Multiple benefits prove energy efficiency is a gift that keeps giving

Blog | December 02, 2015 - 5:01 pm

Energy efficiency improvements provide value over and above utility bill savings. ACEEE’s new report Recognizing the Value of Energy Efficiency’s Multiple Benefits describes the gains outside of energy savings created by energy efficiency improvements. Many of these benefits accrue to residential and business energy consumers. Additional benefits accrue in the form of cost reductions to the utility system, resulting in lower costs for all customers.

Multiple vs non-energy benefits

Earlier research by ACEEE (here, here, and here) and others succeeds in identifying multiple benefits, which vary in type and magnitude as they are realized by energy consumers in different economic sectors. What may begin as an energy efficiency measure may often also offer some combination of improved comfort or convenience, enhanced business productivity or quality, or savings in related maintenance or administrative costs. ACEEE has adopted the term multiple benefits as one that supersedes the traditional concept of “non-energy” benefits. The difference comes from recognizing the simultaneous savings of dissimilar energy forms—for instance, when an electricity improvement causes natural gas savings for the same facility. Multiple benefits therefore encompasses both energy and non-energy effects.

Multiple benefits information will appeal to consumers and providers of energy efficiency improvements as well as the policy and program administrators who guide energy resource programs. The challenge for all parties is to detect and evaluate these benefits. ACEEE’s report describes state-of-the-art approaches to recognizing multiple benefit values in the context of energy resource programs, and summarizes the range of values that have been estimated. Future work should build on the evaluation approaches demonstrated in Massachusetts, Maryland, and a few other states.

Measuring value for residential, business, and utilities sectors

In some instances, multiple benefits are the “icing on the cake” of energy savings. Yet sometimes, the causality is reversed: to the customer, energy savings may be secondary to the larger and more compelling value of other non-energy benefits. In the residential sector, enhanced health, comfort, and durability benefits from whole-home energy retrofits can surpass the value of energy savings. Studies describe single-family residential benefits valued anywhere from 50% to 300% of energy cost savings. In addition to occupant benefits, studies show multifamily building owners experience benefits ranging in value from 3% to 150% of energy savings. Multiple benefits may be the primary focus of promotions and incentives that ultimately encourage more investment in energy efficiency.

In the business sector, multiple benefits are as varied as the businesses themselves—compare, for example, the hotelier’s concern with guest comfort versus the precision tool manufacturer’s need to minimize material waste. Preliminary findings describe business sector multiple benefits ranging from 44% to 122% of energy savings. Suffice it to say, energy efficiency can be advanced not only on its own merit, but for the many valuable outcomes that it facilitates. Consumers, energy solution vendors, and energy resource administrators all find that some benefits are more tangible than others. Accordingly, the new report suggests tactics for segmenting and prioritizing these benefits for promotional and evaluation purposes.

Geotargeting, the practice of targeting program offerings to customers located near areas on the electric grid that are capacity constrained, is emerging as an approach for using energy efficiency as a distribution system resource that can cause the deferral or avoidance of transmission and distribution system investments. Other multiple benefits accruing to utility shareholders and ratepayers include the reduction of environmental compliance costs and reduced customer account arrearages. Overall, utility customers benefit in cost reductions caused by the promotion of strategically located customer end-use efficiencies.

Evolving research in multiple benefit values allows energy policy and program evaluators to adjust their goals and cost-benefit measures accordingly. Our latest report answers many questions, while revealing potential for the future refinement of the multiple benefits concept.