Energy Efficiency and the State of the Union

In last week’s State of the Union address, President Obama stated that no area holds more promise than our investments in American energy.

In addition to calling for increased subsidies for wind and solar, speeding up oil and gas permits, and funding an Energy Security Trust, President Obama issued a goal for America to cut in half the energy wasted by our homes and businesses over the next 20 years.  In a blog post following the address, the American Council for an Energy-Efficient Economy wisely pointed out that “There’s a good reason why energy efficiency has broad support among business and legislators across the aisle, it’s one of the great cost saving success stories for the nation in the last three decades and still has large untapped potential.â€

There are currently multiple policies and programs contributing to energy efficiency, including federal and state minimum efficiency standards, state building energy codes, the ENERGY STAR program, tax credits and incentive-based consumer programs funded largely by utilities.  According to a recent study by the Lawrence Berkeley National Laboratory, spending on the latter is expected to increase from $4.8 billion in 2010 to between $6.5 and $15.6 billion by 2025.  To put the savings potential and economic impact from these types of programs in perspective, consider the success that New York state has had since implementing an aggressive EEPS in 2009.  According to the New York State Public Service Commission, 90 electric and gas efficiency programs have been approved since June of 2009.

Among all of those programs, one has risen to the top as the most successful in not only delivering megawatt hours, but stimulating the local economy: Small Business Direct Install.  In just over three years, SBDI programs operated by electric utilities in New York have generated 765 GWh, which translates into $250 million of investment in making 42,000 small businesses more energy efficient.  These businesses have received incentives which cover around two-thirds of this investment, as much as $165 million and these businesses have reduced their operating costs by more than $220 million per year.   Both the LBNL report and ACEEE’s newest study, Frontiers of Energy Efficiency, cite features of New York’s SBDI Programs as what is needed in ALL states if we are to meet our aggressive goals.  With New York having one of the most stringent reduction targets in the country, the overwhelming success of the SBDI model has proven that utility energy efficiency programs have a unique opportunity to deliver on President Obama’s challenge.

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