Northeast US a smart energy testing ground

By Elisa Wood

August 19, 2010

Ben Franklin’s saying, “Out of adversity comes opportunity” seems to characterize the energy sector in US Northeast. Electricity rates are among the nation’s highest. Population density leaves scant room for new power plants and transmission lines. And the region has little indigenous generation fuel.

So what’s the good news?

“This is why a very large and well spent push for energy efficiency and energy conservation has taken place in the Northeast,” says Ron Tabroff member of the Institute of Electrical and Electronics Engineers (IEEE) and former chairman of its Power & Energy Society, Boston Chapter.

In fact, the Northeastern states make up a large portion of a thriving East Coast energy efficiency market, spurred by about $8.6 billion in incentives being distributed by utilities and state and local governments, according to “Energy Efficiency Incentives for Businesses 2010: Eastern States” by RealEnergyWriters.http://www.realwriters.net/rew/rtlnkpr.htm

IEEE is an organization known for its love of technological advancement – it publishes nearly a third of the world’s technical literature in electrical engineering, computer science and electronics. So it is little surprise that IEEE has a keen eye on the emerging smart grid and the new openings it creates for energy efficiency.

Real-time meters, appliances that ‘talk’ to the grid, and other smart applications offer both macro and micro remedies to the kind of strain and high prices faced by the Northeast electric grid, Tabroff says.

On the macro level, if these devices curb peak usage of electricity, they should result in less need to build and operate expensive peaking generators. That means less pressure to raise electricity rates, now up to 19.4 cents/kWh for households in Connecticut, the Northeast state with the highest rates and second in the nation to only Hawaii.

On the micro level, the consumer will have the ability for the first time to purchase electricity on sale. Digital displays placed in the home will reveal the ups and downs in electricity pricing over the course of the day. You can choose to do your laundry when it’s cheap, or cut back on air conditioning when electricity prices are high.

Smart meters are now making their way into Northeast households through pilot programs. A big question to be answered is whether or not people will take the time in their busy lives to act as personal electricity managers. Tabroff is confident consumers will as they “make the link between these devices and their electricity bill.”

And if they do not, no worries. Down the road, technology geeks are figuring out how to solve that one too. The next wave of smart electrical devices will act as our personal electricity shoppers. These include refrigerators programmed to defrost when electricity prices are cheap and dishwashers instructed not to turn on until the electric grid offers up a good deal.

The opportunity is great for engineers and energy service companies in the Northeast, where support is strong for new smart energy programs . The large investment the region is making into these technologies make it a testing ground. It’s a region for the world to keep an eye on.

Visit www.realenergywriters.com to pick up a free Energy Efficiency Markets podcast and newsletter.

Smartest smart meter: The gasoline pump?

By Elisa Wood

March 18, 2010

Americans do many things well. These things do not include sacrifice of creature comforts.

So it came as a surprise to see US Rep. Brian Baird (D-Wash) suggest we can avert 20% of our energy use if we take short “military showers” over 20 weeks.http://content.usatoday.com/communities/greenhouse/post/2010/03/can-behavioral-changes-save-enough-energy-to-save-earth/1. Who the heck is going to do that?

We already know from Jimmy Carter-era energy policies that lecturing Americans does not result in sustained conservation. So what’s Baird getting at? A clinical psychologist, he is among a growing group looking at behavioral triggers that will encourage us to consume energy more intelligently.

To buy prudently, consumers need to know

1. What a product costs
2. How much of the product they need

Sounds obvious, but it’s often not how we’re sold electricity.

Imagine if you had never been in a supermarket, and all of your food was delivered on demand via a conveyor belt into your house. You pay for the food just once a month and have no idea of the cost for each item you eat. When your bill shoots up, you do not know why. Having never done any grocery shopping, you’re unaware of the high price of the many pints of out-of-season, raspberries you consumed. So you buy the raspberries again and again.

We buy electricity much the same way. Power costs vary throughout the day, but we are unaware of any variation because of the way we consume and pay.

However, the marriage of energy, information technology and behavioral science are changing the way we buy electricity and other forms of energy. Several new devices help us see price, consumptions and alternatives. These include real-time traffic maps that helps us avoid routes where the car will idle and eat up gasoline, Quicken-type software to track our energy costs, smart meters and other new gadgets that lift the cloak from energy pricing. In the March 16 article, “Microsoft Puts Its Weight Behind IT’s Energy-Saving Potential,”http://www.greenercomputing.com/blog/2010/03/16/microsoft-puts-weight-behind-it-energy-saving GreenerComputing’s Marc Gunther discusses some of these technologies and the “democratization of information” they create to end the blind way we now shop for energy.

In the vein of making the consumer more aware, the Natural Resources Defense Council this week published a white paper that shows what drivers suffer most when gasoline prices rise. The paper comes as some analysts predict prices will exceed $3/gallon again this spring.

The economic impact will differ by state based on per capita gasoline use, according to the NRDC paper. http://docs.nrdc.org/energy/files/ene_10031601a.pdf

Gasoline hikes hurt drivers most in these states:

• Mississippi
• Montana
• Louisiana
• Oklahoma
• South Carolina
• Kentucky
• Texas
• Maine
• Georgia
• Idaho

Price spikes cause the least economic harm in:

• Florida
• Washington
• Pennsylvania
• New Jersey
• Colorado
• New Hampshire
• Maryland
• Massachusetts
• New York
• Connecticut

Gasoline prices are more apparent than electricity prices to the consumer, since we see the cost each time we fill up at the pump. Indeed we see them blazing from lit signs along the roadway. We cannot miss each penny rise.

Perhaps that is why gasoline consumption drops when prices rise. People modify their behavior. Chances are if you spotted your state in the most vulnerable list, you’re already thinking of sacrifices or changes you will make this spring if the prices go up. It may be that behavioral psychologists need look no further than their neighborhood gas station for ideas on how to get people to take military showers. A price billboard in every home just might do the trick.

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

Efficiency is cheap, but will it sell?

By Elisa Wood

September 24, 2009

Expect to see this number a lot in energy discussions over the next few years: 2.5 cents/kWh. It is the average cost of energy efficiency, a figure pegged this week in a new report by the American Council for an Energy Efficient Economy. http://www.aceee.org/press/u092pr.htm.

This number is big news because it is so small. As a resource, energy efficiency beats out all conventional power sources on price. (See chart below.) Moreover, it’s a price that has been dropping. Five years ago energy efficiency cost 3 cents/kWh.

But just because something is cheap, doesn’t mean people will buy it. How much energy efficiency will make it into the nation’s energy shopping cart?

Efficiency boomed in the early 1990s, but then busted later in the decade when deregulation allowed many utilities to shed their efficiency programs. It is resurging now, part of push by state and federal policy makers to green and ‘smarten’ energy supply.

Most utilities do not make money on efficiency, and this is part of the reason it busted in the late 1990s. Perhaps as important, efficiency’s branding was off. It was seen as an extra, a nicety to pursue out of goodwill when a utility or state had some extra money.

ACEEE and other efficiency advocates are trying to reshape the image. They refer to efficiency as a fuel – just like wind, sun, coal, natural gas, oil. And they want efficiency to be the ‘first fuel.’ This means that when a utility is planning its energy supply, it first applies as much efficiency as is cost effective and plausible, before it builds more expensive new power. Some eastern states are already using this planning concept. In addition, many states have set specific energy efficiency goals, some very aggressive.

That is why ACEEE’s 2.5 cents/kWh becomes so important. It is a kind of marker against which other resources will find themselves competing more and more in policy planning.

Meanwhile, an increasing number of states are decoupling utility profits from kilowatthour sales or instituting other financial incentives that inspire utility support for efficiency.

Of course, our economy cannot prosper on efficiency alone, but many studies indicate we still have a lot of waste in the system. So as an energy planner, if you were confronted with increased demand – and are not dealing with policy or system issues that require generation or transmission as a solution – which of these would you pursue first?

Resource	Cost
Energy Efficiency	1.6 cents/kWh to 3.3 cents/kWh
Pulverized coal	7 cents/kWh to 14 cents/kWh
Combined cycle natural gas	7 cents/kWh to 10 cents/kWh
Wind energy	4 cents/kWh to 9 cents/kWh

Credit: Cost figures from ACEEE, “Saving Energy Cost Effectively: A National Review of the Cost of Energy Saved through Utility Sector Energy Efficiency Programs,” September 2009, http://www.aceee.org/press/u092pr.htm.

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

Reducing Hospital Costs through Efficiency

By Elisa Wood

August 7, 2008

The energy and healthcare industries share a mutual woe. Both are experiencing meteoric price increases.

The Alliance to Save Energy projects a household’s energy costs will be about $6,300 this year, representing about 13% of median pre-tax earnings. Meanwhile, the National Coalition on Health Care reports that medical costs rose 6.9%— two times the rate of inflation last year with total spending of $2.3 trillion or $7,600 per person. http://www.nchc.org/facts/cost.shtml

Fortunately, the U.S. Department of Energy has launched a program that brings energy efficiency to hospitals to drive down energy costs and reduce some of the financial pressure on the healthcare industry. http://www1.eere.energy.gov/buildings/energysmarthospitals/

The program is important because hospitals are significant energy consumers. A hospital’s energy intensity is 2.5 times that of a commercial building. U.S. hospitals spend more than $5 billion annually on energy, which is 1-3% of their budgets and equivalent to at least 15% of profits.

The program’s goal is to improve efficiency 20% in existing buildings and 30% in new construction. Cost savings are expected to be large — every $1 a non-profit hospital saves on energy is equivalent to generating $20 in new revenue, according to the DOE.

Hospitals are particularly good candidates for combined heat & power, which is 70-95% more efficient than conventional power production. CHP, as it is known, achieves this efficiency because it uses the heat produced in the generation process, rather than wasting it, as large grid-connected power plants do. Thus, it is able to use less fuel to electrify, heat and cool a building. http://files.harc.edu/Sites/GulfCoastCHP/Presentations/CHPForHospitals.pdf

CHP also offers hospitals back-up power if the electric grid goes down. During Hurricane Katrina, when almost everything was out of service, the 642-bed Baptist Medical Center in Jackson, Mississippi continued to care for patients without disruption because of its 3.2 MW CHP plant.

The DOE offers a free screening for hospitals so that they can see if they are good candidates for CHP http://www.bchp.org/prof-assessment.html#form

Pairing energy efficiency with other societal needs, such as bringing down healthcare costs, makes for good public policy. It offers the proverbial killing of two birds with one stone, or in this case with one coin reducing a double-burden on the average American’s pocketbook.

Visit energy writer Elisa Wood at www.realenergywriters.com and subscribe to her free EE Markets newsletter and podcast.

How Long Will Efficiency Be the Favored Choice?

By Elisa Wood

June 26, 2008

Energy efficiency creates an odd sort of market. Nothing (lack of energy use) competes for customers against something (energy generation).

There is no free lunch and even nothing, energy efficiency, costs something. But for now it is cheaper than its main competitor, the power plant.

In fact, it is often three times less costly to install efficient light bulbs, better insulate buildings or pursue other forms of efficiency than to buy power. Specifically, energy efficiency costs about 3 cents/kWh compared with the 9 cents/kWh it takes just to cover fuel costs from a baseload gas-fired generator, according to a June 19 presentation on power prices by the staff of the Federal Energy Regulatory Commission http://www.ferc.gov/legal/staff-reports/06-19-08-cost-electric.pdf.

Given its cost competitiveness, efficiency is increasingly called upon as a “first fuel.” A growing number of states require that utilities use as much efficiency as possible – reduce consumption as much as possible — before building new plants or signing power deals.

As a result, the energy efficiency business is booming. And it is beating power plants as the favored alternative not just because it is cheaper; it also is cleaner, and consumers like it better. As Suedeen Kelly, FERC commissioner, said: “There is decreasing enthusiasm for building and an increased enthusiasm for demand-side resources.”

Indeed, since January 2007, 50 coal plants have been canceled or postponed; only 26 remain under construction. Meanwhile, state after state revamps energy policy to make efficiency a priority. The potential exists for the US to have an economy by 2030 that is 70% larger than today’s, but uses no more energy than it did in the mid-1990s, according to the American Council for an Energy-Efficient Economy http://www.aceee.org/tstimony/Laitner%20Senate%20Testimony%20June%2025%202008.pdf.

Of course, at some point the nation must build new power plants to meet growing demand. Nothing cannot replace something forever. A growing economy needs energy.

So, how long will the efficiency industry boom? How long will efficiency hold this favored position in the marketplace? That’s not easy to answer. But one thing seems apparent. Energy prices are not going down any time soon. The FERC report warned that we appear to be at “the beginning of significantly higher power prices that will last for years.” If this proves true, energy efficiency’s run as the favored fuel has just begun.

Overcoming the dirty secret of clean energy

By Elisa Wood

June 12, 2008

A dirty secret of clean energy is that being green can be an expensive pursuit. The cost of solar panels and hybrid cars is declining, but they remain too expensive for many people. As a result, the green energy movement is often viewed as an upper-income trend in the United States.

But a recent survey indicates energy efficiency may be a more egalitarian product.

The intent of “The 2008 Energy Costs Survey,” released this week by the Energy Programs Consortium and the National Energy Assistance Directors’ Association, is to show the sacrifices made by low, moderate, and middle-income households because of rising energy costs. Households are cutting back on food, medicine, clothing, heating and cooling, education and eating out. And they are paying their bills later, according to survey of more than 500 households in May. http://www.neada.org/

But, the data also reveals an interesting phenomenon about energy efficiency. Even low-income earners invest in appliances and home improvements that reduce energy costs.

In fact, those in the lowest income bracket were most likely to purchase an efficient air conditioner. Eighteen percent of the lowest income households made such purchases compared to 13-14% of those with middle and moderate incomes. Poor households edged close to wealthier ones when it came to installing efficient heating (11% compared with 15% of those richer). In purchasing efficiency appliances, 15% of low-income households reported doing so.

Having 11% to 18% of low-income households invest in EE may not sound like a lot. But compare it to how much solar energy we consume. Only 1% of the electric power used last year in the United States came from solar energy, according to the federal Energy Information Administration -- and that includes business use http://www.eia.doe.gov/fuelrenewable.html.

If 11% of households installed solar panels, renewable energy advocates would be ecstatic and many of our energy woes would ease. Clean energy advocates often lament how hard it is to bring renewable energy to the mass market. This is a problem efficiency products do not appear to face. It is easy and not overly expensive to become an EE consumer. This is one reason why EE advocates may be right when they say the efficiency explosion ramping up in the US will easily dwarf any other energy trend.

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