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ACEEE Blog

Fewer dollars up the chimney with DOE’s proposal for gas fireplaces
January 29, 2015 - 12:00 am

By Marianne DiMascio, Outreach Director, Appliance Standards Awareness Project (ASAP)


Proposed new standards for gas fireplaces may make a cozy night in front of the fire a little cheaper. For decorative hearth products, the little blue flame that stands ready to light your gas fireplace at a moment’s notice can account for about 40% of the total annual energy consumed. Standing pilots lights are on 24/7, continuously burning small amounts of gas and sending dollars needlessly up your chimney. A proposed rule issued by the Department of Energy (DOE) yesterday would eliminate this waste with new energy-saving standards. ­­But don’t fret—with the energy-saving technology, you’ll still be able start up your romantic, cozy, or mood-setting fireplace with the press of a button or turn of a knob.

DOE estimates that the proposed standards would net the average consumer $165 in savings over the life of the product. On a national level, hearth products meeting the new standards sold over 30 years would reduce natural gas consumption by about 7 billion therms, which is equivalent to the annual natural gas consumption of 10 million US households, and net consumers up to $3 billion in savings. Over the same period, the standards would reduce CO2 emissions by 37 million metric tons, an amount equal to the annual emissions of more than 3 million US homes

The proposed standards, the first for hearth products, apply to all vented or ventless hearth products including space heating hearth products, decorative products, gas logs, gas stoves, and outdoor hearth products. The standards would require manufacturers to eliminate the continuously burning pilot light. Many products already use electronic ignition—similar to what is used on gas ranges and ovens—eliminating the need for wasteful pilot lights.

A final rule is expected in December 2015 with an expected effective date five years later.


Fuel economy standards will propel America’s vehicle technology, if we let them.
January 21, 2015 - 12:00 am

By Therese Langer, Transportation Program Director


In his State of the Union address, President Obama rightly pointed to a thriving domestic auto industry as a bright spot in the U.S. economy. It’s a good time to recall that the government’s 2008-2009 intervention on behalf of GM and Chrysler played a big role in that outcome, as did energy efficiency.

The domestic industry’s inability to deliver high quality, fuel-efficient cars was a major factor in the dire financial situation that led to the two bankruptcies. So, in the course of the government-assisted restructuring, the auto industry endorsed the administration’s ambitious new Corporate Average Fuel Economy (CAFE) standards, projected to nearly double the fuel economy of cars and light trucks by 2025, when they were proposed in 2011.

Yet, at this year’s Detroit Auto Show, manufacturers left little doubt they would seek to weaken the 2025 CAFE standards in the upcoming “midterm review” of the program. They argue that low gas prices will keep consumers from buying the advanced vehicles needed to meet the standards. But in fact, the standards rely very little on sales of electric or other advanced technology vehicles. The vast majority of fuel economy gains between now and 2025 are expected to come from gradual improvements to conventional vehicles: better engines, advanced transmissions, mass reduction. The role of CAFE standards is to ensure that all manufacturers adopt such advances across their product lines, even as fuel prices fluctuate.

While the standards can keep technology moving forward, they can’t stem enthusiasm for larger vehicles when gas prices plummet. It is important to realize that such episodes will not prevent manufacturers from meeting the standards, because mile-per-gallon targets under CAFE decline if the size of vehicles grows. A bigger fleet will, however, erode the fuel savings and greenhouse gas emissions reductions of the CAFE program.

That problem calls for a different solution. As many have noted, today’s low fuel prices offer a great opportunity to rethink the federal gasoline tax, which has remained at 18.4 cents per gallon for over two decades. A $3-per-gallon floor on the pump price of gasoline would bolster auto manufacturers’ confidence in their technology investments and nudge consumers towards more fuel-efficient and predictable vehicle purchase and travel choices. It’s tempting to suggest using the resulting revenue to fill the gaping hole in the Highway Trust Fund. But first, let’s see whether the new Congress takes note of the shifts in Americans’ travel habits as they set priorities for infrastructure investment in this year’s transportation bill.


Expanding the energy efficiency pie through high program participation
January 13, 2015 - 12:00 am

By Dan York, Utilities, State, and Local Policy Program Fellow


Energy efficiency programs serving utility customers have grown rapidly over the past decade. While the rates of growth may have slowed in the last couple of years, most states have policies in place to achieve higher and higher energy savings from utility energy efficiency programs. In order to achieve high energy savings, program administrators can follow two key strategies: (1) get more customers to participate, and (2) get more savings from each participating customer. A report released today by ACEEE examines this first strategy—achieving high program participation. We examined a set of prevalent program types to identify programs that have achieved high participation and better understand the challenges with data and nomenclature. We also wanted to identify program areas that are ripe for growth in participation rates.

Participation rates are key variables for estimating the future potential savings of energy efficiency programs, especially for efficiency program plans and integrated resource planning. Participation rates also are key metrics for tracking past program results. Program administrators, evaluators and regulators need accurate tracking of program participation to evaluate program impacts and success.

But while program participation is simple in principle, it is complex in practice. We found that despite the importance of participation data within many aspects of efficiency (such as potential studies, program planning, implementation, and evaluation), it’s not reported consistently or completely. There are no industry standards and conventions for defining and measuring participation. Definitions and nomenclature used to report participation metrics vary significantly, although there is generally greater consistency of such metrics for a given type of program.

Despite these data challenges, we identified many examples of programs that have achieved high participation. Programs serving mass markets, such as residential customers shopping for lighting products, can move millions of products annually. The cumulative result is that in some markets energy-efficient lighting comprises 40% of all household lighting. Other programs serve much smaller markets with more specialized needs, such as industrial customers or commercial builders. Leading new commercial construction programs may reach 50-60% of all new projects. Some programs providing custom incentives to the largest commercial and industrial customers have achieved 50-70% participation over several years. Other types of programs, such as those serving small- to medium-size manufacturers, are ripe for growth in participation rates (another ACEEE report documents successful practices for reaching this sector).

The keys to high participation are not too surprising. They are simply the fundamentals of successful energy efficiency programs: (1) good program design that makes participation easy and offers a range of services valued by customers, (2) attractive incentives, and (3) effective and innovative marketing to targeted customer segments.

Our research reveals that an ever-growing number of utility customers are already participating in energy efficiency programs, and many more could participate. The resulting energy savings are expanding the utility energy efficiency resource pie—a resource that reduces utility system demand and corresponding costs. Participating customers receive the direct benefits of improved energy efficiency while all customers receive the broader system benefits, such as lower pollution and job creation, that cost-effective energy efficiency programs can provide.

This broader view of program participation is important as we seek to achieve a variety of economic and environmental goals through improved energy efficiency. Program participation needs to be seen through the lenses of overall portfolios and applicable markets over long periods. In leading regions with longstanding programs, a majority of customers have benefited directly from participating in available programs. In this way program administrators are expanding the pie of energy savings through improved energy efficiency, enabling ever more customers to share this important resource and collectively contribute to a cleaner energy economy.

 


Assessing favorability for CHP deployment in your state
January 08, 2015 - 12:00 am

By Meegan Kelly, Senior Research Analyst, Industry Program


Here at ACEEE we are big fans of combined heat and power (CHP). It’s energy efficient, it helps with resiliency, and it could be a key strategy for complying with carbon pollution reduction requirements. Each year, as part of the State Energy Efficiency Scorecard, we rank states on policies that encourage deployment of CHP. With each iteration, we review our scoring methodology and collect information on the environment facing CHP developers. As with all of our metrics, scoring of CHP in the State Scorecard focuses on states’ policies, which is only one element that influences the favorability of a state to CHP development.

In a recent blog post, we looked for a correlation between 2014 CHP State Scorecard scores and actual new CHP installations as a simple way to examine the overall relationship between policy and deployment. While the results indicate a moderate correlation between scores and deployment, some inconsistencies exist in states where CHP installations have stayed low despite numerous supportive policies being on the books for many years.

We know that state policies are only a piece of the puzzle when it comes to CHP. A variety of economic factors influence deployment—most importantly, the financial attractiveness of individual CHP investments to host facilities. One of the biggest factors influencing economic attractiveness is the retail price of energy. In states with very low electricity prices, it is often more economical to buy electricity from the grid than to generate electricity onsite with CHP. By contrast, higher electricity prices can make the case for onsite generation with CHP more favorable. Similarly, lower and more stable natural gas prices offer cheaper fuel costs that can improve the economics for CHP.

To get a rough look at the degree to which prices influence the CHP market in a given state, we developed a state-by-state CHP favorability index using information we collected for our 2014 State Scorecard project and for another recent analysis. In that analysis, we estimated the CHP potential achievable in each state using publicly available data from ICF International. Then, we used sector- and state-specific electricity and gas prices forecasted by EIA from 2016 to 2030 and operating characteristics of the potential CHP in each state, which yielded an adjusted CHP potential that includes only those projects that remain cost-effective under future forecasts. The ratio of our original “ACEEE Estimated Achievable CHP potential” to the estimated potential that was adjusted for cost-effectiveness is a market favorability index, which tells us how favorable electricity and gas prices are to the future business case for CHP in a given state.

Recognizing that better policies yield overall improvements in project economics, such as when improved interconnection standards yield reduced costs, we also developed a policy metric using 2014 State Scorecard scores as a proxy for such regulatory factors. This policy favorability index tells us how favorable the existing policy environment is for CHP in a given state. The figure below shows the market favorability index side-by-side with the policy favorability index for twelve Midwestern states.

Midwest CHP favorability index

Seven of the Midwest states show an extremely high level of market favorability for CHP deployment, coupled with only moderate to low levels of policy activity. Future state policy and regulatory action is likely to have the greatest impact in states such as Wisconsin, Illinois, and Ohio, where the market favorability index is high and the groundwork for policy measures are in place. Michigan is an example of a state where, due to unfavorable economic conditions, CHP installations are unlikely to increase despite having supportive policies in place. However, in a state such as Nebraska, which has favorable economics, policies like those in Michigan or Wisconsin could result in greater deployment.

Advocates often wonder why the volume of investments in CHP falls short of their estimated potential. The favorability index may answer this by giving us a glimpse of the impact of market and policy favorability on the potential capacity for CHP installations in a state. In the figure below, we show the original ACEEE-estimated achievable CHP potential by 2030 for each state in yellow. In blue, we apply the market favorability index to existing potential to demonstrate how market conditions can prevent some potential CHP installations from occuring. Finally, in gray, we apply both the policy and market favorability index to existing potential to demonstrate how market conditions and regulatory barriers lower potential CHP penetration.

Impact of market and policy favorability on CHP potential

In the figure, accounting for market conditions (in blue) actually does little to diminish the CHP potential in the majority of Midwest states. This suggests that even when the economics are there, it is a lack of supportive state policy (in gray) that is largely responsible for affecting investments in new CHP projects.

We think the CHP favorability index concept that we’ve presented here can be a useful tool for CHP developers, policymakers, and advocates to use in their discussions. It highlights states where policy changes can make a difference, and where they probably will not. We would be remiss if we did not mention, as a caveat, that both indices exclude certain economic considerations beyond energy prices that can also impact market favorability for CHP. However, the approach represents a start at visualizing the interplay between policies and economic factors influencing CHP deployment and gives us a new way of discussing this subject. We look forward to receiving comments on the usefulness of this tool.


How energy efficiency investment creates a ripple effect of multiple benefits for businesses beyond energy savings
January 06, 2015 - 12:00 am

By Christopher H. Russell, Visiting Fellow, Industry


Everyone knows that energy efficiency results in saving energy, but evidence points to an array of wider benefits. The term “multiple benefits” has emerged to describe the additional value that emerges with any energy performance improvement. The benefits that occur onsite can be especially meaningful to manufacturing, commercial, and institutional facilities. Energy efficiency’s positive ripple effects include increased productivity and product quality, system reliability, and more. Business leaders take note: the bonus value of energy efficiency’s multiple benefits amplifies the return on energy efficiency investments.

Over the past few decades, researchers have documented numerous cases of energy efficiency improvements—almost always focusing exclusively on energy savings. Non-energy benefits are often recognized, but only in concept. ACEEE’s new report, Multiple Benefits of Business-Sector Energy Efficiency, summarizes what we know about the multiple benefits for the business sector. True quantification of these benefits remains elusive due to a lack of standard definitions, measurements, and documentation, but also in part because variations in business facility design and function ensures that a comprehensive list of potential energy efficiency measures is long, varied, and often unique to the facility.

To give some concrete examples of non-energy benefits at work: Optimizing the use of steam in a plywood manufacturing plant not only reduces the boiler’s natural gas consumption, it also improves the rate of throughput, thus increasing the plant’s daily product yield. A lighting retrofit reduces electricity consumption while also introducing lamps with a longer operating life, thus reducing the labor costs associated with replacing lighting. In many instances, monitoring energy use also provides insights into water or raw material usage, thereby revealing opportunities to optimize manufacturing inputs and eliminate production waste. By implementing energy efficiency, businesses can also boost their productivity. This additional value may make the difference in a business leader’s decision to pursue certain capital investment for their facility.

Meanwhile, energy resource planners at utilities and public utility commissions recognize the impact of large-facility energy demands on the cost and reliability of generation and transmission assets. By maximizing consumer efficiency, costs are reduced or offset throughout a utility system. So the ability to quantify the multiple benefits of investing in energy efficiency, if only in general terms, is an appealing prospect for resource planners eager to encourage greater participation in efficiency programs.

Unfortunately, our research shows that this quantification rarely happens, even though the multiple benefits are frequently evident. A number of studies offer measurement methodologies, anticipating the availability of proper data. When these methodologies are employed with limited samples, we see how proper accounting of non-energy benefits dramatically improves the investment performance of energy efficiency improvements—for example, improving payback times by 50% or better. Samples may provide impressive results, but the data remains too shallow to confidently infer the value to come for any single project type implemented in a specific industrial configuration. Developing such metrics will require more data.

To that end, we describe an ideal resource that would allow an analyst or investor to infer multiple benefit values for any energy efficiency improvement proposal. Of course, the data requirements for such an exercise are staggering—not only for the volume required, but also for its collection and codification. Progress toward this goal will require some intermediate steps. For one, stakeholders require a protocol for defining and measuring non-energy benefits. The vast majority of such data would be self-reported by facility management professionals who will need guidance, perhaps from a template to facilitate their assimilation of the appropriate data.

This report represents the first phase of our analysis of energy efficiency’s multiple benefits. We will begin our second phase later this month, and are looking for sponsors and advisors to help shape definition, measurement, and reporting protocols. If you are interested, please reach out to me at crussell@aceee.org.


2014 was a good year for energy efficiency. The outlook for 2015 is uncertain, but we’re guardedly optimistic.
January 05, 2015 - 12:00 am

By Steven Nadel , Executive Director


The New Year is usually a good time to take stock of the year just ended, and to look forward to the year ahead. Regarding energy efficiency, 2014 was generally a good year. Energy-saving technologies and practices continued to advance. For example, in 2014 LED lighting became a mainstream source of light. The Design Lights Consortium now lists more than 70,000 LED lighting products. And a recent DOE report estimates that by 2020, LED lighting will account for about 48% of product sales.

Similarly, intelligent efficiency—using sensors, controls, software, and “big data” to identify sources of energy waste in real time and enable quick solutions—is poised for rapid growth with multiple firms now offering intelligent efficiency services in the commercial sector, and new smart thermostat products from Honeywell and others as direct competition to Nest. Many of these developments were presented at ACEEE’s November Intelligent Efficiency Conference.

There were also policy advances, including the completion of multiple new federal energy efficiency standards that collectively will save consumers more than $50 billion, the inclusion of energy efficiency in the proposed standard regulating greenhouse gases from existing power plants, and the president’s order to set new fuel efficiency standards for large trucks .

States and cities also generally made progress on energy efficiency. For example, utility investments in and savings from energy efficiency programs continue to increase. On the other hand, there were rollbacks of efficiency efforts in Florida,Indiana, and Ohio, and the U.S. Congress could not enact even modest energy efficiency legislation.

For 2015, the outlook is uncertain, but we’re guardedly optimistic. Energy saving technologies and practices will continue to advance. For example, we see the coming year as a pivotal one for zero-net-energy buildings. Several states will be considering improvements to their energy efficiency policies, including Illinois, Michigan, Minnesota, and Pennsylvania.

Congressional leaders, such as Senator John Hoeven (R-ND), have signaled an openness to energy efficiency provisions, quite possibly as part of broader energy legislation. EPA will be finalizing their emissions standards for existing power plants, and energy efficiency is likely to play a major role, spurring additional state actions in future years. New truck efficiency standards that the president promised last year will be formally proposed this year. And DOE is planning to finalize new efficiency standards for many important products this year. To provide just one example, a new standard will be finalized for commercial rooftop air conditioners. DOE estimates that the draft standard will save businesses $16-50 billion.

On the other hand, Arizona and New York are considering proposals that could reduce their commitment to energy efficiency. And some members of the new congressional majority are pledging to use appropriations riders and other techniques to slow the president’s climate change agenda, which could affect some energy efficiency initiatives.

ACEEE has a very active 2015 planned. We’ll be hosting a record seven conferences. Topics will include market transformation, energy efficiency finance, energy efficiency as a utility system resource, and industrial energy efficiency. We have about 30 research reports planned. Some of the areas we will be examining include: non-energy benefits, intelligent efficiency, new energy efficiency opportunities in buildings, industry and transportation, measuring the jobs benefits of energy efficiency, the business case for utility investments in energy efficiency, links between resiliency and energy efficiency, programs with high participation rates, and best practices for municipal utilities and for low-income programs. In addition, our City Energy Efficiency Scorecard will be published in late spring, and our State Energy Efficiency Scorecard will be published in the fall.

Overall, energy efficiency is a bipartisan issue that has made progress under both Democrats and Republicans, a track record we hope and expect to continue. Energy efficiency makes progress each year and those incremental steps steadily add up.


My New Year’s resolutions: get SMART, travel more, use less energy
December 19, 2014 - 12:00 am

By Virginia Hewitt , Local Policy Research Assistant


I start thinking about my New Year’s resolution earlier than most. I like to think ahead and know what I’m getting into before committing. This year I could go to the gym more, eat fewer hamburgers, or do more traveling. OK, let’s start with just one thing. Maybe I’ll try to travel more. But how do I set the perfect goal for me? Where do I even start?

Thanks to my organization’s work on community energy planning, I know I can use the SMART goal-setting framework to wrap my head around my plans.

  • Specific: Where do I want to go?
  • Measureable: Does my goal mean cover more miles, or see more new places?
  • Attainable: Can I really afford trips to England, France, and Germany?
  • Relevant: Would a trip to Germany and Japan be putting my language skills to use?
  • Time-bound: Will I achieve this all in one year or is my goal really about developing a new life-long habit?

Communities and large organizations can use this same framework to set their goals. Our new technical assistance toolkit piece, Local Government Energy Management Goals: Best Practices and Platforms, describes issues and options for cities to consider in setting goals for energy usage intensity reduction. Maybe visiting every continent doesn’t make the most sense for me, but reducing energy use makes sense for every local government. Using less energy saves taxpayer dollars, reduces pollution, and enables a local government to improve its services and shift resources toward achieving other goals.

Like my resolution, a city’s energy management goal should be SMART. A specific goal is defined with a consistent metric. Energy usage can be defined in kilowatt-hours (kWh) or by a proxy such as greenhouse gas emissions (GHGs). Next, a goal cannot be achieved if it is not measured. A local government should institutionalize an energy usage tracking system. Benchmarking software, such as ENERGY STAR® Portfolio Manager, tracks and measures building- and portfolio-level energy usage and delivers feedback.

The third criterion is attainability. A local government should set a target that is meaningful yet challenging to achieve. What past energy savings has the city achieved? What resources are or will be available to achieve new savings? What is the level of commitment from leaders to pursue goals? Relevance is also important. Energy management goals should be in line with a city’s overall vision. An appropriate goal enables short-term success and builds a foundation for long-term energy management. Finally, a goal exists within a time frame. Baseline and target years are commonly used to bound the time period over which progress is measured.

A city that considers the five SMART aspects is on its way to setting a reasonable and effective goal. As part of developing a goal for an individual city, it can be good to research the goals of peer cities. For example, Boston aims to reduce energy use by 20% by 2014, relative to a 2009 baseline. Alternatively, Austin aims to make all City of Austin facilities, fleets, and operations totally carbon-neutral by 2020.

Still need more help deciding on a resolution? How about a usage reduction goal? Luckily, our toolkit piece also presents five standardized and best-practice goal-setting platforms. Local governments that partner with the U.S. Department of Energy’s Better Buildings Challenge pledge to reduce energy usage intensity across building stock by at least 20% over 10 years. Additionally, the Alliance to Save Energy’s Energy 2030 offers cities a roadmap to doubling the U.S. energy productivity by 2030, a big part of which involves energy efficiency. Using less energy to perform the same tasks? That seems like a pretty solid New Year’s resolution to me.


Are building codes the key to unlocking zero net energy buildings?
December 17, 2014 - 12:00 am

By Jennifer Thorne Amann, Buildings Program Director


A zero net energy (ZNE) building is a home or commercial building that on average produces as much energy as it uses, achieved through energy efficiency and renewable technologies. The ZNE concept has captured the imagination of the building design and clean energy communities. Now, policymakers, businesses, and a broader segment of the general public are showing an increased interest in ZNE as a means to reduce building operating costs and environmental impact while addressing energy supply challenges. The burgeoning interest in ZNE is reflected in the growing number of ZNE-related targets, goals, and certifications: the American Institute of Architects’ 2030 Challenge, California’s ZNE goals for residential and commercial new construction, and DOE’s Zero Energy Ready Homes Program are notable examples.

How do we turn the buzz surrounding ZNE into real advances on the ground? To meet goals for ZNE construction by 2030, we need to put in place building codes that establish effective requirements for ZNE performance for most building types by 2030.

In our new paper, Energy Codes for Ultra-Low-Energy Buildings: A Critical Pathway to Zero Net Energy Buildings, we take a look at the current state of zero net energy buildings and explore what it will take to make ZNE construction the norm as of 2030. We place a particular emphasis on building energy codes. Existing technologies and construction practices can deliver ZNE performance for many building types and climates, while allowing a wide range of equipment and design options to meet the functional and aesthetic needs of most construction projects. And experience shows that it can be done cost-effectively. As the market for ZNE grows, these options will continue to expand and the economics will become more attractive.

Building energy codes have a role to play in facilitating the move to ZNE buildings. As advances in construction practices and building components and systems are proven out, we can strengthen the building codes so that higher levels of building efficiency become standard practice. To do this, we need to modernize our approach to building codes to reflect the evolution in construction practices, changes in building energy use patterns, and new goals we've established for our building stock.

Priority changes include

  • expanding the scope of codes to capture all building energy uses (including growing plug and process loads),
  • addressing the energy savings available in building systems rather than only focusing on individual components or products, and
  • shifting the focus from building design to actual building energy use through adoption of outcome-based codes.

Effective codes for ZNE buildings will ensure ZNE performance post-occupancy by considering the impact of building occupants and operators and incorporating future-proofing measures to avoid the built-in obsolescence common in buildings today.

Getting our codes to ZNE by 2030 will be challenging, but much can be done to ease the transition and increase the likelihood of achieving this goal. Complementary policies, targeted research, market transformation and related activities, and the coordination of efforts and advocacy can establish the foundation for ZNE while providing energy savings and related benefits in the interim. ACEEE is committed to working with the buildings industry, policymakers, the efficiency community, and others to further the conversation on ZNE and make ZNE goals a reality. As part of this commitment, ACEEE is a community partner in the Getting to Zero National Forum to be held in Washington, D.C. on February 1-3, 2015. Co-hosted by New Buildings Institute, the National Association of State Energy Officials, and Rocky Mountain Institute, the forum will bring these groups together to share best practices for successful ZNE projects and policies and foster greater collaboration on opportunities for ZNE to transform the built environment. Hope you can join us and be part of the dialog. 


IRP vs. EERS: There’s one clear winner among state energy efficiency policies
December 16, 2014 - 9:57 am

By Martin Kushler, Senior Fellow


With Ohio and Indiana having recently made major changes to their utility energy efficiency policy, and other states like Florida and Arizona considering it, this is an important time to review the evidence about the relative effectiveness of state policies designed to encourage cost-effective energy efficiency. States have embraced energy efficiency policies because the energy savings result in lower customer energy bills, investments in the local economy, improved reliability, and reduced emissions. But not all efficiency policies are equally effective at delivering results, so let’s take a closer look at two commonly touted policies for achieving energy efficiency as a utility system resource: integrated resource planning (IRP) and energy efficiency resource standards (EERS).

ACEEE has examined the relationship between these two widely utilized state energy efficiency policies and their outcomes on efficiency. The two key indicators we used to measure performance are spending on energy efficiency programs ($ as a percent of utility revenues) and annual electricity savings achieved (kWh as a percent of annual sales). We drew upon data on customer-funded energy efficiency programs from the recently released ACEEE State Energy Efficiency Scorecard and supplemented that data with information from Synapse and the Regulatory Assistance Project (RAP), and Pamela Morgan.

It is important to note that every state has a unique mix of circumstances and traditions, as well as a mix of particular individuals in leadership positions at utilities and state government. These factors influence the performance of energy efficiency policies in any particular state. Nevertheless, we believe it is instructive to look at how patterns of performance vary across many states under different policy conditions. These results will be presented and discussed in more detail in a report to be released early next year, but here are our top-line observations.

Integrated Resource Planning (IRP)

Twenty-eight states have a requirement for utilities to prepare IRPs, 10 states have some other type of long-term planning requirement, and 12 states have no IRP or planning requirement. Comparing IRP to no-IRP/planning states, there is no statistically significant difference in either energy efficiency program spending (1.64% of revenues vs. 1.50%) or savings (0.72% of sales vs. 0.48%). If the 10 states with other long-term planning requirements are included with the group of IRP states, the differences are slightly larger, but still not significantly different than the no-IRP/planning states (1.81% vs. 1.50% on spending, and 0.80% vs. 0.48% on savings).

Energy Efficiency Resource Standards (EERS)

By contrast, the differences for states with and without an EERS policy are striking. For the 2013 program year, a total of 26 states had EERS policies in place, while 24 did not. A very significant difference emerges between these two groups, with EERS states showing over three and a half times as much program spending (2.63% vs. 0.76%) and savings (1.11% vs. 0.30%) as the non-EERS states. These strong results from EERS are present whether or not the state has an IRP policy.

Looking just at states with an IRP or other long-term planning requirement, those that also had an EERS spent and saved over three times as much as states that had an IRP requirement but no EERS requirement (2.66% of revenues vs. .76%; and 1.16% of sales vs. 0.35%). For states without IRP/planning, those with EERS spent over 3 times as much (2.51% vs. 0.77%) and saved nearly five times as much (0.90% vs. 0.19%) as states with no IRP/planning requirement and no EERS.

Other policies supporting the use of energy efficiency as a utility system resource

We have also examined states that had policies in place for decoupling/lost revenue recovery and/or utility shareholder incentives for energy efficiency performance.

A total of 28 states had either decoupling or lost revenue adjustment mechanisms (LRAM) in place for at least one major electric utility, while 22 states had neither. There is a modest but not statistically significant advantage for decoupling/LRAM states on both energy efficiency spending (2.09% vs. 1.29%) and savings (0.85% vs. 0.56%).

Interestingly, if one compares the decoupling states to the LRAM states, there is a very significant difference, with decoupling states showing over four times the energy efficiency program spending (4.11% vs. 0.82%) and three times the savings (1.47% vs. 0.48%) of the LRAM states. However, this is likely influenced by the fact that 9 of the 10 decoupling states also had an EERS requirement, which is probably the dominant policy factor.

A total of 28 states had some type of utility shareholder incentives while 22 states did not. Again, there is a slight but not significant difference between the two groups on both energy efficiency spending (1.84% vs. 1.60%) and savings (0.83% vs. 0.58%).

Bottom line

Overall, the inescapable conclusion is that having an EERS is clearly the most effective state policy driving energy efficiency program spending and savings in the U.S. utility sector today. There is little evidence that IRP alone produces meaningful energy efficiency results in the absence of other strong policies. Other supportive policies, such as decoupling and shareholder incentives, appear to be helpful and are associated with modest increases in energy efficiency investments and savings. Yet, the most important value of such policies to date may not be their stand-alone effects, but rather, their ability to establish a fair utility business model that encourages utilities to accept and work toward achieving EERS efficiency targets—instead of seeking to block or overturn the EERS policy.

In a time when some state policymakers are becoming skittish about the concept of “mandates,” it is worth noting that the use of an EERS to set targets for cost-effective efficiency has been by far the most effective policy for achieving customer energy efficiency savings.

Patti Witte, an ACEEE consultant, assisted with the analyses for this blog post.


Congress wraps up with a flurry of activity affecting energy efficiency
December 15, 2014 - 10:19 am

By Steven Nadel , Executive Director


Over the weekend the 113th Congress largely wrapped up its work. It looks like this Congress will pass just over 200 bills, the lowest number since World War II. However, before leaving home for the holidays, Congress took action on several bills that will affect energy efficiency:

  1. Congress appropriated money for the rest of the 2015 fiscal year for most federal departments. Included was $1.93 billion for the Department of Energy’s Office of Energy Efficiency and Renewable Energy, an increase of nearly $25 million from the previous year. The advanced manufacturing office and weatherization assistance programs received increases of 11% and 9%, respectively, while the buildings, vehicles, and federal energy management programs received small cuts.
  2. Energy efficiency tax incentives will be extended for another year. The tax extenders package includes provisions on energy-efficient commercial buildings, new homes, and various residential energy-efficiency retrofits (e.g., heating, cooling and water heating systems, insulation, and windows). These provisions all expired December 31, 2013. but the extension, good through December 31, 2014, will allow these credits to be claimed in 2014. The Senate proposed updating some of the qualification levels, but the House decided to keep the current qualification levels. The Senate is expected to accept the House bill. Information about these credits can be found at energytaxincentives.org. The new Congress will have to decide whether to extend these again to cover 2015.
  3. The Energy Efficiency Improvement Act of 2014 came close but was not enacted. This bill was introduced by Representatives Welch (D-VT) and McKinley (R-WV) and passed the House of Representatives earlier this year. The Senate version was sponsored by Senators Jeanne Shaheen (D-NH) and Rob Portman (R-OH) and includes four provisions from their more comprehensive energy efficiency bill. The Senate sought unanimous consent to enact the bill but a few conservative senators objected; thus, the bill will need to be reintroduced next year. The bill promotes energy efficiency in rental property, promotes commercial building energy-use benchmarking and disclosure, adjusts efficiency standards for “grid-connected” water heaters, and promotes energy efficiency in federal data centers. ACEEE led work on the benchmarking and disclosure provision and played a substantial role in several of the other provisions.

Overall, a disappointing two years for Congress. Hopefully, the 114th Congress that convenes in January can accomplish much more.