Energy Efficiency Costs Utilities 2 to 3 Times Less Than Traditional Power Sources; Average of 2.8 Cents per Kilowatt Hour
Washington, D.C. (March 26, 2014): According to a new report released today by the American Council for an Energy-Efficient Economy (ACEEE), energyefficiency is the cheapest method of providing Americans with electricity. Energy efficiency programs aimed at reducing energy waste cost utilities only about three 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,” said 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, energyefficiency is generally the best choice.”
The report looks at the cost of running efficiency programs in 20 states from 2009 to 2012 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 by the following graph from the report:
Levelized costs of electricity resource options. Source: Energy efficiency data represent the results of this analysis for utility program costs (range of four-year averages for 2009-2012); supply costs are from Lazard 2013.
The report analyzes energyefficiency costs from states across the country, including: Arizona, California, Colorado, Connecticut, Hawaii, Illinois, Iowa, Massachusetts, Michigan, Minnesota, New Mexico, New York, Nevada, Oregon, Pennsylvania, Rhode Island, Texas, Utah, Vermont, and Wisconsin.
Other Key Findings Include:
At an average of 35 cents per therm, natural gas utility energyefficiency programs are also highly cost-effective (in 2013, the national average natural gas commodity price was 49 cents per therm).
Both electricity and natural gasefficiency programs have consistently remained low-cost resources over the past decade, which shows the reliability of efficiency as a long-term resource.
Each dollar invested in electric energyefficiency measures yields $1.24 to $4.00 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 energyefficiency in long-term planning can protect utilities and their customers against volatile and rising costs of traditional energy resources.
About ACEEE: The American Council for an Energy-Efficient Economy acts as a catalyst to advance energy efficiency policies, programs, technologies, investments, and behaviors. For information about ACEEE and its programs, publications, and conferences, visit aceee.org.