Should policy-makers allocate funding to vehicle electrification or end-use energy efficiency as a strategy for climate change mitigation and energy reductions? Rethinking electric utilities efficiency programs

In order to reduce greenhouse gas emissions in the United States by an order of magnitude, a portfolio of mitigation strategies is needed. Currently, many utilities pursue energy efficiency programs. We study a case where utilities could choose whether to allocate their energy efficiency budget to either end-use efficiency or vehicle electrification as a means to reduce CO₂ emissions. We build a decision space that displays the conditions under which utilities should pursue either strategy. To build such decision space, assumptions are needed on how consumers respond to electric vehicle incentives, and what would be the baseline vehicle selected by consumers if no incentives were in place. Since these two aspects are highly uncertain, we treat them parametrically: if consumers are replacing a conventional vehicle with a PHEV, utility incentive programs to induce PHEV adoption appear to be cost-effective for a wide range of efficiency program costs and grid emissions factors.     

How competition might affect electric-utility DSM programs

This paper discusses competition in the electricity industry and how it might affect utility DSM programs. The roles that state regulatory commissions could play to affect retail competition and DSM programs are examined. Commissions could set exit or reentry fees for customers who want to buy electricity from an entity other than the local utility. Or they could ‘tax’ the use of the local distribution system to discourage uneconomic wheeling and to pay for DSM programs. The effects of DSM programs on retail electricity prices and how utilities might redesign their DSM programs for a more competitive environment are considered. In the future, utility DSM programs may

1. (1) focus more on customer service and less on system-resource benefits,

2. (2) emphasize capacity reductions more and energy savings less as utilities seek to minimize the lost revenues associated with DSM,

3. (3) become more cost-effective as utilities identify better ways to deliver DSM services at lower cost, and

4. (4) involve fewer inter- and intraclass transfers as utilities increasingly have individual customers pay for their own DSM services. While DSM programs in the future may be different from what they are today, they will continue to be important to utilities as powerful marketing tools and to society because of their environmental and economic-productivity benefits.

     

RESIDENTIAL PHOTOVOLTAICS APPLICATIONS: THE RELEVANCE OF NON-TECHNICAL ISSUES

This work investigates the relevance of non-technical issues of PV systems in residential applications. The points of view of different groups - consumers, utilities, society, and others (e.g. architects) - are taken into account. Each group may have different benefits and different costs. Of major interest is what influences consumers' willingness-to-pay (WTP) for PV systems. This argues that technical reliability, environmental benignness, affordability, and other non-technical issues are more important than simplified economic assessments using “artificial” interest rates. Therefore, progress has to be made with respect to (i) further reduction in investment costs especially Tor non-module cost components; (ii) an enhancement of technical reliability and system efficiency, and (iii) system standardization, e.g. module-integrated inverters. The most important conclusion is thai governments, municipalities, utilities, and others like NGOs should offer joint and coordinated programs. Then the overall effect could lead to a cost reduction as well as to a removal of other barriers and to an increase in the motivation of consumers to purchase a PV system.     

Context analysis for a new regulatory model for electric utilities in Brazil

This article examines what would have to change in the Brazilian regulatory framework in order to make utilities profit from energy efficiency and the integration of resources, instead of doing so from traditional consumption growth, as it happens at present. We argue that the Brazilian integrated electric sector resembles a common-pool resources problem, and as such it should incorporate, in addition to the centralized operation for power dispatch already in place, demand side management, behavioral strategies, and smart grids, attained through a new business and regulatory model for utilities. The paper proposes several measures to attain a more sustainable and productive electricity distribution industry: decoupling revenues from volumetric sales through a fixed maximum load fee, which would completely offset current disincentives for energy efficiency; the creation of a market for negawatts (saved megawatts) using the current Brazilian mechanism of public auctions for the acquisition of wholesale energy; and the integration of technologies, especially through the growth of unregulated products and services. Through these measures, we believe that Brazil could improve both energy security and overall sustainability of its power sector in the long run.     

Saving megabucks by saving megawatts

Investment in energy conservation frequently provides better rates of return than investment in energy supply. The notion that energy conservation investments can be evaluated as an alternative to an expansion or indeed replacement of energy saving investment may appear at first sight novel, even contradictory. However, utility customers do not require electricity or gas per se, but rather they require energy services: heat, light, mechanical power etc; these can be met by the combination of supply expansion or demand reduction, whichever meets their needs for energy at the lowest possible cost to society. This can come not only from new power supply sources but equally from energy efficiency investments actively encouraged by the utility itself. Economic theory says that in competitive markets utilities will themselves take the correct ‘least cost resource acquisition’ decision, but economic theory and practice differ.     

Evolution of Hungarian residential energy efficiency support programmes: road to and operation under the Green Investment Scheme

The residential sector is the largest final energy consumer and is responsible for 30% of total carbon dioxide emissions in Hungary. In order to address the general poor condition of the building stock and resulting inefficiency in energy use, from 1990 onwards, the government and local authorities initiated energy efficiency support programmes in the residential buildings sector. Furthermore, technical assistance and loan guarantee schemes by the International Finance Corporation (IFC) helped to establish a market for financing energy efficiency investments. EU funds also played a role in the modernisation of non-residential buildings. Residential energy efficiency support programmes entered a new phase in 2009 with the start of the Green Investment Scheme (GIS). While Hungary was a front-runner in establishing the legal framework for GIS, the success of early AAU sales (the financing source of the scheme) were overshadowed by reputation concerns in terms of additionality and the disbursement of funds. At the same time the GIS brought with it improved environmental integrity compared to earlier programmes in terms of monitoring and verification of results, establishing a focus on GHG emission reductions in addition to energy savings, and introducing incentives for deeper refurbishment. The aim of the paper is to provide an overview of the evolution of energy efficiency support programmes for residential buildings in the Hungarian context, pointing out prevailing problematic elements, as well as areas of improvement and good practice.     

Efficient technologies or user behaviour, which is the more important when reducing households’ energy consumption?

Much policy effort focuses on energy efficiency of technology, though not only efficiency but also user behaviour is an important factor influencing the amount of consumed energy. This paper explores to what extent energy efficiency of appliances and houses or user behaviour is the more important, both for understanding why some households consume much more energy than others, and when looking for relevant approaches to a future low-carbon society. The paper uses several sources to explore this question, most of them from a Danish context, including results from the researcher’s own projects and Danish national statistics. These Danish data are discussed together with international studies. Through the presentation of these different projects and examples, it is shown how user behaviour is at least as important as the efficiency of technology when explaining households’ energy consumption in Denmark. In the conclusion, these results are discussed in a broader international perspective and it is concluded that more research in this field is necessary. In relation to energy policy, it is argued that it is not a question of technology efficiency or behaviour, as both have to be included in future policy if energy demand is actually to be reduced. Furthermore, it is also argued that not only individual behaviour is relevant, but also a broader perspective on collectively shared low-carbon practices has to be promoted.     

The impact of informational feedback on energy consumption—A survey of the experimental evidence

In theory, In-Home Displays (IHDs) can revolutionize the way utilities communicate information to customers because they can induce changes in customer behavior even when they are not accompanied by a change in electric prices or rebates for purchasing efficient equipment. IHDs provide consumers with direct feedback—real-time information on energy consumption and costs—and turn a once opaque and static electric bill into a transparent, dynamic, and controllable process. However, to what extent do consumers actually respond to the direct feedback provided by IHDs?     

Compressed air system best practice programmes: What needs to change to secure long-term energy savings for New Zealand?

The establishment of a compressed air system (CAS) best practice programme is a key component of one of the initial industrial energy efficiency programmes being driven by New Zealand government ministries and agencies. In a global context this is not a new initiative in that existing programmes have been functioning in Europe and USA, yet in each of these cases the impact ten years-on has been patchy with limited long-term improvements in overall energy efficiency. The New Zealand CAS best practice programme currently under development is sponsored by the Electricity Commission (EC) and the Energy Efficiency Conservation Authority (EECA). It takes a new approach in policy direction, with variations from those used in other international programmes. A significant level of electricity levy money is to be committed to this programme and it is timely to highlight its merits and potential weaknesses, and what is required to generate long-term energy savings beyond the levels achieved by more mature overseas programmes.     

Energy performance based connection fees : A case study in New York State

Energy connection fees and rebates, based on the projected energy load or efficiency of new buildings are currently being considered as a policy option for promoting greater energy efficiency in new construction. In theory, a well designed system of connection fees and rebates could provide states and utilities with a revenue neutral means of creating direct financial incentives for the construction of more energy-efficient buildings. However, a recent case study in New York State found that, in practice, many of the most important features affecting building energy efficiency could not be easily incorporated in connection fee programmes, and that implementation of even a scaled down programme would require a level of administrative commitment and resources which would be difficult to maintain. Instead of implementing connection fee programmes, the authors recommend devoting more resources to an approach based on the combined use of building energy rating systems, enhanced codes with better enforcement, and strategically placed financial incentives and design assistance.     

Why some electricity utilities actively promote energy efficiency while others do not—a Swiss case study

Electricity utilities are key players for promoting energy efficiency (EE) because of their close link to consumers. Utility-centered EE policy frameworks, such as white certificate schemes coupled to saving obligations, have been shown to be both effective and efficient in several US states and various European countries. In Switzerland, where such a policy framework is absent on a national level, large differences occur among utility providers in their activities to promote EE. This study sheds light on this issue, using data from a survey of Swiss utilities (N?=?114). A two-step cluster analysis was used to identify three groups of utilities. It is based on these utilities’ evaluation of 20 incentives and constraints for promoting EE. An analysis of variance found significant differences between the clusters regarding size (number of employees), share of production, number of large clients, and—most importantly—level of activity in implementing EE programs. The most active cluster comprises mainly larger utility companies, which primarily see the incentives of promoting EE. The passive cluster consists of small companies, focusing primarily on constraints. There is also an ambivalent cluster. It includes middle-sized companies, which see both clear incentives and many constraints – mainly a lack of human and capital resources—for engaging in EE. Based on our analysis, we conclude that due to the large heterogeneity of Swiss utilities, there is a need for contextualized policies targeting different types of utilities in order to effectively promote EE.     

Anatomy of a sub-tropical Positive Energy Home (PEH)

Zero energy buildings (ZEB) and zero energy homes (ZEH) are a current hot topic globally for policy makers (what are the benefits and costs), designers (how do we design them), the construction industry (can we build them), marketing (will consumers buy them) and researchers (do they work and what are the implications). This paper presents initial findings from actual measured data from a 9 star (as built), off-ground detached family home constructed in south-east Queensland in 2008. The integrated systems approach to the design of the house is analysed in each of its three main goals: maximising the thermal performance of the building envelope, minimising energy demand whilst maintaining energy service levels, and implementing a multi-pronged low carbon approach to energy supply. The performance outcomes of each of these stages are evaluated against definitions of net zero carbon/net zero emissions (site and source) and net zero energy (onsite generation vs primary energy imports). The paper will conclude with a summary of the multiple benefits of combining very high efficiency building envelopes with diverse energy management strategies: a robustness, resilience, affordability and autonomy not generally seen in housing.     

Assessing the technical and economic performance of building integrated photovoltaics and their value to the GCC society

This paper assesses the technical and economic performance of PV technology integrated into residential buildings in the Gulf Cooperation Council (GCC) countries. It highlights the value of PV electricity for the GCC society from the perspective of consumers, utilities and environment. Through a systematic modelling analysis it is shown that the efficiency of PV system drops by 4–6% due to high range of module temperature and also a change in power output due to high ambient temperatures. Consequently, the outputs of horizontal and vertical PV modules are found to be less than estimates based on standard test conditions. Economically, this study shows that building integrated photovoltaic (BIPV) systems are not viable in GCC countries and cannot compete with conventional electricity sources on a unit cost basis. From a society point of view, however, the integration of PV technology into buildings would have several benefits for the GCC countries, including: first, savings in capital cost due to central power plants and transmission and distribution processes; second, an increase in the exported oil and natural gas used for electricity generation; and third, a reduction in the CO₂ emissions from conventional power plants. When these considerations are taken into account then BIPV should become a feasible technology in GCC countries.     

Local government influence on energy conservation ambitions in existing housing sites—Plucking the low-hanging fruit?

Greater energy efficiency can be achieved in existing dwellings thanks to longer lifecycles, slow replacement rates, and technical innovations. Many such dwellings are located in dense urban neighbourhoods, where urban renewal projects are undertaken. Local government can encourage the setting of ambitious goals as a stepping stone to realizing energy efficiency goals that achieve high levels of energy efficiency. The research question which this paper addresses is: to what degree do local governments influence ambitions to conserve energy in existing housing sites? To examine this issue, thirty-three sites in the Netherlands were studied using a quantitative analysis. The results show that collaboration between local authorities and local actors increases the level of ambition to conserve energy. However, local authorities intentionally selected sites with poor energy efficiency, so it would be easy to meet ambitious energy conservation targets. Collaboration between local authorities and local actors turns out to be the key factor in selecting those sites. Moreover, there is little sign of genuine ambition. This article contributes to the debate on energy conservation policies in local housing sites. The study provides starting points for systematic, empirical research into the realisation of energy conservation in existing housing, especially in large-scale refurbishment projects.     

Unintended outcomes of electricity smart-metering: trading-off consumption and investment behaviour

Smart-metering allows electricity utilities to provide consumers with better information on their energy usage and to apply time-of-use pricing. These measures have been shown to reduce electricity consumption and induce time-shifting of demand. Less is known about how they affect residential energy efficiency investment behaviour. We use data from a randomised-controlled trial on a sample of almost 2500 Irish consumers, conducted over a 12-month period to investigate the effect of smart-metering and residential feedback on household investment behaviour. The results show that exposure to time-of-use pricing and information stimuli, while reducing overall and peak usage, can also have the unintended effect of reducing investment in energy efficiency measures within the home. Our findings indicate that households exposed to treatment were less likely to adopt any energy saving measure (23–28 % on average), and those households adopted less energy saving features than those in the control group (15–21 % on average). This result highlights the potential for behavioural interventions to have unintended consequences on behaviours other than those specifically targeted. Furthermore, it underlines the importance of examining a wider range of outcomes and allowing longer time-scales when evaluating this type of experiment.     

Ensuring market supply and penetration of efficient lighting technologies

Lighting is one of the major uses of electricity. State-of-the-art lighting systems can increase efficiency and reduce energy demand, but substantial market barriers hamper market penetration. In recognition of these market realities, electric utilities and government agencies in several IEA-member countries have begun to focus their efforts on demand-side oriented activities, such as light bulb give-aways, audits, education, standards promulgation, and other programmes. For example, in the U.S. the shipment of compact fluorescent lamps almost doubled between 1988 and 1990 and is forecast to increase by about 280% between 1991 and 1995. We project that annual utility spending on incentives for efficient lighting will grow to ~$300 to 800 million by 1994. These campaigns can also result in temporary supply short-ages, which can in turn impede successful implementation of the programmes. Efforts to address the problem must begin by enhancing cooperation and information exchange among utilities, manufacturers, and customers.     

The peculiar economics of federal energy management

US federal agency energy managers face different constraints than do comparable private sector managers. They are faced with energy consumption goals mandated via legislation or directed via Presidential Executive Order that encourage if not compel them to invest more in energy efficiency or renewables than would be cost effective from a private sector perspective. To make such investments, they also are provided access to private capital that is additional to their agency budgets. The encouragement to invest beyond what is cost effective may be a source of waste in some instances, and the financing mechanisms appear more expensive than necessary. A rough estimate of the magnitude of the waste is offered, as well as a mechanism to reduce the costs of agency access to capital.     

The energy and monetary implications of the ‘24/7’ ‘always on’ society

This paper reviews the trends in society, technology and energy demand of the past 30 years, together with the growth of the ‘on-demand’ culture. The ‘24/7’ or ‘always on’ society can be defined as one where people demand—and generally receive—what they want ‘now’. It has grown up in parallel with developments in information technology, which have produced the services needed to meet that demand. Larger numbers of appliances, resulting from greater affluence and disposable income, have increased energy use, despite energy efficiencies in other areas. While monetary factors suggest that changes brought about by the 24/7 society will generally be self-correcting at the macro-economic level, there will nevertheless be effects for individuals, such as potentially severe impacts on the fuel poor as electricity prices rise.     

Wind,hydro or mixed renewable energy source: Preference for electricity products when the share of renewable energy increases

While the share of renewable energy, especially wind power, increases in the energy mix, the risk of temporary energy shortage increases as well. Thus, it is important to understand consumers' preference for the renewable energy towards the continuous growing renewable energy society. We use a discrete choice experiment to infer consumers' preferences when the share of renewable energy increases. The study results indicate that consumers are generally willing to pay extra for an increasing share of renewable energy, but the renewable energy should come from a mixture of renewable energy sources. We also found that consumers prefer to trade with their current supplier rather than another well-known supplier. This study contributes to the energy portfolio theories and the theory of energy diversification in a consumer perspective. The managerial implications of this study are also discussed.     

White certificates — Energy efficiency programs under private information of consumers

Energy efficiency is an objective of public interventions at least since the Public Utility Regulatory Policy Act of 1978 (PURPA). Recently, conservation has received considerable attention in the United States and in particular in the European Union but this time in order to mitigate global warming. Policy measures include regulations at the technical level and the introduction of white certificates in order to force utilities and firms to invest into conservation in a way similar to the already existing renewable energy quota. This paper derives the optimal mechanism if utilities must deal with white certificates facing consumers holding private information. The optimal mechanism has some theoretically interesting features like restricted participation and a discontinuity.