Overestimation of actual savings in supplier obligation schemes

The Energy Efficiency Directive 2012/27/EU demands for energy efficiency obligation schemes at the Member state level. Energy efficiency obligations schemes are already implemented in some European countries. The designs of these obligation schemes differ significantly. An evaluation was conducted by Mundaca and Neij (2007) and the latest comprehensive report was published by Bertoldi et al. (2010). In most of the existing European schemes methods of measurement are arbitrary, i.e. parties implementing energy efficiency improvement (EEI) measures may use, first and foremost, either a standardised/deemed or a measuring/monitoring approach. This paper looks at the bargaining power of suppliers and the incentives they underlie in connection with the definition and the application of standardised saving values. Methods applied include simple mathematics and assumptions based on literature review and expert interviews conducted in order to evaluate existing European energy efficiency obligation schemes. Moreover, the total effectiveness of energy efficiency obligation schemes in general is assessed based on a stage-to-stage model comparing the individual steps from policy objectives to policy outcomes. It is argued that, in practice, real savings are probably smaller than calculated savings (overestimation of actual savings) although the applied methods of measurement are eligible and enforced in the obligation scheme. Interviews suggest that the overestimation is tolerated in order to minimise administration costs. Thus, other options of compensation are proposed.