Energy Efficiency Innovation Gets Boost Under the EPA’s Proposed Clean Power Plan

Energy Efficiency “most cost-effective system of emission reduction” under the EPA Clean Air Act Section 111(d) Rule

Today’s release of the proposed Clean Power Plan under EPA section 111(d) underscores the role of energy efficiency as our nation’s least-cost resource. Demand-side management rightfully earns its place as a critical part of a system-wide approach to reduce emissions 30% by 2030.

McKinsey estimates the opportunity to eliminate more than $1.2 trillion in waste in just this decade. But significant barriers have prevented energy efficiency from realizing its full potential. According to UN Intergovernmental Panel on Climate Change (IPCC), one of the key limitations in achieving these additional efficiencies is lack of access to critical information.

Even though the U.S. is on a positive energy efficiency trend – annualized electricity savings are up 82% in 5 years and utility programs saved 126 Terawatt hours in 2012 – the rate of spending has outstripped savings. Spending was up 155% over the same period to $6.9B in 2012.

US Electricity Savings - EEIEE Budgets 2007-2013

Source: The Edison Foundation

It is these very challenges that modern software solutions like EnergySavvy are positioned to overcome. Our innovation focuses on quantifying and delivering real and verifiable demand-side savings, while providing real-time and accurate measurement of its effectiveness to regulators, utilities and customers alike.

Time to Get Beyond 20th Century Approaches

Energy efficiency – famously referred to as our “first fuel” by energy thought leader Daniel Yergin – historically has been dogged by inadequate data and information access. Those resisting energy efficiency have used these challenges to urge abandonment of its practices and programs.

Illustrating their point, the 20th-century approach to energy efficiency quantification is to collect a year’s worth of rebates or more, stack them up and then hand them off to evaluation. Typically, six to 18 months later, a lengthy and complex report shows up to indicate savings, realization rates and cost.

This method of energy efficiency quantification is like a business that sends its auditors stacks of receipts and bills to create their financial statements rather than use accounting software. No scalable business could survive this way, and neither should the nearly $10 billion utility DSM industry.

As an example, several years ago, one utility launched an air-sealing program using deemed savings. During evaluation, those savings were found to be 90 percent too high; but the utility was still using the original savings calculations for two to three years after, which meant that the total write-down, once the numbers were corrected, was material.

Locking up energy efficiency quantification into esoteric paper reports years after the fact creates a murky silo that leaves regulators, utilities and other stakeholders in an often un-empowered and frustrated position. And when evaluation surprises cause regulatory friction or lag, real financial, investor and consumer interests hang in the balance – and now, EPA regulations too.

Real and Verifiable

As reported by Greentech Media, Secretary of Energy Ernest Moniz recently announced that no ‘credible resolution’ ignores the demand side of the energy system. But we need to deliver on what the NRDC has concluded: “energy efficiency programs should include rigorous requirements to ensure that reductions in electricity use and the resulting emission reductions are real and verifiable.”

Our technology now provides tools to measure, quantify and deliver real savings in energy efficiency in ways previously unavailable. The software and systems that make energy efficiency simple to measure and manage are already enabling the vision of a world powered by energy efficiency. Indeed EnergySavvy is driven by this mission. It’s our guiding light.

A World Powered by Energy Efficiency

The EPA’s proposed flexible approach calls reduced electricity demand across the electric grid the “most cost-effective system of emission reduction” for greenhouse gases. And now states can rely on modern technological advancements to quantify and deliver savings reliably and predictably. The technological advances that now allow energy efficiency to meaningfully contribute to a system-wide approach to meeting emissions reduction provides great potential win for both consumers and producers of energy, and the economy as a whole.

While some express doubt about the industry’s ability to quantify and deliver predictable energy efficiency savings, innovation has reached new heights. A world powered by energy efficiency isn’t a hollow concept – it’s today’s reality.