Energy efficiency is a big and growing business with $231 billion invested globally in 2016, according to an estimate by the International Energy Agency (IEA). The American Council for an Energy-Efficient Economy (ACEEE) used the release of the IEA Worldwide Investment report in July as a springboard to examine how much the United States invests in energy efficiency, what is driving that investment and how it could be increased.
We spend how much?
The first blog post, How Many Billions do US Businesses and Individuals Invest in Energy Efficiency Each Year?, gave $41 billion as the estimated figure for efficiency spending in our country. This was the first year that the IEA report gave a separate estimate for the U.S., but spending was not broken out by sector. Based on the worldwide estimate, about 58 percent of that spending is for buildings, 26 percent for transportation and 16 percent for industry.
Drawing on other spending reports to get a clearer picture, ACEEE concludes that our energy-efficiency investments may actually range from $60 billion to $115 billion annually. This wide-ranging estimate results from different studies employing different measurement methods and parameters. However, additional research by ACEEE and by the U.S. Green Building Council suggest this range is reasonable.
Policy appears to be the primary driver in energy-efficiency investments, with building codes and appliance and vehicle standards responsible for about $20 billion worth. “Spillover” occurs when policies and programs, such as utility incentives and customer programs, indirectly influence consumer decisions.
Other factors driving the decision to invest in energy efficiency include income and education levels among residential consumers and type of industry for business customers.
Who Invests in Energy Efficiency and Why?, the second blog post, cites a survey by the U.S. Energy Information Administration (EIA) showing that large firms are more likely to engage in energy management activities than small companies. Businesses participating in the Shelton Group’s 2016 B2B Pulse study rated how important sustainability and conservation were to their company’s operating and capital expenditure decisions. Commercial real estate development and property management were the industry groups that gave energy issues the most consideration.
The EIA’s 2015 Residential Energy Consumption Survey found that consumers with higher incomes are more likely to make energy-efficiency investments large enough to be eligible for federal energy-efficiency tax credits. Smaller investments, such as new lightbulbs, do not appear to be affected by consumer income. Another study found an education effect along with the income effect, but income and education are usually closely related. Households that have moved within the last three years spend more on efficiency improvements, as do younger families.
The reasons commercial customers offer for making efficiency upgrades, while not unexpected, show a subtle shift in priorities. From the Shelton Group study, business customers cited “energy savings or other cost reductions” as the leading motivation for investing in efficiency. Although concern about climate change ranked toward the bottom of the list, the percentage of respondents that mentioned it has nearly doubled in the last year.
Saving on electric bills also topped the reasons residential customers gave for undertaking energy-efficiency improvements at 61 percent. Making the home more comfortable followed with 35 percent and making the home healthier was mentioned by 27 percent of respondents. Taken together, comfort and safety are an equal consideration to financial concerns. The study recommends focusing homeowners on both the financial and non-financial benefits of energy efficiency to explain the value of their investment.
Let’s do more
The final post addresses the question on every utility program manager’s mind—How Can we Increase Energy Efficiency Investments?—and offers 10 suggestions to make it happen. According to ACEEE, only about one-quarter of households and businesses implement efficiency upgrades, in spite of the benefits.
The suggestions focus on expanding what is already working, while remaining open to new approaches. More measurement and benchmarking could help program providers identify successful programs and help customers see the value of energy-efficiency improvements. The article also recommends seeking partnerships with real estate, financial and construction industries to reach consumers through different channels.
Energy-efficiency investments were 8-9 percent higher in 2016 than in 2015. The ACEEE blog series offers some starting points to help utilities keep the momentum going. Energy Services looks forward to hearing about your ideas for getting more results from your existing programs and for creative new service offerings.
Source: American Council for an Energy-Efficient Economy