Energy efficiency is widely considered one of the most significant growth areas for America’s clean energy transition – one recent outlook estimated $327 billion in annual energy efficiency savings by 2030.
But all those long-term estimates often overlook one of the most important questions facing policymakers: what impact is energy efficiency having on consumers today?
Fortunately, a new analysis from the Edison Foundation does just that, revealing customer-funded energy efficiency programs saved 107 terawatt-hours (TWh) of electricity in 2011. This staggering total was enough to power 9.3 million average US homes for a year, and prevented 75 million metric tons of carbon dioxide emissions.
The Edison report is based on data collected from 155 electric and combined utilities, as well as 14 non-utility energy efficiency administrators across the US. For scale, 1TWh equals 1,000,000,000 kilowatt-hours (KWh).
Commercial Consumers Lead, But For How Long?
Commercial customers led the way with 43TWh of aggregate savings, followed closely by residential customers with 35TWh. Consumers in the Western US Census region comprised nearly half of all savings, with over 50TWh of aggregate savings.
Even more promising for economic growth, the Edison study found 36 TWh of aggregate incremental energy efficiency savings – meaning those savings that occurred in 2011 from new programs or new participants in existing programs. Residential customers just edged out commercial customers in incremental savings, 40% to 35%
Who’s Paying For It All?
These massive savings were driven by massive investments. $5.7 billion was spent on energy efficiency efforts in 2011 – with an 18% increase of $879 million over 2010 expenditure levels.
Ten states represented 71% of total energy efficiency spending, led by California’s $1.3 billion – nearly three times second-place New York State’s $554 million. Three states doubled their expenditures from 2010, and nine states increased their energy efficiency spending by over 50%.
So in an era of reduced government funding, where’s all this money coming from? Ironically, nearly every penny came from the consumers themselves, via their electric utilities. $4.9 billion of all energy efficiency spending, or 86% of total expenditures, comes from customer-funded electric utility budgets.
Interestingly enough, total energy efficiency budgets across the US totaled $6.8 billion in 2011, meaning total program participation and energy savings could easily grow under existing budgets.
State Policies Pushing Results
Over the past five years, the average growth rate for energy efficiency budgets grew 21% annually, a trend Edison attributes to dramatic increases in state-level efficiency goals. Considering state efficiency standards now exist in half of all US states and cover two-thirds of the population with several scheduled increases, total budgets could exceed $14 billion annually by 2025.
Indeed, state policies are the most important ingredient to energy efficiency success, regardless of partisan affiliation. Edison reports the states with regulatory frameworks supporting utilities in efforts to use efficiency measures as a sustainable business model tend to be the ones leading America in overall expenditures and savings.
This trend is also shown in the American Council for an Energy-Efficient Economy’s (ACEEE) State Energy Efficiency Scorecard, whose findings track well with Edison’s analysis. ACEEE’s leaderboard has remained relatively static over the past several years, but Edison projects that to change, with multiple states set to increase efficiency funding and launch efficiency programs for the first time.
But perhaps most promising of all, coal is the major source of electricity generation in states where 2012 efficiency budgets were 50% higher than 2011. This means significant carbon emission reductions will accompany future efficiency gains, saving money and the climate.