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Climate Business > Sectors  > Utility Efficiency 

IFC contributes to utility-driven efficiency measures through energy efficiency technologies and approaches, including policy reforms, better commercial management, advanced metering systems, grid automation, and many others.

Utility Efficiency


Enhanced resource efficiency is considered to be the single largest win-win opportunity to reduce global GHG emissions. Much resource potential is simply wasted, and resource savings options are available across different sectors - ranging from agriculture to households to industry. Resource efficiency opportunities exist across the entire chain of modern energy and water production, distribution, and consumption. Disparities in energy and water intensities between the developing and industrialized countries are observed in both the supply and demand side and across various sectors and subsectors.  However, resource efficiency investments in developing countries are subject to market failures and they face technical, financial, institutional, and policy barriers.


Utility-Driven Energy Efficiency 


Utility Driven Energy Efficiency encompasses a great variety of interventions both on the supply and demand sides. On the supply side, energy efficiency can be achieved by producing and delivering power more effectively. For example, existing coal-fired thermal power stations in China or India on average use 10–20 percent more fuel per kWh than a comparable plant in the United States or Germany. There is room for significant improvements. The same applies to district heating in many utilities in Eastern Europe. In many poor countries, the utility company is often dysfunctional, theft is rampant and technical losses are very high. Energy efficiency can be achieved by adequate expansion of the network, automation, improvement in commercial procedures, and metering technologies.


On the demand side, utilities oftentimes play a key role in going “beyond the meter” by helping end-users achieve higher efficiency levels on the consumption side. This has been the case of multiple programs on replacement of millions of inefficient incandescent lamps, implemented across the World Bank Group, leveraging on the efficient lighting knowledge and experience initially developed within IFC. Utility support for households may also include rebates for energy efficient appliance such as fridges, stoves, water heaters and other pieces of equipment.


Energy efficiency is not only how much energy is consumed (MWh), but where and when it is consumed, to avoid coincident peak power, thus overloading the grid and making service less reliable. In that sense, Energy Efficiency also includes utility programs on demand side management and load control.


The success of Utility-Driven Energy Efficiency Programs fundamentally depend a on the enabling policy and regulatory framework, including, inter alia, ambitious government objectives, funding of EE programs,  incentives to utilities, tariff levels, time of use metering, and load  response, just to name a few.


Utility-Driven Water and Wastewater Efficiency


Improving the efficiency of water utilities helps alleviate government fiscal constraints while also lessening the upward pressure on water and wastewater tariffs. On a national or global level, improvements reduce the pressure of adding new resource generation capacity (both power and water) and reduces the emissions of local and global pollutants. Financially viable resource savings depend on the vintage and conditions of facilities, technologies used, effective energy prices, and other factors affecting the technical and financial performances of individual utilities. Despite these challenges, there is evidence that significant energy savings at WWUs in developing countries can be attained cost effectively.


IFC's Involvement


IFC contribution to scaling up both supply-side and demand-side energy comes through a variety of investment, technical assistance, and analytical advisory activities. These support the development of many well-tested energy efficiency technologies and approaches, including policy reforms aiming at rational use pricing), better commercial management, advanced metering systems, grid automation, and many others.


The implementation of Utility-Driven programs oftentimes involves the support from Energy Service Companies (ESCOs). For example, South Africa introduced an incentive to energy efficiency based on a Standard Offer model. This has attracted great interest from ESCOs in identifying, preparing and submitting numerous EE projects to ESKOM.


Project examples:


IFC has also been recently involved in supporting companies develop innovative products or business models which will further enhance utility driven energy efficiency. For example, some of the projects under consideration include:


  • An IT and communication company in India aiming at improving the level of automation in the operation of the power system, from the power plant to the end-user;
  • A service company in Africa interested in developing a new business model to provide load management services to the local utility;
  • A company in Asia working to improve the combustion efficiency of power plants, by using a new technology of fuel emulsification;
  • An ESCO in Latin America interested in developing a new business model with the power utility to replace inefficient street lighting and share the energy efficiency savings with the municipality.


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