This paper proposes a new criterion to determine the cavitation initiation in centrifugal pumps. Because of the importance of saving energy, and the need for specifying a margin for the required net positive suction head (NPSHr) in all centrifugal pumps, a new criterion based on dropping three percent in efficiency (NPSHr,η) was investigated. Extensive experimental and numerical studies were undertaken to assess the effectiveness of the novel criterion from the energy-saving standpoint and its margin compared to the conventional one (NPSHr,Ht). A test bench was employed to conduct numerous experiments on five single-stage centrifugal pumps, generating comprehensive head-drop and efficiency-drop curves under part-load, designed, and over-load conditions. Additionally, simulations were carried out using CFD, employing an appropriate turbulence model and the ZGB cavitation model. Subsequently, dropping curves of total head, hydraulic efficiency, and the torque-rise curve against available NPSH were extracted. Analysis of these simulations revealed that NPSHr,η is consistently higher than NPSHr,Ht. A three-percent total head-drop diminishes the efficiency by an average of 6.04%, ranging from 4.79% to 8.92% depending on the specific case. Using NPSHr,η provides enough distance from the NPSHr,Ht without any need to specify a margin, and a huge amount of energy can be saved annually.