• Energy Efficiency
  • Digital Transformation
  • Electric Grid
  • Decarbonization

The Evolution of Energy Efficiency

Feb 01, 2023

Guidehouse Insights City

Energy efficiency is not a new concept in the energy industry. The practice of reducing the amount of energy it takes to deliver the same amount of (or more) goods and services has been in use by utilities and consumers for decades. Historically, this meant replacing a piece of energy-consuming equipment like a light bulb, household appliance, or HVAC system with one that requires less energy input. However, the evolving energy landscape and the advancement of software functionalities have fundamentally changed how energy efficiency is defined and have expanded its impact on the electric grid.

Digitalization Creates New Use Cases for Energy Efficiency

With the growth of digitalization, internet-connected devices, machine learning, and AI, the concept of energy efficiency now includes software-based solutions in addition to hardware or equipment retrofits. Building and home energy management systems can give consumers greater insight into their energy usage, with some offering load disaggregation functionalities that show energy usage for individual end uses. The advancement and adoption of these systems allow consumers to identify areas of their facility where energy efficiency could be improved. The integration of these software systems with electric meters or existing utility software platforms can also boost customer program participation and effectiveness. Customers receive alerts about the pieces of equipment in their facility that require the most energy input and suggestions for modifying their consumption without sacrificing productivity. This enhanced customer engagement can be paired with demand response programs to drive deeper peak demand savings. Load flexibility, or the ability to shift demand to periods that better match supply, is usually associated with the evolution of demand response, but its enablement is inherently tied to energy efficient technology. To automatically change consumption to match supply conditions without affecting consumer operations, energy efficient devices like heat pumps, clothes washers and dryers, and water heaters must be grid connected or internet enabled. With these advancements, grid operators now have greater control over when and how electric demand is met, something increasingly critical as renewable energy capacity increases and electrification of certain end uses continues.

Bundled Energy Efficiency Solutions Are Expanding to Include New Technologies

Digitalization, advanced software systems, and the increased proliferation of distributed energy resources (DER) have also enabled the creation of more wide-ranging and fully integrated building energy efficiency solutions. Energy efficiency is no longer something that must be addressed one piece of equipment or one appliance at a time but instead can be tackled through holistic building or site efficiency solutions. Furthermore, consumers are now pursuing comprehensive energy efficiency projects as part of broader sustainability goals including decarbonization, not just for energy savings purposes. As a result, DER like solar PV and energy storage systems may be installed as part of these projects. Offering bundled solutions that incorporate fundamental energy efficiency improvements, onsite renewable generation paired with energy storage systems, and advanced monitoring and control systems can give energy efficiency solution providers a competitive advantage when going to market, especially if they are targeting large energy consumers. Energy efficiency can no longer be thought of as a silo; its integration with digital, smart, and connected technologies, coupled with clean DER and advanced control systems, expands the role energy efficiency can have in decarbonization and the energy transition.