energy efficiency policy & market developments
TRANSCRIPT
Energy Efficiency Policy & Market Developments
R. Neal ElliottSr. Director for Research
aceee.org @ACEEEdc
The American Council for an Energy-Efficient Economy is a nonprofit 501(c)(3) founded in 1980. We act as a catalyst to advance energy efficiency policies, programs, technologies, investments, & behaviors.
Our research explores economic impacts, financing options, behavior changes, program design, and utility planning, as well as US national, state, & local policy.
Our work is made possible by foundation funding, contracts, government grants, and conference revenue.
Overview
• Energy market outlook• Issues affecting electricity markets• Policy outlook
Energy Market Outlook
Natural gas prices declining & stabilizing
Source: EIA 2017
Long-term price elasticity of gas supply coming down—more stable price outlook
Source: ICF 2017
Take aways
• Most gas production associated with terrestrial oil production
• Increased oil demand will decrease gas prices• Natural gas prices will remain moderate & may
trend to less volatile• Increased LNG exports unlikely to produce gas
price increases• Low prices will make gas the utility fuel of choice
Electricity prices stabilizing
Source: EIA 2017
GDP & electricity growth now decoupled
Source: ACEEE & EIA
Electricity outlook
• Gas & renewables will displace coal & nuclear as utility resources of choice based on cost of ownership
• New infrastructure investment by utilities will result in increases in utility fixed costs as new plants & infrastructure are replaced and load growth slows
• Opportunities for large customers to defer these investments with EE & CHP and lower future rates
Electricity Markets
Challenges facing electricity markets
• Variable resources (e.g., wind & solar) reduce need for baseload
• Changes in grid loads increase importance of ancillary services
• Low gas prices result in legacy plants becoming non-economic—need to be retired and replaced with new gas & renewables
• Flattening growth puts pressures on fixed charges
• Smartening grid creates opportunities for non-utility players (e.g., large customers)
The Duck Flies Smarter
Source: RAP 2016
RAP Has Identified 10 strategies
Key Strategies:• off peak-oriented
renewables • use of water as a
batteryEmerging strategies:• Intelligent, grid-
responsive loads• Active load
management
Source: RAP 2016
Impact of RAP Strategies
Source: RAP 2016
Convergence of EE & DR• Smart manufacturing allows customers to
continuously optimize energy consumption• Smartening of loads creates opportunities for
customers to provide grid services• Challenges are:
• Changing regulatory model so utilities not incented to build new assets
• Creating market structures that allow customer to participate and receive fair value
• Building customer awareness of the opportunities• Facilitating market players who can realize the opportunists
So what is going on in Washington?
If anyone tells you they know what is going on, they are offering “alternative
facts.”
General Themes Emerging• Less regulation• Support for fossil fuels• Rejection of climate change• Support for small business• Reduced government spending & privatization of
agency activities• Limited appreciation of interaction of existing
programs in meeting needs• Focus on responding to rural community needs—
limited understanding of what that means
Federal Energy Efficiency Developments
• FY18 Budget request calls for major cuts across agencies—particularly at DOE & EPA
• Focus on early stage research—rejection of education & assistance activities
• Congressional FY18 funding—two paths:• Omnibus• Continuing resolution• Major funding cuts unlikely, but continued uncertainty is
disruptive
• Congressional legislation possible
Outlook?• Freedom Caucus has indicated that will oppose
all but the most extreme proposals• House & Senate leadership had indicated they
would move forward on budget in a bi-partisan way, but have cut out the D’s from discussion
• Federal funding cuts are likely, but not as extreme as the OMB proposals
• White House slow in staffing agencies so implementation will be slow
• Uncertainty persists leading to disruptions from funding to permitting to cutting budgets
The top convener in energy efficiency: aceee.org/conferences
Upcoming ACEEE Conferences
Summer Study on Energy Efficiency in Industry August 15-18 Denver, CO
Energy Efficiency as a Resource Oct 30-Nov 1 Phoenix, AZ
Follow ACEEE on Twitter: @ACEEEdc