Benefits of Energy Efficiency Go Beyond Saving Energy and Money

May 8, 2019

Many people know LEDs are great because they use much less energy than traditional incandescent bulbs and will save them money on their energy bill. Maybe they also know saving energy will reduce greenhouse gas (GHG) emissions and benefit the environment. But how many people know that by swapping their bulbs they are also helping to create a more efficient electric grid which can reduce electricity prices for everyone? How many people know that increased energy efficiency will prevent asthma attacks, premature deaths, and save billions in healthcare costs? And how many people know that energy efficiency spending is a massive job creator and provides a boost to local economic development? Based on recent National political arguments, I’d say not enough.

Increasing energy efficiency in the U.S. has been much more impactful than most realize, and provides a wider variety of benefits beyond those typically measured or celebrated. In the decades since the 1970s, when the DOE first began creating equipment and appliance energy standards, energy efficiency has become the nation’s third-largest electricity resource, contributing more to the grid than nuclear power, and without it we would need an additional 313 large power plants to meet our energy needs.  And our efforts have been fairly successful at curbing our ever-increasing energy appetite. Since 2000, the GDP has grown by about 30%, but thanks, in part, to increased energy efficiency total energy consumption has remained nearly flat.

But we still have much work to do. Maximizing energy efficiency is a critical component of any effort to curb the existential threat of climate change, but it often becomes a pawn in partisan political issues. Below is a review of recent data touting some of the more and less obvious benefits of energy efficiency with the hope that energy efficiency can become seen as a non-partisan common-sense tool to improve our quality of life and help save the planet.

Energy Efficiency Benefits the Environment

This one is pretty straight-forward. Our electric energy comes from a mix of sources; some are clean and renewable while others are not. Currently across the U.S. that mix of energy sources is about 63% fossil fuels, 20% nuclear, and 17% renewables. Using energy more efficiently means burning less of those fossil fuels. Burning less fossil fuels means emitting less GHGs and other pollutants into the atmosphere, soil, and water while also reducing the need to procure additional fuels, allowing us to conserve the environment by leaving those resources in the ground.

National energy efficiency standards implemented by the DOE’s BTO since the 1970’s will have saved over 71 quadrillion British thermal units (quads) of energy by 2020. That’s about 2.5 years’ worth of the energy used in all forms of transportation in the U.S. today.

In 2016 alone, ratepayer-funded electric EE programs saved over 30,000 GWh of electricity and 522 million therms of gas in the U.S. and Canada. Using the EPA’s GHG Equivalencies Calculator, this is equivalent to the annual energy use of over 2.8 million U.S. homes, and avoids over 24 million metric tons of CO2 from being released into the atmosphere.  This is enough energy to provide for the annual needs of every home in Washington State.  Perhaps less tangible, the EPA calculator also provides that this is equivalent to the emissions of driving nearly 60 billion miles in the average passenger vehicle, which would take you from the Sun to Pluto and back, six times.

Energy Efficiency Saves Money

For an example of how energy efficiency saves consumers money, take the impacts from the work on appliance and equipment standards implemented by the BTO mentioned above. The BTO has issued efficiency standards for products since 1987 and by 2019 those standards covered products representing about 90% of home energy use, 60% of commercial building use, and 30% of industrial energy use.  Because of the BTO standards, American consumers saved $63 billion on their utility bills in 2015 alone, or about $500 per household. By 2030, cumulative operating cost savings from all standards in effect since 1987 will reach nearly $2 trillion.

Energy efficiency is also often the lowest cost energy resource, meaning it is less expensive to save energy through efficiency measures than it is to generate it through any other means (Molina 2014; Billingsley et al 2014).  Studies have consistently shown that investments in efficiency cost utilities an average of about two to five cents per kWh, while generating the same amount of electricity from other sources can cost two to three times more (LBNL 2017, Lazard 2017).

Even if you are inclined to not believe the science behind climate change or care about pollution, saving money is hard to be against.

Energy Efficiency Benefits the Local Economy

Increased investment in energy efficiency can create a cascade of benefits for the local economy. Studies have found that increased home efficiency leads to additional disposable income that is often spent locally. This supports existing jobs and creates new ones. For businesses, increased efficiency reduces the costs of production resulting in improved profitability and increased output.

A 2013 study by SEEA looking at the overall economic impact of energy efficiency investments in eight southern states found that for every dollar invested $1.90 was added to the state’s GDP and a new full-time job was created for every $57,000 spent on efficiency. Another study, this one looking at the economic impacts of efficiency investments in Vermont, found that $67.1 million invested in efficiency would yield over $272 million saved in energy costs, and also create one full time job for every $23,256 spent on efficiency.

And those induced efficiency jobs are nothing to sneeze at either. Energy efficiency is both the largest and fastest growing sector of energy jobs in the U.S. With over 2.25 million workers, there are more jobs in efficiency than double the workers in all fossil fuel sectors combined and about the same as there are wait staff in U.S. bars and restaurants.  In 2017, the energy efficiency industry added over 133,000 jobs, more than double the total existing jobs in the coal mining industry, which we often hear so much about. In 2019, energy efficiency jobs are expected to increase by another 8%, adding over 150,000 jobs.

Energy Efficiency Improves the Energy System

Energy efficiency also benefits the electric power system itself by reducing electricity consumption and peak loads in a reliable, predictable, long-term, and measurable way. This reduced demand can delay, reduce, or eliminate the need for traditional infrastructure investments and contribute to a more reliable and resilient grid.  This approach to using efficiency, demand response, and distributed generation to optimize the grid is often referred to as “Non-Wires Alternatives” as they represent an alternative to the traditional model of laying new wires and capacity to keep up with demand growth.

However, the value of this demand reduction is complicated to calculate due to it being a function of the amount, timing, and location of the savings, as well as the utility system’s physical and operational characteristics such as the timing of peak demand, load factor, and reserve margin. Because of this difficulty in calculation, energy efficiency is often overlooked and undervalued for these purposes as system reliability benefits are difficult to understand and generally not included in cost-effectiveness tests.

Con Edison of New York, through the NY REV Initiative, has been a pioneer in utilizing non-wires alternatives. Their flagship effort, the Brooklyn-Queens Demand Management Program (BQDM), sought to avoid a $1.2 billion substation upgrade through reductions in peak demand and have been successful in achieving their 52 MW peak load reduction goal in the 5 years since it was announced. As of August 2017, Con Ed calculated that the program has saved the utility $748 million at a cost of $653 million – for a net gain of $95 million in addition to all the other benefits provided by a more optimized and reliable grid, as well as the energy cost savings and emissions reductions.

A further example of the reliability benefits provided by energy efficiency can be found from California’s 2001 energy crisis. In a report, ACEEE found that energy efficiency played a critical role in maintaining the required reserve margins to prevent system-wide outages, which would have had devastating impacts on California’s economy.

Vermont’s Regulatory Assistance Project study of the statewide 2010 efficiency portfolio is one of the few examples of including increased reliability, T&D capacity savings, avoided reserves, and reduced risk provided by efficiency in cost effectiveness testing. The study found the value of avoided costs to maintain the reliability provided by energy efficiency to be $0.026 /kWh – a value not typically included in other efficiency program cost-effectiveness testing and if it were, would further improve energy efficiencies position relative to other options.

Energy Efficiency Enhances Health and Quality of Life

In addition to being damaging to the environment, pollution from fossil fuel generation is also damaging to human health. As an illustration of this impact, a recent study from ACEEE and PSR found that reducing energy consumption in the U.S. by 15% for a single year would result in 2,190 saved lives, $20 billion saved in avoid health harms, and 30,000 fewer asthma episodes. 

Furthermore, studies valuating quality of life benefits in efficiency programs have found that enhanced health, comfort, and durability benefits can even surpass the value of energy savings. A 2015 ACEEE study found that homeowners receiving whole-home energy retrofits receive health and comfort benefits valued anywhere from 50% to 300% of energy cost savings; multifamily building owners experience benefits ranging in value from 3% to 150% of energy savings; and, preliminary findings describe business sector health and comfort benefits ranging from 44% to 122% of energy savings.

This is Not a Difficult Choice

Energy efficiency reduces climate-change causing GHG emissions and other environmental pollutants, saves money for the grid operator and consumer, boosts the local economy by creating new jobs and increasing local spending, improves the health and comfort of residents and employees, and provides a wide variety of additional benefits to all of society.

Faced with these positives, and against the threat of our climate-induced self-destruction, it would seem that increasing our investments in energy efficiency would be something everyone could agree on. And, increasingly it is –Over the last few decades Gallup has asked survey respondents if the U.S. should emphasize production of fossil fuels or conservation by consumers in order to solve our Nation’s energy problems. Since 2011 the percentage of people preferring conservation has risen from 48% to 63%, and in 2019 60% of respondents said they either favor or strongly favor proposals to dramatically reduce the use of fossil fuels over the next decade. The public is not as split on this issue as some would have you believe, and change is moving in the right direction, but there is still much room for improvement. Perhaps by increasing awareness of the scale and range of benefits energy efficiency provides we can move beyond partisan arguments, get to work saving the planet, and be better off for it.