1. Energy Efficiency as a Resource for the Electric Utility Industry
Presented to
Center for Energy Workforce Development 2009 Summit
Presented by
Lisa Wood
Executive Director
October 8, 2009

2. Talking Points Institute for Electric Efficiency
Energy efficiency is first fuel for electric utility industry
Importance of energy efficiency in carbon emissions reductions
Expected growth in energy efficiency and demand response
Uncertainty about roles for future investments in energy efficiency
Energy efficiency: implications of growth

3. The Institute for Electric Efficiency
Mission:
To advance energy efficiency practices and demand response (DR) among electric utilities.
Role of IEE
Provide resources/share information and best practices re: regulatory models for energy efficiency and programs
Identify key issues & barriers/enablers
Provide forum for EE leaders for dialogue on advancing energy efficiency (industry, advocacy, and government leaders)
Provide thought leadership around key energy efficiency issues for electric utility industry

4. IEE governance
Management committee of 17 CEOs of investor owned utilities (IOUs)
Chaired by Jeff Sterba, PNM Resources
Advisory committee of leading energy efficiency advocacy organizations and policy makers
ASE, ACEEE, CEE, EPRI, NRDC, NARUC, NASUCA, RMI, Sierra Club
DOE, EPA, FERC
Strategy committee of VPs overseeing energy efficiency in IOUs

5. Energy efficiency is fundamental to the power business – our “1st” fuel!
In US, 40% of CO2 emissions come from power generation sector
Energy efficiency is a cost effective way to:
Reduce carbon emissions
Moderate the expected growth in electricity demand
Average cost to save = $0.035 per kWh saved

6. Proposed federal climate bill includes combined efficiency & renewable standard
Waxman-Markey climate change bill – HR 2454 (introduced May 15, 2009)
Efficiency and renewable electricity standard: 20% by 2020
1/4 can be met by energy efficiency (5% of the 20%)
Governors can petition for up to 2/5 (8% of the 20%) to be met by EE in a given year
18 states already have EERS
29 states (including DC) have RPS. 7 states allow EE to act as a resource in the RPS.
Carbon reduction goals – EE will play a major role
17% below 2005 levels by 2020
42% below 2005 levels by 2030

7. But, 18 states have already adopted energy efficiency resource standards & more to follow

8. Both EE and DR expected to grow significantly by 2020: forecast bookends
Energy efficiency forecast by 2020
EPRI: 372 TWh by 2020 (maximum achievable potential up to 473 TWh by 2020 (economic potential) – Jan 2009
McKinsey: 1,080 TWh by 2020 (“economic” potential) – July 2009
Demand response forecast by 2020
EPRI: 79 GW by 2020 (realistic achievable potential) up to 147 GW by 2020 (maximum achievable potential) – Jan 2009
FERC demand response forecast: 82 GW by 2019 (expanded business as usual) up to188 GW by 2019 (full participation) – June 2009

9. Comparison between EPRI and McKinsey energy efficiency potential values, year 2020
2020 Electricity Energy Efficiency Potential (Relative to AEO 2008 Reference Case)
TWh = Billion kWh
~60
~120
~1,080
~180
~80
~160
~250
473
372
141
EPRI Realistic Achievable Potential
EPRI Maximum Achievable Potential
EPRI Economic Potential
McKinsey includes more types of electrical devices1
McKinsey includes wider set of technologies in selected end-uses1
McKinsey includes additional market segments
McKinsey allows accelerated equipment replacement (i.e. prior to end of life)
McKinsey assumes evolution of LED lighting technology & economics over time1
EPRI estimates greater heat pump and commercial lighting potential1
McKinsey NPV- Positive Potential
1 Includes small differences in technology performance and cost assumptions, discount rates, and electricity rates between the two reports

10. Historical vs. projected U. S
Historical vs. projected U.S. energy savings due to energy efficiency programs only (EIA and EPRI Report # ) – relative to baseline forecast

11. Historical vs. projected U. S
Historical vs. projected U.S. summer peak load reduction (GW) due to energy efficiency and demand response (EIA and EPRI Report # )

12. FERC national assessment of DR potential – June 2009
NERC baseline (no DR)

13. Over 58 million smart meters will be deployed to mass market customers over next 5 to 7 years (excluding $4.5 billion in DOE stimulus funds)

14. Smart meter platform and home area network technologies will take EE and DR to new levels
…Giving customers the tools and the know-how to be smarter energy consumers
HAN communication
SmartMeter communication

15. Utility spending on energy efficiency: $3 billion in 2008 expected to grow to $5 billion in 2012
Source: LBNL’s The Shifting Landscape of Ratepayer-Funded Energy Efficiency in the U.S. (2009) by Galen Barbose, Charles Goldman, and Jeff Schlegel

16. But, in 2009, $14 billion in recovery act funds for energy efficiency bypasses utility industry

17. EE expected to grow significantly but some uncertainty about roles for future investments
Other State Gov’t,
Including Air Office
Ratepayer
Programs
~$5B ?
ARRA/
Weatherization
$ ?
CO2
Allowances
~$4B ?
Market
Services
Funding
Lead
Oversight
Program/Service
Administrator
State PUC
State Energy
Office
Federal Gov’t /
Regions
Utilities
NGOs,
Community
Action Orgs
Third Party
Local
Gov’ts
ESCOs,
Private
Sector
Uncertainty Exists in Future Landscape for Energy Efficiency Programs ?

18. Energy efficiency will grow over next decade: workforce implications
Utilities will grow energy efficiency as a resource over next decade. How does this happen? Utilities:
Administer energy efficiency programs in house (small numbers of jobs generated)
Contract for fieldwork/technical assistance/audits/program implementation
Contract for evaluation, measurement, and verification of program savings (EM&V)
Work with ESCOs if it makes sense to do so

19. Energy efficiency is a critical resource for electric utilities & a national priority
Utility industry & other players will have key roles in growing energy efficiency over next decade.
Many new players already entering the energy efficiency/smart grid/energy management space
Specialized niche companies; ESCOs
GE, IBM, Google, etc.
Smart meter platform and home area networks will open up new innovations and applications