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State Energy Efficiency Benefits and Opportunities

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Benefits of Energy Efficiency

Improving energy efficiency is one of the most constructive and cost–effective ways to address the challenges of high energy prices, energy security and independence, air pollution, and global climate change. The many benefits of energy efficiency include:

  • Environmental: Increased efficiency can lower greenhouse gas emissions and other pollutants, as well as decrease water use.
  • Economic: Improving energy efficiency is generall less expensive than investing in new generation and transmission. Energy efficiency can also boost the local economy and create downward pressure on natural gas prices and volatility.
  • Utility System Benefits: When integrated into energy resource plans, energy efficiency can provide long-term benefits by lowering baseload and peak demand and reducing the need for additional generation and transmission assets.
  • Risk Management: Energy efficiency also diversifies utility resource portfolios and can be a hedge against uncertainty associated with fluctuating fuel prices and other risk factors.

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Assessing Energy Efficiency Potential

In the energy efficiency field, a "potential study" is a quantitative analysis of the amount of energy savings that either exists, is cost–effective, or could be realized by implementing energy efficiency policies and programs in a state or region. Energy efficiency potential studies can be an effective tool for building the policy case for energy efficiency, evaluating efficiency as an alternative to supply side resources, and formulating detailed program design plans.

EPA's Guide for Conducting Energy Efficiency Potential Studies contains more detailed information on conducting a potential study.

Steps for Conducting a Potential Study
Identify the objective and the audience Seek to reach consensus as to which objective is most important, and consult the intended audiences to determine what data sources they trust, what issues need addressing, and what level of detail they require.
Select potential type to analyze Energy efficiency practitioners often distinguish between four different types of efficiency potential: technical, economic, achievable, and program.
Determine appropriate level of detail and assess data requirements The level of detail should be driven by the study objectives and influenced by considerations of cost, time, and data availability. The level of aggregation depends on the needs and objectives of the study, the available data and budget, and the uniqueness of the region. Consider primary data collection when the study objectives warrant the additional expense and complexity.
Select and define the methodology A potential analysis involves forecasting a baseline, identifying and screening efficiency measures, designing a program, and calculating total savings. Select the appropriate cost-effective test, such as total resource cost, societal cost, participant cost, ratepayer impact measure, and program administrator cost tests, and consider comparing results from multiple tests as appropriate.

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Policies to Capture Energy Efficiency Potential

States have adopted various policies that support greater investment in and adoption of energy efficiency. The policies outlined below have been implemented successfully by multiple states.

  • Building Labeling/Disclosure requires that privately-owned commercial buildings be benchmarked (e.g., using Portfolio Manager) and that the resulting metrics be disclosed to a prospective buyer, lessee, or lender during a real estate transaction. States can also require that utilities make building energy data available at the request of any commercial building owner.
  • Certain Utility Policies — such as integrating efficiency into energy planning, removing utility financial disincentives, designing rates to motivate customer investments, and implementing best practice efficiency programs — can encourage greater energy savings.

Energy efficiency policies are the most common drivers of investment in energy efficiency programs, as described below.

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Energy Efficiency Program Opportunities

Cost–effective energy efficiency programs have been operating successfully in some parts of the country since the late 1980s and have a history of proven energy savings. These programs have succeeded across many different contexts: regulated and unregulated markets; utility, state, or third-party administration; investor-owned, public, and cooperative utilities; and gas and electric utilities. Funding and financing options vary depending on the program delivery provider and goals.

The ENERGY STAR program provides extensive resources for energy efficiency programs addressing all sectors:

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Evaluating Energy Efficiency Policies and Programs

Evaluation is the process of determining and documenting the results, benefits, and lessons learned from an energy efficiency program. Evaluation results can be used in planning and improving future programs and determining the value and potential of a portfolio of energy efficiency programs in an integrated resource planning process. It can also be used to retrospectively determine the performance (and resulting payments, incentives, or penalties) of contractors and administrators responsible for implementing efficiency programs. Energy efficiency evaluations are also conducted to estimate energy savings attributable to a program in a manner that is defensible in utility regulatory proceedings.

More information on evaluating energy efficiency programs is available in this paper: EM&V for Energy Efficiency Policies and Initiatives New! pages.

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Combined Heat and Power (CHP) Partnership

Combined heat and power (CHP), also known as cogeneration, is an efficient, clean, and reliable approach to generating power and thermal energy from a single fuel source, resulting in enhanced fuel efficiency and greenhouse gas emission reductions. The CHP Partnership is a voluntary EPA program seeking to reduce the environmental impact of power generation by promoting the use of CHP. The partnership works closely with energy users, the CHP industry, state and local governments, and other clean energy stakeholders to facilitate the development of new projects and to promote their environmental and economic benefits.

Energy and Environment Guide to Action

The Guide to Action provides in–depth information about over a dozen policies and programs that states are using to meet their energy, environmental, and economic objectives. Policies addressed in the guide include energy efficiency portfolio standards, public benefits funds for energy efficiency, building codes and appliance standards, utility policies, and lead by example initiatives.

Energy Efficiency Savings Opportunities and Benefits

The Department of Energy offers numerous resources to help state and local governments and their stakeholders understand the wide range of energy efficiency opportunities that could support their climate and energy goals. View catalog of state-level EE potential studies, technical resources to understand the energy and carbon savings from efficiency, technical assistance, and more.

ENERGY STAR Resources for States

The ENERGY STAR Program has a long history of partnering with energy efficiency program implementers, providing expertise in effective program design. Learn about their resources.

Roadmap for Incorporating EE/RE in State and Tribal Implementation Plans

The Roadmap for Incorporating Energy Efficiency/Renewable Energy Policies and Programs into State and Tribal Implementation Plans is part of EPA’s effort to encourage state, tribal and local agencies to consider incorporating energy efficiency (EE) and renewable energy (RE) policies and programs in their State and Tribal Implementation Plans (SIPs/TIPs). The initiative includes a manual, training, tools and technical assistance.

U.S. Department of Energy (DOE) State and Local Solution Center

The State and Local Solution Center provides state and local government officials with resources addressing energy planning, policy, financing, data management, and technologies to help them implement successful energy efficiency and renewable energy projects.

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ENERGY STAR Home Energy Yardstick

The Home Energy Yardstick is an online tool for individuals to compare their households' energy use to others across the country and to get recommendations for improvement.

ENERGY STAR Portfolio Manager

Portfolio Manager is an online tool you can use to measure and track energy and water consumption, as well as greenhouse gas emissions. Use it to benchmark the performance of one building or a whole portfolio of buildings, all in a secure online environment.

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