Capturing the World’s “First” Resource With Energy Efficiency Obligations


Energy efficiency is widely recognized as a low-cost, readily available resource that provides benefits to utility customers and to society as a whole. One of the most effective means of capturing energy efficiency resources is establishing an energy efficiency obligation (EEO). An energy efficiency obligation (EEO) is a regulatory mechanism that requires obligated parties to meet quantitative energy saving targets by delivering or procuring eligible energy savings produced by implementing approved end-use energy efficiency measures. There are several other terms used for this regulatory mechanism, including “energy efficiency portfolio standard,” “energy efficiency resource standard,” “energy efficiency commitment,” and “energy supplier obligation.”

Governments in various jurisdictions around the world have endeavored to improve end-use energy efficiency, and in some cases also achieve other objectives, by designing and implementing EEO schemes. These schemes require energy providers, such as electricity and gas companies, to meet quantitative energy saving targets through assisting their customers to implement energy efficiency measures.

RAP provides technical and policy assistance on EEO schemes to policymakers and regulators.  In 2009 we advised the European Commission on using an EEO scheme to deliver energy efficiency on a utility scale. Learn more about the European Union’s energy efficiency goals here. Our office in Berlin also works directly with German stakeholders and policymakers on achieving the Energiewende’s ambitious energy efficiency targets.

In 2012, RAP prepared a major report on best practices in designing and implementing EEO schemes. This report includes detailed case studies of 19 EEO schemes implemented in a range of jurisdictions around the world. A table in the Appendix summarises and compares key design parameters among the schemes.

RAP has also prepared reports on government oversight of the national EEO scheme in China, on determining energy savings for EEO schemes, and on regulatory mechanisms to enable energy provider delivery of energy efficiency.

China’s DSM rule establishes an EEO on its grid companies. Many US states have also established EEOs for their retail distribution utilities, and three States in Australia have placed EEOs on stand-alone electricity retailers. Several European countries have established EEOs for suppliers of electricity, gas, heating oil and transport fuels. India is so far the only country to place an EEO on energy end-users.