Even in states where Opt-Out or Self-Direct programs exist, robust industrial energy efficiency portfolios offer great potential for energy savings. As policymakers and utilities establish and build the program offerings in their states and service territories, they cannot afford to overlook this potential. If a utility is expected to meet an energy savings target, then it will need to achieve some savings from its industrial customers just as it will need to realize savings from its residential and commercial customers. Policymakers should ensure that states and utilities develop robust portfolios of prescriptive and customized programs targeted at industrial customers so that all customer classes are working towards energy efficiency. Another facet of industrial efficiency is Combined Heat & Power (CHP). CHP is the simultaneous production of heat and electrical energy from a single fuel source. This category includes a number of technologies, typically deployed as on-site generation facilities. CHP systems at industrial facilities can yield numerous system, environmental, and economic benefits and are an important tool to deploy in the pursuit of industrial efficiency. Demand Response and Smart Grid Implementation: In addition to the many policy drivers in place with regard to
public facilities, residential and commercial facilities, and industrial facilities, demand response and smart grid implementation efforts have continued to expand. Demand response programs can enable more efficient use of the grid in addition to delivering cost savings for all customers. Smart grid technologies can provide increased efficiencies in the planning and operation of the grid, better integration of distributed generation into the utility’s operations, and greater control over consumers’ demand for electricity at times of peak energy usage. In all 13 states across the Midwest, smart grid investments are taking place that could bring about significant benefits in terms of energy efficiency. With the deployment of smart grid technologies, however, policymakers must consider a number of issues, including: how smart grid deployment integrates with a state’s energy savings targets; how costs are recovered; how the state and utilities will handle the transition to a smart grid; and how customers will be engaged and educated to take full advantage of the smart grid once it is in place.
Energy Efficiency Financing: An overarching barrier to energy efficiency policies and programs confronting all classes of
customers is the availability of energy efficiency financing. Investments in energy efficiency require the end-user to spend money up front on improvements with the promise that the consumer will save energy and money in the future. These up front investments are often significant and traditional lending programs with high interest rates may make them uneconomic. Additionally, the amount an individual project saves hinges at least partially on occupant behavior. This has hindered the ability to aggregate loans to sell on the secondary market, rendering the private capital market either unable or unwilling to finance energy efficiency improvements on a large scale. A number of financing tools have been developed in the Midwest to overcome these barriers, including Property Assessed Clean Energy (PACE) initiatives and on-bill financing. Currently, authorizing legislation or other authority for PACE financing has been enacted in six Midwest states. On-bill financing programs are also currently being used, or in a pilot phase, in seven Midwestern states. These programs allow customers to finance energy efficiency improvements and repay the associated costs, plus interest, through monthly energy savings. Other financing tools – such as loan loss reserve funds and revolving funds – are being used to fund efficiency improvements at low interest rates. Creative approaches are regularly being developed, such as the Michigan Saves program, which is a statewide network of contractors and credit unions that provide financing through an initial $6.5 million grant from the Michigan Public Service Commission5. As is apparent, the Midwest has made great strides in adopting policies and launching programs that promote energy efficiency by state and local governments, as well as electric and natural gas utilities and their residential, commercial, and industrial customers.
Energy Efficiency Policies, Programs, And Practices In The Midwest: A Resource Guide For Policymakers
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