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Berkeley researchers find that saving energy is still cheap

April 28, 2015 - Researchers at Lawrence Berkeley National Laboratory in the U.S. (Berkeley) say they have conducted the most comprehensive study yet of the full cost of saving electricity by U.S. utility efficiency programs and, now, have an answer: $0.046.


April 28, 2015
By Anthony Capkun

That’s the average total cost of saving a kilowatt-hour in 20 states from 2009 to 2013, according to the Berkeley report The Total Cost of Saving Electricity Through Utility Customer-Funded Energy Efficiency Programs: Estimates at the National, State, Sector and Program Level.

To arrive at that average, researchers collected and analyzed several hundred regulatory documents filed in each state by utilities and other administrators of efficiency programs that are funded by utility customers.

“We’ve looked at total costs in more states and in more detail than previous studies,” said Chuck Goldman, principal investigator for the study and head of energy and environmental analysis at Berkeley. “Our results suggest that the cost of energy efficiency still compares favourably to the cost of new energy supply and to retail electric rates.”

Previous Berkeley research suggests that annual spending of utility customer funds on efficiency programs may increase to $9.5 billion by 2025. Understanding how the cost of saving electricity varies across program types, and what influences such variations, can help improve the performance and cost-effectiveness of programs as investment in them grows, says Berkeley. Electric power system planners and states can use information on the cost of saving electricity to evaluate how best to meet future electric system needs.

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Reliable estimation of the total cost of saving energy can be challenging, says the lab; fewer than half of states with efficiency programs require reporting of full costs at the program level, and quantification of costs to the program participant differs among program administrators. As a result, most national studies of efficiency program costs consider only the cost to the utility or other program administrator. For its study, Berkeley collected and standardized the addition of participant costs.

“We now have a portrait of energy efficiency investments driven by utility programs,” said Ian Hoffman, lead author of the study. “We can see exactly where utilities and their customers are turning to save energy. We are beginning to see how those investments—and costs—are shifting over time to tap new markets, technologies and strategies, including the combined application of information and behavioural sciences to reduce energy use.”

Among the findings in the Berkeley Lab report:

• Efficiency programs and participants have split the cost of saving electricity almost right down the middle, on average paying roughly $0.023/kWh each (Figure 1).

• The total cost of saved electricity was $0.033/kWh in the residential sector in Berkeley’s sample of programs. Home lighting programs, with a cost of $0.018/kWh and accounting for nearly 60% of residential energy savings in the lab’s database, have helped drive costs down.

• Commercial and industrial programs (C&I) delivered energy savings at a total cost averaging $0.055/kWh. Prescriptive C&I rebate programs ($0.045/kWh) and custom C&I rebate programs ($0.052/kWh) account for more than 60% of the savings in the non-residential sector.

• Utilities are increasingly are turning to ‘home energy reports’ mailed to households comparing their energy use with similar households, explained Berkeley, with motivational messages and customized tips to save energy. For these behavioural feedback programs, researchers found the total cost of saved electricity averaged $0.057/kWh, based in part on program administrators’ assumption that the energy savings last for one year.

• The total cost of energy savings varies greatly from state to state (Figure 2), noted Berkeley, with many factors influencing the cost. For example, states and utilities that have pursued efficiency as an energy resource for years may have tapped some of their lowest cost sources of savings and, now, are targeting other end uses. States and utilities that are relatively new to energy efficiency may still have substantially untapped low-cost energy savings. States that pursue higher savings require greater market penetration, more savings per project, or both.