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What is energy efficiency (EE)?

Posted By Alexandra Verhein, Monday, March 11, 2019


by Emily Pearce, Johnathon Fata and Jennifer Allen

What is energy efficiency (EE)?

PearceEmily.pngIf I have to explain to my family one more time what my job is, I might lose it! For the most part, every time I tell someone how I work in energy efficiency, they respond with “oh I’m thinking about getting solar for my house” or “my neighbor just bought an electric vehicle” which is great, but not really what I’m talking about. Sigh. Not only is energy mainly out of sight, out of mind, but energy efficiency is two levels below that. And for the most part, that’s why we like it. However, as the number of us, along with our devices and vehicles connected to the grid increases, so does our need to reduce our consumption and emissions. This critical time in our energy history is part of what makes it so interesting to work in efficiency and so challenging to keep up with. Whether you are brand new to the profession or if you’ve been working in EE for decades, there’s always something to be gained by going back to the fundamentals.  

FataJohnathon.pngSo, let’s start at the beginning. At its most basic, energy efficiency refers to the reduction of energy consumption by using less energy to attain the same amount of useful output. For example, a 6-watt LED bulb uses 90% less energy than a 60-watt incandescent bulb but provides the same level of light. Or a well-insulated office will use less energy for heating and cooling to achieve a comfortable temperature than a poorly insulated office. And if it isn’t obvious, why do we want to use less energy? We’ll get into that in greater detail below, but reduced costs, increased grid reliability, and lowered emissions are a few good ones, just to start. And who are the individuals, players and stakeholders benefitting from energy efficiency? In short, everyone.


AllenJennifer.pngWhether you’re a homeowner, business owner, retailer, manufacturer, renter or anyone else who uses energy, there are technologies and programs to help you save energy. For the energy efficiency industry within the built environment (i.e. the spaces we work and live in) buildings are broken out by utilities, technology manufacturers and service providers by market sectors. Generally speaking, buildings are categorized into commercial, industrial or residential sectors. Figure 1 provides a breakdown of how these three sectors utilize electricity within each sector and compared with one another1.

Already, we’ve started to see how the energy efficiency industry becomes quite complicated and can be quite confusing, even for industry veterans. Throughout the rest of this article, we’ll attempt to provide a detailed yet clear and concise description of the history, drivers, barriers and players in energy efficiency.





We can trace the real beginning of energy efficiency to the 1973 oil embargo, wherein the members of the Organization of Petroleum Exporting Countries (OPEC) stopped exporting oil to the U.S. The oil embargo exposed our vulnerability and reliance on foreign oil that had not previously been experienced by the U.S. and got the attention of all Americans. In addition, there were other factors at play at this time -- like high inflation, high prices for goods and concerns over lack of resources that led the U.S. to begin creating policies on energy that considered long term stability.  The first law about energy efficiency was signed by President Gerald Ford in 1975, called the Energy Policy and Conservation Act.

This was followed by the establishment of the Department of Energy in 1977, which was a consolidation of the Federal Energy Administration, the Energy Research and Development Administration, the Federal Power Commission, and others. From there, several pieces of legislation have helped encourage the development and deployment of energy efficient technologies. See Figure 2 below which depicts the energy consumption since 1980.


Since those early beginnings, energy efficiency has always faced an uphill battle. From competing energy generators to high upfront costs to technology uncertainties and in some cases, genuine misinformation, transitioning to a lower energy consumption-based economy has not come easy. More recently, the low prices of oil and natural gas, along with stringent building codes and the fact that efficiency gains are increasing (mainly because they have come so far already) have made motivating individuals and business to pursue efficiency a challenge. Fortunately, we’re here for the long haul and more committed than ever to overcoming barriers and driving efficiency so that inevitably, when energy prices rise, and supply dwindles, energy efficiency will be there working, out of sight and out of mind.

Driving Forces for Energy Efficiency

Despite a national recognition of the need for more efficient use of energy in the U.S., and several legislative accomplishments at the national level, the driving forces for energy efficiency have largely been driven by market and state/local regulations.

  • Free Market Demand: Building owners and home owners have long understood the value of energy efficiency. At its core, the drive to reduce energy costs for owners creates demand for efficiency in commercial, industrial and residential customers.
  • Regulation: State policymakers and regulators provide direction to regulated utilities to provide energy efficiency programs. These policymakers and regulators can be broken out into the following groups:
    • Governor – sets energy policy through work with state legislature or executive orders
    • State-level legislature – passes bills that direct utilities to reduce total energy consumption
    • State public utilities commission – responsible for overseeing utilities operations and execution of goals set by the legislature or governor
    • Other regulating agencies – rate payer advocate groups, air quality management districts and a variety of other organizations may have the ability to directly or indirectly influence energy policy.
  • Public Support: Despite the continuing debate about climate change, peak oil, clean coal and a host of other energy debates, energy efficiency enjoys wide acceptance and support by Americans throughout the country. A staggering 94% of Americans believe that energy efficiency is important4.

Why pursue Energy Efficiency?

Why should you care? It’s not motivating enough to get incentives from utilities, tax rebates from the government and the warm fuzzy feeling in your heart knowing you are saving the planet? No? Okay, then how about these cold hard facts:

  • Cost: Using less energy through efficiency measures is good for the economy and your wallet. By reducing the amount of energy required for certain tasks, you’re automatically lowering your monthly utility bills. You’re also likely using more efficient equipment that requires less maintenance (labor) and provides more control. Energy-efficient appliances can save a U.S. household up to $500 a year on utility bills5
  • Occupant Comfort: The biggest complaint within commercial and residential buildings is thermal comfort. Less leaky windows, less complaining tenants – something everyone can support. Energy efficient buildings also see their tenants roll over less, which translates into fewer vacancies and larger rents.
  • Aesthetics: Efficient products are evolving quickly and most of the solutions available are much more attractive than their conventional counterparts.
Resiliency: It’s much easier to imagine the impacts of climate change now that vulnerable regions are being pummeled by intense tropical storms and extreme weather conditions. The combination of greater control over grid resources combined with overall reduced strain on energy demand, makes energy efficiency one of the greatest tools for increasing the resiliency of our grid.


  • Health & Productivity: Energy efficiency can also help people live healthier, longer lives. Cutting nationwide energy consumption by 15 percent for one year via efficiency measures could help save six American lives a day and avoid up to $20 billion in health-related problems6.
  • Creating Jobs: More than 2.2 million Americans have jobs in energy efficiency or clean energy production. That’s more than five times the jobs in the "dirty" energy industries, including coal, gas, and oil. In fact, about one in every six construction jobs in the country is connected to energy efficiency7.
  • Environment: Energy efficiency is good for the planet. It can help to reduce air and water pollution caused by certain types of energy generation and avoid negative impacts on critical ecosystems.

Barriers to Energy Efficiency?

Earlier we mentioned some of the barriers to energy efficiency, mainly at the highest level. But as we’ve laid out the case above as well, the benefits of energy efficiency are too great to pass up and that’s where we, the energy services professionals come in. To identify the barriers to energy efficiency and provide actionable solutions. Unfortunately, we don’t have the time or room to get into detailed barriers and solutions. Fortunately, the barriers and solutions to energy efficiency has been written about extensively for commercial customers and residential customers. Summarizing those barriers, we can break the barriers and solutions to energy efficiency into four main categories:


How and why do we measure success in EE?

As with anything in life, defining and measuring success is a critical job to ensure that our work provides the benefits described above. To accomplish this, we must look at numerous factors, beyond simple energy savings to not only recognize the full value of EE, but also ensure we are delivery successfully in all aspects. These metrics will vary based on numerous factors but should all be considered when pursuing any EEM.


Energy efficiency has become a mainstream topic and impacts nearly every aspect of our society in a quiet, sometimes invisible way. Though it might not be as shiny or attractive as solar panels, EE plays an essential role in bringing us to the next stage of energy independence and sustainability. Jobs in this sector continue to grow despite political roadblocks and we will likely see a market transformation in our approach to efficiency over the next decade. Hopefully this helped shine some light on EE and acts as a reminder to even veterans in the field.


Emily Pearce is Vice President, Johnathon Fata is Director, and Jennifer Allen is an Associate at Waypoint Energy. Waypoint develops and manages private, public and utility programs within the commercial, industrial and multifamily real estate industry.

This article was contributed by the Implementation Topic Committee.

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