The Cost of Saving Electricity by US Utility Efficiency Programs

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Counting All Costs, Berkeley Lab Researchers Find that Saving Energy Is Still Cheap

Lawrence Berkeley Lab, April 28, 2015. Image credit: gr8effect

Researchers at Lawrence Berkeley National Laboratory (Berkeley Lab) have conducted the most comprehensive study yet of the full cost of saving electricity by U.S. utility efficiency programs and now have an answer: 4.6 cents. That’s the average total cost of saving a kilowatt-hour in 20 states from 2009 to 2013, according to a Berkeley Lab report titled, The Total Cost of Saving Electricity Through Utility Customer-Funded Energy Efficiency Programs: Estimates at the National, State, Sector and Program Level, released today. To arrive at that average, researchers collected and analyzed several hundred regulatory documents filed in each state by utilities and other administrators of efficiency programs that are funded by utility customers.

Among the findings in the Berkeley Lab report released today:

  • Efficiency programs and participants have split the cost of saving electricity almost right down the middle—on average paying roughly 2.3 cents per kilowatt-hour each (see Figure 1).
  • The total cost of saved electricity was 3.3 cents per kWh in the residential sector in our sample of programs. Home lighting programs, with a cost of just 1.8 cents per kWh and accounting for nearly 60% of residential energy savings in the Berkeley Lab’s database, have helped drive costs down.
Graphic courtesy of Lawrence Berkeley Lab
Graphic courtesy of Lawrence Berkeley Lab
  • Commercial and industrial programs (C&I) delivered energy savings at a total cost averaging 5.5 cents per kWh. Prescriptive C&I rebate programs (4.5 cents per kWh) and custom C&I rebate programs (5.2 cents per kWh) account for more than 60 percent of the savings in the non-residential sector.
  • Utilities increasingly are turning to “home energy reports” mailed to households comparing their energy use with similar households, with motivational messages and customized tips to save energy. For these behavioral feedback programs, we found that the total cost of saved electricity averaged 5.7 cents per kilowatt hour, based in part on program administrators’ assumption that the energy savings last for one year. Recent studies suggest instead that the energy savings from behavioral changes may last longer. If savings were to last 3.9 years (a value recommended in a recent meta-analysis study), behavioral feedback programs would have saved electricity at a total cost of 1.7 cents per kWh.
  • Cost performance among program types varied more in the residential sector than in the non-residential sectors, with the inter-quartile range differing by a factor of three to five among various types of residential programs and by a factor of two for most types of non-residential programs.


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