Energy Efficiency: A Crucial Driver for Decarbonizing the Power System in the Era of Renewables

The American Council for an Energy-Efficient Economy (ACEEE) has emphasized the critical role of energy efficiency in decarbonizing the power system, even with the increasing integration of low-cost renewables and lower levels of building electrification. ACEEE’s report highlights that energy efficiency measures can lead to significant cost reductions for customers, amounting to $10-$19 billion per region annually by 2050 across five grid regions in the U.S.

The report notes that the cost-effectiveness of renewable energy sources is a major driver behind their growth in the U.S., even without additional policy support. Consequently, the question arises as to the role of energy efficiency in a future with high levels of renewable energy generation.

ACEEE analyzed various energy efficiency measures and packages across different regions, including California, Texas, the Pacific Northwest, the Southeast, and the Midwest. The research indicates that measures targeting thermal space conditioning loads would have the most significant impact on energy savings and avoided electricity system costs through 2050. These measures encompass building envelope improvements, reductions in plug loads, and the use of more efficient heat pumps, water heaters, and clothes dryers.

However, the report highlights regional variability, with larger savings expected in regions characterized by lower baseline building energy codes, lower quality existing building stock, and more extreme temperatures, such as Texas and the Southeast.

Moreover, the research consistently demonstrates that energy efficiency becomes more valuable as electricity generation decarbonizes. Energy efficiency helps counterbalance the escalating costs associated with fossil-based energy and carbon capture under high renewable energy scenarios.

The study also reveals that, considering a scenario where power sector emissions decrease 95% below 2005 levels by 2050, commercial efficiency measures tend to deliver greater energy savings in the early stages, while residential energy savings surpass them in most regions over time. In 2030, commercial savings exceed residential savings in every region analyzed, except California. However, by 2050, residential savings are greater than commercial savings in all regions except California.

These variations in savings potential can be attributed to factors like rates of new building construction and building equipment replacement. Overall, the findings emphasize the significant near-term savings potential in the commercial sector and the long-term savings potential in the residential sector.