Energy efficiency policy and interventions aim to, ceteris paribus, reduce energy consumption and related greenhouse gas emissions. Growing evidence indicates that we tend to underestimate the benefits that can be achieved through energy efficiency, and specifically, the wider gains that energy efficiency can deliver in terms of economic and social development^[1]. The concept of “multiple benefits”^[2] has therefore been developed to consider the non-energy related benefits that can be derived by a country from improvements in energy efficiency.

Investments into energy efficiency carry different benefits to varying stakeholders. At macroeconomics level, the IEA’s 2014 report on the Multiple Benefits of Energy Efficiency highlights that energy efficiency can: (1) Impact macroeconomic performance through employment, trade and energy prices and (2) Free up public resources through lower expenditure on fuel costs for heating, space cooling and lighting. The successful deployment of energy efficiency policies has shown the potential to increase annual GDP by an additional 0.25 to 1.1%.

In South Africa, policy makers have set national targets on energy efficiency improvements through the National Energy Efficiency Strategy (NEES) released in 2005. There are a series of government driven interventions available in the market designed to facilitate the move towards a more energy efficient economy, namely, tax breaks (12-I and 12-L Tax Incentive programmes), grant funding through the IDC Green Energy Efficiency Fund and similar funds, and standards for measurement and verification. Supply-side measures seem to dominate public discourse and energy efficiency-demand side management issues are less prominent.

For public utilities and energy providers such as Eskom, incentivising consumer behaviour to reduce energy consumption, results in lower costs for the generation, transmission and distribution of electricity, as well as improved system reliability. The counters the need to invest simply to keep up with wasteful energy demand. Given the current electricity supply challenges and Eskom’s delicate financial position, it is perhaps paradoxical that that energy efficiency and other demand side management initiatives are no longer a priority. A review of Eskom’s Integrated Reports from 2009 till 2013 indicates that demand side management enjoyed strategic prominence and featured consistently in these reports, but this is no longer the case.

Implementing energy efficiency in industry and commerce can improve productivity, product quality, system reliability and the overall work environment. For example, monitoring energy use of key production processes may provide insight into water or raw materials usage, exposing process inefficiencies and wastage. Installing modern and efficient equipment in a manufacturing plant not only reduces electricity consumption but improves daily production yield. Retrofitting lights results in less energy consumption and also extends the life of light bulbs, thus reducing the labour costs linked to frequent replacement. These non-energy benefits may amplify the return on energy efficiency investments and reduce the payback period. Unfortunately, research documenting and quantifying these non-energy benefits is limited.

Figure 1: IEA’s depiction of the multiple benefits of energy efficiency improvements

Source: IEA

A multiple benefits approach serves to highlight the importance of energy efficiency for economic development more widely. Energy efficiency can deliver both social and economic improvements and contribute to sustainable development. Given the current energy crisis in South Africa, and the country’s sluggish growth performances, it is important to look beyond traditional energy supply measures, and to consider the immediate and wider benefits of energy efficiency, demand-side management tools.