Efficiency stimulus will lower energy bills, says federal report

By Elisa Wood

April 30, 2009

Depending on your position, the federal stimulus money is either a jobs builder or a national budget buster. The Energy Information Administration offers another take. In a recent analysis, the EIA finds that stimulus money should reduce what consumers and businesses pay to heat, cool and light buildings.

The federal agency this month updated its annual energy outlook to compare how energy costs would fare with and without the American Recovery and Reinvestment Act. http://www.eia.doe.gov/oiaf/servicerpt/stimulus/index.html.

The stimulus package delivers about $12.5 billion for energy efficiency improvements in homes and buildings. Those upgrades should cut homeowner bills an average of $64 annually (in real 2007 dollars) over the next two decades. Homeowners will reduce use of heat 1.7%, and air conditioning 3.4% by 2030, the report says. Likewise, commercial buildings should see energy costs drop by an average of $5.7 billion, or 2.7% annually between 2010 and 2030. In all, the report pegs cost cuts for home and building owners in 2020 at $13 billion, or 2.6%, and in 2030 at $21 billion, or 3%.

In addition, expect to see a lot more solar panels and small wind turbines powering stores and offices very soon as a result of significant tax credits and loan guarantees. The stimulus funds should lead to 121 MW more of solar units on commercial buildings by 2011, a 15% jump, and 120 MW in distributed wind turbines by 2016, a 527% jump.

The EIA does not typically update its annual outlook after it is published. But the federal agency decided to do so this year because it was clear that the stimulus money, approved in February, would significantly alter its 2009 outlook, which was released at the end of last year. Indeed, the information may help inform national policy as Congress debates ways to avert higher energy costs under new programs being contemplated, such as carbon cap-and-trade and a renewable energy standard.

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

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.

The 14 best states for energy efficiency

By Elisa Wood and Reid Smith

April 16, 2009

Once a “token gesture,” energy efficiency is now increasingly becoming a “first fuel” — the resource utilities seek before any other, even before renewable energy or other in-favor generation sources.

So says the report, “Meeting Aggressive New State Goals for Utility-Sector Energy Efficiency: Examining Key Factors Associated with High Savings,” issued today by the American Council for an Energy-Efficient Economy.

Chances are you are experiencing the benefits of efficiency – or are about to do so – if you live in one of 14 states the report identifies as leaders: California, Massachusetts, Connecticut, Vermont, Wisconsin, New York, Oregon, Minnesota, New Jersey, Washington, Texas, Iowa, Rhode Island, and Nevada.

These states show the biggest gains from efficiency. They also spend the most on programs and have the greatest legislative support.

What else makes the states stand out?

*Almost all offer direct financial incentives for delivering utility energy efficiency programs well.

*Eight of the top 14 states have an energy efficiency resource standard (EERS), which requires they meet a certain percentage of energy demand through efficiency. Typically, the requirement ramps up gradually over several years. Such standards do not deliver a lot of savings yet, but will in later years as requirements increase.

The report also looked at which efficiency measures generate the most savings. Lighting retrofits top the list, accounting for 63% to 92% of all residential energy savings and 55% to 69% of commercial and industrial savings.

The winning states still have a long way to go. Few report energy efficiency savings of 1.5% to 2.0% per year or more – the amount targeted by many state policies. Vermont is an exception with energy savings close to 2.0% of total electricity sales. What can speed delivery of results? There is no magic bullet, but the report recommends shareholder incentives, decoupling and support from top utility management.

The report is available for free download at http://www.aceee.org/

Making efficiency easy with on-bill financing

By Elisa Wood

April 9, 2009

Even if hostile governments corner all of the oil, the polar caps melt, and Oprah, herself, says, “It is time to save energy!” consumers will not pursue efficiency in a big way unless it is easy and painless.

That is why a growing number of state regulators are taking a close look at a concept known as on-bill financing. When a customer upgrades a heating system, insulates walls, or undertakes some other efficiency measure, the utility pays for it and then recoups the cost gradually over time in the customer’s monthly energy bill. The approach spares the customer the sticker shock of springing for the improvement all at once. It also gives the customer the opportunity to reduce energy use, which lowers heat or electricity charges and offsets at least some of monthly cost of the efficiency installation.

Utilities offer on-bill payment in two different ways: through loans or tariffs. A loan is assigned directly to the customer who must pay it back even if he moves. In contrast, the tariff approach links the charge to the meter, meaning that whoever lives at the house or owns the business pays the fee. If the customer moves, the new occupant picks up the payment.

The tariff approach allows for a long payment term and therefore lower monthly costs. “It also encourages renters to participate in the program because they only pay for energy saving measures while they benefit from them, and remain in the premises,” says Paying for Energy Upgrades through Utility Bills, a recent brief by the Alliance to Save Energy.

On-bill financing makes a lot of sense, but utilities are not jumping on board quickly. Many see the approach as experimental, given that it has yet to be tested widely. Further, while on-bill financing makes life easier for the customer, it complicates billing for the utility, which must modify its systems, said the ASE brief.

Connecticut and California have the largest on-bill programs. ASE says to keep an eye on New Hampshire, which has the greatest experience with the tariff-based systems. Hawaii and Kansas also have programs underway and may soon report results. Michigan appears to be heading toward adopting an on-bill program. Massachusetts and Rhode Island have used the approach for almost two decades.

More details are available at http://ase.org/content/article/detail/5476.

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

Electricity still hot

By Elisa Wood

April 2, 2009

Latest federal projections reveal that our passion isn’t cooling for large air-conditioned homes and electric gadgets.

US households have increased their electricity use by 23% over the past decade, and consumption will grow another 20% by 2030, according Annual Energy Outlook 2009, released March 31 by the Energy Information Administration. http://www.eia.doe.gov/oiaf/aeo/index.html?featureclicked=1&

The report sees air conditioning use rising 24%, as the population migrates to the South and West. The number of refrigerators, washers and dryers grows as we add more houses; home electronics continue to “proliferate,” EIA says.

It is not just households gobbling up the power. We go to hotels, restaurants, stores, and movie theaters more. And they require more computers and other electronic equipment to serve us. In addition, as the population ages, it needs more electric medical and monitoring equipment. So power use in commercial buildings grows an average of 1.4% per year to 2030.

Of course, the economic recession is likely to dampen electricity consumption somewhat for now. But the report attempts to look “beyond current economic and financial woes and focus on factors that drive U.S. energy markets in the longer term.”

Energy efficiency is a bit like computer software created to negate viruses. The more viruses, the more updates to the software we need. So as electricity use grows, the efficiency industry is likely to find growing demand for its product — technology that allows us to use more and more electronic devices, but less and less electricity.

The report points out that best available efficiency technology cuts energy use without reducing service. By installing compact fluorescent bulbs, solid-state lighting, and condensing gas furnaces, we can reduce home energy consumption 29% over a business-as-usual scenario. Concern about energy prices, power plant emissions and energy independence will drive demand for these products.

The bottom line? Electricity will remain hot, and efficiency may be even hotter.

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