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Study: Investing In Industrial Energy Efficiency Programs Is Money Well Spent

American Council for an Energy-Efficient Economy (ACEEE) (4/11/2012)
During the last few years the industrial sector, primarily public utilities, discovered that exploring energy efficiency programs is one of the smartest and most cost effective investments that can be made, a report by the American Council For An Energy-Efficient Economy, called Money Well Spent: 2010 Industrial Energy Efficiency Program Spending, concluded.

"Energy efficiency reduces emissions, saves consumers money and yields a number of non-energy benefits," researchers found. "Spending by utilities, in particular, on industrial energy efficiency is robust. Industrial facilities offer tremendous bang-for-your-buck in energy efficiency, because their energy use is highly concentrated. Additionally, the industrial sector has the largest potential for energy savings of all major energy-using sectors in the U.S."

Researchers found New York State made the largest collective investment in industrial energy efficiency, spending $193 million in 2010, when the report was researched.

New York State has become a leader in promoting industrial energy efficiency, primarily due to the efforts of Governor Andrew M. Cuomo's Energy Highway Task Force. The report noted New York State already leveraged $3.5 million in private funding and $2.7 from its Energy Research and Development Authority to fund energy efficiency programs.

"The Energy Highway initiative will ensure that New Yorkers have reliable, affordable clean power to meet the electricity needs of a strong and growing economy," Gov. Cuomo said. "The Energy Highway project has the potential to create thousands of jobs and stimulate billions of dollars in private investment in order to rebuild New York's energy infrastructure. The Energy Highway is envisioned as at least a $2 billion private sector initiative to encourage job creation and capital investment in the state's electric system by private companies in partnership with New York State. "

The goal of the Energy Highway is to ensure that a cost-efficient, reliable and environmentally sustainable supply of power is available to fuel the state's economic growth and to meet the needs of its residents, Cuomo added. A key element calls for modernization of existing transmission lines to improve the efficiency of grid operation along with the building of new power lines to carry excess power from upstate sources to the downstate area, where demand for electricity is greatest. The plan also envisions refurbishing existing power plants to make them more efficient and reduce pollution. In addition, it provides for construction of new energy plants, particularly those powered by the wind, the sun and other renewable sources.

The report written by Anna Chittum and Seth Nowak noted California was second highest in energy efficiency spending at $143 million, with Pennsylvania third spending $65 million. Rounding out the top five; Washington State was fourth allocating $49 million, with Massachusetts and Oregon tied for fifth spending $41 million.

The report concluded the federal stimulus, American Recovery and Reinvestment Act of 2009, helped jump-start a number of new industrial energy efficiency programs. In 2010, $229 million in ARRA Funds were allocated to encourage energy efficiency. While federal stimulus funding will likely dry up in coming years, an increase in spending by other programs and private partnerships will likely diminish any impact on sustaining programs, the report surmised.

Researchers found some states utilized ARRA stimulus dollars as a funding source to issue grants to industrial companies, which depleted those funds faster than if it were used in conjunction with loan programs. Other states, such as Florida, utilized ARRA funds to offer loans that encouraged businesses to adopt energy efficiency programs and invest in renewable energy technologies. Those loan programs were self-funding, effectively preserving stimulus dollars.

While ARRA programs stimulated many industrial energy efficiency programs, areas that did not have programs before receiving federal dollars may be forced to eliminate them once outside funding is no longer available, the report said.

As more states prepare to meet rising targets for energy efficiency, utilities in particular will continue to benefit from energy savings programs, the report added.
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