Even rebels like efficiency

By Elisa Wood

April 23, 2009

Clean energy advocates favor a federal requirement that a certain amount of our electricity come from green sources, a concept known as a portfolio standard. No year in history has offered more promise for the policy. President Obama is pushing for at least 10% of our electricity to come from renewable sources by 2012, and 25% by 2025. Congressional Democrats have obliged by putting several proposals on the table.

But one corner of the nation has never liked the idea of national renewable energy requirements: the Southeast. Cheap nuclear and coal-fired generation dominates the region’s power supply, and its officials fear that renewable energy will drive up electricity prices and drive away manufacturers. (See my upcoming article in the May/June issue of Renewable Energy World magazine.)

Enter energy efficiency, an idea that seems palatable to the Southeast, and could serve as a negotiating point to bring southern utilities and lawmakers around to the idea of a national standard. If enough of the standard can be met through efficiency, the Southeast is more likely to accept it, since efficiency is seen as a way to cut energy costs, rather than raise them.

Indeed, the leading portfolio standard on the table contains an efficiency component. Authored by Rep. Henry Waxman, a California Democrat, and Ed Markey, a Massachusetts Democrat, the bill calls for utilities to reduce electricity demand 15% and natural gas demand 10% by 2020. The proposal creates tremendous energy savings — more than the entire current energy use of the state of California — according to the American Council for an Energy-Efficient Economy. http://www.aceee.org/press/0904analysis.htm

The push for such legislation comes as electricity prices fall, not typically a good time to convince the American public of efficiency’s merits. But watch out. Prices may not stay low for long, according to Calvert Investments. In a briefing last week, the investment firm said it sees an economic recovery beginning in 2010 that brings with it higher prices and an improved position for clean energy technologies. Greater use of efficiency may look like a better and better option for those–like the southeastern states–struggling to keep electricity prices low.

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