$1.5 Billion in Energy Costs Avoided by Energy Efficiency/New Study of Winter 2014
With several tough New England winters behind us, the cost of energy remains a top concern for consumers. A recent study by Acadia Center shows that energy efficiency may be one of the best solutions for keeping those costs under control. Without electric efficiency programs, energy costs would have been $1.5 billion higher in winter 2014 alone. *
The analysis shows the value of electric efficiency–especially during the winter periods when we need the greatest relief from high prices. Lower demand as a result of energy efficiency measures reduces the prices that consumers pay for power, and provides significant relief during peak demand periods when prices are highest. In the report, Acadia Center estimated what electricity demand, wholesale prices, and consumer costs would have been in the winter of 2014 and found that, without electric efficiency programs:
• Demand would have been 14% higher
• The price of wholesale electricity would have been 24% higher
• Overall costs for electricity would have been $1.5 billion higher
This winter 2014 energy cost relief complements savings that electric efficiency programs deliver over the entire year. It reinforces the logic of investing in electric efficiency as the “first fuel” in order to meet the region’s energy needs and reduce the risk of fuel price volatility. Saving electricity though efficiency measures such as LED lighting, building weatherization and incentives for efficient appliances costs about four cents per kilowatt hour (kWh), which is about a quarter of the regional average wholesale price of 16 cents per kWh during the winter of 2014. Indeed, since 2000, electric efficiency programs have reduced electricity demand in New England by almost 2.2 gigawatts, equivalent to the combined capacity of the coal-fired Brayton Point and nuclear-powered Pilgrim power plants.
New England states are now considering long-term investments in gas pipelines and electric transmission lines to add to the region’s energy supply. The report data—showing that energy efficiency is a prime method to cost-effectively reduce energy demand—can influence how states shape their energy plans. Given the findings of the report, the policy of implementing all cost-effective efficiency should be a prerequisite to any proposals that could result in ratepayers bearing the risk of new infrastructure investments.
As states work to meet the region’s energy needs while controlling costs, policy makers should prioritize energy efficiency investments. In particular, Massachusetts, Rhode Island, and Vermont should continue to push the envelope in their efforts to procure all cost-effective efficiency, and other New England states should ramp up their efficiency program savings levels to invest in all energy savings that are cost-effective.
The report is available here.
*In this analysis, “winter 2014” is defined as January-March 2014 and the effects of electric efficiency are estimated by comparing actual demand and prices during that period.