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Broader + Deeper = Greater Savings in Energy Efficiency

By Climate Guest Contributor on December 29, 2011 at 12:00 pm

"Broader + Deeper = Greater Savings in Energy Efficiency"

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by Brenden O’Donnell, cross-posted from the Rocky Mountain Institute

This is part two in a three-part series published at RMI on Turbocharging energy efficiency programs.

The momentum for electric utilities to achieve high levels of energy efficiency savings has never been greater. Regulation has taken the lead. Utilities operating in seven states, for example, are required to meet more than 20 percent of their load in 2020 with energy efficiency programs.

Energy efficiency is a central ideal, if not the cornerstone, of Rocky Mountain Institute’s Reinventing Fire, a vision for an oil-, coal- and nuclear-free U.S. energy system by 2050. In fact, RMI believes that 40 percent of capacity can be replaced by energy efficiency.

To meet these ambitious goals, utility program managers are trying to adopt two strategies: seeking more breadth (total program customers) and going for more depth (savings per customer).

As illustrated in the figure above, if a utility wants to increase savings from 0.5 percent of total electricity demand to 2 percent, it could seek to either quadruple program participants or quadruple the savings per participant. Going solely for either strategy is a daunting task. But by pursuing both in combination, program managers are much more likely to meet their goals.

To help utilities achieve both broader and deeper savings and meet ambitious targets, RMI has released Turbocharging Efficiency Programs: Going for Broader and Deeper Savings.

Utility performance on efficiency programs can vary widely. Some programs have achieved participation near 90 percent vs. the 35 percent average. Why is this?

We found several tactics common among the utilities that are leading the way in energy savings. The leaders have incorporated many business process improvements into their programs that can be adopted by other utilities. Turbocharging presents best practices in four main categories:

  • Make marketing work
  • Improve sales execution
  • Drive down transaction cost
  • Embrace collaboration

Good marketing is a targeted message that compels a wide audience to invest in energy efficiency.

Improved sales execution adapts to customer demands and is open to new program ideas. Other sales-oriented businesses ask something akin to “do you want fries with that?” to create added sales. Utilities should do the same.

Driving down transaction costs finds ways to cut unnecessary expense and increases the productivity of program portfolios with faster and simpler audits, moving upstream to vendors and manufacturers, and using the web effectively to drive participation rates.

Embrace collaboration leverages the range of efficiency program stakeholders to embrace market transformation, get credit for codes and standards, and increase buy-in among regulators.

This is the second of three articles to be featured on RMI’s Outlet blog on Turbocharging Energy Efficiency Programs. The first article in the series was written by RMI consultant Mathias Bell and National Resources Defense Council staff scientist Dylan Sullivan.

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13 Responses to Broader + Deeper = Greater Savings in Energy Efficiency

  1. john atcheson says:

    As usual, RMI has done an excellent job of articulating the case for efficiency, and as usual, they have left out one critical ingredient in the solution set — robust public policies and regulations fostering efficiency.

    Markets suffice, they do not optimize. So leaving it up to the market under the presumption they will act as rational agents and take advantage of all cost-effective opportunities is a form of folly that has been one reason the US is one of the least energy efficient economies in the developed world.

    • Mulga Mumblebrain says:

      Market idolatry is the first recourse of the little mind, that needs ‘emotionally potent over-simplifications’ to stock their neuronal shelves. Chanting ‘Leave it to the Market’ over and over, as some sort of deracinated mantra, means, in reality, leaving it to the big concentrations of money power, who distort markets as surely as black-holes distort space-time. Leaving it to the market means begging for mercy from ‘Them’, the 0.01% who have distorted every market to their benefit and Our detriment, from that for real estate to that for trophy wives. Indeed I have not been able to update mine for some considerable length of time, my ‘market power’ being highly..ahem..attenuated.

      • Rabid Doomsayer says:

        Taxing for the externalities and and redistribution can work.

        Laws and regulations can and do have unintended consequences. Consider the case of a local government who bemoaned all the incorrect times on clocks, but was aghast when the response to introducing a fine for being more than 5 mins out was; business taking the clocks down.

        The market is nowhere near perfect, but is quite often fairly efficient. Bureaucratic answers to problems can create many more problems than they solve. Particularly as the Public Service is more concerned with not getting it wrong, rather than getting it right. Timeliness does not come into it, cent perfect but weeks late is fine.

        • Mulga Mumblebrain says:

          You are correct that the current situation could be improved by the mechanisms you mentioned. But it has not happened and is not going to happen and ‘market failures’ are becoming more prevalent and damaging. Why? Because the 0.01% are using their money power to buy politics en bloc and get their servants to rig the economy to their advantage. Cut ‘em off at the ankles, financially speaking, redistribute their ill-gotten wealth, and market efficiency will grow.

  2. john atcheson says:

    OK, disregard the comment above, and chalk it off as a reflex — although I read the bulk of the article, I skipped the intro which clearly states that regulation has led the way …

    Although I would argue that 20% may be a limiting factor. One thing we learned in environmental policy is that you get what you ask for and very little more.

    The art of intelligent regulation lies in creating a race to the top rather than a ceiling.

  3. Mark Shapiro says:

    Hooray for efficiency!

    Grow the supply, grow the demand, lower its cost, repeat.

    Celebrate it, compete on it, brag about it.

    Efficiency is the clean, green, climate friendly path to greater wealth and health.

  4. Mark Shapiro says:

    By the way, efficiency also makes us safer, and more secure.

    Did I say that efficiency makes us wealthier and healthier?

    Yes, I did.

    Hooray for efficiency!

  5. David B. Benson says:

    I strongly suspect that Jevon’s paradox will once again emerge.

    • Joe Romm says:

      Fortunately, it still doesn’t exist.

    • Mulga Mumblebrain says:

      Hoisting your true colours rather brazenly, are you not?

    • Mark Shapiro says:

      Do not worry, folks.

      We (humans) cannot get too efficient.

      Efficiency, and conservation, are terrific for reducing fossil energy consumption. Efficiency makes it easier and cheaper for renewables to carry the whole load.

  6. David M says:

    As the average per person carbon output drops and the total number of humans on this earth increases how does that work out in terms of total fossil fuel amount added to the climate? Has anybody charted that out?

    Efficiency is a great direction but it’s going to take more than this one trick pony to save us.

  7. Steve Schohan says:

    If everyone improves the efficiency of thier homes then there would be more resources available to focus on other attributes of our changing world