The Sustainability and Costs of Increasing Efficiency Impacts: Evidence from Experience to Date

Kenji Takahashi and David Nichols, Synapse Energy Economics

Keywords

Abstract

As interest in increasing the scale of electric energy efficiency programs grows, one question is whether such programs can achieve and sustain high levels of impact. Another question is how the unit cost of saved energy (CSE) for overall portfolios of programs may change as program scale increases. To see what light experience casts on these questions, data covering program performance for numerous jurisdictions and years were collected.

A more complex question concerns CSE. One view is that CSE should increase as more of the energy savings potential is tapped. Steady-state analysis can readily arrange technologies on a "conservation supply curve" of increasing costs per unit of saved energy. Alternatively, CSE may not increase in this way given innovation, economies of scale, and learning curves. To analyze how CSE changes in practice as the scale of programs increases, we analyzed CSE for several programs in different regions that have pursued energy efficiency on a comprehensive basis.

This analysis of actual program CSE finds that program CSE seems to decrease as program scale and impact grows. Of course, program CSE fluctuates due to many factors such as year, utility, and program type and size. Analysis of factors contributing to decreases or increases in CSE is underway.