Energy-efficiency Costs Utilities Two to Three Times Less Than Traditional Power Sources

According to a new report released by the Washington, D.C.-based American Council for an Energy-Efficient Economy, energy efficiency is the cheapest method of providing Americans with electricity. Energy-efficiency programs aimed at reducing energy waste cost utilities only about 3 cents per kilowatt-hour while generating the same amount of electricity from sources, such as fossil fuels, can cost two to three times more.

“The cheapest energy is the energy you don’t have to produce in the first place,” says ACEEE Executive Director Steven Nadel. “Our new report shows that when utilities are examining options on how to provide their customers with cheap, clean electricity, energy efficiency is generally the best choice.”

The report looks at the cost of running efficiency programs in 20 states from 2009-12 and finds an average cost of 2.8 cents per kWh—about one-half to one-third the cost of alternative new electricity resource options, as illustrated in the graph. The states analyzed are Arizona, California, Colorado, Connecticut, Hawaii, Illinois, Iowa, Massachusetts, Michigan, Minnesota, New Mexico, New York, Nevada, Oregon, Pennsylvania, Rhode Island, Texas, Utah, Vermont and Wisconsin.

Key findings include:

At an average of 35 cents per therm, natural-gas-utility energy-efficiency programs are also highly cost effective; in 2013, the national average natural-gas commodity price was 49 cents per therm.
Electricity and natural-gas efficiency programs have consistently remained low-cost resources during the past decade, which shows the reliability of efficiency as a long-term resource.
Each dollar invested in electric energy-efficiency measures yields $1.24 to $4 in total benefits for all customers, which include avoided energy and capacity costs; lower energy costs during peak-demand periods, like heat waves; avoided costs from building new power lines; and reduced pollution.
Incorporating higher levels of energy efficiency in long-term planning can protect utilities and their customers against volatile and rising costs of traditional energy resources.

Read the report at aceee.org/research-report/u1402.