THE American Council for an Energy-Efficient Economy (ACEEE) have published an interesting white paper entitled: “How to Avoid a Train Wreck: Replacing Old Coal Plants with Energy Efficiency.”
The report highlights that over the past year, the U.S. utility industry has experienced significant angst over pending updates to utility environmental regulations.
Of particular concern is the question of whether to invest in plant updates to comply with these regulations or to retire these plants altogether and replace this capacity with new (and most likely natural gas-fueled) power plants. Many inside and outside the utility industry have painted this situation as a crisis in the making.
These effects will likely be felt most acutely in a crescent area of the U.S. from the Great Plains through the Midwest and down the Appalachians, where utilities rely heavily on coal to generate electricity. Utilities are indicating that they will need to invest billions of dollars in these supply-side assets, resulting in significant increases in electricity rates for customers.
This situation does not have to lead to a crisis according to the ACEEE’s report, expanded investments in energy efficiency and combined heat and power (CHP) can meet much of this lost capacity at a fraction of the cost of upgrading old power plants or building new ones.
These customer-side investments will have the added benefit of enhancing communities by creating more efficient, modern infrastructure that can result in more jobs and a more robust economy.
Achieving this level of energy efficiency investment will not be easy. Enabling these investments will require significant changes in the utility regulatory business model to allow utilities to make customer-side investments and be allowed to earn a preferred rate of return.
Michael Walls, American Chemistry Council (ACC) Vice President of Regulatory and Technical Affairs issued this statement after the release of the white paper: “We welcome ACEEEs report, which shows how energy efficiency and CHP can ease a major transition underway in Americas electricity sector. By reducing energy demand, both approaches can help replace lost generation as utilities retire coal-fired plants in response to new environmental regulations.
“Perhaps most important, the cost to ratepayers will be far lower with energy efficiency and CHP, as compared with building and updating power plants.
“We urge policymakers to strongly consider demand-side approaches, especially energy efficiency and CHP, as they seek cost-effective ways to meet their citizens electricity needs. Whenever possible, demand-side solutions should be given equal favor in energy policies.”