Market basket approach
The market basket approach estimates energy consumption trends for a controlled set of energy services (the market basket) with individual categories of energy services controlled relative to their share in the index. This method of indexing is a type of ‘bottom up’ approach. Limitations: lack of efficiency measures for some services and nature of measures may not be derived in actual use conditions, updated regularly and so on, and consumers may substitute comparable products if prices change’.
The comprehensive approach attempts to take all energy use into account. It starts the measurement process with the broadest available measures of energy use and demand indicators. Over time, changes in these measures reflect changes in behaviour, structure, energy efficiency and so on. The effects, unrelated to changes in energy efficiency, are then removed. This approach can be thought of as a ‘top down’ approach. It is like peeling away all the effects until energy efficiency is all that remains. Energy consumption is measured as primary energy (the amount of energy delivered to an end user adjusted to account for the energy that is lost in generation, transmission or distribution) or site energy (the amount of energy that is delivered to an end user and not adjusted for primary energy). The demand indicator is a measure of the number of energy consuming units for which energy inputs are required. The main limitations of this approach are that it is difficult to decide which energy services should be included and challenging to separate weather, structure and behavioural changes.
Divisia Index Approach
The Divisia index approach may be used to decompose time trends into different factors such as structural and intensity. The results may measure energy savings over time and uses time trend data.