Energy efficiency refers to 1. how much of a resource is used when power is being generated, and 2. how efficiently that power is used by consumers.
Energy efficiency in power generation
In power generation, efficiency refers to the amount of useful energy output relative to the input. For wind power and solar power, efficiency measures something fundamentally different than for non-renewable resources. For instance, an old coal plant may have an efficiency of 33 percent, meaning that a third of the energy in the coal is converted into electricity, with the other two thirds being lost as waste heat. Nonetheless, 33 percent may sound better than the 15 percent efficiency of an off-the-shelf solar panel.
But there is a difference: the coal is lost forever when consumed, so it makes sense to use it as efficiently as possible; in other words, we lose what we use. While it obviously also makes sense to use sunlight as efficiently as possible, with solar and wind we lose what we do not use – the earth gets roughly the same amount of energy from the sun every day. Whatever we do not 31harvest with wind turbines and solar panels is lost forever. This distinction becomes clearer when we keep in mind that the volume of coal power is different depending on whether we count primary energy or useful energy, but the amount of wind and solar power is the same in terms of primary/useful energy.
There is a lot of room for improvement in the electricity sector. Studies have shown that the power consumed each year by electric motors used in industry could be reduced by around 30 TWh up to 2020 – enough to make several central power plants redundant. Similar conservation potential can come from the use of efficient lighting systems and a switch from inefficient electric heaters to more efficient systems.
Energy efficiency in power consumption
A renewable energy economy will only be possible if we lower energy consumption considerably. Policies to improve efficiency are in place, but they consistently fall short of what is not only theoretically possible, but also what is affordable.
When people talk about Germany’s energy transition, they often think mostly about the switch from nuclear and coal power to renewables – but in fact, a renewable future will only be possible with significantly lower energy consumption.
As the authors of Factor Four showed about 25 years ago, lower consumption does not entail a lower standard of living – on the contrary, our consumption of fossil energy detrimentally affects our health and is contributing to climate change, which is a threat to civilization. Furthermore, by consuming nuclear power, we create “mines” of nuclear waste that will threaten future generations for millennia.
Perceptions of energy use
What people want is not energy, but energy services – the things we do with energy. In other words, we do not want gallons of gas, but mobility; not electricity and fuel oil, but cold food storage and well lit, comfortable homes. Over the past decade, our computers and handheld devices have become far more high-performance even as they increasingly function with less power. Such advances are possible in a wide range of fields. In our buildings, for instance, we can provide a comfortable indoor climate not only with energy-intensive air conditioning and heating systems, but also properly filtered air and low concentrations of carbon dioxide. In other words, buildings of the future will provide even greater comfort than the ones today while consuming less energy.
When it comes to efficiency, however, we face a special obstacle: information. Economists who believe that the market takes care of everything most efficiently assume that all market participants are equally and sufficiently informed – and therefore that all efficiency measures that pay for themselves have already been utilized.
In fact, while most consumers may know what their monthly power bill is, they may not know how many kilowatt-hours they consume, nor are they used to assessing how much a particular appliance will cost them per year in terms of power consumption. Yet, without such information, it is impossible to assess the payback on investments in energy efficiency. So even if we believe that the market comes up with the best solutions, the government still needs to ensure that everyone is properly informed.
The example of standby power consumption is especially illustrative. Unbeknownst to most consumers, household appliances – from coffee machines to toasters, televisions, game consoles, and computers – consume power even when they are “off.” Recent estimates show that such “standby consumption” amounted to six percent of a typical electricity demand of a typical European household. Consumers are not always aware that the annual power costs for an inexpensive appliance might even exceed its purchase price.
One example of the government providing market participants with information is the European Union’s Ecodesign directive, also known as the ErP (Energy-related Products) directive. It aims to make products more sustainable over their entire lifecycle (not just in terms of energy) partly by providing labels as guides for consumer purchases and by imposing stricter energy efficiency standards for designs.
The European Union (EU) is also working to reduce energy consumption in buildings, and Germany is at the forefront of that movement as well. In 2002, it adopted the Energy-Conservation Ordinance, which was made stricter in 2009, 2014 and 2016. Some homes built as early as the 1990s demonstrate what the standard of the future will be: passive houses, which become plus-energy homes when solar roofs are added to them. The EU will require that all houses constructed starting in 2020 be “nearly zero-energy homes,” essentially making German passive houses the standard within Europe.
While these new laws will help when it comes to new buildings, Germany needs to address the situation with existing buildings. The country’s renovation rate, the number of buildings renovated per year, is too low in Germany at just around one percent; the figure needs to be doubled, if not tripled. In addition, renovations often do not go far enough. Frequently, not enough insulation is added, and the building service technologies used do not fulfill the requirements that buildings will have to meet in the future. As of 2017 Germany was not scheduled to meet its targets for efficiency by 2020 because primary energy consumption has not fallen enough, partly due to record high power exports.
Germany has set an ambitious goal for itself of a ten percent reduction in power consumption by 2020 and a 25 percent reduction by 2050. However, Germany was not on schedule to meet its targets for efficiency by 2020: in 2017, energy consumption was about 13,500 petajoules (about 2 thousand petajoules higher than the goal for 2020).
Unfortunately, not enough is being done to promote energy efficiency. While the EU has binding targets for carbon emissions and renewables, the target for energy efficiency (a 20 percent reduction in primary energy consumption by 2020) is not binding. For 2030, there is a binding 40 percent reduction of greenhouse gas emissions. The target for renewable energy by that year is 32 percent, but it is only binding for the EU as a whole – there are no specific targets for member states. Finally, the target for efficiency is also 32.5 percent, and it is nonbinding.
At the end of 2014, this lack of political action in energy efficiency was recognized by the German government, leading to the announcement of the National Energy Efficiency Action Plan (NEEAP) in December 2014.