Energy Efficiency Trends

For some time, energy efficiency had been relegated to the back burner in sustainability discussions. This is even though inefficient use of energy leads to both financial and environmental costs, in micro and macroeconomic space. It is essential to reduce the energy used to produce goods and services. This is an easier path of reducing costs of production and related emissions and the capital cost requirements for construction of new power plants.

Kenya has been on the correct path to achieve some of its energy efficiency goals. It is signatory to international treaties and has developed national policy instruments and strategies towards this.

Sustainable Development Goal 7 (SDG 7) for example, seeks to ensure universal access to affordable, reliable, sustainable and modern energy. To achieve, several targets were prioritised, key among them being, increasing substantially the share of renewable energy in the global energy mix and doubling the global rate of improvement in energy efficiency by 2030. By doubling the global rate of improvement in energy efficiency, energy consumption can be reduced while maintaining the same level of energy services.

Energy efficiency will therefore make energy more affordable and accessible, bringing other benefits that extend across several SDGs.
Further, improving energy efficiency together with electrification, behavioural change and digitalisation will have a great impact in reducing the global energy intensity. It is for this reason that energy efficiency is currently gaining a strong global focus among policy makers in recognition of its important role in enhancing energy security and affordability, and in accelerating clean energy transitions.

The energy sector is responsible for three-quarters of global emissions, and transforming it is critical to tackling the climate change. 133 parties at the UN’s COP28 held in Dubai in December 2023 committed to the Global Renewable and Energy Efficiency Pledge, that seeks for an integrated strategy and international cooperation to combine energy efficiency with renewable energy. The parties committed to doubling the annual average rate of energy efficiency improvements to 4% by putting energy efficiency at the core of policymaking, planning, and major investment decisions.

Promoting renewable energy without enhancing energy efficiency on both the supply and demand sides could result in energy waste and continued reliance on fossil fuels. The combined approach of increasing renewable capacity and enhancing energy efficiency is crucial for reducing dependence on fossil fuels and achieving a cost-effective transition to renewable energy. Improving energy efficiency lowers the total demand for energy resources allowing for an increase in the proportion of renewables in the energy mix, thereby decreasing environmental impact caused by energy production and consumption. This will enhance energy security by making energy systems more resilient and less dependent on fossil fuels.

The global energy efficiency rates, according to IEA, improved by 2% in 2022. That was double the speed of gains the previous five years but slowed to a 1.3% improvement in 2023. In terms investment growth in energy efficiency-related measures in 2023 there was a reduction in growth from 16% in 2022 to 4% in 2023 reaching USD 624 billion in investments. Under current expected and announced policies, efficiency-related investment is projected to rise by a further 50%, to almost USD 910 billion per year by 2030. However, these levels are still around half of the energy efficiency-related investment needed in the second half of the decade to realise the Net Zero Scenario goals of over USD 1.8 trillion in 2030.

According to IEA’s Net Zero Scenario, doubling energy efficiency improvement from 2% to 4% annually would reduce global energy-related CO₂ emissions by almost 11 Gt CO₂ in 2030. In addition to energy savings and carbon emission reductions, other benefits would accrue from continuing to increase energy efficiency. Around 12 million new jobs would be created on the energy demand side by 2030 to achieve the efficiency improvements laid out in the IEA’s Net Zero scenario. This includes mostly high and medium skilled workers in the professional, construction and manufacturing sectors to support renovations and new buildings, electric vehicle deployment and energy management.

Electrification holds a great potential to reduce final energy demand given that electric technologies are generally more efficient than fossil fuel-based alternatives. Electrifying sectors such as transportation (electric vehicles) and heating (heat pumps) is leading to more efficient energy use, especially when combined with renewable energy sources. Fully electrified energy systems can cut final energy consumption by up to 40%.

Green hydrogen is also emerging as a promising clean energy carrier that could be utilised in hard to abate sectors. It can produce high-temperature heat to power industrial processes—all while emitting zero greenhouse gases. Hydrogen can also be utilised in transportation, power generation and heating buildings. There are ongoing efforts to improve the overall efficiencies of green hydrogen production and conversion technologies.

The Energy Act 2019 mandates Energy and Petroleum Regulatory Authority (EPRA) to develop and implement national energy efficiency and conservation programmes. The Authority executes this mandate through regulations and initiatives on energy management targeting designated high energy consuming facilities and establishing minimum energy performance parameters for key appliances. The Energy (Energy Management) regulations, 2012, requires facilities consuming more than 180,000 kWh of energy to conduct energy audits at least once every three years and implement the identified energy saving measures, among other obligations.

The Authority, through the Energy (Appliances’ Energy Performance and Labelling) regulations,2016, has also established minimum energy performance standards (MEPS) for appliances such as household refrigerators, non-ducted air conditioners, three-phase induction motors and general service lamps.

The MEPS ensures that the least efficient appliances are excluded from the market while the labelling programme provides consumers with accurate and comparable information on the appliance’s energy efficiency performance. This enables consumers to make informed decisions when purchasing these appliances.

There still exists a significant potential to improve energy efficiency rates in Kenya especially among the designated facilities as well as through setting of MEPS for more household appliances. The Authority is in the process of reviewing the two regulations with a view of incorporating additional regulatory tools such as establishment of energy benchmarks for various sectors, establishment of a framework governing operations of Energy Savings Companies (ESCOs), among others. The adoption of these revised regulations is expected to revolutionise the energy efficiency sub-sector in Kenya, enabling the country to fast-track the achievement of its obligations under the Paris Agreement.

Despite the high benefits and low cost of energy efficiency as a major solution for reducing cost of production as well as mitigating climate change, many energy efficiency opportunities remain untapped due to multiple barriers key among them being limited technical skills and inadequate financing.

The establishment of ESCOs in Kenya is expected to unlock the potential for implementation of energy efficiency projects through provision of structured financial products and technical expertise to the facilities. ESCOs will therefore play an important role in boosting private investments in the implementation of energy efficiency projects. The establishment of a Super ESCO by KPLC to address both public- and private-sector opportunities for ESCOs will also help in fostering the growth of ESCO industry in Kenya.

It is expected that the Super ESCO will facilitate the development and implementation of energy efficiency projects (including the financing) but subcontract implementation to private-sector ESCOs. The public sector entities have generally lagged its private sector peers in undertaking energy efficiency projects and KPLC’s Super ESCO could play an important role by establish a revolving fund to support implementation of these projects.

Ronald Ketter, Eustace Njeru, and Ignatius Chirchir are Manager Energy Efficiency, Senior Officer Energy Efficiency and Energy Efficiency Officer respectively in EPRA

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