This guide discusses how financial incentives, nonfinancial incentives, and electricity pricing schemes can be harnessed to improve energy efficiency. It also describes the conditions that enable these strategies to be effective.
Financial and nonfinancial incentives can help overcome barriers that prevent consumers from adopting new technologies and behaviors. At the same time, energy pricing structures can be designed to drive energy efficiency and conservation. In order for customers to appreciate the true value of energy efficiency, energy pricing should reflect the full cost of electricity production, transmission, and distribution, as well as take into account any negative externalities (i.e., costs to third parties) incurred along the way. Subsidies will, in general, dilute the benefits that end-users perceive from the energy efficiency investments they make. Government ministries or regulatory bodies are often best placed to fund and administer these incentive and pricing efforts and may support increased efficiency measures for low-income and other vulnerable populations. Utilities can also play a significant role in delivering energy efficiency programs if enabled by government and regulatory structures.
DISCLAIMER
This publication was produced for review by the United States Agency for International Development. It was prepared by ICF as part of the Energy Efficiency Toolkit. The author’s views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government.
