This blog was written by John D. Wilson, former Deputy Director for Regulatory Policy at the Southern Alliance for Clean Energy.Guest Blog | February 18, 2011
The long darkness is over! OK, that’s a bit melodramatic but … after many years of very little access to energy efficiency programs, Southeastern households and businesses are finding that their utilities may be offering attractive and comprehensive energy efficiency programs.
- As recently as 2008, significant energy efficiency programs in the Southeast were limited to Florida and a few municipally-owned utilities in the Southeast. Most customers were offered token programs, or programs that were barely publicized and difficult to use, if anything at all.
- Today, most utility customers across the Southeastern states that we focus on have or will very soon have access to meaningful energy efficiency programs.
- By 2015, these programs will be achieving ten times the energy savings they were just a few years ago.
- By 2020, these programs will have helped cut energy bills by $2 billion a year!
- Although these programs are generally not as ambitious as they could be, for the first time they will substantially affect the amount of fossil fuels burned to generate electricity in the Southeast.
SACE is hosting a webinar on Wednesday, February 23 to discuss this in-depth. But because I know you just can’t wait to read the good news, we’ll cover a few highlights today.
Energy efficiency by the numbers
Accounting for energy efficiency is a tricky business. First of all, you are counting something that doesn’t happen. In what other business do you pay for a product not to be used? It can be done, but not with the precision that businesses can achieve when selling paper or tomatoes.
The other challenge is that each utility plans in its own unique, special way. That’s why we love all our utilities so much, right? They’re all individuals!
Kidding aside, some utilities have published plans for as much as ten years of energy efficiency programs. Other utilities take the short view, and just look at the next three or four years.
The graph represents the cumulative impact of programs operated since 2005. We’ve had to make a few assumptions regarding how long the energy savings persist (that’s a complicated topic that we happen to find interesting, but a bit wonky for even my blog posts). Regardless of how you add things up, it is clear that Southeast utilities are finally planning to help us save a lot of energy over the next decade.
Saving energy, saving dollars, reducing air pollution
How many people know what it means for energy efficiency programs to save about 25,000 GWh of energy in 2020? Well, if you’re a reader of this blog, then you probably know that GWh means gigawatt hours. You might even know that a typical homeowner uses 10-15 MWh of electricity per year. So this means that 25,000 GWh is the amount of electricity that might be sold to around 1.5 – 2.5 million homes in a year.
In dollar terms, 25,000 GWh represents about $2 billion a year in lower energy bills by 2020. These savings aren’t free, of course … we estimate that the annual investment in energy efficiency with these plans will be about $1 billion per year. Still, that means that by 2018 or so, the net savings will have climbed to about $1 billion per year, a financial boost to the Southeast that will then continue to grow for over a decade.
And although 25,000 GWh is a lot of energy savings, it represents only about 3% of forecast energy use in 2020. We could do better.
- Leading utilities across the country are offering programs that help customers save 7-15 kWh per MWh sales, per year. Over ten years that translates into savings of 7 – 15%.
- In the Southeast, the TVA and Duke Energy are planning on achieving savings of 5 kWh per MWh sales, but are considering more aggressive programs that could put them in the lower tier of national leadership.
- Utilities in the Southwest, California, Pacific Northwest, Upper Midwest, Northeast and Midatlantic are planning on achieving 2-5 times more energy efficiency than utilities in the Southeast. The South and lower Great Plains regions remain laggards when it comes to reducing the wasteful use of energy.
While we should be excited that we have finally begun to take energy efficiency seriously, no one should consider what is underway across the Southeast to be adequate. We still have a long way to go before maximizing the potential benefits of energy efficiency.
Energy savings will also directly reduce CO2 emissions. Human activities are increasing carbon dioxide emissions, the main source of global warming pollution. Along with other greenhouse gases, CO2 traps heat and drives global warming, changing our climate in many ways. Cutting utility power plant emissions is an essential part of any strategy to cut global warming pollution.
- If current utility plans are implemented, it would result in a reduction of 20 million metric tons in carbon dioxide emissions.
- If more aggressive energy efficiency plans were implemented, the Southeast could avoid 50 million metric tons in carbon dioxide emissions.
To put 50 million metric tons in perspective, that amount represents about 1% of total global warming pollution from the entire United States. Or the equivalent of the total emissions of Denmark or Ireland. It’s not a large enough cut to appreciably slow global warming on its own, but it is a worthy goal for one strategy, in one region, in one decade.
More energy efficiency to come?
While utilities in every Southeastern state where SACE is active are now offering attractive and more comprehensive energy efficiency programs, there is vast opportunity for improvement. Even the two most ambitious plans from TVA and Duke Energy, only aspire to about 1/3 of what “leading” utilities are planning elsewhere in the country.
Both TVA and Duke Energy are actively considering whether they could double the scale of their programs over the next ten years. The context of these deliberations are different, and probably worthy of a full blog post in the future.
- In TVA ‘s draft resource plan, the most ambitious level of energy efficiency is represented by the “EE Focused” alternative. We anticipate that TVA staff will recommend that its Board approve a resource plan that relies on almost this maximum level of efficiency. Based on our evaluation, this plan seems reasonable through about 2018, but beyond that date, TVA’s plan falls short of what can be achieved.
- Duke Energy’s resource plan also considers a “high case” evaluation of energy efficiency. Duke Energy does not currently “prefer” this plan, even though the plan would result in lower costs to customers, lower rates, lower risk of price spikes, and lower environmental impacts. There seem to be two factors driving this preference. One is a legitimate concern that North Carolina law (and agreements in South Carolina) mean that much of the low-cost energy efficiency potential at large commercial and industrial customers will not be achieved. The second is the corporate commitment to build two nuclear power units which do not appear necessary based on Duke Energy’s own analysis.
Planning can be complicated, confusing and (therefore) rather dull to most people. In spite of their preference to build expensive, unnecessary power plants … Southeastern utilities can’t escape the conclusion that much higher levels of energy efficiency are in their customer’s best interest.