In light of a recent UN report on climate change, the need for energy efficiency has taken on even more urgency. Scientists warn that to avert the damages of global warming, we need to make massive changes to the way that we live our lives. The 2018 UN report says it will take nothing less than “rapid, far-reaching and unprecedented changes in all aspects of society.”
Cue the utility sector, which plays a huge role in implementing energy efficiency. Electric and natural gas utilities and independent statewide program administrators claim the lion’s share of electricity and natural gas efficiency programs in the United States. These programs use incentives, rebates and savings to encourage customers to use efficient technologies and reduce their energy waste in the process.
Utility programs across the country are making energy efficiency more of a priority. According to the 2018 State Energy Efficiency Scorecard from the American Council for an Energy-Efficient Economy (ACEEE), “the U.S. spent approximately $7.9 billion on energy efficiency in the utility sector in 2017 and saved close to 27.3 million megawatt-hours (MWh), a 7.3% increase from 2016.”
Utilities have a growing appreciation of the role they play in strengthening the grid and transitioning the country to a clean energy economy. Here are three ways utilities are successfully moving the dial on energy efficiency.
Savings from electricity and natural gas efficiency programs
Among the numerous strategies to achieve energy efficiency savings, programs tend to deploy methods that harvest the low-hanging fruit first. These are the most cost-effective and easily accessible measures, such as energy-efficient lighting and appliances. As both utilities and customers gain experience, the number of approaches increases. Typically, the shift entails moving from widget-based approaches (e.g., installing new, more-efficient water heaters) to comprehensive deep-savings approaches.
This more holistic lens generates greater energy efficiency savings per participant by conducting whole-building or system retrofits.
Duly noted: Massachusetts and Rhode Island earned top scores for their utility sector efficiency programs, getting 20 points out of an allotted 20 points. Those 20 points represent 40 percent of the 50 total points possible in the State Scorecard. This ratio was designed to mirror how the savings potential of utility and public benefits programs weighs in at approximately 40 percent of the total energy savings potential of all the policy areas combined. One of Massachusetts’s latest bold moves: In May, the Department of Public Utilities issued an order “approving $220 million in utility investment in grid-side modernization technologies over the next three years to improve efficiency and reliability and to pave the way for smart meter deployment.”
Energy efficiency resource standards
This category rewards states for having energy efficiency resource standard (EERS) policies with mandatory savings targets. The policies serve as a binding mechanism to raising efficiency goals and become the legislative backbone to long-term savings. It’s one key aspect of the leadership, sustainable funding sources, and institutional support trifecta needed to make energy efficiency goals a reality.
Duly noted: Having reputable standards is no guarantee of success. Take Florida, which has EERS structures in place but no bandwidth to carry them out. Florida earned no points for their EERS standards this year because they are in fact reducing their energy efficiency efforts by 80 percent.
Major updates for state utility policies and programs
While there are a few examples of states devolving on energy efficiency, overall the majority of states continue to make progress. The ACEEE report notes, “Several states have established and expanded utility savings targets since the release of the 2017 Scorecard. States that had recently reaffirmed or strengthened EERS policies are writing regulations, and in some cases the utilities are now filing efficiency portfolio plans.” The East Coast is leading the charge in efficiency target-setting for utilities.
Duly noted: New York announced on Earth Day that it will set 3 percent annual targets by 2025 for the electric utility sector. This significant increase positioned New York as a contender, along with Massachusetts and Rhode Island, for national leadership in annual savings target levels. For New York, it represents a 40 percent acceleration of efficiency in the next seven years.
These kinds of leaps indicate the comprehensive agenda needed to combat climate change—and how utilities are positioned at the forefront of the change. The state’s new efficiency strategy calls for a wide-ranging portfolio of approaches to reach the 2025 target, but one of the cornerstones is increasing market-based efficiency. As utilities across the country articulate and legislate goals, the real test lies ahead as the states must now turn to implementation.