Can Howard Geller make us like the broccoli of efficiency a little more?
by Allen Best
Howard Geller is like your mother, advising you to eat your energy efficiency vegetables before ordering your renewable energy desert.
This broccoli of the energy world is less glamorous than shiny solar panels and towering windmills, the gains more difficult but ultimately just as important. We must get smarter about how we use energy and not just find new ways to create it.
Geller, the executive director of the Southwest Energy Efficiency Project, is a leading proponent of this gospel of efficiency. He has a Ph.D. in energy policy and has published a book, “Energy Revolution: Policies for a Sustainable Future.”
In 2002, he founded SWEEP, an organization based in Boulder, Colo. It advocates for energy efficiency in the six states of the Colorado River Basin. Funding comes from the U.S. Department of Energy and charitable foundations.
In an appearance last Thursday night in Golden, Colo., however, Geller spoke most frequently about Colorado’s evolution. He told members of the Colorado Renewable Energy Society that energy efficiency in Colorado has cut demand by about 500 megawatts. By way of comparison, the Valmont coal-fired power plant in Boulder can generate up to 186 megawatts.
A pivotal year in Colorado’s energy efficiency story was 2004. Colorado voters that year approved a renewable portfolio standard for Xcel Energy and Black Hills Energy, the state’s two privately-owned electrical utilities. But that year, the Public Utilities Commission also approved the deal that resulted in construction of Comanche 3, Colorado’s newest and likely last coal-fired power plant.
That might seem like a blow against advocates of energy transformation, but in a 2010 story in Colorado Biz Magazine, Geller argued that in the compromise that yielded the new power plant, Xcel agreed to launch into energy efficiency.
A law passed in 2007 was also an important trigger. Colorado HB 1037 requires the state PUC to set energy saving goals for the investor-owned utilities and gives them an opportunity—not a guarantee—to make profits on these energy efficiency programs.
In Geller’s telling, “Xcel’s goals then weren’t very ambitious. He described a pattern, apparently initiated from the outset and continuing to this day. Xcel insists it can’t achieve these giant steps of energy efficiency. SWEEP—and others—insist that Xcel can do much, much more. The PUC settles somewhere in the middle. But then Xcel achieves more than it said it could and does so within budget.
This does not cost the owners of Xcel, a publicly traded company. Instead a 3 percent surcharge on electricity bills pays for the 30 different programs. They include everything from reduced prices for energy-efficient lightbulbs to TV ads with subtle reminders to unplug your toaster after breakfast, to avoid the “vampire” energy demand of that and other devices.
Xcel’s demand-management program also gives customers incentives to let air conditioners sit idle for relatively brief periods during hot afternoons and evenings. Here’s the logic: It’s expensive to build churches just for Easter Sunday, and the equivalent in the energy world are blazing-hot days in July. By shaving demand, Xcel avoids having to build more power plants or pay for very expensive spot-market power.
Over the last six years, said Geller, Xcel Energy has spent $394 million on demand-side programs. But these programs have cut electricity by about two billion kilowatt-hours per year. This represents 7 percent of sales over the six-year period.
Looked at differently, Xcel’s programs achieve a 1.5 savings of total sales on an annual basis. Black Hills Energy, serving the Pueblo area, has achieved 1 percent savings.
Xcel and Black Hills together account for about 60 percent of electrical demand in Colorado.
Farms, ranches and city utilities
Municipal utilities and the electrical co-ops provide the other 40 percent of electricity in Colorado. Unklike the privately owned utilities, they do not have state energy efficiency mandates
Some have done so anyway. Fort Collins has done extraordinarily impressive work, with 2.2 percent annual savings of total sales (compared to Xcel’s 1.5 percent). From 2005 through 2015, per-capita use has fallen 13 percent. Colorado Springs, the state’s largest municipal utility, lags behind at about 1 percent in annual savings.
The 22 co-operatives also cover a spectrum. The most robust among them is Holy Cross Energy, which serves Vail, the four Aspen ski areas and down-valley communities as far west as Battlement Mesa. The Holy Cross ‘s five-year plan adopted in 2011 called for efficiency gains of 0.55 percent per year—not that impressive, said Geller.
(Mary Wiener, who runs Holy Cross’s efficiency program, tells MTN that the co-op has an efficiency goal of 2.5 percent of sales by 2017, and the co-op is actually ahead of schedule on that. It’s not clear whether this is an apples-to-apples comparison with the measuring tool cited by Geller. She also warned that direct comparisons against other co-ops in Colorado may not always be fair, as Holy Cross Energy has more affluent customers and, with its ski areas, semi-urban customer basis. This compares with the often poorer and more rural areas of much of Colorado. She suggested that makes it easier to implement energy efficiency programs. Holy Cross collects 2 percent of customer bills for allocation to both energy efficiency and renewable energy programs).
Other co-ops, most of which are supplied by Tri-State Generation and Transmission, have had less ambition, says Geller. And one independent co-op, Sedalia-based Intermountain, has no efficiency program “that I can tell,” he adds.
For that matter, state government’s record is also mixed. He credited the Colorado Energy Office with efficiency work involving dairy farms now expanded to irrigation in rural Colorado but added: “They could do more.”
Instead of voluntary efforts, he said, the Colorado Legislature must make energy efficiency mandatory in all of Colorado’s cities and rural areas, as it did in 2007 for Xcel and Black Hills.
Arizona leads the way in the West
Outside of Colorado, he said that New England states have done the most to promote energy efficiency. But in the West, it’s not California in the lead, nor Colorado. Rather, it’s Arizona, a state determinedly conservative in its politics but fully embracing of energy efficiency.
Arizona was looking at 4 to 5 percent growth in electrical demand per year until Kris Mayes, the chairman of the Arizona Corporate Commission (similar to Colorado’s PUC) “grabbed onto efficiency.”
Geller also pointed to a coalition of interests that have backed up the program, including religious groups and military retirees. “In Arizona, we don’t talk about C02 emissions. We talk about the economic benefits.”
For utilities, efficiency can have an important downside. Revenues in the traditional utility model depends upon growth in demand—demand that can be met by the utilities through centralized power production, whether in giant coal-fired power plants or in new utility-scale wind or solar farms.
Now, load growth has slowed. Colorado’s load growth used to be 2 to 3 percent annually. Now it’s less than 1 percent, even as Colorado’s population and economy have continued to grow. Without the demand from marijuana growers for intense 18-hour-per-day lighting in warehouses, Colorado probably would have no growth, Geller joked.
What needs to be done going forward?
For investor-owned utilities: decoupling. This notion, advanced long ago by Amory Lovins, co-founder of the Rocky Mountain Institute, holds that utilities need to be in the business of delivering energy services, not energy itself. In other words, their profitability should not be tied to how much power they sell.
So far 21 states have decoupled natural gas sales while 15 have decoupled electricity sales. The most recent was Minnesota, and it came with the support of Xcel Energy, a major operator there. Geller says he thinks Xcel will also support decoupling in Colorado.
“They see a lot of forces holding down load growth, potentially eliminating any load growth,” says Geller. “And if decoupling isn’t adopted, they are harmed.”
Decoupling, in this new slow- and no-growth scenario, represents risk reduction for the investor-owned utilities.
Geller also said energy efficiency needs to be a central part of the EPA’s Clean Power Plan. He called for aggressive adoption of up-to-date energy codes by local jurisdictions. And he mentioned net-zero energy buildings.
And he talked about expanded mandates for energy performance benchmarks. Several cities—Seattle, Chicago, and Philadelphia, among them—have that mandate. Denver, he added, does not. As a result just 150 of the city’s 60,000 or so buildings have been benchmarked.
Benchmarking allows buyers as well as owners to know specifically the energy performance of a building, allowing energy demand—and efficiency—to become a metric for evaluating the worth of a property.
This story was amended to reflect the correct realm of Howard Geller’s Ph.D. plus the longer time period of Xcel’s demand-side management program and, finally, to replace a million with a billion. To paraphrase the late U.S. Senator Everett Dirksen, a billion here, a billion there — pretty soon you’re talking about real electricity savings.