Featured Research

from universities, journals, and other organizations

Disincentives to energy efficiency can be fixed

Date:
June 4, 2013
Source:
Oregon State University
Summary:
A new study finds that utilities aren't rewarded for adopting energy efficiency programs, and that reforms are needed to make energy efficiency as attractive as renewables.

A new study finds that utilities aren't rewarded for adopting energy efficiency programs, and that reforms are needed to make energy efficiency as attractive as renewables.

The article, just published in the current issue of Environmental Law, examines key differences between energy efficiency projects and renewable resources. Author Inara Scott, an assistant professor at Oregon State University, outlines ways to increase the amount of energy utilities save each year through efficiency programs.

"Right now, the system actually discourages utilities from building programs to increase efficiency," she said. "We need to start addressing efficiency as we do renewable energy -- by looking at it systemically and removing the barriers."

Scott spent a decade as a lawyer specializing in energy and regulatory law. Her research in the College of Business centers on the transformation of utility systems, clean energy, energy efficiency, and utility regulation.

Her study makes four key recommendations: redesigning rate structures, setting hard targets, streamlining cost-effective tests and addressing market barriers.

Cost-recovery systems for many investor-owned utilities in the United States are based on an old rate structure model -- the more energy that is produced, the higher return for shareholders. "You don't want to penalize utilities for selling less energy," Scott said.

Instead, she said, states can use ratemaking mechanisms to decouple the link between utility sales and revenues and establish performance incentives for the adoption of efficiency programs.

"Decoupling mechanisms may add complexity to utility rate structures, but they are essential to eliminating environmentally nonsensical ratemaking models that reward utilities for higher sales and penalize them for efficiency."

Setting hard targets is doable, she said. The state of Oregon has set a goal for 25 percent of its energy to be consumed through renewables by 2025. Scott said other states also could set aspirational goals for energy efficiency.

"If states are committed to reducing the strain on the electric grid, diversifying utility resource portfolios, reducing dependence on foreign markets, and reducing carbon emissions through the adoption of renewable resources, they should be just as willing to do so through the adoption of energy efficiency as they are through the purchase of renewable resources."

Streamlining cost-effectiveness tests will be difficult, Scott said, because a simple, accurate way to measure energy efficiency does not exist. "The difficulty is that you're trying to measure energy you didn't use. So really, you're measuring something that doesn't exist."

Many of the tests that do exist are so complicated that they may discourage utilities from adopting energy efficiency. Issues with cost-effectiveness testing will be difficult to fully remedy, Scott said, but these steps -- conducting assessments at a programmatic level, streamlining the precision of tests, and considering the development of national standards -- will move the bar forward.

Market barriers, Scott said, can be addressed through incentives. Some states, including Colorado and Michigan, have increased the size of incentives for consumers to take on energy efficiency programs (including, in some cases, reimbursing consumers 100 percent of their investment) and finding ways to make incentives more attractive to customers through advertising and education.

"There needs to be better marketing around efficiency," Scott said. "We need to make increasing energy efficiency as attractive as opting for 'green' or 'salmon-friendly' renewables."


Story Source:

The above story is based on materials provided by Oregon State University. Note: Materials may be edited for content and length.


Cite This Page:

Oregon State University. "Disincentives to energy efficiency can be fixed." ScienceDaily. ScienceDaily, 4 June 2013. <www.sciencedaily.com/releases/2013/06/130604153518.htm>.
Oregon State University. (2013, June 4). Disincentives to energy efficiency can be fixed. ScienceDaily. Retrieved July 31, 2014 from www.sciencedaily.com/releases/2013/06/130604153518.htm
Oregon State University. "Disincentives to energy efficiency can be fixed." ScienceDaily. www.sciencedaily.com/releases/2013/06/130604153518.htm (accessed July 31, 2014).

Share This




More Earth & Climate News

Thursday, July 31, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Big Waves In Arctic Ocean Threaten Polar Ice

Big Waves In Arctic Ocean Threaten Polar Ice

Newsy (July 30, 2014) Big waves in parts of the Arctic Ocean are unprecedented, mainly because they used to be covered in ice. Video provided by Newsy
Powered by NewsLook.com
Raw: Thousands Flocking to German Crop Circle

Raw: Thousands Flocking to German Crop Circle

AP (July 30, 2014) Thousands of people are trekking to a Bavarian farmer's field to check out a mysterious set of crop circles. (July 30) Video provided by AP
Powered by NewsLook.com
Amid Drought, UCLA Sees Only Water

Amid Drought, UCLA Sees Only Water

AP (July 30, 2014) A ruptured 93-year-old water main left the UCLA campus awash in 8 million gallons of water in the middle of California's worst drought in decades. (July 30) Video provided by AP
Powered by NewsLook.com
In Virginia, the Rise of a New Space Coast

In Virginia, the Rise of a New Space Coast

AP (July 30, 2014) Every summer, tourists make the pilgrimage to Chincoteague Island, Va. to see wild ponies cross the Assateague Channel. But, it's the rockets sending to supplies to the International Space Station that are making this a year-round destination. (July 30) Video provided by AP
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:

Breaking News:
from the past week

In Other News

... from NewsDaily.com

Science News

Health News

    Environment News

    Technology News



      Save/Print:
      Share:

      Free Subscriptions


      Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

      Get Social & Mobile


      Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

      Have Feedback?


      Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
      Mobile: iPhone Android Web
      Follow: Facebook Twitter Google+
      Subscribe: RSS Feeds Email Newsletters
      Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins