Efficiency saved Northeast $1.5B in winter energy costs
April 16, 2015 | By
Barbara Vergetis Lundin
A new report reveals that energy efficiency may be one of the best ways for keeping energy costs under control during winter months. In fact, the Acadia Center report shows that, due to existing investment in energy efficiency programs, Northeastern customers saved approximately $1.5 billion in the winter of 2014.
Lower demand reduces the prices that consumer pay for power and provides significant relief during periods of peak demand when prices are highest. Acadia Center estimated what electricity demand, wholesale prices, and consumer costs would have been in the winter of 2014 without electric efficiency programs. They found that demand would have been 14 percent higher and the price of wholesale electricity would have been 24 percent higher. Overall costs for electricity would have been $1.5 billion higher. Since 2000, electric efficiency programs have reduced electricity demand in New England by almost 2.2 gigawatts, equivalent to the combined capacity of the coal-fired Brayton Point and nuclear-powered Pilgrim power plants, according to the report. Electricity prices in the winter of 2014 were unusually high due to a variety of reasons, including the region's over-reliance on natural gas for power generation and below-average temperatures, which increased consumption of natural gas for heating, according to the report, and with the constrained fuel supply the price of electricity was higher. Electricity market reforms and lower prices for liquefied natural gas helped keep costs lower during the winter of 2015 despite colder temperatures, but electric efficiency investments also significantly contributed to keeping energy more affordable. "Without efficiency, winter costs would have been much higher. Saving electricity through efficiency costs about 4 cents per kilowatt hour, while the regional average wholesale price of electricity was about 4 times that in winter of 2014," said Jamie Howland, director of Acadia Center's Climate and Energy Analysis (CLEAN) Center. "When weather and market forces cause electric prices to rise, efficiency becomes even more valuable." The analysis comes as states consider making long-term investments in gas pipelines and electric transmission lines to add to the region's energy supply. This data, which demonstrates the role of efficiency as a way to cost-effectively reduce energy demand, could help to influence how states shape their energy plans. "Energy efficiency will always generate savings, regardless of volatile fuel prices. As the states in the region determine the appropriate mix of resources to address winter electric prices, the policy of all cost-effective efficiency should be a prerequisite to any proposals that ask ratepayers to bear the risk of infrastructure investments," said Howland. A number of states are also facing important decisions related to continuing with long-term investments in electric efficiency programs, all of which are opportunities to capture more efficiency as a cost-saving resource, including the development of spending plans for 2016-2018 in Massachusetts -- which to-date is top in the nation for efficiency investments; the establishment of an energy-efficiency resource standard in New Hampshire; and the 2016-2018 plan for efficiency in Connecticut. For more: © 2015 FierceMarkets, a division of Questex Media Group LLC. All rights reserved. http://www.fierceenergy.com/story/efficiency-saved-northeast-15b-winter-energy-costs/2015-04-16 |