation will significantly reduce demand for fossil fuels. 

How can we tackle the climate crisis through demand side solutions?

Energy efficiency is the largest, fastest and cheapest source of greenhouse gas emission reductions and is also a key to resilience from increasingly difficult climatic conditions. It also provides economic opportunity as the value of energy wastage for countries and companies is colossal. 

What are the mistakes by policy makers and the markets?

1. Not enough focus on energy efficiency by policy makers
2. Short-term focus by over reliance on renewables
3. Reluctance to invest in energy efficiency by markets Firstly, It’s great that energy efficiency is 10-20% of the wide-ranging US Inflation Reduction Act of 2022, but it should be at least half of it.

Adopting an efficiency-first approach can turn society’s greatest challenges into its greatest opportunities.