Energy Efficiency: Overlooked & Underutilized Grid Resource

Over the last year, policy discussions relating to energy efficiency as a resource have become more and more frequent. In Texas, the one-year anniversary of Winter Storm Uri has shined new light on energy efficiency at the statewide level at the Public Utility Commission of Texas (PUCT). These talks are set to remain a prominent focus for the immediate future. Today we intend to review the recent policy discourse in Texas as well as we look forward to future considerations for energy efficiency as a resource in the state.

The Texas Legislature directed the PUCT to weatherize generation facilities and reform the electricity grid through a slew of bills passed in 2021. By December, a two-phased proposal had been approved by the PUCT, which includes several provisions aimed at increasing capacity in hopes of ensuring a more resilient, reliable grid. While demand response and energy efficiency are included, the focus remains on the supply side of the equation.

Experts suggest demand-side market mechanisms for the energy grid in Texas are viable, cost-effective solutions to reduce total energy demand in the state as opposed to the supply-side mechanism which has garnered most of the attention, yet are often more expensive and take longer to implement. Additionally, there is potential to decrease the high energy cost burden that low-income Texans face due to years of underinvestment in marginalized communities. During a recent policy panel hosted by SPEER, Mechanisms of the Texas Energy Market: Demand-side and Energy Efficiency, the panelist concluded energy-efficient solutions such as smart thermostats and efficient heating/cooling system replacements or upgrades coupled with demand flexibility is significantly cheaper in the long run while achieving the goal of resiliency and reliability the PUCT set for the market. Specifically, 39% cheaper than building a new gas power plant according to the American Council for an Energy-Efficient Economy (ACEEE) recent study. The panelists reiterated the importance of inclusion and engagement with state officials as these proposals continue to be developed and implemented.

In a separate webinar we recently hosted, Nuts and Bolts of Texas Energy Efficiency Rules, Alison Silverstein, an independent energy consultant, discussed the possibility of the PUCT opening their energy efficiency rule up for review. PUCT Commissioners have spoken as recently as February 17, 2022, regarding their interest in opening the rule to ensure the agency is achieving their expected performance standards for energy efficiency, however, there is still much left to be determined about what the outcome will be from that rulemaking process. Now is the time for stakeholders to begin setting expectations for what a robust rulemaking process will look like, because the outcome may directly affect the demand-side inputs for the Texas energy market.

Building retrofits, replacement of inefficient heating sources, increased usage of smart thermostats, the addition of adequate insulation, and many other energy-efficient technologies remain cost-effective solutions to address total energy demand while increasing reliability and resiliency for all Texans. Recognizing the disproportionate impact on low-income and underserved communities and tailoring energy efficiency policies to address equity can yield significant reductions for cost burdens across vulnerable populations while achieving reduced energy consumption. And with a potential energy efficiency rulemaking likely coming this year, now is the time to consider energy efficiency as the resource for Texas energy. To watch a recap of these recent efficiency and Texas policy webinars discussed above or past SPEER webinar offerings head over to our YouTube channel.