[BETA] Fortnightly

Pending legislation, maturing energy-efficiency programs and lower avoided costs are severely limiting program administrators’ ability to acquire cost-effective efficiency resources to meet their portfolio goals. It’s time to look in new places for economic, long-term savings. Activity-based options in the industrial sector that revolve around continuous energy improvement would be a good starting point.

Where Have All the Savings Gone?

The Energy Independence and Security Act (EISA), signed into law on Dec. 19, 2007, is by many accounts the most sweeping energy-efficiency legislation ever enacted in the United States. Perhaps one of EISA’s most far-reaching provisions is the standard for efficient light bulbs under Subtitle B—Lighting Energy Efficiency, Section 321. The provision directs the Department of Energy to set performance standards for general service light bulbs with 25 to 30 percent savings compared to traditional incandescent bulbs, beginning in 2012. Once fully implemented, the act will essentially eliminate conventional 40-watt, 60-watt, 75-watt, and 100-watt screw-base incandescent light bulbs by 2020. The act sets equally dramatic energy-efficiency standards for weatherization and energy-using equipment and appliances.

According to a recent report by the American Council for an Energy Efficient Economy (ACEEE), EISA is expected to reduce energy consumption by 7 percent and greenhouse gas emissions by 9 percent from the forecast for 2030, and to save American consumers and businesses more than $400 billion through 2030.

EISA’s passage was therefore exciting news to everyone interested in energy efficiency and its contribution to reducing greenhouse gas emissions. But the reaction among some ratepayer-funded energy-efficiency program administrators was somewhat less enthusiastic. For years, program administrators have relied on low-cost, easy-to-deploy measures in a few end-uses where deep inefficiencies created a vast reservoir of conservation potential. EISA’s high efficiency standards, once implemented, would severely constrain this potential.

Currently, energy efficiency performance standards (EERS) are in effect in 26 states. In 21 of these states, annual savings targets are set at 1 percent or more of retail sales between 2009 and 2020, and several include non-performance penalties. In states such as Vermont, New York, Maryland, Massachusetts, and Rhode Island, the targets are set at 2.5 percent or higher. Progress toward meeting energy efficiency goals so far has been encouraging. As a recent study by ACEEE reports, 13 of the 20 states with EERS in place for two or more years reached or surpassed their targets in 2010. Nine of these states achieved savings of 1.2 percent or higher in 2010.

But, as the authors of the ACEEE study reckon, the hard work is yet to come. Acquiring savings at the current rate will become more difficult as the early adopter markets for energy-efficient equipment are saturated, and low-cost savings are exhausted. With much of the existing savings potential in line to be captured, the EISA legislation will further aggravate the situation by raising the bar higher. To make matters worse,