Midwest Energy Savings

Rebecca Stanfield, Deputy Director for Policy, Midwest Program, Chicago

An important new federal study confirms that saving energy is far less expensive than generating power in a power plant.  It also shows that here in the Midwest, energy efficiency programs are succeeding at delivering energy savings at rock-bottom costs, translating into lower customer bill savings as we eliminate the need for building new power plants. 

Specifically, the study reports a national average levelized cost of implementing utility energy efficiency programs of about 2 cents per kilowatt hour – compared to the range of 6 to 15 cents per kwh that it would cost to build new power plants.  However, in the Midwest that average cost of saved energy was just 1.4 cents per kwh, which is just a quarter of the cost of the least expensive new power plant options. Again, it would cost between four and ten times more per kwh to build and use a new power plant than it has been to implement energy efficiency programs to simply reduce the amount of energy we waste.   

These findings from the Lawrence Berkeley National Laboratory (LBNL) confirm what we’ve seen reported in utility regulatory proceedings across the Midwest.  For example, the State of Michigan reported that in the first three years of utility energy efficiency programs, the programs saved customers a net of $800 million on their electric bills. In Illinois, ComEd’s programs alone have reduced customer costs by $700 million to date.

ACEEE confirms efficiency is the cheapest resource

The LBNL study was followed quickly by a new ACEEE study released today, which provides additional evidence that energy efficiency is the least expensive resource available to utilities for serving customer electric needs.

ACEEE (American Council for an Energy-Efficient Economy) looked at data from 20 states from 2009 to 2012 and concluded that the cost of energy savings for utility programs was between 1.3 and 5.6 cents per kwh, and averaged 2.8 cents nationwide.  Again, the Midwest had among the lowest costs for energy savings with Michigan, Iowa, and Wisconsin all reporting savings at under 2 cents per kwh.

Another new report out this week shows that nationwide, utilities are investing an all-time high of $7 billion annually in programs ranging from weatherization to high-efficiency appliance rebates to help customers save money. In addition, these programs saved a whopping 126 terawatt-hours (TWh) of electricity in 2012, enough to power more than 12.2 million U.S. homes for one year, and avoided the generation of 89 million metric tons of carbon dioxide pollution. 

New insights into efficiency

In the largest sample of utility energy efficiency program administrators to date, the LBNL report that shows it’s cheaper to cut energy waste than build power plants provides important new insights by aggregating information reported to state regulators across 31 states from 100 administrators of 1,700 programs over four years. “The Program Administrator Cost of Saved Energy for Utility Customer-Funded Energy Efficiency Programs” attempts to provide some answers to questions like:

  •  Are consumers responding to incentives for “small” changes such as replacing energy-wasting light bulbs?
  • Do massive government and utility-sponsored programs scale – as in, are larger programs operated more cheaply than smaller ones?
  • What areas of the country do better than others in terms of spending on energy-efficiency programs?

Perhaps the most important finding, in effect, was the need for better reporting standards across jurisdictions in order to get a true picture of what we pay to save energy.  As it stands, the utility customer-funded efficiency programs studied are overseen by state regulators and administered by more than 100 different entities, including utilities, state energy agencies, non-profit, and for-profit institutions. Even with that complexity, the report showed that program-level cost and savings data can be collected and analyzed systematically, but analysts urged that standardized reporting – and more reporting in general – will lead to more definitive future results.

Efficiency creates jobs

Finally, it’s worth keeping in mind that energy efficiency programs create much needed jobs in two ways.  First, by employing people to make, design, and install energy efficiency measures.  A survey of energy efficiency jobs in Illinois released on March 20 found that of the 96,000 clean energy jobs existing in Illinois today, more than 60 percent were people employed in the energy efficiency sector.  The second way efficiency creates jobs is by lower energy bills for businesses and families, so that they can spend that money on new employees or in their communities, instead of on unnecessarily high energy bills.

Photo Credit: Midwest Energy Savings/shutterstock