Energy bill could open Southeast’s EE market

By Elisa Wood

July 2, 2009

I live a kind of Tale of Two Cities, or rather tale of two regions. My work requires that I spend a lot of time covering the Northeast power markets, but I live in Southeast. So after reporting on the rich world of efficiency incentives available in places like Connecticut, Massachusetts and New York, wasn’t I surprised to find my local utility offers pauper’s fare, nothing more than an energy audit.

This is in keeping with a culture of inefficiency in the Southeast. For example, Energy Star appliances have achieved only 20% market penetration in the region, compared with a 30% penetration elsewhere.

But this culture could change soon because of the politics behind the proposed federal renewable portfolio standard. RPS opponents in the Southeast say the region can’t afford the standard because it lacks vast wind and solar resources http://www.renewableenergyworld.com/rea/news/article/2009/06/winning-dixie-drawing-in-the-southeastern-us.

True or not, the Southeast was given a reprieve in the Waxman-Markey bill passed by the House June 26. If states cannot secure enough renewable energy to meet the standard, they can substitute with some energy efficiency. The bill requires that 6% of power come from renewables in 2012 rising to 20% by 2020. But states can substitute up to 25% of the requirement with energy efficiency. Moreover, a state governor may petition to increase the efficiency portion to 40%. http://www.usgbc.org/ShowFile.aspx?DocumentID=6070

So if the Southeast can’t – or won’t – develop enough renewable energy to meet the RPS, it can rely on energy efficiency to fulfill nearly half the requirement. As a result, we could see a broad new market for energy efficiency build up in the Southeast. The World Resources Institute underscored this possibility in a brief, “Southeast Energy Opportunities,” circulated last week. The Southeast has the potential to reduce total expected electricity use 11% by 2015, enough to meet most of the region’s new power needs through 2015, according to the brief. That may be why the Rocky Mountain Institute ranked six of the Southeast states in the top ten for energy efficiency potential.

Efficiency advocates see the Southeast as an important market because its households tend to heat and cool with electric energy. In fact, electricity consumption per person is almost 40% higher than the national average. Moreover, the region has the fastest growing population in the United States. Greater population equals more demand for electricity equals more power plants – unless the need is offset through efficiency.

Of course, none of this is set stone yet. By most reports the energy bill faces rough going in the Senate, which is expected to take it up in the fall. http://www.foleyhoag.com/NewsCenter/Publications/Alerts/Environmental/Environmental_Alert-070109.aspx.

So those of us in the Southeast may look northward with envy for awhile longer – but perhaps eventually the tale will take a turn.

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.