Negawatts Are Creating a Market for Energy Savings

“Negawatts”, a termed coined by Amory Lovins in 1989 to describe savings created by using less energy, are becoming a reality. The fact that saving energy is much cheaper than building new power generation capacity has motivated the markets to create financial and other incentives to monetize that savings. According to an article in Renewable Energy World, several market mechanisms have emerged:

• Demand response: enrolling large users of energy in programs to lower their usage in return for compensation, which helps take pressure off the grid. Examples of demand response networks include Comverge and Gridpoint.
• White Tags: businesses earn energy savings certificates for the energy they send back to the grid based on efficiency measures they put in place. White Tags can then be sold or put toward achieving mandatory emission goals.

The potential of energy savings is largely untapped, but there is plenty of precedent for it in California. “Since the 1970s, California, through the California Public Utilities Commission (CPUC), has worked with utilities to encourage conservation rather than consumption. As a result, Californians now use about half as much electricity as other Americans.” –Glenn Croston, Renewable Energy World.

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