Increasing energy efficiency and reducing energy demand are cornerstones of strategies to increase economic competitiveness while reducing greenhouse gas emissions. Making better use of existing energy supplies through better technology for lighting or appliances can reduce or stabilize demand, even as populations continue to grow. Demand-side management (DSM) strategies can reduce customer bills, minimize total system costs, reduce tariff hikes (which are often necessary to improve the financial viability of the utility and sector), and improve system reliability and resiliency.
A fundamental barrier to wider adoption of DSM measures in developing countries is identifying the highest-impact measures, analyzing their cost-effectiveness, and adequately comparing them to alternatives, such as traditional generation resources (like gas or solar power). Beyond this barrier is the challenge that other country-specific factors can prevent cost-effective measures that save consumers money from taking off in the market. This requires another analytical step to determine whether the technical feasibility of a measure is met with political and economic feasibility—for example, is the program too complex given institutional capacity, or will financial incentives work if prices are too subsidized?
To meet this challenge, USAID and ICF developed the Energy Efficiency Opportunity Tool and the accompanying Opportunity Study methodology. The study considered the cost-effectiveness of different energy efficiency measures, while also evaluating implementation viability based on country-specific indicators and policies, such as consumer awareness and the availability of credit—two of six building blocks for market readiness that the tool considers.
Read the full post on the ClimateLinks blog.