State energy savings targets evolve to meet new policy goals

Blog Post | August 01, 2019 - 10:15 am
By Rachel Gold, Senior Manager, Utilities Program

As more states seek to reduce costs and meet climate goals, new ACEEE research finds that energy efficiency resource standards (EERS) are delivering huge gains — 80% of all electricity savings — in the utility sector.

Our report, released today, shows that these energy savings targets —adopted by 27 US states over the past two decades — are the most effective utility-sector energy efficiency policy. In fact, in 2017, states with such targets achieved electricity savings at a rate four times higher than states without targets.

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To build on this success, leading states are taking new approaches toward their EERS as they pursue multiple goals: lower costs, climate mitigation, increased utility flexibility to meet demand, and customer benefits (especially for those most in need) such as bill savings and healthier homes.

States with electricity savings targets in place. Shading indicates the average incremental annual level of electricity savings required by the policy. RES stands for Renewable Energy Standard

Some states are finding that their EERS policy needs to change. For many years, these energy savings targets have looked quite similar, calling for specific amounts of electricity (and sometimes natural gas) savings. The new generation of EERS policies casts a wider net, encouraging utilities and other program administrators to achieve multiple goals, like emissions reductions, electricity savings, and peak reductions, all while maximizing benefits to customers.

Our paper details five states that are evolving their EERS policies: California, Hawaii, Massachusetts, Minnesota, and New York. We find that, unlike earlier EERS policies, these new designs vary greatly. For example, while Massachusetts and New York have both adopted fuel-neutral savings goals, their overall frameworks look quite different.

Illustration of next-generation EERS policies in New York and Massachusetts.

States will need a comprehensive approach to decarbonization to ensure that everyone benefits. States are leaning on additional tools to meet their emissions-reduction goals while ensuring that costs stay low and benefits are delivered equitably. For example, some states create carve-outs or spending rules within their existing goals that guide utility investment toward underserved market segments, like the 18 states with spending requirements for low-income customers.

Others have established separate portfolios of programs to achieve their ambitious goals, keeping EERS targets largely unchanged. For example, California has used this separate-portfolio approach to address priorities like ensuring that electrification programs reach disadvantaged communities and scaling up building decarbonization. These strategies operate within a larger context, where cost-effectiveness rules, performance incentives, and potential study methodologies can have a major impact.

You can dive deeper into these findings in our new report, Next Generation Energy Efficiency Resource Standards. The report authors will discuss their findings in a webinar on Thursday, August 1 at 1 pm ET, joined by Commissioner Jennie Potter of the Hawaii Public Service Commission and Janet Joseph, Senior Vice President for Strategy and Market Development at New York State Energy Research and Development Authority (NYSERDA). Register here.

Annie Gilleo co-authored the report and this blog post.