Role of Energy Efficiency in Addressing Electric System Reliability and Other Energy Problems

1. Role of Energy Efficiency in Addressing Electric System Reliability and Other Energy Problems Steven Nadel Executive Director American Council for an Energy-Efficient Economy Washington, DC

2. Reliability Problems Face Multiple Regions

3. Past DSM Cutbacks Have Contributed to the Problem Projected vs. Actual Available Peak Reductions for 1998 Source: ACEEE analysis of EIA reports and Form 861 data.

4. Capacity Margins Continue to Decline Source: NERC Reliability Assessment, 1999-2008.

5. Supply Side New power plants (particularly peakers) New transmission lines Improved system maintenance Demand Side Load management Traditional (radio control, I-rates) Real-time pricing or credits Energy-efficiency programs Resource acquisition Market transformation Options for Closing the Demand-Supply Gap

6. Potential for Cost-Effective Electricity Savings in the Mid-Atlantic States Note: Savings analysis based on implementation of 80% of cost-effective opportunities by 2010. Source: ACEEE, 1997, Energy Efficiency and Economic Development in NY, NJ, & PA.

7. Allocation of Peak Demand by End-Use Source: Xenergy study for N.J. utilities.

8. Program Example: Residential Cooling Systems • Encourage purchase of high-efficiency air-conditioners and heat pumps in new construction and when existing systems are replaced - National savings potential ~5,000 MW annually - Examples: NJ, Long Island • Early replacement of old inefficient a/c (e.g. CA) • Training and incentives on good installation and maintenance practices - National savings potential ~20,000 MW - Examples: NJ for new units, CA for repair of old

9. Program Example: Commissioning of Existing Commercial Buildings • Commissioning - 5-15% energy savings, 1-3 year simple paybacks • Also substantial peak savings (national potential ~22,000 MW) • Program needs to address: • Service provider training and technical support • Educating building owners/managers about opportunity • Educating maintenance staff on how to maintain savings • Model programs : NYSERDA, Portland General Electric

10. Program Example: Residential CFLs • CFLs reduce energy use ~70% relative to incandescent bulbs • Prices have been dropping and sizes shrinking • Savings particularly large in evening hours • Program approach • Discount coupons, redeemable in local stores (e.g. NW, PEPCo) • Complement with public education and point of purchase materials

11. Summary of Savings Potential from Peak Reduction Programs • These savings are approximately 40% of expected demand growth over the next decade

12. Options for State Policy Makers • Adopt and implement public benefit fund to support energy efficiency programs • Adopt up-to-date building codes • Adopt state tax credits for efficient equipment and buildings • Encourage use of combined heat & power (CHP or cogeneration) systems

13. Options for State Policy Makers (continued) • Support/adopt minimum efficiency standards (e.g. CA) • Finance and implement efficiency upgrades to state and municipal facilities (e.g TX) • Promote Energy Star equipment and buildings

14. Status of State Energy Efficiency Public Benefit Programs

15. State Energy Efficiency Public Benefit Funds

16. Residential Building Code Status

17. Commercial Building Code Status

18. State Tax Incentive Options • Waive sales tax for Energy Star equipment (e.g. MD; OR has larger incentives) • Green buildings tax credit for commercial buildings (e.g. NY) • Credits for efficient new homes • Titling or other tax waivers/credits for hybrid and fuel cell vehicles (e.g. MD)

19. Encouraging CHP • Adopt favorable CHP and distributed generation interconnect and access rules (e.g., Texas PUC) • Establish interagency team to facilitate siting and permitting (e.g., NY and CA) • Cost-share CHP feasibility studies (e.g. NY) • Review state facilities for CHP opportunities (e.g. NY)

20. Federal Standards Retain new residential standards -- a/c, water heaters and clothes washers Develop new standards -- commercial a/c, transformers State Standards Stronger a/c standards Standards on products not federally regulated -- torchierres, exit signs, transformers & commercial refrigeration Equipment Efficiency Standards

21. Texas Loan Star Program • Capital retrofit program for building energy efficiency • $95 million revolving loan fund • Over 10 years,$133 million loaned for 118 projects; savings to date $83 million • Average 22% energy savings • Continuous commissioning a key component of the program

22. The ENERGY STAR Label • Residential • Consumer Electronics, Dishwashers, Clothes washers, Lighting fixtures, CFLs, HVAC, Refrigerators, Windows, Room A/C, Dehumidifiers, Set-top boxes

23. The ENERGY STAR Label • Commercial • Office equipment, Exit signs, Roofing products, Transformers, Traffic signals, Water coolers • New Products • Telephony, Ceiling and ventilation fans, industrial motors, small commercial HVAC

24. Existing Programs Offices Schools In Beta Test Groceries Convenience stores Other building types planned Energy Star Building Labeling Program

25. Employment Impacts of Energy Efficiency Programs & Policies Source: ACEEE, 1997, Energy Efficiency and Economic Development in NY, NJ, & PA.

26. RAND Study on California Programs • Examined impacts of energy efficiency programs and policies from 1977-1995 • Found statewide economic benefits of $875-1300 per capita • Added 3% to state economy • Reduced air pollution emissions from stationary sources by ~40% Source: The Public Benefit of California’s Investments in Energy Efficiency