What’s Ahead for New England Energy Efficiency Markets?

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If you’re in the business of installing efficient light bulbs, New England is a good place to be. If you build conventional power plants, it’s not so good. And it looks like it won’t be so good in the near future either.

That’s one of our takeaways from a recent report, “ISO New England Energy-Efficiency Forecast Report for 2018 to 2023,” published June 3 by the grid operator.

The report is important because the region is one of the most active energy efficiency markets in the US. The analysis shows that an aggressive energy efficiency drive works. It measurably reduces demand for power. That translates into a need to build fewer power plants and transmission.

New England’s electric use is now growing by only 0.1 percent annually, barely a nudge upward. Without energy efficiency, energy use would increase about 1 percent annually, says the report.

Lighting installations drove the greatest savings over the last three years, and also delivered greatest bang for the buck among energy efficiency products and services. HVAC was the second most common measure installed, according to the report.

Energy efficiency also is influencing the expensive peak demand periods in New England (usually days of extreme cold or hot). Last year, the region’s highest use came on July 19 when the peak reached 27,379 MW. Without the energy-efficiency measures installed in New England, the peak would have come in at about 29,065, the ISO said.

Although we live in a society that relies increasingly on electric gadgets, New England will see almost no growth in electric demand over the forecast period.  And in some states –  Vermont, Maine and Rhode Island – demand for electricity will actually fall because of their energy-savings efforts.

For energy geeks, here’s the forecast by the numbers.

  • Annual regional average energy savings of 1,518 GWh and total savings of 9,105 GWh from 2018 to 2023
  • New Hampshire will achieve the lowest savings of 68 GWh annually and Massachusetts the highest of 749 GWh
  • Peak demand is expected to fall 1,233 MW from 2018 to 2023.

New England is becoming more energy efficient largely because of state-sponsored programs. The six states are pumping $900 million annually into energy efficiency. In all, the states will spend $5.7 billion on energy efficiency from 2018 through 2023. The region already spent about $2 billion from 2009 to 2012.

This generous budget has helped several of the states achieve top rankings in the American Council for an Energy-Efficient Economy’s coveted state scorecard. Massachusetts has been number one for three years running.

New England raises money for energy efficiency three main ways.

Most of the money comes from a system benefits charge, a small surcharge on ratepayer bills.  The theory behind the charge is that although it raises rates slightly, ultimately it lowers bills since consumers who take advantage of energy efficiency programs buy less electricity.

The second largest chunk of energy efficiency funding comes from the ISO’s forward capacity market auction. The ISO holds the auction to assure the region will have adequate resources in the future to meet demand. Those resources might be power plants that supply electricity or energy efficiency that reduces demand for electricity. Utilities and others who administer energy efficiency programs can bid their savings into the market. The forward capacity market channels about $138 million to energy efficiency.

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The third source of energy efficiency funding is the Regional Greenhouse Gas Initiative, or RGGI, a nine-state cap and trade program. In all, RGGI has raised about $1.75 billion for the states from its 24 auctions to date, according to Environment Northeast, which tracks the program.

This is the third year that the  ISO has been conducting the forward-looking analysis of New England’s energy efficiency markets. It is a pioneering effort – New England was first region in the nation to conduct a multiple-state, long-term forecast for energy efficiency when it issued its first report in 2012. To download the  most recent analysis, “ISO New England Energy-Efficiency Forecast Report for 2018 to 2023,”  go here.

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Elisa Wood About Elisa Wood

Elisa Wood is the chief editor of MicrogridKnowledge.com. She has been writing about energy for more than two decades for top industry publications. Her work also has been picked up by CNN, the New York Times, Reuters, the Wall Street Journal Online and the Washington Post.

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