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New Data, Same Results: Saving Energy Is Still Cheaper Than Making Energy

Keeping the lights on for customers is every electric utility’s top priority. To do so, utilities have choices. They can build power plants to convert fossil fuels to energy. They can capture renewable resources like solar and wind. And they can work with their customers to more efficiently use energy, meeting demand by saving energy rather than generating it.

ACEEE research has shown a dramatic growth in energy efficiency’s role in the electric sector. We estimate that today it’s the United States’ third largest electricity resource – contributing more to our grid than nuclear power. But it’s not just one of our most common resources, it’s also typically the lowest-cost way to meet customers’ energy needs. New data by Lazard on levelized costs of electricity supply resources released in November 2017 confirms that by helping customers install efficient appliances, insulate their homes and buildings, and refine operations and maintenance practices, utilities are still investing in the lowest-cost energy resource out there.

Levelized Cost of Electricity Resources

Energy efficiency investments aimed at reducing energy waste cost utilities two to five cents per kilowatt hour (an average of about three cents), while generating the same amount of electricity from sources such as fossil fuels can cost two to three times more. It isn’t a surprising result that energy efficiency continues to stack up as the lowest-cost resource. Recent research from ACEEE found that even among utilities achieving the highest levels of electricity savings from efficiency, the cost of saved energy has remained consistently low. Lawrence Berkeley National Laboratory (LBNL) has found similar results.

Investments in energy efficiency can have a big effect. In fact, the investments we’ve made in energy efficiency between 1990 and today have helped us to avoid building the equivalent of 313 large power plants and have delivered cumulative savings of nearly $790 billion to customers across the country.

Energy efficiency has a host of other benefits, too. It’s clean, readily available, and reliable. It can increase comfort in homes and offices, and spur economic development in cities and towns. Utilities that invest in energy efficiency do so because it makes financial sense for them, but the payoffs accrue to everyone.

For more on the cost of energy efficiency, see ACEEE research including The Best Value for America’s Energy Dollar: A National Review of the Cost of Utility Energy Efficiency Programs and Big Savers: Experiences and Recent History of Program Administrators Achieving High Levels of Electric Savings.

By Annie Gilleo, Senior Manager, State Policy

Original Post

Content Discussion

Bob Meinetz's picture
Bob Meinetz on December 6, 2017

Annie, among all the entrepreneurs promoting energy efficiency as though it were something of substance, I have yet to find one with a background in physics or engineering.

If they exist, they likely recognize the senseless, false-equivalence of comparing a ratio (efficiency) to a quantity (energy). Though they no doubt recognize there’s financial value in this misrepresentation, selling snake oil has never been a particularly responsible way to solve a problem.

Thorkil Soee's picture
Thorkil Soee on December 6, 2017

On the graph you see price of nuclear as 12-18 cents/kWh
May be you can find it “somewhere” in the West where the so-called environmentalists have succeeded in putting a spoke in the wheel.
Russia and especially China can do it for much less.

Roger Arnold's picture
Roger Arnold on December 7, 2017

I’m partly with you on this, Bob. I’m as big a fan of energy efficiency as anybody; I think it’s in my epi-genome. (Folks came of age during Great Depression, worked hard and scrimped to support parents and siblings “back on the farm”. I absorbed abhorrence of waste at my grandparents’ knees.) But something in this piece rubs me the wrong way.

I’d hardly label promotion of energy efficiency as “selling snake oil”, but the unqualified assertion that “saving energy is cheaper than making energy” ruffles my feathers. In many cases it is, but in many cases it isn’t. Glittering generalities and fallback on ideology in place of rational analysis and understanding really bug me.

I’d feel more tolerant toward it if it weren’t so widespread, doing so much damage.

Bob Meinetz's picture
Bob Meinetz on December 7, 2017

Thorkil, more to blame than environmentalists are the investment banks (Lazard, Deutsche Bank, and others), with $billions invested in renewables, who they trust for impartial analysis. What used to be known as advertising might, in this era, be labeled “Fake Research”.

Like the used-car dealer who tells you the car you’re eyeing was only driven by a little old lady to church on Sundays.