ACEEE Blog

New Senate bill spells progress for industrial energy efficiency
April 23, 2015 - 1:33 am

By Meegan Kelly, Research Analyst, Industry Program


This Congress has started out well for industrial energy efficiency. Today, Senator Shaheen (D-NH) introduced the Smart Manufacturing Leadership Act. This new bill joins the Energy Savings and Industrial Competitiveness Act of 2015 (S. 720), better known as the Portman-Shaheen bill, which was introduced earlier this year.

The Smart Manufacturing Leadership Act of 2015 will facilitate innovation, enhance energy savings, and improve the global competitiveness of American manufacturers through the use of smart manufacturing technologies and processes. It directs the U.S. Department of Energy (DOE), in cooperation with other agencies, to develop a national smart manufacturing plan and to provide assistance to small- and medium-sized manufacturers in implementing smart manufacturing in their facilities.

Smart manufacturing is the use of information and communications technology to integrate all aspects of manufacturing, from the device level to the supply chain level, for the purpose of achieving superior control and productivity. Research by ACEEE and others has shown that smart manufacturing is demonstrating great promise for enhancing the efficiency of the existing manufacturing industry and dramatically reducing energy intensity, while making the firms more competitive.

A hallmark of the Smart Manufacturing Leadership Act is its focus on making the promise of smart manufacturing available to small- and medium-sized facilities that may not have the access to the same resources, such as high-performance computing capabilities, and expertise that larger firms can use to implement smart manufacturing solutions. DOE’s national labs are home to some of the fastest supercomputers in the world, and access to this infrastructure will allow small- and medium-sized manufacturers to develop realistic simulations and gain insight on product behavior, testing, and optimization of their processes and products.

In addition, the bill proposes that DOE use the existing Industrial Assessment Centers (IACs) to deliver some of the technical assistance that will help manufacturing facilities use energy more efficiently by applying intelligence. The IACs are celebrating their 40th anniversary this year. In recognition of the success of the program, the Portman-Shaheen bill reauthorizes a refreshed and enhanced program, making the IACs all the more important in assisting small- and medium-sized manufacturers with modernization through the use of technologies such as smart manufacturing.

We commend Senator Shaheen and her colleagues for providing the leadership to help make our manufacturing firms more energy efficient through smart manufacturing, and for remembering that firms of all sizes need access to 21st century technology.

While the introduction of legislation does not necessarily lead to passage (as we have seen over the past four years with the previous versions of Portman-Shaheen), these bills may have a better chance this Congress. We anticipate that the Senate Energy and Natural Resources Committee, under the leadership of Senators Murkowski and Cantwell, will include this provision, along with some others from the Portman-Shaheen bill, in the Manufacturing subtitle of an omnibus energy bill. A similar effort to develop a comprehensive energy bill is underway by the House Energy and Commerce Committee under the leadership of Chairman Upton.


A SUPR tool to map Clean Power Plan state compliance scenarios
April 21, 2015 - 10:47 pm

By Rachel Young, Senior Research Analyst, National Policy


Later this summer, EPA will publish its final Clean Power Plan rule, regulating greenhouse gas emissions from existing power plants. Though the final rule has not yet been released, policymakers, state governments, utility operators, and other stakeholders are weighing their options to reduce carbon dioxide (CO2) from the power sector in compliance with the rule. As states consider plans to submit to EPA, they will want to evaluate the costs of their compliance options, but comparing different strategies can be complex. To assist states in exploring the cost and pollution reduction potential of different options, ACEEE has created the State and Utility Pollution Reduction (SUPR) Calculator (Beta).

The proposed Clean Power Plan rule that came out last year allows states flexibility to pick from a host of pollution-reducing technologies and policies when designing their compliance plans. Energy efficiency is included in those options, along with renewable energy, nuclear power, natural gas generation, improvements to power plants, and many more.

The purpose of the SUPR calculator is to provide policymakers and stakeholders with a rough estimate of some of the costs and benefits of different policies and technologies that could help a state meet its air quality goals. Users can select from a list of 19 different policies and technologies, including energy efficiency policies, renewable energy options, nuclear power, emission control options, and natural gas, to build a compliance scenario in their state. SUPR shows users how much their scenario will cost and what they will get for that investment in just 4 easy steps:

For example, under the proposed rule, South Carolina is required to reduce its emission rate by 57%, to 772 pounds per megawatt-hour (MWh). In SUPR, you can pick from our options to see what you would need to do to comply with the rule. If you select an annual 1.5% energy savings target, building codes (high), combined heat and power (medium) twice, and ESCO programs, the results show that those policies together achieve 65% of the state’s compliance target, at a lower cost than many other compliance options. In addition, you can see in the figure—one of many in the calculator—how close the selected policies get the state to its goal.

SUPR calculator results for South Carolina

We will continue to refine the SUPR calculator to make it more useful. Please reach out to Sara Hayes (shayes@aceee.org) or Rachel Young (ryoung@aceee.org) with questions or suggestions. For more information regarding the SUPR calculator or other information on the Clean Power Plan, see our dedicated web page on the topic.


Congress just passed an energy efficiency bill
April 21, 2015 - 7:54 pm

By Steven Nadel , Executive Director


Today, the House of Representatives passed S. 535, a modest energy efficiency bill sponsored by Senators Rob Portman (R-OH) and Jeanne Shaheen (D-NH). This follows Senate passage a few weeks ago. The bill now heads to the president’s desk for his approval, which is highly likely.

The bill includes three provisions drawn from a larger efficiency bill sponsored by Portman and Shaheen. The bill has provisions that: (1) promote commercial building energy-use benchmarking and disclosure; (2) establish a voluntary “Tenant Star” program to promote energy efficiency in rental property; and (3) adjust efficiency standards for “grid-connected” water heaters so that water heaters needed for demand response and thermal storage programs can continue to be sold. ACEEE led work on the benchmarking and disclosure provision and played a substantial role in the other provisions, including presenting testimony on the water heater provision before a House committee earlier this month.

The bill will have modest impacts on energy consumption. What is probably most notable is that, in an environment where the political parties can agree on very little, energy efficiency is one of the few issues that generates enough bipartisan support to pass legislation. In fact, the bill passed both the House and Senate by overwhelming margins.

Hopefully this is a harbinger of future energy efficiency bills. For example, the Senate Energy and Natural Resources Committee will hold a hearing on April 30 on a broader array of energy efficiency bills, and the House Energy and Commerce Committee is expected to hold a similar hearing soon. We congratulate the House and the Senate for recognizing the value that energy efficiency brings to America’s homes and businesses, such as reduced energy bills and a better-functioning electric grid, and we look forward to working with both chambers to create a more energy-efficient nation.


Celebrate Earth Day’s 45th anniversary by getting ready for an energy-efficient summer
April 21, 2015 - 7:34 pm

By Maxine Chikumbo, Communications Assistant


Earth Day turns 45 tomorrow, which means spring is in full swing and summer is just over the horizon. But you can stay calm, stay cool, and lower your carbon footprint, too, despite the approaching heat, by putting energy efficiency to work for you. Here is a sampling of tips gleaned from our recently launched smarterhouse.org, the evolution of ACEEE’s Consumer Guide to Home Energy Savings. Following these tips can save you money by cutting down on your utility bills, make your home more comfortable, as well as improve its performance, and cut your energy waste.

As you dream about warmer weather and summer activities, keep in mind that costs can creep up during the summer when you’re cooling your home. Cooling systems account for about 17% of energy use in the typical house. Here are our recommendations for keeping cool and saving energy:

Upgrade your cooling system. Thinking about improving your home cooling system before it gets really hot? If you are unsure, or your central air conditioning is 10-15 years old, you may want to consider calling in a qualified home performance contractor so you don’t end up selecting an inefficient model that will add to your expenses over the long term. Bear in mind that your decision should depend on your climate, and whether you are replacing an existing unit or installing an entirely new system.

Use your AC less and fans more. There are several measures you can take to ensure optimum performance of your AC. Start by keeping the air filters clean so they don’t impede air flow and damage the unit, conditioning only when ventilation is inadequate, and avoiding cooling unoccupied rooms. You can also use your AC in conjunction with ceiling or standing fans for more efficient cooling. Whenever you leave your home, adjust your thermostat to a warmer temperature to save energy. Or install a programmable thermostat, so you don’t need to remember to manually change the thermostat every day—you can save 3–5% on air conditioning costs for each degree that you raise the thermostat.

Drive green. Whether you are driving to the beach, the movies, or a mountaintop camping site, you can reduce your environmental impact not only by driving a more eco-friendly vehicle, but also by being more efficient about the way you maintain and drive your car. Little changes like keeping your tires properly inflated or carrying a lighter load when you travel can make a difference—Did you know that carrying around an extra 100 pounds reduces fuel economy by about 1%?

Change your lights. Replace traditional heat-generating incandescent light bulbs with compact fluorescents (CFLs) or light-emitting diodes (LEDs), and think about installing light sensors and lamp timers to reinforce those energy savings. Lighting makes up about 5–10% of total energy use in the average American home, costing the typical household between $75 and $200 per year in electricity.

Keep your beer cold. The last thing you need is a non-functioning fridge in the middle of summer. Check the age and condition of your major appliances, especially the refrigerator. You may want to replace it with a more energy-efficient model before it dies. Note that it is generally much less expensive to buy and operate one big refrigerator rather than two small ones, so if you are thinking of buying a second one or keeping your old one for extra storage, you might want to reconsider. While you are at it, replace aging, inefficient appliances such as your dishwasheroven, or dryer. Even if the appliance has a few useful years left, a top-efficiency model is generally a good investment. Make sure you know what to look for in order to select the most efficient model to save on energy and long-term costs.

Scrape, don’t rinse. Summer calls for a lot of hosting of family and friends. When you’re cleaning up after those parties, this will likely increase the number of dishwasher loads. A brand-new dishwasher isn’t the only way you can save and operate it efficiently. For example, instead of pre-rinsing all your dishes, before loading, simply scrape off any food and empty liquids to save time, water, and energy. If you find you must rinse dishes first, get in the habit of using cold water.

Find and seal air leaks. Did you know that air leakage accounts for almost 30% of heat lost from your house? Many of these holes in the building envelope are found in the attic, in places you might not think to look. Look into how to find and seal some of these leaks to make your house more comfortable before the hot summer weather begins.

Get an energy audit. Call in a home energy specialist (also known as house doctors, energy auditors, raters, or home performance contractors) before making major efficiency improvements to your house. They will figure out where and why energy is being wasted, and what you should do about it. Home energy specialists study the building as a system, and perform full checkups that are designed to address overall safety, comfort, energy efficiency, and indoor air quality.

For a robust list of changes you can make today, this month, or over the course of the year, check out the Home Energy Checklist.

Happy Earth Day, every day!


No Building Left Behind: The Clean Power Plan and Multifamily Energy Efficiency
April 15, 2015 - 11:37 pm

By Lauren Ross, Senior Analyst, Utility, State, and Local Policy Program


This post was co-written​ by Todd Nedwick of the National Housing Trust

States will soon begin developing compliance plans to meet the greenhouse gas reduction targets required by EPA’s upcoming Clean Power Plan (CPP). As they contemplate different strategies, states should consider the important role that increasing the energy efficiency of multifamily buildings could play in cutting emissions and supporting local economies. Multifamily housing has been underserved by energy efficiency programs in most states, leaving great potential to reduce carbon emissions while also improving affordability of rental housing.

The CPP proposal calls on states to develop strategies for reducing greenhouse gases from existing power plants. The proposed plan grants states a great deal of flexibility in adopting strategies that best address the emissions of their individual energy portfolios. While states may draw from a variety of approaches, there’s increasing evidence that energy efficiency, as a pathway to compliance, might be the lowest-cost option for reducing carbon pollution. For many states, end-use energy efficiency is nothing new. In fact, many have shown much success in developing their energy efficiency resources, including statewide policy and utility-sponsored efficiency programs.

The CPP proposal gives states an incentive to ramp up energy efficiency, especially in underserved sectors. There remains significant untapped potential to cut emissions, save money, and boost local economies by reducing energy waste in affordable multifamily buildings. A forthcoming study by Efficiency for All will determine that a 26% reduction in electricity usage in affordable multifamily housing is cost-effectively achievable by 2034 in some states. The same study concluded that every dollar invested in multifamily energy efficiency returns more than $3 in benefits in reduced arrearages, customer calls, collection activities, and safety-related emergency calls. This is not to mention the higher comfort levels, increased housing property values, and health-related benefits that come with multifamily energy efficiency.

Equally important, because energy costs are often the highest operating expense in affordable multifamily housing, reduced energy costs help ensure the continued affordability of a much-needed housing stock—an issue facing many states and localities.

States should capitalize on recent developments in multifamily energy efficiency by including programs and policies that target the affordable multifamily housing sector in their compliance plans. In states with an energy savings target for utilities, or a similar commitment, utility-sponsored multifamily efficiency programs are a good starting point. Key elements of well-designed energy efficiency programs can be readily adopted to increase participation and savings in this sector. For example, utilities and governments can work together to provide a “one-stop shop” for building owners to access services and improved processes for building benchmarking. Moving forward, states can look to examples such as Massachusetts, Washington, and Minnesota, where energy savings achieved from multifamily, ratepayer-funded programs count towards state-set annual energy savings targets.

Beyond utility-sponsored efficiency programs, a handful of states support financing for multifamily energy efficiency through their state housing finance agency. Maryland’s Department of Housing and Community Development, for example, offers a multifamily loan program for energy efficiency investments that targets affordable rental properties. Similarly, the Pennsylvania State Housing Finance Agency recently provided financing for capital improvements that resulted in a reduction in carbon dioxide equivalent emissions of over 10,000 metric tons across 91 affordable multifamily properties. In their plans, states should consider claiming affordable housing energy programs like this as a means to compliance.

Many communities recognize the multiple benefits of healthier and more affordable housing for their residents. By including energy efficiency initiatives and programs targeted at affordable housing as part of state compliance plans, states can respond to these concerns while cutting emissions. States should seize the moment and collaborate with utilities, communities, and affordable housing stakeholders to ensure multifamily energy efficiency is a state priority.


Implementation of clean vehicle standards: How’s it going?
March 26, 2015 - 8:14 pm

By Therese Langer, Transportation Program Director


Standards cutting greenhouse gas emissions from cars and light trucks and raising fuel economy are among the biggest environmental achievements of the Obama administration. The standards are projected to save consumers hundreds of billions of dollars in fuel expenditures over the next decade. In the process, they are helping to shape the US and global auto industries by establishing an expectation of continuing technological progress toward high efficiency, low-emitting vehicles.

A new report from the EPA presenting manufacturer performance data from the first two years of the greenhouse gas emissions standards shows how the program is shaping up. Manufacturers by and large met the standards in both 2012 and 2013, with room to spare. Average compliance values in 2013 were 12* grams per mile, or 4%, below (better than) what the program called for in 2013, and in fact a bit below the more stringent requirement for model year 2014.

The performance of a sampling of manufacturers (figure 1) helps to explain two important aspects of the program: how the size mix of vehicles sold affects the emissions requirements, and what the role of special credit provisions has been.

Figure 1: Performance of selected manufacturers, 2012 and 2013 

Data from EPA’s 2013 Manufacturer GHG Performance Report

Footprint Rules

The case of Ford underscores a key feature of the standards that press accounts often obscure: average fuel economy and greenhouse gas emissions levels required under the standards for a given year depend on the size mix of vehicles sold that year. Average emissions of both Ford’s cars and its trucks declined from 2012 to 2013, yet their average emissions overall increased, due primarily to a whopping 11% shift from cars to trucks in Ford’s sales mix. This shift also meant that Ford’s average vehicle footprint (the area of pavement defined by the four wheels), and consequently its emissions standard, increased in 2013. Ford easily met its standard in both years.

This illustrates one reason that the “54.5 miles per gallon equivalent” commonly used to describe the requirement of the 2025 standards is not quite what it seems – the actual value required in 2025 will depend upon the mix of vehicles sold in that year. By the same token, how easy or difficult it is to achieve the standards in a future year is unrelated to what size vehicles consumers choose in that year.

Emissions also crept up for Toyota, even though average footprint went unchanged from 2012 to 2013. Toyota still met its standard handily, however, thanks in no small part to the Prius: we estimate that 58% of Toyota’s emissions margin can be traced to the high fuel economy of the iconic hybrid, though it accounted for only 11% of sales. Meanwhile, Nissan went from a 3 gram per mile deficit in 2012 to a 20 gram per mile surplus in 2013 and achieved the largest year-over-year reduction in emissions of the large manufacturers. The battery-electric LEAF, treated as a “zero emissions vehicle,” substantially helped Nissan’s performance (18% of compliance margin, at 2% of sales), but several other models also contributed to its 28-gram-per-mile average emissions improvement from 2012 to 2013.

Extra Credit

EPA’s report also lays out manufacturers’ use of credit provisions and other flexibility mechanisms of the program. Air conditioning (A/C) credits and flex-fuel vehicle (FFV) credits make up the vast majority of these special credits claimed in both 2012 and 2013. Manufacturers are acquiring A/C credits faster than the agencies expected by reducing the leakage of refrigerants and producing more efficient A/C systems, both of which yield real-world reductions in greenhouse gas emissions.

By contrast, FFV credits, which are awarded for the sale of vehicles that can run on ethanol (E85), do not generally reflect any real emissions reductions, because FFVs in the United States run almost entirely on gasoline. Figure 2 shows how much credit manufacturers claimed under the program. (Manufacturers not shown claimed none.)

Figure 2: Flex-fuel vehicle credits by manufacturer, 2012 and 2013

Data from EPA’s 2013 Manufacturer GHG Performance Report

The Detroit manufacturers have taken far more advantage of the FFV credits than the industry has on the whole; they’ll need increasingly to do without as the credits are phased out in the coming years. As figure 1 shows, Chrysler came just shy of meeting its emission standard in both 2012 and 2013. The company has nonetheless stayed in compliance using other flexibilities of the program, including the purchase of a modest number of credits from other manufacturers in 2013. But without FFV credits, Chrysler’s emissions would have exceeded the standards by more than 20 grams per mile, or roughly two year’s worth of emissions reductions under the standard. Thus, continued reliance on FFV credits could leave the company behind in terms of real technological progress a few years hence.

As the fuel economy and greenhouse gas standards go under the microscope in an upcoming “midterm review” of the program, detailed accounts of progress such as the EPA report provides will be essential. The first two years of data indicate the program is on track and unfolding largely as planned.

Peter Slowik contributed to this blog post.

EDIT: Originally, we published 13 grams per mile. The correct value is 12.


Seizing a Critical Moment for Energy Efficiency Finance
March 19, 2015 - 12:23 am

By Casey Bell, Senior Economist and Finance Policy Lead


An unprecedented amount of capital is ready to be deployed into the market for energy efficiency investments. Deals are getting done, and pipelines are being filled for some. Momentum is growing, but we are still far shy of tapping this market’s $279 billion investment potential.

Simultaneously, the policy landscape is evolving in ways that may drive demand for projects in the near- and mid-term future. The Clean Power Planenergy efficiency resource standards, and benchmarking and disclosure laws may generate project development. In addition, improved collection, dissemination, and analysis of building and financial performance may reduce the perceived risk around energy efficiency investments.

At the state level, many are thinking about new paths for deploying energy efficiency through resiliency investment, the transactive grid, and green banks to leverage private-sector dollars. Other factors that may bolster demand include intelligent efficiency, advances in net metering, and innovations in building and financial-performance data collection.

With all this exciting activity, it is clear to us that energy efficiency finance is facing a critical moment. The question is: Can we seize the moment and match capital with projects? As the clean energy landscape evolves, how do we ensure the greatest energy savings and financial returns from energy efficiency?

We are excited to explore these developments and questions at this year’s ACEEE Energy Efficiency Finance Forum. The forum, designed for investors, financiers, utilities, and policymakers, is scheduled for May 31–June 2 at the Marriott Marquis in San Francisco. Please visit our website for more information. Registration is now open!

We are also pleased to announce that we are collaborating with the Council of Development Finance Agencies to bring the CDFA Deal Room to this year’s conference. In the Deal Room, project implementers will spotlight energy efficiency projects that need financial support, and financiers and lenders interested in the energy efficiency space will have green-light opportunities to invest. To learn more, please reach out to Matthew McNerney at mmcnerney@aceee.org.

So, if you’re going to San Francisco, we look forward to seeing you there.


New York’s REV: Will the state’s new energy plan spur savings or slow progress?
March 09, 2015 - 12:55 am

By Steven Nadel , Executive Director


At the end of February, the New York Public Service Commission (PSC) released its final decision in Phase One of its Reforming the Energy Vision (REV) docket. We applaud the commission’s efforts to address 21st-century energy service needs and the improvements in this decision compared to the initial straw proposal. However ACEEE is concerned that the energy efficiency efforts outlined in the plan may not match the PSC’s stated intent to “not only achiev[e] current energy reduction goals, but accomplish[] higher goals consistent with State energy policy, and potentially, federal carbon reduction rules.” The decision leaves many details still to be determined, and these details will very much affect whether the state energy efficiency policy goals can be met. We also have concerns about several of the details provided.

The REV Decision

According to PSC Chair Audrey Zibelman, REV is designed to “reorient the electric industry and the ratemaking process toward a consumer-centered approach that harnesses new technologies and markets.” The emphasis appears to be on distributed energy sources like solar, wind, and combined heat and power systems, and on shifting loads away from times of peak demand. At the same time, a section of the decision (pages 72-82) specifically addresses energy efficiency programs. Under the decision, the state’s distribution utilities will take the lead in offering such programs which will gradually transition from a focus on “resource acquisition” to a focus on long-term “market transformation” that “will drive more market-based approaches.”

The PSC decision initially requires utilities to file energy efficiency programs for 2016 by the end of this month, but later this year each utility will need to file a three-year plan covering 2016–2018. The PSC decision establishes minimum energy-saving goals each utility must achieve in 2016. All of the utility goals combined total about 0.37% of statewide electricity sales. As discussed below, this is an extremely modest initial goal, and therefore we hope that the utility proposals will significantly exceed their minimum.

For 2017 and beyond, the utilities are told to propose metrics, both with the expectation that “longer-term goals should exceed existing targets,” and should include market progress metrics that go beyond kWh savings. Under REV, current statewide resource acquisition programs now operated by NYSERDA will largely end, the major exception being programs for low-income consumers that NYSERDA will continue to operate. NYSERDA will operate a set of market-transformation-focused programs in 2016 that will be finalized in a separate PSC docket.

The final decision is a significant improvement relative to a staff straw proposal issued in August 2014 that said energy efficiency budgets and targets would exist only for a transition period until “markets develop” and “utility performance measures…drive efficiency to become more integrated into utility operations.” In the final decision, programs continue “at least during the transition to REV markets,” and in various places the decision seems to support longer-term energy efficiency programs and goals that extend beyond a short transition period. In addition, the decision focuses much more on the market transformation approach to program design, an approach that ACEEE has long espoused.

However, even with these changes, we have concerns in three areas: energy-saving goals, how best to transform markets, and the transition from the present programs to the new construct.

Energy-Saving Goals

The energy-saving goals established by the PSC for 2016 are modest. While the PSC notes that it expects higher savings goals in the future, it offers no specifics. Developing these specifics will be critical. In 2007 New York set the goal of using energy efficiency to reduce electricity consumption by 15% below projected levels by 2015, an average of 1.9% savings per year. While building codes and equipment efficiency standards accounted for part of this goal, a substantial majority of the savings were to come from utility and NYSERDA programs.

In contrast, the 2016 minimum savings targets in the decision are only about 20% of this overall prior goal. Some of New York’s neighbors such as Massachusetts, Rhode Island, and Vermont have exceeded 2% annual savings (see p. 33 of our State Scorecard), showing that much higher savings are possible. The PSC should strive to meet these same goals and work with utilities to steadily ramp up savings to at least the prior goal of 1.9% per year if not higher.

As the PSC notes and ACEEE has found, the market transformation approach can increase energy savings in the medium and long terms. Energy saving goals should reflect this, complemented by goals for other key market transformation metrics. Our research indicates that states with binding energy savings targets save much more energy and money than states that leave energy efficiency decisions to utility planning processes.

Transforming Markets

As I wrote recently in a series of posts on the role of energy efficiency markets and programs, the most successful efforts meld the two. In particular, some market segments are riper for market-focused approaches than others. For example, private energy service companies have done well with large institutional customers. However other market segments such as small businesses and many residential customer segments have yet to see significant success. We should experiment with new market-based approaches for these unproven market segments, but we should also continue to use proven program approaches until alternatives prove their efficacy. The details of REV’s experimentation are critical and will be determined later this year in utility filings and an open docket on NYSERDA’s clean energy programs.

The market transformation approach to program design can help address the gap between current programs and an increasing reliance on markets. Market transformation programs work to overcome market barriers in specific market segments and also help with the development of promising technologies and services. Unfortunately, the REV decision seems to take a simplistic view of market transformation. For example, while we agree with the PSC that rebates are only one tool in the market transformation kit bag, they can be an important one, and the PSC is making a mistake by claiming that the place for a rebate program within a market transformation curve is “limited.” (We discuss the full kit bag including the role of rebates in Appendix B of an earlier ACEEE paper.)

Likewise, the PSC is too limited when it says “the end goal of a market transformation program for any particular measure is to eliminate further need for customer-funded subsidies of that measure.” Incentives can sometimes be ended once a market transformation initiative is successful, but sometimes it makes sense to continue a program and raise the eligibility level. For example, if efforts to promote air conditioners with a SEER (seasonal energy efficiency ratio) of 16 are successful, rather than end the air conditioner program, perhaps the target should be increased to SEER 18 or 20. At the same time the program might focus more on quality installation and maintenance to achieve additional energy and peak-demand savings.

Transitioning from the Present to the Future

It will take time until new market transformation initiatives have an impact, and time to experiment with other market-focused approaches. For example, a 2003 ACEEE study that examined 28 market transformation initiatives illustrates that it generally takes at least five years before a market transformation initiative has a significant impact, and often substantially longer. In the meantime, the recent REV decision leaves the fate of many successful programs in limbo. NYSERDA has had some very successful programs that ACEEE has recognized in the past such as its Multifamily Performance,Commercial and Industrial Existing Facilities, Commercial New Construction, Flexible Technical Assistance, Home Performance with Energy Star, and low-income programs. As part of REV, NYSERDA will retain the lead for low-income and many market transformation programs, but the others will end unless the utilities pick them up. We had hoped that the REV decision would direct the utilities and NYSERDA to carefully consider these proven programs and to develop transition plans for many of them. Instead the decision provides no direction on this issue and leaves decisions on these programs up to the individual utilities.

The Path Forward

New York fell four places (from 3rd to 7th) in ACEEE’s 2014 State Energy Efficiency Scorecard, due in part to REV transition issues. Without robust and ongoing support for energy efficiency from the PSC, the state could drop further. For example, if New York had achieved only 0.37% electricity savings in 2013 and higher goals had not been established, it would have placed even lower in the 2014 Scorecard.

There is much the PSC can and should do to build on the energy efficiency intentions stated in its REV decision. First, it should encourage utilities to include robust energy efficiency programs and goals in their plans, and it should make these goals an important consideration for plan approval. As part of this effort, the PSC should encourage the utilities to work with NYSERDA and develop transition strategies for current programs. Second, with the completion of Phase One, REV now moves into a second phase which will focus on rates and rate making, including performance-based regulation under which performance metrics are set and utilities are rewarded for good performance on them. Energy efficiency performance should be one of the key metrics used to evaluate utility performance.

New York has been an energy efficiency leader for many years. It can build on this leadership if REV is implemented with strong energy savings and other market transformation goals while gradually transitioning from past programs to the future.


Challenges and Opportunities in the Land of Lincoln
March 04, 2015 - 3:51 am

By Steven Nadel , Executive Director


Illinois—the land of Lincoln according to its license plate—has made great strides in energy efficiency in recent years. In 2014 it ranked 11th overall in ACEEE’s annual State Energy Efficiency Scorecard, up 15 slots from its score 5 years earlier. The main reason for its rise in rank was the state’s performance on utility-sector energy efficiency programs and policies. Energy efficiency measures installed under utility-sector programs reduced statewide electricity use by about 1% of the state’s total electricity consumption in 2013, the most recent year for which data are available. This placed Illinois 13th among US states in electricity savings, up from a tie for dead last in the 2009 Scorecard.

Under Illinois law, utilities collect the money for efficiency programs through rates, keeping 75% of the funds to operate their energy efficiency programs. They remit the remaining 25% to the Illinois Department of Commerce and Economic Opportunity (DCEO), which uses these funds to operate energy efficiency programs for low-income households and for state and local government facilities. Both the utilities and DCEO have done well. A 2014 ACEEE analysis found that Illinois electric utilities have exceeded their energy saving goals every year, while the gas utilities have just about met theirs. A 2014 independent evaluation of DCEO’s programs estimated that they have an overall benefit-cost ratio of 2.26.

Unfortunately, in late February, Illinois’ new governor, Bruce Rauner, proposed a budget that would divert $265 million of ratepayer funds intended to be used for energy efficiency and low-income energy assistance to the state general fund, to apply to a state budget shortfall (further information here). This includes DCEO’s energy efficiency programs that are discussed above as well as the Low Income Home Energy Assistance Program (LIHEAP), which helps pay the energy bills of low-income families. Even though the proposed budget isn’t effective yet, it’s reported that senior staff at DCEO’s energy efficiency programs have already been laid off, and remaining staff told not to sign any new contracts or to approve any new rebate applications. Most legal observers believe the legislature must approve the diversion—its approval is far from certain—but the governor appears not to be waiting.

In addition to considering budget issues, the legislature will also be debating energy legislation this year that could increase energy efficiency activity in the state. Current Illinois law calls for savings that are double what the utilities are currently achieving. The savings are lower than the law requires since the law also includes cost caps that limit the amount of money the utilities can spend. This keeps them from reaching their full savings goals even if the additional spending is cost effective to ratepayers. As part of the forthcoming energy bill, a coalition of business, environmental and labor leaders is proposing to raise the cost caps while still requiring programs to meet cost-effectiveness tests.

If the governor doesn’t want DCEO to operate energy efficiency programs any more, it might also make sense to use this legislation to let utilities keep all the energy efficiency funds they raise instead of diverting a quarter of the money to the state. If such a change is made, the utilities should be directed to provide energy efficiency services to the customers DCEO used to serve.

While Illinois does have budget problems, the solution shouldn’t divert utility ratepayer funds that are intended by statute to achieve cost-effective energy savings and reduce energy bills for public facilities and low-income customers. This diversion is penny wise and pound foolish. These funds not only save energy, they reduce costs for all taxpayers and ratepayers in Illinois.


ACEEE introduces updated website and launches smarterhouse.org, new home of Consumer Guide to Home Energy Savings
March 02, 2015 - 8:32 pm

By Eric Schwass, Web Manager


ACEEE celebrates its 35thanniversary this year. To commemorate that milestone, we’ve updated the design of our online home, aceee.org, to include larger, darker text, a simpler layout, and bigger images.

But the changes are more than cosmetic. We’ve improved our site’s search function, combined the blog and press release sections into one feed, and improved the way the site displays on mobile devices.

We’ve also expanded our popular consumer resources section, putting it on its own brand-new website: smarterhouse.org. Besides offering advice on what options to consider when upgrading or replacing home appliances, SmarterHouse can help homeowners and renters discover energy efficiency improvements that fit their budgets and pay dividends in energy savings.

These improvements arrive on the heels of our redesign of greenercars.org, ACEEE’s vehicle ratings site. For the first time, all of the ratings are available to everyone, subscription-free! And, we’ve just released the ratings for model year 2015.

I hope you will take a few minutes to browse the three sites. It is our goal to provide energy efficiency information that’s relevant to you, as an energy manager, researcher, policymaker, homeowner, or new car shopper. Your feedback is welcome and appreciated!