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Our new guide helps separate the Pikachus from the Digletts of energy efficiency behavior-change programs
October 18, 2016 - 1:00 pm

By Reuven Sussman, Manager, Behavior Program

In the energy efficiency world, programs that reduce energy use by targeting human behavior are relatively few, but proliferating quickly. In 2013, some US states claimed as much as 28% of their energy efficiency savings from behavior change programs. Like Pokémon Go characters in the wild, some behavior change programs are common, well-known, and seen everywhere. Others are rare and largely unknown. Still others are rarely seen but hold great potential. Utility program administrators may be familiar with a few of these programs, but an expert guide can help identify others and explain the best methods for capturing, collecting and using all of them. A new ACEEE report provides a thorough guide for understanding the world of energy efficiency behavior change programs, and why they work.

Home Energy Reports, the Diglett of behavior change programs

By far, the most common behavior change program implemented by utility program administrators are home energy reports (HERs) that feature social comparison information. These programs reduce energy consumption by giving residents reports on their energy use every one to four months (in addition to their monthly energy bills). The reports tell residents how much energy they used in comparison to similar homes in their region and include tips on how to reduce energy consumption. HERs have been implemented by utilities since 2008 and consistently reduce electricity use by about 1-2% (and gas by roughly 0.5-1%) by the end of their second year. The ACEEE report summarizes 30 such programs that were evaluated since 2013, and examines questions such as: How long do savings persist? Should HERs be delivered by paper or email? Should participants be automatically enrolled? How frequently should HERs be delivered? Like Diglett, these programs are common and well known. They play a significant role in shaping the landscape of behavior programs.

Games and competitions, the Pikachu of behavior change programs

For those interested in slightly more exotic behavior change programs, there are games and competitions. These proliferating programs are becoming the go-to-strategy for utilities and third parties interested in reducing energy consumption through behavior change. Like a rare Pikachu in the wild, they are quick, but their stamina (HP) is unknown. Though they can effectively change behavior, more needs to be learned about their long-term effectiveness. Utilities have implemented competitions between individuals, businesses, buildings, neighborhoods or even cities. For example, a series of competitions between commercial offices in Northwest USA resulted in 2-6% electricity reduction. Games such as Cool Choices make saving energy within a workplace fun and, in the process, reduce electricity consumption by as much as 6.6%. However, games and competitions can’t last forever. They motivate participants to save energy by rewarding the highest achievement when the event is complete. Although initial research suggests that energy savings likely persist after the end of the program, more data is needed.

Education Programs in K-12 Schools, Dragonite or Mew?

Education programs in K-12 schools frequently claim that they can reduce electricity use by 20% or more, but their methods of evaluation are usually weak or unknown. As such, these may be rare and powerful Dragonite-like programs, or they may continue to be mysterious Mew-type programs. More research is required to determine their true impact and long-term effectiveness.

Capture difficulty: Which social science strategies make behavior change programs effective?

Behavior change programs may work in different ways, but they all benefit from integrating research on psychology and human behavior. For example, community-based programs sometimes solicit pledges from homeowners to reduce their energy consumption. This element is effective because research shows that people who make public commitments to energy savings are more likely to take action than those who make private commitments or no commitments at all. According to one meta-analysis, the most effective strategy may be to use an energy champion or leader with a social network to promote the behavior change. Volunteer leaders or trusted messengers are effective at changing the behavior of their friends, family, co-workers, or community members, because they are trustworthy and credible, and because they can exert a degree of social pressure. Including this element can strengthen most group-based efforts such as competitions, education programs or strategic energy management. Public commitment and energy champions are just two of many tested strategies that make behavior change programs effective.

Feeling lost?

For those wanting to navigate the energy-behavior wilderness or nurture their own behavior change programs to maturity, the ACEEE guide to Behavior Change Programs: Status and Impact picks up where the 2013 Field Guide to Behavior Change Programs left off. There are many behavior change programs out there, each ranging in effectiveness and applicability. This guide helps to identify a variety of programs, from common to rare.

New research shows Michigan could actually profit from Clean Power Plan compliance
October 14, 2016 - 10:14 am

By Martin Kushler, Senior Fellow

My home state of Michigan recently released two reports summarizing how Michigan could comply with EPA’s Clean Power Plan requirements.  As has been the case with numerous other analyses, they found energy efficiency to be a core strategy for reducing the total costs of Clean Power Plan (CPP) compliance.  In fact, the modeling showed energy efficiency would help Michigan achieve excess carbon credits, which could be sold to other states. As a result, a Michigan compliance plan would cost less than a “business as usual” future with no CPP policy at all!

Setting efficiency targets pays off in Michigan

The importance of energy efficiency was emphasized by the executive director of the Michigan Agency for Energy, Valerie Brader.  She noted that expanding Michigan’s utility energy efficiency programs beyond the current statutory 1% annual savings requirement “is absolutely key to our energy future”, and would result in lower total costs to ratepayers than a business as usual path.  She added: “This is absolutely vital to control Michigan’s energy costs in the future.  It is saving us literally billions of dollars.”

While Michigan is officially “pencils down” in terms of working on CPP issues, until the courts lift the current ‘stay’, they did allow some modeling work that had been previously contracted-for to proceed to completion.  These results should be very helpful in guiding policy when CPP planning resumes.

Among the key findings were analyses which showed that doubling the state’s Energy Efficiency Resource Standard for utilities from 1% annual savings to 2% would produce net savings of an additional $900 million compared to a compliance plan with the current 1% standard. The modeling results also revealed that using a mass-based approach and engaging in interstate trading (to sell excess credits) would be the most advantageous path for Michigan.

Resources to get started in your state

The final Clean Power Plan rule makes it clear that energy efficiency has a big role to play to reduce greenhouse gas emissions. ACEEE has done extensive work examining the implications of using energy efficiency as a Clean Power Plan compliance approach and consistently finds opportunity for efficiency to eliminate pollution at a lower cost than the alternatives. Tools such as ACEEE’s SUPR calculator and Synapse’s CP3T are free and can provide states with a first look at the role energy efficiency can play in different states.

Michigan’s new analyses tell us what we at ACEEE know to be true for most states: energy efficiency puts the state in an excellent position to adopt a compliance approach that improves both the state economy and citizen health through reduced pollution. We hope that policymakers and regulators take notice of how effective and beneficial energy efficiency can be in achieving Clean Power Plan compliance.

Here’s how we scale up participation and savings in residential retrofits
October 12, 2016 - 10:00 am

By Jennifer Thorne Amann, Buildings Program Director

Our existing housing stock is an underutilized energy efficiency resource. We’ve only scratched the surface of its potential to save energy. Decades of research and thousands of retrofits show that even the most basic home retrofits can cut energy use by 15-20% while more comprehensive retrofit projects can double or even triple the energy savings. Residents benefit not only from lower energy bills, but also from improved comfort, better health, and safer, more durable homes. Despite the widely-documented benefits of whole home retrofits, demand for retrofits lags.

Approximately 518,000 retrofit projects were completed through the Home Performance with ENERGY STAR program from 2002-2015, according to DOE.  Add to that the roughly 115,000 homes retrofit through the Better Buildings Neighborhood Program and the total number of home performance retrofits completed through the leading program efforts approaches 700,000—less than 1% of US single-family homes. While this number doesn’t include retrofits completed outside of programs or those conducted through weatherization efforts targeted to low- and moderate-income households, it does illustrate the need to scale up retrofit activity to capture the energy savings available.  

How to meet challenges and expand retrofits

Our new report explores some of the lingering challenges facing residential retrofit programs as well as strategies for growing participation while delivering anticipated savings. We include examples of current programs that use these strategies for better results.  Specific challenges include: (1) calculating accurate project-level savings estimates, (2) ensuring that upgrades are installed and perform as expected, and (3) encouraging public buy-in and participation in programs. All of these factors affect a program’s ability to realize savings.

New technologies, practices, and program features represent opportunities to improve outcomes.  Already gaining traction in retrofit programs are data standardization, calibration of energy models to actual energy use, and real-time program evaluation---all strategies that help improve project-level realization rates. Emerging opportunities include leveraging the capabilities of smart technologies (e.g., smart thermostats and home energy management systems), expanded focus on HVAC system measurement and verification, and potentially, the inclusion of pay-for-performance incentives.

Programs can play an important role in growing consumer demand for home performance work. They can improve systems and practices that enable contractors to perform quality work and, at the same, boost energy savings. More accurate, reliable realization of savings at the project level opens up more opportunities to use financing strategies that are tied to energy savings, such as pay-as-you-save or on-bill financing. This can also enable better integration of energy efficiency improvements with other home maintenance and renovation projects, such as roofing or siding replacement. By seizing these opportunities, retrofit program providers can help residents gain all benefits of more energy-efficient homes.

Solar and energy efficiency need to work together like peanut butter and jelly
September 20, 2016 - 10:00 am

By Steven Nadel , Executive Director

Energy efficiency and solar advocates have on occasion butted heads over which option should be implemented in homes and buildings first and how much should be installed before the other is considered. Here at ACEEE we believe that, like market solutions vs. energy efficiency programs, this is a false choice. Both are valuable and can, and should, work together as an integrated solution to create cleaner and cheaper energy. While energy efficiency is just as clean as solar when it comes to emissions, efficiency by itself can’t produce energy for customers looking for a clean energy option, and solar without energy efficiency can’t reach the full extent of its potential.

However, in recent years, some solar companies and some consumers have been employing a solar-first strategy in the residential sector—installing solar systems without paying much attention to energy efficiency. This strategy has been spurred in part by substantial solar tax credits, net-metering rules in place in most states, and the availability of solar financing that reduces or even eliminates the initial purchase price, replacing the up-front cost with monthly payments that extend over many years. 

Despite these incentives, it still generally makes sense to implement as much efficiency as possible when installing generation. To look more closely at this issue, we conducted two illustrative analyses. The first compares the cost per kWh produced or saved from solar and energy efficiency when done individually or together. The second compares solar technical potential and residential electricity use, with and without efficiency. We find that when efficiency and solar are implemented in tandem, costs are lower, and solar can meet a larger share of residential loads.

Cost per kWh

For this comparison, we looked at the average cost per kWh produced from a typical solar system today, the average cost per kWh from residential energy efficiency, and the cost per kWh when efficiency and solar are done together.  Our results are summarized in the table below. A solar system costs about 17-23 cents per kWh produced (the low-end estimate is based on very sunny Las Vegas, the high-end on Washington, DC). Energy efficiency costs less—about 8 cents per kWh. But when solar and efficiency are combined, the cost is 3-6 cents less per kWh than solar alone. Energy efficiency has a lower cost, and it also reduces the size and cost of the needed solar system. PB&J (solar and efficiency) is less expensive than PB (solar) alone.

This analysis ignores the federal 30% solar tax credit and also ignores utility incentives that are commonly available for energy efficiency measures. If tax credits and incentives are included, the overall result is still generally the same—a combined approach is less expensive per kWh than solar alone. This is just a simple analysis for typical measures and hence is only useful as a rough approximation.

Solar production relative to residential electricity use

For this analysis, we compared estimates of the technical potential for rooftop solar systems in each state (as estimated in a GIS-based analysis by the National Renewable Energy Laboratory) with residential electricity use (from the most recent EIA Residential Energy Consumption Survey or RECS). We looked for states where the solar technical potential in the residential sector was at least 50% of current residential consumption, or of residential consumption if energy efficiency were to reduce consumption by an average of 30%. 

Our analysis only covers 24 states, as those are the states with detailed data in RECS at the single- or two-state level. Results of our analysis are shown in the map below. With efficiency, 23 out of the 24 states could hit the 50% solar threshold, including six reaching 75% solar (California, Colorado, Kansas, Nebraska, New Mexico, and Nevada). Without energy efficiency, only nine of the 24 states could meet at least half of the residential load with rooftop solar. Only in two states (California and Colorado) does solar potential exceed 75% of residential consumption. In other words, solar can meet a much larger proportion of residential loads if efficiency is included.  

This analysis doesn’t include potential growth in electric loads such as from increased use of electric vehicles, or conversion of gas and oil space- and water-heating systems to heat pumps. Details of our analysis, including a case where all gas and oil space-heating systems are converted to heat pumps can be found here. In this alternative case, only two states meet the 50% threshold without efficiency, while 12 states meet the threshold with efficiency. 

As with our first analysis, this is a rough analysis that assumes all of the solar potential is achieved and that all homes implement energy efficiency. Also, this simple analysis ignores the fact that some homes can produce more solar power than they use while other homes are not suitable for solar, such as those heavily shaded by trees or that do not face south. This analysis should be considered a yardstick and not a definitive analysis.


Energy efficiency will generally be less expensive per kWh than solar. And by lowering consumption, energy efficiency will stretch the available rooftop solar resource farther, allowing solar to serve a higher percent of residential consumption while also allowing a smaller and less expensive solar system.  These are two simple analyses but they make a clear case that jelly (efficiency) is needed to help peanut butter (solar) do its best.


Energy efficiency should be placed on a level playing field in the Clean Energy Incentive Program
September 15, 2016 - 1:37 pm

By Cassandra Kubes, Senior Research Analyst, Environmental Policy

Despite the fact that energy efficiency is generally the least-cost option for states looking to comply with the Clean Power Plan, it has yet to be fully considered as a strategy for the Clean Energy Incentive Program (CEIP). This could result in reduced investment in energy efficiency which would mean increased electric costs and less money in the hands of communities. As we’ve shown, it costs significantly less to reduce emissions through energy efficiency than through other means. These savings get passed down to customers, resulting in local job creation and economic development. The Environmental Protection Agency’s latest proposal for the CEIP is an important opportunity to ensure that states can reward investments in energy efficiency while claiming credit for the pollution it avoids. The CEIP early-action program incentivizes renewable energy and energy efficiency serving low-income communities, but as currently drafted, it puts efficiency at an unfair disadvantage. Earlier today ACEEE submitted comments to the EPA that seek to put energy efficiency on a level playing field.  

The CEIP is expected to spur early investment in clean energy and provides benefits to low-income communities. In addition to rewarding early investments in energy efficiency and solar projects implemented in low-income communities, the CEIP offers an extra incentive to renewable energy. While we support many elements of EPA’s recent proposal, we are requesting that EPA expand this pool of credits available to renewable energy to also include energy efficiency.

We think this point is so important that we’ve created a letter for sign-on that requests EPA to treat energy efficiency as equal to renewable energy in the CEIP. The exclusion of energy efficiency is a significant oversight that could cause states to opt for more expensive compliance options. We’ve received broad support for this idea from businesses, policymakers, localities, health advocates, environmental groups, and others. Now is the time to show your support and put efficiency on a level playing field in the CEIP. If you would like to add your organization in support of this letter, please contact Aileo Weinmann of Resource Media at aileo@resource-media.org.

ACEEE’s broader comments also recommend an increased incentive for residential efficiency and solar projects implemented in low-income households. We think the current award is not enough to drive the significant investment needed in these communities. Increasing the incentive will help to ensure that residential projects are a major component of the CEIP and that low-income households can directly participate and benefit from this program. We also request that EPA recognize the full benefits of combined heat and power (CHP) installed at critical facilities and other public buildings in low-income communities, and include it as an eligible technology under the CEIP. We support having EPA create a presumptively approvable CEIP plan for states to follow, and request that EPA provide clear guidance to states for evaluation, measurement, and verification (EM&V) to award efficiency savings. You can view a copy of ACEEE’s comments for more detail. With a recent deadline extension to November 1, there is still time to provide comments to EPA. Click here for more details on how to submit your comments.

Studies suggest that past rates of energy efficiency improvement can be sustained
September 08, 2016 - 11:46 am

By Steven Nadel , Executive Director

Can efficiency improvements achieved in past decades be sustained in the future?  How much impact does the rebound effect have on energy efficiency potential out to 2030, or even 2050? To answer these questions, I was invited to write a paper entitled The Potential for Additional Energy Efficiency Savings Including How the Rebound Effect Could Affect This Potential. The paper appears in the current issue of Current Sustainable/Renewable Energy Report (September 2016), an academic journal published by Springer. A PDF of the paper can be accessed here.

Energy savings potential past and future

The paper discusses energy efficiency achievements in several countries over the past several decades and finds that energy efficiency improvements have reduced energy use by 0.6-2.0 % per year, varying by country and period studied. The paper then reviews a variety of recent studies that estimate how much energy efficiency potential remains, looking at studies that estimate efficiency potential out to at least 2030 and, in multiple cases, out to 2050.

Based on this analysis, as well as past accomplishments, I find that compound energy efficiency savings of 1.0–1.4% per year appear to be feasible, and savings of 2.0–2.6% per year might be possible, but have been infrequently demonstrated in practice. By and large, these estimates of potential future savings do not include rebound effects, although estimates of past efficiency improvements do generally include rebound effects.

How rebound effects savings estimates

The paper summarizes a variety of studies that look at direct and indirect rebound effects. (Direct rebound is the impact of a purchase of an efficient product on the purchaser’s use of that product; indirect rebound reflects upstream impacts such as the impact of re-spending money saved on energy bills.) From this review, I find that direct and indirect rebound effects are generally each in the range of 10–20% of savings; therefore total rebound typically is in the 20–30% range.

Putting it all together—how much future savings are possible?

If we reduce the estimates of future energy efficiency potential to account for direct and indirect rebound, at a minimum it appears that recent rates of energy efficiency improvement can be sustained for many years. Some studies suggest that even higher rates of energy efficiency improvement might be achieved, but for the most part, these levels of savings have not yet been achieved in practice.  Still, given objectives of fostering economic growth and reducing emissions of greenhouse gases, striving to take efficiency improvements to a new level is a worthy objective. 

Expanding the energy efficiency toolbox through green banks
September 07, 2016 - 10:00 am

By Annie Gilleo, State Policy Manager

There are many tried-and-true tools in the energy efficiency toolbox. Programs in the utility sector that offer customers a variety of rebates, incentives, and technical services totaled more than $7 billion in 2014. In the private market, energy service performance contracts totaled more than $4 billion. And state energy offices loaned more than $74 million in revolving loans.

While these investments have led to substantial energy savings, there’s still enormous potential. One study estimated that more than $279 billion could be invested in energy efficiency retrofits and upgrades in commercial, residential, and institutional markets in the United States, resulting in more than $1 trillion of energy savings over 10 years. But getting there may require expanding our toolbox. Green banks are one strategy gaining more attention from states and local governments.

In a new report from ACEEE, we review the progress of six green banks and four additional financing entities that serve similar functions. Our goals were to understand how green banks are working in specific market sectors and to identify promising strategies and lessons learned, with a particular focus on energy efficiency. If more states are looking to green banks to stretch public dollars, fill market gaps, and ramp up clean energy investment, we want to know how the early results and lessons learned can shape the next round of green bank deployment.

What is a green bank?

There is no one established definition of a green bank. Green banks are typically created by state and local governments to address the barriers faced by consumers and lenders in financing clean energy projects and environmentally beneficial technologies. They take many shapes, but in general, green banks share the following key features:

  • They are publicly chartered financing institutions.
  • They have a mandate to invest in clean energy deployment.
  • They leverage public funds to stimulate private capital.
  • They offer products across sectors, focusing on bridging market gaps.

What do the data show?

We reviewed current and planned portfolios of green banks to better understand their role in catalyzing energy efficiency projects. Many of these institutions are in the early stages of planning or deployment, so data are limited. However, we did find some interesting results. Here are just a few:

  • Nearly all of the green banks we reviewed invest in both renewable energy and energy efficiency projects, or they have plans to expand portfolio offerings to cover both. However, established green banks like Connecticut Green Bank tend to have portfolios that lean heavily toward renewable energy projects, suggesting opportunity remains for investing in efficiency. Furthermore, we found relatively few projects combining energy efficiency and renewables.
  • Data on energy savings are less commonly available. For green banks that were able to report them, statewide incremental energy savings amounted to less than 0.01% of statewide electricity sales. The limited size of these energy savings reflects the relative newness of green banks, with many programs not yet reaching full scale.
  • Partnerships can be the key to success. We found that most green banks work in tandem with utility-administered programs, leveraging ratepayer-funded programs to achieve deeper energy savings.

What does the future hold?

Green banks are still relatively new, and there is significant opportunity to expand and refine program offerings. Green banks have ambitious goals of deploying clean energy technologies and delivering energy savings. But to better understand the current and potential impact of green banks, we need better data. Several green banks are taking the lead in developing thorough tracking and evaluation metrics that will help us better understand the role green banks play in the marketplace.

Green banks show promise in several states, and we expect that more states will consider whether a green bank is the right fit for them in the future. But they are not the only strategy to provide streamlined clean energy to customers, and several states have chosen to fill market gaps by leveraging an array of existing programs and services. Ultimately, whether states choose to develop green banks or deploy clean energy resources in other ways, partnerships and integration of services will be the most important tool for breaking down market barriers. 


The good, better, and best of the Phase 2 heavy-duty vehicle standards
September 01, 2016 - 11:07 am

By Siddiq Khan, Senior Researcher

Heavy-duty vehicle fuel efficiency and greenhouse gas emissions standards are a signature program of the Obama administration, initially adopted in 2011. The Department of Transportation (DOT) and the Environmental Protection Agency (EPA) adopted a second phase of the program last month, built on the success of the Phase 1 program. Phases 1 and 2 together will reduce fuel consumption of new heavy-duty vehicles by 25-48%, depending on vehicle type, between model years 2010 and 2027.

The good: Major efficiency gains for tractor-trailers

Tractor-trailers are the biggest fuel users among heavy-duty vehicles, responsible for two-thirds of heavy-duty oil consumption. Therefore, getting major fuel efficiency gains from tractor-trailers is key to an effective program. Long-haul tractor trucks are good candidates for rapid uptake of new technologies due to their high fuel consumption and high mileage—more than 100,000 annual miles for their first several years on the road. Clearly, fuel efficiency investment pays back quickly. Inclusion of trailers in Phase 2 was a crucial step forward, because known, affordable trailer aerodynamic and tire technologies can deliver over 10% fuel savings for tractor-trailers. Tractor truck engine efficiency will improve 5% by 2027. Combining improvements from engines, transmissions, aerodynamics, tires, and trailers, average tractor-trailer fuel efficiency will almost double from 2010 to 2027.

The better: Forward-looking program design

The vehicle certification protocols in Phase 2 will promote integration of engine, transmission, and vehicle components. The modeling tool for calculating vehicles’ fuel efficiency and GHG emissions (GEM) has become more sophisticated, which will allow many more technologies to contribute to vehicles’ certified fuel efficiency. Improved categorization of vehicles, inclusion of road grade, and re-weighting of certification cycles will help certification values closely mimic real-world fuel efficiency.  

The best: Cost-effective program and big oil savings

The Phase 2 standards are highly cost-effective. A typical buyer of a new long-haul truck in 2027 will recoup the cost of the added technologies in under two years through fuel savings. The program will provide continuity and certainty to manufacturers, deliver savings at the pump to truck owners and operators, and reduce freight costs. The 37% overall reduction in heavy-duty vehicle fuel consumption from Phases 1 and 2 together will yield savings of about 1.5 million barrels of oil per day (MBD) in 2040.

The Phase 2 standards are a win-win-win for the transportation industry, consumers, and the environment. The new program enjoys wide-ranging support from engine and truck manufacturers, suppliers, fleets, and the environmental community. Cummins, Daimler, Con-way, FedEx, UPS, Waste Management, and PepsiCo, among others, have endorsed the new standards. 

Will New England electricity consumption continue to stay flat?
August 30, 2016 - 1:55 pm

By Steven Nadel , Executive Director

In the US, electricity consumption has been essentially flat in recent years. Increased energy efficiency efforts have contributed to this lack of consumption growth, even as the US economy has grown. Looking forward, we believe that energy efficiency measures will likely drive consumption further down. However, there will be a variety of other trends affecting future electricity consumption and peak demand including:

  • Accelerating use of distributed power generation on the customer side of the meter, such as photovoltaic (PV) systems, which decrease the power that must be supplied by the grid
  • Growing use of electric vehicles (EVs)
  • Possibly expanding use of electric heat pumps (HPs) to replace space and water heating equipment that burn fossil fuels

The pace of these different trends is hard to predict. As Niels Bohr has noted, “prediction is very difficult, especially about the future.” This said, it is useful to get a sense of how these trends might affect electricity consumption and peak demand in the future so that we can begin to plan ahead. Today, ACEEE released a paper that provides three scenarios on how these trends could affect one region in particular—New England. We chose New England because all of these trends are active in New England, based in part on regional efforts to address climate change.

Our analysis includes a reference scenario as well as two alternative scenarios with progressively more aggressive assumptions about the use of energy efficiency, PV, EVs, and heat pumps. In the reference scenario (which comes from the Energy Information Administration’s Annual Energy Outlook), electricity sales decline until 2018 and then gradually rise. In our two alternative scenarios, sales decline more through about 2030 (due primarily to the greater energy efficiency included), but then increase over the 2030–2040 period as the electric vehicle and heat pump market shares increase significantly. Our three scenarios are presented in the figure below, which also shows the Independent System Operator—New England (ISO-NE) forecast that extends to 2025. The impacts of energy efficiency on sales are greater than the impacts of PV. Heat pumps and EVs both increase sales, with heat pumps having the larger effect relative to the reference case.

We also examined trends for summer and winter peak demand. In the reference case, both summer and winter peak demand modestly increase. ISO-NE also predicts gradually rising peak demand. In our more accelerated scenarios, summer peak demand declines and winter peak demand modestly grows. In our middle scenario, summer peak declines until about 2030 and then levels off before starting modest growth, reflecting the impact of EVs and heat pumps. (We assume that a significant share of heat pump growth occurs in homes lacking central air conditioning because adding air conditioning to a home can be a significant consumer motivator.) The increase in winter peak demand is driven by growth in EVs and heat pumps. In the most aggressive scenario, by 2040 summer peak demand is only a little higher than winter peak demand. And the trends are such that the winter peak could surpass the summer peak in the 2040s.

Of course, other scenarios are also possible, such as combining our more aggressive EV and heat pump scenarios with lower levels of efficiency and PV. Such scenarios would result in higher sales and higher summer peaks. The annual rate of efficiency savings shown in the accelerated and aggressive scenarios have been achieved in several of the New England states, although there is uncertainty about how many years these increased savings rates can be maintained. The levels of PV, EV, and heat pumps are more speculative and are subject to large uncertainty.

Both the ISO-NE forecast and our scenarios illustrate the importance of incorporating energy efficiency, as well as PV, into load forecasts. If energy efficiency and PV were not included, forecasts would be much higher, resulting in extra costs for ratepayers if the grid were designed to serve higher loads. Our scenarios also illustrate the importance of including EVs and heat pumps in long-term forecasts. While the impacts of these technologies are moderate over the next ten years (the period covered by the ISO-NE load forecast), for longer timeframes these technologies could become increasingly important.

At this point, it is probably premature for resource planning to put too much weight on these long-term scenarios. However, these scenarios do point out two possibilities that resource planners should keep in mind. First, it is possible that kWh sales and summer peak demand will no longer grow. Existing power plants will retire and may need to be replaced, and the grid will also need investment to replace aging equipment and address growth in some fast-growing regions, but significant growth in sales and resource needs above present levels are unlikely over the next 25 years. Second, over the longer term (post 2040), electricity sales could grow beyond current levels if EVs and heat pumps take off, and it is possible that the New England region will become winter peaking during this period.

We are entering a dynamic period with substantial uncertainty for long-term electricity sales and peaks. Trends in energy efficiency, PV, EV, and heat pump impacts need to be carefully observed and analyzed over the next few years. Resource planners should be sure to incorporate these emerging trends into their long-term forecasting and planning, giving them greater clarity and clearer direction. This observation and analysis may also keep energy consumption, energy costs, and energy sector emissions down while continuing to provide the electricity needed to grow the New England economy.

Our new analysis finds energy efficiency is the 3rd largest resource in the US electric power sector
August 19, 2016 - 10:00 am

By Maggie Molina, Utilities, State, and Local Policy Director

Have you ever described efficiency as an energy resource and gotten a quizzical look in return? We have, even though utility system planners have been using energy efficiency for decades to make sure that power for their customers is both reliable and affordable. For those of us who have been in the energy efficiency industry for years, or even decades, we sometimes take for granted that others will understand what we mean. But we must not. We must help educate a wider audience that energy savings from greater efficiency—whether we call them negawatts, an invisible energy source, virtual power plants, or something else—are a cornerstone of our nation’s energy system and critical to a clean and affordable energy future. In fact, energy efficiency is now the third largest resource in the US electric power sector, as shown in a new report we released today.

How we crunched the numbers

Last year we set out to quantify the size of the energy efficiency resource that currently exists in the electric power sector using a bottom-up approach to estimate energy savings achieved through specific policies and programs. We looked at three areas. First, through our State Energy Efficiency Scorecard, we had 10 years of state-level data on evaluated energy savings from utility-sector energy efficiency programs. Second, we used state-level energy savings estimates of appliance efficiency standards from the Appliance Standards Awareness Project (ASAP). And third, we used state-level energy savings estimates of building energy codes from the Pacific Northwest National Laboratory (PNNL).

Energy savings produce huge benefits

The combined impacts of these three major energy efficiency efforts since 1990 amount to a remarkable accomplishment in the US electric power sector. We estimate that not only is efficiency our third largest resource, but, more importantly, it has averted the need to build the equivalent of 313 power plants since 1990. We also estimate that efficiency reduced annual carbon dioxide emissions, a major contributor to climate change, by 490 million tons in 2015. We can see further evidence of efficiency’s impact in the fact that electricity consumption has flattened in recent years even as the economy has grown. What’s more, energy efficiency has saved consumers $90 billion annually on electric bills. For American households, this translates to average savings of $460 per year.

Many more benefits come from investing in energy efficiency. For example, efficiency is especially important for low-income, African-American, Latino, and renting households because it lowers their energy bills over the long term and helps alleviate their disproportionate energy burden (the percentage of household income spent on utilities). Our new report also details other benefits of efficiency such as economic development, job creation, community resilience, and improved health, safety, and comfort.

Energy efficiency could become our number one resource by 2030

We can do much more through energy efficiency in the electric power sector, as ACEEE and others have recently documented. If we increase our application of the three major policies examined in this report (appliance and equipment efficiency standards, utility energy efficiency targets of 1.5% per year, and building energy codes), efficiency could become our nation’s largest electricity resource by 2030, providing one-third of total expected electricity generation needs. These additional energy savings would avoid the need for electrical capacity equivalent to 487 power plants. Combined with the gains since 1990, savings from energy efficiency could amount to the output of 800 power plants by 2030.

State-level policy action is critical to this level of achievement. ACEEE has found that energy efficiency policies can play a major role in each state’s compliance plan for the Environmental Protection Agency’s (EPA) Clean Power Plan, which is aimed at reducing greenhouse gas (GHG) emissions in the electricity sector to limit climate change. Most states could meet at least 25% of their emissions reduction requirement through efficiency policies and the resulting investments, and many could achieve 100%.

Other sectors have huge energy efficiency potential

While this paper tells the story of the efficiency resource in the electricity sector and its emission reduction benefits, there is much more to the story of energy efficiency and climate change mitigation. According to the EPA, the transportation sector accounts for 26.5% of GHG emissions in the United States, followed by industrial (21.4%), buildings (12.4%), and agricultural (9.2%), Efficiency has an important role to play in all of these areas. For example, the transportation sector could potentially reach zero emissions by 2050, with more than half the reductions coming from energy efficiency, including both vehicle and transportation efficiency. The International Energy Agency estimates that energy efficiency will need to account for nearly half of all GHG emission reductions through 2040 to reach a scenario in which the global increase in temperature is limited to 2 degrees Celsius.

We will need major investments and critical support from government, industry, and the nonprofit community to reach these relative levels of energy savings in the US and realize all the benefits they can bring. Just as major policies and commitments in recent decades have helped energy efficiency become our third largest electricity resource today, now we need a new era of visionary policy to create opportunity for future generations.