David Reynolds, ERS, for Zondits
The point of this article is to challenge those who believe in energy efficiency and all of the benefits it provides to society and to the environment – and to our continued employment in a noble field. It is time to rethink, reevaluate, and restate the benefits of energy efficiency, because if that doesn’t happen the commitment to efficiency as we know it will no longer exist.
The regulatory landscape for energy is shifting. REV, anyone? California recently enacted new energy policies that most certainly will change how energy efficiency is valued. I have overheard many energy efficiency-minded folks speak of these changes with excitement: new policies could expand our energy efficiency efforts. However, these same folks appear to be blind to the downside, that energy efficiency’s position as first in the loading order to meet our energy resource needs is under threat.
How, you ask? Well, I have a story to share with you about a fictitious event in the not-too-distant future.
The region’s energy policies have been successfully changed with an eye to the future. Outdated policy is gone; in its place is policy that promotes an integrated and flexible approach to meeting the region’s clean energy needs. The time has come to develop the resource plan in which financial commitments will be made for the integrated portfolio of distributed energy, renewable energy, demand response, and energy efficiency as a resource.
Now you step in. You represent energy efficiency and are about to enter the region’s master resource-planning board room, where financial commitments will be made that determine the balance of the integrated resource portfolio. You are confident that you will obtain more funding for efficiency because the facts are on your side, and the most important is this: energy efficiency is the least-cost resource at 3 cents a kWh. It’s better than traditional polluting resources and far more cost-effective than DER or renewables. It’s a no-brainer. You walk into the board room confident, prepared.
The meeting begins with a focus on the demand side, where the total resource needs for the next 10 years are determined. Next on the agenda: determine the portfolio of resources.
Esteemed colleagues, let’s discuss energy efficiency. As we all know, energy efficiency is the least expensive resource and should be funded first before we divvy up the rest of the proceeds.
Then it happens. The person seated next to you stands up and says, “Dear colleagues, I represent a coalition of interested stakeholders, and I am afraid that I have to disagree with Ms. Efficiency. Her presumption that energy efficiency is the least expensive resource simply isn’t true. In fact, it’s as old and outdated as the policies we just abolished. First, it’s based on unproven assumptions about the persistence of savings.”
This is followed by a ten-slide presentation that concludes that persistence is roughly half of what is traditionally assumed. “Second, the cost of energy efficiency does not account for the real-world behavior phenomenon of take-back, or as it is known to Ms. Efficiency and her friends, the rebound effect.” A presentation of twenty slides concludes that a rebound factor must be applied to assess the true cost of efficiency. “Last, Ms. Efficiency’s evaluations of her own programs over the last several years have concluded that the claimed savings from efficiency are never realized. In fact, in places like California, the efficiency program’s realization rates are disturbingly low.” The next five slides show a detailed accounting of the cost of energy efficiency with the real-world effects of persistence, rebound, and realization rates. “You see, as I have clearly demonstrated, the actual cost of energy efficiency is closer to 10 cents a kWh.”
You stand throughout the presentation, flat-footed and frozen, as it is decided by the group that funding for energy efficiency is slashed in favor of other resources. You pleaded your case, you strenuously objected, but you did not come prepared to defend what you believed to be fact. You think back to your preparation in meetings with other energy efficiency experts, where everyone agreed that energy efficiency was the least expensive resource. No one raised concerns; we just all believed. But this coalition twisted the facts and did not present a fair picture of the benefits and value of efficiency. You know that you can present energy efficiency as the best solution for meeting resource needs, but you need time. Unfortunately, the die has been cast, and efficiency has paid the price.
Is this really a sign of things to come? Or things that could be? I believe the future is in your hands.