"Benjamin Franklin said that 'a penny saved is a penny earned'. The same can be applied to energy efficiency. A Megawatt not used – a so-called 'Negawatt' – is the most secure, environmentally-friendly unit of energy to be found. A unit of energy saved is a unit of energy earned.
With the challenges it is currently facing, the entire world is waking up to how important saving energy is and finally, energy efficiency is starting to get the attention it deserves. The discussions on nuclear power across Europe following the accidents in Japan highlight the fact that in the near to medium term, we are likely to have less generation capacity at our disposal, while consumption will continue to rise.
The efficiency plan adopted last week by the European Commission shows the compromise and the imperative need to optimise energy spending. But first, how do we make the current energy system fit for new challenges?
The realisation of Europe's full energy efficiency potential will require much more than simply changing light bulbs. The Commission estimates that business as usual will only allow us to achieve half of the 20% improvement in energy efficiency by 2020. To secure the EU's future energy supply, we will require not only the appropriate regulatory support, but also greater investment and faster infrastructure development.
The energy infrastructure in the European Union is decades old, for the most part, and we can't expect it to meet future demands for energy efficiency any more than we should expect a car from the 1960s to meet today's fuel efficiency requirements.
To meet the 20-20-20 targets, Europe needs to be faster in the deployment of smart grid technologies – starting with smart metering.
Smart meters employ information communications technology for two-way communication between the utility and the final consumer. They can provide a wide range of services to consumers, suppliers and network operators alike. Most importantly, they are essential to monitor and manage energy use.
Smart metering will not only help make the network more efficient, but will also enable consumers to make their own concrete contribution to energy efficiency.
How do we make the energy system smart?
The reality is that bringing intelligence into the energy supply system is fundamentally different to simply new investment in 'copper and steel'. This must be reflected in the regulatory regimes. New initiatives on smart grids and energy-saving solutions for cities should start by setting a clearly defined road map with concrete milestones for the development of smart grids in Europe. It can also be done by encouraging national regulators to reward investment in technologies, including smart metering. The technology is ready – but we are running out of time.
The longer we wait, the farther we will be from meeting Europe's energy and environmental policy goals. As it is today, the time frame for smart metering deployment in the Third Energy Package is too long to be able to develop smart grids in time.
The Electricity Directive in the Third Energy Package foresees that 80% of European households will be equipped with smart meters by 2020. The Commission correctly sees the deployment of smart metering as 'an essential first step towards the implementation of smart grids'. But smart metering will need to be introduced across Europe well ahead of that deadline if the smart grid is to be developed enough to deliver the expected 20% energy efficiency.
We need to realise that the sooner smart metering is deployed, the quicker smart grids will be up and running and the greater our chances of meeting the 20-20-20 goals."