ACEEE review of 2009-2012 utility program data from 20 states finds electricity efficiency costs an average 2.8 cents per kWh, one-half to one-third the cost of new generation, and gas efficiency 35 cents per therm.
Overview
Published in March 2014 as ACEEE Report U1402, this 51-page study by Maggie Molina asks a question regulators and utilities were increasingly raising as savings targets climbed: what does it actually cost a utility to save a kilowatt-hour or a therm, and is that cost rising? ACEEE gathered program cost, net savings, and measure-life data from utility and program-administrator reports for 2009 through 2012 and computed a levelized cost of saved energy (CSE) that can be set beside the cost of building new supply.
Key Findings
- Across 20 states with electricity programs, the utility CSE averaged 2.8 cents per kWh (median 2.6 cents), with four-year state averages spanning 1.6 to 4.8 cents. Single-year values ranged from 1.3 to 5.6 cents.
- That places efficiency at one-half to one-third the levelized cost of new generation options, and the authors describe it as the least-cost resource available to utilities.
- Natural gas programs in 10 states averaged 35 cents per therm, below the 2013 national average commodity price of 49 cents per therm.
- Where class-level data existed, residential portfolios cost about 3.7 cents per kWh and business (commercial and industrial) portfolios about 2.7 cents, and business customers supplied 55% of portfolio savings.
- Total resource cost tests reported by nine states showed benefit-cost ratios of 1.24 to 4.0, meaning each dollar spent by utilities and participants returned $1.24 to $4.00 in benefits.
- An initial correlation test found only a weak link between a state's savings level and its cost per kWh, undercutting the assumption that deeper savings must cost more per unit.
- Data collection was hampered by inconsistent reporting formats, nomenclature, and frequency; the report closes with recommendations for standardized reporting of net and gross savings, measure life, and costs by customer class.
Why It Matters for Daylighting
Utility efficiency programs are the main source of rebates for daylighting controls, high-bay lighting retrofits, and in some territories skylight installations, and this report is the evidence base regulators use to keep funding them. Its finding that commercial and industrial savings are the cheapest in the portfolio is good news for warehouse, distribution, and manufacturing owners: a prismatic skylight project with daylight-responsive controls delivers exactly the kind of long-lived, verifiable business-sector savings that programs are built to pay for.
The report's emphasis on measured, net savings and consistent evaluation also dovetails with field research showing that daylighting controls often need commissioning to reach their potential. Owners who document light levels and controls performance will find it easier to claim incentives, and program managers who require commissioning protect the savings they have paid for.
About the Source
The American Council for an Energy-Efficient Economy is a Washington, D.C., nonprofit research organization founded in 1980 whose state scorecards and program cost studies are widely cited by utility commissions and legislatures. This report, written by Maggie Molina, was released March 25, 2014, and runs 51 pages including a state-by-state appendix of data sources. The full report and a summary are available free on ACEEE's website.
This page is an original summary written by Logistics Lighting. The source article is the copyrighted work of its publisher and is referenced here for research and educational purposes under the fair-use provisions of Section 107 of the U.S. Copyright Act. A reference copy of the original is provided for convenience; please contact the publisher for any use beyond fair use.
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