Dive Brief:
- The American Council for an Energy-Efficient Economy (ACEEE) is preparing a report which will estimate the cost of energy efficiency at $0.035/kWh saved based on the group's analysis of 14 successful program administrators.
- The group said estimates of efficiency costs used by the U.S. Environmental Protection Agency, about 7.5 cents/kWh in its Clean Power Plan, are "overly conservative," but in all cases are still cheaper than building new power plants.
Dive Insight:
No matter how you cut it, efficiency is cheaper than building a new power plant. That's the takeaway from a short paper on efficiency's costs put out by ACEEE. In it, the group indicates it has a forthcoming report which will peg the cost at 3.5 cents/kWh – less than half the cost used by the federal government, but slightly higher than other estimates.
Lawrence Berkeley National Laboratory, for instance, has estimated energy efficiency programs are costing program administrators about 2.4 cents/Wh saved. And previous ACEEE reviews of energy efficiency programs in 20 states found an average program administrator cost of 2.8 cents/kWh saved.
In its Clean Power Plan, according to ACEEE's math, the federal governemt priced efficiency at 7.5 cents/kWh saved initially, ramping down to 6 cents/kWh and then 4.5 cents/ kWh.
The EPA costs are derived from a 2009 ACEEE study, the group explained, "but EPA doubled the costs for the initial savings and then reduced them by 20% and 40% as savings reached 0.5% of sales and 1.0% of sales respectively."
"EPA is overly conservative," ACEEE wrote. "Most likely, energy efficiency will cost program administrators under 4 cents per kWh saved, much less than a new power plant. EPA’s very conservative numbers are higher, but still show an energy efficiency cost that is likely to be less than most new power plants."
ACEEE said the difference may be intentional. "To us, it appears that the agency wanted a relatively high cost in order to show that even if costs are high, energy efficiency is cost effective," they said.
