Key findings of the article:
• Spending on electric efficiency programs is projected to increase significantly and will be considered as a priority;
• Although compliance with regulatory legislation is expected to be the primary driver of compliance for the increase in electric program spending, a substantial part of such increase will be motivated by Demand Side Management (DSM) and Demand Response (DR) planning management, thus focused in control power usage by encouraging consumers to modify their level and pattern of electricity consumption;
• In the US, northeastern and western states will be more penalized in electric efficiency programs thus more impacted by the expected electricity costs growth. Energy conservation procedures are to be considered by users, in such states.
• The pathway that customer-funded efficiency programs ultimately take will depend on a series of key challenges associated with the offer of sustained energy efficiency technologies available in the market and the regulatory oversight of the programs.
A variety of organizations and analysts have examined trends in utility-customer funded energy efficiency programs. In some states, regulators have focused in demand response planning, savings target, and business incentive mechanisms in the electricity sector to balance safety and reliability of the electrical grid while assessing new customers without the risk of power overload or major investments in reconditioning the electrical distribution network.
While such studies were focused on the US power grid, the analysis has a broader relevancy to policy makers where energy and environmental policies may require the development of specific costumer-funded energy conservation programs for electricity savings and rational usage of resources.
For the utility sector, policies that drive incentives in energy efficiency consider: system benefit charges; energy efficiency resource standards; renewable portfolio under which energy efficiency is a qualifying resource; long-term integrated resources planning requirements; multi-year DSM and Demand Response management effectiveness and sustained requirements. Naturally, the scope and level of determination in pursuing each type of policy vary and fortunately many users adopted multiple policies in their sustainability goals. Depending upon the manner and extent to which utilities are required to assess their energy efficiency programs, the Integrated Resource Planning (IRP) may culminate in a 10 to 20 year plan with specified levels of energy efficiency resource acquisition.
Utilities in many states are required to submit a demand response management plan to their state regulator to show they meet cost-effectiveness guidelines and smart grid safety balance.
Though Integrated Resource Planning, DSM and Demand Response planning have both been used for many years, their growing importance is now impacting electricity distributors that encourage their clients to consider applying to energy efficiency programs designed to meet state’s energy savings mandates. The observation of such incentive packages must be an indisputable priority for any energy user and engineering department, sometimes not even aware of their facility environmental influence in the community, neglectfully wasting important resources and cost-savings that negatively impact business sustainability.
The precious assistance and guidance of proficient Energy Management Providers to end users allow the necessary knowledge and adequate market solutions to buy high-efficiency equipment and/or apply for eventual available incentives to motivate manufacturers and retailers to stock and distribute high-efficiency products at competitive prices.
Total spending on energy efficiency programs are expected to increase, in all scenarios, by 2025 though the impact of the 2020/2022 pandemic had a negative impact on energy efficiency actions thus delaying the Electric Energy Efficiency Spending (EERS) assumptions forecasted, thus tightening federal efficiency goals, demanding a revised approach to the programs in place.
The overall growth of national efficiency program spending is driven with contingent of populous states that are expected to ramping up to meet statutory EERS goals, while for states in the US South, the increases in EERS are associated with a relatively modest Electric Energy Efficiency Spending policies and embryonic IRP -DSM/DR management in States with a relevant large base of electricity usage, thus a situation of concern when considering electric mobility requirements both in public, industrial and commercial facilities plus households.
The western states, in particularly California, devoted to energy efficiency, although not successful with a balanced supply, will keep being included in all EERS programs, and nominated cases will largely be driven by assumptions about how utility programs administrators and regulators translate statutes, requiring acquisition of cost-effective energy efficiency into multi-year savings goals and in parallel of state’s investment in a questionable reliance on renewable energy.
Key problems
The impact of the current economy and the timing /extent for its recovery may restrain efforts to boost energy efficiency spending. Customer-funded energy efficiency programs require the user to pay part of the investment, therefore the financing of EE solutions may be deferred or prioritize short payback proven technologies. As result utilities incentives may be suspended or even suppressed if program administrators are required to increase rebates or face higher costs in their marketing campaigns. Besides, a slow or even stagnant economy may indirectly constrain EE program efforts due to potential rate impacts in EERS, increased risks in funding rebate programs and an unforeseen slow in electric load growth, therefore reducing the effectiveness of EERS programs, transferring to the user the concerns and actions to reduce their electricity costs while promoting sustainable energy conservation programs, in a growing volatile energy market.
Energy Efficiency and the rational use of resources represent not only a responsible strategy for any industrial or commercial facility, but a natural practice towards socio-economic balance.
In the age of increasing environmental concerns, it’s only coherent to search for the best cost-effective solutions that can fit the business energy profile while increasing its sustainability, community’s best interests and state compliance.
The final approach to Electric Energy Efficiency Spending (EERS) program budgets will mostly depend on:
– Timing and severity of final rules and regulations;
– Price of natural gas for gas-fired electricity generation;
– Coal price for fossil-fired electricity generation;
– The capital cost-profile of renewable electricity generation and its highly questionable sustainable supply;
– Price for nuclear power generation;
– The regulatory outline between electricity generation, transportation and supply/delivery;
– The DSM/DR investments to balance electricity supply and demand;
– Future legislation, state and tribal, that will impact utility resource plans;
– Economic recovery
New strategies to produce larger savings for future years challenge EERS program administrators to design and implement solutions that can achieve deeper savings at user facilities and have wider reach in terms market penetration over a sustained period of time. Savings over 25% – 40% of existing consumption widely expanding market penetration with tailored programs targeting under-served locations.
EERS programs are expected to grow under the anticipated new legislations, though more focused on political concepts than in proven scientific confirmations, therefore aggravating electricity generation costs and ultimately endangering its reliability. One thing is guaranteed, the Integrated Resource Planning, DSM and Demand Response planning is critical both to the safety of the interconnected smart grid and to the balance the old electricity distribution networks without compromising steady supply or its dependability.
The Electric mobility is a fast growing concern and a big challenge since it will also regulate many technical aspects of current electrical public network that, in many locations, is already reaching dangerous capacity limits, thus the hazard of electrical circuit overloads, protections tripping and shutting off electricity or create fires. Such situation will require heavy investments in new distribution networks, both public and private, to accommodate a sudden increase of electrical demand that will be reflected in consumption (kWh) and in peak demand (kW).
The highly questionable plan, from the Environmental Protection Agency (EPA), to curb nationwide power sector emissions by about 617 million metric tons through 2042, may force electric power providers to reduce their emissions by about 90% over the next two decades. To achieve such dystopic reductions, power plants must adopt carbon capture (carbon is only 0.04% of the atmosphere), a nascent and costly technology, or shut down completely, ignoring society requirements and social economic balance. Under EPA’s proposal, US electric generation derived by coal plants without carbon capture, will decline 67% by 2030 and 100% by 2035, while coal plants with carbon capture will increase 29% and 13%, respectively, the mentioned analysis also showed, thus a disappointing energy outlook for the electricity market.
Meanwhile, power industry groups warned that the EPA’s proposal would threaten the power grid reliability, arguing the agency was too ambitious and reckless with the proposed standards.
Regulations must be sustained with engineers and professional guidance, not politicians, in pursue for what is technologically achievable, rationally feasible and commercially available. Going beyond that, regulations will threaten electric reliability and raise energy prices to unsustainable levels, harming the entire economy and endangering thousands of communities already penalized with power swags and blackouts.
The electric grid reliability is definitely not a partisan or ideological issue, and much less a pure political misconception without critical honest support from the scientific community. The power grid is agnostic to politics. When a critical System cannot generate and deliver sufficient power to meet demand reliably, everyone loses, without exceptions.
Final considerations
Under a quite unstable future of energy supply, electricity prices and reliability of power supply, engineers are, more than ever, an important contribution for the accomplishment of energy efficiency processes. The indispensable study of facility’s energy profile, commercial contractual details, and power supply constraints will determine suitable state-of-the-art technologies that will reduce electricity costs, increase business sustainability and observe legislation compliance.
New challenges are now facing engineering and facilities management. Recent advances in digital technology allow substantial cost-decreases in smart energy management systems, allowing real-time capabilities that not only allow energy monitoring but optimize both peak demand and consumption, producing substantial quantifiable energy savings while identifying waste and irregular performance of designated equipment, thus maximizing energy conservation without disturbing desired reliability or design intent.
One may assume new incentive programs will, at some point, reappear but current economic indicators demand immediate actions to be on top of the primary source of business sustainability: energy.