Future Potential of Energy Efficiency

Future Potential of Energy Efficiency

Future Potential of Energy Efficiency

When it comes to evaluating the future potential of energy efficiency, there are two solutions to consider: one solution is upgrading the power generation mix with cleaner energy sources; and, the second solution is to use energy more efficiently, reducing the need for expansions in generation capacity. These two approaches are not mutually exclusive, and can in fact achieve a great degree of synergy if implemented together.

History and the Long-Term Benefit of Energy Efficiency Measures

Energy efficiency measures have had a significant impact on energy consumption in the USA. According to Steven Nadel, from the American Council for an Energy-Efficient Economy, energy efficiency has reduced US energy consumption by 1.2% per year since 1980, and during the year 2014 energy consumption would have been 59% more in the absence of this compounded effect. There are multiple examples of the effectiveness of energy efficiency in the rest of the world as well: according to the International Energy Agency, which encompasses 29 countries, energy efficiency has been the main factor reducing the energy footprint of its members over the past decade.

In general, Nadel concludes that energy efficiency can be sustained over the next few decades, with realistic savings in the range of 0.7 to 1.1% per year through 2050, but which could go as high as 2.5% per year with the adoption of new technologies.

The Rebound Effect: What is it and Why it is Important?

When estimating the future impact of energy efficiency measures, the analysis can’t be limited to comparing the end result with current conditions – it is also important to analyze how the energy efficiency measures themselves influence consumption.

Direct Rebound

This effect occurs when there is a change of habits that increases energy consumption, brought forth by the energy efficiency upgrade itself. The following are some examples:

  • A company upgrades outdoor lighting from HID to LED. Since the new fixtures are more efficient, they are activated earlier and turned off later to improve visibility and safety.
  • A homeowner replaces an old air conditioning unit and a resistance heater for a high-efficiency heat pump, with an Energy Star label. Since the unit is efficient, it is used for more hours during both the summer and winter to improve comfort.

In both cases, the real savings achieved are less than what is theoretically possible. However, Nadel concludes that the direct rebound effect is not high enough to negate savings – it only reduces savings by 10% on average.

Indirect Rebound

As implied by its name, this effect occurs when energy efficiency upgrades influence other habits or business processes. A clear example of indirect rebound would be the following:

  • A textile manufacturing company carries out a large-scale energy efficiency program.
  • Production costs are driven down, and the lower price of products increases demand.
  • The company expands and builds a new production line.

According to Nadel, the indirect rebound effect ranges from 10 to 20%, for a total impact of 20 to 30% when considered along with direct rebound.


Energy efficiency upgrades such as an LED lighting retrofit or the adoption of an energy management system, can decrease a company’s energy footprint, but the measure can be made more effective if complemented with staff training and energy-conscious habits. Building controls that include lighting automation measures and daylight harvesting can also increase percentage savings, helping offset the rebound effect.

Scott Van Kerkhove is the CEO of EnergyWise and writes on issues surrounding energy management, energy efficiency and sustainability.

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