Energy Efficiency Gap – What Causes this Gap

Energy efficiency takes notice as a key resource for economic and social development across all layoffs. Many Energy efficiency actions are widely advised as a means of both saving money and cost effectively reducing areas associated with energy use. Yet in practice, they are little accepted and the performance of which is never fully revealed to the buyer, which can cause under-investment in energy efficiency. This paradox is commonly referred to as the energy efficiency gap i.e. persisting gap between the optimum energy efficiency and the actual energy efficiency.

What causes this gap?

Policies: Divergence in segments and detailed energy consumption

Market failures: Investment towards end user energy efficiency improvement remains low such as lack of information or misplaced incentives

Behavioral effects: Despite the availability of energy efficient technologies and its environmental advantages their adoption remains low as end users prefer least-cost option and the inattentiveness to future energy savings when purchasing energy-consuming products

Price thoughtful market: Efficient technologies unlikely to make benefits convincing as users look for immediate benefits rather than long term advantages

Industry levels: Wide difference in energy efficiency levels among different industries and among companies even in the same industry.

Many financial experts believe that consumer choices reveal more about the business of energy efficiency improvements than do engineering calculations. Hence some necessary changes can be done by re-examining energy efficiency policies and their effectiveness,

Some of them are:

  • Strategies should be reconciled to address discrepancy of end users
  • Proper procurement tools to guide end user Energy Efficiency behavior
  • Identifying and correcting the investment inefficiencies
  • Careful realistic work is needed to assess the actual energy efficiency potential and the available options

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