Enefirst will identify the most relevant policy areas where the E1st principle can be applied to achieve the highest impact in terms of energy system benefits. As starting point, the project partners came up with a clear and comprehensive definition of the principle, in order to identify policy areas for potential application. International experience and existing definitions used in Europe for the concept were benchmarked, especially the European Parliament’s from 2018 and the European Climate Foundation’s from 2016.
E1st is sometimes understood as simply more energy efficiency – however, this is not what it means. To unveil the actual meaning of E1st, enefirst will focus on demand-side resources in buildings, including energy efficiency and demand-response, storage and more, influenced by a range of different policy areas.
Existing definitions in legislation are very high-level and do not provide enough clarity and guidance for policymakers and market stakeholders. Taking stock of 20 international practices related to the E1st principle and the lessons learned in the areas of Integrated Resource Planning and Least Cost Planning, enefirst developed the following definition:
“Efficiency First gives priority to demand-side resources whenever they are more cost effective from a societal perspective than investments in energy infrastructure in meeting policy objectives. It is a decision principle that is applied systematically at any level to energy-related investment planning and enabled by an ‘equal opportunity’ policy design.”
E1st is a necessary decision tool to ensure a cost-effective decarbonisation of the economy, including enabling the transition to a future powered by renewable energy. The result is a more cost-effective allocation of resources across the energy systems, including in the many emerging opportunities for customer engagement (prosumers).
Efficiency First provides what has been a missing link in fully implementing two other guiding principles of climate and energy policy: cost-effectiveness and consumer protection. In practice, Efficiency First means giving energy efficiency a fair chance in the models and impact assessments that policymakers use to make decisions, strengthening those laws that already target efficiency, and integrating it into all other Energy Union policies.
Applying this principle will help correct the persistent bias towards increasing supply over managing demand, a bias which has impeded Europe’s ability to create a least-cost, jobs-rich, low-carbon energy system.
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The EU Governance Regulation 2018/ 1999 on the Governance of the Energy Union defines E1st as: ‘taking utmost account in energy planning, and in policy and investment decisions, of alternative cost-efficient energy efficiency measures to make energy demand and energy supply more efficient, in particular by means of cost-effective end-use energy savings, demand response initiatives and more efficient conversion, transmission and distribution of energy, whilst still achieving the objectives of those decisions’.
European Parliament : “‘energy efficiency first’ means the prioritisation, in all energy planning, policy and investment decisions, of measures to make energy demand and energy supply more efficient, by means of cost-optimal energy end-use savings, demand-side response initiatives and more efficient conversion, transmission and distribution of energy.”
European Parliament. (2018, January 17). Amendments on 17 January 2018 on the proposal for a regulation of the European Parliament and of the Council on the Governance of the Energy Union
For the European Climate Foundation (ECF), Efficiency First is the fundamental principle around which the EU’s energy system should be designed. It means considering the potential value of investing in efficiency (including energy savings and demand response) in all decisions about energy system development – be that in homes, offices, industry or mobility. Where efficiency improvements are shown to be most cost-effective or valuable, taking full account of their co-benefits, they should be prioritised over any investment in new power generation, grids or pipelines, and fuel supplies. In practice, Efficiency First means giving energy efficiency a fair chance in the models and impact assessments that policy-makers use to make decisions, strengthening those laws that already target efficiency, and integrating it into all other Energy Union policies. That includes funding decisions and infrastructure planning. Applying this principle will help to correct the persistent bias towards increasing supply over managing demand, a bias which has impeded Europe’s ability to create a least-cost, jobs-rich, low-carbon energy system.