The Power of Efficiency

Illinois is sitting on a vast reserve of energy, waiting to be used. However, this energy is not in the form of coal, oil or natural gas. Rather, we are rich in the potential to get more work done with the electricity and natural gas that we already use, through improved energy efficiency.

Energy efficiency measures offer a cost-effective and simple opportunity to solve the state’s biggest energy challenges. By reducing demand for electricity and natural gas, energy efficiency measures can prevent the need to build new power plants and ease pressure on limited fuel supplies, bringing a variety of benefits for the economy and for the environment of the Midwest. And at the same time, energy efficiency offers large potential for citizens and businesses to save on energy bills.

Opportunities to improve energy efficiency are everywhere. Homeowners can improve weather sealing and install high-efficiency appliances, saving energy and improving comfort. Businesses and institutions can take advantage of improved lighting systems and high-efficiency ventilation. Manufacturers can improve production through technologies such as efficient motors and precise controls. And with fuel prices on the rise, opportunities for cost-effective energy efficiency improvements are expanding.

While Illinois has taken important steps to improve energy efficiency, much more remains to be done. To take full advantage of all cost-effective opportunities for improved energy efficiency, the state should expand its policy support for efficiency programs.

A variety of readily available technologies and practices can dramatically reduce energy use in homes in Illinois. For example:

• Through home weatherization – including air and duct sealing, insulation and window replacement – Illinois could cut energy use for home heating by 20 percent, saving 64 billion cubic feet of natural gas per year and reducing total natural gas consumption by 7 percent.
• By requiring all new furnaces to meet federal Energy Star® standards (exceeding the efficiency of a typical new furnace by 20 percent) and to include high-efficiency fans, Illinois could save 1,000 gigawatt-hours (GWh) of electricity and 14 billion cubic feet of natural gas in the year 2020 – enough energy to supply more than 100,000 homes.
• Replacing five conventional incandescent light bulbs with compact fluorescent versions in every home could reduce electricity use for residential lighting by 25 percent, saving 1,100 GWh of electricity per year – enough to power 120,000 homes.
• Adopting minimum energy efficiency standards for just three appliances – DVD players, audio equipment, and power supplies (used for laptop computers, cell phones and related electronics) – would save 300 GWh of electricity per year by 2020 – equivalent to the electricity needs of 32,000 homes.
• Putting all these measures together, energy consumption in a typical Illinois home could be reduced by 20 to 40 percent or more, without sacrifice.
• The potential for energy savings doesn’t stop here. For example, “zero-energy” designs for new homes could cost-effectively reduce energy use compared to a conventional home by 60 to 90 percent, making up the difference with on-site renewable energy generation.

Many of the same strategies that are available for reducing residential energy use also apply – on a much larger scale – to business, institutions and industry.

• Retrofitting lighting systems in commercial buildings and institutions to reduce electricity use for lighting by 40 percent could save 8,000 GWh of electricity every year in Illinois, or about 5 percent of current statewide electricity consumption.
• The use of efficient motors and precise controls in commercial building systems and manufacturing processes could reduce statewide electricity consumption by as much as 15 to 25 percent.
• Efficient technologies have applications on farms as well. For example, installing variable speed motors in vacuum pump systems at dairy farms can reduce system energy consumption by up to 80 percent.
• Combined heat and power technology, which can generate both electricity and heat in an on-site facility, offers huge opportunities for efficiency gains. For example, the University of Illinois at Chicago installed a CHP system on the East Campus in 1993, reducing energy use by about 15 percent. The greatest potential for expanding the technology in Illinois lies in office buildings, schools and hospitals, which could together support more than 1,400 megawatts (MW) of CHP capacity.

Illinois will capture a substantial amount of its energy efficiency resources through legislation that will halt rising demand for electricity by 2013, but many other potential savings measures remain untapped.

• In July 2007, the Illinois General Assembly adopted a bill that will require electric utilities to reduce electricity demand annually by 0.2 percent in 2008, rising to 2 percent per year in 2015 and thereafter. If properly enforced, the bill will stabilize the state’s electricity consumption by 2015. Commonwealth Edison estimates that annual electricity savings will exceed 1,000 GWh four years into the program.
• However, Illinois limited the total annual rate impact of the energy efficiency program to a 0.5 percent increase per year, capped at 2 percent. If the rate cap is triggered, the energy savings goals will be scaled back – even if further investment in energy efficiency would yield greater savings for consumers.
• While Ameren and Peoples Gas have proposed natural gas energy efficiency programs, Illinois has no statewide energy savings targets focused directly on reducing natural gas consumption.
• Illinois is also one of just a handful of states in the country that does not have a statewide residential building energy code.

By taking greater advantage of energy efficiency, Illinois can save money, reduce pollution, and help to reinvigorate the region’s economy.

• Energy efficiency directly translates into lower electricity and gas bills for consumers. For example, if every household in the state replaced five incandescent bulbs with compact fluorescent bulbs, residential electricity use would drop by more than 2 percent, saving consumers $1.7 billion on electricity and maintenance costs over the life of the bulbs.
• Energy efficiency also leads to lower energy prices. For example, if Midwestern states reduced natural gas consumption by 1 percent per year for five years through efficiency measures, wholesale natural gas prices would decline by as much as 13 percent.
• Money saved through efficiency programs can then be spent on other goods and services, creating jobs and stimulating the local economy. For example, in 2005, researchers at the University of Illinois calculated that an energy efficiency package (coupled with other clean energy policies) would create 191,000 new jobs in Illinois by 2020, increase wages by $5.5 billion, and expand economic output by $18 billion.
• Energy efficiency programs, which increase the penetration of efficient technologies and practices into the marketplace, can save electricity at less than half the cost of generating electricity at a power plant and delivering it to consumers over transmission lines. For example, Wisconsin’s Focus on Energy Program is currently saving electricity at a cost of about 3 cents per kWh (compared to an average retail cost of electricity in 2005 of 7.5 cents per kWh.) The program also saves natural gas at a cost of 18 cents per therm (compared to a 2005 delivery cost of at least $1 per therm).
• Energy efficiency measures also prevent global warming pollution. For example, if all commercial buildings in Illinois improved the efficiency of their lighting systems by 40 percent, it would reduce pollution at levels comparable to removing about 800,000 cars from the road.

To capture more of its energy efficiency resources, Illinois should:

• Implement and enforce the recently passed energy efficiency resource standard, requiring utilities to reduce electricity consumption before building new power plants.
• Remove the rate cap that arbitrarily limits investment in cost-effective efficiency opportunities.
• Create similar energy efficiency savings targets for natural gas utilities.
• Set strong energy efficiency standards for household and commercial appliances inadequately covered by federal policy.
• Establish a strong residential building energy code and strengthen commercial building codes, ensure the codes are adequately enforced, and update the standards regularly.
• Eliminate obstacles to the use of combined heat and power (CHP), which would dramatically expand opportunities for industrial and commercial energy efficiency.
• Create incentive programs to encourage businesses to go above and beyond minimum standards, and to encourage consumers to adopt new energy-saving technologies.