Efficiency improvements in the electricity sector have the potential for big savings in total power use and large reductions in GHG emissions.

• Improvements can be hindered by: lack of knowledge or skills to recognize and achieve potential savings; low priority relative to other costs for many users; significant upfront costs, long pay-back periods and the riskthat savings will not materialize; or energy cost subsidies and un-priced Iexternalities such as climate change.
• Appropriate energy and carbon pricing will incentivize energy savings. However, sometimes this might not be enough to tap the efficiency potential and additional energy efficiency policies are needed.

Energy efficiency is critical to the:  decarbonization of electricity supply, energy savings along the entire electricity value chain, and electrification offossil fuelled processes. Key measures for energy efficiency in the power sector value chain include:

• On power generation: build know-how capacity , provide a convincing cost perspective for utilizing the highest efficiency technologies for  new plants and make existing plants more  efficient.
• On the grid: build high voltage DC to increase throughput capacity for existing corridors; interconnect grids that are not mutually synchronized that enhance energy efficiency both at generation and at end use; and provide  intelligent coordination of supply and demand, as well as smart meters to facilitate energy saving by consumers.
• On the consumer side: electrification, particularly for ground transportation and heating; new energy-saving business models; sector benchmarking and capacity-building to raise efficiency to highest level; and energy and carbon pricing measures, complemented with other regulatory measures that promote the use of energy efficient appliances, such as labeling and standards.