Mehdi Farhadkhani - Electric Power and Energy Economics Research Department, Niroo Research Institute (NRI), Tehran, Iran.

Energy efficiency has been at the centre of attention in various jurisdictions and countries as a promising solution to the challenges posed by climate changes caused by the rise of greenhouse gas emissions, energy security, etc. Experiences regarding energy efficiency initiatives worldwide indicate that adopting market-oriented approaches to achieve energy efficiency targets is more effective than relying solely on regulations. This article intends to provide some recommendations for developing a competitive environment for Iranian energy efficiency measures by reviewing energy efficiency market models, their characteristics, and the pertaining practices and experiences across the world. For this aim, market-based instruments and energy efficiency markets are introduced. Energy efficiency market models are comparatively evaluated. Barriers regarding the development of energy efficiency markets are expounded and the challenges of launching energy efficiency markets are described. The results indicate that there is a serious exiguity of investment in providing energy efficiency initiatives in the Iranian electricity generation sector. Hence, due to electricity shortage in peak periods, it is proposed to take advantage of the Iranian capacity market potential to develop energy efficiency measures in Iran.

Energy Efficiency Markets, White Certificates, Electricity Markets, Capacity Market, Applicable Demonstration Projects