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Utilities’ Cost of Adding Energy Efficiency Continues to Drop

utility plantIncreasing total energy capacity by adding energy efficiency measures continues to be cheaper than adding new sources of electricity, such as conventional coal-fired plants.

A new report from the American Council for an Energy-Efficient Economy (ACEEE) shows the benefits of utility costs of saved energy (CSE), or the act of using utility ratepayer-funded energy efficiency programs to increase efficiency, and thus effectively add more electrical capacity to the system.

According to the new report (PDF, registration required), the average cost per kiloWatt hour of energy efficiency is about 2.5 cents, down from about 3 cents in a similar 2004 report.

By contrast, adding new energy generation costs between 7 and 15 cents per kiloWatt hour, according to ACEEE.

Considering that energy inputs such as coal and natural gas are subject to price swings, it makes sense for utilities to put in place programs that encourage businesses and residents to be more energy efficient.

“Energy efficiency is by far the least costly energy resource option available for utility resource portfolios,” said report author Katherine Friedrich. “Saving a kilowatt-hour through energy efficiency improvements is easily one-third or less the cost of any new source of electricity supply, whether conventional fossil fuel or renewable energy source.”

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