The savings of energy saving: interactions between energy supply and demand-side options—quantification for Portugal

Reducing demand by increasing end-use energy efficiency on the demand side of energy systems may also have advantages in reducing fossil dependency and greenhouse gas (GHG) emissions on the supply side. This paper addresses interactions between energy supply- and demand-side policies, by estimating the impact of measures addressing end-use energy efficiency and small-scale renewables uses in terms of (1) avoided large-scale electricity generation capacity, (2) final energy consumption, (3) share of renewables in final energy and (4) reduction of GHG emissions. The Portuguese energy system is used as a case study. The TIMES_PT bottom-up model was used to generate four scenarios covering the period up to 2020, corresponding to different levels of efficiency of equipment in buildings, transport and industry. In the current policy scenario, the deployment of end-use equipment follows the 2000–2005 trends and the National Energy Efficiency Action Plan targets. In the efficient scenarios, all types of equipment can be replaced by more efficient ones. Results show that aggressive demand-side options for the industry and buildings sector and the small-scale use of renewables can remove the need for the increase in large-scale renewable electricity capacity by 4.7 GW currently discussed by policy makers. Although these measures reduce total final energy by only 0–2 %, this represents reductions of 11–14 % in the commercial sector, with savings in total energy system costs of approximately 3,000 million euros2000—roughly equivalent to 2 % of the 2010 Portuguese GDP. The cost-effectiveness of policy measures should guide choices between supply shifts and demand reduction. Such balanced policy development can lead to substantial cost reductions in climate and energy policy.