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Energy Efficiency Mirage

July 4, 2014

It’s fair to say that it’s possible to improve energy efficiency, but it’s also fair to say that improved energy efficiency usually comes at a cost.

It’s the costs that organizations promoting energy efficiency like to ignore.

Automobiles have improved their energy efficiency, but at the cost of higher prices and smaller cars … and some will say, safety.

This article will deal with savings on the use of electricity, as this is a major component of the EPA’s proposed regulations for cutting CO2 emissions(1).

At the outset, it’s important to distinguish between improving efficiency, and not using electricity.

Organizations, such as the American Council for an Energy-Efficient Economy (ACEEE), promote setting thermostats higher, e.g., 78 degrees, in the summer, and lower, e.g., 68 degrees in the winter.

This does not improve efficiency, it reduces the use of electricity … and imposes a lower standard of living on people.

The ACEEE is one of the most egregious proponents of energy efficiency.

My article, Calling For Government Mandates, describes in detail why the ACEEE’s reports are so misguided, and misleading. The ACEEE, for example, ranked China’s residential segment as being among the most efficient in the world, with the United States ranked near the bottom. See Calling for Government Mandates

Having been to China, I know from first hand experience that China’s residential sector is not only less efficient, but also provides a much lower standard of living.

Clearly the ACEEE has a distorted view of America, yet the EPA adopted the ACEEE’s views to justify one aspect of its proposed regulations for cutting CO2 emissions.

Improving energy efficiency is a worthwhile goal, providing it’s done while keeping costs and living standards in mind.

LEDs for lighting use less electricity, while providing the same amount of light as the incandescent bulbs it replaces.

LEDs improve efficiency.

But even LEDs come at a cost. It costs around $12 for a 60-watt LED lamp as opposed to 60 cents for a comparable 60-watt incandescent bulb. The 100-watt LED lamp costs even more.

If a 100-watt LED cost $18 and a 100-watt incandescent cost 70 cents, and the LED replaces an incandescent bulb that burns 4 hours per day, it would only require about 14 months to recover the higher cost.

A 14-month payback is reasonable, but if the incandescent bulb only burns 15 minutes each day, such as in a closet, the payback would be 19 years, which is an unreasonable payback, and a bad use of financial resources.

 

Replica of 1879 Edison bulb used by GE at its 100th anniversary, alongside a modern LED lamp.

Replica of 1879 Edison bulb used by GE at its 100th anniversary, alongside a modern LED lamp.
Pat Hingle played Edison at commemorative dinners around the country.

Many other so-called proposals for improving energy efficiency also cost a great deal and are bad investments.

As mentioned in an earlier article, replacing all the windows in a moderately sized home will cost around $25,000 while only saving small amounts of electricity and heat.

Here’s what DOE’s Pacific Northwest National Laboratory (PNNL) says about triple pane windows it has used in its studies:

“It would take 23 to 55 years to save enough on a utility bill to cover the higher cost of the windows, based on national electricity costs.”

Obviously, replacing windows in an existing home with energy efficient windows is a bad idea, but is one of the alternatives for lowering CO2 emissions.

Improving energy efficiency can be worthwhile, but not if the costs are exorbitant.

Not only can the costs for improved efficiency be exorbitant, but the aim of demand response, as proposed by the EPA, is to force people to change their behavior.

Changing people’s behavior is when Big Government becomes intrusive.

Here is how one utility is approaching the issue of cutting CO2 emissions.

Their spokesman said, “Seattle City Light is committed to remaining a carbon neutral utility(2).”
“[ The plan is to] Capture savings through residential customer behavior change, and drive participation in our new whole home weatherization rebate program(3).”

It’s worth noting that the weatherization rebate program will result in higher electric rates, since the utility must recover the costs of subsidizing the program. The program cannot be justified on purely economic grounds since the return on investment is pitiful.

An advocate on Fox News said people can take cold showers to lower their electric bills.

Gina McCarthy, EPA Administrator, said that the proposed new regulations will save people money. If the program forces people to use less electricity with resulting lower living standards, she may be right.

But the chances are that higher electricity rates from the proposed regulations will result in higher electric bills, as well as lower living standards(4).

Forcing people to use less electricity does not result in improved energy efficiency, while forcing people to spend money to achieve improvements in efficiency without a fair return on their investment, deprives people of having an opportunity to invest where they want, e.g., on education, or medical bills, or food.

That’s something to think about on this Independence Day.

And, that’s not good for America.

 

Notes:

  1. Building Block # 4: “Reducing emissions from affected EGUs in the amount that results from the use of demand-side energy efficiency that reduces the amount of generation required”.
  2. From IntelligentUtility, Utility2Utility series.
  3. Ibid
  4. Replacing low cost electricity with high cost electricity from wind and solar will increase electric bills for consumers and industry.

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4 Comments leave one →
  1. donb permalink
    July 4, 2014 1:30 pm

    A valuable perspective.

  2. July 4, 2014 1:35 pm

    Thanks for your comment.

  3. kakatoa permalink
    July 5, 2014 12:06 pm

    Morning Donn,

    Yes a few assumptions have been made in regards to how quickly decision makers, be they homeowners, commercial property owners or industrial organizations are willing to invest in energy efficiency efforts. A cornerstone, one of the wedges, of the mitigation efforts to meet CA’s AB 32 carbon dioxide reduction goal are EE efforts.

    We are trying to quantify how effective our efforts are to our CO2 reduction goals out here in CA- a very good idea as long as the administrative efforts don’t swamp out all the benefits. Our public purpose funds- collected from Non-Care electrical and natural gas rate payers historically, are used to encourage EE efforts via various programs.

    An energy audit is a critical piece of the puzzle as they are required to access the free money, make that rebates, being made available for targeted home EE efforts. A couple of the specifics about how we are putting EE efforts (programs, incentives etc.) as a higher priority than our self-generation-SGIP- programs are codified in this document-

    http://www.cpuc.ca.gov/NR/rdonlyres/0DDABA86-9DF1-41C7-AD08-FF5B255155FA/0/2013_SGIP_Handbook_v1.pdf

    See page 22 which states this:

    4. Energy Efficiency Audit (All Projects)
    An Energy Efficiency Audit (EEA) report issued within the last 5 years identifying the payback periods for all prescribed measures should be submitted. EEA reports must be issued by utility, PA, or qualified vendor/consultant. Any measures identified with a payback period of two years or less must be implemented prior to receipt of the upfront incentive payment. Implementation of the required measures will be verified during the field verification visit.

    A Title 24 energy efficiency compliance report issued within the past three (3) years may also be used in lieu of an Energy Efficiency Audit. To verify that the requirements have been met, a copy of theTitle 24 building permit documentation should be submitted.”

    Your concern about how cost effective our programs are being addressed now as the EE auditors have to calculate:
    1)how much energy any recommended upgrade will save the homeowner (ie the kWh’s).

    2) The value of the saved kWh’s for the site specific location is needed in order to determine ROI’s. Figuring out the value proposition is not an easy effort out here in CA- as we have a rather complicated set of rate schedules for the various service providers. I HOPE the calculations of the economic benefits are done with specific rate schedule information for the specific services provider and not an AVERAGE statewide kWh metric…. As the SD (vs X bar) in the state for what any particular kWh costs a customer is rather huge.

    As has been reported in the news of late our EE programs have not meet their expected goals- that is not very many people have been willing to fork out their capital for EE efforts even with the targeted rebate monies to soften the blow.

    A rebranding effort for CA’s energy efficiency efforts is underway:

    “Ogilvy PR West began work in mid-February 2014 to provide public relations services to Energy Upgrade California for a re-branding assignment. A cross-practice Ogilvy PR team is helping transform Energy Upgrade California to become a comprehensive umbrella brand for energy management solutions, new energy saving behaviors and, importantly, enhance California’s leadership in helping to fight climate change and making the air clean and the environment healthy and sustainable.”

    https://ca.finance.yahoo.com/news/energy-upgrade-california-selects-ogilvy-214400064.html

    “Energy Upgrade California’s new brand position will have a significant impact and generate understanding, engagement and behavior change in how Californians use and manage energy,” said Nathan Friedman, regional managing director, Ogilvy PR West. “We’re excited to partner with Energy Upgrade California and utilize the agency’s extensive background in energy, social marketing and public affairs to create lasting behavior change.”

    These changes to the programs are in response to folks not signing up for any improvements as noted here:

    http://www.greentechmedia.com/articles/read/californias-efficiency-program-struggles-to-gain-traction

    Sorry for the length of this…..

  4. July 5, 2014 1:19 pm

    Thanks for taking the time to make the comment. It’s very instructive.
    The headline of the article from the last link sums up the probleml: “The state [CA] has achieved only one-tenth of its efficiency retrofit goals so far.”

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