Low-income energy customers typically spend a larger percentage of their income on electricity costs and need help to afford upfront investments in efficiency improvements. Governors can promote programs that provide financing mechanisms for energy efficiency upgrades.
Improving energy efficiency can assist utilities in preventing power outages and achieving system resiliency goals. Additionally, it can reduce greenhouse gas emissions and enhance air quality, leading to better public health.
Utilities
Numerous electric utilities want to introduce energy efficiency programs to assist their customers in conserving energy. These initiatives can diminish environmental effects like greenhouse gases, and pollutants, and reduce water consumption. They can also provide economic benefits, lowering consumer utility bills and creating jobs. In addition, they can lower system costs by reducing electricity demand and thus the need for new generation and transmission capacity. Finally, they can assist in risk management by diversifying utility resource portfolios and providing a hedge against fluctuating fuel prices.
While EE programs can be very valuable for utilities, they are not without their challenges. For example, utilities are often discouraged from investing in EE programs that will lower their sales growth because capital investment and sales growth drive shareholder returns. In addition, state-level policies often limit a utility’s ability to manage its demand to reduce GHG emissions and overall electricity costs.
Consumers
Consumers can play a significant role in promoting energy efficiency. Whether through home energy reports more than a decade ago or by participating in utility EE and EC programs, consumers can help reduce electricity demand and save money.
Increasing energy efficiency also has other benefits for consumers. For example, it can lower utility bills, create jobs, reduce greenhouse gas emissions and other pollutants, decrease water use, and help stabilize electricity prices and volatility. It can also provide economic resilience in communities affected by natural disasters and increase grid reliability and resiliency.
States can advance energy efficiency through a variety of policy tools. For example, they can encourage municipal utilities and co-ops to participate in energy efficiency resource standards (EERS) and set energy savings targets. They can also establish rate designs and structures to promote efficiency, such as time-of-use rates.
Additionally, they can support a diverse energy marketplace by encouraging the participation of new market participants, including electric company Dallas and third-party providers of services related to energy efficiency, such as service companies and independent contractors. Finally, they can leverage public benefit funds to support energy efficiency programs and help finance energy efficiency investments in their communities.
Government
Governments set energy efficiency goals and policies for a range of reasons. They offer cost savings, reduced energy consumption, cleaner air and water, increased grid reliability and resilience, and economic development. Energy efficiency is a cheaper source of electricity than building new power plants. It also reduces risk by diversifying utility resource portfolios and decreasing dependence on fluctuating fossil fuel prices.
Many states use financial incentives, including tax credits and value-added tax exemptions for energy-efficient products, to encourage consumers and businesses to implement efficiency measures. They also provide education on making energy-efficient choices and design programs that help consumers and businesses implement their efficiency plans.
State regulators can also create innovative rate designs and structures, such as time-of-use rates, to incentivize energy efficiency. They can even create utilities that specialize in providing energy efficiency services to their customers. A recent study found that more than 80% of the private market energy service companies interviewed viewed public policy support as essential to their success.
While the COVID-19 pandemic has slowed some of these activities, significant federal and state action is needed to promote energy efficiency. Improving energy efficiency is crucial in the country’s plan to lessen greenhouse gas emissions and is a cost-effective approach to reach this goal. It can also contribute to job creation and boost the economy, particularly in sectors affected by the pandemic.
Businesses
Businesses can benefit from energy efficiency by saving money on electricity costs and promoting their business as environmentally conscious and socially responsible. These efforts can help to increase customer retention and enhance the brand image, especially with consumers who prioritize environmental concerns.
Additionally, businesses that invest in energy efficiency can reduce operating costs and improve profit margins by delaying or avoiding costly infrastructural investments in energy generation, transmission, and distribution infrastructure. The reduced demand resulting from energy efficiency programs can dampen price volatility in wholesale markets and support grid reliability and resiliency.
In addition, businesses that invest in energy efficiency are helping to create a cleaner environment by reducing greenhouse gas emissions. This can boost a company’s marketability to environmentally conscious consumers and may even provide an additional marketing advantage over competitors.
Lastly, energy efficiency programs can create jobs. This is a significant contribution to the economy and should be considered. 2.2 million jobs are currently supported by energy efficiency. This is more than double the number of workers in all fossil fuel sectors combined and about the same as the number of wait staff in U.S. restaurants and bars. Moreover, these jobs generate substantial economic benefits, including avoiding air pollution-related health impacts such as non-fatal heart attacks and asthma exacerbations.