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06 ENERGY EFFICIENCY
The average primary energy efficiency of electricity generation i
increased between 2000 and 2014 across all regions but Latin
America, where it declined by 0.5%. 68 The efficiency of power
generation ranges from about 30–35% in the CIS (a region
heavily reliant on coal) and the Middle East (heavily reliant on
oil), to almost 60% in Latin America, where a significant share
of electricity is generated by hydropower. Efficiency of thermal
power plants, which account for most of the world’s generating
capacity, increased between 2000 and 2014 in all regions, with
average improvements of around 9% in the Americas, 6% in
Asia and under 5% in other regions. 69 Efficiency of coal-fired
power plants, specifically, increased during this period in most
regions, with the greatest improvements seen in Asia (12%) and
the CIS (8%). Among different types of thermal power plants
mentioned above, gas-fired plants experienced the highest levels
of improvement between 2000 and 2014, with the increase in
average efficiency exceeding 20% in North America and Africa. 70
About 8% of the world’s electricity generating capacity is in
combined heat and power (CHP) facilities, with a total global
installed electric capacity of 325 GW. CHP captures waste heat
and utilises it to meet thermal energy demand. CHP systems,
which capture and re-use waste heat from power generation, are
generally 75–90% efficient in their overall use. 71
The rate of transmission and distribution (T&D) losses, incurred
through resistance and voltage conversion losses on the grid,
varies across regions, ranging between 5% and 15% in 2014, with
lower losses occurring generally in more-efficient power grids in
developed regions. 72 Efficient and superconducting transformers
and high-temperature superconducting cables, including direct
current and ultra-high-voltage transmission, are considered
promising solutions for increasing electrical energy efficiency
and reducing T&D losses. 73 Other solutions may involve
advanced demand monitoring and management to reduce
losses; automation to measure and control the flow of power and
improve system reliability; and movement towards smart grids ii to
manage loads, congestion and supply shortages. 74 The increased
use of distributed energy also reduces T&D losses by producing
electricity closer to where it is utilised.
Smart grids offer a potential to improve energy efficiency and
reliability, better integrate high shares of renewable energy
and improve the responsiveness of both supply and demand
to conditions in real time. 75 The global market for smart grid
technologies – such as transmission upgrades, substation
automation, distribution automation, smart metering, etc. – is
growing rapidly; between 2010 and 2015, the market more than
tripled (from USD 26 billion to USD 88 billion), while respective
annual investments more than doubled (from USD 81 billion to
USD 187 billion). 76
INVESTMENT
Investment in energy efficiency can be defined as the monetary
value of public expenditure, private funds, public-private ventures
and commercial commitments to technologies and assets that lead
directly and indirectly to energy savings relative to business-asusual
scenarios (energy productivity improvements not undertaken).
It is estimated that investments in energy-efficient assets and
technologies yield two- to four-fold returns in lifetime cost savings. 77
In 2013, global investments in energy efficiency totalled an estimated
USD 130 billion. This figure covers the end-user categories of
buildings, transport and industry (but not fuel switching). It also
includes associated costs, e.g., taxes, shipping and labour. 78
Green bonds have emerged as one of the most substantial
sources of capital for energy efficiency projects, especially in the
transport sector. Energy efficiency improvements in industry and
buildings (including efficient lighting and appliances) also source
financing through debt. As of September 2015, an estimated 27%
of all labelled green bond issuances was for energy efficiency
projects (including low-carbon buildings). 79
Historically, development banks dominated the green bond
market in all categories, including those issued for energy
efficiency; however, green bonds are being issued increasingly
by corporations, municipalities and commercial banks, with
additional activity from niche sources, such as universities. 80
Bonds issued for energy efficiency categories increased
considerably during 2013 through 2015. Specifically, debt issues
covering certain categories of transport reached USD 418.8 billion
in 2015 (16.8% average annual increase from 2013). Efficient
buildings- and industry-related bonds, including appliances,
surged to USD 19.6 billion in 2015 (nearly 58% average annual
increase from 2013). In total, energy efficiency-related bonds
reached USD 438.4 billion in 2015 (as of early December 2015;
17.8% average annual increase from 2013). 81
Development finance institutions (DFIs), or multilateral
development banks, have played a critical role in energy
efficiency investments by providing loans, credit lines, partial
risk guarantees and other products to both public recipients and
private parties. Between 2012 and 2014, investments in energy
efficiency leveraged through multilateral development banks
climbed by almost 45%, from USD 3.5 billion to USD 5 billion. 82
Among the initiatives undertaken by DFIs in 2015 was the launch
of the Partial Risk Sharing Facility for Energy Efficiency project
by the Global Environment Facility, the World Bank and the
Government of India. This USD 43 million initiative is designed
to help energy service companies mobilise investment by banks
in India for energy efficiency opportunities by protecting against
potential loss, which can inhibit upfront investment. 83
The German development bank KfW continues to be a leader
in energy efficiency investment; in 2015, it invested more than
USD 4.1 million in its Energy Efficiency programme, up from
approximately USD 3.4 million the previous year. Between
2006 and 2014, KfW invested more than USD 202.7 billion in
its Energy-Efficient Construction and Refurbishment Funding
programmes. 84
i The efficiency of power generation is the net electricity production divided by energy inputs.
ii According to the European Technology Platform, a smart grid is an electricity network that can intelligently integrate the actions of all users connected to
it in order to efficiently deliver sustainable, economic and secure electricity supplies.
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