Location: New York
Author: Ken Silverstein, EnergyBiz Insider, Editor-in-Chief
Date: Tuesday, May 6, 2008
The nation's energy options will require new energy efficiency tools along with a host of fuels that are all supported by a substantial investment in generation and transmission. That's the view from an industry-sponsored report.
The demand for energy is expected to grow by 30 percent a year by 2030 and the United States will need to build 151 gigawatts of new generation by that time, according to the Brattle Group that performed a study for the Edison Electric Institute. Toward that end, energy conservation is critical -- as is the need for more controversial fuel sources. None of the ideas comes free of charge and energy conservation is no different. It necessitates new technologies and perhaps some government incentives.
The analysis comes at a time when utilities, regulators, and policymakers are aggressively seeking ways to meet growing electricity demand, while reducing the carbon footprint of the U.S. economy. The key challenge is to maximize potential gains in energy efficiency, while ensuring adequate new electric generation to maintain reliability and meet future demand. The report says that new efficiencies in the electric power sector have the potential to cut the need for electric generation by 7-11 percent -- that's above and beyond what is expected to accrue from new building codes and appliance standards.
"Achieving efficiency improvements going significantly beyond those already in the pipeline will be a major undertaking," says Diane Munns, executive director at Edison Electric Institute. "No matter how you slice it, we'll have to build significant new generation to ensure that we meet demand."
To get to a higher level of efficiency, the study says that increased consumer education is necessary along with the adoption and enforcement of aggressive new building codes and appliance standards. It also says that electricity should be subject to more market forces, giving consumers a greater understanding of the true cost to produce power. That, in turn, would promote cutting-edge technologies such as energy feedback devices that can respond to market pressures.
To illustrate, the Electric Power Research Institute found that a 2 percent reduction in energy usage in California in the summer of 2001 would have cut wholesale electricity expenditures by $700 million. Similarly, the Brattle Group said that a 10 percent reduction in peak demand there during the same time period would have reduced wholesale prices by 50 percent.
New York City-based Con Edison, for example, has set out to reduce energy consumption by 500 megawatts by 2015. The goal coincides with the state's desire to achieve a 15-percent reduction in the growth of electricity consumption while at the same time cutting its carbon emissions. The utility expects to spend $306 million during that time on things such as residential lighting programs, appliance dealer incentive programs and office building assessments.
Government Incentives
To give energy efficiency efforts a lift nationally, a host of businesses and trade organizations are urging Congress to extend renewable energy and efficiency tax credits that have either already expired or are set to do so at year-end. The tax incentives would strengthen the renewable energy industry and expand the market for energy-efficient products, which ultimately would reduce residential and commercial energy costs, generate new domestic jobs and boost a struggling economy, says the coalition.
"Our nation's buildings account for 70 percent of our nation's electricity use, and that's why these incentives are vitally important to deploy energy-efficient designs, technologies and equipment," says R.K. Stewart, former president of the American Institute of Architects. "The end result is that we would get the most energy-conserving buildings possible, which means reduced utility bills for businesses and homeowners, and lower overall energy demand across the nation."
Commercial and industrial sites are often some of the most voracious users of energy. Because a lot of industrial facilities are old, for example, they may be using antiquated equipment that is not energy efficient. Tax incentives can motivate building upgrades and so can energy savings. SAP Americas is spending $105 million to build a modern complex that it says could use 32 percent less energy.
Offices can certainly take advantage of simpler and less costly moves that would involve cycling the air conditioning so that it turns off at night or does not go full blast if rooms are only sparsely populated. Or, in the case of a manufacturing complex, such options might include using combined heat and power that captures the steam and then reuses it to heat or cool a building.
Clearly, high energy prices along with concerns over air quality are giving energy conservation and the new technologies that enable them a better standing in the market. By extension, energy and environmental awareness have never been higher. Disagreement, though, exists as to whether the government should get more involved.
Sterling Burnett, with the National Center for Policy Analysis in Dallas, is of the belief that if people or businesses want more efficient appliances or equipment, then they are qualified to make such purchases without a government mandate. "It is up to consumers and government should not be dictating this."
Energy efficiency, though, has traditionally been given short shrift while other, traditional fuel sources, have garnered the majority of government subsidies. The reality is that more generation and transmission is necessary and that the nation must show innovation. Toward that end, efficiency efforts must be considered alongside other options. The goal is not just to reduce energy consumption. It's also cut the harmful emission as well as to give consumers a chance to beat back higher energy costs
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