Duke Energy and North Carolina proceed to steer the Southeast on energy effectivity, accounting for vastly extra energy financial savings than every other utility or state in the area. New state insurance policies and company emissions discount commitments set the stage for much more financial savings in coming years, regardless of headwinds.

Forest Bradley-Wright | February 19, 2020 | Energy Efficiency, North Carolina, Utilities

North Carolina Leads the Southeast

SACE’s 2019 Energy Efficiency in the Southeast Annual Report exhibits that North Carolina continues to be the clear chief on energy effectivity in the Southeast. In reality, it was the solely state in the area to exceed the nationwide common for annual energy financial savings as a proportion of retail gross sales in 2018 (the most up-to-date 12 months for which information is obtainable). Energy effectivity drives invoice financial savings: North Carolina residential prospects had the lowest common electrical payments of all Southeast states analyzed.

North Carolina stands aside from different Southeastern states with significantly increased annual effectivity financial savings

With simply 17% of the area’s complete inhabitants, North Carolina accounted for 40% of all energy financial savings in the complete Southeast. Per capita effectivity financial savings in the state have been greater than 3 times increased than the remainder of the area.

While North Carolina is clearly distinctive amongst peer utilities in the South, that’s admittedly a fairly low bar. And though the state comes in above common by nationwide requirements, it may possibly look to quite a few increased reaching states in the Northeast, Midwest, and Pacific areas because it strives for additional financial savings in the coming years.

Historic Policies Positioned North Carolina for Leadership

Many years of supportive state insurance policies laid the basis for North Carolina’s current relative success. In explicit, the state’s beneficiant efficiency incentives gave its largest utility operator, Duke Energy, the skill to earn on its effectivity investments – whilst prospects spend much less on their energy payments. Efficiency provisions in the state’s Renewable Energy Portfolio Standard have been one other necessary driver, with Duke commonly exceeding the allotted annual financial savings threshold. Policies in South Carolina are additionally typically aligned, giving Duke Energy Carolinas (DEC) and Duke Energy Progress (DEP) the skill to deploy a broad set of roughly related applications throughout each corporations and each states. This, in flip, permits economies of scale and administrative efficiencies in program supply.

New Driver for Efficiency: Carbon Emissions Reduction Commitments

Attractive economics is the major driver for insurance policies supporting energy effectivity development. It merely prices much less to take a position in efficient energy effectivity applications than to produce power for wasted energy. Recently, nonetheless, altering political landscapes and company commitments have led to a different probably potent driver for increasing effectivity in the coming years: lowering carbon emissions. Energy effectivity cuts demand for fossil gasoline power technology, offsets the want for development of latest power crops, and can help in retiring outdated, polluting legacy power crops. Efficiency additionally facilitates the transition to renewable energy, reducing complete funding prices by first lowering buyer demand. North Carolina’s governor, Utility Commission, and Duke Energy have all not too long ago indicated their intention to chop carbon air pollution:

Replacing fossil gasoline technology represents a significant alternative for energy effectivity, particularly when mixed with renewable energy and battery storage.

The Duke Effect

North Carolina’s profitable effectivity features in current years could be attributed virtually completely to the state’s largest utility, Duke Energy. For the second consecutive 12 months, Duke Energy Carolinas achieved effectivity financial savings in extra of 1% of prior 12 months retail gross sales, once more incomes the high rating spot amongst utilities in the area in SACE’s 2019 Energy Efficiency in the Southeast Annual Report. At 0.86%, Duke Energy Progress held the second-highest financial savings place by a substantial margin. In 2018, these two utilities delivered over $900 million of internet current worth financial savings to prospects in the Carolinas.

Besides Duke in the Carolinas, most utilities are dragging the Southeast effectivity common downward.

No different Southeastern utility was even near reaching the 0.71% nationwide common for annual energy financial savings. Georgia Power and Tampa Electric exceeded the 0.31% regional common, however the remaining main utilities did not ship even that stage of financial savings for their prospects. Unfortunately, this contains Duke Energy Florida (DEF), which trailed far behind its sister corporations in the Carolinas at simply 0.21% effectivity financial savings.

Duke’s Corporate Culture Supports Efficiency

North Carolina’s coverage management is bolstered by Duke Energy’s supportive company tradition and a powerful inner staff accountable for designing and delivering a variety of energy effectivity applications. Some members of Duke’s effectivity program workers work throughout all six Midwest and Southern states the place the firm operates. This breadth of expertise facilitates the growth of latest program approaches, helps with figuring out key classes, and informs their method when executing new methods. Moreover, by Duke’s distinctive Energy Efficiency Collaborative, the firm has additionally demonstrated a spotlight on steady enchancment and willingness to work with effectivity advocates and stakeholders that’s unequalled in the Southeast.

Facing the Headwinds

The street forward contains some vital challenges for Duke regardless of current accomplishments. The firm is projecting substantial declines in future effectivity financial savings. For 2020, DEC initiatives a 20% discount, DEP initiatives a 9% drop, and DEF’s meager 0.27% goal will fall precipitously over the subsequent 5 years. Duke explains their projections by pointing to decrease prevented prices charges, higher constructing codes, and increased effectivity requirements for lighting and home equipment, noting that every of those erodes the financial savings that may be attributed on to utility effectivity applications.

Duke will not be alone in dealing with these challenges. Other utilities throughout the nation face related pressures, however for years the most profitable utilities have used innovation and efficient program design to beat related adjustments and many have nonetheless steadily elevated their effectivity financial savings. Through the Energy Efficiency Collaborative, Duke has assist from quite a few energy effectivity advocates to determine new applications and financial savings alternatives that might assist the firm once more exceed 1% annual financial savings in future years.

Room for Improvement

Even with North Carolina and Duke Energy’s success so far, there’s nonetheless appreciable room for enchancment. Leading energy effectivity states like Rhode Island and Massachusetts are delivering financial savings which might be roughly 4 instances increased.

Efficiency efficiency at Duke Energy Florida is out of step with its sister corporations in the Carolinas

Duke Energy Florida’s efficiency on energy effectivity stands in stark distinction with its sister corporations in the Carolinas. The utility’s shortfall is basically a matter of coverage: the Florida Commission penalizes effectivity by treating all energy financial savings as a price to the utility, fairly than counting it as a profit to prospects. Florida can be the solely state to robotically eradicate any effectivity measure that pays again in 2 years or much less. These ridiculous insurance policies run straight counter to the motive all of us do energy effectivity in the first place – to cut back buyer payments by capturing the most price-efficient energy financial savings out there. In impact, this incentivizes utilities to do much less – fairly than extra – effectivity for prospects.

The distinction between Duke’s efficiency in Florida versus the Carolinas is a textbook case for why supportive insurance policies are wanted for energy effectivity.

Efficiency efficiency in the South trails far behind different areas of the nation.

Excluding Duke Energy’s effectivity financial savings, North Carolina’s annual effectivity financial savings in 2018 would have been a mere 0.22%. North Carolina’s co-operative and municipal utilities are nonetheless offering little or no energy effectivity for their prospects.  There are nonetheless significantly extra effectivity financial savings out there in the state.

This weblog is a part of a unbroken sequence following the launch of the Energy Efficiency in the Southeast 2019 Annual Report.

Read Part 1 of the sequence giving an summary of the report: “Energy Efficiency in the Southeast” 2019 Annual Report.
Click here to watch a webinar where SACE technical does deep dive on “Energy Efficiency Report” findings.

Stay tuned for future installments in this series and click here for more blogs related to energy efficiency in the Southeast.

 Notes:
For functions of knowledge calculations referenced in this weblog, the Southeast area for SACE doesn’t embrace the portion of North Carolina in the PJM territory served by Dominion Energy.
 

SACE commonly participates in Duke’s Energy Efficiency Collaborative conferences and is a proper participant in official utility regulatory proceedings associated to Duke Energy’s effectivity efforts in North Carolina, South Carolina, and Florida.

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