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Annual Update on Energy Efficiency from America's Utilities

Ralph Cavanagh's picture
Codirector, Energy Program NRDC

Since joining NRDC in 1979, Ralph Cavanagh has focused on removing barriers to cost-effective energy efficiency and on the role that electric and natural gas utilities can play in leading a clean...

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  • Mar 26, 2018


NRDC Expert Blog by Ralph Cavanagh

America’s electric and natural gas utilities are now investing more than $7.8 billion annually in programs to help customers use energy more efficiently, according to the latest comprehensive survey. The electricity savings alone exceed the annual production of eight giant coal-fired power plants (enough to serve millions of residences). This is the latest reminder of the importance of utilities as partners in our nation’s accelerating clean energy transition, which my colleague Sheryl Carter and I recently addressed.

The new Consortium for Energy Efficiency’s (CEE) 12th Annual Industry Report also covers Canadian utility investments (the U.S./Canada total for the year reached $8.5 billion, counting only utility contributions, and exceeded $8.8 billion if you include supplementary energy-saving sources like the Northeast’s Regional Greenhouse Gas Initiative, or RGGI). In total, this represents an inflation-adjusted 11 percent increase in energy efficiency investment over the past five years.

The CEE report serves as a reminder of the importance of this vital source of clean energy. Independent research has affirmed repeatedly that the cost of programs to avoid energy use—such as weatherization and rebates for highly efficient appliances—is less than half as much as alternative sources of serving customers’ energy needs, such as using natural gas or nuclear power.  Energy efficiency is the cornerstone of NRDC’s recent “Pathways” report, which outlines the most promising options for decarbonizing the U.S. economy.   

CEE tracks both annual investment in energy efficiency programs (about 90 percent of the “Demand Side Management (DSM)” total) and other DSM, such as incentives to reduce stress on grids by moving customers’ energy use to off-peak periods, in both the United States and Canada. 

Energy efficiency—all the ways we can get more work from less energy—has for decades been the cheapest and largest contributor to meeting our growing economy’s energy needs. The most important single source of North American efficiency investment is our electric and natural gas utilities, and every year CEE reports on progress across the United States and Canada. CEE exhaustively canvasses the entire utility industry, and its latest report is a compelling overview of progress and prospects.

Highlights include:

  • Total U.S. utility investment in energy efficiency and DSM for 2016 (the most recent year with complete data) was up 3 percent from the previous year, and up 8 percent over the past five years (adjusted for inflation).
  • Electricity sector investment dominates energy efficiency funding, accounting for more than 80 percent ($6.8 billion), although natural gas industry trends are positive and annual investment there reached $1.3 billion for the first time in 2016 (these numbers reflect both utility investment and supplementary funding from sources like RGGI). The breadth of participation in energy efficiency programs is impressive, involving more than 306 utility and non-utility administrators of utility-funded initiatives in all 50 states, the District of Columbia, and eight Canadian provinces.
  • Although methodologies for calculating savings are not completely consistent, a conservative assessment for the North American utility programs alone yielded annual savings from the 2016 programs of almost 26 million tons of carbon dioxide emissions avoided. This is particularly impressive in that utility customers didn’t have to pay more to achieve those reductions, which were a dividend from programs that also reduced their utility bills.

While investing more than $7.8 billion in U.S. utility energy efficiency programs is significant, we can do better and we must in order to meet our climate and clean energy goals. Today’s programs don’t tap anywhere near all cost-effective energy efficiency savings that we could achieve. Adding more of a very good thing here would mean lower energy bills, reduced power plant pollution, and more jobs.

Republished with permission from the Natural Resources Defense Council's expert blogs.

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Charles Grunewald's picture
Charles Grunewald on Apr 2, 2018

Energy effeciency efforts in the Northern US heating zone have to respect that the majority of annual hours are heating hours. Just yesterday on April fools day the temperature was less than 10 degrees, not an April Fool joke!

 Every reduced electric heat sourced BTU  of heat from lights and appliances is made up with equal increased BTUs from fuel heating systems! We are just fuel switching to use more heating fuel to make up for conserved electric use for the majority of 8,760 annual hours. Electric bill goes down andfuel bill goes up porportionally.

I you are a gas company or oil business owner the LED bulbs and energystar appliances have been great for new heating season business. Ideal situation may be to change to LED bulbs for summer AC season and back for winter but certainly not very practical.

Just think if each of the 2,400,000 Minnesota homes installed 10 LED bulbs saving about 400 watts electric use during the long winter lighting hours that would be 960,000 kilowatts of Minnesota heating made up with increased fuel burn during the winter lighting hours.

Energy effeciency analysis on annual basis has to account for the increased heating cost to make up for any reduced heat from lighting and appliances. Investments in reducing winter heat loss with insulation may win out over investing in new more efficent appliances and lighting plus reducing heat loss also reduces energy required for summer air conditioning. One way to win is investing in a geothermal heat pump where one BTU of energy to power heat pump will yield 3 to 4 more BTUs of heat plus more effecint for summer AC. If water to water or water to air geothermal heat pump not practicle an air to water or air to air heat pump can still have a annual coeffcient of performance (COP)  of 2 or greater.

With the rapid transition away from coal and gas sourced electric generation plants to renewable electric generation there will be a tipping point where "all Electric" homes with heat pumps cause the least greenhouse gas. Note Norway will have no fuel heating in two years. A geothermal heat pump application served from a coal plant already has less CO2 than a natural gas furnace plus natural gas has a nasty methane greenhouse gas (GHG) comtribution from leaked unburned gas.

Given that 75% of North Central US wind generation is coincident with space heating use the ultimate heating application to reduce CO2 and GHG emissions is dynamically balancing space heating use with wind generation. There is about 11 tons CO2 emisison per year from each fuel heated home which time 2,400,000 Minnesota homes equals millions of tons plus add for commercial space heating. One can retain the fuel furnace for backup use when wind not blowing and / or use under slab electric or hydronic tube thermal storage.  

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