Yet another report finds that energy efficiency improves the economics of reducing carbon dioxide emissions

Date: 17 June 2015

Contributing writer Cara Miale Goman looks at how energy efficiency improves the economics of reducing carbon dioxide under the proposed Clean Power Plan: 

The EPA’s Clean Power Plan, a federal rule that aims to help cut carbon pollution from the energy sector 30 percent by 2030, is slated to be finalized this summer. As states, cities and utilities evaluate individual plans to meet the proposed standards, yet another analysis, this time from the U.S. Energy Information Administration (EIA), finds energy efficiency technology can improve the economics of meeting the standard.

The EIA’s recent analysis projects that U.S. retail electricity prices will indeed climb, especially during the the Clean Power Plan’s early years (2020-25), as more coal-fired generators are retired in favor of natural gas-fired generation, and as investments are made to improve the efficiency of existing electric generators. The EIA’s analysis projects a household electricity cost increase of about four percent, roughly $62 tacked on to the annual household electricity bill.

It comes as no surprise, though, to find energy efficiency technology named as a viable option for cost mitigation and compliance.

According to the analysis, price increases are highest in the initial years of implementation, and likely vary by region: some regions, like the South and Southwest, can anticipate steeper price increases (as much as 15 percent higher than baseline) than the Northeast and Pacific, but also show more potential for future energy efficiency savings. By 2040, demand reductions range from 0.8 percent in New England to 3.7 percent in the Rocky Mountain and Southwest regions, according to the EIA analysis.

Demand-side energy efficiency is identified in the analysis as one option to help offset the early cost hike. Electric utilities and government programs can incentivize residential and commercial consumers to make energy efficient improvements such as more efficient lighting, appliances, higher quality insulation and windows.

The incremental costs associated with these programs, borne by the utilities, can be passed on to customers on their electricity bill. As consumers’ energy savings continue into 2040, the analysis says, household electricity bills will approach baseline levels.

The EIA’s report, available here, joins a chorus of numerous climate studies that have confirmed energy efficiency as a widely available, cost-effective option to reduce carbon dioxide emissions and overall electricity demand.

District energy and combined heat and power (CHP), which capture and use excess power-plant waste heat, as well as grid-connected microgrids, which often employ CHP, are among other increasingly employed energy efficient technologies that can cost-effectively cut emissions while also strengthening — and lending flexibility to — the grid.

A new white paper now available from Anna Chittum with the International District Energy Association suggests the proposed federal rule represents an opportunity for states to take advantage of the benefits of investing in district energy and CHP — benefits that include: “a more reliable heat and power supply, the chance to utilize local and renewable fuel sources, and reduced energy costs.” Chittum’s paper was released in advance of a conference IDEA is holding later this month in Boston.

The impact and cost of the Clean Power Plan will undoubtedly vary from state to state, depending on current infrastructure, demand and the unique strategy each state designs to meet the emissions standards. And the plan will face legal opposition — so its implentation could be delayed. It may be awhile, therefore, before we see exactly how enery efficiency plays into Clean Power Plan economics. But the EIA’s analysis adds to growing evidence that energy efficiency technology will be a key player in helping states manage cost and meet their carbon dioxide emission reduction goals.

Source: Energy Efficiency