Multiple Benefits of Energy Efficiency: A Big Task with Even Bigger Results
By Kelly O’Connell for Zondits, January 21, 2015
The American Council for an Energy Efficient Economy (ACEEE) released a report this month detailing a new agenda for the energy industry to focus on – the multiple benefits of energy efficiency. It is well understood that energy efficiency improvements reduce energy usage and save money in the long term, but there are many additional benefits that result from these improvements that are not as well understood.
The multiple benefits of energy efficiency improvements affect society, environment, economy, and human welfare. Due to the wide realm of possible benefits, they are difficult to define and measure, and even more difficult to forecast. The report focuses only on the benefits for the business sector because its programs and decisions are quite different from those in the residential sector. It discusses what the benefits could include, how they might affect businesses, and how to market them, and then it proposes the steps to develop measures of the benefits.
The multiple benefits of energy efficiency are a new way of promoting energy efficiency to business investors that will have an impact on their companies beyond just energy savings. Revenue enhancement, expense reduction, capital performance enhancement, and risk mitigation are just some of the larger non-energy related effects caused by energy efficiency improvements. This idea is relatively new and there is not sufficient data yet to make quantitative claims, which is why ACEEE is proposing to put a larger emphasis in developing protocols to measure these benefits and collect data. By compiling enough data via a standardized protocol, utilities will be able to estimate both the energy and non-energy benefits that particular projects will produce. Depending upon the depth and breadth of the data collected, these results could be refined to specific regions, industries, and even applications.
With that being said, the amount of data that would need to be collected in order to provide these estimations within a range of statistical reliability is enormous. Each benefit would need to be defined and then measured, observed, and documented in a standard way to ensure that the data is comparable across studies. Furthermore, each benefit would need to then be simplified to the common denominator of dollars, in order to easily communicate the benefits to business investors. Collaborative efforts between utilities will be necessary to develop a “statistically adequate volume of data.”
While this may seem like a daunting task, the potential advances are worthwhile. It will increase business investments in energy efficiency, reduce payback times for improvement projects, reduce environmental pollutants, and increase energy security. One small-scale study conducted by the Lawrence Berkeley National Lab suggested that including additional benefits in a project’s value resulted in a 44% increase in savings and reduced the payback time by 31%. The ACEEE report also listed the following outcomes:
- Make the full range of energy efficiency benefits more transparent to business investment decision makers.
- Stimulate the market for energy efficiency solutions by improving business-sector understanding of—and thus demand for—energy efficiency and its benefits.
- Expand the body of knowledge that can be used to promote energy efficiency to business facilities.
- Refine the cost–benefit evaluation of economic and societal benefits resulting from energy efficiency programs.
- Improve the determination of energy efficiency rebates and incentives offered by utilities and similar program authorities.
- Highlight evolving methodologies for defining, measuring, documenting, and reporting benefits over and above energy savings.
In conclusion, ACEEE proposed the next steps that need to be taken in order to advance this initiative, which include the following:
- Collaboratively craft protocols to define, measure, and report multiple benefits. This step has already begun in several organizations, including the International Energy Agency and, more locally, in the Massachusetts Energy Efficiency Advisory Council.
- Begin outreach to business leaders to raise awareness of the multiple benefits and to increase interest in investment. This can be done initially by using the several case studies available as an indication of what is coming in the future.
- Create a provision of guidelines for facility managers, which will assist in the recognition of multiple benefits within their respective facilities.
- Using U.S. Business Census data, develop proxy metrics that make correlations between increases of productivity and energy efficiency improvements. These metrics can serve as a starting point for this initiative until more definitive protocols are developed for determining multiple benefits at the facility level.
To read the full report, click here.