New Jersey Energy Efficiency: Progress and Opportunity

While the state needs to move forward on all fronts to achieve its clean energy goals, energy efficiency represents a particularly important opportunity

Credit: Lime Energy
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Almost one year ago, Governor Murphy signed the Clean Energy Act, new legislation to advance New Jersey’s clean energy economy. An important part of that legislation were new and ambitious energy efficiency goals that require “each utility to implement energy efficiency measures to reduce electricity usage by 2 percent and natural gas usage by 0.75 percent.”

As the recent and dramatic report from the International Panel on Climate Change made clear, there is no time to waste to reduce our collective carbon footprint. Earth and society are in real trouble without immediate action. Delay is no longer an option and New Jersey is leading the charge with this new legislation and upcoming Energy Master Plan.

While New Jersey needs to move forward on all clean energy fronts, energy efficiency represents a particularly important opportunity. According to a National Resources Defense Council report, energy efficiency is the single largest carbon emissions reduction opportunity in the U.S.

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Energy efficiency in buildings, for example, is a leading way to decarbonize the economy but it is also a deeply underappreciated clean energy solution. Improving buildings’ energy performance is nearly always the lowest-cost, carbon-free energy resource. It lowers residents’ and businesses’ energy bills and it improves comfort, productivity, air quality and health outcomes among other benefits. Yet solar panels, wind turbines, and electric vehicles get all the glory. Why?

The challenge is that energy efficiency is largely invisible and takes many forms. It is in basements (heating equipment) and ceilings (lighting). It appears as small objects on walls (thermostats) and disappears behind them (insulation).

Although energy efficiency doesn’t always get the acclaim it deserves, it does have a bright future here in New Jersey — thanks in part to our Trenton lawmakers. In particular, the Clean Energy Act has put the onus on utilities to ensure their residential and commercial customers have robust energy efficiency savings opportunities.

Public Service Electric and Gas (PSE&G) has seized the moment with an ambitious proposal that matches the aims of the energy efficiency provisions of the Clean Energy Act. PSE&G’s landmark $2.8 billion “Clean Energy Future — Energy Efficiency” (CEF-EE) proposal is comprised of no-regrets investments that will meet New Jersey’s energy efficiency goals, add $10 billion in benefits, and create an estimated 30,000 New Jersey jobs.

As companies like Lime Energy and Sealed know, utilities can be leaders in scaling energy efficiency when they have a greater incentive to save energy than to sell energy. As NRDC wrote recently, “[i]t’s a win-win that’s proven successful in the top-performing energy efficiency states…and has already led to great efficiency improvements at New Jersey Natural Gas.”

With this incentive, utilities can leverage their powerful and unique assets to effectively reach customers and help them save energy. Utilities have the brand presence, data infrastructure, and customer relationships necessary to turn energy efficiency into a serious energy and carbon reduction resource.

Luckily, PSE&G is ready to lead and transform their business model. The wide range of 22 programs in their energy efficiency proposal will target every type of customer that PSE&G serves, with a focus on hard-to-reach customer segments and disadvantaged communities. With these programs, many companies will be able to help New Jersey residents save energy and create many new jobs retrofitting homes and business.

PSE&G’s proposal can also unleash a wave of innovation, with private sector capital taking on the energy investment risk instead of the ratepayers. For example, both Lime Energy and Sealed offer Pay for Performance (P4P) programs where customers and utilities only pay based on actual energy savings at the meter.

There have been extensive discussions about energy efficiency in New Jersey for a long time, yet few customers have been able to fully realize its benefits. As a state, New Jersey is ranked #18 for overall energy efficiency and #29 in terms of energy efficiency savings, according to the “2018 State Energy Efficiency Scorecard” from the American Council for an Energy Efficient Economy (ACEEE). While this is an improvement from 2017, it is not nearly good enough.

Earth Day was a great opportunity to both acknowledge the progress New Jersey has made with energy efficiency and recognize that we have tremendous opportunities ahead of us. Having just celebrated Earth Day, we don’t have time to lose in seizing these opportunities.