The objective of this report is to provide modellers and policymakers with guidance on conceptual implications and on existing quantitative approaches for assessing demand and supply side resources in light of the Efficiency First (E1st) principle.
It identifies existing modelling approaches associated with the concept of E1st, distinguishing the normative and exploratory approaches and considering different levels of analysis: national, utility, and buildings. This shows that there is no universal model for representing E1st and that each model-based assessment is nested in a trade-off between data needs and computational complexity versus robustness and credibility of the model outcomes.
Finally, the report discusses three challenges to modelling the trade-off between demand and supply side resources with respect to the E1st principle: (1) to capture a broad array of multiple impacts and to monetize them, where possible; (2) to apply social discount rates, unless a model aims to simulate actual technology adoption behaviour; (3) to ensure sufficient model detail to represent the true costs of supply-side resources and the value of demand-side flexibility options.