2011-10-25   Source: WBCSD

A new WBCSD report titled Integrating Energy Efficiency addresses the challenge of climate change driving a three-pronged strategy in the electricity sector:  decarbonization of electricity supply, energy savings along the entire electricity value chain, and electrification of fossil fuelled processes. Energy efficiency is critical to all three aspects of this strategy.

This report is a result of collaborative work among executives from eleven member companies of the WBCSD Electricity Utilities Sector Project, providing insights on the potential and key drivers for energy efficiency within the power sector value chain - generation, grids, commercial, residential and industrial use of electricity- including nine business cases and policy recommendations.

Efficiency improvements in the electricity sector have the potential for big savings in total power use and large reductions in GHG emissions. According to the IEA ETP 2010 Blue Map Scenario, energy savings in the electricity sector could reduce CO2 emissions by 7.3 Gt CO2 in 2050 relative to business as usual; this is equivalent to 17% emission reduction. However, improvements in energy efficiency can be hindered by:

l  Lack of knowledge or skills to recognize and achieve potential savings;

l  Low priority relative to other costs for many users;

l  Significant upfront costs, long pay-back periods and the risk that savings will not materialize; or

l  Energy cost subsidies and un-priced externalities such as climate change.

Appropriate energy and carbon pricing will incentive energy savings. However, sometimes this might not be enough to tap the efficiency potential and additional energy efficiency policies are needed. Their suitability will vary depending on the way decisions are made, such as:

l  Nature and location of potential energy savings;

l  Roles of key decision-makers: owners, tenants, operators, regulators, users; or

l  Electricity market and tariff structures, particularly subsidies and carbon costs.

In power generation energy efficiency measures that focus on building know how capacity and providing a convincing cost perspective for utilizing the highest efficiency technologies for all new plants and, restoring design efficiency in existing plants, can help tap 2.15 Gt of CO2 of the potential emissions reductions identified by IEA for the sector in 2050. Our companies are already working on that direction. Alstom undertook the upgrade and retrofit of six units in the South African Arnot coal plant, improving efficiency thought the extended plant’s lifetime.

In the grid, high voltage DC (HVDC) can increase throughput capacity for existing corridors, interconnect grids that are not mutually synchronized that enhance energy efficiency both at generation and at end use. A good example is E.ON plans to implement a dynamic line rating (DLR) system to integrate wind energy while not compromising the reliability of the system. Grid measures can also pursue efficiency gains through intelligent coordination of supply and demand, as well as smart meters to facilitate energy saving by consumers.

On the consumer side, the IEA estimates an electricity savings potential of 5,700 TWh in 2050 (a 13% reduction from BAU). Electrification, particularly for ground transportation and heating and new energy-saving business models could help achieve those targets. In the different industries, sector benchmarking and capacity building to can help raise efficiency towards best in class. Finally, energy and carbon pricing measures complemented with other regulatory measures can promote the use of energy efficient appliances, such as labeling and standards.