As the Energy Union concept begins taking form, it is essential to consider how to effectively meet the goals of a secure, integrated, low-carbon energy market while driving growth. A new policy brief by the Regulatory Assistance Project (RAP) suggests that success of the Energy Union rests on an organizing principle called “Efficiency First”. The key to this concept, and to a sound Energy Union, is prioritising energy savings and other demand-side resources first. Unlocking the Promise of the Energy Union: “Efficiency First” is Key highlights successful Efficiency First policies in power markets in the United States and suggests opportunities to adapt those policies for European markets.

“Europe’s top-line energy and economic goals can be met more reliably, at lower cost, and with lower environmental burdens if our traditional focus on supply-side solutions is reversed,” explains Richard Cowart, author of the brief and director of European programmes at RAP. “We need to require a thorough exploration of less expensive demand-side resources before more expensive supply-side commitments are locked into place. We call this ‘Efficiency First’.”

Recognising that Europe has taken steps to support energy efficiency investments through the Energy Efficiency Directive and other EU and Member State policies, and that demand-side resource potential cuts across a broad swath of the policy framework, Mr. Cowart recommends an overarching Efficiency First mandate to fully integrate demand-side resources into policy development and implementation. In this way, Efficiency First goes beyond individual policies to fully tap the benefits of energy-saving investments in households and businesses across a wide range of energy policy decisions.

“We have to get past piecemeal approaches to energy savings,” adds Mr. Cowart. “We need a high-level commitment that will inspire a hard look at efficiency and demand-response resources as a key part of each Member State’s infrastructure.”

The policy brief reviews several options for achieving Efficiency First, which have been proven to improve energy security, lower energy import costs, and improve economies in North America. These policies include least-cost investment requirements, a “loading order” prioritising demand-side resources (now effective practice in California), demand-side bidding in power markets, and non-wire (or pipe) solutions to congestion and reliability challenges.

Investments in customer-side resources are the engine that will drive the Energy Union’s objectives most swiftly and at least cost to European economies. An Efficiency First approach will ensure that low-cost, domestic, demand-side solutions are chosen before higher-cost energy imports and infrastructure investments.