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Making Energy Efficiency First principle operational

Periodic Reporting for period 1 - ENEFIRST (Making Energy Efficiency First principle operational)

Reporting period: 2019-09-01 to 2020-11-30

Energy Efficiency First (E1st) is not just another name for energy efficiency!

Energy efficiency is one of the five dimensions of the Energy Union. The European Union adopted the E1st principle as part of the Clean Energy for All package in 2018. This concept is to prioritize demand-side resources over investments in energy infrastructures, acknowledging that energy efficiency can contribute to meet multiple objectives.

Implementing E1st represents a paradigm shift. Policymakers and market actors need guidelines to walk the talk. E1st implies to adapt decision paths with a holistic view: considering both society’s and investors' perspectives. This means embedding E1st across energy system models, impact assessments, funding and infrastructure decisions, into all energy and climate policies.
The EU and its Member States must make critical investment decisions about energy systems for the next decades. E1st is about ensuring that opportunities to value the most beneficial options are not missed, and that today’s decisions will not undermine achievement of long-term climate goals.

ENEFIRST project aims at making the E1st principle operational, with a focus on energy uses in buildings and the related energy systems. The operational objectives are:
• To define the E1st principle in practical terms.
• To map how E1st has been applied internationally.
• To assess the value of applying E1st across different policy areas and to quantify the potential impacts.
• To develop policy proposals for the implementation of E1st in the EU.

The ENEFIRST project combines policy analysis and energy systems modelling. It also organises various activities to engage and exchange with stakeholders.

The brochure presenting ENEFIRST is available in 7 languages:
A first report reviewed the background of the energy efficiency first (E1st) principle and related existing definitions to draw a practical definition used for the ENEFIRST project. This report analysed similar concepts and what added value the E1st principle brings. It then discussed the application of the E1st principle in six policy areas (renewable policy, energy efficiency policy, climate policy, power market rules, building policy and energy security). The report also analysed the process and methodological issues when comparing demand-side resources with supply investments and identified typical investment decisions where applying the E1st principle should be considered.

A second report reviewed examples of policies, regulatory frameworks, utility programmes or other initiatives that have implemented the E1st principle in practice. We analysed why and how E1st has been implemented, and what lessons can be learned from these experiences. These examples also show policymakers, regulators and energy policy actors in general that the concept of E1st can be implemented and can provide various benefits to the energy transition:

A third report examined at a general level what barriers may impede the implementation of E1st in the EU in several policy areas linked to energy use in the buildings sector. A variety of barriers is discussed including legal and regulatory, institutional and organizational capacity-related barriers, economic and social/cultural barriers. The report focused on the barriers that appear specific to E1st, beyond the well-known barriers to energy efficiency.

A fourth report developed a framework to analyse the transferability of policy approaches used to implement E1st, based on a targeted literature review. The framework was then applied to the 16 examples identified earlier in the project. Overall, it showed that policymakers in the EU and its Member States can certainly learn from their counterparts to establish a level playing field between demand and supply side ressources, thereby implementing the E1st principle. The report also points out that embedding the E1st principle in the EU will require a custom set of policy and regulatory instruments that go beyond fragmented international practices.

A fifth report reviewed the possible approaches for quantitative assessments of demand and supply side resources in view of implementing the E1st principle. Looking at normative and exploratory approaches, considering different level of analysis (national, utility, buildings), the report analysed 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. Three main challenges were identified when dealing with modelling the trade-off between demand- and supply-side resources: (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.
ENEFIRST helps making the E1st principle more concrete and operational, better understand its relevance for energy demand and supply and its broader impacts across sectors and markets. This enables the EU and its MS to take the next step from theory to practice by providing a practical definition, understanding its value for the energy system, developing policy proposal and testing those in specific cases.

Although the overall aim of ENEFIRST is straightforward, there are various complexities in this project, due to the different governance levels, country situations, local characteristics, building stocks, policy consistency and technical needs within the EU. Hence an important impact of ENEFIRST is that it addresses the challenge of operationalizing the E1st head-on, thereby making a significant contribution to social and policy science. It does this in two main ways:
1) by offering detailed diverse case studies, for the impact assessment and for the application of policy design in countries, which will reveal the diversity but also common features of the application of E1st in different policy areas;
2) by developing a conceptual framework that encapsulates this diversity while also providing a straightforward, useable model of how E1st impacts on economy, society, energy markets and others can be assessed and quantified.
ENEFIRST timeline
ENEFIRST approach