Efficiency, Part 3: The only cheap power left

[This series is based in part on the Salon article, “Why we never need to build another polluting power plant.”]

Energy efficiency is by far the biggest low-carbon resource available (see Part 1) — and it is as limitless as wind, PV, and solar baseload (see Part 2). It is also the cheapest power you can buy, by far.

California has cut annual peak demand by 12 GW — and total demand by about 40,000 GWh — over the past three decades. The cost of efficiency programs has averaged 2-3¢ per kWwhich is about one fifth the cost of electricity generated from new nuclear, coal and natural gas-fired plants. And, of course, energy efficiency does not require new power lines and does not generate greenhouse gas emissions or long-lived radioactive waste.


Power plants costs have doubled since 2000” and electricity from new nuclear plants, in particular, has become absurdly expensive — 15¢ a kilowatt hour. Even wind power, now the cheapest of all new generation, has seen its price creep up in recent years — although that is expected to reverse over the next few years.

But year after year, efficiency stays absurdly cheap — indeed, it has even gotten cheaper as utilities have gotten smarter, as is clear from analysis by the California Energy Commission:

From 2000 to 2004, California utilities spent $1.4 billion. The average cost of the electricity saved was 2.9 cents per kilowatt hour. By 2004, the average cost of the efficiency programs had dropped in half, to under 1.4 cents per kilowatt hour, cheaper than any form of new power supply in this country–indeed, cheaper than electricity from almost any existing power plant.

It is absurd that any state is seriously considering building a new nuclear power plant or a new coal plant. Every state should learn from and embrace the strategies of California, its energy commission, and utilities. What those strategies are and how the federal government can motivate states to adopt them will be the subject of Part 4.

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10 Responses to Efficiency, Part 3: The only cheap power left

  1. llewelly says:

    B-But Jimmy Peanut Carter wuz duh worst president ever!

  2. Martin Paul says:

    re Salon article, we in Australia are making some progress, signed Kyota, looking at a carbon emissions trading scheme for the whole economy in 2010, big report released last month by Ross Garnaut. Thanks for your work , will continue reading. Come on US, you have gotta catch up :-)

  3. Martin Paul says:

    Professor Ross Garnuat link
    shaping Australia’s future policy on climate change, carbon emissions etc

  4. John Mashey says:

    Pacific Gas and Electric’s CEO Peter Darbee gives strong talks about .

    I’ve heard him say it very simply:

    If the PUC rewards us, not just for generating megawatts, but for efficiency, that’s what we do. The CA PUC does. Don’t expect utilities in other states until their PUCs do it also.

    Many people just don’t expect utilities to give away CFLs, send out energy audit teams, show up in force for PHEV events, encourage solar panels, and have their CEOs arguing passionately for efficiency.

    Joe: is there any summary of the state of the states, not in differences in energy usage, but PUC rules?

  5. John Mashey says:

    Argh, last one had typo breaking links, sorry.

  6. jorleh says:

    OK, of course, fine etc. Must be done. But better still the potential energy of Greenland and Antarctic ice massees, there is no fossile energy used. And Himalaya, Andes, Rocky Mountains etc, the same. Use them all and we have never more climate catastrophe.

  7. Rick says:

    Joe, it all sounds great but I have this one nagging question. If the utilities pricing policies incentivize building the most expensive plants over efficiency then wouldn’t this mean that the utilities would build IGCC plants over the current conventional ones? The IGCC plants are, after all more expensive then the traditional coal powered electrical generating plants. Oh wait, they’re more efficient then traditional coal plants but they do cost more in terms of sequestering CO2. So why don’t they build them, allowing for the fact that large scale CO2 sequestration hasn’t been tried yet?

  8. Joe says:


    They don’t incentivize building the most expensive plants — they incentivize building any plants rather than efficiency. The utility needs to convince the PUC that whatever plant it is planning to build is the cheapest around.

    In fact, some PUCs have turned down IGCC because it is more expensive. But IGCC that doesn’t have CCS designed into it isn’t very useful anyway.

  9. Anonymous says:

    The measured costs are only those expenditures by the utilities.

    Many increased efficiency costs are absorbed by government or the consumer.

    [JR: Actually, the reverse is true. The economic benefits of a lower electric bill are “absorbed” by the consumer.]

  10. Sam W. says:

    Link for the gif doesn’t work.

    [JR: Don’t know what this means.]