When All Low-Hanging EE Fruit is Picked, What’s Next, Especially for Jobs?

Consumers Energy

Utility Energy Efficiency Programs: Consumers Energy

Consumers Energy, Michigan’s largest utility, has a lot to brag about when it comes to utility energy efficiency programs. Since Michigan launched its energy reform law in 2008—requiring energy providers to provide up to 1% in electric sales savings over a number of years—the utility has reaped more than $365 million for customers who participated in its energy efficiency programs.

But what happens next? Consumers Energy has already picked a lot of its low-hanging fruit, says Teri VanSumeren, manager of  the utility’s energy efficiency. The utility can’t keep growing its program—a program that has generated about 900 jobs.

“We’ve gotten much of the low-hanging fruit,” she says. The utility can’t keep pushing high-efficiency furnaces and other measures once all the customers who want them have bought them, she says. Items such as efficient furnaces will reap savings for at least 10 or 15 years. What’s more, new building codes and efficiency standards tighten up new buildings and also make it difficult to reap additional savings.

For the utility, all this good news means harvesting efficiency is getting harder and harder—and more and more expensive. Right now, Consumers Energy invests about $115 million a year to deliver energy savings. For every dollar invested, the utility reaps $2 to $3 in benefits, she says. But soon enough the program will end because costs will exceed benefits—as defined by state law.

But wait a minute. What about all those jobs? The success of this program raises interesting questions about how regulators and utilities determine the costs and benefits of efficiency programs. The new jobs created as a result of the efficiency program aren’t factored into the cost-benefit equation—even though Consumers Energy brags that since the efficiency program began in 2009, it has created about 900 jobs. Most of these jobs are for employees of trade allies and implantation contractors—the people who market the programs and do the installation work.

It’s difficult to quantify the benefits of these new jobs, so they’re not included in the cost-benefit analysis, which involves dividing the benefits of the efficiency programs by the cost of them, says VanSumeren.

“There certainly are benefits associated with new energy efficiency jobs but in order to account for that we would need some very detailed information beyond the number of jobs such as the wages paid for each new job, which is often difficult to obtain from our trade allies,” says VanSumeren.

Here’s a question for regulators and utilities in Michigan and elsewhere: If we’re going to spend a lot of time bragging about all the jobs created as a result of efficiency programs, wouldn’t it make sense to include these jobs as benefits in the all-important cost-benefit analysis? If they’re not important enough to quantify, maybe they’re not important enough to boast about.

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Comments

  1. Lisa,

    The topic of sustainable jobs that result from incentives- and stimulus- programs does not receive the attention that it warrants. I commend you for bringing it to the fore.

    Questions similar to the ones you’ve asked began surfacing in earnest in 2009, following the announcement of stimulus programs (so-called “shovel-ready” ones, in particular) designed to assist in the economic recovery necessitated by the 2008 Wall Street meltdown. The Web site wiseGEEK makes several interesting observations in defining the expression [from: http://www.wisegeek.org/what-is-low-hanging-fruit.htm ] :

    1. Selecting the easiest targets with the least amount of effort, and
    2. A sure thing, in opposition to a more difficult but more rewarding pursuit.

    What makes an EE pursuit “more difficult” isn’t always obvious. It is frequently NOT about engineering factors, but instead in the criteria rooted in guidelines originating from well-meaning NGOs, vendor-led groups, politicians – and not just a modicum of FUD.

    Take any of the prescriptive programs — e.g., Energy* , Utility Rebating (based on Service Benefit Charges), and LEED, to name a few of the more popular ones, and what one finds is a system whereby “points” are assigned based on the efficiency ratings of replacement equipment. This approach to incentives is usually a good thing, especially when the appliance or system under consideration is unquestionably required in the first place.

    Realistically, however, customers generally regard point-allocating criteria as the rule of law, almost always accepting them blindly, much less ever challenging or offering alternatives to them on situational grounds.

    Question: Wat if a far-more efficient solution dictated eliminating the need for, of radically reducing the number of those appliances? Such solutions are usually shunned by customers and EE Programs, since presently they do not assign points to the customer or property owner who is working towards a * or an award with a metallic-sounding name, nor do such solutions easily qualify for tax breaks and other financial incentives.

    Thus, the definition of “low hanging fruit” is shaped in the main by incumbents, each with their own profit-motivated interests in mind (for which I do begrudge them at all – hey, everyone’s got to put food on the table), with little if any other options for customers and their MEPs to pick from while remaining in the good graces of owners. The latter aspect of those programs is not a good thing, especially when they discourage the right EE solution while favoring wrong ones.

    These alternative solutions I’m referring to would also otherwise be considered “low hanging fruit. But they are not, because they do not receive points for measures that do not fit narrowly-defined criteria. In effect, these other instances of low-hanging fruit hide in plain sight behind an imaginary blind spot.

    For example, in many cases involving office buildings and campuses, fully a quarter to a third of a structure’s energy load goes unnoticed due to reasons I’ve explained above, despite potential windfall energy savings that would accrue month after month in perpetuity. For a more in-depth look at one example of what I’m referring to, see my white paper entitled:

    “New Energy Efficiency Incentives: Opportunities Hiding in Plain Sight”
    http://www.cirrant.com/cirrantpdf1.pdf

    To the question of a job’s shelf life: It took civilization thousands of years to create what we now come to regard by today’s standards as inefficient built infrastructure, which will not be optimized after only a few short years of swapping out air conditioners. Also, for every one of those 900 jobs discussed in the article that actually does vanish, untold thousands more are currently being created to tackle the second of the two definitions above: “more difficult but more rewarding pursuit[s]. However, even before resorting to going after the “more-difficult” ones becomes necessary, I submit there’s still a lot of good, low-hanging fruit opportunities left for picking.

    I t is my belief that the programs referenced above will come to realize this with time and amend their criteria to take into account both actives and passives in a more holistic manner. But first, it will require getting past the notion that purchasing new appliances can somehow merit more points than eliminating the need for those appliances in the first place. Corrections, questions, comments welcome.

    BR,

    frank@cirrant.com

    ——

  2. Correction:

    In my previous post, in referring to program principals’ profit motivations, I meant to type “for which I do NOT begrudge them at all …”

    Sorry for the confusion.

  3. Lisa Cohn says:

    Hi Frank,
    This is a very interesting idea!
    Thanks for getting in touch. I’m interested in reading more about it.
    You can email me at Lisa@energyefficiencymarkets.com and give me details.

    Best,
    Lisa

    • Hi Lisa,
      Thanks for the reply. Sure, I’d love to get back to you via email tomorrow. Meanwhile, the following clip from Sandia Laboratories begins to address the dynamics of which I write. They claim to be able to save approximately $20Million in recurring energy costs over the next five years, which is just about what we find is the case for large tenants and tenant owned office buildings, i.e., about $300 to @400 per employee workstation per annum. Apologies in advance if I’ve sent this to this blog before.

      See:
      http://www.youtube.com/watch?v=G1UyylAlfSM

      We are very excited about the amount of energy savings and environmental benefits that will accrue from this technology.
      BR, Frank

  4. Thank you for another excellent article. Where else could anybody get that type of information in such
    a perfect way of writing? I’ve a presentation next week, and I’m at
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