Advanced Energy Perspectives

Industrial Energy Efficiency has Much to Offer Pennsylvania – and Other States

Posted by Dylan Reed and J.R. Tolbert

Mar 24, 2016 11:56:43 AM



As a nine-month budget impasse comes to an end this week, Pennsylvania is ready to start looking at new opportunities. The Commonwealth can look to advanced energy as one investment opportunity, which would allow Pennsylvania to take its place as a leader of the broader market transformation in energy now under way across the country. The city of Pittsburgh and Allegheny County represent leading examples of localities reaping the benefits of advanced energy, including energy efficiency. Just last week, Advanced Energy Economy Institute (AEE Institute) and Keystone Energy Efficiency Alliance, our state partner, joined with the Scott Institute for Energy Innovation at Carnegie Mellon University (CMU) to convene a discussion with utility, advanced energy, and thought leaders on industrial energy efficiency in southwest Pennsylvania, including Pittsburgh, as part of CMU’s Energy Week. With industrial companies, as large energy users, prime targets for energy savings, the potential benefits of advanced energy loom large – in Pennsylvania and beyond.

The United States built the strongest economy in the world on industry. In order to maintain a vibrant economy, it is vital that energy costs stay low for the industrial sector. In Pennsylvania alone, industrial customers consume 34% of total electricity generated. But a range of advanced energy technologies can be used to improve the efficiency of industrial energy users and reduce their costs. 

A statewide energy efficiency evaluation prepared for the state’ public utility commission (PUC) estimated that Pennsylvania could easily achieve 3% to 6% savings from the industrial sector by 2020. These savings are equivalent to generating capacity of 150 MW to 300 MW. Within the service territory of Duquesne Power and Light, the local electric utility for Pittsburgh, the study estimates that similar levels of savings can be achieved. Even with the efforts already undertaken within the state, business owners can save more money with investments in efficiency.

While the technical potential of industrial efficiency is high, barriers stand in the way of realizing these savings. Participants in the Energy Week discussion noted that industrial users often do not have access to their own energy data. Understanding their energy usage can help customers identify opportunities for savings. For example, industrial companies are typically assessed a demand charge based on their peak electricity usage, which can make up 15% to 40% of their total bill. Knowing when their electricity usage reaches its peak, and taking action to manage consumption at that time, can save companies money.

There are several policies that can help Pennsylvania get more out of efficiency efforts. Phase III of Act 129 – the state’s energy efficiency program – is set to begin in June, and is expected to bring billions in savings to the Commonwealth, on top of $8.3 billion in savings through Phase I and II. The PUC is also considering alternative ratemaking methods like decoupling and a performance incentive mechanism for efficiency. The commission held a hearing on March 3 to gather public input, with written comments collected through March 16. The PUC also recognized that more can be done in Pennsylvania to drive deployment of combined heat and power (CHP), which produces both useful heat and electricity with the same fuel for maximum efficiency, and passed a motion proposing a Policy Statement to require utilities to publish a biennial report on actions to remove regulatory obstacles for this technology.

States with large industrial sectors, like Pennsylvania, have much to gain from industrial energy efficiency. With proper policy support, these states, and the industrial companies that call them home, can reap the economic benefits. 

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Topics: State Policy Update


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