What’s better than using lots of cheap natural gas? Here’s what. Why energy efficiency is an essential complement to the current natural gas boom Carl Nelson Center for Energy and Environment EI Natural Gas Forum St. Paul, MN September 21, 2012
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What’s better than using lots of cheap natural gas? Here’s what.
Why energy efficiency is an
essential complement to the current natural gas boom
Carl Nelson Center for Energy and Environment EI Natural Gas Forum St. Paul, MN
September 21, 2012
Page 2
+ Strong MN leadership in energy efficiency policy
+ Experienced energy-efficiency workforce
+ Strong economic benefits + Cheapest resource option in the long run + Provides in-state jobs + Lowers customers’ energy bills + Benefits of utility programs exceeded costs by 3 times in 2011 + 2.3 million Dth saved in 2011 (25,000 households) + Lowered demand = lower prices
Efficiency is Minnesota’s Preferred Resource
Page 3
Electric efficiency also decreases NG demand
Source: ACEEE, adapted from Lazard 2009 and ACEEE, 2009
Levelized cost of new electric resources
MN avoids building new gas plants with least-cost resource
Page 4
+ Efficiency is cost-effective now even with relatively low gas prices
+ We need to be cautious in using natural gas price projections to look at long-term energy efficiency policy + Energy-efficiency requires long-term view + Significant risk in disrupting programs (stop/start) + Natural gas price projections have been fairly inaccurate in long-
term, while actual prices have been fairly volatile + Many reasons to think there may be significant upward pressure
on prices
Do low gas prices mean we don’t need efficiency? (Hint, answer is no)
Page 5
AEO projections vs. actual natural gas prices
Source: AEO, 2012
Page 6
One upward pressure on prices: US markets out of synch with world
Source: PIRA, 2012
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+ Help to hedge against impacts of price volatility
+ Can help to further lower the long-term price of natural gas
+ Provides strong economic benefits as a native energy source Recent report provides more detail:
Saving Money and Reducing Risk: How Energy Efficiency Enhances the Benefits of the Natural Gas Boom
ACEEE, Sept. 2012 http://aceee.org/white-paper/saving-money-and-reducing-risk
Strong efficiency policy is good compliment to natural gas boom
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