Anchoring costs: the role of industry programs in U.S. ratepayer-funded energy efficiency

摘要

Over the past decade, sustained energy efficiency growth has helped transform U.S. energy use. At the household level, this transformation is illustrated by the drop of 2013 electricity demand to 10,819 kilowatt-hours per U.S. household, which is roughly the same level as 2001 average household power usage (10,535 kWh), though real GDP has grown more than 20 percent over the same period. Energy savings are achieved through federal energy efficiency standards, state building codes, private energy service company programs and investments, ratepayer-funded energy efficiency programs, and structural changes in the economy. Among these, ratepayer-funded energy efficiency (EE) programs have doubled in the past five years in terms of total annual budgets and estimated energy saved. These programs help participating customers reduce their energy costs, and keep the cost of electricity down for all customers, by reducing overall demand for electric power generation and fossil fuels. As ratepayer-funded efficiency programs have continued to grow, a number of states are debating how to treat large industrial customers, some of whom have lobbied through industrial ratepayer advocacy groups to be excluded from funding ratepayer efficiency programs. To help inform ongoing policy debates on the role of the industrial sector in ratepayer-funded EE programs, this paper offers a quantitative assessment of how such programs have performed to date. In particular, this paper assesses the cost-effectiveness and total energy savings achieved by industrial programs compared to the performance of programs that target residential and commercial sectors.rnA key finding of this paper is that industrial sector programs have lower cost of saved energy than residential and commercial sector efficiency programs on the aggregate national level. Cost effectiveness varies with program design, industrial subsector composition, and state policies. The growing diversity of program designs and outcomes suggests that reliable data will become increasingly important for integrating cost-effective energy efficiency into state and federal climate policy. The programs reviewed here demonstrate that industrial process efficiency programs have achieved lower cost of saved energy than residential or commercial sector-focused programs; however, it is necessary for program managers and participating customers to invest a significant amount of upfront time and resources for programs to be successful. While there is no single program type that works for all industrial customers in all states, this assessment finds a number of characteristics that contribute to successful, low-cost energy savings. Based on this assessment and a review of the ever-changing state and federal policy landscape, we find that appropriately designed programs in the industrial sector play an important cost-limiting role in improving overall U.S. energy efficiency. Complete removal of industrial programs from existing ratepayer-funded energy efficiency program would have increased overall cost of saved energy by 5 percent in 2012.rnBy virtue of their low costs, industrial EE programs help keep energy costs down for all consumers. The better utilities, public benefit organizations, and states become at prioritizing and capturing available industrial EE opportunities, the more easily the economy can continue to meet energy demand in a low-cost and low-emissions manner. There’s no single bestrnpractice for ratepayer-funded industry sector energy efficiencyrnprograms, but this assessment underscores the importance ofrnkeeping industry in the picture as energy efficiency programsrncontinue to develop.