Electricity use falls because of efficiency

By Elisa Wood

October 30, 2008

Electricity sales can gauge the national economic health. An ailing economy uses less electricity because is produces fewer goods and services. Sometimes, however, electricity sales fall for a good reason – efficiency.

Such is the case in the United States, according to a recent statistics released by the North American Electric Reliability Corporation (NERC). The organization annually assesses how well the grid is likely to perform over the next several years.

The 300-page report has a lot to say, but this headline jumped out at us: Demand Response Projected to Offset Nearly 80% of U.S. Peak Demand Growth in 2016; Significant Growth in Energy Efficiency Projected.

NERC forecasts that North America will offset 34,000 MW through demand response – a kind of efficiency program where customers are paid to reduce energy use when the grid is under strain. In addition, conventional energy efficiency programs are expected to cut electricity use by 11,000 MW. As a result, total electric demand will drop 3.3%, NERC said.

Demand response will become “a critical resource” to help us keep the lights on over the next ten years, according to the report. Our economy is becoming increasingly electrified, but we are unwilling to build more energy infrastructure. “Many coal plants have been deferred or cancelled, nuclear plants are becoming more and more expensive, and transmission lines increasingly difficult to site,” NERC said. Demand response will help bridge the gap between our electricity needs and our power resources.

Further, demand response is a good “dance partner” for wind energy, a resource that NERC forecasts will grow 750% by 2017. Wind farms offer a clean source of energy. But they only create electricity when the wind blows. Demand response can serve as wind’s partner during these times, reducing energy use to make up for the loss and averting a greater ramp-up of fossil fuel generators.

Our demand for electricity will still grow over the next several years, as our use of computers, cell phones and other electronic devices increases — but not as much as we had thought. Last year, NERC forecasted a 17.7% growth in summer peak demand; this year it puts the figure at 16.6%. The organization attributes much of the change to efficiency. We’ve figured out how to do more with less, a good economic move.

Visit Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets podcast and newsletter.

Toasting Pop-Tarts cheap: How electricity may solve our energy woes

By Elisa Wood

October 23, 2008

We tend to talk about electricity in terms of its problems — it degrades the environment, costs too much and messes up scenic views. But the Manhattan Institute’s Peter Huber takes a different stand in his new report “The Million-Volt Answer to Oil.”

Huber says electric power may be the cheap, efficient resource we seek to give America energy independence. He divides energy into two camps: electric power and transportation fuel. Our energy woes stem from our dependence on oil for transportation. To get over $4 per gallon gas, he says, we need to connect our transportation fleet and home heating systems to cheap 4 cents/kWh electricity.

“We spend roughly half as much on electricity—about $350 billion a year—as we’re currently spending on $100-a-barrel oil, and electrically powered systems do more, faster and better, than oil-fired alternatives,” he says in the report.

Huber’s theory opens the door wide for use of plug-in hybrid cars and electric heat pumps. “If we could deliver electricity straight to electric motors connected to our wheels, it would deliver miles at a price that most current car engines could match only on gasoline priced under a dollar a gallon. Delivered to our homes at off-peak prices, electrical heat would cost homeowners a lot less than $4-a-gallon heating oil,” he says.

Of course, electricity doesn’t cost 4/kWh cents everywhere. Some places it is 19 cents/kWh. And no matter where you live, the price goes up and down dramatically all day, depending on how many customers use power at any given time. When the East Coast is winding down its work day and its electricity prices fall, the West Coast is still going full tilt and its electricity prices rise. The trick is to transmit the cheap power quickly from place to place, and keep it rolling over four time zones by building a new and sophisticated high-voltage transmission backbone that can handle such movement.

“A kilowatt-hour of electricity toasts as many Pop-Tarts in Palo Alto as it does in Poughkeepsie; an efficient, integrated market with cheap, long-distance transmission available would charge everyone the same price for toasting them,” he says.

The technology exists, and it is not terribly pricey, to create such a transmission system. Huber estimates that building a 21,000-mile grid to network all major sources electricity, and push wind power from the Midwest to the coasts, would add roughly 0.3 cents/kWh to the current 9-cent/kWh average retail price of electricity.

He points out that a single 765-kV transmission line can move “almost 1 percent (4 GW) of the total average power generation of the entire United States, or 0.5 percent of the power that Americans collectively consume during the most power-hungry minute of the year.”

With such a transmission system in place, developers could build power plants and wind farms in rural expanses, rather than the crowded coasts where people object to the intrusion on their space.

Last, he points out that very few US power plants now use imported oil as a fuel, and instead use domestic sources, increasingly renewable. “With electricity, America controls its own destiny,” he says.

As Huber tells it, electricity is not part of the energy problem, but is the overlooked solution.

See the report at http://www.manhattan-institute.org/html/eper_03.htm.

Visit Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets podcast and newsletter.

Clean Energy Prospers: Toto, We’re Not on Wall Street Anymore

By Elisa Wood

October 17, 2008

Wall Street is in the middle of an earthquake. Main Street is shaking from the tremors. Easy Street has been wiped off the map. Is there a safe haven from this economic meltdown? Green Street looks pretty appealing.

Green Street is a term used increasingly to describe businesses that offer energy efficiency, solar, wind and other forms of clean power. While the global economy braces for cost cuts and job loss, Green Street is forecasting profit and massive job creation.

Green Street has been prosperous for while, but its fortunes rose considerably October 3 when President Bush signed into law the $700 billion financial rescue bill.

By way of a series of odd events, the recovery bill included tax credits for clean energy. The credits have nothing to do with the financial rescue, but were attached to the bill at the last minute. Clean energy advocates had been trying to convince Congress to pass the tax incentives for 18 months. Some of the credits had expired; others were about to end; and still others were new to the bill. Before the credits were attached to the recovery bill, clean energy lobbyists in Washington had all but given up on any chance of their passage this year.

What does the bill offer the efficiency industry? Homeowners once again receive tax credits for making a range of efficiency upgrades to their houses. The new law also gives a boost to green commercial buildings, efficient appliances, smart grid technologies and plug-in hybrids. Equally important, it recognizes the efficiency of combined heat and power by offering a new 10% tax credit for small projects. For specifics about the credits see http://www.ase.org/content/article/detail/2654.

A solar conference held this week in San Diego underscored the financial health of Green Street. More than 20,000 people attended. Solar companies described plans for a dramatic increase in rooftop installations, mega solar concentrated power in the southwestern deserts, and manufacturing facilities to equip all of the projects. In all, the solar industry, alone, expects to create nearly a half million jobs as a result of the clean energy tax credits.

This is more good news for energy efficiency, since it is closely aligned with the solar industry. A mantra throughout the solar industry is that efficiency is the first fuel; that is, it is important to first find all cost-effective efficiency in a building, then add solar. In fact, some solar installers help customers finance solar installations with the money they save by cutting back on energy use.

Several factors conspired to cause today’s financial crisis. High oil prices certainly contributed. Energy, the dirty kind, helped get us into this, and energy, the clean kind, will help get us out.

Visit Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets podcast and newsletter.

The Ghost of High Energy Prices Past

By Elisa Wood

Oct. 9, 2008

Halloween is still a few weeks away, but a ghost is already making an appearance, this one floating over the presidential campaigns. His name is Conservation.

I first heard the specter of sacrifice evoked by Sen. Barack Obama in the Oct. 7 debate. The next day Gov. Sarah Palin repeated the term several times in a television interview. Conservation, she said, is part of Senator John McCain’s “all-of-the-above” energy policy.

Wait a minute. Isn’t this the Jimmy Carter approach – the turn-down-the thermostat and put on the sweater – that proved fruitless?

I’m not saying conservation is a bad idea; I am saying it is ineffective over the long term. Americans will conserve only as long as money is tight. Once energy prices drop or personal income rises, the house heats up again.

For that reason, today’s energy efficiency movement has distanced itself from the idea of self sacrifice. Instead, advocates define energy efficiency as doing more with less, not doing less. While conservation is a 1970s notion, efficiency is a child of the Internet age, a series of advanced technologies that allow our factories, data centers, homes and appliances to function better while using less energy (with some good old-fashioned insulation thrown in.)

I can only guess that the candidates are using the term “conservation” freely again because polls indicate the American consumer is ready for a period of self-sacrifice – not surprising given all of the bad economic news that seems to stem from a certain amount of financial hubris. But what the polls giveth the polls taketh away. Energy policy based on conservation offers us a fleeting green alternative.

Better that we stay with the efficiency theme.

To that end, it was encouraging this week to see the American Council for an Energy-Efficient Economy announced state progress in pursuing efficiency policies. (See ACEEE’s “2008 State Energy Efficiency Scorecard” http://aceee.org/pubs/e086.pdf?CFID=17536&CFTOKEN=51038700.) State policy is important because states invest two to three times more money than the federal government in efficiency.

Moreover, efficiency frees up money for investment in other clean energy projects. As ACEEE points out, “Energy efficiency is the only resource that can help states actually reduce energy consumption to combat rising energy demand and create a hedge against skyrocketing energy prices – making efficiency the ‘first fuel’ states can use to balance their energy portfolios.”

Thus, states, utilities and businesses can use money saved through efficiency to build renewable generation and a smart grid. These are solid things that keep saving energy even after the ghosts of Halloween (and election seasons) vanish.

Visit Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets podcast and newsletter.

Energy Tax Credits and the Devil in Congress

By Elisa Wood

October 2, 2008

It is difficult to get beyond the hyperbole of the election season to uncover a candidate’s true position. The non-partisan Pew Center on Global Climate Change performed a service with a recently released just-the-facts guide on the energy platforms of the presidential contenders http://www.pewclimate.org/voter-guide.

What is remarkable about this year’s election, Pew says, is that “both major party candidates for the presidency are deeply concerned about global climate change and publicly support a mandatory, economy-wide cap-and-trade system for reducing the U.S. greenhouse gas (GHG) emissions.”

What does this mean in a practical sense for energy efficiency markets? “Both candidates recognize that improving energy efficiency across the economy can be a powerful tool for reducing GHG emissions,” Pew says.

Sen. John McCain says he would create higher efficiency standards for new or retrofitted buildings leased or purchased by the federal government, the largest energy consumer in the world. McCain also promotes investments to upgrade and smarten the national electricity grid.

Sen. Barrack Obama would set national standards to reduce demand by 15%; make new buildings carbon-neutral or zero-emission by 2030; improve new building efficiency by 50% and existing building efficiency by 25%; improve efficiency in all new federal buildings by 40%; and make federal buildings zero-emitting by 2025.

The policies of both candidates sound positive. Of course, the devil is always in the details.

The devil also appears to be in Congress. One wonders if these policies would make it through Congress, given lawmakers’ treatment this year of the all-important tax incentives for efficiency and clean energy. Most lawmakers claim to support the tax credits, many of which expire at the end of this year or already have expired. Yet Congress wrangled all year over the incentives without extending them, mostly for reasons that had little to do with the credits and their merits. Now, at the 11th hour, just before recessing, the Senate has approved the ‘tax-extenders bill’ as part of the credit-crisis bail-out package. The House reportedly will take up the bill Friday, Oct. 3.

Long-time energy lobbyist Scott Sklar has watched Congress’ shenanigans from a front row seat and explains why he is “hopping mad” about treatment of the tax incentives in an insightful Renewable Energy Weekly column, “Fuming in D.C.” http://www.renewableenergyworld.com/rea/news/recolumnists/story?id=53711

Why is the tax-extender bill important to energy efficiency markets? The Senate bill includes tax incentives for consumers and building owners who install energy-efficient products, builders of energy-efficient new homes and commercial buildings, and manufacturers of certain energy-efficient appliances, according to the Alliance to Save Energy. The bill also includes incentives for combined heat and power.

“Congress is preparing to pass one of the largest pieces of legislation in a century to bail out Wall Street and, with that in mind, it is unthinkable that Congress would adjourn before providing critical tax incentives to ‘Main Street’ to help consumers facing a lagging economy and growing energy costs and the nascent clean energy industry, so that it can create new jobs and help to build a new ‘green’ economy,” said Kateri Callahan, ASE president.

Unthinkable, yes. Improbable? We’ll know after Friday.

Visit energy writer Lisa Wood and pick up her free Energy Efficiency Markets newsletter and podcast by clicking on www.realenergywriters.com.