Ten innovations that will reduce the amount of energy we consume

 

By REBECCA SMITH

October 16, 2006; Page R1

 

America is facing a crisis when it comes to electricity. But also a tremendous opportunity.

 

The forces that put us here look grim. Energy prices are high, supplies are

increasingly tight, and anxiety is growing about climate change. But that

dark outlook is driving consumers, utilities and public officials to

finally take advantage of innovations that could radically reshape the

nation's power consumption without lowering the standard of living.

 

Some are technological fixes, from more-efficient light bulbs to

variable-speed motors that use less energy when the load on them isn't as

heavy. Others involve public policy. States are rewriting their building

codes with an eye on conservation, and Washington is trying to lay down

efficiency standards for more household appliances and electronic goods.

Utilities are joining the effort as well, offering consumers rebates for

buying efficient appliances and urging customers to use electricity more

wisely.

 

The good news is, "we haven't found a major use of electricity for which

there aren't great opportunities for savings," says David B. Goldstein,

director of energy programs at the Natural Resources Defense Council and a

recipient of a MacArthur Foundation award for his work on

appliance-efficiency standards.

 

Of course, we've all heard revolutionary promises like these before. But

the promises seem to fade as each crisis recedes. So what makes this time

different? Forces are converging to make the prospect of big change much

more achievable.

 

Most urgent, of course, is the skyrocketing demand for electricity -- and

the tightening supply. Many parts of the country set new records for

electricity use in July and August, which sent a warning signal to

officials that they have little time to act. Conservation seems a much more

feasible solution than quickly building dozens of new power plants to add

generating capacity -- especially if reducing emissions is a goal. The fact

that the nation's energy bill totaled $296 billion last year, up nearly 50%

from 1993, also provides impetus.

 

We've also gotten smarter about saving energy. New technology makes it

possible to build more-efficient hardware without breaking the bank. And

public officials now have much better data to draw on when they plan

conservation efforts. They know what's worked in the past and can build on

that success.

 

BUILDING MORE PLANTS

 

Some experts expect a transformation more profound than any since the

1973-74 Arab oil embargo. As a result of that six-month crisis, U.S.

electric utilities largely weaned themselves off oil and shifted to coal

and nuclear fuel for their power plants. The federal government set

efficiency standards for automobiles and appliances, and building codes

were revised. But much is left to be done. After all, 80% of U.S. buildings

were built before 1980.

 

At the very least, the current push should produce considerable savings for

consumers and unmistakable environmental benefits. "If you consume a lot

less energy, it solves a lot of other problems," says Peter Darbee, chief

executive of PG&E Corp., the San Francisco utility that serves one in 20

Americans.

 

Indeed, James E. Rogers Jr., chief executive of Duke Energy Corp. and

president of the utility industry's leading trade group, the Edison

Electric Institute, calls energy efficiency the "fifth fuel." By that he

means that it's an alternative to coal, natural gas, hydropower and nuclear

fuel.

 

Here's a look at 10 innovations capable of making a big difference

immediately and in coming years:

 

1) LET THE LIGHT SHINE

 

Lighting was the first market for electricity, and it's still one of the

costliest. But because lighting is ubiquitous, it tends to get less

attention than other big power burners like air conditioners. And that

means some tremendous improvements in lighting have gotten overlooked.

 

Technology has improved conventional lighting systems, making them much

more efficient. Take compact fluorescent bulbs, which have bases so small

they can fit inside a standard screw socket. These bulbs can often cut

lighting costs by 75%, and they last at least eight times as long as

regular incandescent bulbs. Many even offer a soft white light that mimics

incandescent light.

 

The bulbs are readily available in stores, and prices have dropped

substantially recently. Sales volume has increased, and many utilities are

offering rebates that cut the cost of 24-watt fluorescent bulbs that

produce as much light as 100-watt incandescent bulbs to $1 or $2 apiece.

 

If each U.S. household replaced one regular bulb with a compact

fluorescent, according to the Environmental Protection Agency, consumers

would collectively save more than $600 million a year. The energy saved,

meanwhile, would be enough to light seven million homes, and the

greenhouse-gas reductions from power plants would be equivalent to taking

one million cars off the road.

 

Then there's LED, or light-emitting-diode, technology, which is based on

semiconductors. This method already has slashed power use dramatically for

many cities as a replacement for conventional traffic lights. Typically, an

11-watt LED unit in a traffic light replaces a 140-watt incandescent unit,

producing a 92% energy saving.

Image

 

Now LEDs are poised to sweep into more industrial applications, such as

supermarket refrigeration cases. For now, white LED light is more difficult

to make, and thus far more costly, than colored LEDs. But lighting experts

say they expect the price to drop enough in the next couple of years to

permit broader use of white LEDs.

 

Meanwhile, a host of new methods are being adopted by consumers and

companies, such as systems that "harvest" daylight, concentrating it and

shooting it indoors so that buildings don't need to use as much artificial

light. Nature's Lighting, of Park City, Utah, manufactures solar dishes,

lined with mirrors, that sit on flat roofs and project sunlight through

skylights into buildings. Diffusers distribute the bright light.

 

Mike Basch, a founder of Federal Express who's now chief executive of

Nature's Lighting, says warehouses, auto makers and big-box retailers have

been especially keen on the systems, which employees like because of the

full-spectrum light.

 

At Wal-Mart Stores Inc., electricity is the leading expense after labor

costs, exceeding $1 billion a year. So the retailer has been perfecting

harvesting techniques to channel daylight into stores through prismatic

skylights that concentrate the light without radiating heat. Sensors

automatically adjust the store's fluorescent lights up and down in response

to the amount of natural illumination available.

 

Wal-Mart now uses the system at nearly all of its stores, representing 330

million square feet of floor space. The systems cost about $200,000 per

location and pay for themselves in two to three years through reduced

electricity and cooling costs. "It's a pretty sophisticated setup," says

Charles Zimmerman, Wal-Mart's vice president in charge of the initiative,

who adds that Wal-Mart will gladly share its equipment specifications with

anyone who wants them.

 

2) MORE-EFFICIENT HARDWARE

 

The past few years have seen tremendous advances in the energy efficiency

of hardware. For instance, new developments in industrial motors promise

huge savings for businesses. Currently, the motors represent 67% of

industrial energy use, according to Clark Gellings, vice president of

innovation at the Electric Power Research Institute in Palo Alto, Calif.

But older motors waste lots of power because they constantly switch on and

off.

 

Now many companies are turning to variable-frequency drives. Instead of

constantly turning on and off, the drives "let motors change speed in

response to the load on them," says Mr. Gellings.

 

MGM Mirage, the big casino and hotel operator, is installing 22 of the new

variable-speed drives on refrigeration units at its Las Vegas properties.

The $4 million retrofit will pay for itself through reduced energy costs in

about 2ˆ years and thereafter will save the company about $1.6 million a

year.

 

Big gains also are being realized in air conditioning. New federal

efficiency standards took effect in January for central air-conditioning

units used by homes and businesses; the least-efficient units sold must be

at least 30% more efficient than last year's least-efficient models. In

industry parlance, that's a 13 SEER, short for seasonal energy efficiency

rating, versus a 10 SEER, the standard that had been in effect for 14 years.

 

According to the Department of Energy, the higher standard will save a

total of 4.2 quadrillion British thermal units, or "quads," of energy from

2006 through 2030 -- enough of a saving that utilities will be able to

forgo building 40 new power plants nationally. Consumers, meanwhile, will

save about $1 billion by 2020.

 

The saving might even be more pronounced than that. Many central-air units

can achieve ratings in excess of 14 SEER at only slightly greater expense

-- and manufacturers say consumers are very interested. One reason may be

utilities like Austin Energy, a city-owned utility in Austin, Texas, which

is offering a 20% rebate on air conditioners with SEER ratings of 14 or

greater.

 

3) SMARTER SENSORS

 

Manufacturers are designing their products to be more intelligent, using

advanced sensors to better control energy use and drive down operating

costs. Sensors selling for a few dollars can save thousands of dollars over

the course of a few years. And more companies are taking advantage of the

technology.

 

For example, custom-sensor maker Kavlico Corp., of Moorpark, Calif., is

seeing robust sales for semiconductor-based controllers used in commercial

refrigeration equipment. Sensors tell a controller when to begin the

defrost cycle in the freezer case, replacing automatic timers that put

equipment through unnecessary heat-up-and-cool-down cycles.

 

The new controllers "result in a 25% to 30% reduction in power use," says

Scott Farrenkopf, general manager of Kavlico, a unit of Schneider Electric

of France. He says auto makers and equipment makers are ordering more

custom-tailored sensors for systems designed to improve fuel economy and

energy efficiency.

 

4) BETTER MEASURES

 

Consumers, meanwhile, are getting better tools for tracking energy use

around the house with tools that are inexpensive and readily available.

Eric Bier, a retired group-home administrator in San Diego, got concerned

about his rising home utility bill. So he bought a device called a

Kill-A-Watt meter, made by P3 International Corp. of New York.

 

He plugs the gadget, which cost about $40, into a standard wall outlet.

Then he plugs various other devices into the meter, and it tells him how

much power they're consuming. By multiplying this kilowatt-hour reading by

his local utility's rate, he can easily figure out the monthly cost of

operating the device in question.

 

Mr. Bier was surprised at the results of a recent home test. He learned

that his new computer and accessories were using 242 kilowatt-hours of

electricity a month, costing $48.50, because he never turned them off. Once

he began shutting them down at night, the monthly cost dropped to about

$18.80 a month for 94 kilowatt-hours of energy. On the other hand, his

Roomba vacuum cleaner, from iRobot Corp., provided a pleasant surprise,

vacuuming 8,960 square feet of floor space automatically each month for a

total of $1.17 in electricity. "Considering how much work it does, it's a

baby," he says.

 

Tom Lynch, director of sales and marketing for P3 International, says sales

of the meters took off last winter. Sales in the first quarter of 2006

exceeded sales for all of 2005, he says, lifted by consumer worries about

high utility bills.

 

5) SETTING STANDARDS

 

The federal government sets minimum standards for energy efficiency on more

than a dozen products, including dishwashers, refrigerators, water heaters,

room air conditioners and electric motors. From 1990 to 2000, these

standards saved consumers approximately $50 billion in energy costs,

according to one federal estimate.

 

The EPA, meanwhile, puts its own Energy Star labels on about 40 products,

generally identifying the 25% of products in each category that are the

most energy-efficient. In 2005, consumers with Energy Star products saved

an estimated $12 billion, as well as enough electricity to power 11 million

homes, according to the EPA.

 

But there are some glaring omissions in the EPA standards, and closing

those gaps will bring more savings in coming years. For instance,

television sets. The government doesn't impose an efficiency standard on

TVs, and the Energy Star label identifies only TVs with low power

consumption in "standby" mode -- in other words, not turned on. (Any device

with a remote control is never really shut off, unless you unplug it.)

 

The call for a standard has grown louder as electricity use by televisions

has boomed in recent years. Television screens have exploded in size, and

add-on devices have proliferated, from satellite dishes to programmable

set-top boxes. Some families now spend more money powering

home-entertainment systems than they do refrigerating their food.

 

The International Electrotechnical Commission, which prepares standards for

electrical and electronic technologies that often are adopted by

governments, is working on common metrics to measure TV electricity

consumption. After the IEC concludes its work, some efficiency information

may begin appearing on sets in early 2008, the government says. Meanwhile,

the EPA says it's considering Energy Star labels that would look at total

power consumption by TVs instead of just power use in standby mode to give

consumers a valuable tool to use when buying a new television.

 

The push for better disclosure is receiving some resistance from the

electronics industry. The Consumer Electronics Association encourages

voluntary labeling, but opposes mandatory efficiency standards for goods

like TVs because "the industry has so many products and they change so

fast," says Brian Markwalter, the group's vice president of technology

standards.

 

Activists argue that the speedy evolution of products makes new standards

more urgent. "Energy use has changed, and it's time for labeling to catch

up," says Chris Calwell, principal in Ecos Consulting in Portland, Ore., a

firm that specializes in energy issues.

Image

 

6) NEW BUILDING CODES

 

All states have building codes for health, fire and safety. But 40 also

have codes for energy efficiency. The rules require, for example, at least

minimal amounts of insulation in new buildings. The Department of Energy

estimates code changes saved consumers $4.7 billion in lower electric bills

between 1991 and 2005.

 

Now some of the 10 states that don't have statewide energy-efficiency

codes, including Mississippi and Alabama, are considering adopting them, in

part because they're facing lots of hurricane-related rebuilding.

Meanwhile, several states that already have efficiency codes are

considering adopting the latest version of a model code, released last

winter by the International Code Council, a membership organization that

creates the building codes often adopted by governments.

 

Experts say the latest version is shorter and less complex than the

previous one; for instance, it divides the nation into eight climate zones

instead of 19. At the same time, the new rules set more-ambitious goals for

energy savings. The code hasn't yet been certified by the Department of

Energy, but many states are moving ahead to consider it anyway.

Energy-efficient building codes are expected to reduce primary energy use

in the U.S. enough to save consumers $10 billion annually by 2010.

 

7) INCENTIVES FOR UTILITIES

 

Most utilities earn higher profits as energy use rises; that's the way

their rates are structured. So conservation efforts undermine their ability

to make money and get reimbursed for their costs.

 

But many states have changed that pricing scheme to remove the disincentive

for utilities to sponsor energy-reduction programs. California and some

other states assess a larger proportion of a utility's costs in basic

service fees, not volumetric charges based on the number of kilowatt-hours

of power consumed.

 

In July, dozens of utilities, big energy users and regulators pledged to

attack the rate-structure problem in states where it still exists and

promote energy efficiency through resource planning, giving conservation

more attention. Rather than build a new 500-megawatt power plant, for

example, states would see if they could cut demand by 500 megawatts more

cheaply and without environmental harm.

 

Utility regulators from more than half of these states have endorsed this

National Action Plan for Energy Efficiency. The industry is engaged because

most state regulators are confronted by "new plant proposals and rising

rates" that they would prefer to avoid, says Diane Munns, a utility

commissioner from Iowa and a leader of the effort. If the plan were adopted

nationally, U.S. energy bills could be reduced by $20 billion annually,

according to the EPA, a proponent of the effort.

 

Meanwhile, the California Public Utilities Commission is considering

creating special monetary incentives for utilities that promote

conservation. Says Michael Peevey, president of the commission, "I want to

see utilities get a return on energy efficiency comparable to what they'd

get for putting steel in the ground."

 

8) VARIABLE PRICING

 

One of the more ambitious conservation efforts utilities are trying out --

both on their own and at the urging of regulators -- is a new kind of

metering. Sophisticated electric or gas meters monitor how much energy is

consumed by individual customers, taking automatic soundings several times

a day instead of monthly.

 

This makes it possible for utilities to charge different prices by time of

day or season. Regulators might use higher rates when the electric system

is stressed or when fuel prices are especially high to suppress demand so

fewer power plants need to run. Mr. Peevey of the California Public

Utilities Commission says some consumers balk at the idea, "but when people

understand this is the more environmentally sensitive option, they are

supportive."

 

Nationwide, about 6% of electric customers have the meters in place,

according to a recent study by the Federal Energy Regulatory Commission.

Pennsylvania, Wisconsin, Connecticut, Kansas, Idaho and Maine have the

highest usage rates, ranging from 14% to 53%.

 

California soon will make the list with a massive remetering project

expected to cost about $3 billion. Five million customers of Southern

California Edison, a unit of Edison International, will receive new meters

beginning in 2008, for example. The meters will be two-way communication

devices, able to send the utility instantaneous readings as well as talk to

other devices like smart thermostats, which allow remote control of

temperature settings. This will let consumers better control energy use --

for example, by cutting use at periods of grid stress or especially high

prices.

 

9) REBATES

 

Many utilities also offer rebates on energy-efficient appliances and

equipment, trying to permanently reduce demand by getting obsolete

equipment retired. When New York offered a $75 bounty for old air

conditioners in 2002, 160,000 units were turned in, saving enough juice

over 10 years to equal a full year's output from a large power plant.

 

California, where consumers pay about $20 billion a year in electricity

charges, has committed to spend $2 billion of customer funds on

energy-efficiency programs from 2006 through 2008, a record expenditure for

any state. Elsewhere, states are considered aggressive if they get

utilities to spend the equivalent of 1% to 2% of electricity revenue on

energy-efficiency programs.

 

PG&E's Pacific Gas & Electric utility will spend $974 million and expects

to permanently cut demand by 600 megawatts, eliminating the need for one

large power plant and 30 to 50 years of fuel. About 250 megawatts of

reductions will come from lighting alone.

 

Some of these efficiency programs involve big rebates. GMH Capital Partners

LP, a real-estate investment firm, bought a big apartment complex in

Richmond, Calif., last year. It spent $327,428 rejuvenating the nearly

20-year-old structure, installing new lights, water heaters and

heat-reflecting roofing materials. The expected annual energy savings:

$112,000, most of which will be realized by renters at the 1,008-unit

complex.

 

For its trouble, GMH got a rebate check for the full amount of the

equipment and installation. The local utility, PG&E, made the move because

most property owners won't do expensive retrofits if renters reap the

savings. "It's a tough market to crack," says Beverly Alexander, vice

president of customer energy at the utility.

 

10) CUSTOMER-RESPONSE PROGRAMS

 

Getting customers to trade up to energy-efficient equipment permanently

reduces energy use. But there are ways to temporarily cut consumption,

particularly among big energy users. These "demand response" programs will

be more visible in coming years, especially in places like New England that

are having trouble getting new plants built.

 

Early programs paid big energy users to reduce energy use, sometimes

forcing them to curtail production. One current approach cuts consumption

more painlessly, with the help of controls that dim lights or cycle air

conditioners and pumps when requested by the utility.

 

In response to a directive from Congress, the Federal Energy Regulatory

Commission recently surveyed the electric-power industry and found existing

demand-response programs can cut consumption by 37,500 megawatts when

activated, equivalent to the output of 75 big power plants.

 

In July and August, when U.S. electricity markets set new records for

energy use, the outfit that runs the high-voltage electric grid in the

mid-Atlantic region got big energy users to cut their usage in exchange for

payments. This benefited all consumers by cutting wholesale power costs by

about $650 million.

 

Many experts think that well-designed programs, backed by the right

technology, can easily cut peak energy use by 5% to 10%. In fact,

California did better than that in the 2000-01 energy crisis.

 

Jon Wellinghoff, a member of the Federal Energy Regulatory Commission, says

consumers "easily could save billions of dollars annually" with only a

modest expansion of existing programs and no impact on productivity. What

you need, he says, is "a willingness to try new things."

 

Some utilities seem willing to go down that road. Rick Green, chief

executive of Aquila Inc., a Kansas City, Mo., holding company that owns

utilities in five Midwestern states, says utility executives gradually are

becoming convinced they can't build their way out of the current situation,

as they did in the past.

 

He says one employee in Colorado recently told him that when he talks to

conservationists, "I don't say 'no' anymore. I say, 'Yes, if...' "

 

 

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