Interview with Steve Nadel (ACEEE)

Steve Nadel has served as Executive Director of the American Council for an Energy-Efficient Economy (ACEEE) since 2001.

What kind of an organization is ACEEE? What is its mission and what kind of things does it do?

ACEEE is a non-profit research and education organization. Through research and outreach, ACEEE acts as a catalyst to advance energy efficiency policies, programs, technologies, investments, and behaviors. ACEEE is known for its research reports on energy efficiency issues, its conferences, and its work on energy efficiency policy at the national, state and local levels. For example, we played a major role in enactment of federal energy efficiency legislation in 1987, 1988, 1992, 2005, 2007, and 2012 and have contributed to energy efficiency policy development in more than two dozen states.

How did you personally get involved with energy efficiency?

I waited on gasoline lines in high school and got involved in energy issues in college, ultimately writing a thesis on opportunities for energy efficiency and renewable energy in urban areas. My first job out of college was implementing energy programs in poor neighborhoods in Connecticut. One thing led to another and now 30 years later I’m still doing energy efficiency work.

What do you see as the biggest issues and challenges facing energy efficiency today?

Energy efficiency programs have been growing rapidly in recent years, with more states pursuing energy efficiency programs and savings targets increasing. Challenges are two-fold – sustaining the momentum in states that are now pursuing energy efficiency, and extending such programs to the roughly one dozen states that are not presently doing much. This in turn requires reforming the utility regulation model so that utilities can earn reasonable profits from energy efficiency, a change now underway in roughly half the states but which will need refreshing in the face of slow or even declining demand growth.

As the head of an energy efficiency organization, how do you view the relatively new DSM area “demand response” in terms of policy and programs?

First, demand response is not new, since it builds on the more than 20 year experience with load management. I view demand response as a useful complement to energy efficiency efforts. Energy efficiency reduces energy use and energy demand. Demand response shifts use from one time period to another, but can cause modest reductions in energy use. Both energy efficiency and demand response can reduce energy system costs by reducing the need for new capacity and reducing system operating costs.

What about smart grid? Do you see smart grid technologies helping to expand and/or enhance energy efficiency efforts?

I think smart grid technologies can help to expand and enhance energy efficiency efforts, but so far this is more potential than actual impacts. Smart grid technologies, such as smart meters, can provide information to consumers and program operators to better manage energy use. However, so far, only a few utilities have really used their smart grid technologies in this way.

A lot of people are talking about the need to integrate EE and DR/SG. What do you think?

There definitely are opportunities to better integrate EE and DR/SG. For example, we can promote high efficiency heating, cooling and lighting systems and appliances with built in DR capabilities. It shouldn’t be a question of EE or DR but how to get both. Another approach is for utilities to provide smart meter energy consumption information to consumers in ways they can readily access, understand and act upon.

Where do you see the best places for integration in policies and programs? Where does integration not make sense?

I think it makes sense to walk before we run. I recommend we find a few areas to work together and make these very successful. Let’s build on our mutual strengths, then we can expand. Some places to start might be joint EE/DR efforts for major areas of peak demand such as air conditioning and commercial lighting. Other initial opportunities might be ways to tap smart meter information to help motivate consumers to both reduce and shift their energy use.

ACEEE is known for its state-by-state work related to estimating demand side potential. You recently began including DR in that work, correct?

We have included DR in many of our state studies since about 2007. Energy efficiency typically reduces energy use and peak demand by roughly the same percentage. DR can result in further peak demand reductions, reducing the need for additional peaking resources. They are nice complements.

A lot of new attention is being paid to behavioral efficiency, as opposed to just the efficiency of an end-use device. Is that something ACEEE is looking at as well?

ACEEE has promoted behavioral energy savings for many years and started a behavior program about two years ago. Initially, like many organizations, we worked on single-family homes. But presently we are focusing more on additional opportunities including in multifamily apartments, the office environment, other commercial facilities, and even the industrial shop floor. All of these involve people and how they use energy.

What can demand-response proponents do better to foster joint efforts with energy efficiency organizations and programs?

For EE and DR to truly prosper together, DR proponents should recognize that EE proponents care about reducing and not just shifting energy use. Energy use reductions cut energy bills and also reduce power plant emissions. Many DR techniques can help reduce energy use, and DR proponents should embrace and document these opportunities.

For example, I recall a variety of studies a few years ago that found that with extensive DR efforts, energy use can sometimes also be reduced. While peak demand might decline 10-15%, energy use might decline roughly 3%. Further studies documenting these effects would be useful and efforts undertaken to increase the energy savings achieved as a result of DR activities.

Using the ACEEE crystal ball, what does the future of energy efficiency, demand response, and smart grid look like in 10 years? How about 20? What will utilities and government agencies be doing? What will the marketplace provide if anything that it does not now?

I see EE programs and policies continuing to grow over the next 10-20 years since generally EE is the low-cost resource, costing roughly half that of new supply resources. DR and SG can also prosper to the extent they can promote and document cost savings. I think DR has done this to a large degree, but for SG there’s been more promise than actual savings. The challenge for SG is to start pursuing and documenting actual cost savings. As a result, of EE, DR, and SG, as well as distributed generation (DG), I see very slow sales and demand growth in much of the country, and actual declines in some regions such as the northeast. The utility industry will need to change from a focus on increasing sales to delivering value to consumers and shareholders, and ideally doing both at the same time. For example, I can see utilities investing more in EE, DR, SG, and distributed resources and being able to earn a return on their investments and/or receiving performance bonuses for exemplary performance.

In terms of the marketplace, the market is the dominant player and utilities and government influence but don’t determine the market. To the extent EE/DR/SG/DG can provide good value to consumers and are easy to act upon, they should prosper in the market. One other long-term factor will be the price of carbon – to the extent a price on carbon is incorporated into the market, market decisions will further embrace EE/DR/SG/DG.

Find out more about ACEEE here.

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