The Next Phase in Energy Conservation

May 1, 2008
The current crisis is focused on the soaring prices of gasoline and diesel fuel, but they are only symptoms of the larger issue …

Energy has certainly been in the news lately. The current crisis is focused on the soaring prices of gasoline and diesel fuel, but they are only symptoms of the larger issue …

Coal is too dirty to burn, and it will take a decade to commercialize the FutureGen technology hoping to separate CO2 and pump it into empty oil caverns to protect the planet from global warming. China is in the process of constructing more than 500 coal-fired power plants to fuel its growing demand for electricity; we have delayed or cancelled more than 20. So, we export coal to many countries, which only depletes our supply and raises prices, doubling since last year, in some cases. St. Louis-based Peabody Energy Corp. shipped more coal overseas in the first 6 weeks of 2008 than it did all of last year, says Chief Executive Gregory H. Boyce. That exports our air pollution that eventually crosses the Pacific and falls back on North America.

Nuclear power is too expensive, and is getting more so each week as we delay and delay any permanent storage of the radioactive waste and refuse to mine domestic uranium. We haven’t built a nuclear power plant lately, and most of our technology lies in operating legacy systems while other countries, like France, forge ahead with plans for a new uranium enrichment plant in Idaho.

Natural gas is nice, but we must import our increasing marginal needs; no one wants a liquid natural gas terminal anywhere near them, which drives up its cost. Hydro-dams are restricted because there is nowhere possible to build any new really big ones in North America as they are doing in China and Africa.

Oil must be reserved for personal and commercial transportation until the hydrogen-fuel-cell engine can replace the internal-combustion workhorse. We must import 12 million barrels per day—nearly two-thirds of our needs. No need to mention the obviously skyrocketing oil prices from shifts in world demand that are growing much faster these days while production is peaking. Why should oil suppliers increase output when rising prices can provide all the increased revenue and profits they want? Shifting to hybrid and electric vehicles will only add to the demands for electricity from the objectionable sources as above.

Biofuels are coming, mostly from corn-derived ethanol, but at the expense of other agriculture crops—a scenario that will create food shortages and higher prices at dinner.

Renewables have their place, but they have their limitations, too. Solar power still is costly, requires a lot of space, and doesn’t work at night or in cloudy climates, so backup power must be available. Wind generation mucks up the landscape and requires all those pesky new transmission lines and coordinators to synchronize them with the grid; it also kills too many birds. And, the wind only blows at certain places at certain times, so backup power must be available—but I repeat myself. The grid itself is in transition, from a collection of state-controlled reliable local and regional systems interconnected for mutual support to an international monster that will require the wisdom of Solomon to control and coordinate to prevent a local outage from cascading to a continental disaster. That challenge has been outsourced by the Federal Energy Regulatory Commission (FERC) to the North American Electric Reliability Council (NERC).

Meanwhile, national economic growth is connected in lock-step with energy consumption, and no one wants to be responsible for throttling the economy, do they? Congress chips away at these issues one at a time through its several committees that are driven by local political conditions back home. The states are taking a variety of wide-ranging responses. Consequently, some proposed solutions are state driven and some are federally driven. So, where do we go from here?

There are only two ways forward; as Yogi Berra said, sometimes you come to a fork in the road and you have to take it: One is increasing supply and the other is reducing demand. Some people are saying it’s time to seriously begin decoupling economic growth from energy consumption because the likelihood of continuing as-is looks slim (and may be getting slimmer). In fact, they would like to see economic growth driven by efforts to consume less and less energy—just the opposite of present conditions.

You could begin with a revolutionary idea spawned at the Edison Electric Institute (EEI), the national trade association of shareholder-owned utilities representing approximately 70 percent of the U.S. electric-power industry. Last year, EEI formed the The Edison Foundation (TEF) ( Its first venture is called the Institute for Electric Efficiency, described as “A forum to promote energy-efficiency practices among electric utilities; promote the sharing of information, ideas, and experiences in energy efficiency in the power sector; and develop a resource base of effective business models and options.” If it’s to be taken literally, this seems like a sea change among the investor-owned electric utility industry. One can only hope that investors who depend upon reliable utility dividends and increasing stock prices have also “seen the light” and look forward to decoupling economic growth from energy consumption. If they have a problem with that, The Institute replies: “Electric efficiency is—and will continue to be—a critical part of the solution to meeting the rising demands for electricity while also addressing climate change and other environmental issues associated with the generation of electricity.”

The financial magnitude of the energy challenge ahead was highlighted at a conference sponsored by TEF on April 21, 2008, “Keeping the Lights On.” A key presentation by The Brattle Group consulting firm disclosed that growing demand for electric services will require investment by utilities on the order of $1.5 trillion between now and 2030. Presenter Peter Fox-Penner estimated that new and replacement generating plants will cost about $560 billon through 2030, absent a significant expansion of energy-efficiency programs or new climate initiatives. Transmission and distribution together will require nearly $900 billion by 2030 under current trends and policies. But, The Brattle Group reported that incremental generation capacity needs could be decreased from 224 to 151 gigawatts (a 33-percent reduction) based on an analysis by the Electric Power Research Institute (EPRI). That translates into an overall reduction of electricity consumption between now and 2030 by an additional 7- to 11-percent below the 2007 Energy Information Administration baseline projection … if aggressive energy-efficiency programs are implemented.

The keyword here is “aggressive.” Documented results of utility-sponsored conservation programs indicate that energy savings cost only a fraction of the amount to install additional generation capacity. But, work by EPRI indicates that government regulations, new codes and standards, and market-driven product innovations will be needed to approach the full potential for energy conservation. Potential downright peak power curtailments and outright blackouts could be most effective in getting that badly needed, “aggressive” conservation in response. And, of course, there are always those rising energy prices to pay for new capacity and higher fuel costs that will get your attention.

Electric utility associations are not the only groups with a growing emphasis on energy efficiency. The American Council for an Energy-Efficient Economy (ACEEE) is touting development of Energy Efficiency Resource Standards (EERS). EERS consists of electric and/or gas energy-savings targets for utilities, with flexibility to achieve the target through a market-based trading system. EERS targets are achieved through end-user energy-saving improvements, aided and documented by utilities or other program operators. Distribution system efficiency improvements, combined heat and power (CHP) systems, and other high-efficiency distributed generation systems may be included as well. With the trading provision, a utility that saves more than its target could sell savings credits to utilities that fall short of their savings targets, permitting the market to produce the lowest-cost savings. EERS programs are most commonly implemented at the state level, but they also can be implemented across smaller or wider areas. “Based on states and countries that have been implementing EERS policies for several years, it’s clear that large, cost-effective savings are being realized,” states Executive Director Steven Nadel. “States and countries are finding that these efficiency savings cost several times less than generating the same amount of power, and many of the early adopters are increasing their savings goals.” EERS savings could potentially amount to about one-quarter of the currently projected growth in electric sales over the 2007–2020 period and about one-half of projected growth in natural gas sales over this same period. States rated highest in EERS programs by ACEEE include Vermont, Connecticut, California, Massachusetts, Oregon, Washington, New York, New Jersey, Rhode Island, Minnesota, and Texas. Energy-efficiency measures cost about $400 per kilowatt—the most common single measurement of power—while building a new coal plant costs roughly $3,000 per kilowatt, according to figures compiled by the Ohio Consumers’ counsel, Janine Migden-Ostrander. She concludes, “Energy efficiency is a least-cost option.”

America has some very resilient and very creative people, so perhaps your bottom line could be improved by learning more about their ideas for energy efficiency. The ACEEE publishes and updates a report on Emerging Energy-Savinsg Technologies and Practices for the Building Sector. For details, visit Wal-Mart apparently saved so much in energy costs at its stores that it added a new commercial building energy audit service and organized partnerships in 20 state capitols through the National Governors Association to market its services. Diane Munns, executive director at EEI, summed it up this way: “To maximize utility investment in efficiency programs, energy efficiency must be treated as an energy resource on par with new generation.” So, it may be a good idea to add conservation to your energy portfolio from now on.

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