A new paper from the University of California, Berkeley and the University of Chicago garnered a little press this week and deserves a deeper dive. The paper makes a broad claim about demand-side management (DSM) program impacts based on a comprehensive study of program performance, with one hitch—the focus is exclusively low-income weatherization. One Forbes perspective came to the conclusion that “the study shatters a central orthodoxy in the rarified realm of energy and environmental policy. It suggests that energy efficiency is not necessarily a win-win solution for the environment and the economy. That suggestion is likely to influence future political debates over federal subsidies for energy efficiency.”
The authors have made a dramatic claim that falls short of the bigger picture on DSM program impacts. The paper states that “even when accounting for the broader societal benefits of energy efficiency investments, the costs still substantially outweigh the benefits; the average rate of return is approximately -9.5% annually.” Low-income programs have long had a special place in utility DSM projects as a public benefit and have been accepted as a part of the broader portfolio approach to energy efficiency by passing less stringent cost-effectiveness tests than other program types.
In fact, in an American Council for an Energy-Efficiency Economy (ACEEE) paper from 2014, this very issue was fleshed out. Low-income programs have faced distinct challenges from other energy efficiency programs but do not represent the overall cost and benefits of DSM as a whole. Let’s take a deeper look at recent utility program performance.
Here are the results from the most recent Energy Efficiency Evaluation Report for the state of California:
California Energy Savings for Statewide 2010-2012 Portfolio
(Source: California Public Utility Commission)
The report also states that the portfolio of energy efficiency activities for 2010-2012 was cost-effective, with every dollar invested in non-codes and standards energy efficiency returning $1.04.
Extrapolating the performance of one category of a utility energy efficiency program, in one state, from one study can mislead the public in understanding the macro-level impacts of energy efficiency as a whole. Maybe even more problematic is the threat of using this kind of academic assessment as fodder for the heating politics of energy policy in the United States. Let’s keep an honest focus on the big picture.
Tags: Building Innovations, CPUC, Demand Side Management, Energy Efficiency, Intelligent Building Management
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