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Midwest Energy Efficiency Investment Economic Impact
MEEA Policy Committee Quarterly Call
October 24, 2016
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Call Agenda
• 12:00 pm – 12:10 Update on MEEA’s State
Efficiency Policy Work, Nick Dreher
• 12:10 – 12:45 Economic Impacts of Energy Efficiency Report, Tyler Browne
and Nick Dreher
• 12:45 – 1:00pm Discussion
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The Trusted Source on Energy EfficiencyAbout MEEA
We are a nonprofit membership organization with 160+ members, including: • Utilities• Research institutions and advocacy organizations• State and local governments• Energy efficiency-related businesses
As the key resource and champion for energy efficiency in the Midwest, MEEA helps a diverse rangeof stakeholders understand And implement cost-effective energy efficiency strategies that provide economic and environmental benefits.
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Energy Efficiency Policy State Update
• Michigan• Ohio• Indiana
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Energy Efficiency Policy Update
• Multifamily Energy Efficiency– Joint REEO Multifamily Paper– MEEA Multifamily Paper
• Clean Power Plan– Comments on the Clean Energy
Incentive Program are due to the EPA by November 1. Link to information on submitting comments:• https://www.epa.gov/cleanpowerplan/how-
comment-proposed-design-details-clean-energy-incentive-program-ceip
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6
Economic Impacts of Energy Efficiency Analyzing the Effects of Regional and State-Level Investments
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Agenda
• Background• Analysis Method • Findings• Conclusions
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Section 1: Background
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To explore current clean energy employment in the Midwest region as well as jobs created, energy saved,
greenhouse gas emissions avoided, and the impacts on the regional income as a
result of utility investment in energy efficiency
Project Goal
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Study OverviewMEEA commissioned a study of the economic impacts of energy efficiency investments• Analyzed regional and state-level
program activities– Midwest Region– Michigan, Ohio, Indiana
• Estimated impacts on four economic indicators– Employment– Income– Economic Value Added– Sales
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Earlier Statewide EE • MN
1983 – Pilot legislation1991 – CIP requirement adopted
$0.0$200,000,000.0$400,000,000.0$600,000,000.0$800,000,000.0
$1,000,000,000.0$1,200,000,000.0$1,400,000,000.0$1,600,000,000.0$1,800,000,000.0$2,000,000,000.0
$1,396,695,724.82
$415,680,150.96
$1,812,375,875.78
$Billi
ons
EERS Legislation• IL Gas Admin
Order• IN Electric
Voluntary Standard Legislation• MO Electric
Legislative Committee•WI EERS adjusted
Legislation• IN EERS overturned• OH EERS frozen
EERS Legislation• IL
Electric• MN
Electric, Gas
EERS Legislation• MI
Electric, Gas• OH
Electric Exec Order• IA Gas,
Electric
Admin Order• WI Elec,
Gas
Earlier Statewide EE • WI
1999 - Public Benefit Fund Adopted
Earlier Statewide EE • IA
1990 – Initial legislation1996 – Legislation updated
Estimated Annual Utility Investment in EE
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2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
01,000,0002,000,0003,000,0004,000,0005,000,0006,000,0007,000,0008,000,0009,000,000
020,000,00040,000,00060,000,00080,000,000100,000,000120,000,000140,000,000160,000,000180,000,000
729,601.0
7,260,196.2
3,389,425.9
159,476,641.9
Year
Elec
tric
- M
illio
n M
Wh
Save
d
Nat
ural
Gas
- M
illio
n Th
erm
s Sa
ved
Midwest Energy Savings through Utility Energy Efficiency
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MIDWEST• 13 states• Investment is
growing• 2000=$151 M• 2014=$1.5 B• 2016=$1.8 B
MICHIGAN• Annual targets
• 1% (electric)• 0.75% (gas)
• Legislature considering voluntary standards
OHIO• Legislature
imposed two-year freeze on EE standard in 2014
• Future of EE policy currently under debate
INDIANA• Legislature
repealed statewide EE mandate in 2014
• EE now pursued voluntarily
EE Investments in Context
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Section 2: Analysis Method
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15
Tyler R. BrowneSenior Analyst, Energy Services Division
[email protected](630) 292-9016
Linkedin.com/company/the-cadmus-group
@CadmusGroup
Facebook.com/CadmusGroup
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16
Input Data Overview
Model Region
EE Spending ($2015 M)
GWh Savings
therm Savings
Avoided CO2
(tons)
Avoided SO2
(tons)
Avoided NOX
(tons)Michigan $220 11,663 376,847,434 21,303,908 64,534 23,625
Ohio $211 16,212 NR* 13,029,988 62,886 13,863
Indiana $127 6,894 21,437,150 7,481,057 23,281 7,266
Rest of MW $898 43,730 1,050,429,450 69,815,427 127,847 67,988
TOTAL $1,456 78,499 1,448,714,034 111,630,380 278,548 112,742
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17
Program-Related Cash FlowsUsed REMI PI+ to model annual impacts on employment, income, economic value
added, and sales from energy efficiency program-related cash flows
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Analysis Method
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19
Key Economic Indicators
EMPLOYMENT PERSONAL INCOME
ECONOMIC VALUE ADDED SALES GENERATED
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Section 3: Findings
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Summary Findings
Economic IndicatorNet Study Period Impacts
Michigan Ohio Indiana Rest of Midwest
Midwest Region*
Employment (jobs) 17,112 15,930 8,869 63,014 104,925
Income ($2015 M) $1,517 $1,369 $727 $5,158 $8,771
Value Added ($2015 M) $2,191 $2,153 $1,089 $8,315 $13,749
Sales ($2015 M) $3,551 $3,700 $1,882 $13,859 $22,992
*Totals may not sum due to rounding.
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Employment
2014 2015–20380
20,000
40,000
60,000
80,000
100,000
18,605
86,319
Annual Average =3,597 Jobs
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Personal Income
2014 2015–2038$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$1,169
$7,603
Annual Average =
$317 million
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Economic Value Added
2014 2015–2038$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$1,840
$11,909
Annual Average =
$496 million
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Sales Generated
2014 2015–2038$0
$2,500
$5,000
$7,500
$10,000
$12,500
$15,000
$17,500
$20,000
$3,346
$19,646
Annual Average =
$819 million
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Findings by Model Sub-Region
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Summary Findings
Economic IndicatorNet Study Period Impacts
Michigan Ohio Indiana Rest of Midwest
Midwest Region*
Employment (jobs) 17,112 15,930 8,869 63,014 104,925
Income ($2015 M) $1,517 $1,369 $727 $5,158 $8,771
Value Added ($2015 M) $2,191 $2,153 $1,089 $8,315 $13,749
Sales ($2015 M) $3,551 $3,700 $1,882 $13,859 $22,992
*Totals may not sum due to rounding.
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Economic IndicatorNet Study Period
Impacts
2014
Employment (jobs) 15,203
Income ($2015 M) $1,353
Value Added ($2015 M) $1,975
Sales ($2015 M) $3,190
Michigan
In-State Activity Impacts
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Michigan
Economic Indicator
Net Study Period Impacts
In-State Activity Impact Spillover Impact Total Impact
Value % of Total Value % of Total
Employment (jobs) 15,203 89% 1,909 11% 17,112
Income ($2015 M) $1,353 89% $164 11% $1,517
Value Added ($2015 M) $1,975 90% $216 10% $2,191
Sales ($2015 M) $3,190 90% $362 10% $3,551
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Michigan
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Economic IndicatorNet Study Period
Impacts
2014
Employment (jobs) 14,002
Income ($2015 M) $1,211
Value Added ($2015 M) $1,891
Sales ($2015 M) $3,277
OhioIn-State Activity Impacts
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Ohio
Economic Indicator
Net Study Period Impacts
In-State Activity Impact Spillover Impact Total Impact
Value % of Total Value % of Total
Employment (jobs) 14,002 88% 1,928 12% 15,930
Income ($2015 M) $1,211 88% $158 12% $1,369
Value Added ($2015 M) $1,891 88% $263 12% $2,153
Sales ($2015 M) $3,277 89% $423 11% $3,700
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Ohio
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Economic IndicatorNet Study Period
Impacts
2014
Employment (jobs) 6,238
Income ($2015 M) $513
Value Added ($2015 M) $804
Sales ($2015 M) $1,348
IndianaIn-State Activity Impacts
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Indiana
Economic Indicator
Net Study Period Impacts
In-State Activity Impact Spillover Impact Total Impact
Value % of Total Value % of Total
Employment (jobs) 6,238 70% 2,631 30% 8,869
Income ($2015 M) $513 71% $214 29% $727
Value Added ($2015 M) $804 74% $285 26% $1,089
Sales ($2015 M) $1,348 72% $535 28% $1,882
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Indiana
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Rest of the Midwest
Economic Indicator
Net Study Period Impacts
In-Region Activity Impact Spillover Impact Total Impact
Value % of Total Value % of Total
Employment (jobs) 60,007 95% 3,007 5% 63,014
Income ($2015 M) $4,959 96% $199 4% $5,158
Value Added ($2015 M) $7,896 95% $419 5% $8,315
Sales ($2015 M) $13,136 95% $722 5% $13,859
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Rest of the Midwest
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Economic Indicator Net Study Period Impacts
Employment (jobs) 104,925
Income ($2015 M) $8,771
Value Added ($2015 M) $13,749
Sales ($2015 M) $22,992
Midwest Region
Regional Activity Impacts
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Section 4: Conclusions
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Study Conclusions• 2014 Midwest EE investments create
jobs, boost personal income, and increase spending– Nearly 105,000 jobs created– Almost $8.8 billion boost to personal income– Over $13.7 billion of value to regional
economy– About $23 billion in regional sales generated
• Program-year activities generate substantial positive impacts, and additional positive impacts result from sustained energy savings lasting most of the study period
• Most impacts are local, but neighboring economies benefit as well
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Policy/Economics Correlation
State Spending ($2015)
GWh Savin
gs
Therm Savings*
Illinois $346,397,221 8,737 310,881,694
Indiana $126,920,331 6,894 21,437,150
Iowa $184,502,608 7,098 97,547,514
Kansas $510,605 9 NR
Kentucky $48,073,549 3,767 15,519,685
Michigan $220,038,068 11,663 376,847,434
Minnesota $162,987,250 11,106 403,698,727
Missouri $36,957,959 4,415 NR
Nebraska $20,281,045 2,351 NR
North Dakota $385,457 25
NR
Ohio $210,872,860 16,212 NR
South Dakota $5,328,317 167 NR
Wisconsin $92,937,455 6,055 222,781,830
Total $1,456,192,725 78,499 1,448,714,034
*Kansas, Missouri, Nebraska, North Dakota, Ohio, and South Dakota utilities do not report gas savings.
Economic IndicatorNet Study Period Impacts: Midwest
Region
Employment (jobs) 104,925Income ($2015 M) $8,771Value Added ($2015 M) $13,749Sales ($2015 M) $22,992
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Discussion