SACE | Southern Alliance for Clean Energy
Energy Efficiency Resource Standard (EERS)
Leading businesses, industry groups and environmental advocates are urging Congress to enact a national Energy Efficiency Resource Standard (EERS) that will require electric and gas utilities to reduce demand by 15 and 10 percent respectively by 2020. In order to meet this standard, utilities would provide incentives and assistance to help customers make their homes and businesses more energy?efficient, utilizing programs including appliance standards, building codes, improvements to equipment, structures, local distribution systems and combined heat and power systems.
An aggressive national Energy Efficiency Resource Standard (EERS) will encourage innovation, lower utility bills for consumers & businesses, create new green jobs, reduce greenhouse gas emissions and boost the economy. States’ adoption of energy efficiency resource standards and their successes reinforce the value of implementing a national EERS. In 1999, Texas became the first of many states with an EERS; today, 25 states have efficiency standards.
Two Southeastern states have significant (but hardly aggressive) EERS policies. North Carolina’s policy is combined with renewable energy. Florida sets energy efficiency goals through an administrative process. States have the opportunity to achieve many of the same benefits of a national EERS policy using state-level EERS policies.
A national EERS does have the advantage of building an economy of scale and generating the full economic and employment impacts that are anticipated. State-by-state adoption can lead to lower in-state employment and economic activity since work is often outsourced. These impacts, as analyzed by ACEEE, are described below.
Direct Impacts of a National EERS
|State||Annual electricity savings (GWh)||Estimated peak demand savings (MWh)||Estimated peak demand savings (equivalent power plants)||Annual direct gas savings (TBtu)|
|8 SE States||117,820||37,893||126||70.0|
Benefits of a National EERS (2011-2020)
|State||Household energy needs met (equivalent number)||Energy savings ($millions)||Net jobs created||CO2 emission savings (MMT)|
|8 SE States||13,664,626||37,875||56,350||90.5|
A national Energy Efficiency Resource Standard will accelerate utility investment in energy-saving technologies, products, and practices by providing each major electricity and natural gas distributor with a simple and equitable target for achieving energy savings over a multi-year period.
In addition to the standard itself, other key features of an EERS include:
- Energy recycling, including combined heat and power, as a tool to achieve efficiency
- Credit for energy efficiency improvements within utility distribution systems
- Accountability for results with measurement and verification of energy savings
- Transparency in energy efficiency procurement
- Partnerships among utilities and third-party efficiency providers to achieve results
We recommend the establishment of a stand-alone Energy Efficiency Resource Standard that will achieve, by the end of 2020, annual electricity savings of 15 percent and annual natural gas savings of 10 percent, including savings from new building codes and equipment efficiency standards.
Working together to achieve energy efficiency
Even though energy efficiency is the cheapest, fastest, and cleanest energy resource, there are a variety of reasons why it is not being implemented as widely as it could be:
- Split incentives – This includes situations where one party (a tenant) pays the utility bills, and another party (the landlord) pays for equipment (refrigerators, for example), so there is no incentive for the landlord to spend more money on an energy-efficient refrigerator when the tenant is the one who will see the benefits of a lower electricity bill.
- Upfront costs and financing – Even though buying a highly efficient refrigerator or replacing all of the inefficient light bulbs in a home or office would save money in reduced energy costs, paying for these measures all at once or borrowing the money to do so is beyond the reach of some consumers and businesses.
- Lack of awareness – Many consumers and businesses underestimate their energy consumption and the environmental impacts associated with operating their appliances and equipment. They are often unaware that buying more efficient products can lead to energy and utility bill savings. Sometimes this problem is created by having to make a quick decision to replace an expensive, but critical appliance. Understandably, it is difficult to research and make the most cost-effective choice when the unexpected occurs.
- Limited availability of efficient products – Manufacturers often produce two versions of the same product line: one is a basic model that typically meets minimum efficiency standards while the other is a value-added model that includes improved efficiency and other extra, non-energy features at a significantly higher cost. Consumers who want improved efficiency without the extra features usually purchase the less efficient basic model to save money. What’s more, equipment distributors generally have limited storage space and tend to only stock equipment that is in high demand, so even those wishing to purchase energy-efficient equipment often are stuck with the inefficient selection.
Electric and gas utilities are responsible for meeting the EERS because they have the advantage of existing customer relationships and are uniquely positioned to help consumers realize the benefits of efficiency. Setting annual and cumulative targets helps utilities meet short-term goals and monitor progress. The initial savings targets start at modest levels, giving utilities in states without an existing EERS the opportunity to develop successful energy efficiency programs. As utilities gain experience, they are able to reach higher savings targets by eliminating programs that are not performing as anticipated and building programs that are successfully achieving savings by expanding into additional sectors.
Some states use a different approach, relying on a state or third-party organization to administer energy efficiency programs. Both utility-led energy efficiency and state administrators have demonstrated effectiveness in achieving energy savings, and are allowed under the proposed national EERS.
Energy efficiency reduces global warming pollution
Almost fifty percent of electricity in the United States comes from coal. As a national EERS cuts demand for electricity use, the amount of coal being burned at power plants is reduced. Less electricity use means less coal burned, which means less global warming pollution. According to ACEEE, a national EERS would eliminate the need for 390 coal-fired power plants and reduce CO2 emissions by 262 million metric tons in 2020.