The Power of Efficiency

Energy efficiency measures offer a cost-effective and simple opportunity to solve Wisconsin’s biggest energy challenges. The Power of Efficiency shows that 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.

Wisconsin 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-quality 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.

While Wisconsin 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 Wisconsin. For example:

  • Through home weatherization – including air and duct sealing, insulation and window replacement – Wisconsin could cut energy use for home heating by 20 percent, saving 18 billion cubic feet of natural gas per year and reducing total statewide 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, Wisconsin could save 500 gigawatt-hours (GWh) of electricity and 2.5 billion cubic feet of natural gas in the year 2020 – enough energy to supply well over 30,000 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 520 GWh of electricity per year – enough to power more than 50,000 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 135 GWh of electricity per year by 2020 – equivalent to the electricity needs of more than 13,000 homes.
  • Putting all these measures together, energy consumption in a typical Wisconsin 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 3,600 GWh of electricity every year in Wisconsin, 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 on-site at a facility, offers huge opportunities for efficiency gains. For example, Beloit Memorial Hospital in Beloit installed a CHP system in 2000, shaving more than 30 percent off of its energy bill. The greatest potential for expanding the technology in Wisconsin lies in office buildings, hospitals and nursing homes, which could together support more than 700 megawatts (MW) of CHP capacity.

Wisconsin is capturing many energy efficiency opportunities through Focus on Energy, but other potential savings measures remain untapped.

  • Wisconsin requires investor-owned electric and natural gas utilities to invest 1.2 percent of their annual revenues into a public benefits fund for energy efficiency, renewable energy and low-income household assistance programs. In 2006, about one-third of this fund went toward Focus on Energy, an independent organization that promotes electric and gas energy efficiency. In fiscal year 2006, Focus on Energy helped consumers save almost 200 GWh of electricity (about 0.2 percent of annual consumption) and 13 million therms of natural gas (about 0.3 percent of annual consumption).
  • However, Wisconsin could do more. A 2005 study for the Governor’s Taskforce on Energy Efficiency and Renewables concluded, based on avoided costs of generation alone, that the state could sustain economically justified energy efficiency spending levels up to three times higher than in fiscal year 2006. Studies of achievable energy efficiency potential indicate that savings levels on the order of 1 percent per year are possible for electricity and natural gas efficiency programs.
  • Wisconsin also has relatively outdated building energy codes for new buildings. The state’s commercial building energy code is six years older than the current 2006 International Energy Conservation Code. The state’s residential building energy codes are more than 10 years out of date – and only 10 states in the country have weaker codes.

By taking greater advantage of energy efficiency, Wisconsin 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 Wisconsin replaced five incandescent bulbs with compact fluorescent bulbs, residential electricity use would drop by more than 2 percent, saving consumers $800 million 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 2001, researchers at the University of Illinois calculated that an energy efficiency package aimed at reducing regional electricity consumption 28 percent by 2020 would create 7,400 jobs and increase Wisconsin’s economic output by $2.7 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 Wisconsin improved the efficiency of their lighting systems by 40 percent, it would reduce pollution at levels comparable to removing more than 600,000 cars from the road.

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

  • Set ambitious energy efficiency savings targets for electric and gas utilities, translating the current public benefits fund spending requirements into specific targets for annual electricity and natural gas savings aiming to reduce annual electricity and natural gas consumption by 1.5 percent per year, or more. The state should set targets for both investor-owned and municipal and cooperative utilities.
  • Set strong energy efficiency standards for household and commercial appliances inadequately covered by federal policy.
  • Strengthen building energy 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.

Travis Madsen

Policy Analyst

Elizabeth Ridlington

Associate Director and Senior Policy Analyst, Frontier Group

Elizabeth Ridlington is associate director and senior policy analyst with Frontier Group. She focuses primarily on global warming, toxics, health care and clean vehicles, and has written dozens of reports on these and other subjects. Elizabeth graduated with honors from Harvard with a degree in government. She joined Frontier Group in 2002. She lives in Northern California with her son.

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