The Financial Crisis Brings Opportunity: The Business Case for Energy Efficiency Programs

Energy Efficiency as a First Fuel
One thing we keep hearing from power utility experts is that with the volatility of capital markets negatively impacting the availability, terms and cost of capital, there is no better time for utilities to invest in energy efficiency as a resource.

While I was at the American Public Power Association's (APPA) National Conference in Orlando last week, I wanted to find out how public power was using energy efficiency as a first fuel to overcome the challenges of the financial crisis and meet growing demands for power.

In an informative breakout session on this exact topic, Bill Radio, director of member and public relations at Missouri River Energy Services (MRES), talked about how his organization has made energy efficiency a cornerstone of their resource planning strategy.

Missouri River Energy Services Taps Potential of Energy Efficiency
MRES, a joint action agency which sells power to 57 municipal utilities in Iowa, Minnesota, North Dakota and South Dakota, submitted in their most recent Integrated Resource Plan (IRP) to the Minnesota Public Utilities Commission in 2005. The plan indicated that 30% of projected capacity needs, or an additional 85 megawatts of generation, could be achieved if MRES members' implemented demand-side management programs.

In 2008, MRES began to tap into this resource, starting off with a portfolio of turn-key commercial & industrial efficiency programs that its member utilities could opt into and roll-out in their own communities. In 2009, MRES expanded to residential programs and now offers energy auditing, building retrofit and financing programs.

Member utility response to the programs has been tremendous. Only two years after launch, 54 of MRES's 57 member utilities are offering energy efficiency programs to their customers.

Making the Business Case for Energy Efficiency
The financial statistics don't look too bad either. The lifecycle costs of MRES's programs over the past two years averaged just 6 cents a kilowatt hour. And that's not just for the incentives, adds Radio. This includes staff time, overhead... the whole package.

In fact, a recent report from the American Council for Energy Efficient Economy (ACEEE) indicates that power utilities are delivering energy efficiency programs across the country for up to 2/3 less than the cost of any new generation, regardless of fuel source. With those numbers, the business case for energy efficiency programs as supply resource strategy for the near term is incredibly strong.

"Energy efficiency is a cost-effective option that is attractive in comparison to traditional power supply resources," says Radio. "It's simply a smart business decision."