Will energy efficiency be like a treadmill that never stops? Is that a good thing or a bad thing? The idea of “negawatts” and investing in energy efficiency has been around for a long time.
When I was in grad school Amory Lovins of the Rocky Mountain Institute came and did a talk on negawatts and pushed the case for investing in energy efficiency instead of large new generators. He said it was cheaper to reduce energy than investing in large generation. In Manitoba, where I was at the time, a land of large hydro electricity and lots of potential and clean sources of power, it was not clear how the message was received. Manitoba Hydro went on to launch one of the first energy conservation programs in the country (Powersmart) while at the same time examining which next big dam to build. This was even though the big dams that were built in the 1960’s and the 19070’s – the time of the mega project in Canada had significant unintended consequences. Not unexpected as they significantly altered the flow of the Churchill River so that it flowed down a different river (The Churchill River Diversion) and flooded the land of several First Nations. Of course as nowadays, the business model of Manitoba Hydro and Quebec Hydro is to export as much clean power as possible. In the 1980’s, it was more about exporting power and now it is about exporting “clean” power.
After the Amory Lovins speech being inspired I went back and did a paper for a course using a scientific American article showing the negawatts (could have been this one – paywall) that could be generated in Manitoba rather than building the next big dam – Conawapa. That was the first supply curve for energy efficiency that I had seen.
The underlying message that Amory Lovins made to us remains the core reason why utilities in all countries pursue energy conservation and efficiency programs. If anything the argument has been strengthened based on the experience over the last 20 years. It remains significantly cheaper and less risky to invest in energy efficiency than to build new generation. OF course when these programs started they were targeted at large industrial users or homes and residences. Now more and more energy efficiency is starting to target commercial and institutional buildings and all aspects of power use in these buildings. There were far more barriers as well to financing and accessing capital and that is why the utilities tend to run programs to incent energy efficiency.
I have heard that it takes 30 years for an invention to be proven in the lab to get to the broader marketplace. Just now in 2015, there is finally starting to be booming or at least the start of a booming market place in energy efficiency. The private sector is investing capital and there are now a number of companies working to lower the barriers to investing in energy efficiency. These include companies like Noesis, HASI, Mercatus and the numerous other solutions providers that have arisen. All of these institutional infrastructure have started to provide the tools and language and trust that the marketplace to needs to realize the returns, mobilise the capital and educate the marketplace on the benefits and returns of investing in energy efficiency.
The energy efficiency market is here to stay and in some ways it is just going to get bigger. As technology progresses, the existing building stock gets bigger and bigger, opportunities will always remain for reducing energy and saving money and having these upgrades financed through the savings, particularly in a world where electricity prices appear to keep increasing and where there is uncertainty around the price of fossil fuels. In addition, as societal values continue to change and value the environment more and more, there will be an increased value put on reducing greenhouse gas emissions and this naturally implies less energy use and increased efficiency.
I have more to say about the treadmill analogy in a future post.