The Efficiency Factor
Shortly after his "Put on a Sweater" speech in 1977, President Jimmy Carter began a televised address to the American people with the words, "Tonight I want to have an unpleasant talk with you about a problem unprecedented in our history." President Carter went on to describe the energy situation then being faced by the U.S. as the moral equivalent of war. He argued that the U.S. needed to reduce its dependence on imported oil and start to develop the new, unconventional sources of energy it would rely on in the 21st century.
At the heart of President Carter's speech was a recognition of the need for a sustainable approach to energy consumption. Forty years later, around the world, energy conservation is being embraced by industry, regulators, and consumers who now have significant new tools and many more choices in the fight for a sustainable future.
Energy efficiency is about much more than achieving equal or greater output with the same energy. It encompasses eliminating unnecessary energy consumption, reducing our global energy footprint, and correlating our energy demand and supply to optimise how we consume power and balance our grids. In doing so, energy efficiency contributes to our environmental, social, economic, and political future by reducing the impact of our energy consumption on the planet. It is one of the few policy tools and solutions capable of simultaneously addressing each element of the carbon reduction, affordability, and security of supply trilemma.
The corporate agenda is increasingly focused on energy efficiency. Energy consumption is no longer a cost line simply to be managed down, but can be a valuable component of a corporate's identity and integrity, helping to lock-in an authentic connection with a company's stakeholders, and contributing to its license to operate, sales, and profitability. At the same time, for manufacturers of regulated products and builders subject to new energy codes, efficiency standards represent both a new compliance challenge and the opportunity to offer products that many consumers see as more desirable.
Energy efficiency is shifting our energy landscape and heralds an unprecedented period of legal and regulatory change as legislatures and regulators seek to adjust to the new energy economy and away from a system underpinned by large, transmission connected generation. Additionally, complementary drivers of that change are (i) the increasing prevalence of distributed and behind-the-meter generation; (ii) the growing importance of demand side response and ancillary
services in balancing the network - driven in large part by renewables, smart devices, and the "internet of things"; (iii) the potential offered by energy storage; and (iv) energy price fundamentals that do not, by themselves, create the market signals needed for new investment. That policy, legislative, and economic uncertainty naturally increases risk and transaction costs and makes taking investment decisions more difficult.
President Carter spoke of reaching "peak oil." Energy efficiency may prove to be the key to reaching peak energy consumption, even in aworld with increasing economic growth and global population.