by Steve Cowell, CSG
Writing about energy security in Foreign Affairs in 1976, scientist Amory Lovins contrasted the capital burden of increased, centralized energy supply technologies with the new opportunity for a “soft path” to energy security. This, he suggested, involved improved efficiency, a commitment to conservation and the rapid growth of renewable energy resources.
Thirty-eight years later, the continued growth of energy efficiency strategies reflects Lovins’ prediction for them as “cheaper than increasing energy supply, quicker, safer, of more lasting benefit. They are also better for secure, broadly based employment using existing skills.”
Consumers and utilities have realized these benefits and the potential for energy efficiency as a market mechanism and driver of electrical innovation.
Despite the promise of energy savings and conservation, utilities approached negotiations about promoting energy efficiency with questions about how they would be rewarded appropriately for doing so. Beginning in 1987 with the New England Energy Policy Council’s groundbreaking report “Power to Spare,” we made the case for energy efficiency as an optimal route to environmental protection and economic growth. Working in collaboration with New England Electric System and what was then Boston Edison, a coalition embraced Lovins’ idea of the “negawatt,” treating saved energy as a commodity and underscoring the market opportunities for energy efficiency.
The successful deal negotiated in 1990 helped make pursuing conservation and energy efficiency economically consistent with what utilities could realize from incentives structured around new plants and selling more power.
From the Energy Policy Act of 1992 through the electric system’s restructuring with the formation of ISO-New England, consumer-funded programs for efficiency and renewable energy gained increasing traction as part of the equation.
This helped make efficiency integral to the region’s energy source diversity, a recognized commodity that could provide relief from price fluctuations across the broader mix of power generation sources.
In Massachusetts, for example, this led to performance-based incentives for utilities to achieve efficiency-savings minimums, and compelled utilities to meet or exceed their design performance goals to maximize their incentives.
With the creation of ISO-New England’s forward capacity market in 2006, new market mechanisms focused on sending appropriate price signals and maintaining existing resources to ensure grid reliability. This also created market indicators to show the true cost of new capacity. The establishment of a forward capacity auction, which also included demand response resources, made energy efficiency a central component of assets calculated by load reduction. ISO-New England carved out a crucial role for energy efficiency in meeting the region’s capacity and energy needs over the next decade.
The history is by no means exhaustive, but it shows strides the industry has taken to make efficiency more integral to the energy mix. In states such as Massachusetts, energy consumption no longer correlates with economic growth; usage-and costs-can decrease without curtailing economic development. Meanwhile, the conservation benefits accrue to society.
Even as big states such as Massachusetts and New York contemplate increased production and distributed generation sources as part of grid modernization, energy efficiency is omnipresent. Now that consumers nationwide embrace energy efficiency, new policies and regulations will and must reflect changing attitudes and values. The road ahead is not without obstacles, but the opportunity to harness the enormous potential of energy savings in the residential sector is too great to pull back now.
New technologies are accelerating the adoption of efficiency programs, reshaping what’s feasible and actionable for consumers and delivering more predictable savings. We’ve moved far beyond the original benefits of the digital technology introduced in the 1980s and 1990s. Instead of simply improving information gathering and enabling customer feedback, today’s technology provides insight into energy usage habits and areas for potential savings. The industry relies on advanced analytics and enhanced data integration that constantly is improving as smart meters and smart grids improve.
But the power of energy data and analytics is lost if residential and business consumers cannot access it or act upon it. Utilities can and must make this new data meaningful, turning it into timely insights that can be put into practice in the form of affordable, achievable efficiency improvements.
Google’s $3.2 billion acquisition of Nest this year seems a long way from our one-employee enterprise in 1984. But it shows how energy efficiency continues to attract investment and interest. Many hailed the acquisition as further growth of the Internet of Things, but it was more than that. It showed how powerful and influential information is, and it shows how far we’ve come to pull energy consumers more actively into the fold.
This is an important moment, and we must remain vigilant. As consumers make passive behavioral changes where energy waste is taken care of automatically by technology, we risk losing our way in a “set it and forget it” world.
In our pursuit of peace of mind, we might overlook practical actions that often yield much greater long-term savings.
As the energy efficiency industry grows, adding new technologies and welcoming new companies, we cannot forget that structures aren’t perfectly built; even a so-called green home is likely inefficient by tomorrow’s standards. A smartphone can manage your systems and track usage data, but it can’t identify and fix a hole in the roof. The future of energy efficiency cannot be one-dimensional. We need a combination of data analytics, energy experts and efficiency retrofits to reduce energy usage and drive savings. And all this must come back to the larger issue: the energy mix and how the utility industry and regulators respond.
We’re still on an energy-efficient continuum that started 30 years ago. We’ve made major strides, but we must be mindful of the history, even as we look forward. We can’t be caught chasing bright lights, even if that comes in the form of technology that helps us understand our behaviors better.
In 1976, Lovins observed that energy consumption per capita had doubled since 1963, but, he argued, we didn’t come close to doubling our standard of living. That suggests that we had and still have an efficiency issue, and we can improve our standard of living without increasing energy consumption. Following his logic, it’s possible to increase our standard of living by consuming even less energy. With more than 120 million homes’ nationwide still using energy inefficiently, we can improve our standard of living right now without investing one more dollar to produce energy. That’s just the beginning.
Stephen L. Cowell founded Conservation Services Group (CSG) in 1984 and is the organization’s chairman and CEO. For more than 30 years, he has been involved in energy efficiency programs across the country and has advocated for energy efficiency as a least-cost power supply option. He is a graduate of Brown University.
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