Governments are interested in energy efficiency because they have to ensure energy security. Energy use in many developing countries is rising due to more industrial activity but also due to the increased use of applications such as air conditioning, domestic and industrial refrigeration. This leads to strain on the electricity grid especially during peak hours and – unless a lot of money is invested in new power plants and an updated power grid – can cause power cuts.
Supporting efficiency measures financially or introducing laws that regulate the energy consumption of applications such as minimum energy performance standards (MEPS), labelling or appliance replacement schemes can be a cost effective way for governments to avoid or postpone having to build new power stations and to balance the increased use.
Energy efficient applications can save the end-user a lot of money over the unit’s lifetime. Sometimes the initial cost of efficient units is higher than that of less efficient ones. Depending on the electricity prices the payback time of more efficient units can be as low as one year. After this period, users save money. Many countries offer subsidies for efficient units or even replace old units to help overcome the barrier of higher initial costs. For bigger industrial systems there may be grants that can be paid back through savings made by lower electricity costs.
The environment profits because less energy consumption means less CO2 emissions and can also mean less air pollution in the case when electricity is produced by burning coal or wood.