A $2 trillion push in the U.S. to blend renewable energy into the
power supply and fortify transmission lines against extreme weather
means that Americans must act more like Europeans to keep their power
costs down.
Even with electricity rates as much as three times
higher than what the average American pays, French, Italian and German
consumers still enjoy lower monthly bills. That’s because they use less
energy due in large part to new smart technology, smaller homes, denser
populations and more efficient appliances.
The U.S. government and the energy industry are now
taking the first steps toward that goal, with smart thermostats, more
efficient air conditioning and systems that better regulate power grid
current. Still, the U.S., ranks only 13th of 16 countries in energy efficiency among the world’s major economies, according to the American Council for an Energy- Efficient Economy.
“We need to stop looking at rates and start looking at
bills,” Jon Wellinghoff, a former U.S. Federal Energy Regulatory
Commission chairman, said in an interview. Increased efficiency in energy use
would create “some level of savings” that could help fund system
upgrades that “might require a whole hell of a lot of money up front,”
Wellinghoff said.
U.S. Environmental Protection Agency Administrator
Gina McCarthy and industry chief executive officers are scheduled to
discuss power infrastructure investments Thursday at the IHS CERAWeek
conference in Houston. Boosting efficiency is a key piece of President Barack
Obama’s plan to combat climate change, which seeks a 30 percent
reduction in carbon emissions from existing power plants by 2030. It
also makes good business sense. Investments in energy conservation are
cheaper than building expensive new power plants to meet electricity
demand.
Grid Investments
In the U.S., investments in the power grid lag Europe.
Since 2000, the U.K., Italy, Spain, France and Germany have spent a
combined $150.3 billion on energy-efficiency programs, compared with
$96.7 billion for the U.S, according to data compiled by Bloomberg New
Energy Finance. The U.S. grid, described as the most complicated
machine in the world, needs about $2 trillion in upgrades by 2030,
according to a report this month from the Rocky Mountain Institute, a
Snowmass, Colorado-based energy consultant.
U.S. power companies are beginning to step up. Power sellers in Texas and the U.S. Northeast are offering smart thermostats such as Google Inc.’s Nest
in exchange for signing long term contracts. The device, which
memorizes and automatically adjusts to users’ preferences, can save
customers as much as 15 percent on cooling bills, according to Google. Houston-based Direct Energy, the largest competitive
retail power supplier in North America, is encouraging customers to
install smart water heaters and efficient air conditioning systems to
help cut demand.
Fossil Fuel Savings
“Every kilowatt hour of electricity that is not
consumed saves on fossil fuels and the construction of power plants and
grids,” said Philipp Ackermann, minister of the Embassy of the Federal
Republic of Germany, in a statement last year.
Germany ranks first among the world’s major economies
in energy efficiency, according to the American Council for an
Energy-Efficient Economy. German households pay an average monthly electricity
bill of $96.36, at a rate of 33.88 cents a kilowatt-hour and usage of
284.42 kilowatts, according to 2012 data from the World Energy Council
and International Energy Agency. U.S. households pay an average of
$111.95 a month, at a rate of 11.88 cents per kilowatt-hour and usage of
942.33 kilowatts. The contrast is starker in Italy where the average
monthly bill is $65.99 at a rate of 28.84 cents per kilowatt-hour. In
France, the monthly power tab is only $75.64, at an average rate of
17.51 cents per kilowatt-hour.
Input Costs
“Historically, the input costs for generating much of
the electricity in Europe have been higher than in the United States,
which in turn makes electricity prices on a per unit basis higher,” said
Andrew Colman, a managing director of Black & Veatch, an
infrastructure consulting and construction firm. “These higher prices
spurred the development of energy efficiency measures.”
Similar pressures may emerge in the U.S. as a result
of proposed EPA rules to combat climate change. The Electric Reliability
Council of Texas Inc., the state’s grid operator, said in November that
the EPA plan will force the shutdown of 3,300 to 8,700 megawatts of
coal-fired generating capacity, and cause consumer energy costs in Texas
to rise by as much as 20 percent by 2020. Some of the tools to offset price increases by
boosting efficiency are already in place. In the U.S., 32 states either
pay utilities for lost revenue from energy efficiency programs or have
decoupled power company profits from the amount of electricity sold,
according to the Edison Foundation Institute for Electric Innovation, a
Washington-based industry group.
California Unchanged
In California, decoupling profits from sales has
helped per capita energy use remain unchanged since the 1970s. Power
companies including PG&E Corp. and Edison International are paid to
meet energy savings targets. U.S. grid operators can install systems that help
transmission lines more efficiently regulate current, a move that may
cut grid energy costs as much as 5 percent, said Wellinghoff, who
represents smart grid and solar clients as a partner with Stoel Rives
LLP in San Francisco.
The biggest bite of higher prices can be offset
through changes in behavior, according to Jurgen Weiss, a principal in
the climate change practice at the Brattle Group, a Cambridge,
Massachusetts-based consulting firm. “Some of them are fast, and some are longer term and perceived as more painful,” Weiss said of efficiency efforts.
Copyright 2015 Bloomberg
http://www.renewableenergyworld.com/rea/news/article/2015/04/us-power-grids-2-trillion-upgrade-needs-european-efficiency
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