Optimal trade-offs between energy efficiency improvements and additional renewable energy supply: A review of international experiences

Energy efficiency is a key priority also from a climate perspective, but efforts to increase efficiency should be balanced with the effort to increase the share of renewable sources in order to reduce fossil emissions. The climate impact of various energy efficiency measures are quite different depending on the type of fuel used and the impact from the efficiency increase on energy costs and thereby the demand for that particular energy use. Therefore it is important to address the energy efficiency options together with the alternative to switch the energy supply towards renewable sources. This calls for models and analysis that incorporate both types of options and thereby address the trade-off in a consistent way. The literature dealing with the trade-off in a direct or less explicit way is categorized and reviewed here. The aim of this paper is to review and evaluate international experiences that include the trade-off between efficiency improvements and additional renewable energy supply whether in a partial analysis of a sector or in an energy system optimization model. A critical review of the approach, focusing on purpose, methodology and outcome, is provided along with a review of modelling tools adopted for the analyses. Models are categorized and presented according to their main characteristics (e.g. bottom- up/top-down model, regional/national analysis, partial/general equilibrium, static/dynamic model). This paper intends, to provide future modelers and policy evaluators with an overview of approaches and methodologies suitable for analyzing energy efficiency policies and options with a focus on the optimal trade-off between renewables and energy efficiency measures in energy-systems under different objectives.