Last week the Virginia Commission on Energy and the Environment held a day long meeting to hear testimony on the future role of electricity in the commonwealth.
Representatives of the various power companies serving the state testified as to their plans and their commitment to reaching the state’s goal of reducing electricity consumption by 10 percent by 2022. As it turns out, this goal turns out to be murky as nobody ever said what the 10 percent should be based on – 10 percent of current consumption so that the state is actually using 10 percent less 14 years from now, or 10 percent less than what 2022 consumption would be if no efforts to conserve electricity were undertaken. In the latter case the state could actually be burning considerably more electricity in 2022 as the state’s population is expected to grow and it is likely that a lot of electric or plug-in hybrid cars will be refueling off the electric grid by then.
The most interesting presentation of the day, however, was made by a non-profit group called the American Council for an Energy Efficient Economy (ACEEE). This group believes that making the most efficient use of the electricity we already generate is the best and cheapest way to gain more electricity. While converting over to more efficient electricity consuming devices (such as compact fluorescent bulbs) is not free, the Council cites studies that replacing end user equipment, adding insulation, etc. can cost anywhere from one half to one quarter the cost of installing and fueling new electricity generating capacity. This includes wind generated electricity which gets its energy for free.
It turns out that ACEEE recently completed a detailed 170 page study of electricity consumption in Virginia and concluded that with a maximum effort, the commonwealth could save as much as 31 percent of its current electric consumption while still doing all the things we do today. They also cite policy achievable savings of 19 percent, or possibly 27 percent with more aggressive policies, which are deemed a more realistic goal rather than an all out efficiency effort. Either of these numbers amounts to some serious savings which when combined with conservation measures such as turning off power suggests that there are ways to survive and prosper while using considerably less electricity than we use today.
Part of the problem in Virginia is that it has had relatively inexpensive electricity due to readily available supplies of coal in the state and in nearby West Virginia and two large nuclear reactors that have been functioning for many years. In this situation, consumers, businesses, and governments do not have a particularly strong economic incentive to turn off lights, adjust thermostats and buy more expensive, yet more efficient, devices. As a result, Virginia consumers use a lot of electricity. The average residential customer now consumes 14,000 KwH per year which is 25 percent above the national average and the average commercial customer has increased consumption by 50 percent in the last eight years. As a result, Virginia ranks 38th out of the 50 states in terms of efficient use of electricity.
All this is about to change. The cost of new generating capacity has been rising steadily. Cheap Appalachian coal is running out. Regulatory boards have recently given the power companies substantial rate increases, are beginning to contemplate increasing the cost of electricity during high demand periods and possibly even reversing the concept that the more you use the cheaper it gets.
Although oil, coal and natural gas prices are currently in a slump due to a multiplicity of factors, over the long run they have no place to go but up and up. The limitations on carbon emissions could send electricity prices to unheard-of levels. In this environment, conservation and efficiency become the only viable option, for, in coming decades dwindling supplies of liquid fuels and eventually natural gas are going to leave us with electricity as the only viable way of powering our civilization.
The ACEEE recommends to Virginia policymakers a suite of 11 policy recommendations that the council feels the state has the power to implement and which combined will result in energy savings of 20 percent or better and savings of roughly $2 billion for electricity consumers over the next 14 years. There are, however, numerous cultural and regulatory barriers to increased efficiency. For example, why should the landlord pay for more efficient lighting and air conditioning when the tenant pays the electric bills directly?
Over half the savings from increased energy efficiency will come from industrial and business consumption and only a third from residential. The advent of smart meters and electricity prices based on time of day consumption will likely be in place within the next ten years. If the rate structure puts a very high premium on electricity consumption during peak hours, a little consumer education should be enough to encourage washing and drying late in the evening and setting air conditioners to higher settings on summer afternoons.
Most of the policy recommendations to achieve higher efficiency are simply adjustments and tightening to existing laws, codes, policies, and rate structures. For example leaving office and other lighting on all night when no one is there is a prime example of egregious waste of dwindling resources. Redrawn regulations, rate structures and building codes can do much to reduce or eliminate such waste.
Some of the energy efficiency problem is the relationship between the state and federal governments. Most state building codes that have great potential for saving energy are modeled after the national code. Here again you have the problem of who is paying for the building and who pays for the energy. It is obviously to the benefit of builders to keep their cost of construction to a minimum and argue vigorously that their industry and the economy will be destroyed by energy efficiency standards. This, of course, is a problem for the Congress to sort out. Amidst all the bluster about “energy independence” the proper decision makers will soon figure out that tougher codes and regulations are the quickest and cheapest way to make progress towards this goal.