It’s the environment, stupid

By Elisa Wood

October 22, 2009

If Harry Truman were running for president today, he’d probably ‘Give ‘em Green,’ rather than ‘Give ‘em Hell.’ Bill Clinton’s campaign slogan would be, ‘It’s the environment, stupid.’ And Herbert Hoover might be promising a solar panel on every roof, rather than a chicken in every pot – and the pot would sit on a smart-metered stove, powered by a plug-in hybrid, eligible for renewable energy certificates.

Today, green credentials count. Hardly a day goes by without a mayor, governor or legislator claiming some sort of first, best or highest green energy goal.

That’s why the state energy efficiency scorecard, released this week by the American Council for an Energy Efficient Economy, is significant. It carries political currency.

Bragging rights go to California, Massachusetts, Connecticut, Oregon and New York,* the top five states (in that order) doing good by energy efficiency.  Some red faces, however, might be found in Nebraska, Alabama, Mississippi, North Dakota, and Wyoming, the group that ACEEE says “most needs to improve.”

States are expected to continue their pursuit of energy efficiency into the next decade. The ACEEE reports that utility ratepayer-funds for efficiency will likely grow from $3.1 billion in 2008 to $5.4-$12 billion in 2020.

What’s most interesting is that so much money and effort is being put into energy efficiency now – during the Great Recession – when states face deficits. This defies conventional behavior: Historically, Americans worry about the environment only when the economy is sound.  It appears that green energy advocates have successfully imprinted in the American psyche a link between renewable energy and efficiency and economic prosperity.

“This growing and deepening commitment to energy efficiency is so strong that the current recession has not put a dent in the vast majority of state programs,” says Steven Nadel, ACEEE executive director. “And that is for good reason:  Energy efficiency is the only resource that can actually reduce energy consumption while growing the economy — making efficiency the ‘first fuel’ states can use to balance their energy portfolios.”

So we find ourselves in a kinder, greener nation, one with no electric meter left behind, where we walk softly and carry a big wind tower…

*At about the same time the ACEEE released the report, New York announced plans to shift Regional Greenhouse Gas Initiative money, slated for clean energy programs, toward reducing its deficit. This may have reduced New York’s ranking in the eyes of the environmental community.

Visit Elisa Wood at http://www.realenergywriters.com/ and pick up her free Energy Efficiency Markets podcast and newsletter.

Efficiency is cheap, but will it sell?

By Elisa Wood

September 24, 2009

Expect to see this number a lot in energy discussions over the next few years: 2.5 cents/kWh. It is the average cost of energy efficiency, a figure pegged this week in a new report by the American Council for an Energy Efficient Economy. http://www.aceee.org/press/u092pr.htm.

This number is big news because it is so small.  As a resource, energy efficiency beats out all conventional power sources on price.  (See chart below.) Moreover, it’s a price that has been dropping. Five years ago energy efficiency cost 3 cents/kWh.

But just because something is cheap, doesn’t mean people will buy it. How much energy efficiency will make it into the nation’s energy shopping cart?

Efficiency boomed in the early 1990s, but then busted later in the decade when deregulation allowed many utilities to shed their efficiency programs. It is resurging now, part of push by state and federal policy makers to green and ‘smarten’ energy supply.

Most utilities do not make money on efficiency, and this is part of the reason it busted in the late 1990s. Perhaps as important, efficiency’s branding was off. It was seen as an extra, a nicety to pursue out of goodwill when a utility or state had some extra money.

ACEEE and other efficiency advocates are trying to reshape the image. They refer to efficiency as a fuel – just like wind, sun, coal, natural gas, oil. And they want efficiency to be the ‘first fuel.’ This means that when a utility is planning its energy supply, it first applies as much efficiency as is cost effective and plausible, before it builds more expensive new power. Some eastern states are already using this planning concept. In addition, many states have set specific energy efficiency goals, some very aggressive.

That is why ACEEE’s 2.5 cents/kWh becomes so important. It is a kind of marker against which other resources will find themselves competing more and more in policy planning.

Meanwhile, an increasing number of states are decoupling utility profits from kilowatthour sales or instituting other financial incentives that inspire utility support for efficiency.

Of course, our economy cannot prosper on efficiency alone, but many studies indicate we still have a lot of waste in the system.  So as an energy planner, if you were confronted with increased demand – and are not dealing with policy or system issues that require generation or transmission as a solution – which of these would you pursue first?

Resource	Cost
Energy Efficiency	1.6 cents/kWh to 3.3 cents/kWh
Pulverized coal	7 cents/kWh to 14 cents/kWh
Combined cycle natural gas	7 cents/kWh to 10 cents/kWh
Wind energy	4 cents/kWh to 9 cents/kWh

Credit: Cost figures from ACEEE, “Saving Energy Cost Effectively: A National Review of the Cost of Energy Saved through  Utility Sector Energy Efficiency Programs,”  September 2009, http://www.aceee.org/press/u092pr.htm.

Visit Elisa Wood at http://www.realenergywriters.com/ and pick up her free Energy Efficiency Markets podcast and newsletter

Energy sprawl: The next worry?

By Elisa Wood

September 3, 2009

Energy facilities take up space. Some, like wind farms, take up a lot of space. In fact, new energy production will consume more land than can be found in all of Nebraska by 2030, according to a recent report by The Nature Conservancy.

This will create what the report describes as “energy sprawl,” a term I’m guessing we will start to see more in the legal briefs by NIMBYists. It’s a flashpoint phrase. Americans don’t like sprawl of any kind — although we appreciate the convenience it affords. Nice that the super store is only five minutes away; not so nice to give up the paradise that became the parking lot.

Unfortunately, cleaner energy often means greater energy sprawl, the report says. The more aggressively we pursue greenhouse gas reduction, the more acreage we are likely to use. Biofuels, in particular, gobble up a lot of land because they use farm crops.

The report is not suggesting we give up on green energy. On the contrary, it appears to be more a matter of choosing energy sites with care. Chief among the report’s recommendations is pursuit of more energy efficiency. Of all energy choices, efficiency has the lowest impact on land use. For every terawatt hour of electricity use avoided, we avoid sacrificing 4.7 to 17.8 square miles, says the report.

After efficiency, the next three best ways to achieve emissions reductions, but limit energy sprawl, are to:

*Build power plants on brownfield sites as much as possible

*Create flexible cap and trade rules, which allow for emissions reductions with certain low-land impact technologies, such as nuclear power.

*Site plants carefully, in areas where they have minimum impact on habitat

The report also suggests that we make energy sprawl a new metric in energy policy, another issue to weigh when debating which resources to build. Is this a good idea? I’d be interested in hearing what readers think. On the one hand, clearly it’s important to protect habitat. On the other hand, siting power plants already is difficult. And if we don’t produce enough electricity, the consequences are serious.  Power shortages drive up prices, undermine our economy and disrupt our well-being.

I’m looking forward to hearing your thoughts. And I’m guessing they may depend, at least in part, on how close you live to that piece of ‘Nebraska’ likely to disappear.

See the full report at http://www.plosone.org/article/info:doi/10.1371/journal.pone.0006802

Visit Elisa Wood at http://www.realenergywriters.com/ and pick up her free Energy Efficiency Markets podcast and newsletter

Carbon cap and boom?

By Elisa Wood

August 6, 2009

If we try to reduce greenhouse gases, the economy will take a hit, according to conventional wisdom. The Energy Information Administration bolstered the notion this week by reporting that energy prices would rise for the average US family by $142 in 2020 and $583 in 2030 under the House cap and trade bill passed in late June.

Steven Chu, US energy secretary, tried to soften the blow by saying that the carbon invoice amounted to less than a postage stamp per day. But cash-strapped US households are counting their postage stamps these days and finding they have none to spare.

So if cap and trade truly increases costs, it may be a tough sell to the American public when taken up by the Senate in September. But must we take an economic hit to revamp our energy supply?

The American Council for an Energy Efficient Economy offers an interesting twist on the conventional thinking about the cost of carbon reduction.  If we do it right, we could actually better the economy, the organization says in its report, “The Positive Economics of Climate Change Policies: What the Historical Evidence Can Tell US,’ by John “Skip” Laitner, an ACEEE senior economist.

Laitner provides some interesting historic detail to underscore the argument that energy efficiency can reduce greenhouse gases without breaking the bank. Efficiency is not only relatively cheap, but it also creates a more productive economy. Consider this: The US has expanded its output threefold since 1970 and doubled its per capita income, yet the nation only increased its demand for power by 50% because of energy efficiency.

To give perspective on what this means, Laitner converted our energy use into equivalent gallons of gasoline. Today we use the energy equivalent of 2,600 gallon of gasoline per resident; had we not imposed greater efficiency, we would be using the equivalent of 5,500 gallons per person.

So, we have reduced our “energy intensity,” the amount of energy it takes to support a dollar of economic activity. “This decoupling of economic growth and energy consumption is a function of increased energy productivity: in effect, the ability to generate greater economic output, but to do so with less energy,” the report says.

Analysts tend to over-estimate the cost of carbon reductions by underestimating the economic benefits of energy efficiency. For example, energy efficiency not only reduces energy bills, but also often leads to cuts in other costs to homes, buildings and factories. Maintenance, water use, chemical use all tend to decline.

“Changing our investment mix away from traditional, energy intensive patterns toward one that emphasizes more productive technology and behavior, greater energy efficiency, and more labor intensive activities can yield higher rates of economic growth and lower economic and environmental costs,” says the report. “In many ways this is much like rebalancing of a retirement portfolio to take advantage of changing market conditions and new growth opportunities.”

We managed to accomplish a high level of efficiency over the last 40 years with no particular plan. In fact, we proceeded in a “haphazard” and sometimes “counterproductive” way, says the report. What kind of energy productivity could we achieve if we actually tried? Might our energy secretary 40 years from now be talking not about what the new energy economy cost, but what it saved American households?

The report is available at: http://www.aceee.org/.

Visit Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets podcast and newsletter

Efficiency: Highest priority for no one

By Elisa Wood

July 30, 2009

If there was still any question about the economic value of energy efficiency, it was put to rest this week by a McKinsey & Company report. The United States could save $1.2 trillion and generate 900,000 new jobs through better energy management, according to “Unlocking Energy Efficiency in the US Economy.”

Sounds good. But there is a problem. We’ll need billions of keys to do the unlocking. Efficiency potential rests in “100 million buildings and literally billions of devices,” the report says. “This dispersion ensures that efficiency is the highest priority for virtually no one.”

In other words, anyone have a magic wand handy?

Efficiency is a tough to sell, not because people don’t want it, but because it doesn’t exist as a tangible item to buy, like say, a solar panel. Efficiency is not even an idea. It’s a way of operating every electric item in our highly electric world. No one is master of this universe. Even if government sets out mandates for buildings and appliances, the homeowner still may not turn off lights before bed, or the factory owner may decide against the cogeneration unit in favor of the familiar status quo.

It will take significant effort – far more than what is offered in the federal stimulus package – to put so many keys in so many locks. In fact, the $20 billion in stimulus will create only a “blip” compared to the vast potential, says Lisa Wood, (no relation to the writer of this blog) executive director of the Institute for Electric Efficiency, part of the Edison Foundation.

Indeed, the McKinsey report finds that to unlock this potential over the next decade, the US needs to make a $50 billion/year investment. And if a decade seems like a long time, consider that that cell phones, microwaves and radio took 10-15 years to scale up.

“There are so many different pieces. Some of it is in changing the mindset about using energy; some of it is about introducing new technologies, like smart thermostats and home area networks. I don’t think that is far away.”  Of course, the technology must be easy for people to use, she says. We learned a long time ago that people don’t come home from work and say, “What can I do now to save energy?”

The report recommends “a holistic combination of solutions,” such as recognizing efficiency as an important energy resource, launching a portfolio of strategies that work nationally and regionally, finding ways to overcome the significant upfront costs for efficiency installations, aligning various stakeholders, and fostering technology. McKinsey goes on to describe specific programs and strategies to bring about these solutions.

The McKinsey report marks an important step in the right direction, Wood says, by getting the efficiency story “out there in a very organized way to the larger community.” Not a magic wand, but at least a pointer in the right direction.

The report is available at http://www.mckinsey.com/clientservice/electricpowernaturalgas/US_energy_efficiency/.

Visit Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets podcast and newsletter.

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.

Has the clean energy economy arrived?

By Elisa Wood

June 18, 2009

We’ve seen many forecasts that show the clean energy industry boosting future US job growth. But a Pew Charitable Trust study released last week indicates that green job creation isn’t just a thing of the future; it’s been emerging for several years.

From 1998 and 2007, clean energy jobs increased by 9.1%, while total jobs grew by only 3.7% nationally, according to “The Clean Energy Economy.” http://www.pewtrusts.org. In all, clean technology accounted for 770,000 jobs in 68,200 businesses by 2007.

States showed a similar trend.  The clean energy economy outperformed overall job growth in 38 states and the District of Columbia during the same period.

What’s interesting is that the growth occurred before the influx of federal stimulus funds for clean energy. So what will the clean energy job market look like after $85 billion makes its way into the economy? Lori Grange, interim deputy director of the Pew Center on the States,  envisions nothing less than “explosive growth.”

The report also shows that Americans are clearly on board with the idea of pursuing energy efficiency. In 2007, alone, consumers purchased more than 500 million Energy Star® products, up 67% from the previous year.

As the economy recovers, what kind of jobs will the efficiency industry produce?  Expect demand for  workers “who make and distribute software and meters to monitor energy consumption and who manufacture and install efficient glass and lighting, along with service-related jobs that help companies and individuals improve home or business energy use,” the report says.

Regulators see the writing on the wall in New York, which intends to meet 45% of its energy needs from renewables and efficiency by 2015. They are concerned the state will lack enough clean energy workers. So the state public service commission this week approved $6.6 million to train workers for energy efficiency jobs.

The commission described the money as only a “bridge” until it can get federal stimulus dollars to further ramp up training, and said it hopes to avoid “bottlenecks” in programs caused by lack of workers.

True, the clean energy economy has been hurt like all sectors. Venture capital investments dropped in 2008, Pew says. But the downturn appears to be only a dip in what has been – and by all accounts will be — an upward trajectory in clean energy growth for several years.

Visit Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets podcast and newsletter.

Will society unplug?

By Elisa Wood

May 21, 2009

As a society, we’re accused of being too plugged-in, too reliant on our computers, televisions, and charged-up cell phones. Turns out, we are willing to unplug.

A study by SmartPower (http://www.smartpower.org/) found that unplugging unused appliances, those sucking up vampire energy, is an energy savings act people are willing to do. And they don’t just say they will unplug – they do unplug.

This is an important distinction because often people tell researchers that they intend to conserve power or buy renewable energy. But when it comes time to do act, they balk. SmartPower was able to discern where and when people walk-the-walk through a “Living Diary” study, part of a two-year effort in New England to see how the economy, volatile energy prices and environmental concerns motivate consumers.

Smartpower followed the activities of 81 people for two weeks. The participants were given daily questions, homework and tasks, which led to over 1,000 diary entries.

“Unplugging was the most frequent efficiency experience. Panelists reported that it was the easiest to perform, required the least sacrifice and was the most universally relevant to all participants,” SmartPower said in recent comments filed before the Connecticut Department of Public Utility Control.

Such research becomes increasingly important as the industry seeks ways to spur consumers to act in a more energy efficient way, an approach known as “residential behavioral strategy.”

In Connecticut, SmartPower and two other companies have proposed an ambitious behavioral strategy program intended to encourage people to cut energy use 20% by 2020. The trio – which also includes Earth Markets (http://earthmarkets.com/), a finance company, and Efficiency 2.0 (http://efficiency20.com/), a software firm – offers consumers several goodies, among them free compact fluorescent lights and software to monitor energy use online.

But that’s not all. The program includes two of the biggest all-time motivators for the US consumer: beating the Jones and earning cash. Communities compete to see who saves the most energy and the results appear on line for all to see. In addition, participants have the chance to earn money through the sale of efficiency certificates or “white tags,” a currency of value in Connecticut. Consumers and businesses can earn a certificate for each megawatthour of energy they save. They sell the white tags to utilities and others who must, under state law, produce or buy a certain number each year to help the state achieve its efficiency goals.

The program must still win regulatory approval (http://www.dpuc.state.ct.us/dockcurr.nsf/(Web+Main+View/Search+Electric)?OpenView&StartKey=05-07-19RE02) . But if it does, its 200,000 customers would not only earn money from white tags but also save money on their energy bills – for a total financial gain estimated to be $100 million.

Not a bad benefit. Definitely worth the time of unplugging the appliances at night.

Visit Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets podcast and newsletter.

The one energy efficiency report to read

By Elisa Wood

May 14, 2009

Jon Wellinghoff, chairman of the Federal Energy Regulatory Commission, raised a lot of eyebrows recently when he suggested that the US may no longer need to build conventional power plants – that efficiency and renewable energy might meet our needs.

He has since clarified his position, saying much will depend on how we think about energy, its use in the system, and market response.

Still, critics say he overestimates green technologies. Are they right? Reading over the most recent report by the American Council for an Energy-Efficient Economy gives one pause about underestimating technology.

We know that semiconductors have given us computers, cell phones, the Internet – they’ve changed the way we live and work. But often semiconductors are thought of as the source of energy gluttony. We are all plugged in much more than we were 20 years ago.

Steve Nadel, ACEEE director, calls this “the high tech energy paradox,” in his introduction to the report. “Analysts tend to pay more attention to the energy-consuming characteristics of semiconductor devices than to their broader, economy-wide, energy-saving capacity.”

Turns out that in making life easier for us, semiconductors also have been taking a lot of strain off our power system. ACEEE looked at how we might have accomplished tasks without the semi-conductor and found it would have taken a lot more energy.

“Computers and servers show us that it can be easier to make decisions, and that it is easier to move electrons than it is to physically move people and goods,” says the report.

In fact, technologies that use semiconductors saved us 775 billion kWh in 2006 alone. Without semiconductors we would have used 20 percent more power that year. Or put more strikingly, had it not been for semiconductors, we would have built 184 additional, large power plants.

The report goes on to extrapolate that the semiconductor industry is likely to lead to even greater savings in the future.

Semiconductors could support an economy in 2020 that is 35 percent larger than today, but uses seven percent less electricity. By 2030 the economy could be 70 percent larger and use 11 percent less power. What does this mean in practical terms? About $1.7 billion in electricity savings, a lot less carbon dioxide and many more jobs, says the report.

Such startling projections make Wellinghoff’s statement seem less dramatic.

Here I’m in danger of sounding like a sales pitch on the jacket of a paperback. But if you read only one energy efficiency report this year, make it this one: “Semiconductor Technologies: the Potential to Revolutionize U.S. Energy Productivity. http://www.aceee.org/press/e094pr.htm. It is an eye opener.

Visit Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets podcast and newsletter.

Electricity still hot

By Elisa Wood

April 2, 2009

Latest federal projections reveal that our passion isn’t cooling for large air-conditioned homes and electric gadgets.

US households have increased their electricity use by 23% over the past decade, and consumption will grow another 20% by 2030, according Annual Energy Outlook 2009, released March 31 by the Energy Information Administration. http://www.eia.doe.gov/oiaf/aeo/index.html?featureclicked=1&

The report sees air conditioning use rising 24%, as the population migrates to the South and West. The number of refrigerators, washers and dryers grows as we add more houses; home electronics continue to “proliferate,” EIA says.

It is not just households gobbling up the power. We go to hotels, restaurants, stores, and movie theaters more. And they require more computers and other electronic equipment to serve us. In addition, as the population ages, it needs more electric medical and monitoring equipment. So power use in commercial buildings grows an average of 1.4% per year to 2030.

Of course, the economic recession is likely to dampen electricity consumption somewhat for now. But the report attempts to look “beyond current economic and financial woes and focus on factors that drive U.S. energy markets in the longer term.”

Energy efficiency is a bit like computer software created to negate viruses. The more viruses, the more updates to the software we need. So as electricity use grows, the efficiency industry is likely to find growing demand for its product — technology that allows us to use more and more electronic devices, but less and less electricity.

The report points out that best available efficiency technology cuts energy use without reducing service. By installing compact fluorescent bulbs, solid-state lighting, and condensing gas furnaces, we can reduce home energy consumption 29% over a business-as-usual scenario. Concern about energy prices, power plant emissions and energy independence will drive demand for these products.

The bottom line? Electricity will remain hot, and efficiency may be even hotter.

Visit Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets podcast and newsletter.