Green Power, Energy Conservation, And Cost Savings

Abstract

Energy efficiency efforts could suffer significantly if electric deregulation results in less funding for efficiency incentives and if it allows declining block and marginal rate structures which undermine the economics of efficiency projects by reducing the dollar value of energy savings. On the other hand, introducing competition will create new choices for energy users as well as new opportunities for both energy users and energy service companies (ESCOs) to work as partners to achieve environmental as well as cost saving objectives.

Energy users will need to develop a number of "green" strategies to maintain their conservation efforts in a deregulated market while taking advantage of reduced energy prices. These strategies include incorporating energy efficiency services in power purchases; us ing efficiency measures to shift, level and reduce electric loads (to help attract cheaper power); identifying rate structures which work in the marketplace but preserve efficiency incentives; and creating a "culture change" to shift to life-cycle cost/benefit evaluation of energy conservation projects. These endeavors lend themselves to creative partnerships with traditional energy efficiency ESCOs and with ESCOs which have expanded their offerings to include power sales.

With choice comes responsibility, and at least some larger energy users will want to buy electricity from less polluting sources. ESCOs can develop a portfolio of clean power sources and provide this product, or they can serve a consultant's role and help energy users learn and use the market to buy clean power. ESCOs which develop these value-added capabilities will serve the public interest while occupying an advantageous and profitable marketing niche.