Oil prices have fallen, yet negawatts still cheaper than megawatts 

Oil prices have fallen a bit from their recent highs, yet energy efficiency remains the cheapest option around. That should not come as a surprise, but coming from the conservative, fossil-fuel focused International Energy Agency (IEA) makes it noteworthy. The global energy efficiency market, according to IEA, is worth at least $310 billion a year and growing, making it the world’s first fuel.

“Energy efficiency is the invisible powerhouse in IEA countries and beyond, working behind the scenes to improve our energy security, lower our energy bills and move us closer to reaching our climate goals,” according to IEA’s Executive Director Maria van der Hoeven, speaking at the Verona Efficiency Summit in Italy in October 2014 where the agency released its Energy Efficiency Market Report 2014.

Energy efficiency: First fuel 

Savings attributed to energy efficiency in selected regions, in Mtoe

This is the second edition of the report – IEA has discovered that there is more to energy than fossil fuels, branching into renewables and energy efficiency in recent years, like everyone else. The 2014 version notes that investments in energy efficiency are improving energy productivity – the amount of energy needed to produce a unit of GDP. It says that among 18 IEA countries examined, total energy consumption was down 5% between 2001 and 2011 primarily as a result of investments in energy efficiency.

It reckons that cumulative avoided energy consumption over the decade from energy efficiency in IEA countries was 1,732 million tonnes of oil equivalent. This is larger than the energy demand of the US and Germany combined in 2012, an impressive feat. The report shows that energy efficiency investments over the past 4 decades have avoided more energy consumption than the total final consumption of the European Union in 2011.

Much more can be saved

Savings attributed to energy efficiency in IEA study, in Mtoe

Moreover, IEA notes that huge potential exists for energy efficiency in emerging economies notably in efficient vehicles and transport infrastructure. The IEA estimates that efficiency can reduce up to $190 billion in fuel costs in transport globally by 2020 while alleviating local air pollution and traffic congestion in developing countries. Politicians in polluted and congested cities like Beijing, Mumbai, Jakarta and Bangkok already know.

According to the IEA, some 40% of the global energy efficiency market is financed with debt and equity, putting it in the range of $120 billion per annum. “Energy efficiency is moving from a niche interest to an established market segment with increasing interest from institutional lenders and investors,” said Maria van der Hoeven.

Published Originally in EEnergy Informer: The International Energy Newsletter December 2014 Issue.