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Energy efficiency has yet to see a period in history more open to its products than now, thanks to a convergence of events: rising energy prices, concerns about climate change, and a desire to reduce use of petroleum products and promote clean energy. Several nations have set double digit goals to reduce their energy use and are backing plans with sizable government investment.

US President Barack Obama allotted $20 billion for energy efficiency as part of the nation’s federal stimulus package and set a target for the nation to reduce electricity use 20% by 2020. China, the world’s second largest electricity consumer, also has set aggressive efficiency goals. The nation in recent years built power plants at a rate of about 90 GW per year, nearly as much power as Germany has installed in total. In search of more cost effective, less polluting measures, China has set a goal to no more than double energy use by 2020. In addition, China and the US in late 2009 agreed to collaborate on building an energy efficiency industry. This is a significant step considering that together the two nations consume 40% of the world’s energy, so can achieve considerable economies in manufacturing energy efficiency equipment. Meanwhile, the European Union has set a target to reduce annual consumption of primary fuels 20% by 2020.

Still, the energy efficiency sector faces some obstructions, chief among them a reticence by consumers and businesses to adopt its products. New, smart technologies are expected to draw the consumer toward energy efficiency pursuits in the near future, as are plug-in electric cars that offer a possible revenue source to their owners. In other cases, technologies will be installed in power plants and transmission systems that energy consumers never see, yet benefit from. Thus in a recessionary economic period when many industries are waning, the energy efficiency industry appears to be on a strong, upward trajectory worldwide. This report shows how and why.

Key features of this report

• Analysis of growth in worldwide energy demand as energy supplies tighten and costs rise. Discussion of why these factors are causing nations to pursue energy efficiency.
• Review of common programs and legislation that foster greater use of energy efficiency, as well as barriers to its adoption.
• Review of major types of power plants and explanation of how they are becoming more efficient. Analysis of gas, coal, nuclear and cogeneration.
• Analysis of inefficiencies in electric transmission, including line loss and congestion. Review of solutions, such as infrastructure upgrades, specialized pricing mechanisms, smart grid and microgrid.

Scope of this report

• Understand the drivers behind the current worldwide effort to increase energy efficiency
• Analyze the opportunities available for investment in technologies that improve efficiency for energy consumers, as well as in vehicle fuel use and power production and transmission
• Be better-informed about the political and regulatory goals, plans and funding mechanisms for energy efficiency worldwide.
• Assess the attraction and the risks for your company of investing in new energy efficiency and smart grid technologies.
• Benefit from the report’s information to help make your company’s next international investment decision in energy savings or energy production.

Key Market Issues

• Growing energy consumption: Increased use of appliances in advanced economies, along with growing electrification in developing nations, will increase energy demand 44% by 2030
• Rising costs of energy production:- Construction of new generation facilities will increase energy costs. In the transportation sector, governments are trying to diminish reliance on oil, seeing it as a political and economic liability.
• Increasing political support for energy efficiency:- Governments worldwide have set aggressive targets to increase energy efficiency, and have devoted significant funds to encourage consumers to adopt energy saving technologies.
• The marriage of information technology and energy:- The semiconductor already has significantly decreased energy use over the last 40 years, a trend expected to continue, as the energy industry makes use of the Internet and digital devices to better monitor and control energy use.

Key findings from this report

• To serve this growing consumption, the world is expected to build more power plants and transmission lines, increasing electric generation by 77%, from 18trn kilowatt-hours in 2006 to 31.8trn in 2015, according to EIA.
• Energy efficiency is commonly viewed as the quickest, cheapest and least polluting way to meet growing demand for energy. Energy efficiency costs have held steady at about 2.5 cents/kWh in recent years, making efficiency at least one-third the cost of any new power plant.
• About two thirds of the energy from fuels used for power generation is lost during conversion to electricity.
• The majority efficiency losses occur in the conversion of heat energy to mechanical energy in steam driven generators at gas-fired, coal-fired, and nuclear facilities. These facilities provide nearly 56% of electricity worldwide.
• The way we now delivery power is inefficient. Transmission lines lose 2% to 4% of the power they move because of line friction.

Key questions answered

• How much will energy consumption increase over the next two decades. What parts of the world will see the greatest increase?
• How does energy efficiency compare on a cost basis against generation?
• Why do consumers resist energy efficiency and what innovations are in place to encourage their participation?
• What role does energy efficiency play in economic development. What is energy intensity and why is it important to a nation’s economy?
• How close are we to significantly increasing the efficiency of conventional power plants?
• Why are nations making transmission upgrades and expansions now and how will these investments improve the electric system.

Table of Contents

The Future of Energy Efficiency

Executive summary 10

Introduction 10

Energy generation 11

Efficiency in the grid 12

End-user efficiency: residential 13

End-user efficiency: transportation 14

Conclusion 15

Chapter 1 Introduction 18

Summary 18

Introduction 19

Too much demand, too little energy 19

Oil running out? 21

The world plugs in 22

What drives the use of coal? 23

Why energy efficiency is important today 25

Producing more with less energy 26

Climate change: driving factor 27

Legislation and market instruments 29

Utility decoupling 29

Energy efficiency resource standards (EERS) and white tags 30

Who are the buyers? 32

CO2 reduction schemes 33

Efficiency on equal footing with generation 33

Rebates, loans, tax incentives 34

Barriers to energy efficiency 35

Curing energy anemia 36

Chapter 2 Energy generation 40

Summary 40

Introduction 41

Combined cycle gas turbine 41

Cogeneration and trigeneration 46

Integrated gasification combined cycle 47

Supercritical and ultrasupercritical pulverized coal 50

Nuclear power 53

Improving efficiency for nuclear power 54

Additional opportunities for efficiency improvements 54

Market conditions driving investment in efficiency technologies 57

Market barriers to investment in efficiency enabling technologies 58

Chapter 3 Efficiency in the grid 62

Summary 62

Introduction 63

The grid and its significance 65

Why the grid needs to be changed 66

Restructured markets 66

Integrating renewable energy 67

Difficulty siting transmission 68

Technology solutions 70

New high voltage lines 70

Decentralized generation and microgrids 71

Microgrids 73

Smart grid 74

Software 76

Smart meters 78

Conclusion 80

Chapter 4 End-user efficiency: residential sector 82

Summary 82

Introduction 83

Residential energy consumption on the increase 86

Legislation promoting household efficiency 88

Main sources of household energy use 90

Heating and cooling systems 90

Ground source heat pump 92

Air Ducts 93

District heat and cooling 93

Lighting 94

Appliances 95

Smart appliances 96

Smart Home Automation 98

Building materials and building standards 99

Conclusion 99

Chapter 5 End-user efficiency transportation 102

Summary 102

Introduction 103

Growth in use of autos 104

OECD countries 105

Non-OECD countries 107

Energy efficiency in transportation 108

Technology challenges 109

Legislation promoting fuel efficiency 110

United States 110

European Union 111

China 112

An electrified transportation system 112

Hybrid Electric vehicles 112

Battery Electric vehicles (BEVs) 114

Plug-in hybrid electric vehicles (PHEV) 115

Fuel Cell Vehicles 115

Energy efficiency of electric vehicles 116

Chapter 6 Conclusion 118

Summary 118

Introduction 119

Global trends in energy efficiency 120

International Partnership for Energy Efficiency Cooperation 122

Energy straightjacket 123

Investment in energy efficiency 124

Economics of energy efficiency and possible savings 127

Potential of energy efficiency improvements on a global level 128

Glossary 130

Index 133

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