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State and Local Climate and Energy Program

Energy Efficiency



The National Action Plan for Energy Efficiency is a private–public initiative facilitated by EPA and the U.S. Department of Energy to create a sustainable, aggressive national commitment to energy efficiency through the collaborative efforts of gas and electric utilities, utility regulators, and other partner organizations.


Benefits of Energy Efficiency

Improving energy efficiency is one of the most constructive and cost–effective ways to address the challenges of high energy prices, energy security and independence, air pollution, and global climate change. The many benefits of energy efficiency include:

  • Environmental: Increased efficiency can lower greenhouse gas emissions and other pollutants, as well as decrease water use.
  • Economic: Improving energy efficiency costs significantly less than investing in new generation and transmission. Energy efficiency can also boost the local economy and create downward pressure on natural gas prices and volatility.
  • Utility System Benefits: When integrated into energy resource plans, energy efficiency can provide long-term benefits by lowering baseload and peak demand and reducing the need for additional generation and transmission assets.
  • Risk Management: Energy efficiency also diversifies utility resource portfolios and can be a hedge against uncertainty associated with fluctuating fuel prices and other risk factors.

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Assessing Energy Efficiency Potential

A potential study is a quantitative analysis of the amount of energy savings that either exists, is cost–effective, or could be realized by implementing energy efficiency policies and programs in a state or region. Energy efficiency potential studies can be an effective tool for building the policy case for energy efficiency, evaluating efficiency as an alternative to supply side resources, and formulating detailed program design plans.

EPA's Guide for Conducting Energy Efficiency Potential Studies (PDF) (96 pp, 979K) contains more detailed information on conducting a potential study.

Steps for Conducting a Potential Study
Identify the objective and the audience Seek to reach consensus as to which objective is most important, and consult the intended audiences to determine what data sources they trust, what issues need addressing, and what level of detail they require.
Select potential type to analyze Energy efficiency practitioners often distinguish between four different types of efficiency potential: technical, economic, achievable, and program.
Determine appropriate level of detail and assess data requirements The level of detail should be driven by the study objectives and influenced by considerations of cost, time, and data availability. The level of aggregation depends on the needs and objectives of the study, the available data and budget, and the uniqueness of the region. Consider primary data collection when the study objectives warrant the additional expense and complexity.
Select and define the methodology A potential analysis involves forecasting a baseline, identifying and screening efficiency measures, designing a program, and calculating total savings. Select the appropriate cost-effective test, such as total resource cost, societal cost, participant cost, ratepayer impact measure, and program administrator cost tests, and consider comparing results from multiple tests as appropriate.

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Policies to Capture Energy Efficiency Potential

States have adopted various policies that support greater investment in and adoption of energy efficiency. The policies outlined below have been implemented successfully by multiple states.

  • Energy Efficiency Portfolio Standards (PDF) (18 pp, 742K) require that energy providers meet a specific portion of their electricity demand through energy efficiency within a particular timeframe.
  • Public Benefits Funds for Energy Efficiency (PDF) (18 pp, 826K) are a pool of resources used by states to invest in energy efficiency projects. Funds are typically created by levying a small charge on customers' electricity rates (i.e., a system benefits charge).
  • Building Codes for Energy Efficiency (PDF) (18 pp, 791K) establish energy efficiency standards for residential and commercial buildings, thereby setting a minimum level of energy efficiency and locking in the energy savings at the time of new construction or renovation.
  • State Appliance Efficiency Standards (PDF) (15 pp, 773K) set minimum energy efficiency levels for appliances and other energy-consuming products and typically prohibit the sale of less efficient models within a state.
  • Building Labeling/Disclosure requires that privately-owned commercial buildings be benchmarked (e.g., using Portfolio Manager) and that the resulting metrics be disclosed to a prospective buyer, lessee, or lender during a real estate transaction. States can also require that utilities make building energy data available at the request of any commercial building owner.
  • Certain Utility Policies (PDF) (216 pp, 3M) — such as integrating efficiency into energy planning, removing utility financial disincentives, designing rates to motivate customer investments, and implementing best practice efficiency programs — can encourage greater energy savings.
  • Lead by Example activities can improve energy efficiency in public facilities through measures such as lighting improvements and energy efficient appliance and equipment purchase requirements.

Energy efficiency policies are the most common drivers of investment in energy efficiency programs, as described below.

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Energy Efficiency Program Opportunities

Cost–effective energy efficiency programs have been operating successfully in some parts of the country since the late 1980s and have a history of proven energy savings. These programs have succeeded across many different contexts: regulated and unregulated markets; utility, state, or third-party administration; investor-owned, public, and cooperative utilities; and gas and electric utilities. Funding and financing options vary depending on the program delivery provider and goals.

The ENERGY STAR program provides extensive resources for energy efficiency programs addressing all sectors:

More information is available at Designing and Implementing Programs.

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Evaluating Energy Efficiency Policies and Programs

Evaluation is the process of determining and documenting the results, benefits, and lessons learned from an energy efficiency program. Evaluation results can be used in planning and improving future programs and determining the value and potential of a portfolio of energy efficiency programs in an integrated resource planning process. It can also be used to retrospectively determine the performance (and resulting payments, incentives, or penalties) of contractors and administrators responsible for implementing efficiency programs. Energy efficiency evaluations are also conducted to estimate energy savings attributable to a program in a manner that is defensible in utility regulatory proceedings.

More information on evaluating energy efficiency programs is available on the Measuring Energy Savings page.

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Resources

Advancing State Clean Energy Funds

The Advancing State Clean Energy Funds manual (PDF) (55 pp, 1.35M) is intended to help policy and program decision-makers identify the clean energy funding and administration approaches that make sense for their jurisdiction. For each approach, it provides an overview of advantages and disadvantages, implementation options, and state examples. The manual also references other policies for promoting clean energy and briefly describes interactions and considerations related to establishing a Clean Energy Fund.

Clean Energy-Environment Guide to Action

The Guide to Action provides in–depth information about 16 clean energy policies and programs that states are using to meet their energy, environmental, and economic objectives. Policies addressed in the guide include energy efficiency portfolio standards, public benefits funds for energy efficiency, building codes and appliance standards, utility policies, and lead by example initiatives.

Combined Heat and Power (CHP) Partnership

Combined heat and power (CHP), also known as cogeneration, is an efficient, clean, and reliable approach to generating power and thermal energy from a single fuel source, resulting in enhanced fuel efficiency and greenhouse gas emission reductions. The CHP Partnership is a voluntary EPA program seeking to reduce the environmental impact of power generation by promoting the use of CHP. The partnership works closely with energy users, the CHP industry, state and local governments, and other clean energy stakeholders to facilitate the development of new projects and to promote their environmental and economic benefits.

Communicating the Energy Efficiency of Today's Commercial Buildings

EPA held a workshop in December 2008 called “The Power of Information to Motivate Change: Communicating the Energy Efficiency of Today's Commercial Buildings.” The workshop was design to help policy–makers understand the power of energy efficiency information to motivate change and to discuss how to meet the increasing demand for public disclosure of this information.

National Action Plan for Energy Efficiency

The National Action Plan for Energy Efficiency is a private–public initiative that provides a number of resources to aid in the development of policies and programs to improve energy efficiency:

Rapid Deployment Energy Efficiency (RDEE) Toolkit

The RDEE Toolkit provides detailed program design and implementation guides for 10 broadly applicable energy efficiency programs across the residential and non–residential sectors. The toolkit includes a planning guide, an implementation guide, and program snapshots and templates that provide a detailed look at each of the RDEE programs. It also includes a brief overview of the energy efficiency-related funding opportunities in the American Recovery and Reinvestment Act (ARRA) of 2009.

State Lead by Example (LBE) Guide

States lead by example (LBE) by establishing programs that achieve substantial energy cost savings within their own buildings and operations, and demonstrate the feasibility and benefits of clean energy to the larger market. EPA's State Lead by Example Guide identifies best practices and state examples of clean energy activities; highlights the benefits and costs of taking action; and identifies issues, strategies, and resources for implementing key steps in the development of a comprehensive LBE program.

U.S. Department of Energy (DOE) Technical Assistance Project

The Technical Assistance Project is designed to provide state and local government officials with quick, short–term access to experts at DOE national laboratories for assistance with their renewable energy and energy efficiency policies and programs.

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Tools

ENERGY STAR Home Energy Yardstick

The Home Energy Yardstick is an online tool for individuals to compare their households' energy use to others across the country and to get recommendations for improvement.

ENERGY STAR Portfolio Manager

Portfolio Manager is a Web-based resource that benchmarks the performance of commercial buildings on a scale of 1-100 relative to similar buildings nationwide using EPA's national energy performance rating system. Buildings rating 75 or greater may qualify for ENERGY STAR. The tool's data on short- and long-term trends in energy performance can be used to make budget and management decisions regarding investments in energy-related projects. A Statement of Energy Performance is provided for each building, summarizing important energy information and building characteristics.

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