Advertisement

Energy Efficiency

, Volume 12, Issue 5, pp 1379–1398 | Cite as

Market-based instruments for energy efficiency: a global review

  • Jan RosenowEmail author
  • Richard Cowart
  • Samuel Thomas
Original Article

Abstract

Across the world, an increased uptake of the so-called market-based instruments (MBIs) for energy efficiency, such as energy efficiency obligations and auctions, can be witnessed. So far, a global assessment of those instruments is absent. In this paper, we analyse the most recent data across the world for all MBIs for energy efficiency. Whilst most of the 52 instruments identified can be found in the USA and in Europe, they are now operational on all continents. We estimate that globally around $26 billion of investment in energy efficiency is delivered through these instruments—this equates to more than 10% of the global annual investment in energy efficiency. There is considerable variation in costs among programmes. The available data show that expenditure by obligated parties and payments to auctions winners (programme costs) average around 0.013 USD/kW and are below the typical costs of producing a kWh in most sectors and locations.

Keywords

Market-based instruments Energy efficiency Auctions Energy efficiency obligations White certificates 

Notes

Funding information

The authors gratefully acknowledge funding received for this research from the International Energy Agency.

Compliance with ethical standards

Conflict of interest

The authors declare that they have no conflict of interest

References

  1. ANEEL (2016a): Programa de eficiência energética. Retrieved from: http://www.aneel.gov.br/programa-eficiencia-energetica. Accessed 29 Nov 2017.
  2. ANEEL (2016b): Relação de propostas de projetos de eficiência energética cadastrados na aneel. Retrieved from: www.aneel.gov.br/documents/656831/14930488/PEE+Projetos+junho2016/7a401677-72ac-4557-8532-adb200c1a753. Accessed 29 Nov 2017.
  3. ATEE (2017): Snapshot of energy efficiency obligations schemes in Europe: 2017 update. Retrieved from: http://atee.fr/sites/default/files/part_6_2017_snapshot_of_eeos_in_europe.pdf [accessed 08/01/2018].
  4. Barbose, G.L., Goldman, C.A., Hoffman, I., Billingsley, M.A. (2013). The future of utility customer-funded energy efficiency programs in the United States: projected spending and savings to 2025. LBNL-5803E. Retrieved from: https://emp.lbl.gov/sites/all/files/lbnl-5803e_0.pdf. Accessed 29 Nov 2017.
  5. Berg, W., Nowak, S., Kelly, M., Vaidyanathan, S., Shoemaker, M., Chittum, A., DiMascio, M., Kallakuri, C. (2016), The 2016 state energy efficiency scorecard. Report U1606. Washington: American Council for an Energy-Efficient Economy. Retrieved from: http://aceee.org/sites/default/files/publications/researchreports/u1606.pdf. Accessed 29 Nov 2017.
  6. Bertoldi, P., Rezessy, S., Lees, E., Baudry, P., Jeandel, A., & Labanca, N. (2010). Energy supplier obligations and white certificate schemes: comparative analysis of experiences in the European Union. Energy Policy, 38(3), 1455–1469.CrossRefGoogle Scholar
  7. Bertoldi, P., Rezessy, S., & Oikonomou, V. (2013). Rewarding energy savings rather than energy efficiency: exploring the concept of a feed-in tariff for energy savings. Energy Policy, 56, 526–535.CrossRefGoogle Scholar
  8. BIGEE (2016): Energy efficiency and demand side management incentive program (EEDSM). Retrieved from: http://www.bigee.net/en/policy/guide/buildings/policy_examples/51/. Accessed 29 Nov 2017.
  9. BMWI (2016): STromEffizienzPotentiale nutzen - STEP up! Förderung von Stromeinsparungen im Rahmen wettbewerblicher Ausschreibungen. Retrieved from: http://www.bmwi.de/BMWi/Redaktion/PDF/S-T/stromeffizienzpotentiale-nutzen,property=pdf,bereich=bmwi2012,sprache=de,rwb=true.pdf. Accessed 29 Nov 2017.
  10. BMWI (n.d.). Haushalt 2017. Retrieved from: www.bmwi.de/Navigation/DE/Ministerium/Haushalt/haushalt.html. Accessed 29 Nov 2017.
  11. Brazzale, R. (2016): Energy efficiency pays off for fast-growing Victoria economy. RenewEconomy 23 June 2016. Retrieved from http://reneweconomy.com.au/2016/energy-efficiency-pays-off-for-fast-growing-victoria-economy-52003. Accessed 29 Nov 2017.
  12. Broc, J., Melo, C.A., Jannuzzi, G.D.M. (2012): Detailed comparison of Brazilian and French obligation schemes to promote energy efficiency. Proceedings of the 2012 International Energy Program Evaluation Conference, 12–14 June 2012, Rome, Italy.Google Scholar
  13. CEN. (2007). Saving lifetimes of energy efficiency improvement measures in bottom-up calculations. CWA, 15693.Google Scholar
  14. Central Committee of the Communist Party and State Council of China. (2015). Deepening reform of the power sector.《关于进一步深化电力体制改革的若干意见中发〔2015〕9号)文》全文 Beijing: Central Committee and State Council. Retrieved from http://www.ne21.com/news/show-64828.html. Accessed 29 Nov 2017.
  15. China Southern Power Grid Company (2015), Green development report. Retrieved from: www.csg.cn/shzr/zrbg/201605/P020160525421954982981.pdf. Accessed 29 Nov 2017.
  16. Commission for Regulation of Utilities (2017) Energy supply costs information paper. Retrieved from: https://www.cru.ie/wp-content/uploads/2017/10/CRU17291-RFI-Information-paper.pdf. Accessed 29 Nov 2017.
  17. Crossley, D., Xuan, W. (2015): Case study: China’s grid company energy efficiency obligation. Retrieved from: www.raponline.org/document/download/id/7711/. Accessed 29 Nov 2017.
  18. Crossley, D., Gerhard, J., Lees, E., Kadoch, C., Bayer, E., Xuan, W., Watson, E., Wasserman, N., & Sommer, A. (2012). Best practices in designing and implementing energy efficiency obligation schemes. Montpelier, VT: Regulatory Assistance Project Retrieved from http://www.raponline.org/document/download/id/5003. Accessed 29 Nov 2017.
  19. DECC (2015): Electricity market reform annual update 2015. Retrieved from: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/468337/EMR_Annual_Update_2015_web_accessible_version.pdf. Accessed 29 Nov 2017.
  20. DECC (2016a), Contracts for difference and capacity market scheme update 2016. Retrieved from: www.gov.uk/government/publications/contracts-for-difference-and-capacity-market-schemeupdate-2016. Accessed 29 Nov 2017.
  21. DECC (2016b), Energy company obligation (ECO): help to heat. Consultation document. Retrieved from: www.gov.uk/government/consultations/energy-company-obligation-eco-help-to-heat. Accessed 29 Nov 2017.
  22. Downs, A., Cui, C. (2014): Energy efficiency resource standards: a new progress report on state experience. Report number U1403. ACEEE.Google Scholar
  23. Durkan, J. (2018): Personal communication 26/01/2018Google Scholar
  24. Efficiency Valuation Organisation (EVO). (2014). International performance measurement and verification protocol: core concepts.Google Scholar
  25. EIA (2016): State profiles and energy estimates. Retrieved from: https://www.eia.gov/state/?sid=US. Accessed 29 Nov 2017.
  26. EIA (2018a): Electric power monthly with data for June 2018. Retrieved from: https://www.eia.gov/electricity/monthly/current_month/epm.pdf. Accessed 29 Nov 2017.
  27. EIA (2018b): Natural gas prices. Retrieved from: https://www.eia.gov/dnav/ng/ng_pri_sum_dcu_nus_a.htm. Accessed 29 Nov 2017.
  28. Energy Efficiency Exchange (2016): Mandatory obligation schemes. Retrieved from: http://eex.gov.au/business-support/grants-funding/mandatory-obligation-schemes/. Accessed 29 Nov 2017.
  29. ENSPOL (2015): Report on existing and planned EEOSs in the EU—part I: evaluation of existing schemes.Google Scholar
  30. Eskom (2015): Eskom integrated demand management annual report for the financial year 2014/15 (not published).Google Scholar
  31. Essential Services Commission of Victoria. (2016). Victorian energy efficiency target scheme: performance report (p. 2015). Melbourne: ESC Accessible at https://www.veet.vic.gov.au/Public/Pub.aspx?id=413. Accessed 29 Nov 2017.
  32. European Commission (2016): Proposal for a directive of the European Parliament and of the Council amending Directive 2012/27/EU on energy efficiency. COM(2016) 761 final. 2016/0376 (COD).Google Scholar
  33. Eurostat (2018a): Final energy consumption. Retrieved from: https://ec.europa.eu/eurostat/web/energy/data/main-tables. Accessed 29 Nov 2017.
  34. Eurostat (2018b): Electricity price statistics. Retrieved from: https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Electricity_price_statistics. Accessed 29 Nov 2017.
  35. Eurostat (2018c): Natural gas price statistics. Retrieved from: https://ec.europa.eu/eurostat/statistics-explained/index.php/Natural_gas_price_statistics. Accessed 29 Nov 2017.
  36. Eyre, N., Pavan, M. and Bodineau, L. (2009): Energy company obligations to save energy in Italy, the UK and France: what have we learnt? Proceedings of the European Council for an Energy Efficient Economy, pp. 429–439.Google Scholar
  37. Gillingham, K., Newell, R., Palmer, K. (2006). Energy Efficiency Policies: A Retrospective. Examination. Annual Review of Environment and Resources 31, 161–92Google Scholar
  38. Farinelli, U., Johansson, T., McCormick, K., Mundaca, L., Oikonomou, V., Ortenvik, M., Patel, M., & Santi, F. (2005). White and green: comparison of market-based instruments to promote energy efficiency. Journal of Cleaner Production, 13(10–11), 1015–1026.CrossRefGoogle Scholar
  39. Fawcett, T., Rosenow, J. (2016): The Member States’ plans and achievements towards the implementation of Article 7 of the Energy Efficiency Directive. Report for European Parliament. Retrieved from: eng.janrosenow.com\uploads\4\7\1\2\4712328\s_2014_2019_plmrep_committees_itre_dv_2016_03-16_study_plans_achievements_en-1_1_.pdf. Accessed 29 Nov 2017.
  40. Fawcett, T., Rosenow, J. & Bertoldi, P. (2018). Energy efficiency obligation schemes: their future in the EU. Energy Efficiency.  https://doi.org/10.1007/s12053-018-9657-1.
  41. Gilleo, A. (2014), Picking all the fruit: all cost-effective energy efficiency mandates. Proceedings of the ACEEE Summer Study on Energy Efficiency in Buildings.Google Scholar
  42. Giraudet, L.-G., Bodineau, L., & Finon, D. (2012). The costs and benefits of white certificates schemes. Energy Efficiency, 5, 179–199.CrossRefGoogle Scholar
  43. Hoffman, Ian M, Leventis, G, Goldman, C.A. (2017): Trends in the program administrator cost of saving electricity for utility customer-funded energy efficiency programs. LBNL-1007009.Google Scholar
  44. IEA. (2016). Energy efficiency market report 2016. Paris: OECD/IEA.Google Scholar
  45. IEA (2017): Personal communication 31/10/2016.Google Scholar
  46. IEA (2018): Statistics. Retrieved from: http://www.iea.org/statistics/. Accessed 29 Nov 2017.
  47. IEPEEC (2016): Analytical report on instruments for energy efficiency. Retrieved from: https://www.iea.org/media/topics/engagementworldwide/g7/G7EnergyEfficiencyInstrumentsReport.pdf. Accessed 29 Nov 2017.
  48. IESO (2015), 2011–2014 conservation results report. Retrieved from: www.ieso.ca/Documents/2011-2014_Conservation_Results_Report.pdf. Accessed 29 Nov 2017.
  49. IESO (2016): Conservation progress report. Fourth quarter. Retrieved from: http://www.ieso.ca/Documents/conservation/Q4-2015-Conservation-Progress-Report-Posting.pdf. Accessed 29 Nov 2017.
  50. Ipsos MORI, CAG Consultants, UCL, Energy Saving Trust (2014), Evaluation of the carbon emissions reduction target and the community energy saving programme. Retrieved at: www.gov.uk/government/uploads/system/uploads/attachment_data/file/350722/CERT_CESP_Evaluation_FINAL_Report.pdf. Accessed 29 Nov 2017.
  51. ISO-NE (2015): Annual forward capacity market auction acquires major new generation resources for 2018–2019. Retrieved from: https://www.iso-ne.com/static-assets/documents/2015/02/fca9_initialresults_final_02042015.pdf. Accessed 29 Nov 2017.
  52. Kulevska, V. (2016): Personal communication 21/12/2016.Google Scholar
  53. Lees, E. (2010): European and South American experience of white certificates. WEC-ADEME case study on energy efficiency measures and policies. Retrieved from: https://www.worldenergy.org/documents/ee_case_study__obligations.pdf. Accessed 29 Nov 2017.
  54. Lees, E., Bayer, E. (2016), Toolkit for energy efficiency obligations. Retrieved from: www.raponline.org/document/download/id/8029. Accessed 29 Nov 2017.
  55. Liu, Y. (2017). Demand response and energy efficiency in the capacity resource procurement: case studies of forward capacity markets in ISO New England, PJM and Great Britain. Energy Policy, 100, 271–282.CrossRefGoogle Scholar
  56. Ministère de l'Économie (2014): Third National Energy Efficiency Action Plan for Luxembourg. Retrieved from: https://ec.europa.eu/energy/sites/ener/files/documents/NEEAP_LU_EN.pdf. Accessed 29 Nov 2017.
  57. Ministerio de Industria, Energía y Minería (2016): Certificados de eficiencia energética (CEE) Convocatoria 2016. Retrieved from: www.eficienciaenergetica.gub.uy/documents/20182/29399/CEE_Convocatoria_2016.pdf/06dffc4f-d026-41ed-878b-45fd807af392. Accessed 29 Nov 2017.
  58. Ministerio de Industria, Energía y Minería (2017): Personal communication Jorge Pena 11/01/2017.Google Scholar
  59. Ministry for Energy and Health (2014): Malta’s National Energy Efficiency Action Plan (NEEAP). Retrieved from: https://ec.europa.eu/energy/sites/ener/files/documents/2014_neeap_en_malta.pdf. Accessed 29 Nov 2017.
  60. Ministry of Economy (2014): National Energy Efficiency Action Plan for Poland 2014. Retrieved from: https://ec.europa.eu/energy/sites/ener/files/documents/NEEAP_Poland_ENG_2014.pdf. Accessed 29 Nov 2017.
  61. Ministry of Economy and Energy (2014): National Energy Efficiency Action Plan 2014–2020. Retrieved from: https://ec.europa.eu/energy/sites/ener/files/documents/NEEAPBulgaria_en.pdf. Accessed 29 Nov 2017.
  62. Ministry of Industry, Energy and Tourism (2014): 2014–2020 National Energy Efficiency Action Plan. Retrieved from: https://ec.europa.eu/energy/sites/ener/files/documents/2014_neeap_en_spain.pdf. Accessed 29 Nov 2017.
  63. Ministry of Infrastructure (2015): National Energy Efficiency Action Plan 2014–2020. Retrieved from: https://ec.europa.eu/energy/sites/ener/files/documents/NEAPSLOVENIA_en.pdf. Accessed 29 Nov 2017.
  64. Molina, M. (2014): The best value for America’s energy dollar: a national review of the cost of utility energy efficiency programs. Report number U1402. ACEEE. Retrieved from http://aceee.org/sites/default/files/publications/researchreports/u1402.pdf. Accessed 29 Nov 2017.
  65. Moser, S., Leutgob, K., Reichl, J., & Kollmann, A. (2012). Making the results of bottom-up energy savings comparable. Thermal Science, 16(3), 687–702.CrossRefGoogle Scholar
  66. Neme, C., & Cowart, R. (2014). Energy efficiency participation in electricity capacity markets—the U.S. experience. Montpelier, VT: The Regulatory Assistance Project Retrieved from:http://www.raponline.org/document/download/id/7303. Accessed 29 Nov 2017.
  67. New South Wales Office of Environment and Heritage. (2016). Personal communication. Sydney: OEH.Google Scholar
  68. Persson, A., & Landfors, K. (2017). Seeing is believing—VISUALIZING helps realize the hidden benefits of energy efficiency. Proceedings of the ECEEE Summer Study, 2017, 271–277.Google Scholar
  69. PJM (2016): 2019/2020 RPM base residual auction results. Retrieved from: http://www.pjm.com/~/media/markets-ops/rpm/rpm-auction-info/2019-2020-base-residual-auction-report.ashx. Accessed 29 Nov 2017.
  70. Rohde, C., Rosenow, J., & Eyre, N. (2015). Energy saving obligations. Cutting the Goardian knot of leverage? Energy Efficiency, 8(1), 129–140.CrossRefGoogle Scholar
  71. Rosenow, J., & Bayer, E. (2017). Costs and benefits of energy efficiency obligations: a review of European programmes. Energy Policy, 107, 53–62.CrossRefGoogle Scholar
  72. Rosenow, J., Platt, R., & Flanagan, B. (2013). Fuel poverty and energy efficiency obligations. The case of the Supplier Obligation in the UK. Energy Policy, 62, 1194–1203.CrossRefGoogle Scholar
  73. Rosenow, J., Fawcett, T., Leguijt, C., Pató, Z. (2016a): Evaluating the implementation of Article 7 of the Energy Efficiency Directive. IEPPEC Conference, Amsterdam, 7–9 June 2016.Google Scholar
  74. Rosenow, J., Leguijt, C., Pato, Z., Fawcett, T., & Eyre, N. (2016b). An ex-ante evaluation of the EU Energy Efficiency Directive—Article 7. Economics of Energy & Environmental Policy, 5(2), 45–63.CrossRefGoogle Scholar
  75. Rosenow, J., Guertler, P., Sorrell, S., & Eyre, N. (2018). The remaining potential for energy savings in UK households. Energy Policy, 121, 542–552.CrossRefGoogle Scholar
  76. Schlomann, B., Rohde, C., & Plötz, P. (2015). Dimensions of energy efficiency in a political context. Energy Efficiency, 8(1), 97–115.CrossRefGoogle Scholar
  77. Sinton, J., & de Wit, J. (2014). Exploiting market-based mechanisms to meet utilities’ energy efficiency obligations. In Live Wire, 2014/18. Washington, DC: World Bank Retrieved from: https://openknowledge.worldbank.org/handle/10986/18678 [accessed 08/01/2018].Google Scholar
  78. Sousa, J., Gomes, A. Jorge, H.M. (2015): Are energy efficiency obligations an alternative? The case-study of Portugal. ECEEE Summer Study Proceedings.Google Scholar
  79. State and Local Energy Efficiency Action Network, (2012). Energy Efficiency Program Impact Evaluation Guide. Evaluation, Measurement, and Verification Working Group. Retrieved from: https://unfccc.int/files/documentation/submissions_from_parties/adp/application/pdf/see_action_network_-_the_state_and_local_energy_efficiency_action_network._submitted_by_the_u.s..pdf. Accessed 29 Nov 2017.
  80. State Grid (2016), Corporate social responsibility report 2015. Retrieved from: www.sgcc.com.cn/csr/images/reports/2016/02/22/C0F6696460C59686CFA54B9C11EFCB06.pdf. Accessed 29 Nov 2017.
  81. Statistics Canada (2018): Report on energy supply and demand in Canada. Retrieved from: https://www150.statcan.gc.ca/n1/pub/57-003-x/57-003-x2018001-eng.htm. Accessed 29 Nov 2017.
  82. Stavins, R. (2003). Experience with market-based environmental policy instruments. Handbook of Environmental Economics, 1, 355–435.CrossRefGoogle Scholar
  83. TecMarket Works Framework Team. (2004). The California evaluation framework. San Francisco, CA: California Public Utilities Commission.Google Scholar
  84. Vendramin, M. (2016): Personal communication 11/10/2016.Google Scholar
  85. Wade, J., & Eyre, N. (2015). Energy efficiency evaluation: the evidence for real energy savings from energy efficiency programmes in the household sector. A report by the UKERC Technology & Policy Assessment Function. Retrieved from www.ukerc.ac.uk/asset/EEBD91B1-C5A0-4F77-BF8B90201FF8A2C7. Accessed 29 Nov 2017.
  86. Wild-River, S. (2016). Personal communication. Canberra: ACT Government Environment and Planning Directorate.Google Scholar

Copyright information

© Springer Nature B.V. 2018

Authors and Affiliations

  1. 1.The Regulatory Assistance ProjectBrusselsBelgium
  2. 2.Centre on Innovation and Energy Demand, Sussex Energy GroupUniversity of SussexBrightonUK
  3. 3.Environmental Change InstituteUniversity of OxfordOxfordUK

Personalised recommendations