A message from the Executive Director
Peak Efficiency: A Resource of Extraordinary Value
As air conditioners across the region begin to battle the summer heat, our electric system once again faces the strain of peak energy demand. Maximizing energy efficiency can provide critical savings during peak periods to control energy costs and maintain the reliability of our energy supply. Beyond addressing peak constraints, energy efficiency holds a unique value in that the savings it yields build seasonally and year round to deliver greater load, demand and cost reductions for the region.
Opportunities to increase efficiency abound in both existing buildings and new construction. Anything that operates during peak periods represents the potential to save. Installing high performance, high efficiency equipment such as commercial and residential air conditioners saves energy each time the equipment is turned on, contributing to reduced load during peak demand periods, as well as season long savings. The same is true in the case of commercial lighting systems and commercial motor technologies. Joining that equipment with a set of demand response controls allowing customers to manage their energy loads increases the impact of energy savings to further reduce peak demand.
There are many examples of energy efficiency programs reducing peak demand in the Northeast. In New York, according to research by ACEEE, NYSERDA’s energy efficiency programs saved nearly 1,700 MW during peak summer periods between 1990 and 2001. For additional examples, see the related article in this issue Keeping the lights on: How energy efficiency is helping to meet peak demand.
Recognizing the value of energy efficiency as a cost-effective peak demand resource, the Federal Energy Regulatory Commission this month directed PJM Interconnection, the grid system operator serving the Mid-Atlantic states, to consider methods to specifically include energy efficiency in its capacity market design including specific consideration of how efficiency is included in the ISO-New England Forward Capacity Market.
High efficiency equipment in transmission and distribution equipment represents another important opportunity to cost-effectively meet system peak. Public Service Electric and Gas (PSE&G) recently announced that it will use more energy efficient primary and secondary wires for new overhead installations, install more energy efficient transformers atop utility poles when new or replacement units are needed, and expedite the replacement of aging transformer banks with state-of-the-art units in some of its electrical substations. This will reduce carbon emissions, reduce line losses and operating costs, as well as improve power system reliability (see related press release).
In a related effort earlier this year, utilities large and small serving the northeast, including PSE&G, National Grid, Long Island Power Authority and Burlington Electric Department, signed onto a letter to Energy Secretary Samuel Bodman adopted by the Edison Electric Institute (EEI) and the American Public Power Association (APPA), to set higher minimum efficiency standards for distribution transformers than that proposed by U.S. Department of Energy. (see related press release)
Peak demand, however, is not just a summertime issue. Particularly in the Northeast, where we rely heavily on a constrained supply of natural gas for heating, peak winter demand periods strain our energy systems and contribute to higher fuel prices. High efficiency furnace and boiler equipment and tighter building envelopes, can not only save energy for the consumer, but can in fact reduce the demand that pressures our region’s energy system.
Public policies that support and accelerate the role of energy efficiency as a resource to address system peak include requiring peak capacity resource solicitations to effectively include energy efficiency resources, establishing peak demand reductions as a goal of ratepayer funded energy efficiency programs, requiring the participation of ratepayer funded programs in capacity market solicitations and flowing the resulting market revenues back into additional efficiency investments, allowing distribution companies cost recovery for the higher initial cost of energy efficient transmission and distribution (T&D) equipment, and setting federal appliance efficiency standards for T&D equipment to maximize net savings on a life-cycle cost basis.
By advancing policies and programs that encourage energy efficiency, policymakers in the Northeast have a unique opportunity to address multiple energy challenges at once. Increased investment in energy efficiency as a primary resource will not only save our region’s valuable energy supply and lower customer energy bills, but it will also reduce harmful carbon emissions and stabilize the reliability of our energy systems. With the summer peak demand period upon us, the time to act is now.
Sue Coakley
Executive Director
