Costs of demand-side solutions for decision-making

Predominant global assessments indicate that demand-side solutions could reduce GHG emissions by 40%–70% by 2050, but little is known about the costs of implementing them at scale. This is a critical knowledge gap: cost is a key factor in policy and investment decisions. Demand-side solutions are becoming increasingly crucial amid rising global energy prices, but in the absence of comparable cost metrics, they are rarely evaluated alongside supply-side resources. This paper addresses this gap by presenting a method for evaluating the costs of demand-side solutions. It includes a set of energy-service-specific metrics across the building, transportation, food, and industrial sectors, along with quantitative estimates and comparisons with supply-side solutions. Using a consistent framework, we analyzed case studies implemented across various global regions and estimated their potential for energy reductions along with associated costs and CO2 emissions mitigation. Compared with baselines, we find that adopters of alternative demand-side solutions can achieve the same energy-service level while realizing lifetime cost savings of up to 94% with certain solutions. The building sector’s potential savings in energy use, emissions, and costs range from 10% to 94%; the industry sector can reach 60% at the plant level, depending on plant sizes and measures. We also observed potential emission savings, but with cost increases in the transportation and food sectors, both of which are highly context dependent. Compared with the benchmark costs of supply-side solutions, almost 98% of the selected demand-side solutions in this study are cheaper than the 2022 wholesale peak electricity price in Europe, making them valuable resilience hedges and no-regret options. A comprehensive evaluation of potential costs and savings for demand-side energy solutions, along with a comparison with supply-side options, helps bridge the knowledge gap for informed decision-making and supports climate action among policymakers, businesses, and consumers.