How to unlock energy efficiency's enormous potential

As nations rush to cap energy prices, many commentators are urging governments to introduce new energy efficiency measures to help people cut their energy use, emissions and bills. Yet energy efficiency seems to be a curious blind spot for many policymakers given that the benefits – financial, economic, social and environmental – are so clear. As the International Energy Agency says: “Energy efficiency offers some of the fastest and most cost-effective actions to reduce CO2 emissions.”

Efficiency measures range from the cutting edge of technology to the blindingly obvious – for example, shutting windows and turning lights off when leaving a room. Thankfully common sense is increasingly becoming automated. Motion sensors can turn lights and equipment off when a room is empty. And smart city infrastructure can co-ordinate energy use across entire urban areas taking into account energy use in transportation, buildings and infrastructure, as well as energy production profiles.

Insulation is one of the simplest and most effective efficiency tools there is – the Energy and Climate Intelligence Unit says that supporting insulation in millions of UK homes would be cost neutral to the UK government and would save households £600 – and rising – on their energy bills at the same time.

But even insulation technology is evolving. It can be made from materials ranging from fungi to straw to wool and from recycled denim, bamboo and recycled automotive glass to advanced aerogels. These were originally developed by Nasa for spacesuits and vehicles such as the Mars Rover. Some companies are even using CO2 to make insulation.

Switching lighting to LEDs is another simple measure that has a huge impact – the UN Environment Programme says that switching to LED lighting in 156 developing countries could save 110 TWh of electricity, almost the same as the amount of power used by the Netherlands.

And in industry, variable speed drives that operate machinery at the optimal speed for the task in hand can cut energy use of machinery by between 20% and 60%.

 

The rise of the digital economy has also created huge opportunities as smart controls become more commonplace in the home, from meters to thermostats to plugs that make any device plugged into them “smart” and able to be remotely controlled and disconnected. In workplaces, thousands of sensors tell building management systems which parts of the building are occupied and therefore need to be lit and heated. 

These sensors, all part of the “internet of things”, generate huge amounts of data and analysing this data using artificial intelligence and machine learning can lead to energy savings of up to 30% by enabling building management systems to switch off equipment when it is not needed, according to Siemens.

The IEA points out that in the past five years, the stock of connected appliances, devices and sensors has grown by around one third every year and reached 9bn in 2021. As more devices and appliances become connected, the opportunities to cut energy use increase, for example, by turning off devices or by feeding power back into the grid from electric vehicles at peak times.

 
Electricity revolution 

As electrification becomes more commonplace across the economy – in transport, space and water heating and many industrial applications – energy efficiency will increase, cutting emissions, because electrical equipment is much more efficient than its fossil fuel equivalent. Heat pumps powered by electricity are typically three to four times as efficient as gas boilers, for example. Their environmental impact is further increased when the electricity is from renewable sources. Similar benefits are available from replacing internal combustion engines with electric vehicles.

Increasing the roll-out of district heating and cooling networks will also have a huge impact, not just because these networks use less energy but because they can integrate a wide range of energy sources, such as renewables and waste heat. 

Helsinki uses wastewater to run a heat pump for the city’s district heating network, for example, while Vienna uses a power-to-heat plant to convert electricity from wind turbines into district heat for 10,000 homes.

McKinsey estimates that almost half of the energy used in industry could be replaced with electricity, making processes more efficient. Even industries such as oil and gas can become more efficient through electrification – the World Energy Council says that implementing all-electric systems could increase efficiency in the upstream sector from 20% to 50%. In addition, the best available technology for electricity transmission, high-voltage transmission has losses of less than 4% per 1,000km compared to the global average of 12%.

The energy efficiency debate’s go-to cliché is that the cheapest energy is the energy that you never use. At a time of massively inflated energy prices, this has never been truer. Governments around the world should embrace this reality as soon as possible and leverage the huge potential that efficiency measures offer not just to save energy but to accelerate the transition to a decarbonised energy system.