Simply put, energy efficiency means using less energy to get the same job done - and in the process, cutting energy bills and reducing pollution. Declines in energy intensity are a proxy for efficiency improvements, provided a) energy intensity is represented at an appropriate level of disaggregation to provide meaningful interpretation, and b) other explanatory and behavioral factors are isolated and accounted for.

51 Plug-in hybrids also have increased battery capacity, which makes it possible to drive for limited distances without burning any gasoline; in this case, energy efficiency definition physics is dictated by whatever process (such as coal-burning, hydroelectric, or renewable source) created the power.

Solar panels convert solar energy into usable electricity through a process known as the photovoltaic effect Incoming sunlight strikes a semiconductor material (typically silicon) in solar cells and knocks electrons loose, setting them in motion and generating an electric current that can be captured with wiring.

Similarly, investing in energy efficiency is almost always cheaper and cleaner for utilities than new generation resources—or even the fuel costs of existing generation—but such investments lead to reduced earnings potential under the traditional utility business model.