Does the scope for interpretation risk undermining the Energy Efficiency First Principle's ambition?

The new EU's Energy Efficiency First (EE1) Principle was enshrined to level the playing field between supply-side and demand-side solutions in energy policy. It requires to verify whether the objectives of large-scale energy-related investments could be achieved more cost-effectively using energy efficiency. Relying on cost-benefit methodologies, such assessments should include wider impacts of examined measures. However, several technical parameters to carry out these assessments are not specified. In this study, we model a large number of combinations of supply- and demand-side measures in the EU residential sector. We found that across all examined approaches and countries, energy efficiency is cost-optimal on average for 69% ± 21% of buildings. Yet, we also show stark differences in cost-effectiveness of energy efficiency solutions when varying key parameters, with particularly cost perspective and discount rate having considerable effects. As well as revealing misalignments in legislative frameworks and cost-optimal levels of energy efficiency at national level, our results provide an analytical basis to further clarify and narrow down technical details of the envisaged cost-benefit methodologies: In spite of its essential role in energy policy in promoting cost-effective energy efficiency measures, strengthening assessments' technical details will be key to ensure the EE1 principle's effectiveness and ambition.