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1. IEA 2019. All rights reserved.
Behind-the-meter energy system trends
15 January 2020
Jeremy Sung and Tim Goodson

2. IEA 2019. All rights reserved.
Overview
• Current energy demand and efficiency trends from Energy Efficiency
2019
• Current and mid-term trends in small-scale renewables from
Renewables 2019
• Future demand-side trends and scenarios from WEO 2019

3. IEA 2019. All rights reserved.
Energy Efficiency 2019

4. IEA 2019. All rights reserved.
2018 demand growth was the fastest rate this decade
Change in global primary energy demand
Global total primary energy demand rose by 2.3% in 2018, with the largest economies, US and China,
responsible for more than 60% of growth. Renewables and gas grew the fastest.
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
2011 2012 2013 2014 2015 2016 2017 2018
Changeinprimaryenergydemand
Rest of the
world
United
States
China

5. IEA 2019. All rights reserved.
Global energy efficiency improvements are slowing down
In 2018 the global economy produced 1.2% more value for every unit of energy used compared to 2017.
Improvements in primary energy intensity
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
2000-09 2010-14 2015 2016 2017 2018
Rate achievable via the IEA's Efficient World Strategy
Cost-effective opportunities exist to deliver an annual improvement rate of 3%.

6. IEA 2019. All rights reserved.
What’s behind the slowdown?
Three factors are driving the efficiency slowdown:
1. Short term factors: recent jumps in industrial activity and exceptional weather have pushed up demand
2. Broader trends: overarching structural trends are blunting the impact of technical efficiency improvements
3. Policy progress and investment are flat, and are not keeping up with the upward pressures on demand

7. IEA 2019. All rights reserved.
Growth in energy-intensive sectors drove demand
China’s steel sector consumes 4% of global final demand. Chinese steel output grew by 8% in 2017 and
6% in 2018 after 4 flat years.
Global production of crude steel, 2010-18
Sources: Adapted from World Steel (2019), Total Production of Crude Steel; IEA (2019p), World Energy Balances 2019 (database).
0
100
200
300
400
500
600
700
800
900
1 000
2010 2011 2012 2013 2014 2015 2016 2017 2018
Milliontonnes
China Rest of the world

8. IEA 2019. All rights reserved.
Short term weather patterns also influenced demand
US selected monthly temperature anomalies and change in gas demand, (2018 compared to 2016-17 average)
In the US and China, relatively cooler winter months led to higher gas use. Electricity use for air
conditioning was also higher in several regions due to hotter summers.
Source: National Oceanic and Atmospheric Administration (2019), Climate at a Glance: Global Time Series
Notes: Anomalies are based on the difference between temperatures in a given year and an average monthly temperature over the period 1910-2000.
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
- 3
- 2
- 1
0
1
2
3
4
5
April September October November
Degreescelsius
2018 monthly temperature anomaly, compared to 2016-17 average (left axis)
2018 change in US residential gas demand, compared with 2016-17 average (right axis)

9. IEA 2019. All rights reserved.
Structural change is blunting technical efficiency gains
Structural factors can be as influential on energy demand patterns as technical efficiency gains.
However, recent structural trends have worked against technical efficiency, creating more energy use.
Net energy savings from technical efficiency and structural change in major economies, 2011-18
0
1
2
3
4
5
6
7
2012 2013 2014 2015 2016 2017 2018
EJ
Structural
change
Technical
efficiency
Net
savings

10. IEA 2019. All rights reserved.
Technical efficiency isn’t keeping pace with societal trends
The technical efficiency of homes and appliances is improving, resulting in energy savings.
However, these savings are overwhelmed by wider societal factors that create more energy use.
Factors influencing residential buildings energy use, 2015-18
Population, weather
and other factors
Higher appliance ownership
Greater use of appliances
More floor area per person
- 4
- 2
0
2
4
6
Technical efficiency gains
EJ

11. IEA 2019. All rights reserved.
Transport users’ decisions are also affecting energy use
Vehicles are more technically efficient but people are driving more, shifting to more intensive modes
and larger vehicles, while travelling in smaller groups.
Factors influencing passenger transport energy use, 2015-18
0
1
2
3
4
5
6
Activity Inter-mode shift Vehicle type Occupancy Technical efficiency
EJ

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Policy progress and investment are flat, just when they need to grow
Efficiency policy progress is slow, and investments in efficiency stayed flat. Returning to a 3% annual
improvement in intensity requires annual investments to double on average, between now and 2025.
Mandatory policy coverage Investments in energy efficiency by region
0%
20%
40%
60%
80%
100%
2010 2011 2012 2013 2014 2015 2016 2017 2018
Finalenergyusecoveredbymandatory
policy
Uncovered
Covered
72.2 73.5 78.4 76.0 76.5
0
50
100
150
200
250
2014 2015 2016 2017 2018
USDbillion(2018)
Other
North
America
China
Europe

13. IEA 2019. All rights reserved.
The slowdown is a lost opportunity for the global economy
In 2018, global efficiency improvements equated to $1.6 trillion in additional productivity over 2017.
Without the slowdown, the gain could have been 2.5 times bigger.
Energy productivity bonus, actual and if energy efficiency had improved at 3%
0
1
2
3
4
5
2015 2016 2017 2018
USD(2018)trillions
Additional
bonus from 3%
energy intensity
improvement
rate
Actual energy
productivity
bonus

14. IEA 2019. All rights reserved.
Efficiency continued to deliver financial and energy security benefits
Efficiency bolstered the energy security of all fuels. Because of efficiency gains made since 2000, Japan
and China reduced their 2018 oil import bill by $20 billion each.
Efficiency gains have reduced oil imports by:
Japan
20%
South
Africa
13%
Germany
11%
China
10%
India
8%
Mexico
7%

15. IEA 2019. All rights reserved.
Efficiency lowered emissions, but not as much it could have
Energy-related emissions were lower thanks to efficiency but still continued to increase.
Reversing the recent trend is possible with cost-effective energy efficiency measures.
Energy related emissions, with and without energy efficiency improvements
22
26
30
34
38
42
2000 2005 2010 2015 2020 2025
GtCO2
22
26
30
34
38
42
2000 2005 2010 2015 2020 2025
GtCO2
Emissions
without
technical
efficiency
gains
Actual
emissions
Emissions with
efficiency
improvements
under EWS

16. IEA 2019. All rights reserved.
Digitalisation: A paradigm shift?

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Policymakers can avail of the digitalisation opportunity
If current trends continue, digital technologies could double between now and 2026. This presents risks
of higher energy demand but also new opportunities for energy efficiency.
Number of digital devices and connections, 2015-26
0
5
10
15
20
25
30
35
40
45
2018 2019 2020 2021 2022 2023 2024 2025 2026
billionsofdevices
Network communications devices Smartphones Non-smartphones TVs PCs Tablets Other

18. IEA 2019. All rights reserved.
Digitalisation: From end-use to system efficiency
Traditional efficiency policy addresses devices individually. Digitalisation, with the right policies,
enables a progression to optimising the efficiency of the whole energy system.
Smart home Smart grid

19. IEA 2019. All rights reserved.
Digitalisation requires policy action
Policy makers must engage with a range of challenging issues if the world is to harness digitalisation
for greater energy efficiency
Policy principles comprising the Readiness for Digital Energy Efficiency framework

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Renewables 2019
Market analysis and forecast from 2019 to 2024

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Solar PV drives strong rebound in renewable capacity expansion
Renewable capacity growth between 2019 and 2024 by technology
Renewables expand by 50% through 2024, with distributed PV alone growing as much as onshore wind
0 100 200 300 400 500 600 700 800
Solar PV
Onshore wind
Hydropower
Offshore wind
Bioenergy
Others
GW
Distributed PV

22. IEA 2019. All rights reserved.
Distributed PV expansion more than doubles
Distributed PV growth by country/region
Over the next five years, China’s distributed PV capacity becomes the world’s biggest, growth in the EU
resumes, and other countries such as India emerge as new markets
0 50 100 150 200 250 300 350
2007-12
2013-18
2019-24
GW
0 50 100 150 200 250 300 350
2007-12
2013-18
2019-24
GW
China EU United States Japan India Australia Other countries

23. IEA 2019. All rights reserved.
Commercial buildings and industry lead distributed PV growth
Distributed PV growth by application
Economies of scale + better match between PV output and electricity demand in commercial/industrial
applications enable higher self-consumption, saving more on electricity bills than in case of residential
0 50 100 150 200 250 300 350 400
Off-grid
Residential
Commercial
2018 2019-24

24. IEA 2019. All rights reserved.
But residential sector leads growth in the United States
Distributed PV growth by application and region (2019-24)
By 2024, China surpasses Europe to have the most distributed PV capacity installed, due to commercial
boom
0
20
40
60
80
100
120
140
China Europe Asia-Pacific North America Others
GW
Residential Commercial

25. IEA 2019. All rights reserved.
Distributed PV increasingly cheaper than retail electricity prices
Distributed PV LCOE versus residential retail electricity prices
Continuing decline of solar PV costs widens the gap with retail electricity prices, increasing distributed
PV’s economic attractiveness for private investors
0
50
100
150
200
250
300
2018 2024 2018 2024 2018 2024 2018 2024 2018 2024 2018 2024
Germany Japan Australia California
USA
China India
USD/MWh
LCOE in 2018 LCOE in 2024 Residential electriciy price

26. IEA 2019. All rights reserved.
Distributed PV policies vary by application and country
Remuneration policies for distributed solar PV for capacity growth over 2019-24
Buy-all, sell-all and net metering models are expected to drive growth in the residential sector while real-
time self-consumption models with value-based remuneration to dominate commercial applications
0%
20%
40%
60%
80%
100%
Residential Commercial
No rem. Value-based Wholesale Net metering Buy-all, sell-all
Real-time self consumption models
0%
20%
40%
60%
80%
100%

27. IEA 2019. All rights reserved.
Distributed PV’s rapid growth must be managed
Estimated annual revenue losses from distributed PV in 2024
New policies and market reforms are needed to find a balance between the opposing interests of
distributed PV owners, energy & distribution companies, and electricity consumers in general
0
10
20
30
40
50
60
70
25% 50% 75%
% of contractual self-consumption
USDbillion
VAT
Levies and
surcharges
T&D
Energy

28. IEA 2019. All rights reserved.
World Energy Outlook
Future trends from behind the meter

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No single or simple solutions to reach sustainable energy goals
Energy-related CO2 emissions and reductions in the Sustainable Development Scenario by source
A host of policies and technologies will be needed across every sector to keep climate targets within reach,
and further technology innovation will be essential to aid the pursuit of a 1.5°C stabilisation
10
20
30
40
2010 2020 2030 2040 2050
Gt CO2
Other renewables end-uses
Nuclear
Sustainable Development Scenario
Biofuels transport
Air conditioners
Cars & trucks
Heavy industry
Wind
Solar PV
Hydro
Electric vehicles
Fuel switch incl. hydrogen
Buildings
CCUS power
Current Trends
Efficiency
Renewables
Fuel switch, CCUS
and other
Aviation and shipping
Power
CCUS industry
Other renewables power
Light industry
Stated Policies Scenario
Industrial electric motors
Behavioural change
Resource efficiency

30. IEA 2019. All rights reserved.
New solar PV projects are taking off
Global power capacity by source in the Stated Policies Scenario
The power mix is being re-shaped by the rise of renewables and natural gas. In 2040, renewables account
for nearly half of total electricity generation.
Gas
Coal
Nuclear
Solar PV
Wind
Hydro
1 000
2 000
3 000
2000 2010 2020 2030 2040
GW

31. IEA 2019. All rights reserved.
With increasing variable renewables, time of use becomes critical
Daily variation in the average CO2 intensity of electricity supply increases dramatically as solar PV and wind
penetration grows. Times of lowest CO2 intensity do not necessarily correspond with highest demand
Average hourly CO2 emissions intensity of electricity supply in India and the European Union
50
100
150
200
250
200
400
600
800
1 000
0h 12h 24h
Total Flexible demandToday Stated Policies 2040
India
gCO2/kWh
150
300
450
100
200
300
0h 12h 24h
European Union
gCO2/kWh
GW GW
CO2 intensity: Electricity demand:
Daily variation in the average CO2 intensity of electricity supply increases dramatically as solar PV and wind
penetration grows. Times of lowest CO2 intensity do not necessarily correspond with highest demand

32. IEA 2019. All rights reserved.
Demand-side flexibility can unlock further savings
Tapping additional demand-side flexibility potential can further shift demand to periods of low CO2
intensity of electricity supply, reducing emissions and facilitating integration of additional renewables.
Average hourly electricity supply and demand in China in the Sustainable Development Scenario, 2040
0h 12h 24h
Electricity demand
WithenhancedDSR
500
1 000
1 500
2 000
0h 12h 24h
GW
Coal Gas Oil Nuclear Other renewables Wind Solar PV Storage Unmet demand
Withoutenhanced DSR
Electricity demand

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Targetted energy efficiency improvements can multiply benefits
The time of day when appliances or equipment is used can have a major impact on the emissions
intensity of a given use of electricity.
Average CO2 emissions intensity of electricity supply and electricity demand by end-use in India in the Sustainable
Development Scenario, 2040
50
100
150
200
0 250 500 750 1000 1250 1500 1750 2000 2250 2500 2750 3000 3250
gCO2/kWh
TWh
Residential buildings Services buildings Light industry Heavy industry Other transport Agriculture
Space cooling Appliances Heating & cooking Lighting Electric Vehicles

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Learn more
https://www.iea.org/reports/energy-efficiency-2019
https://www.iea.org/reports/renewables-2019
https://www.iea.org/reports/world-energy-outlook-2019
https://www.iea.org/commentaries/empowering-electricity-consumers-to-lower-their-carbon-footprint

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