Making sense of commercial-sector energy use data
April 29, 2016 - 10:16 am

By Jennifer Thorne Amann, Buildings Program Director

Commercial-sector energy use in the US increased by 63% from 1979 to 2012, rising from total source energy use of 10.6 quads in 1979 to a peak of 18.4 quads in 2008 before declining to 17.4 quads in 2012.  This growth can largely be attributed to a corresponding increase in commercial building floor area, which grew by 70% over the same period. But that is only part of the story. As the graph below illustrates, as floor area has trended upward over time, energy use per square foot has gone up and down, peaking in the 1999-2003 period but declining since then. As of 2012, energy use per square foot was 4% lower than 1979.  

Commercial building floor area and energy consumption per square foot, 1979-2012

Source: ACEEE analysis based on EIA data from the Monthly Energy Review and the Commercial Buildings Energy Consumption Survey

Why is that? Reductions in energy use per square foot are due in part to improvements in the efficiency of new construction and key end-use equipment, a shift to less energy-intensive building uses, and higher growth in more temperate regions. At the same time, some of the improvement in energy use per square foot (which we report on a source energy basis) is offset by the significant increase in electricity use in commercial buildings, which has doubled since 1979 while other fuel usage has remained flat.

While these data begin to sketch a picture of the broader landscape of commercial sector energy use trends, we need more details to understand which technologies, practices, and policies are driving changing energy performance in individual buildings. EIA recently released preliminary consumption data from the 2012 Commercial Building Energy Consumption Survey (CBECS). This long-awaited and highly-anticipated data comes almost a decade after the last CBECS survey for 2003. In the coming months as the full dataset is released, we’ll dig in and report further insights on the most important efficiency trends in commercial buildings. 

Data Points is a blog series focusing on the graphs and other images that tell the energy efficiency story.

Can energy efficiency rise to its $279 billion potential and help meet climate goals?
April 29, 2016 - 10:00 am

By Brian Stickles , Research Analyst, Finance Policy

Energy efficiency financing has seen record growth over the past year. Property-assessed clean energy (PACE) hit a billion dollar milestone, the nation’s largest green bank has roughly $4 billion of projects in the pipeline, and green bond issuance grew from $3 billion four years ago to over $40 billion in 2015. Total energy efficiency investment in buildings is slated to reach $125 billion by 2020, which is still less than half of the estimated $279 billion available.

But is it enough? On one hand, the market is telling us that we are poised to leave hundreds of billions of dollars on the table, while the Paris climate negotiations earlier this year set investment targets of over $200 billion to help avoid climate change. Energy efficiency financing is growing fast, but can it grow fast enough?

Green banks have emerged to meet the demand previously unmet by cash-strapped public enterprises and risk-wary private ones. They are facilitating billions of dollars of investment and growing nascent program to scale, but there are just a handful of them and many are nascent programs themselves.

PACE has seen astounding success in the past year, but all that success is still a fraction of its potential. Of the 32 states with enabling legislation, only 16 have active programs, and the vast majority of projects are being done in just one.

For this reason, green banks and PACE are headlining this year’s ACEEE Energy Efficiency Finance Forum in Newport, Rhode Island. These two topics exemplify the theme of this year’s conference, “going deep,” as they have both just scratched the surface of their potential. In order to scale, we need deep energy efficiency retrofits as well as deep market penetration. We need to move beyond swapping out light bulbs and reaching only early adopters.

At this year’s conference we explore all facets of the industry: residential; commercial; multifamily; and the municipalities, universities, schools, and hospitals sector. Within these tracks we will feature case studies of successful financial programs and products so that you can apply these concepts in your own companies and communities. Covering utility programs, different lease agreements, and all types of energy performance contracts, this year’s Finance Forum will spread myriad success stories.

To shed more light on these topics, we will be joined by Rhode Island general treasurer Seth Magaziner who will give the opening plenary speech. Massachusetts energy secretary Matthew Beaton will cross state lines from the top-ranked state in energy efficiency to give Monday’s luncheon address. Tuesday morning, Judith Greenwald, deputy director for climate, environment, and energy efficiency from the Department of Energy’s Office of Energy Policy and Systems Analysis (EPSA) will talk about the Quadrennial Energy Review.

We’d welcome you joining in the discussion. There’s still time to register and book a room at conference rates. Please visit our Finance Forum web page for more information. See you in Newport!

A DOE budget request sheds light on the future of advanced manufacturing
April 28, 2016 - 9:50 am

By Naomi Rogoff, Industry Intern

The Department of Energy’s 2017 budget request was released back in February, and is now awaiting congressional approval. The request included $261 million for the Advanced Manufacturing Office (AMO), the part of DOE that focuses on energy use in the manufacturing sector. It does so by bringing together manufacturers, research institutions, suppliers, and universities to promote manufacturing clean energy products and implementing best practices. The increase, over prior years, of the AMO budget allocation demonstrates a continuing interest and commitment by the federal government to invest in energy efficiency in the industry sector, especially in helping energy-intensive manufacturers reduce their energy use and develop new, energy-efficient technologies, processes, and products.

Industrial priorities in the AMO budget

The AMO budget request is divided into three subprograms: Advanced Manufacturing R&D Projects ($102.5 million), Advanced Manufacturing R&D Facilities ($129 million), and Industrial Technical Assistance ($29.5 million). The R&D Projects subprogram request includes $10 million for projects at the Manufacturing Demonstration Facility at Oak Ridge National Lab, and the bulk of the budget, $40 million, would be invested in competitive solicitations. The R&D Facilities subprogram plans to concentrate its efforts on new and continued funding for Clean Energy Manufacturing Innovation Institutes, specifically highlighting the first annual payment for a new Energy-Water Desalination Hub. The Technical Assistance subprogram allocates $10 million each in continuing support for the Combined Heat and Power Technical Assistance Partnerships and the Industrial Assessment Centers (IACs).

The request continues a long history of government support for industrial energy efficiency and advanced manufacturing. The graph below compares annual investment in AMO activities dating back to 1998 (adjusted to 2015$) and a breakdown of the programs funded. The 2017 request represents a 14% increase over last year’s allocation for AMO and is one piece of the administration’s overall request for a 40% increase for the Office of Energy Efficiency and Renewable Energy. While the budget allocations have fluctuated over the years, this year’s request represents a firm commitment by DOE to invest in the development of energy-saving research and technology.

What we learned from AMO’s director

Earlier this month, AMO’s director, Dr. Mark Johnson, shared more details on the office’s future plans during a meeting of ACEEE’s industrial working group. Dr. Johnson highlighted upcoming efforts relating to water desalination, specifically encouraging the development of technology, scientific research, and manufacturing that can increase the efficiency of desalination without an increase in cost or energy usage. He also emphasized the work of the IAC program, which is celebrating its 40th anniversary. Through the program, teams at 24 of the top US engineering schools have conducted more than 16,000 energy assessments, helping manufacturers save more than $1 billion in energy costs, enough energy to power 1.4 million homes. A solicitation is currently open to determine which universities will host the 24 IACs for the next five years, and DOE will invest approximately $35 million in those centers over that period.

If you’re interested in becoming involved in ACEEE’s industrial working group, send an email to and request an invitation to join. The group is an informal committee of stakeholders that convenes periodically, primarily to discuss federal policy issues affecting the industrial sector.

Industrial topics in this year’s Better Buildings Summit

AMO staff and industry partners will showcase best practices and leading energy efficiency solutions at DOE’s upcoming 2016 Better Buildings Summit in Washington, DC. The Summit will be held on May 9–11, and will include 900 participants and speakers from the commercial, industrial, public, multifamily, residential, and data center sectors. Industrial topics will cover water-saving technology and projects, smart manufacturing, data analysis, and energy savings related to heating/cooling, steam, pumps, process heating, and compressed air. Dr. Johnson and ACEEE’s senior director for research, Neal Elliott, will be featured panelists on the first day of the summit, during the Better Plants Partner Meeting: Key Trends and Future Directions in Industrial Energy Efficiency session. Other staff from the ACEEE Industry Program will participate in panels, including Ethan Rogers, who will discuss supply chain efficiency, and Christopher Russell, who will discuss how to value the multiple benefits of efficiency. 

Want to use energy efficiency to benefit low-income communities in planning for the Clean Power Plan? We’ve got a guide for that.
April 27, 2016 - 11:24 am

By Mary Shoemaker, Research Assistant, Environmental and State Policy

The Clean Power Plan may be stayed, but the Environmental Protection Agency (EPA) continues to guide states who are considering their compliance options. This morning, EPA indicated its commitment to moving ahead with the Clean Power Plan by sending a proposal on the Clean Energy Incentive Program (CEIP) to the Office of Management and Budget. The CEIP is a program that would provide states with extra credit for using energy efficiency in low-income households and communities to reduce emissions prior to the compliance period.

In an ACEEE white paper released today, we guide states through designing and implementing low-income energy efficiency programs and investments. We focus on approaches that are well suited for credit under the CEIP and for helping states achieve their overall emission limits under the CPP. Consistently a cost-effective option for meeting electricity demand, keeping electricity bills low, and reducing environmental compliance costs, energy efficiency is a great way for states to meet a significant portion of their Clean Power Plan targets. States with high poverty rates particularly stand to benefit from low Clean Power Plan compliance costs, so it’s important for them to think carefully about compliance strategies that will reduce low-income households’ energy burden and generate benefits for their communities.

The value of energy efficiency in low-income households and communities

The Clean Power Plan offers an excellent opportunity for states to set up long-term strategies to benefit the communities most in need. Recent ACEEE research has illustrated that low-income families face a distinct energy burden, spending a larger portion of their income on utility bills than the general population. Because of that, energy efficiency can make a big difference to those families. Energy efficiency keeps electricity affordable and improves low-income families' quality of life. Many businesses and community-based organizations that serve low-income households also stand to benefit from energy efficiency projects, which reduce their operating expenses and spur local economic development. It’s important for state regulators and program administrators to consider the best way to meet the needs of those communities by keeping compliance costs low and investing in energy efficiency in low-income neighborhoods. We lay out the elements of the most successful energy efficiency programs for low-income residents in a report published last month. Now, it’s time for states to think even bigger. By expanding energy efficiency programs and investments for people at all income levels, states will harness untapped energy and emission savings, laying a strong foundation for success.

Next steps for states

States don’t need to start from scratch when it comes to making plans for energy efficiency in low-income communities. Instead, they can draw upon the great resources already available to them. As our best practice guide lays out, public housing authorities, housing finance agencies, affordable housing organizations, and other energy efficiency program managers can help state air offices understand how energy efficiency programs and investments designed for low-income communities are delivered, and how they can be improved. In turn, state air regulators can incentivize these programs in their compliance plan and participate in the CEIP to earn extra compliance credit for early emission reductions from energy efficiency programs for low-income households. By working together to include programs for low-income communities in their state’s compliance plan, air offices and the affordable housing community will create a sense of permanence for these programs and investments, and they will open the door for any additional funding that becomes available for compliance efforts.

Leveraging energy efficiency in Clean Power Plan compliance

There are many ways that states can use energy efficiency to lower the cost of compliance with air regulations. ACEEE’s best practice series highlights several of the energy efficiency policies and programs that states should consider. The first paper describes the steps states can take to develop a compliance plan and use energy efficiency as a core strategy. The second paper helps states lead by example through energy efficiency in public buildings. Today’s paper on implementing and evaluating investments and energy efficiency programs for low-income communities is our newest addition to the series. From webinars to compliance planning tools, stay tuned as ACEEE continues working to help states take full advantage of opportunities to increase their energy efficiency.

Intelligent Efficiency & Continual Commissioning
April 22, 2016 - 10:00 am

By Ethan Rogers , Program Director, Industry

One of the more vexing challenges for those in the energy efficiency program sector is ensuring that savings resulting from the implementation of an efficiency measure persist over time. Fortunately, a solution exists: intelligent efficiency can prevent the degradation of energy savings, and in some instances increase savings over time.

The Challenge

Imagine you’re a building operator with a complex building management system. You’ve become accustomed to the decline in energy savings that often occurs in the months and years following the implementation of an energy efficiency measure. As time goes by, the tenants in your building change, old walls come down, and new walls go up. The ductwork on a floor that supplied air to one large room now supplies air to several smaller ones. The programming that once optimized energy use has been turned off or overridden. Your tenants all keep different hours, have different equipment, and hold different expectations of the building. Without changes to the design and controls of the lighting, heating, cooling, and hot water systems, to adapt to these changes, one or more of the systems may operate against the interests of the tenants. Perhaps they suffer with it for a while, but ultimately they begin to adjust thermostats and install work-arounds such as closing off air supply vents, overriding programs on programmable thermostats, and opening windows. These changes induce a response from the system that exacerbate the situation. A negative feedback loop is created that moves the system further away optimal energy use.

Energy Savings of Continual Commissioning

Now, look at the figure, and assume a new energy efficiency measure has been installed in your building. Say, a programmable thermostat. The initial change in energy use and its subsequent increase is captured in the first part. When first programmed, the thermostat is likely to reduce energy use, because it enables the user to reduce the level of cooling or heating during hours when a building is not occupied. But this level of savings is likely to be lost once the needs of the building change, because rather than reprogram the thermostat, operators are likely to bypass the programming and set the temperature manually. The energy use that had been going down now trends back up and savings degrade.

The energy use may not return to pre-implementation levels because some energy measures are more sustainable than others. New, more efficient lighting will, more often than not, permanently reduce the energy use of a building, regardless of hours of operation.

Also captured in the figure is the common experience of a building receiving occasional upgrades. With each upgrade, energy consumption falls. And then, over time, savings degrade as devices drift out of spec, building needs change, and programming is overridden. A new project is implemented and the trend continues. To address this issue and to realize greater savings, homeowners, building operators, and program administrators are turning to more advanced building management systems.

Intelligent Efficiency and Programs

Reducing or eliminating the degradation of savings is not only important to building operators, it is important to energy efficiency programs because the persistence of savings is key to meeting their savings targets and obligations. Savings degradation is a common issue in whole-building retrofit programs. To ensure the persistence of savings, programs are investing in learning thermostats for residential programs, and advanced building management systems for commercial programs, which utilize machine learning and historical building operating information to identify trends and optimal operating conditions. Data analytics enable these systems to not only maintain savings, but to actually increase them. They can also adapt to changing conditions and adjust equipment settings more quickly than human operators. The result is a building that is at or near optimal operating conditions a majority of the time.

In the figure, we can see the difference in energy consumption between re-commissioning and continual optimization. With re-commissioning, the periodic optimization of building systems is followed by degradation of savings and the need for repeated re-commissioning. With continual optimization, the savings increase over time as the control systems learn how to refine operations.

The pattern captured in the figure is relevant to many other intelligent efficiency measures. Any compressed air, water, ventilation system, or industrial process can realize the same saving gains through continual optimization. The ability to capture energy savings that would normally be lost to degradation of savings is a key benefit of intelligent efficiency.

Data Points is a blog series focusing on the graphs and other images that tell the energy efficiency story.

This Earth Day, let’s look at how much energy we’ve been using.
April 21, 2016 - 10:00 am

By Rachel Cluett, Senior Research Analyst

Earth Day was first celebrated in 1970, and that got us thinking about how households used energy back then. What did they use it for? Do we follow the same conventional wisdom for saving energy in our homes today, even though there are some obvious differences in the types of devices we use now?  We were curious to dig in and see how energy use has changed over the past 35+ years, and how that change shapes our efforts to conserve.

Let’s travel back to the 1980s, when the first comprehensive survey of US residential energy use was published, to get an idea of how the average American household was using energy at the time. Microwaves were just beginning to gain popularity (14% of households had one) and personal computers were so rare that a question about them didn’t even appear on the survey. Ten years later in 1990, almost 80% of households had microwaves and 70% of households had personal computers (EIA 2015). From there the number of electronics and other miscellaneous loads have only continued to grow (AEO 2015).

Meanwhile, heating and air conditioning systems and major appliances are becoming more efficient during this time period, and new homes are being built with more insulation and more efficient windows. Between the late 1980s and late 2000s the share of household energy used to heat and cool a house shifted from a majority of the overall load (61%) to less than half (48%). Over the same time period the share of energy used for appliances, lighting, electronics, and other miscellaneous energy loads swelled from 23% to 35% (EIA 2013, 1987).

Source: EIA 1987, EIA 2009

During this time, lighting and major appliances on the market were getting more efficient, largely thanks to energy efficiency standards, so why the big increase? You can probably think of more than a few devices that are common in homes today that did not exist in the 1980s. While no single device is a particular energy guzzler, in sum their cumulative impact adds up.

So what can we learn from these statistics to help save energy in our own homes? Now more than ever, we need to address a variety of end uses to help chip away at the cost of our energy bill. While heating and cooling loads are still important to address, especially in hot and cold climates (need insulation and air sealing? Here’s how to get it done right), we need to consider a range of energy end uses. Drawing from ACEEE’s energy efficiency consumer resource,, we offer a few recommendations for how you can make smart energy choices in your own home.

  • Addressing growing electric use requires a variety of strategies. provides a number of ideas for addressing the energy use of the home electronics you already have, and for making smart decisions when purchasing new ones. There are efficient options for products including TVs, computers, set top boxes, and audio equipment. Look for the ENERGY STAR® rating to get the most efficient model. 
  • Major appliances like clothes washers, refrigerators, and dishwashers are much more efficient than they were in the 1980s. If you’re still hanging onto an old appliance, it makes financial sense to replace it (and, if it’s the second, spare fridge in the garage, consider whether you really need it—if the extra fridge space is a must, replace it with a high efficiency model). Today’s models are so much more efficient than they were in the 1980s (and even the 1990s) that the return on your investment won’t take long. For example, average energy use for refrigerators decreased by almost 70% between 1980 and 2014. If you replace your 1980s refrigerator with a new ENERGY STAR model you would save about $200 a year. Find buying tips here.
  • Saving energy in your home in the most cost-effective way possible requires planning and coordination. Getting ready to do a home improvement or remodel? Need to replace a major appliance? Here’s how you can incorporate energy efficiency into your project to be sure to invest in products and improvements that will save you over their lifetime.
  • Unless it’s not working and you’re stuck taking a cold shower, the water heater is not an appliance that people think much about. Instead of waiting for it to break, do some research now to figure out what the most efficient option is for your home. High efficiency electric heat pump water heaters are increasingly common and readily available, and use 50% less energy than a standard electric tank. That amounts to about $200 of energy savings annually, and well over $1000 over the lifetime of the unit. Find heat pump water heaters rated by ENERGY STAR here.

For more recommendations on how you can make the smartest decisions about using energy in your home, visit SmarterHouse. In celebration of Earth Day this year, we encourage you to commit to acting on some of these energy saving recommendations that can both save you money and cut down on energy waste. 

Proposed RGGI raid puts Connecticut’s continued leadership in energy efficiency at risk
April 18, 2016 - 10:00 am

By Annie Gilleo, State Policy Manager

Connecticut may be a small state, but in recent years it has become a big leader in energy efficiency. As one of only seven states with a formal goal of achieving all cost-effective energy efficiency, Connecticut has consistently ranked among the top ten in ACEEE’s annual State Energy Efficiency Scorecard.

The Constitution State has made a commitment to maximize energy efficiency as a way to help businesses and residents lower their energy bills, while also creating jobs and improving health, comfort, equity, and business productivity. However, a recent proposal from the state legislature may put these energy efficiency programs at risk.

Connecticut is one of nine states in the northeast that participates in the Regional Greenhouse Gas Initiative, a voluntary program to reduce emissions in the region. States that participate in RGGI sell emission allowances through auctions, then invest the proceeds in programs to deliver clean energy and energy efficiency to customers. Connecticut has raised about $160 million through the RGGI program to date, funneling the majority of this funding into energy efficiency. These programs generate significant benefits while reducing customers’ energy bills. Energize Connecticut, a statewide program supported in part by RGGI proceeds, calculates that every dollar invested in energy efficiency in 2015 generated $2.80 in benefits. These programs keep dollars in customers’ pockets, and in the local economy by generating jobs in the clean energy industry. According to the state’s deputy commissioner for energy, RGGI funds support more than 10,000 jobs across Connecticut.

But with budget holes to fill, state legislators aren’t thinking about economic benefits. Instead, they’ve proposed to divert $22 million in RGGI funds into the state’s general fund. Not only would such a raid reduce the scale of energy efficiency programs offered to customers in the state, it would also chip away at Connecticut’s innovative financing program, the Connecticut Green Bank. Every dollar invested in the Connecticut Green Bank’s financing programs supports $10 of private-sector investment. These programs help low-income customers make energy-efficient upgrades in their homes and help towns and businesses invest in renewable energy.

Balancing a budget is not an easy task, to be sure, but raiding RGGI funds is not the solution.

Things are moving quickly in Connecticut, but there are glimmers of hope. Governor Dannel Malloy’s recently released budget proposal does not include the RGGI raid. And businesses and clean energy advocates are working to ensure the state legislature understands the value of the programs RGGI funding helps deliver. Connecticut has a long history of leadership when it comes to increasing energy efficiency, but short-sighted efforts to fill state coffers could have serious long-term implications for the businesses, workers, and residents who depend on these programs to keep energy affordable.

We’re tracking major US energy efficiency metrics on a new webpage. Check out how 2015 measures up.
April 15, 2016 - 10:00 am

By Chetana Kallakuri, Research Analyst, Federal Policy

Ever wondered just how much energy we consume to power our economy? To keep our buildings working, machines humming, and wheels running? Are we really energy smart as a country?

ACEEE tracks a lot of data that could be used to help answer these questions. Today, we are unveiling a new web page that brings together many of these key numbers to demonstrate our country’s overall energy efficiency. We chose metrics that measure trends from the perspective of major energy users. The metrics can also serve as a gateway to investigate the nuances of energy efficiency across the economy.

Since efficiency is a relative concept, we can only describe a product or system as being more or less efficient than itself or another. We say that an LED bulb is more energy efficient than an incandescent bulb because it consumes less electricity to produce the same amount of light. In your home, you might find mobile phones, electric toothbrushes, hair dryers, heating and air conditioning units, cooking stoves, washing machines, and various electronic appliances. Each of these have their own measure of efficiency, just like the LED bulb.

Similarly, to understand the energy efficiency of say, the residential sector in the United States as a whole, we can measure the average energy consumed per household or per unit floor area. From year to year, this value may fluctuate for many reasons, such as changes in weather, the size of homes, the number of appliances in homes. Thus, when looking at an entire sector, it is not easy to isolate improvements in energy efficiency from other reasons we might use more or less energy.

We picked metrics covering residential and commercial buildings, state adoption of building codes, energy savings from appliance standards, industry energy intensity, combined heat and power (CHP) capacity, personal and freight transport energy intensity, and the use of public transit, to represent the efficiency of US buildings, industry, and transportation. We also included national- level indicators on energy productivity (gross domestic product per unit of energy use), public spending on energy efficiency, and savings from energy efficiency programs. The figure below shows that US energy productivity has been climbing steadily; that is, the US economy is becoming more efficient.

Data source: ACEEE analysis based on data in Monthly Energy Review, EIA. In 2015, the United States used less energy to produce more than in previous years.

We also tracked indicators on oil consumption, net imports, and energy-related emissions in the country. Overall, these metrics capture most of the energy use in the United States. Similar metrics illustrate and compare national energy efficiency profiles of other countries.

Almost all our data for the United States show improvement in 2015 over 2014. Energy productivity stepped up by 3.3% and per-capita energy use declined by 1.6%. Average energy efficiency in residential buildings improved by 4.3%, and in commercial buildings by almost 2%. However, we caution that some of these improvements may be due to milder than normal weather in 2015. Industry and transportation metrics also show progress. Industrial energy efficiency is continuing to improve in small steps. Millions more recorded trips are being taken by public transportation every year. Average fuel economy of new passenger vehicles and light trucks has improved by 1.6%. Annual net oil imports declined by 8.7%  and annual energy-related carbon dioxide emissions were lower by 2.5%.   

There are a few metrics for which we used projections or did not have the latest data. These metrics will be updated when new information becomes available. Trends from previous years still indicate that we are making modest progress in these areas. Savings from electricity programs improved by a significant 5.6% in 2014 over 2013, and the largest improvement was from natural gas efficiency programs, in which energy savings rose by 35% in 2014 over 2013.

To enable a smarter, cleaner, and less expensive energy system, the United States must continue to make progress on efficiency. In the face of increasing demand for energy services globally, governments, not just at the national level, but also at the regional and local levels, should take action to improve the energy efficiency of their economies. And focusing on energy efficiency starts with understanding where and how energy is used.   

For more information, explore ACEEE’s new US energy efficiency metrics webpage

Data Points is a blog series focusing on the graphs and other images that tell the energy efficiency story.

Looking at studies that are critical of energy efficiency: identifying useful findings and where they fall short
April 14, 2016 - 10:00 am

By Steven Nadel , Executive Director

Several papers in the last few years claim to show that particular energy efficiency programs and policies do not work or are too expensive. We have commented on some of these in blog posts (see herehere, and here), noting that some of them do have useful insights, but also that many of them make serious mistakes.

Have we turned the corner on criticisms of energy efficiency programs and policies?

In recent months, there have been signs that such criticisms may be abating or softening. For example, the E2e project, a source of several of these critical studies, is turning toward some commercial and industrial programs, which tend to have lower costs than the residential programs they have been criticizing. Initial results from one of their residential studies (abstract available here under Allcott) have found that residential weatherization programs are of borderline cost-effectiveness when considering only energy cost savings. This finding is consistent with other studies on these programs (see residential retrofits here), leaving researchers to debate the other benefits of these programs such as improved resident comfort and health.

Unfortunately, not everyone is taking a more measured approach. There are some questionable studies about automobile fuel economy that we will be commenting on in a forthcoming blog post. And, just last week, a study was published by the Fraser Institute in Ontario implying that efficiency programs there are not cost effective. Their conclusion is not based on data from Ontario, but cites previous critical studies of other programs, in particular a controversial study from 1992. Their analysis ignores or downplays other more recent studies that found much lower costs.

New ACEEE paper

Since we expect some studies like this to continue, we thought it would be useful to prepare a paper reviewing a few of the recent studies, identifying useful findings, but also pointing out  a variety of recurring mistakes, such as misunderstanding the programs and markets they are examining or unreasonably extrapolating their findings to areas they did not study. This short paper, which we are releasing today, is written for people who are not evaluation experts, but who are trying to understand what conclusions they should take from these studies. That said, we acknowledge that not all energy efficiency programs are stellar, and that sound evaluation is critical in identifying what is working well and what needs improving.

We conclude our new paper with suggestions for constructively moving forward, such as the need for academic economists and energy efficiency evaluation experts to better understand where the other side is coming from, and to explore opportunities to find a middle ground, potentially even working on some projects together. With cooperation and combined expertise, energy efficiency studies can achieve their intended purpose: to understand what works, and to improve what falls short.

Replacing retiring power plants, is it a two-horse or three-horse race?
April 11, 2016 - 4:45 pm

By Steven Nadel , Executive Director

There’s been a steady drumbeat of reports about coal and other power plant retirements in the face of low natural gas prices, aging plants, and new environmental regulations. As discussed in a recent ACEEE blog post, electricity use has been flat in recent years, although many forecasts continue to project modest growth (e.g., EIA projects electricity consumption to increase 0.8% per year). This roughly means that as old generating capacity is retired, it needs to be replaced by new generating capacity, plus, an allowance for modest load growth in some regions. The question is, what will replace this capacity? Many reports focus on natural gas and renewable energy, casting it as a race between these two “horses.” But since energy efficiency is generally less expensive than either of these options (click here for our most recent comparison), shouldn’t it be allowed to compete in the race?

When planners ignore the efficiency resource

Most recently, the American Public Power Association (APPA) released a report called America’s Electricity Generation Capacity 2016 Update, which estimates that over the 2008–2015 period, 90 Gigawatts (GW: a billion watts or 1000 megawatts) of power plants were retired, including 43 GW of coal. They project that an additional 45 GW will be retired by 2020, including 22 GW of coal. The APPA report finds that “natural gas, followed by wind, is the major source of new generation, though solar deployment continues to expand as well.” They express some concern about greater reliance on natural gas. The only time efficiency is mentioned in the report is in connection with higher efficiency power plants.

Similarly, in mid-March the Mid-Continent Independent System Operator (MISO – the entity that operates the electric grid in much of the Mississippi Valley) released its “Midterm Analysis of EPA’s Final Clean Power Plan.” They estimate that about 25% of the coal fleet in the MISO region will be retired by 2030, based on a variety of factors including states’ and utilities’ efforts to meet the Clean Power Plan targets. They also look to natural gas, wind, and solar to replace the retired capacity, including additional transmission capacity in order to move renewable power to population centers. Their analysis does not mention the word “efficiency” once.

Examples of planning done right

For both of these studies, there is a modest amount of energy efficiency in their base case. But energy efficiency can save a lot more than what is assumed in a business-as-usual baseline. For example, the graph below comes from the New England Independent System Operator (MISO’s “sister”) forecast, and shows the large role that energy efficiency is expected to play in New England. Similarly, the just-released Northwest Seventh Regional Power Plan expects to meet nearly all of their resource needs with energy efficiency as shown in another recent ACEEE blog post.

Role of energy efficiency and peak load reductions in meeting electric load in New England

 Source: ISO-New England

Capturing more than savings for customers

In ACEEE’s 2014 Change is in the Air report we estimate that just four energy efficiency policies (energy savings targets for utilities, building codes, combined heat and power systems and equipment efficiency standards) can, by 2020, avoid the need for 71 GW of new power plants. That is more than the 45 GW of retirements projected by APPA. Of course, power planning needs to be done on a localized level, and there will be some regions where additional generating capacity will be needed even with a lot more energy efficiency. Power planners, including MISO and APPA, need to more carefully examine what they can do to expand energy efficiency efforts, how much more can be saved, and at what cost. Work in New England, the Northwest, and at ACEEE indicates that expanding energy efficiency will reduce system costs, save consumers money, and also reduce the need for new gas and renewable energy plants.

The retirement of a large amount of generating capacity presents many regions with a golden opportunity to provide electric customers with a low-cost, emission-free resource: energy efficiency. Power planners need to open the barn door to give expanded energy efficiency efforts a chance to participate in a competitive horse race. If they do, we are confident that energy efficiency can win in a fashion that would give American Pharoah a run for his money.