Energy Efficiency is Cheaper, Cleaner, Smarter than Other Options, Say Experts
World Rivers Review, October/December 2005
“I believe the world needs only half as many new power plants as it
thinks it does,” exclaims Art Rosenfeld, a founder of the American
Council for an Energy Efficient Economy (ACEEE) and a founding father
of the energy efficiency movement. A lively septuagenarian with decades
of experience in the energy field, Rosenfeld was addressing a recent
ACEEE conference in Berkeley, California, where he was joined by dozens
of speakers armed with statistics-rich case studies detailing how much
energy can be saved with a range of efficiency measures.
The need to do more with less is particularly acute in the US, where
a “perfect storm” of factors – including the recent hurricanes,
skyrocketing energy costs, global warming, dwindling oil supplies, the
Iraq war, the Enron collapse, and China’s growing energy consumption –
is affecting energy use in the US and elsewhere. “This year will go
down in history as the year the United States finally woke up” on
energy issues, predicted Martin Kushler, Director of the Utilities
Program at ACEEE.
The good news is that so many communities are already waking up
around the nation. Some utility managers described serving up to two
people for every one they used to serve with the same amount of energy,
thanks to aggressive energy efficiency programs.
Kathleen Hogan from the US Environmental Protection Agency's climate
program, stated: "We can lower our growth in electricity use by half
with efficiency measures, and the savings persist over time. It's time
to make all of our utilities be the agents for change on energy
efficiency. Every community should have a clean energy action plan,
with public input. It's time to make it happen."
California Sets the Pace
The conference was held just days after the state of California
announced a huge energy efficiency program, which is being touted as
the largest of its kind in the US and perhaps the world. Susan Kennedy,
the lead commissioner for energy efficiency with the California Public
Utilities Commission, told conference attendees, “This is an auspicious
moment in an ominous time.” She said that California – the most
populous state in the nation (and the world’s sixth largest economy) –
plans to spend $2 billion on energy efficiency over three years, which
will ultimately save $5 billion in energy costs. The program, which is
part of a statewide initiative to reduce global warming, is expected to
save as much electricity as three large power plants in the next three
years, and reduce the state’s carbon output by an estimated 3.4 million
tons (equivalent to taking about 650,000 cars off the road). The state
energy efficiency program’s new budget is about 50% larger than the
entire federal government’s budget for energy conservation.
The new program will likely cover new ground in finding
efficiencies, as California is already one of the world’s most
energy-efficient economies, and has already “picked the low-hanging
fruit” (including, most recently, during the 2000-01 energy crisis).
Previous efforts have saved an estimated 5,000 megawatts, or about 10
large power plants, according to Kennedy. The result is, while the
average American uses 50% more energy now than in 1975, the average
Californian uses roughly the same as before, according to the San
Francisco Chronicle. California is setting a good example not just for
other states, but for other parts of the world too, with a special
emphasis on China (see box below).
"Our population and our economy will continue to grow, and we’ll
still need more power plants – especially to replace ageing, dirty
plants," said Kennedy. "What this plan does is help us meet those
growing needs with the cleanest, most cost-effective energy of all –
greater efficiency."
A Broad Menu
The conference included detailed presentations on a broad menu of
efficiency measures, including a mix of technological fixes, incentive
programs (such as rebates for more-efficient appliances), programs to
encourage behavioral changes, and policy reforms. An important first
step for utilities is to ensure that “profits are decoupled from sales
– as long as the market is encouraging energy sales, you can’t get
efficiencies,” said Susan Kennedy.
Ralph Cavanaugh of the US environmental group Natural Resources
Defense Council agreed: “Utilities should not have their financial
health tied to power sales. You need to create earnings opportunities
for demand-side management programs.” Grid owners must also be brought
in as willing partners, and to ensure they are winners in programs that
will send fewer kilowatts through the grid system.
Changing behavior makes use of everything from tariffs to
discourage excessive use (“we need to get rid of ‘all you can eat
rates’ and have electricity bills that go up with the size of the
house,” said Cavanaugh) to time-of-use incentives to educational
campaigns. Behavioral change is one of the only ways to get energy
savings in a hurry, such as during a crisis or when unusual weather or
other factors result in looming blackouts.
"It's critical to teach people how they are using energy," said
Peter Smith of New York State's efficiency program. "We're not a
freeze-in-the-dark program, but we are showing people how they can save
money by using less electricity. Conservation is cheaper than coal,
cleaner than renewables. You can get a 10-20% return on your investment
with efficiency measures – it's a better investment than Wall Street."
In addition to educating consumers, some programs may require
broader educational efforts. For example, efficiency standards for
appliances “enforce themselves,” but building codes intended to improve
energy efficiency require training of building inspectors and
contractors, noted Art Rosenfeld.
A number of policy approaches were described that encourage
utility-based energy efficiency. The most effective policy change is to
make efficiency the resource of "first-choice" (in California and
Austin, Texas, for example, utilities must first undertake
cost-effective efficiency measures before new supply-side energy
investments can be considered). The next-best approach is to include
set targets for efficiency savings, either as part of a renewables
portfolio standard or under a separate energy efficiency performance
standard.
Giving extra credit for peak-load savings is another way to get the
most value from these programs, and setting targets for such reductions
is recommended. A speaker from Austin, Texas, noted: "Our top 160
megawatts are only used 40 hours each year, so focusing efficiencies in
the peak hours saves the most expensive energy." To shave these "peak
loads," it can be cost-effective to take steps such as giving lower
rates to customers who install remote-controlled thermostats so that
their air conditioning can be cycled off during excessively high-use
times such as a heat wave, to avoid black-outs throughout the system.
Many speakers from utilities around the nation emphasized the use of
independent studies to ensure that conservation programs were
cost-effective.
"We're looking for least-cost, least-risk alternatives, and energy
efficiency meets both of those goals," said Tom Eckman of the Northwest
Power Planning Council. "Efficiency programs are high-value even when
market prices are low – about 2.4 cents a kilowatt hour, on average.
Utilities need to integrate efficiency into their portfolios, and
should undertake efficiency and demand-management measures before
energy prices are high. It's like buying insurance – you don't buy
insurance after the house burns down. "
Concerns about climate change (and the lack of leadership on it at
the federal level) has resulted in some innovative programs that
encourage efficiency, which is considered a zero-emissions source of
energy with neither a "fuel risk" or "carbon-control risk." One of
the biggest such programs in the US is a joint effort of nine states in
the northeast (including populous New York), which are developing a
regional cap on carbon dioxide emissions from power plants. This
Regional Greenhouse Gas Initiative will offer carbon credits, through a
public entity, for energy efficiency programs and renewable energy
projects. Many western states are also banding together to reduce
emissions. Since electricity accounts for 34% of US CO2 emissions, and
two of the nation's four most populous states (along with many smaller
states) are involved in carbon-reduction efforts, these programs will
have global impacts.
Reminding the participants of the global impacts of an
energy-intensive lifestyle was Michael Dworkin, who previously was
chairman of the Vermont utility regulatory commission and is now
heading up the Institute for Energy and the Environment at the Vermont
Law School. "Some 1.5 billion people in the world have no access to
electricity, and another 1.5 billion have inadequate access. We have to
come up with a better plan for them, and to do that, we need serious
funding for research and development," he stated. "The world cannot
afford all the power plants it would take to meet that need, so we have
to redouble our efforts on energy efficiency. The world hasn't yet had
its breakthrough moment on efficiency, so we need to help move it along
with carrots, not just sticks."
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California Dreamin' in China's Energy Sector
California's energy efficiency programs and experts are sharing
their expertise with China, the world's fastest-growing economy and
fastest-growing energy-user.
In September, officials from the state Public Utilities Commission,
the Energy Commission and the utility PG&E signed a pact with
Jiangsu province and informal agreements with Shanghai province and
China's central government to provide expertise and training to Chinese
regulators and utility companies, according to the San Francisco
Chronicle.
The Natural Resources Defense Council, which helped organize the
trip, has done research showing major potential for efficiency measures
in China. "It is practical and feasible to ... save 50% of energy for
public and residential buildings in China," according to an NRDC
report. The US Department of Energy reports that in 2003, China used
almost 3.5 times the amount of energy as the US for every dollar of
gross domestic product.
One program that could be exported to China is California's "public
goods charge," a 1% fee on electric bills that pays for about $500
million annually in conservation programs. Song Hongkun, an official
with the nation's main utility, told the Chronicle that China could
raise as much as $1 billion per year by adopting such a charge, which
would pay for energy-metering technology, new home-appliance standards
and other programs.
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A Few Online Efficiency Resources
ACEEE: www.aceee.org (Presentations from the above conference are posted at: http://www.aceee.org/conf/05ee/05eeagenda.htm then click on the underscored presenter names.)
More on the California program: www.energy.ca.gov
More on NRCD's China energy conservation work: http://www.beconchina.org/energy_saving.htm
Gridwise: http://www.nwcurrent.com/smartenergy/1576136.html
Rocky Mountain Institute: http://www.rmi.org/sitepages/pid17.php
US Dept. of Energy consumer fact sheets: http://www.eere.energy.gov/redirects/consumerinfo.html
