Potential for Energy Efficiency, Demand Response, and Onsite Solar Energy in Pennsylvania

Research Report E093


Maggie Eldridge, Steve Nadel, Amanda Korane, John A. "Skip" Laitner, Vanessa McKinney, Max Neubauer, and Jacob Talbot


Since 2000, electricity consumption in the Commonwealth of Pennsylvania has risen at nearly 2% per year and usage is expected to continue to rise steadily at about 1.4% per year between 2008 and 2025. Peak demand, or use of electricity during the hottest days of each year, is also expected to grow. This growing need for energy is compounded by the fact that energy markets have become increasingly volatile and electricity rate caps for most Pennsylvania customers are coming off in the next 2 years, creating concerns about high consumer energy bills that will increasingly strain household budgets. Consumer energy bills for natural gas and fuel have faced alarming volatility that also strains household budgets. As this report will demonstrate, there is significant potential for clean energy solutions, including energy efficiency, demand response, and onsite solar technology, to revitalize the economic health of Pennsylvania while simultaneously moderating the impacts of increasing energy needs and volatile energy markets.

Energy efficiency is the least-cost resource available to meet energy needs in Pennsylvania, is the quickest to deploy for near-term impacts, and has a positive net benefit on job creation and economic stimulus. With electricity rate caps expiring for most electricity customers in the state by 2010, some utilities are projecting rate increases1. Unlike supply-side energy resources, energy efficiency and demand response are the only resources that can actually begin to reduce customer electric bills by reducing overall consumption. And by freeing up dollars in consumer budgets, these clean energy investments can stimulate the economy and create new "green collar" jobs in fields such as construction and technology development and deployment.

Recent legislation in Pennsylvania that aims to encourage energy efficiency and renewable energy investments (the Alternative Energy Investment Fund and Act 129) and a growing awareness of the value of these resources demonstrate a growing consensus that the Commonwealth must do more to realize these clean energy resources. The goal of this study is to inform policymakers, stakeholders, and the general public of the opportunities for energy efficiency, demand response, and onsite solar energy in Pennsylvania, and to suggest specific policy and program recommendations the Commonwealth could implement to tap into these clean energy resources.

The report is organized into the following sections:

  • Background: Provides a brief overview of the electricity, natural gas, and fuel oil markets in Pennsylvania, including recent actions and future opportunities regarding energy efficiency and demand response.
  • Project Overview and Methodology: Provides a context for ACEEE’s work with state-level energy efficiency potential studies and an overview of both the project approach and analysis methodology.
  • Reference Case: Discusses the reference case electricity, peak demand, natural gas, fuel oil, propane, and price forecasts used in this analysis.
  • Energy Efficiency Resource Assessment: Estimates the cost-effective potential, from the customer’s perspective, for increased energy efficiency in the state’s residential, commercial, and industrial sectors by 2025 through the adoption of specific energy-efficient technology measures. The resource assessment goes beyond what the state can achieve through penetration of specific programs and policies.
  • Onsite Solar Assessment: Characterizes the technical and market potential for onsite PV and solar water and space heating. Prepared by the Vermont Energy Investment Corporation (VEIC).
  • Energy Efficiency Policy Analysis: Outlines the recommended policies for Pennsylvania to adopt to tap into the energy efficiency resource potential and estimates the energy savings impacts from energy efficiency policies.
  • Demand Response Analysis: Estimates the potential for increased demand response in Pennsylvania and makes specific recommendations to the Commonwealth.
  • Macroeconomic Impacts: Estimates both the costs and consumer energy bill savings from the policy analysis, and assesses the impact of energy efficiency policies on Pennsylvania’s economy, employment, and energy prices.

1PPL Electric Utilities Corporation has advised its customers to expect at least a 25% increase when rate caps come off (PPL 2007). However, electric rates for PennPower and Duquesne residential and commercial customers have decreased (in real dollars) about 30% over the past 15 years and PECO is projecting residential rate increases of 8 percent (DEP 2009).