Energy Demand Reduction as a Supply Chain: What are the Risks?

Demand Reduction is a strategy with the potential to make a significant contribution to the energy supply/demand balance. Its two major themes are improving the energy efficiency of devices (appliances and processes) and changing people’s behaviour towards using less energy. In our analysis of a nation’s energy security, we treat Demand Reduction as an additional fuel which delivers ‘negafuel’, allowing a particular level of energy services to be met at a lower volume of supply than would be possible in its absence. In common with other fuels, negafuel is delivered by a supply chain with linked stages, all encountering risks of various types. A comprehensive survey of these risks in a case study of the UK, shows that Demand Reduction belongs to a middle-ranking group of fuels in terms of overall risk. High-level risks encountered include the difficulty of assessing and delivering potential energy savings, the rate of building construction at the highest energy efficiency standards, optimism bias, changing policy and regulation, and operational failure (both of technology and policy). Assessing the risk of Demand Reduction as a supplied negafuel focuses attention on specific risks requiring mitigation, facilitating design of better policy and more effective commercial products.