Getting those high efficiency products should be getting more affordable. According to researchers at Berkeley Lab projections published yesterday, efficiency programs funded by electric and natural gas utility customers will double by 2025 to about $9.5 billion per year. Rates are sure to be going up, so catching the improvement grants is going to be very helpful.
According to the Berkeley Lab report, energy efficiency programs funded by utility customers are projected to continue expanding beyond the traditional bastions of energy efficiency in the Northeast and West. The funds, which come from a charge on ratepayer’s utility bills, historically constitute the nation’s largest source of spending on programs to foster the adoption of more efficient products and buildings. If you don’t use ‘em you’ll be paying for them anyway.
The Berkeley team projects that by 2025, states in the Midwest and South could account for 49% of total U.S. spending on customer-funded energy efficiency programs, up from 27% in 2010. By 2025, only a handful of states would not have significant customer-funded efficiency programs.
The projected growth in program spending is driven by policies in a number of states requiring that utilities obtain all cost-effective energy efficiency savings. Another driver is energy efficiency resource standards, which require electric utilities to meet minimum energy savings goals each year.
Berkeley staff scientist Charles A. Goldman, a co-author of the study and head of the laboratory’s energy analysis and environmental impacts department adds this, “In addition, we see some utilities turning to energy efficiency as part of their strategy for reliable delivery of electricity as older coal-fired generators are retired.”
In the background of the analysis press release the Berkeley Lab team developed low, medium, and high scenarios for program spending and savings, intended to reflect a range of potential outcomes under the current policy environment – that is, without considering possible major new policy developments. The analysis was based on a detailed review of all relevant state policies and legislation, regulatory filings and decisions, and utility integrated resource and demand-side management plans. The researchers refined the scenarios through extensive interviews with regional and national energy efficiency experts, efficiency program administrators, regulatory staff, and other industry actors.
That sounds like a pretty deep look.
The lead author of the report, Galen Barbose explained that, “this study is intended to provide a detailed, bottom-up analysis of state policies and to capture the market context in which programs operate.”
Hold on – here comes the dreadful part. Total U.S. spending on electric and gas efficiency programs (excluding load management programs) is projected to grow in all scenarios examined, ranging from $6.5 billion to $15.6 billion in 2025, with a mid-range projection of $9.5 billion under a scenario in which states are fairly successful in ramping up their programs to meet state energy-savings policies now on the books. Thus, power bills are projected to climb in a major way.
This compares to total spending of $4.8 billion in 2010 making the mid range projection a doubling. As discussed within the report, the range in potential spending trajectories reflects a number of key challenges and significant uncertainties in market and policy drivers, including concerns about utility rate impacts from energy efficiency programs, the timing and pace of the economic recovery, the long-term trend in natural gas prices, and the impact of recent and possible future changes to federal and state minimum efficiency standards for appliances and building codes.
If states remain on their current policy paths, annual incremental savings from electric energy efficiency programs could be expected to reach about 0.8% of retail electricity sales in 2025, compared to about 0.5% of retail electricity sales in 2010. These numbers are but fractions of a percent compared to the possible 100% cost increase.
The supposed good news is electricity savings at that level in 2025 could offset the majority of load growth forecasted through that year in the Energy Information Administration (EIA)’s most recent reference case forecast for electricity usage. This assumes that the EIA forecast correctly estimates savings from future customer-funded energy efficiency programs.
Goldman takes up the narrative again with, “So far, only a few very aggressive states have come close to offsetting growth in electricity needs through efficiency. Our finding that, in aggregate, U.S. energy efficiency programs could offset a significant portion of projected load growth in the electricity sector over the next decade is subject to some uncertainties but striking nonetheless.”
In the near term spending on gas energy efficiency programs is projected to continue its rise in the current policy and market environment, but flatten from 2015 onward, reflecting the influence of low natural gas prices and new state and federal equipment efficiency standards.
However it the promotional grants and other policy matters evolve, energy is going to be priced higher. The special interests are winning, costs be damned; the policy to get more energy, better and cheaper isn’t being spoken or heard anywhere but here. Better take care of ourselves, and dig in for efficiency and conservation.