Dive Brief:

• A Lawrence Berkeley National Laboratory study concludes the overall cost of saving electricity at publicly-owned utilities is about $0.024/kWh — though the price varies widely between sectors, with commercial and industrial (C&I) costs just $0.02/kWh versus residential costs of $0.034/kWh.
• The overall public power cost is slightly lower than at investor-owned utilities, which Berkeley Lab pegged at $0.025/kWh in a similar 2018 study.
• Across all types of electric utilities in the United States, researchers found efficiency spending levels rising. The national laboratory expects 3% annual growth in efficiency program spending through 2025, then slowing to less than 1% annually until 2030.

Dive Insight:

With energy savings now widely seen as a key component to carbon reduction and combating climate change, Berkeley Lab researchers say they expect utilities will continue growing spending on efficiency programs.

In a webinar last week presenting the research, authors of the November report said spending on efficiency programs funded by customers was about $5.8 billion in 2016 and $6.1 billion in 2017, and could increase to $8.6 billion in 2030 under a medium-growth scenario. They said the new research can help utilities find additional opportunities for cost-effective savings.  

"These programs really are important components of utility resource portfolios, and cost performance is a key consideration," Lisa Schwartz, deputy group leader of Berkeley Lab's Electricity Markets and Policy Group, said during the discussion.

The research examined data from 111 program administrators for 219 publicly-owned utilities in 14 states, and compared the program administrator cost of saving electricity (PA CSE), which calculates total costs from the utility perspective.

The C&I sector made up more than half of the savings publicly-owned utilities reported. The low-income customer segment had significantly higher costs, at $0.133/kWh. However, the report found some challenges in assessing the cost of low-income efficiency programs.

Many public utilities "target hard-to-reach customers, including low-income households, even though such efforts may not be reported discretely," researchers said. The report also noted recent data from the American Public Power Association found 80% of members targeted efficiency programs to disadvantaged customers, and 63% specifically targeted efficiency programs to areas with low-income residents.

While the PA CSE for all sectors was similar between public power utilities and investor-owned, there were differences. Berkeley Lab's 2018 research on IOUs showed residential programs were cheapest, and low-income PA CSE came in at just $0.105/kWh.

"Part of this comes back to the difference in measure lives," report author and Berkeley Labs Scientific Engineering Associate Sean Murphy said during the presentation. The average life of residential sector programs for public power utilities measured just under 80 years, and C&I was five years longer, he said.

The public power focus on C&I savings can account for some of the differences, with IOUs focused on residential programs.

"Measure life is a key input," Murphy said. "Longer measure life can drive overall levelized costs down."

By region, the Midwest had the lowest PA CSE at $0.014/kWh, while the Northeast was highest at $0.041/kWh.

In the Midwest, the low cost "could be that program administrators there are leaning on the low cost savings in the C&I sector more than is true in other regions," said Greg Leventis, a Berkeley Lab program manager. "The variability is likely due to the specific sectors targeted and the size and maturity of markets."

There is a growing recognition of energy efficiency's potential, which extends far beyond utility programs. According to a December report from the Alliance to Save Energy (ASE), the American Council for an Energy-Efficient Economy and the Business Council for Sustainable Energy, the resource could deliver more than 40% of the carbon reductions needed globally to meet Paris Agreement climate targets.

But the three groups also concluded total U.S. energy efficiency investment levels fell by an estimated 18% from 2016 to 2018. There has been a slowdown in the growth of Property Assessed Clean Energy investment, the groups say, and efficiency investments by energy service companies are leveling off.

"There are warning signs that suggest the commitment to energy efficiency is waning," Natasha Vidangos, ASE vice president of research and analysis, told Utility Dive.