Originally posted by Energy Central


September 8, 2004 | By Stephen Heins

Energy Efficiency is finally being recognized as an important component to America’s energy future. In particular, states like Pennsylvania and Wisconsin have begun discussion about including Energy Efficiency into what many states call Renewable portfolios and Renewable Portfolio Standards (RPS). The whole idea being that combining Energy Efficiency and Renewables will allow the practicality of Energy Efficiency to enhance the economic viability of a program, which still depends on tax breaks and state subsidy. Pennsylvania calls their proposed plan an “Advanced Energy Technology Portfolio.” Semantics is the first problem with any thoughtful energy discourse. When discussing energy issues, one cannot help notice how many semantic mine fields there are. You have such terms as”green,” “renewable,” “stainable,” “conservation,” “energy efficiency,” “alternative energy,” “efficiency utility,” “emission reduction,” “portfolio standards,” “renewable portfolio standard,” “base load reduction,” “new generation resource,” “negawatts,” “virtual power plant” and many other catchy and oft-times poetic phrases. It is enough to confuse even the most battle hardened energy veteran. The first objective of this article is to establish a set of terms we can all agree on. Of the terms already mention, the first five are the most important for sake of beginning of this discussion. Green, renewable and sustainable are sometimes used as if they are interchangeable, while conservation and Energy Efficiency are often used as a distant third cousin kind of add-on with no actual precise meaning or status. As a precept for discussing the Advanced Energy Technology Portfolio, I would like to suggest that conservation and Energy Efficiency are green, renewable, and sustainable, especially if one includes in each of their definition the fact that they do not deplete natural resources, they can be consistently implemented over a long period of time and they have a positive environmental impact. Given the fact that conservation has acquired a slightly simplistic meaning, which includes turning the thermostat down and wearing a heavy sweater, most informed energy people prefer to use the phrase Energy Efficiency, because it implies the most efficient use of energy without any compromises required. In other words, Energy Efficiency is the art of getting more while using less. Therefore, I would like to define energy efficiency as “the quickest, cleanest and cheapest source of new energy,” which means it should be accorded at least the same respect and consideration that Renewables receive today. In fact, the American Council for an Energy Efficient Economy (ACEEE) has done a study recently, entitled “The Technical, Economic and Achievable Potential for Energy Efficiency in the United States: A Meta-Analysis of Recent Studies,” that shows as much as a 24% reduction of all electricity usage could be achieved in the U.S., which means that as much as one hundred thousand Megawatts of savings is possible. If it true that “we need to promote energy efficiency” as James DeGraffenreidt, chairman of the American Gas Association’s (AGA) policy-making committee has said, then we need a broad based plan not unlike the one proposed by Secretary Katie McGinty of PA Department of Environmental Protection, which she calls the “Advanced Energy Technology Portfolio.” This portfolio would include Energy Efficiency and renewable energy under one portfolio standard. Ms. McGinty expects the state of Pennsylvania to derive a full 10% of future energy requirements by completing the Advance Energy Technology Portfolio. Currently, there is a pilot program being tested by Oregon, American Gas Association (AGA) and Natural Resources Defense Council (NRDC) that is designed to encourage utilities to promote energy efficiency. According to Ralph Cavanagh, an energy analyst with NRDC, “Our studies show that very small decreases in demand in tight markets can mean big reductions in price.” The only problem with this program is, that it does not go far enough to reward utilities for all forms of energy efficiency, because it only involves natural gas savings. The fact is that utilities and state regulators need to be able to treat energy efficiency as a supply side option, with an allowable return on investment. If given a return on energy efficiency competitive to the one they are given now for energy supply and production, utilities will be able to justify to their shareowners their investments to reduce demand and make Energy Efficiency a growing part of their business platform. In the case of the California energy crisis, the state was able to reduce demand by 5% within the first year of the crisis, with as much as a reduction 10% in overall electrical consumption possible for California over the next decade. New evidence is emerging that California could cost-effectively reduce its electricity needs by at least 5,900 MW –the equivalent of 12 large power plants — over the next decade. It has been estimated that the net benefits to California would be $12 billion and the environmental benefit is equally as large. Imagine the economic and environmental benefits of Energy Efficiency nationally if we coordinate efforts throughout the U.S. In another example of an innovative approach to energy policy, the state of Vermont has started a program that they call “Efficiency Vermont,” which establishes a portfolio standard for Energy Efficiency including measurement and verification protocol. It is a program that involves both Vermont individuals and businesses, because “the bottom line is that energy efficiency is one of the best investments we can make in meeting our needs for electricity.” In 2003, the cost savings from Efficiency Vermont represent 28% of what utilities would have had to pay on the wholesale market.

All of these examples of individual states and programs suggest that the U.S. could harvest large economic, environmental, and energy benefits if it took a broad view of electricity. Instead of dribs and drabs, we have an historic opportunity to change the way we fund, build, and use sources of new energy. By including energy efficiency into any broad energy plan or program like Pennsylvania is trying to do, the U.S. can expect 2/3 of all new sources of energy will come from Energy Efficiency efforts, as predicted by Secretary of Energy Spencer Abraham. Ultimately, if we are able to agree on the semantics of energy and a broad based approach to energy solutions, the U.S. can start the process of reducing dependence of foreign oil and construction of new power plants. By creating incentives to maximize energy efficiencies, we will send the right signal to the global marketplace. Katie McGinty, said it best when she said, “My philosophy has always been and continues to be that environmental challenges properly understood and approached are economic opportunities.”

With the establishment of an Advanced Energy Technology Portfolio like Pennsylvania’s, the U.S. can unleash the innovative powers of American industry both as users and inventors, which will then unleash the power of job creation, cost competitiveness and environmental stewardship.

“We need to develop a nationally accepted template so that states can establish effective energy portfolios that are not swayed by the politics of the day at the expense of sound and proven Energy Efficiency technologies that benefit each state and their business owners and residential customers alike,” stated Charles O’Connor, Supervisor of Energy Efficiency in the Valley, Los Angeles Department of Water and Power. By motivating utilities, businesses and individuals to benefit from Energy Efficiency, we will have a 21st Century solution to the vexing problems involving energy, economics and environmental issues.