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Spending on energy efficiency programs funded by U.S. electric and natural gas utility customers will double by 2025 to about $9.5 billion per year, according to a new report from the Lawrence Berkeley National Laboratory (LBNL).

These funds, which come from a charge on utility bills, historically constitute the nation's largest source of spending on programs to foster the adoption of more efficient products and buildings. LBNL projects energy efficiency programs funded by utility customers to continue expanding beyond the traditional bastions of energy efficiency in the Northeast and West.

By 2025, the report says states in the Midwest and South could account for 49% of total U.S. spending on customer-funded energy efficiency programs, up from 27% in 2010. By 2025, only a handful of states would not have significant customer-funded efficiency programs.

The projected growth in program spending is driven by policies in a number of states requiring that utilities obtain all cost-effective energy efficiency savings, LBNL adds. Another driver is energy efficiency resource standards, which require electric utilities to meet minimum energy savings goals each year.

“In addition, we see some utilities turning to energy efficiency as part of their strategy for reliable delivery of electricity as older coal-fired generators are retired,” says staff scientist Charles A. Goldman, a co-author of the study and head of the laboratory’s energy analysis and environmental impacts department.

Total U.S. spending on electric and gas efficiency programs (excluding load management programs) is projected to grow in all scenarios examined, ranging from $6.5 billion to $15.6 billion in 2025, with a mid-range projection of $9.5 billion under a scenario in which states are fairly successful in ramping up their programs to meet state energy-savings policies now on the books. This compares to total spending of $4.8 billion in 2010, LBNL notes.

If states remain on their current policy paths, the report says annual incremental savings from electric energy efficiency programs could be expected to reach about 0.8% of retail electricity sales in 2025, compared to about 0.5% of retail electricity sales in 2010.

Significantly, electricity savings at that level in 2025 could offset the majority of load growth forecasted through that year in the Energy Information Administration's (EIA) most recent reference case forecast for electricity usage, the report adds. This assumes that the EIA forecast correctly estimates savings from future customer-funded energy efficiency programs.

“So far, only a few very aggressive states have come close to offsetting growth in electricity needs through efficiency,” says Goldman. “Our finding that, in aggregate, U.S. energy efficiency programs could offset a significant portion of projected load growth in the electricity sector over the next decade is subject to some uncertainties but striking nonetheless.”

The report, entitled “The Future of Utility Customer-Funded Energy Efficiency Programs in the United States: Projected Spending and Savings to 2025,” was funded by the U.S. Department of Energy’s Office of Electricity Delivery and Energy Reliability and can be downloaded here.







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