Introduction
1 Electricity Demand Growth
Electricity demand growth has been steadily falling within the OECD block for 30+ years. In many developed economies including the United States, the EU and Japan, future demand is projected to grow at a tepid rate of 1 percent or less. In the case of United States, the Energy Information Administration (EIA) projects 0.7 percent growth per annum under a business-as-usual scenario for the period to 2035. On a per-capita basis, electricity consumption has been flat – as in California – or falling in some cases. Moreover, there is a growing recognition that it is feasible, and many experts believe, desirable to eliminate electricity demand growth cost-effectively and with minimal intervention.
It is, of course, a rather different story for the rapidly growing developing economies. It can, however, be argued that the imperative to influence electricity demand growth in these economies is even more compelling. Otherwise, they will end up with inefficient and wasteful infrastructure, appliances and buildings – for which they will have to pay dearly over a very long time.
This book’s main focus is to describe why and how we can influence the future of electricity1 demand growth globally, based on what is feasible and often cost effective.
2 Theme of the Book
For quite some time, a number of influential thinkers have been saying that our traditional approach of investing ever-increasing amounts on the “supply-side” to meet ever-growing demand may be unsustainable – economically and ecologically. A number of these same thinkers have been vouching for improvements in energy efficiency – not just in more efficient cars, appliances, and buildings – but also more clever and focused ways of using energy to deliver the energy services that we desire while using as little energy as possible – and wasting less in the process.
Despite some progress, many studies suggest that energy efficiency remains largely untapped, under-utilized and under-appreciated. There are many reasons for this, some institutional, others behavioral or cultural. Many forms of energy, in general, and electricity in particular, are underpriced – for example, because environmental externalities are not fully accounted for – inappropriately priced – for example, when one class of customers are charged more than others or when electricity tariffs remain flat even though costs vary – and/or are artificially subsidized – as is prevalent in many countries.
Among the topics examined in this book is why energy efficiency, including active customer demand-side participation (DSP), has not made as much of an impact as its proponents would like. What can and should be done to eliminate the energy efficiency gap – defined as how much is actually captured vs. how much is available yet untapped – to the extent that it exists.2
The overall intent of the book is to examine what can be done in both developed and developing economies to increase the energy efficiency of electricity generation and consumption with the ultimate aim of reducing and eventually eliminating demand growth – when and where it makes sense to do so, is feasible, and economically cost-justified.
2.1 Against the Grain
Perhaps a logical starting point for a book on energy efficiency is to ask why a book on this topic is needed in the first place? If energy efficiency is cost effective as is often claimed, why is it underappreciated by consumers and firms? It is as if there were $20 bills sitting on the sidewalk, and no one is bothering to pick them up, as Amory Lovins,3 an energy efficiency guru, rhetorically asks. Lovins goes even further, frequently claiming that energy efficiency is not only a free lunch, but in fact a lunch we are paid to eat. So why aren’t we eating the free lunch?
The answer turns out to be more complicated than it seems.4 A number of reasons are frequently provided.
One explanation may be that historically, the industry’s focus has been on production and delivery of ever-larger volumes of electricity through an ever-expanding infrastructure that typically spans from primary fuels to the ubiquitous outlets on customers’ walls. The industry’s massive expansion in the 1900s, accompanied by major technological advances in generation, transmission, and distribution, allowed customers to benefit from enormous economies of scale and scope.
During much of this period, per unit costs of supplied electricity were falling, while incomes were broadly rising. The mentality behind the famous saying that electricity would be “too cheap to meter” became ingrained5 in the culture of the stakeholders and institutionalized through rate-of-return regulations. Why bother with conserving energy when prices were constantly falling? Many utilities offered – and some still do – declining block tariffs: the more you use, the lower the per unit costs.6
There are also many institutional and regulatory reasons. For example, in many parts of the world, utilities have mild to strong financial incentives to sell more – rather than less – all else being equal.7
Partially as a result of these institutional and regulatory policies, utilities in nearly all parts of the world, with a few exceptions, are entirely or mostly focused on selling energy or kWhrs, instead of services that are ultimately desired and valued by consumers.8 The distinction between energy and energy services, of course, is critical to any discussion of energy efficiency.
Even though Lovins was not the first to focus on the virtues of energy efficiency or the importance of energy services – the fact that what consumers really want and need is the cold beer and the hot shower, using his colorful metaphor – he must be credited with a bold vision at a time in the late 1970s and early 1980s when the power industry was overwhelmingly supply-side focused and the demand-side and energy efficiency were rarely mentioned or seriously considered in resource planning process. In those days, the power industry’s mission was to build as much capacity as was remotely necessary to meet the demand – which was often treated as a “given.”
The challenges facing the early promoters of energy efficiency continues to this day partly because energy efficiency or negawatts run against the electric utility grain – long-held beliefs and established regulatory and institutional protocols that have gone mostly unchallenged since the formative days of the industry.
The challenge was, and still remains, to convince a hostile industry and occasionally skeptical regulators that the customers, the society and the environment can be better off if the industry’s prime focus were to change from selling volumetric energy, be it kWhrs or therms – or, for that matter, gallons of petrol – to serving customers’ energy service needs at the least cost, which often also means least amount of environmental costs.
Another fundamental issue putting energy efficiency at a distinct disadvantage under current regulatory regimes and rate-of-return paradigm has to do with how energy efficiency is currently measured and rewarded. When a kWhr is consumed, it is easy to measure and record. Moreover, in this case, someone is able to invoice for it and get paid. The bigger the number of kWhrs, the bigger the invoice, and the happier the utility – not necessarily the consumer.
In contrast, it is complicated to measure and record when a kWhr is conserved or not consumed. All manner of convoluted questions arise as to why the kWhr was not used, why was it conserved, who caused, encouraged, assisted, or prompted the conservation to take place, was it the result of a behavior modification, an investment in more efficient technology or appliance, or did the consumer actually settle for a lower level of service, suffer some discomfort, or sacrifice convenience to achieve it?
As a number of chapters in this book explain, the measurement and reward system for megawatts and negawatts are vastly asymmetric – and all else being equal – selling a kWhr is far more rewarding than not. Which leads to the point that, with the exception of car mileage standards, there are few programs encouraging oil companies to sell nega-gallons. In the case of gasoline, retail prices are supposed to provide adequate incentives to consumers to conserve, to buy smaller and more efficient cars, to car pool, use mass transit, to walk or bicycle, or avoid driving.9
The energy efficiency battle, which is still being waged in different parts of the world with various degrees of intensity, involves changing the market rules and mechanisms that have historically encouraged the energy industry to invest in infrastructure to meet customers’ growing demand. This is still the norm in many parts of the world.
Until and unless the paradigm is changed to remove the incentives for stakeholders to sell more kWhrs, energy efficiency will face an uphill battle. Similarly, until a way or ways can be found to cause the industry to focus on consumers’ energy service needs – rather than selling kWhrs – megawatts will be favored over negawatts.
3 Organization of the Book and Chapter Summaries
This book, which consists of a collection of contributions from a number of scholars, experts, and practitioners from around the world, is mostly10 focused on the demand or consumption side of the electricity equation. The book’s overarching objective is to examine approaches that can lead to more efficient utilization of electricity, resulting in lower future demand growth, ultimately bringing an end to demand growth when and where it makes sense, is feasible, and economically justified. The book is organized into four parts:
Part I: End of Demand Growth is within Reach sets the book’s context by presenting the potential scale and scope of energy efficiency opportunities and the constructive role that it can play in modifying and defining our energy future.
In Chapter 1, Will Energy Efficiency make a Difference?, Fereidoon Sioshansi, with contributions by Ahmad Faruqui and Gregory Wikler, sets the context for the book. The chapter makes references to material in the book while suggesting that the answer to the question posed by the chapter’s title is a definite yes. The how much and how will depend on choices we make as individuals and societies and by decisions, policies, standards, enabling technologies, and prices selected by regulators and policymakers.
In Chapter 2, Utility Energy Efficiency Programs: Lessons from the Past, Opportunities for the Future, Steven Nadel describes how utilities have been offering energy efficiency programs for more than 30 years. He summarizes these developments, focusing in particular on recent and projected trends.
The author’s main contribution is to highlight that in recent years programs have expanded in terms of the number of utilities offering programs and many utilities are achieving growing savings each year. In fact, some utilities are already saving more each year than underlying load growth, resulting in load decline, not growth. Furthermore, the number of utilities targeting and hitting this milestone is increasing.
The chapter concludes that these levels of savings can likely be sustained in the future, but in order to do so strong regulatory support is needed and program approaches need to continue evolving and improving.
In Chapter 3, A Global Perspective on the Long-term Impact of Increased Energy Efficiency, Paul Nillesen, Robert Haffner, and Fatih Ozbugday provide an overview of the potential contribution of increased energy efficiency to a more sustainable energy system using empirical evidence from a number of countries around the world, and alternative future scenarios.
The authors provide an overview of the potential scope of energy efficiency, the targets that have been set, and an economic analysis of the costs and benefits.
The chapter’s main conclusion is that energy efficiency offers substantial potential from a welfare perspective and a significant contribution to the sustainability targets. However, there remain implementation challenges in making savings stick and locking in the benefits over the longer term.
In Chapter 4, Carpe Diem – Why Retail Electricity Pricing Must Change Now, Allan Schurr and Steven Hauser envision a future where the industry’s time-honored sales growth paradigm can no longer be assumed in many markets due to expected energy efficiency effects, self-generation, and structural changes in the composition of the economy.
The authors examine the ramifications of such a scenario for a mostly fixed-cost industry with a rising cost structure for labor, materials, and environmental compliance. Any erosion in sales growth will place new pressure on prices, and on managers and regulators to mitigate costs, which must be spread over a shrinking volume of sales.
The chapter’s main conclusion is to point to potential reductions in sales growth, which will vary geographically, but nonetheless suggest a consistent pattern in most of the OECD countries with significant implications for the price structure and viability of this important industry.
In Chapter 5, Is There an Energy Efficiency Gap?, Hunt Allcott and Michael Greenstone examine the extensive literature on the scope of energy efficiency gap, namely the difference between cost-effective energy efficiency potential and what is actually captured in market. The sheer existence of this gap, reported to be significant in numerous prior studies, and its persistence, appears paradoxical, to say the least.
The authors analyze the empirical evidence on the magnitude of profitable yet unexploited energy efficiency investments and the reasons that cause consumers and firms not to fully exploit them. The analysis leads them to conclude that the claims of a massive energy efficiency gap may be overrated considering the net present value of savings and other unmeasured costs and benefits.
The chapter’s main conclusion is that the magnitude of the energy efficiency gap may be much smaller than many engineering-accounting studies suggest. These problems notwithstanding, there are ample opportunities for policy-relevant research to estimate the returns to energy efficiency investments and their welfare effects.
Part II: The – Frustratingly Slow – Evolution of Energy Efficiency, provides historical perspective on why it has taken so long to get traction on energy efficiency, particularly highlighting why selling energy efficiency has been an uphill battle despite well-articulated and documented understanding of the causes.
In Chapter 6, Making Cost-Effective Energy Efficiency Fit Utility Business Models: Why has it Taken So Long?, Ralph Cavanagh explains what is needed to align utilities’ and customers’ financial interests in securing cost-effective energy savings, and why the necessary reforms have been slow to emerge.
The author’s main contribution is to highlight the multiple conflicts of interest that traditional price regulation unintentionally creates for utilities as energy efficiency partners and promoters, and to identify ways of overcoming obstacles to proven reforms. Utilities want and need both to break longstanding linkages between retail sales volumes and financial health, and to see energy efficiency success as a potential earnings driver. Regulators have been accumulating much useful experience with solutions, but significant resistance remains among some stakeholder groups.
The chapter’s conclusions are that utility business models are already changing to accommodate expanded energy efficiency investment and results, that stakeholder concerns are far from insuperable, and that the ultimate outcomes will be well worth the wait.
In Chapter 7, The Evolution of Demand-Side Management in the United States, Frank Felder examines how DSM arouse from the oil price shocks of the 1970s combined with stricter environmental regulations, over-capacity, and cost over-runs of nuclear power plants.
By exploring the history and evolution of DSM, the author highlights that even with DSM’s history of 40 years, there are substantial open questions regarding the need for DSM programs, how they should be structured, and how they coexist with electricity markets.
The author concludes that DSM proponent must directly engage these questions and issues if DSM is to achieve its potential as a tool to address critical energy, environmental and economic needs.
In Chapter 8, China: Energy Efficiency Where it Really Matters, Mark Levine, Nan Zhou, David Fridley, Lynn Price and Nina Zhen examine to what extent China’s rapid economic growth is linked to electricity demand growth, specifically focusing on credible policies that can delink the two.
The authors examine two scenarios of future growth – an expected future and another that assumes strengthened energy efficiency policies – using an end-use energy model developed at the Lawrence Berkeley National Laboratory (LBNL). The model considers sales and saturation of energy-using equipment, efficiency standards, usage, turnover rates, size, and other factors, which are updated every decade. The inputs are based on historical experiences of developed countries and assumptions about technological change and human preferences.
The chapter’s main contribution is to suggest that a plateauing of energy use somewhere in the 2025–2030 period combined with a reduction of growth in electricity demand is possible, countering the prevailing wisdom. This is supported by sensitivity analyses, which demonstrate the significant role that aggressive energy efficiency policies can play in lowering the growth rate of energy and electricity demand and related carbon emissions.
In Chapter 9, Rapid Growth at What Cost? Impact of Energy Efficiency Policies in Developing Economies, Youngho Chang and Yanfei Li give an overview of electricity demand growth under different scenarios in several developing Southeast Asian countries and examine how alternative energy efficiency policies can make a difference in the outcome.
The authors contrast demand projections under a business-as-usual scenario vs. alternative scenarios where demand growth is managed and reduced due to policies such as appliance efficiency standards, building codes, pricing, and mandatory quotas.
The chapter’s main conclusion is to show that without aggressive policies, electricity demand in the developing countries will grow for the foreseeable future. With aggressive policies, however, significant reductions can be achieved often accompanied by cost savings. The key question is which policies would be more effective in managing electricity demand growth and how they can best be implemented.
Part III: Case Studies of Low-Energy Communities and Projects, presents examples of planned and/or existing efforts to achieve low energy or zero net energy status with empirical evidence that it is technically feasible and economically viable.
In Chapter 10, The Prospect of Zero Net Energy Buildings in the United States, Nicholas Rajkovich, William Miller, and Roland Risser debate whether efforts to achieve zero net energy represent a sustainable response to climate change or are a diversion from other necessary efforts to reduce greenhouse gas emissions.
The authors’ main contribution is to show how zero net energy buildings, as currently conceived, may or may not help to propel the market forward. As one vision for achieving carbon neutrality, zero net energy buildings are in the process of being tested and may ultimately be rejected in favor of alternative approaches to a low-carbon future.
The chapter’s conclusion is that existing regulatory frameworks may impede progress to a lower carbon future and that the utility rate case process needs to be altered to reflect a quickly moving and uncertain shift to zero electrical demand growth.
In Chapter 11, What If this Actually Works? Implementing California’s Zero Net Energy Goals, Anna LaRue, Noelle Cole, and Peter Turnbull examine the bold zero net energy (ZNE) regulatory goals of California and its implications for the relationship between buildings and the electric grid.
The authors explain the current status of ZNE in California, including the effort to drive California’s Title 24 building energy codes towards ZNE. The authors discuss how, as government agencies and utilities push towards those goals, stakeholders are also wrestling with what the ZNE definition should ultimately be for California and at what scale the ZNE goals should be implemented.
The chapter concludes by examining how the relationship between utilities and customers will change in a future world of high performance buildings, distributed generation, and ZNE performance, where it is currently unclear how customers will pay for use of the grid and how decisions about generation infrastructure will be made.
In Chapter 12, Zero Net Energy At A Community Scale: UC Davis West Village, Stephen Wheeler and Robert Segar show how the ZNE concept has been implemented on a large scale at the U.C. Davis West Village, a new ecological neighborhood for 4,200 students, faculty, and staff of the University of California, Davis.
The authors describe the first phase of the project, inaugurated in 2011, which aims for ZNE status using highly energy efficient construction, passive solar design, and photovoltaic arrays on roofs and parking canopies. The technology required for the project was readily available in the late 2000s, although it took creative partnerships to develop and implement the concept. Several additional features are still in the development stage.
This chapter’s main conclusion is to show that ZNE status can be achieved through collaborative public/private partnership with no increased costs to the residents. This advanced eco-district bears similarities to some European examples such as Hammarby in Sweden and Vauban in Germany, and points the way toward a new generation of ZNE neighborhoods in North America.
In Chapter 13, Crouching Demand, Hidden Peaks: What’s Driving Electricity Consumption in Sydney?, Robert Smith explores how electricity consumption and peak demand for residential customers in Sydney and across Australia has plateaued since 2007. He describes this departure from the long-term post-war trend of energy and peak demand growth and unpacks the possible causes, focusing on the role of energy efficiency versus price.
Looking at a period of volatile weather, unstable economic conditions, soaring electricity prices, erratic peak demand growth, and flat or falling energy consumption, the author sifts out the key underlying causes and outlines the implication for the future. The review highlights how low-profile regulations and minimum energy performance standards (MEPS) have delivered lasting savings compared to impacts of higher profile, short-term, and expensive one-off programs.
The chapter concludes that the forthcoming end of large price increases will test the resilience of recent energy savings and how, without corresponding falls in peak demand, it will be difficult to translate the benefits of energy savings into long-term savings in customer bills.
In Chapter 14, From Consumer to Prosumer: Netherland’s PowerMatchingCity Shows the Way, Stefanie Kesting and Frits Bliek describe a smart energy pilot project in the Netherlands where dynamic pricing is employed to optimize energy use at customer level.
The authors explain an experiment where the end users in a multi-goal optimization “game” can produce and/or consume energy, hence the term “prosumers.” The game allows prosumers to decide between using energy or selling it to their neighbors or to a local market.
The chapter’s main contribution is to show how a decentralized energy future can look like in reality. It also confirms that people act in a smarter, and more energy efficient and sustainable way when they get the instruments to do so.
In Chapter 15, Back to Basics: Enhancing Efficiency in the Generation and Delivery of Electricity, Clark Gellings points out that approximately 11 percent of electricity is consumed in the production and delivery process before it reaches consumers in the United States. The figure, which includes auxiliary loads as well as losses in transmission and distribution network, varies from country to country but is significant given the industry’s scale, accounting for nearly 50 percent of primary energy used in many advanced economies.
The author’s main contribution is to highlight the potential for improving the electrical efficiency of power production and delivery by examining the electricity portion of the industry’s long value chain, from power production to delivered electricity at the customer’s premises.
The chapter’s conclusions are to examine opportunities for reducing these uses through applications of appropriate technologies.
In Chapter 16, Smarter Demand Response in RTO Markets: The Evolution Toward Price Responsive Demand in PJM, Stuart Bresler, Paul Centolella, Susan Covino, and Paul Sotkiewicz describe how PJM has succeeded in creating a new option for market participation by load reduction capability in the largest organized U.S. electricity market.
The authors examine how the convergence of advanced metering infrastructure (AMI) deployments and dynamic retail rates combined with the growth of demand response resources and the rapid emergence of smart grid technology has required PJM to create price responsive demand, or PRD. The chapter lays out the mechanics of how PRD will integrate the wholesale and retail markets and describes how customers empowered by timely and detailed usage information will be able to make decisions about when and how to use electricity in response to market prices.
The chapter’s main contribution is to demonstrate the impact of PRD in reconnecting the wholesale and retail markets in new and valuable ways.
Part IV: Opportunities and Remaining Obstacles, discusses a number of challenges and obstacles that remain to be addressed.
In Chapter 17, Shifting Demand: From the Economic Imperative of Energy Efficiency to Business Models that Engage and Empower Consumers, John Laitner, Matthew McDonnell, and Heidi Keller examine the need for developing new utility business models to drive critical gains in energy efficiency.
The authors provide an overview of the economic imperative of energy efficiency and suggest that to achieve the requisite decrease in the cost of energy services while simultaneously increasing the amount of useful energy consumption, utilities must shift the business model from that of a static deliverer of electrons to one of a dynamic provider of energy services.
The chapter’s main conclusion is that engaging and empowering consumers through the development of new business models is essential to move from anemic levels of inefficiency toward levels that enable a more robust economy in the future.
In Chapter 18, What Comes After the Low-Hanging Fruit? Glenn Platt, Daniel Rowe and Josh Wall point out that whilst at the moment there remains huge opportunity to realize significant savings through existing efficiency technologies such as compact fluorescent lights, insulation, more efficient appliances, and so on, there remains a significant question of what to do after these options have saturated the market.
The authors introduce a number of technologies that so far have received little attention with significant future potential including solar cooling systems, energy recommender technologies, new types of heating, ventilation and air-conditioning control that use fundamentally different set points to traditional approaches.
The chapter’s main conclusion is that these promising technologies are being trialed in major projects around the world and will soon be ready for significant uptake including case studies that demonstrate the potential savings and cost benefits while examining technical and regulatory hurdles.
In Chapter 19, Energy Convergence: Integrating Increased Efficiency with Increased Penetration of Renewable Generation, Ren Anderson, Steven Hauser, and Dave Mooney describe future trends in energy systems integration and the complementary nature of efficiency and renewable energy resources while also accounting for the disruptive impacts of emerging innovations on residential building energy use.
The authors’ main contribution is to highlight the key barriers that limit successful capture of the value of distributed energy resources and the development of integrated systems modeling tools that identify least cost pathways to maximize total energy savings.
The chapter’s conclusion is that systems interactions that seem to limit achievement of cost effective energy savings can also be used to drive energy transformation provided that market strategies focus on total system-level energy savings rather than overly constrained optimization of individual sub-systems and components.
In Chapter 20, Energy Efficiency Finance: A Silver Bullet Amid the Buckshot? Theodore Hesser examines the progress being made on avoided cost financing mechanisms and explores the necessary steps to assimilating energy efficiency finance into the mainstream of the capital markets.
The author surveys the activity of all existing financing models and contrasts this expenditure with the raw potential of each financing mechanism. The chapter points out that despite years of progress, energy efficiency finance has only achieved 1 percent of its technically achievable potential.
The chapter concludes that successful energy efficiency finance mechanisms could dramatically reduce annual energy consumption in the United States and catalyze a feedback loop whereby rate increases further incentivize energy efficiency, which further begets rate increases, and so on until new utility business models emerge.
In Chapter 21, The Holy Grail: Customer Response to Energy Information, Chris King and Jessica Stromback describe how access to detailed energy usage data, especially when integrated with other data sources, enables utilities and others to deliver actionable information needed for consumers to achieve energy efficiency’s true potential. They describe a vision for “Intelligent Efficiency” and the associated information infrastructure supported by the empirical evidence of a wide range of feedback and other studies in delivering quantifiable savings.
The authors’ main contribution is to synthesize the range of available data program offerings into a structured framework comprising policy, technology, data services, security, privacy, and standards. Beyond that, the authors include a meta-analysis of the extensive available literature on pilot program results and show the link between the theoretical framework and real-world results.
The chapter concludes that achieving the maximum achievable energy efficiency potential requires empowering consumers with a “triad” of information, pricing options, and automation, while focusing on the data element of that triad. This further requires the right data collection and access infrastructure. Their contribution is timely as policymakers are adopting “intelligent efficiency” policies to help achieve efficiency targets from a combination of user behavior adaptation, investments in efficiency and distributed renewables, and automated usage reduction.
In Chapter 22, Trading in Energy Efficiency – A Market-Based Solution, or Just Another Market Failure? Iain MacGill, Stephen Healy, and Robert Passey describe the underlying theory, rationale, and mixed performance to date of policy measures that establish a trading market in energy savings. Such approaches, going under names including White Certificates, Energy Efficiency Portfolio Standards, Energy Savings, and Energy Efficiency Certificate Trading, are receiving growing attention in Europe, the United States, and Australia.
The authors highlight the many challenges – technical, economic, and social – in implementing such designer markets that attempt to commodify energy savings including measurement and additionality as well as difficulties in the complex interaction between technologies and consumer behavior inherent in energy use and in the financialization of energy savings.
The chapter concludes that considerable care is required with such approaches to energy efficiency policy lest governments merely add yet another market failure to those already existing. More important, policy makers need to move beyond framing energy efficiency within conventional economic terms of market failure, and address the broader challenge of engaging energy users on their behavior including, for many, an ever-growing desire for energy services.
In Chapter 23, The Ultimate Challenge: Getting Consumers Engaged in Energy Efficiency, Alex Laskey and Bruce Sayler describe how consumers have been left out of the energy efficiency equation and how innovative utilities, like Connexus, are engaging and motivating customers.
The authors’ main contribution is to highlight that many energy efficiency advocates have focused on pushing new technologies to engage customers in using energy more judiciously and sparingly. Although such initiatives are an essential piece of the puzzle, there is a critical missing ingredient: how to engage consumers. The authors show how Connexus, working with Opower, has succeeded to engage their customers and is generating real energy savings.
The chapter’s conclusions are that to deliver real energy efficiency savings, consumers need to be informed of their energy use and the information on how they can save energy and money.
In the book’s epilogue, How Do We Get There From Here? Fereidoon Sioshansi sums up what needs to take place for the vision espoused by this book’s contributors to become a reality.
1The book’s focus is on electricity demand, although many of the approaches would apply to energy – broadly speaking.
2Ironically, Chapter 6 concludes that the energy efficiency gap may not be as large as some prior studies have suggested.
3Amory Lovins, the founder of Rocky Mountain Institute (RMI), is often cited among the pioneers of energy efficiency. He famously coined the word negawatts, as opposed to megawatts, in promoting what is now universally accepted, namely that the cheapest and cleanest kWhr is the one we do not use. His latest book, Reinventing Fire, presents a scenario where the United States can cost-effectively phase out it reliance on oil and coal by 2050.
4Jared Diamond wrote a book trying to answer a simple question asked by an illiterate nomad from Papua New Guiney.
5The famous quote is often attributed to Lewis Strauss, the Chairman of the U.S. Atomic Energy Commission, who predicted that “our children will enjoy in their homes electrical energy too cheap to meter.” He was, of course, talking about the promise of cheap nuclear energy touted as the ultimate answer to man’s insatiable demand for electricity in the context of President Dwight Eisenhower’s Atoms for Peace initiative, which he announced at the United Nations General Assembly in December 1953.
6The reverse is now the case in California, for example, where rates rise significantly at higher consumption levels, intended to discourage heavy use.
7This is further explained in Chapter 6.
8Thomas Edison, the inventor of the fabulously inefficient incandescent light bulb and among the industry’s pioneers, famously wanted to sell energy services, not kWhrs. His vision was that consumers would pay for light or light bulbs not kWhrs consumed.
9Gasoline prices, as is broadly recognized, do not fully capture all externalities associated with driving, including pollution and congestion. Moreover, in many cases, gasoline prices are subsidized, further eroding the strength of the price signal.
10The only exception is Chapter 15.