Can policymakers make turnoffs a turn-on?

By Katherine Ling | 08/07/2015 01:00 PM EDT

Energy efficiency is being trumpeted as the “low-hanging fruit” of U.S. energy policy and the “great test bed of bipartisanship” in Congress. But it’s never been called exciting.

Correction appended.

Energy efficiency is being trumpeted as the "low-hanging fruit" of U.S. energy policy and the "great test bed of bipartisanship" in Congress.

But it’s never been called exciting.


"Energy efficiency is invisible," said Cliff Majersik, executive director of the Institute of Market Transformation, which promotes energy efficiency through market incentives. "Energy efficiency is largely the absence of stuff. It is having a light not on, having fewer lights or better insulation. You don’t see the insulation in the wall. You are not thinking about a comfortable home that is not cold. You only care when it is uncomfortable."

Yet energy efficiency is a big deal. Last year alone, energy efficiency standards and upgrades saved the United States $800 billion in energy productivity — with improved automotive fuel efficiency and reduced demands for electricity leading the way, the American Council for an Energy-Efficient Economy says. ACEEE said in a report last month that energy efficiency by 2050 can reduce power use by 40 to 60 percent from current forecasts.

Sounds great, but it’s not going to come easy. Policymakers, regulators and manufacturers are struggling to learn how to finance, create incentives for and measure efficiency improvements and ensure they deliver promised benefits.

"The idea of efficiency is very simple; the implementation is difficult," said Keith Dennis, senior principal of end-use solutions and standards at the National Rural Electric Cooperative Association. "I think it’s a tough situation once you start getting into it. It’s tough day to day. It is kind of the nature of the details of selling something that you are not using."

"Selling" is the key word. Energy efficiency runs aground if regular folks don’t buy in.

Energy efficiency’s image also still suffers from its association with President Carter’s televised Feb. 2, 1977, fireside chat on the energy crisis in which he donned a cardigan sweater to show that thermostats had been turned down in the White House to save power. He discussed efforts to devise an energy policy that "will emphasize conservation." He called saving energy the "moral equivalent of war," spurring critics to call it by an acronym, MEOW.

Kateri Callahan of the Alliance to Save Energy said Americans quickly forgot the crisis when energy prices retreated in the Reagan years. "Sacrifice and conservation were almost an ugly word. We were caught in that trap of abundance and relatively cheap energy at the time," she said. "Prices matter, and technology wasn’t there like it is today."

Of late, sparkling new technologies and climate change concerns have moved energy efficiency’s image away from that of the hair-shirted scold to something quiet, dependable and "nice." It’s anchored many an energy bill and program, but it has yet to shine on its own.

Pressing environmental and energy needs with limited widely accepted options may turn nice to necessary.

The first energy bill to be passed since 2007 on a bipartisan basis was centered on energy efficiency, even if a small one, advocates note. And the Obama administration has put a significant emphasis on improving the nation’s "energy productivity" — the amount of goods that can be produced per unit of energy — calling for a doubling of 2010 levels by 2030.

It is considered an integral part of a comprehensive energy bill the House and Senate are trying to compile and a key short-term solution for states to comply with the carbon dioxide emission targets laid out in U.S. EPA’s Clean Power Plan.

"I believe it is the opportunity for it to be a bride, at least in the policy arena, and not the bridesmaid," Callahan said.

"Everyone loves it," she added, "but do they love it enough to rally around it on its own and move forward?"

‘Exclusive and rarified company’

While images of the solar panels, electric cars and wind turbines are used often to "convey new or 21st century," Majersik said, energy efficiency lacks eye-grabbing high-tech gadgetry.

Its symbol: the light bulb.

It might be an LED (light-emitting diode) or a CFL (compact fluorescent), but it’s still a light bulb.

And even that symbol is misleading. While a light bulb is as visible as energy efficiency gets, the emphasis has led most people to assume turning off the lights is the most effective way to conserve energy, according to surveys by Opower, a cloud-based platform company that uses data and behavioral science to help utilities lower energy demand. But it is the thermostat or water heater that is the real energy hog, and upgrading those can make the biggest difference.

So education and information are keys to winning converts. But energy efficiency campaigns to a large extent have been the domain of engineers, advocates, and manufacturers and developers who speak in kilowatt-hours, lumens, coincidence peak demand and acronyms.

"Fairly exclusive and rarified company indeed," as David Garman, former undersecretary at the Department of Energy, who also took a turn in charge of the energy efficiency programs, said at a recent Washington, D.C., appliance standards forum hosted by the Bipartisan Policy Center.

Energy efficiency also means different things to different people and can be measured as successful in many different ways.

"Here is the problem: These are all in the great scheme of things … small, discreet programs," said Tracy Warren, senior communications officer at the National Rural Electric Cooperative Association. "You have to look at so many different projects when talking about energy efficiency. It is really hard to make broad generalizations."

Motivation also varies: money, comfort, environment and reliability.

Money has generally been the main driver of energy efficiency, usually paired with a "buy one get one free" notion of reliability and pollution reduction. Lawmakers call that a "win-win-win."

The complication: It takes time to save money through energy efficiency.

"The outcome is really far in the future," said Julie O’Brien, Opower’s lead behavioral researcher. "It is really hard to connect individual behaviors even to the monthly [electric] bill."

People question, she said, whether spending to make their house energy efficient is working.

There’s upfront sticker shock in energy efficiency. Even as the cost of efficient technology has fallen — LED light bulbs are now under $10, a small fraction of their cost just a few years ago — big efficiency upgrades tend to be expensive and tedious.

Opower has also found that energy efficiency is a lot like driving a car. There is a general problem with overconfidence. People tend to think they’re doing better than they are.

Opower’s global surveys show energy efficiency is important to people, but "it is really hard to evaluate one’s ability," O’Brien said.

Making renewable energy viable

Smart meters, sensors, mobile phones and the Internet have made it easier to slash energy use and make its impact visual. They are also, experts say, opening new avenues of understanding and influencing consumer behavior, leading to greater energy efficiency uptake.

Arlington, Va.-based Opower, which focuses on behavior to find the best way to influence choices, says competition, simplification and other aspects of social or "normative" behavior are powerful motivators for improving energy efficiency.

The company tells consumers how their energy consumption compares to that of their peers — the people next door.

Finding out that you are dragging down the average energy use in your ZIP code or that the family next door with a similar house is using 20 percent less energy and paying lower utility bills can pack a punch, O’Brien said.

"People have a way to get feedback they otherwise wouldn’t be able to get," she said. "Knowing what your behavior is is the first step" to actually changing behavior.

Opower is no longer alone in using technology and data to cut energy demand. Other companies — EnerNoc and FirstFuel, to name two — are working with utilities, manufacturers and commercial customers to cut power use as well. Energy efficiency and management startups were among the top three draws for venture capitalists in the clean energy realm last year, according to CB Insights.

There are also companies providing information directly to consumers through in-home sensors, smart thermostats and mobile applications.

Nest, which is owned by Google, has grabbed press attention for its sleek thermostats, but there are many other companies in that market, including Honeywell, Carrier, Emerson and Apple stores now carry the ecobee3 and also the Nest. Still, even these "smart" thermostats have some ways to go in making efficiency easy (EnergyWire, April 25, 2014).

Some are looking to take the headache out of consumers hands. The Great River Energy cooperative in Minnesota actually can control appliances in the house to meet demand on peak electricity days. Having reliable control of energy reductions is important for the co-op, which must measurably meet Minnesota’s energy efficiency standard even as its program has shifted from focusing on new builds to retrofits, according to Gary Connett, director of demand-side management and member services.

The Institute of Market Transformation’s Majersik said seeing energy consumption data is bringing efficiency into the 21st century. In commercial buildings, which make up 20 percent of U.S. energy use, owners and tenants now know the equivalent of the miles-per-gallon stickers on cars.

"It is leading to the kind of energy accountability and energy information that we should have had 100 years ago, but it is a completely foreign concept," he said.

Energy efficiency is also propelling renewable energy and net-zero buildings industries by lowering those projects’ costs by reducing energy demands, the Alliance to Save Energy’s Callahan said.

"Energy efficiency is what is allowing us to move so quickly on solar panels and batteries," Callahan said. "I look at energy efficiency as an enabler of renewable energy. It is not piggybacking. It is making that industry more viable."


One area where the sky may not be limit for energy efficiency: appliance standards.

There has been pushback from lawmakers on standards for light bulbs, ceiling fans and gas furnaces, even as DOE looks to expand regulations into consumer electronics.

Karim Amrane, senior vice president of regulatory and international policy at the Air-Conditioning, Heating and Refrigeration Institute, said that after being regulated for more than 30 years, some equipment may have few options for efficiency upgrades without technology breakthroughs.

"There is no question that those energy efficiency standards have saved a significant amount of energy, and it is clear that that is the case," he said. "However, we are reaching a point, for us for our industry — I am not talking about everybody — but for us, a point within three to four years of a diminishing return. Yes, we can squeeze a little bit here and there, we are not done yet, but we are close."

Amrane added, "Increasing energy efficiency for our products becomes more expensive, and frankly the savings are not as much as you would think you are going to get. At some point … we need to look at different things, to look at system efficiency rather than just appliances."

Ted Gayer, senior fellow and vice president and director of economic studies at the Brookings Institution, also warned about depending too much on energy efficiency because it is politically expedient to solve our environmental issues.

"We are using a less cost-effective tax and calling it an energy efficiency mandate," Gayer said. A "one-size-fits-all of a mandate" on a swath of products that assumes a consumer is irrational "is a clunky, poor way to help the environment," he said.

It would be better, he said, to focus on setting up schemes to make polluting more expensive, such as the carbon tax.

And while there are a growing number of programs promoting energy efficiency, few help with costs.

"That is what seems to stop people, to stop so many, from going forward with that," Senate Energy and Natural Resources Chairwoman Lisa Murkowski (R-Alaska) said at a recent hearing on energy efficiency. "It is this upfront commitment that I think stalls out so many of these newer technologies."

That’s changing. Slowly.

There are several programs that will pay for the upfront costs of energy efficiency retrofits as a loan and then assess costs through either property taxes or property assessed clean energy (PACE). Private company Pay-As-You-Save uses utility bills to pay back loans and also allows renters to use it and doesn’t require a credit check. Effortless Energy in Chicago takes a cut of the efficiency savings to pay for loans.

Utilities are also starting to get into the act of paying for upgrades with the help of regulators that are allowing companies to recover costs for reduced energy use and not just for building new power plants and transmission.

And about half of U.S. states have energy efficiency resource standards that require utilities to reduce energy consumption by a set amount every year — a practice that is likely to gain steam under the Clean Power Plan.

Many states consider energy efficiency their top option for meeting the EPA requirements, said Chuck Gray, director of the National Association of Regulatory Utility Commissioners.

"I think the Clean Power Plan may have a kick-start kind of effect on funding as well, if it is proven to be cost-effective," Gray said.

Correction: An earlier version of this story incorrectly stated the amount of peak load the Delaware Electric Cooperative can control with its "Beat the Peak" program.