Estimating the cost of saving electricity through U.S. utility customer-funded energy efficiency programs

Abstract

The program administrator and total cost of saved energy allow comparison of the cost of efficiency across utilities, states, and program types, and can identify potential performance improvements. Comparing program administrator cost with the total cost of saved energy can indicate the degree to which programs leverage investment by participants. Based on reported total costs and savings information for U.S. utility efficiency programs from 2009 to 2013, we estimate the savings-weighted average total cost of saved electricity across 20 states at $0.046 per kilowatt-hour (kWh), comparing favorably with energy supply costs and retail rates. Programs targeted on the residential market averaged $0.030 per kWh compared to $0.053 per kWh for non-residential programs. Lighting programs, with an average total cost of $0.018 per kWh, drove lower savings costs in the residential market. We provide estimates for the most common program types and find that program administrators and participants on average are splitting the costs of efficiency in half. More consistent, standardized and complete reporting on efficiency programs is needed. Differing definitions and quantification of costs, savings and savings lifetimes pose challenges for comparing program results. Reducing these uncertainties could increase confidence in efficiency as a resource among planners and policymakers.

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