Energy Efficiency in States and Beyond

The first Wednesday in October, we celebrate Energy Efficiency Day to lift up a time-honored, though sometimes overlooked, energy resource. In all of its shapes and sizes, energy efficiency is a dependable and cost-effective way to reduce electricity and gas demand, provide innovative new solutions to consumers, and clean up the energy supply.

While it isn’t always obvious how energy efficiency improves our daily lives, our federal and state legislatures, public utility commissions, and independent grid operators are always working hard to strengthen and expand efforts to save energy. Here’s a quick rundown of some of the energy efficiency highlights from 2021 so far.

State legislatures across the country have been crafting new laws to increase energy efficiency efforts, though the approaches are as varied as the states themselves. Here, we name just a few 2021 bills that have already received a gubernatorial signature. New Jersey S3995 and Maine LD815 provide technical and financial support to upgrade the efficiency of grade school buildings, while Oregon HB2842 and Connecticut SB356 target efforts towards residences, with a focus on providing support to low-income owners and renters. Rhode Island S339, Maine LD940 and Nevada AB383 upgrade state appliance efficiency standards, while Colorado SB231 allocates public funds to weatherization efforts. Minnesota HF164 increases the state’s annual energy savings goals and calls for utility energy conservation plans, and Illinois SB2408 provides for new energy efficiency programs, especially for low-income residents, and stretch energy building codes. Nevada SB448 doubles the percentage of energy efficiency program dollars that must be invested in low-income and historically underserved communities.

The infrastructure legislation currently being debated by Congress also contains a range of investments in energy efficiency. The bipartisan bill passed by the Senate, the Infrastructure Investment and Jobs Act, provides energy efficiency funding for states and local governments through the State Energy Program, the Energy Efficiency and Conservation Block Grant Program, funding to implement updated building energy codes, and a new revolving loan fund for energy audits. It also provides funding for efficiency upgrades in public schools and nonprofits and for weatherization for low-income homeowners. And it provides funds to improve efficiency in the industrial sector and train the energy efficiency workforce. In addition, although the final text of the Build Back Better Act is still uncertain, it would also likely provide significant funding for energy efficiency programs. Taken together, the programs proposed in these bills represent a potential multibillion dollar federal investment in energy efficiency.

Many state public utility commissions oversee a fairly constant stream of utility proposals to invest in energy efficiency programs. While there has been no shortage of this work in 2021, at least three states have already made, or are in the process of making, fairly substantial policy changes related to energy efficiency. In California, regulators have just set new energy savings goals for electric and gas utilities (Docket No. R.13-11-005). In Michigan, the MI Power Grid Energy Waste Reduction Low Income Workgroup has been collaborating throughout the year to design programming that better addresses the health, comfort, safety, and energy burden of low-income residences. And finally, a new rulemaking in Colorado responds to recently passed legislation calling for strategic building electrification and natural gas utility plans that reduce the usage of the fuel and its carbon intensity through a myriad of strategies that include electrification and energy efficiency (Docket No. 21M-0395G). In the docket, the Commission will explore how energy savings targets, weatherization, insulation, and fuel-switching to high-efficiency electric appliances can reduce climate-warming emissions and minimize energy transition costs.

Finally, energy efficiency remains an important (if sometimes overlooked) factor in wholesale electricity markets. In PJM, recent improvements in load forecasting (including assumptions that rely on increases in energy efficiency) meant that customers had to buy less generating capacity to meet reliability needs, saving billions. In addition, in ISO New England, Midcontinent ISO, and PJM, energy efficiency resources (bundled energy efficiency projects that produce verifiable energy savings and reduce the need for generating capacity) can compete to meet reliability needs alongside traditional resources like power plants. Allowing energy efficiency to participate on the supply side of the electricity market has a number of benefits, including spurring innovative new projects that go beyond existing energy efficiency programs, such as consumer incentives to buy products that exceed efficiency standards or commercial and industrial process improvements that reduce electricity usage. PJM’s recent capacity auction to procure resources to meet reliability needs resulted in the purchase of over 4800 megawatts of energy efficiency resources, a sharp increase from previous auctions.

Whether it’s through legislation, a regulatory proceeding, or in competitive wholesale electricity markets, energy efficiency continues to be an important topic worth celebrating all across the country.