Energy Efficiency Blog

New ACEEE report finds that states are successfully meeting their EERS energy efficiency targets

The American Council for an Energy-Efficient Economy (ACEEE) just released a report in June finding that states in general are having great success in meeting the goals of their Energy Efficiency Resource Standards (EERS) (report link).

An EERS standard, in its broadest sense, is simply a requirement for a utility to reduce energy usage by a certain amount over a certain period of time.  An EERS standard typically either specifies an amount of energy usage reduction per year (e.g., Massachusetts’ 2.0% in 2011 and 2.4% in 2012) or over a longer period of time (e.g., New York’s requirement for a cumulative 15% reduction from forecast levels by 2015).  The states with the highest EERS electric annual savings goals are Massachusetts, Vermont, Arizona, Illinois, and New York.

Twenty-six states have now adopted an EERS in one form or another, meaning specific energy efficiency programs are in place in the majority of states in America.  There has been some movement for a national EERS, but with the current gridlock in Washington, a national EERS does not seem to be likely soon.  In the meantime, the majority of states are pulling their weight on implementing energy efficiency programs.

The advantage of these energy efficiency programs is that for the relatively low cost of 2.5-3.0 cents per kilowatt, the need can be eliminated for building additional power generation facilities that typically cost more than twice as much as energy efficiency efforts, thus saving all electricity ratepayers money.  In addition, energy efficiency programs reduce peak demand, grid congestion, pollution, and greenhouse gas emissions.

The ACEEE study found that an impressive nine states achieved energy savings of at least 1.2% of annual sales in their latest reporting year of either 2009 or 2010.  Just five years ago, only one state was able to save 1.2% in electricity costs.

While annual energy savings goals of 1% or 2% may not seem like much, those savings are sufficient to add up to big numbers after compounding those annual savings figures over a decade. For example, six states already have EERS programs that should produce an overall drop of 20% or more in electricity usage by 2020.  Vermont, Maryland and New York, for example, all have programs that are designed to reduce electricity usage by an overall 27% by 2020.

Measured against targets, the ACEEE study found that 13 of the 20 states with EERS programs in place for at least two years are achieving 100% or more of their goals, 3 states are achieving more than 90% of their goals, and only 3 states are realizing savings below 80% of their goals.  North Carolina has not measured its electricity savings and ACEEE, therefore, had to exclude them from the results.  The bottom line is that more than three-quarters of states are achieving 90% or more of their EERS savings goals, which is an impressive outcome.

ACEEE points out, however, that states have benefitted so far from plucking the low-hanging fruit and that the process will get more difficult as savings goals rise and as deeper penetration is needed to find energy efficiency projects.  Moreover, ACEEE notes that some states such as Massachusetts and Minnesota are in the midst of major program ramp-ups and have therefore fallen slightly behind their savings goals.

ACEEE also notes that where there is a multi-year target, there is a tendency for savings to be low early in the period and then for savings to catch up towards the end as the programs attain full steam.  This has been the problem in the two states, New York and Maryland, which have achieved less than 80% of their savings goals so far.  ACEEE found that there is confidence that New York will be able to catch up and hit its 15% savings goal by 2015, but ACEEE says that Maryland is unlikely to meet its long-term goals because the Maryland public service commission has not approved utility targets or funding sufficient to meet the goals.

In discussing success factors in EERS programs, ACEEE notes that regulation by itself cannot assure the success of an EERS efficiency program and that success actually depends on execution by the utility, third-party administrators, and program implementers.  Lime Energy, as a program implementer for EERS energy efficiency programs, has found from its own experience that there is a wide range of competence levels among energy management companies that are tasked with marketing and implementing the energy efficiency programs to electricity customers.  There are many capabilities that are needed for success such as program marketing, facility auditing, project development, energy engineering, material procurement, database administration, and project installation.

Lime Energy provides an example of a firm that has repeatedly demonstrated its success in meeting and exceeding energy efficiency goals for a number of different energy efficiency programs in multiple states.  For example, in Lime’s engagement with National Grid in western New York, Lime is in the process of carrying out a $32 million program at over 4,000 customer facilities (see success story fact sheet).  Lime has thus far delivered 122% of its savings goal to National Grid, thus helping the utility meet its EERS requirements and helping the state of New York meet its overall goal of reducing electricity usage by 15% by 2015.

The bottom line is that state law and regulators can issue mandates about how much energy needs to be saved, but at the end of the day, it is the people and the companies on the ground that make or break an EERS program.