Waste Not, Want Not

Thursday, December 15, 2005

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."


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.


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