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Energy Efficiency: A Resource Large Enough to Matter (Part 2 of 2)

Scott Johnstone -

At this fall’s Energy Efficiency as a Resource conference in Nashville, I had the opportunity to be part of a plenary panel that discussed how far we have come with energy efficiency, and where we are going in the future. As I previously wrote, one example of how far we’ve come is Efficiency Vermont, which VEIC has operated since the year 2000.

During that time, we’ve seen the share of Vermont’s electric portfolio that is supplied by low-cost energy efficiency steadily grow. In 2012, energy efficiency represented a full 12% of Vermont’s portfolio – “a resource large enough to matter”, as the title of this series suggests.

As notable as that historic success has been, what is truly exciting is thinking about what the future holds for energy efficiency. Sticking with the Vermont example, we now do 20-year planning and budgeting horizons for Efficiency Vermont, in close coordination with distribution utility and transmission company forecasts. When we look into that crystal ball, we see a future in which efficiency grows and grows as a portion of our state’s energy portfolio – with all the economic and environmental benefits that come with a least-cost, zero-carbon energy source.

This planning suggests that with our current thinking and approaches Vermont can move from annual incremental savings of 2% to 3% in the years to come. On a cumulative basis, this would come to represent a full quarter of Vermont’s electric supply portfolio.

As we push towards these goals, and beyond, here are a number of policy considerations that I offered to the audience of energy efficiency professionals in Nashville:

  • Don’t leave money on the table: Energy efficiency is without question the least-cost source of energy. We should have the courage to stand up for the simple principle that anything less than acquiring every last megawatt hour of cost-effective energy efficiency is economically irrational.
  • Use more electricity: We need to get away from the simplistic world view that simply focuses on driving down electricity use without regard for other policy goals. For reasons of cost and climate change, in some cases using more electricity, not less, is part of the answer. If we can offset $4 per gallon heating oil for a furnace with $1.50 per gallon equivalent renewable electricity to run an air source heat pump, why wouldn’t we do that (as long as we do it in a way that doesn’t increase peak demand)? The economics for heat pumps are getting better every day, and the economics for other end uses such as electric vehicles aren’t far behind.
  • Efficiency for the grid, not just for the end user: The grid is necessarily built to accommodate peak demand, but the rest of the time, it is an expensive and under-utilized resource. Taking steps towards strategic electrification with technologies such as heat pumps and electric vehicles will enable us to make more efficient use of this existing resource without having to build additional capacity. We’ve only scratched the surface on how innovations such as smart grid technology and dynamic rates can shape our utilization of the grid.
  • Make it simple for the customer: As a rule we as an industry don’t do a very good job delivering our services in ways that are customer-friendly. Some of this is due to regulatory barriers, some of this is due to choices we’ve made. Consumers have a limited interest in energy issues, and are in search of simple solutions for saving money and in some cases making the switch to renewables. We need to attack the barriers that prevent us from offering a spectrum of energy services that integrates efficiency across fuel types as well as renewables and distributed generation.
  • Count all the benefits: Energy efficiency often comes down to a game of economics, but too often we aren’t counting all of the benefits of these investments. There are the direct economic benefits of course, but there are also countless “non-energy benefits” in areas such as health, comfort, job creation, and the environment. Some regulators, including in Vermont, have taken baby steps towards recognizing these benefits. Until they are fully valued, the predictable result will be continued under-investment and a failure to realize the entirety of the benefits that energy efficiency can deliver to society, particularly its most vulnerable members.

Marty Kushler of ACEEE coined the metaphor for energy efficiency potential that it’s “growing like kudzu.” Others might say “the sky’s the limit.” Whatever your choice of metaphor, it should be beyond dispute that energy efficiency is going to play a growing and central role in our energy planning for the future.

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