Like everything else in the electric power industry, energy efficiency is beginning to feel the tectonic shifts underfoot. The vibrations are unmistakable now even to casual observers. Its perch atop the Northwest's resource stack is no longer certain. It faces competition with cheap renewables—namely wind and solar. Even natural gas resources are constraining energy efficiency targets in the Northwest Power and Conservation Council's 2021 Power Plan.

The name of the plan's creator—the Northwest Power and Conservation Council—exemplifies how central energy efficiency is to the industry's culture in the region.

The name also exemplifies how the region needs to reevaluate energy efficiency's role in the Northwest power sector.

The panel I moderated at the annual Efficiency Exchange conference May 25-27 (the virtual event was presented by BPA and the Northwest Energy Efficiency Alliance) took head on some of the existential questions facing the region's EE industry. The decision to schedule the panel as the conference's kickoff discussion underscored the critical importance of these challenges.

Here is the "too long; didn't read" version of the 75-minute-long discussion: The status quo of EE is broken, probably for the better. It is still a vitally important resource for the region, but its role is dramatically changing. The Northwest electric power industry gets to rethink and be much more intentional about how it values EE, and when and why it invests in energy efficiency.

Here is the even shorter version: The King is dead. Long live the King!

Yes, that exceedingly is reductionist. But in my defense, it is the short version of the TLDR version. Moreover, it is true. While EE in the Northwest has been evolving ever since it was crowned King of the Resources in the 1980 Northwest Power Act, it is time to acknowledge that that monarch's reign is over, and that its successor, call it King EE the Second, is not an absolute monarch but a constitutional one. (Also, when does the next season of The Crown drop on Netflix?)

Energy efficiency used to be a fairly straightforward proposition in the Northwest: Demand would go up and utilities could either build a new generating resource or curb load growth through EE. It was almost always cheaper to do the latter. Over the years, there has been plenty of low-hanging fruit that delivered substantial savings. Most recent examples include Energy Star appliances, LED lightbulbs and better building standards and codes. These helped the region exceed annual energy savings goals set by the NWPCC year after year.

Those days are done.

The region came up short of the annual targets set in the Council's Seventh Power Plan in 2018 and 2019. Before the COVID-19 pandemic hit, it was expected to fall short again in 2020 and 2021. On average, utilities' budgets for last year and this year included less spending on energy conservation. While many utilities continue to declare EE the least-cost resource, there is little reason to suggest that trend will change.

Energy efficiency could be a victim of its own success. The low-hanging fruit has been harvested, and now the law of diminishing returns is in effect. Installing heat-pump water heaters is much more difficult and time consuming than getting people to swap incandescent lightbulbs for LED ones.

Utilities also face much more complicated challenges than they did even just 10 years ago. Furthermore, EE's value is less straightforward, especially if it still valued as it has been for decades—purely for its energy value. That is a losing proposition.

Considered strictly in terms of levelized energy cost from a regional perspective, EE targets in the 2021 Power Plan should be significantly less than in the current plan, according to preliminary results for the Council's regional portfolio model (CU No. 1989 [8]). That early modeling puts the plan's six-year goal at about 500 aMW, compared to a 1,400 aMW goal for EE in the Seventh Power Plan.

That's because the current plan considered EE investments to be cost-effective up to $100/MWh. When the plan was released in 2016, that cost was slightly lower than the levelized energy cost for wind and solar. Preliminary projections for the 2021 Power Plan put solar at $40/MWh and wind at $50/MWh.

But as NWPCC Power Planning Resources Manager Tina Jayaweera noted during the panel discussion, those are preliminary levelized energy costs based on the baseline conditions. Those conditions are tweaked and reworked in the myriad scenarios produced for the plan. Furthermore, the Council's eight members can change the EE targets before they adopt the final version.

That said, the numbers reflect a monumental shift, and preliminary projections for various scenarios have shown little change in the plan's EE targets. Even preliminary modeling for the decarbonization scenario only has slightly higher targets

Puget Sound Energy's 20-year achievable technical potential for electric energy savings declined from 692 aMW in its 2019 integrated resource plan to 552 aMW in its 2021 IRP. The decline is due in part to successes in LED installation and higher state standards, as well as lower forecasted growth of energy-hungry indoor cannabis production, according to a Cadmus study commissioned by PSE for the IRP.

Nonetheless, EE is a key part of PSE's preferred resource portfolio, because it will help the transmission-constrained utility meet Washington's stringent clean energy requirements in 2030 while maintaining a reliable system, noted panelist Elizabeth Hossner, who heads PSE's resource planning team.

PSE actually increased its EE targets by about 6 percent in the IRP compared to its previous plan, she said.

EE is critical to the future of Emerald PUD, which faces growing peak demand, the utility's general manager and panelist Scott Coe said. He also is a NEEA board member.

Emerald and NEEA partnered last year to install more than 100 heat-pump water heaters in the PUD's largely rural service territory. The program delivers savings during the PUD's biggest challenge—morning ramps in winter.

Conservation is key to shaving peaks and filling valleys, and that is why Emerald has increased program spending in recent budgets, he said.

EE's capacity value has to be increasingly appreciated in the new reality. Its ability to make the system more flexible during capacity constrained times goes beyond its energy value.

Efficiency should be split into three portfolios: energy resource, market transformation and energy equity, said panelist Mohit Chhabra, an analyst with the Natural Resources Defense Council.

In the Northwest, the missing part is the last portfolio—energy equity, he said.

Where does the money come from to help low-income households weatherize their rental home so the kids don't have to do their homework while they are shivering with cold?

And how do we select objectives for such programs?

Quantitative models only get us so far, Hossner said.

There were far too many excellent points made by the panelists for me to include them all here. I will end with a comment from Chhabra.

"Sometimes we forget these are means to ends," he said.

Energy efficiency is not the end; it is a tool. Equity, decarbonization, reliability, affordability—these are ends we can use conservation to achieve.

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Contributing Editor

Dan has covered stories from Seattle to Tbilisi; spent time with the AP, Everett Daily Herald and Christian Science Monitor; and was twice a member of a team nominated for a Pulitzer Prize. He and his wife have three young children and live in Seattle.