The United States loses about two-thirds of the energy it generates due to inefficient systems andwaste. No system is 100 percent efficient, but the U.S. has opportunities toimprove the efficiency of its energy use.
These
opportunities exist across nearly all areas of the energy industry. Energy
companies can improve efficiency by making large-scale changes, such as
upgrading transmission lines and minimizing methane leaks to using more efficient air compressors
for both onshore and offshore energy exploration. Customers, too, can help
improve U.S. energy efficiency by purchasing more efficient products and
avoiding energy waste.
Here’s how utilities, government and others can help promote energy efficiency.
Utility Energy-Efficiency
Programs
Utilities
often offer programs that encourage customers to use energy more efficiently.
It might seem counterintuitive that energy companies would want their customers
to buy less energy, but efficiency can save utilities’ money.
This is because it is much more cost-effective to reduce consumption than to
build new generation facilities and infrastructure. In this way, utilities
treat energy efficiency like a resource.
Through their efficiency programs, utilities might offer their customers discounts on energy-efficient appliances, light bulbs, HVAC systems and other equipment. The utility may also provide a rebate to customers who purchase these types of products. Online tools that help customers manage their energy use can also beconsidered energy-efficiency programs. Utilities might also employ variousfinancing mechanisms to assist customers with efficiency projects.
Government Energy-Efficiency Programs
The government can also encourage energy efficiency. It may establish standards that appliances and equipment must meet. Building codes could include requirements related to energy efficiency. They may also create programs suchas ENERGY STAR, which rates products and buildings on their efficiency.
Some government energy-efficiency policies apply to energy companies. A utility rate adjustment mechanism called decoupling, for example, may support utilities in promoting efficiency. Decoupling removes the link between the amount of revenue a utility makes and the amount of energy it sells. Instead, the company recovers a fixed amount for its costs. This removes the incentive to sell more energy, making efficiency more attractive to the utility. Governments might also establish Energy Efficiency Resource Standards, which require energy providers or jurisdictions to meet a predetermined efficiency goal.
Like utilities, governments might also use financing options to help energy users begin an energy-efficiency project.
Financing Options
Organizations might use their own funding to finance their energy-efficiency projects, but they can also take advantage of numerous financing options. Some typical methods include leases and loans. Other more specialized financing methods include:
- On-bill financing and repayment: In this arrangement, a utility or a private lender provides capital toa customer for an energy-efficiency project. The customer repays this capital through regular payments on a utility bill.
- Property Assessed Clean Energy (PACE): This financing structure allows building owners to borrow money to use for energy-efficiency projects and repay it through an assessment on their property tax bills. The arrangement will remain with the building even if the owner sells the property. Government programs or private investors may fundPACE, but it requires enabling legislation.
- Efficiency-as-a-service: Under this type of agreement, the provider pays for a project, and the customer makes payments based on the resulting energy savings. The agreement typically has a contracted period of five to 15 yearsand may include a buyout option.
Energy
efficiency may be one of the most valuable resources the U.S. has. There are
many ways in which the U.S. can explore its options, enabling it to play a role
in a variety of different circumstances.
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