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Conservation Update: Measuring State Energy Accomplishments

This article was featured in the May-June 2003 edition of the State Energy Program's bimonthly newsletter, Conservation Update.

by Martin Schweitzer, Oak Ridge National Laboratory

Metrics have always challenged state energy efficiency programs. How do we account for a program that allows states to set their own energy agendas according to local needs and energy challenges?

For the past several years, a team of researchers from Oak Ridge National Laboratory (ORNL) has tackled the problem of how to present uniform results for the U.S. Department of Energy State Energy Program (SEP). The results are important because bean counters in both federal and state agencies are constantly comparing results with other government programs in their assessments of funding.

ORNL published the report in January 2003 showing:

• Leverage - states obtained $3.54 in funding for their energy programs for each dollar contributed by DOE's State Energy Program.
• Cost and energy savings from SEP are $256 million and 41 trillion BTU every year. This means that for every federal dollar invested in SEP, there are energy savings worth $7.23.
• Emissions reductions that result from these energy savings are substantial and cost effective.

The average payback on SEP investment is 0.14 years. The short payback periods and impressive ratios of savings to funding indicate the program is operating very effectively.

Managing Director of the National Association of State Energy Officials (NASEO) David Terry said, "NASEO has worked for years with state and territory energy offices to collect data on the energy efficiency demonstration, deployment, and market transformation programs in the states under the cost-shared State Energy Program. Unfortunately, these efforts were generally ad hoc and lacked the resources and expertise needed to deliver consistent national data on SEP. The ORNL analysis team brought expertise, independent rigor, good methodology, and a true national scope to this metrics challenge. Their report is a tremendous step forward for showing the value of state efforts under SEP."

Methodology for Measuring State Energy Savings

A few years ago, DOE charged staff at Oak Ridge National Laboratory with the task of coming up with a methodology for describing the activities carried out by the states under the State Energy Program and, more difficult still, measuring the nationwide energy and cost savings resulting from those efforts. After reviewing existing procedures used to track program accomplishments and examining a host of reports and articles on a wide variety of energy efficiency and renewable energy programs, the ORNL team came up with a two-tier scheme for describing key SEP activities.

First, we identified a set of 20 different program areas where state and territory energy offices carry out similar sets of activities. For example, energy offices offer ongoing training and workshops to a wide variety of energy professionals. Even though these workshops cover widely varying topics in buildings and transportation and deal with disparate professions, we decided to group these training activities together for the purpose of estimating savings. Coming up with a classification scheme that adequately covers all of the diverse activities carried out by the states proved to be one of the more difficult parts of this analysis.

Ultimately, the ORNL team identified the following 20 sets of activities for calculating savings as shown in Table 1.

Table 1: State Energy Program Areas and Number of States Providing Data for the SEP Metrics Study, August 2002
Program Area	Number of States Providing Data
Workshops and training	19
Mass media	18
Information inquiries	17
Loans and grants	16
Technical assistance	16
Alternative fuels	16
Building codes and standards	15
Development, demonstration, and deployment	13
Planning	12
Retrofits	12
Energy audits	12
School education programs	10
Procurement	6
Home energy ratings and energy efficient mortgages	5
Rebates and product promotions	5
Interest buy-downs	2
Carpools and vanpools	2
Appliance rating and labeling	2
Tax credits	2
Traffic signals	2

Next, we identified several distinct pieces of data that we could count for each of these program areas called enumeration indicators. These are the pieces of data we would ask the states to collect about their energy programs. For example, we would ask for the number of people attending a training session or workshop and the number of such events held during the year. These data focus on the specific types of actions taken by the states rather than on the end-use sectors addressed, such as residential or commercial buildings, or the kinds of energy sources involved.

On average, we developed four indicators for each set of activities. Under retrofits, for example, we asked states to tell us the number of buildings retrofitted, the number of buildings receiving various types of measures, and the total floor area affected.Under loans and grants, we asked for the number of loans issued, the number of grants given, and their monetary value.

Our final challenge was to estimate energy savings.We scoured the available literature reporting findings from recent evaluations and used those findings to develop estimates of the average savings achieved by each individual SEP activity performed by the states. Due to limitations posed by the evaluations performed to date and by the structure of some of the indicators, we were not able to come up with per-unit savings estimates for every set of activities. Nevertheless, we were able to develop savings estimates for at least one indicator in 14 different program areas. These per-unit savings estimates can then be multiplied by the state-provided information on the number of activities undertaken to calculate energy savings.

These energy-savings numbers, in turn, can be multiplied by average energy prices and emissions of carbon and other substances per unit of energy to provide estimates of cost savings and emissions reductions. Because the individual savings estimates generally were taken from a limited number of studies, the savings and emissions reduction numbers generated by this study have to be treated as approximations. Nevertheless, they are the best numbers available to date and we believe they represent statistically valid estimates of the energy and cost savings and emissions reductions achieved by the State Energy Program.

Calculating National Savings from State Data

The next step was to collect data from the states about their activities and, using these data, calculate energy savings. In late 2001, NASEO asked the state and territory energy offices to provide specific data describing their SEP activities for the most recent program year.

By the following August, 20 states had responded and provided the data that form the basis for the ORNL study. As shown in Figure 1, the responding states are spread across the entire United States, both from east to west and from north to south. They include the three most populous states in the nation—California, Texas, and New York—as well as the least populous state—Wyoming. Together, these 20 states account for almost half of all funds allocated by SEP in 2000 and half of the U.S. population.

One of the first things that we noticed about the data was the tremendous financial leverage generated by the State Energy Program. Altogether, the 20 states received a total of slightly more than $26 million in SEP funds for that program year. At the same time, they reported a total of more than $119 million in total funding. In other words, they leveraged a total of $93 million additional funds from state treasuries, other federal agencies, local governments, and the private sector. From this, we developed an important metric for SEP that for each dollar of SEP funding, the states obtained more than $3.50 from other sources.

We could also glean from these data the types of activities on which states were putting most of their emphasis. Three-fourths or more of the responding states conducted activities using SEP funds in the areas of alternative fuels, building codes and standards, information inquiries, loans and grants, mass media, technical assistance, and workshops and training. On the other end of the scale, fewer than one-fourth of the responding states engaged in SEP supported activities related to appliance rating and labeling, carpools and vanpools, interest buy-downs, tax credits, and traffic signals and controls.

The five most heavily funded types of activities—alternative transportation fuels, building codes and standards, information inquiries, loans and grants, and technical assistance—together accounted for nearly 75% of all SEP funding reported by the responding states.

Similarly, we found that annual energy savings were concentrated in just a few areas. Approximately 85% of the total energy savings occurred in five areas—appliance rating and labeling, building codes and standards, energy audits, rebates and product promotions, and training and workshops. Nearly all of the remaining energy savings came from the next three highest-saving types of activities—loans and grants, retrofits, and technical assistance; see Figure 2.

Table 2: Cost and Energy Savings Calculated from Data Provided by 20 Responding States, August 2002
Program Area	Annual Energy Savings (million source BTUs)	AnnualCost Savings
Building codes and standards	6,396,625	$39,659,074
Energy audits	3,354,427	$20,797,448
Rating and labeling	2,466,907	$15,294,823
Workshops and training	2,069,284	$12,829,559
Rebates and product promotions	1,815,481	$11,255,984
Retrofits	970,465	$6,016,901
Loans and grants	860,693	$5,336,295
Technical assistance	580,422	$3,598,618
Traffic signals	196,053	$1,215,529
Tax credits	78,507	$486,744
Procurement	49,867	$309,173
Carpools and vanpools	19,143	$118,686
Interest buy-downs	1,291	$8,007
Home energy ratings and energy efficient mortgages	301	$1,865
Total	18,859,466	$116,928,706

Conclusion

When added together, the energy savings are impressive. Furthermore, this is the most rigorous and comprehensive study of DOE's State Energy Program (SEP) undertaken to date, and the resulting energy and cost savings numbers represent valid estimates of program accomplishments.

Based on the data that 20 responding states provided and for which results can be quantified, annual energy savings were estimated to be nearly 19 trillion source BTUs and cost savings were almost $117 million. Emissions reductions follow from these energy savings and are substantial; see Table 3.

Table 3: Emissions Reductions from Energy Savings in 20 States Providing SEP Metrics Data, August 2002

Emissions Reduced	Annual Metric Tons
Carbon	328,000
SO2	3,500
NO2	2,600
Volatile organic compounds (VOC)	450
Particulate matter 10 microns and smaller	60

These estimates are likely to be low because they do not include savings for all of the enumeration indicators that the 20 responding states provided. Nor do they include energy savings for six types of SEP activities for which we could not develop precise formulas for estimating energy savings. The latter include such activities as educating consumers about energy efficiency and supporting energy policy initiatives by governors' offices and state legislatures. While these activities are important and most energy offices engage in them, we could not measure their results in terms of BTUs saved.

For similar reasons, we did not try to monetize other benefits that are external to energy savings calculations. For example, energy security, environmental quality, and economic development naturally result from energy projects in the states, but we did not try to quantify their value in this study. Had the full monetary value of all non-energy benefits been calculated, it is likely that the cost savings numbers would have been considerably larger.

For the 20 responding states, energy offices annually saved 1.17 million source BTUs and $7.23 in cost savings for each dollar of funding from the State Energy Program. This represents a payback period of less than two months. For total reported funding, which includes SEP plus leveraged funds, each dollar allocated to those same program areas resulted in annual energy and cost savings, respectively, of 0.25 million source BTUs and $1.58. The payback period for this total investment is about seven and a half months. Keep in mind that energy hardware is capital intensive and remains in use for many years. Despite the quick payback, the annual savings from these measures are expected to continue for many years to come.

The savings and emissions reductions estimates for the responding states can be extrapolated to the nation as a whole based on the proportion of total SEP funding represented by the states that provided data. We estimate the annual energy and cost savings, respectively, from DOE's State Energy Program for the entire country to be more than 41 trillion source BTUs and $256 million. We estimate that the annual carbon emissions reductions for the entire program are nearly 720,000 metric tons.

The above findings are important because they show the magnitude of the energy and cost savings and emissions reductions achieved by the State Energy Program. Clearly SEP saves money, enhances the nation's strategic energy position, and improves environmental quality.

The full credits for the report are as follows: Schweitzer, M., D.W. Jones, L.G. Berry, and B.E. Tonn; Estimating Energy and Cost Savings and Emissions Reductions for the State Energy Program Based on Enumeration Indicators Data; ORNL/CON-487; Oak Ridge National Laboratory, Oak Ridge, TN; 74 pp.; January 2003.

In addition, NASEO publishes a summary of the report in the form of a fact sheet.

You can read the metrics report and other reports dealing with measuring results from DOE's State Energy Program and Weatherization Assistance Program at ORNL's Weatherization Library.

About the Author

Martin Schweitzer, Oak Ridge National Laboratory
Martin Schweitzer is a research analyst at Oak Ridge National Laboratory (ORNL), where he has worked since 1978. During his tenure at ORNL, he has studied and evaluated the organizational processes and outcomes related to a number of energy efficiency and renewable energy programs, including the low-income Weatherization Assistance Program and the State Energy Program. His work has appeared in Energy, Energy Policy, The Electricity Journal, Public Utilities Fortnightly, Utilities Policy, and other journals.