Publication

Efficiency First (E1st) is now an established principle of EU energy policy. It has been embedded in various legislative pieces of the Clean Energy for All package in 2018-2019.

This report reviews the background of this concept and existing definitions in order to draw a definition that can serve as a basis for the Enefirst project and its specific objectives, that is, making E1st operational for the building sector and related energy systems.

Similar concepts such as Integrated Resource Planning (IRP) and Energy Efficiency as a Resource have been developed in the U.S. and sometimes tried in some European countries. The well-documented U.S. experience shows how this type of approach can be implemented in the electricity sector. The European approach of E1st aims at a broader scope encompassing the entire energy system. Another difference is that the time horizon considered in the implementation of IRP, or similar concepts, in the U.S. is often in line with the cycles of utilities energy planning, that is, five to ten years, whilst E1st in Europe is thought to be applied in multiple timeframes, from short-term investment planning to medium-term targets (for 2030) and long-term goals (for 2050).

The background analysis also highlights the importance of the scope of costs and benefits considered when comparing supply-side and demand-side resources. The general trend is to expand this scope to take into account multiple impacts, along with the experience gained in assessing them.

Based on these analyses, the definition of E1st adopted for Enefirst is as follows:

Efficiency First gives priority to demand-side resources whenever they are more cost effective from a societal perspective than investments in energy infrastructure in meeting policy objectives. It is a decision principle that is applied systematically at any level to energy-related investment planning and enabled by an equal opportunity policy design.

This report then discusses the application of the principle in six policy areas (renewable policy, energy efficiency policy, climate policy, power market rules, building policy and energy security) with reference to the main EU legislations in these areas. It also analyses the process and the methodological issues when comparing demand-side resources with supply investments and identifies those typical investments both at the system and at the household level where its application should be considered. These decision points are illustrated by comparing business-as-usual decision paths with ones that would integrate the E1st principle.

Authors: Zsuzsanna Pato (RAP)

Co-author(s): Benigna Boza-Kiss (CEU), Jean-Sébastien Broc (IEECP), Senta Schmatzberger (BPIE), Tim Mandel (Fraunhofer ISI)