SACE | Southern Alliance for Clean Energy

Utility energy efficiency programs: TVA Region


“The Southeast is the Saudi Arabia for energy efficiency,” according to Dr. Marilyn Brown, a professor at the School of Public Policy at Georgia Institute of Technology and member of the Tennessee Valley Authority Board of Directors. The key to tapping this vast potential in the Tennessee Valley region lies in the energy efficiency programs offered by TVA.

The Tennessee Valley Authority is a federal corporation and the nation’s largest public power company. TVA operates fossil-fuel, nuclear and hydroelectric power plants and also produces energy from renewable sources. Electricity generated by TVA is distributed by the municipal and cooperative power companies of the Tennessee Valley, serving the needs of about nine million people. TVA provides electric power to 155 local power distributors. TVA also sells electricity directly to 57 large industries and federal agencies. TVA’s power-service area covers 80,000 square miles in the Southeast, including almost all of Tennessee and parts of Mississippi, Kentucky, Alabama, Georgia, North Carolina, and Virginia.

As a regional development agency TVA stimulates sustainable economic development in the public interest. It also manages the nation’s seventh-largest river system to reduce flood damage, produce power, maintain navigation, provide recreational opportunities, and protect water quality in the 41,000-square-mile watershed.

In August 2010, the TVA board of directors adopted a renewed vision to help TVA lead the Tennessee Valley region and the nation toward a cleaner and more secure energy future, relying more on energy efficiency and other clean energy sources and less on coal. This renewed vision calls for TVA to focus on six areas:

  • Cleaner air
  • Greater energy efficiency
  • More nuclear generation
  • Low rates
  • High reliability
  • Responsibility

Energy Efficiency Programs at TVA
TVA offers a suite of energy efficiency programs through their distributors. These programs are offered under TVA’s EnergyRight Solutions brand. For residential customers these programs include audits, rebates and a new-homes program. TVA also offers EnergyRight Solutions programs for commercial and industrial customers. These programs offer energy assessments, financial incentives and customized technical evaluations.

In program year 2014, TVA’s energy efficiency programs saved about 514 gigawatt-hours of electricity (gross). This savings number is about 8% greater than in program year 2013 and represents about 0.32% of TVA’s total electricity sales. According to the report this savings was accomplished at a cost of about 1.8 cents per kilowatt hour, clearly showing that energy efficiency is one of TVA’s lowest cost resources.

Unfortunately, TVA’s stated vision of greater energy efficiency has not translated into reasonable budgets for its programs. In spite of the fact that TVA has been achieving highly cost-effective energy savings, its energy efficiency budget remained roughly flat for program years 2012-2014 and saw a damaging 25% cut for program year 2015.

Energy Efficiency Potential and Resource Planning at TVA
TVA’s 2011 Integrated Resource Plan called for energy efficiency savings of 11,400 to 14,400 GWh by 2020. Several stakeholders in the IRP process questioned whether that was a sufficiently aggressive goal in light of the fact that no energy efficiency potential study had been done. In order to answer these questions TVA commissioned just such a study.

In December 2011 TVA released that study by Global Energy Partners, examining the potential of energy efficiency as a resource in the Tennessee Valley. This study showed that energy efficiency could provide 8,000 to 15,300 GWh of savings between now and 2020. The high end of this range represents an average savings from energy efficiency of 1% per year. Compare that to the 0.32% savings achieved in 2014, and it is clear that there is much more TVA could be doing to realize more energy efficiency savings and to become the energy efficiency leader in the Southeast.

For its 2015 IRP, which was approved by the TVA Board in August 2015, TVA set out to model energy efficiency as a resource, which means that energy efficiency would be allowed to compete against generation resources for selection as the least-cost resource to meet projected energy requirements. Very few utilities have modeled energy efficiency in resource planning, and TVA is the first in the Southeast. SACE had encouraged TVA to model energy efficiency as a resource during our engagement in the 2011 IRP process.

Unfortunately, the methodology developed by TVA for its 2015 IRP did not allow energy efficiency to compete on a level playing field with generation resources. Citing concerns about uncertainty, TVA applied a series of unreasonable assumptions and constraints to inflate the true cost of energy efficiency and limit the growth of energy savings. The cumulative effect of TVA’s price adjustments and growth caps was that the planning model was essentially told to assume that about one-third of potential future investments in energy efficiency would fail to yield energy savings – an assumption not backed up by industry experience. Ultimately, the 2015 IRP called for less energy efficiency than the 2011 IRP, representing a disappointing step backward in the midst of an otherwise positive step as the first utility in the region to model energy efficiency as a resource.

In its August 2015 meeting, the TVA Board also approved the staff-proposed FY 2016 energy efficiency budget, and planned energy efficiency budgets for FY 2017-2018. Following the prior-year’s 25% cut from roughly $139 million in FY 2014 to $104 million in FY 2015, the Board approved a modest increase to $110 million for FY 2016. The planned budgets would see additional increases to $125 million in FY 2017 and $126 million in FY 2018. Unfortunately, the planned budgets would remain lower than the budgets for FY 2012-2014, and it is not clear how TVA intends to meet even the modest energy efficiency plans laid out in the 2015 IRP without restoring its previous spending level.

If you live in the TVA service territory you can be part of the solution. Call your local electricity provider today to schedule an eScore home energy audit. And while you’re at it tell your local provider that you think TVA should adopt a 1% annual energy efficiency savings goal to promote a clean, modern and healthy Tennessee Valley.

If you’d like to help SACE keep up with what’s going on in your area you can do so by volunteering with SACE’s utility monitor network. Through this network we hope to gather occasional information regarding your experiences and communications with your utility to support us in being strong advocates for clean energy in Tennessee. Your assistance will ultimately help us improve public health and quality of life throughout the state.