Assessing the cost of energy efficiency programmes

CleanTechnica provides an important article on a recent study by Lawrence Berkeley National Laboratory on energy efficiency costs. This is reputed to be the most comprehensive study to date and it is definitely needed both in America and beyond.

US Energy Efficiency Programs Cost 2 Cents Per Kilowatt-Hour Saved

America’s most comprehensive study of energy efficiency costs has found programs paid for by utility customers cost just two cents per kilowatt-hour (kWh) of power saved.

The new study from Lawrence Berkeley National Laboratory (LBNL), “The Program Administrator Cost of Saved Energy for Utility Customer-Funded Energy Efficiency Programs,” puts a price tag on the cost of saving energy through various types of efficiency programs from 2009-2011.

Until now the program administrator cost of saving energy (CSE) has not been comprehensively studied at a state or national level, let alone the impact of stimulus funding, but this report could be the first step in better understanding the value of energy efficiency programs.


Energy Efficiency Program Spending and Savings chart via LBNL


Energy Efficiency’s $0.021 Cost of Saved Energy

LBNL’s report represents the most comprehensive look yet at the cost of U.S. utility-run energy efficiency programs. Analysts sought out data from all 45 states currently running utility customer-funded energy efficiency programs, and were able to secure information from over 1,700 individual electric and natural gas efficiency programs in 31 states primarily from 2009 through 2011.

Their findings reveal an incredible return on investment for energy efficiency spending. A total of $5.3 billion dollars was spend on efficiency programs and returned a first-year total of 32,749 gigawatt-hours (GWh) gross savings, with 353,595 GWh projected lifetime gross savings.

Based on these totals, LBNL reports the average levelized CSE of energy efficiency programs is just $0.021/kWh, with a first year CSE of $0.16/kWh. Residential efficiency programs spent $1.5 billion and had the lowest CSE at a national level, with $0.018/kWh, and efficient lighting rebate programs represented at least 44% of total 109,929GWh gross lifetime savings.


Residential Energy Efficiency Program Results chart via LBNL

Commercial and industrial (C&I) efficiency programs spent $3.2 billion, with a slightly higher CSE of $0.021/kWh, but returned far greater lifetime gross savings of 219,476GWh. Customized efficiency programs addressing multiple facets of energy use made up 38% of all efficiency spending.

Major Regional Differences Due To Program Newness

The CSE differences may have varied between types of efficiency program, but even greater differences were seen on a regional level. Energy efficiency programs in 7 Midwest states had the lowest average levelized CSE at $0.014/kWh, followed by 11 Western states at $0.023/kWh, 4 Southern states at $0.029/kWh, and 9 Northeast states at $0.033/kWh.

Even though only four Southern states were included in the study, LBNL’s analysis synchs with another recent report that found a 387% return on investment for energy efficiency in the Southeast US.

LBNL researchers noted interesting differences in the regional breakdown of lifetime energy savings compared to expenditures. For instance, Midwest programs reported around 20% more forecast savings on $1 billion in spending while Western programs predicted 75% greater forecast savings on $2 billion in spending than the savings forecast for Northeast programs’ $1.9 billion in spending.


Cost of Saved Energy Results by State chart via LBNL

Several factors may factor into the Midwest’s leadership, most notably the relative newness of energy efficiency programs or efficiency building codes across the region, which allow states to achieve significant savings from low-cost measures. Compare this trend to the Northeast, where states have been consistently been running efficiency programs for years and have well-established savings requirements. In addition, higher labor costs in the Northeast may have factored into higher CSEs.

Even Lower Future CSE Estimates?

While results may have varied across regions and efficiency sectors, this report adds to the litany of resources outlining the value of energy efficiency programs for energy consumption reduction goals. While this is the most exhaustive estimate of efficiency costs and benefits to date, LBNL notes actual CSE may be even lower today due to updated appliance and lighting standards.

The researchers also note that with additional program reporting, energy efficiency programs could become more valuable to state regulators or grid operators as the costs of implementation versus potential savings to overall demand become better understood.

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