Who Cares About Energy Efficiency?

Most readers will receive this issue while they are experiencing Northern Hemisphere winter, with its colder temperatures and higher energy bills, so it’s fitting that several articles address efficiency. You’ll find discussions of combined heat and power (CHP) as well as a refresher on the various ways to enhance thermal unit efficiency and thereby improve heat rate.

But energy efficiency can be a hard sell. Take CHP. According to POWER’ s latest reader survey, interest in coverage of CHP is high, yet the approach accounts for only about 7% of U.S. generating capacity and 10% worldwide. As our cover stories explain, location, infrastructure, and markets all have to align for project success.

However, just because CHP or other efficiency measures aren’t a perfect fit for all scenarios doesn’t mean they aren’t worth pursuing. Humans have historically pursued efficiency—using wheels to move more cargo with less work, and minimizing time and energy needed for cooking as we moved from pit fires to wood-burning stoves to microwaves. In the power sector, motivations for energy efficiency include compliance with mandates and lower operating costs. Yet, there are some who argue against efficiency.

Who’s Afraid of Efficiency?

There has long been a vocal minority arguing that energy efficiency of any sort, achieved by switching to light-emitting diode lightbulbs or more-efficient appliances, is at best a fool’s errand because of the rebound, or boomerang, effect—when efficiency leads to lower bills, which leads to finding new or additional ways to use energy. Typically, folks making that argument have a particular self-interest that isn’t necessarily in the interest of end users. (After all, you can’t build new, expensive central power plants if overall demand doesn’t rise.)

But even when rebound effects can be identified, efficiency gains aren’t nil. A comprehensive review of 500 studies found that although rebounds can be between 10% and 60%, direct and indirect rebounds in developed countries are in the range of 20% to 45%. Even if rebound, in some places, were as high as 60%, that still leaves a 40% savings. I’ll gladly take that level of savings anywhere in my budget!

When Efficiency Matters Most

Efficiency (which is not the same as conservation, deprivation, or demand response) simply means achieving one’s desired results with the least waste—of time, energy, or other inputs. Calls for efficiency have intensified when primary energy resources are scarce, when society is worried that energy resources will run out, or when other factors come into play, as with the proposed federal Clean Power Plan (CPP), which includes demand-side energy efficiency. At the plant, the CPP promotes thermal generation heat rate improvements and CHP as ways to reduce emissions. It also encourages state and utility programs that promote residential, commercial, and industrial energy efficiency.

Whether the CPP’s goals for all of its efficiency measures can be met by every state is an open question. What’s less debatable is that efficiency almost always benefits end users. For example, if your home loses the electricity or gas service that enables winter heating, you’ll stay comfortable far longer during an outage if you have a well-insulated (that is, energy efficient) building. When you have regular energy service, good insulation will keep your bills lower than poor insulation and leaky single-pane windows.

Efficiency Winners and Losers

Although California has long promoted efficiency measures and has been a market maker for efficient goods and technologies, it’s not the only place to find positive news about efficiency. Last fall, for instance, the Northwest Power and Conservation Council (NPCC) reported on a study of 80 entities that represent 90% of the region’s retail electricity sales. The study found that energy efficiency had saved 5,570 MW since 1978 and had met nearly 62% of Pacific Northwest load growth since 1980. The NPCC estimates that the region’s electricity consumers saved nearly $3.5 billion in 2013.

Power generators in the region are avoiding the cost and hassle of building new plants. But they’re also foregoing increased power sales, which could make them “losers” to efficiency. That’s why many states have found ways to reward utilities for efficiency programs. In fact, the Natural Resources Defense Council (NRDC), which some in the fossil generation sector view as an opponent, supports such measures. A mid-December NRDC blog post explained that the group tries to persuade state utility commissions to adopt decoupling, “which prevents reductions in sales of electricity and natural gas from inflicting financial harm on the utilities themselves.”

Others who may not embrace end-use efficiency include companies that depend on new utility-scale generation facility engineering and construction, because, as the NPCC example shows, measures that reduce demand may cut into their business.

More Efficiency Incentives

The proposed CPP isn’t the latest federal move to promote efficiency. As I was writing this editorial, I received a notice about a new “open” funding opportunity announcement (FOA) from the Advanced Research Projects Agency-Energy (ARPA-E). The agency that seeks to jump-start very early stage research and development says, “The objective of an ARPA-E OPEN FOA is simple, yet comprehensive: to support the development of potentially disruptive new technologies across the full spectrum of energy applications.”

This open FOA encompasses virtually all stationary and transportation energy technologies plus energy efficiency. Pretty much any technology is game, provided it serves the agency’s mission: “reducing imported energy, reducing energy-related emissions, and improving energy efficiency.” The amount to be awarded is “approximately $125 million, subject to the availability of appropriated funds.” ARPA-E may award those funds to “one, multiple, or no” submitted projects.

Limits and Possibilities

Energy efficiency, especially when its marginal cost is zero or low, is just plain smart. But it can’t solve all problems on its own. Despite the language used by some promoters, energy efficiency is neither a fuel nor an energy source. What effiency does is allow us to use energy more wisely, enabling us to deploy the saved resources—whether electricity or money—in new ways. In the best case, those redeployed resources can enhance lives and energize economies. ■

—Gail Reitenbach, PhD is POWER’s editor.