The Economic Impact of Midwest Utility Energy Efficiency Investment and Savings - Webinar Recording - Slides Only
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MEEA collaborated with The Cadmus Group to conduct a study of utility energy efficiency investments and savings throughout the Midwest to determine their economic impact. The study uses a dynamic forecast model to study the economic impacts of energy efficiency investments specific to four target regions: 1) Indiana, 2) Michigan, 3) Ohio and 4) the Midwest region. This webinar walked through the findings of this study and included presentations from Nick Dreher, Policy Manager at MEEA and Tyler Browne, Senior Analyst at The Cadmus Group, Inc.
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The Economic Impact of Midwest Utility Energy Efficiency Investment and Savings - Webinar Recording - Slides Only
- 1. Midwest Energy Efficiency Investment Economic Impact MEEA Policy Committee Quarterly Call October 24, 2016
- 2. Call Agenda • 12:00 pm – 12:10 Update on MEEA’s State Efficiency Policy Work, Nick Dreher • 12:10 – 12:45 Economic Impacts of Energy Efficiency Report, Tyler Browne and Nick Dreher • 12:45 – 1:00pm Discussion
- 3. The Trusted Source on Energy Efficiency About MEEA We are a nonprofit membership organization with 160+ members, including: • Utilities • Research institutions and advocacy organizations • State and local governments • Energy efficiency-related businesses As the key resource and champion for energy efficiency in the Midwest, MEEA helps a diverse range of stakeholders understand And implement cost-effective energy efficiency strategies that provide economic and environmental benefits.
- 4. Energy Efficiency Policy State Update • Michigan • Ohio • Indiana
- 5. Energy Efficiency Policy Update • Multifamily Energy Efficiency – Joint REEO Multifamily Paper – MEEA Multifamily Paper • Clean Power Plan – Comments on the Clean Energy Incentive Program are due to the EPA by November 1. Link to information on submitting comments: • https://www.epa.gov/cleanpowerplan/how- comment-proposed-design-details-clean-energy- incentive-program-ceip
- 6. 6 Economic Impacts of Energy Efficiency Analyzing the Effects of Regional and State-Level Investments
- 7. Agenda • Background • Analysis Method • Findings • Conclusions
- 9. To explore current clean energy employment in the Midwest region as well as jobs created, energy saved, greenhouse gas emissions avoided, and the impacts on the regional income as a result of utility investment in energy efficiency Project Goal
- 10. Study Overview MEEA commissioned a study of the economic impacts of energy efficiency investments • Analyzed regional and state-level program activities – Midwest Region – Michigan, Ohio, Indiana • Estimated impacts on four economic indicators – Employment – Income – Economic Value Added – Sales
- 11. Earlier Statewide EE • MN 1983 – Pilot legislation 1991 – CIP requirement adopted $1.40 $0.42 $1.81 $0.0 $0.5 $1.0 $1.5 $2.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 $Billions EERS Legislation • IL Gas Admin Order • IN Electric Voluntary Standard Legislation • MO Electric Legislative Committee •WI EERS adjusted Legislation • IN EERS overturned • OH EERS frozen EERS Legislation • IL Electric • MN Electric, Gas EERS Legislation • MI Electric, Gas • OH Electric Exec Order • IA Gas, Electric Admin Order • WI Elec, Gas Earlier Statewide EE • WI 1999 - Public Benefit Fund Adopted Earlier Statewide EE • IA 1990 – Initial legislation 1996 – Legislation updated Estimated Annual Utility Investment in EE
- 12. 0.7 7.3 3.4 159.5 0 20 40 60 80 100 120 140 160 180 0 1 2 3 4 5 6 7 8 9 2000 2002 2004 2006 2008 2010 2012 2014 2016 NaturalGas-MillionThermsSaved Electric-MillionMWhSaved Year Midwest Energy Savings through Utility Energy Efficiency
- 13. MIDWEST • 13 states • Investment is growing • 2000=$151 M • 2014=$1.5 B • 2016=$1.8 B MICHIGAN • Annual targets • 1% (electric) • 0.75% (gas) • Legislature considering voluntary standards OHIO • Legislature imposed two- year freeze on EE standard in 2014 • Future of EE policy currently under debate INDIANA • Legislature repealed statewide EE mandate in 2014 • EE now pursued voluntarily EE Investments in Context
- 14. Section 2: Analysis Method
- 15. 15 Tyler R. Browne Senior Analyst, Energy Services Division tyler.browne@cadmusgroup.com (630) 292-9016 Linkedin.com/company/the-cadmus-group @CadmusGroup Facebook.com/CadmusGroup
- 16. 16 Input Data Overview Model Region EE Spending ($2015 M) GWh Savings therm Savings Avoided CO2 (tons) Avoided SO2 (tons) Avoided NOX (tons) Michigan $220 11,663 376,847,434 21,303,908 64,534 23,625 Ohio $211 16,212 NR* 13,029,988 62,886 13,863 Indiana $127 6,894 21,437,150 7,481,057 23,281 7,266 Rest of MW $898 43,730 1,050,429,450 69,815,427 127,847 67,988 TOTAL $1,456 78,499 1,448,714,034 111,630,380 278,548 112,742
- 17. 17 Program-Related Cash Flows Used REMI PI+ to model annual impacts on employment, income, economic value added, and sales from energy efficiency program-related cash flows
- 18. Analysis Method
- 19. 19 Key Economic Indicators EMPLOYMENT PERSONAL INCOME ECONOMIC VALUE ADDED SALES GENERATED
- 21. Summary Findings Economic Indicator Net Study Period Impacts Michigan Ohio Indiana Rest of Midwest Midwest Region* Employment (jobs) 17,112 15,930 8,869 63,014 104,925 Income ($2015 M) $1,517 $1,369 $727 $5,158 $8,771 Value Added ($2015 M) $2,191 $2,153 $1,089 $8,315 $13,749 Sales ($2015 M) $3,551 $3,700 $1,882 $13,859 $22,992 *Totals may not sum due to rounding.
- 22. Employment 18,605 86,319 0 20,000 40,000 60,000 80,000 100,000 2014 2015–2038 Annual Average = 3,597 Jobs
- 23. Personal Income $1,169 $7,603 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 2014 2015–2038 Annual Average = $317 million
- 24. Economic Value Added $1,840 $11,909 $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 2014 2015–2038 Annual Average = $496 million
- 25. Sales Generated $3,346 $19,646 $0 $2,500 $5,000 $7,500 $10,000 $12,500 $15,000 $17,500 $20,000 2014 2015–2038 Annual Average = $819 million
- 26. Findings by Model Sub-Region
- 27. Summary Findings Economic Indicator Net Study Period Impacts Michigan Ohio Indiana Rest of Midwest Midwest Region* Employment (jobs) 17,112 15,930 8,869 63,014 104,925 Income ($2015 M) $1,517 $1,369 $727 $5,158 $8,771 Value Added ($2015 M) $2,191 $2,153 $1,089 $8,315 $13,749 Sales ($2015 M) $3,551 $3,700 $1,882 $13,859 $22,992 *Totals may not sum due to rounding.
- 28. Economic Indicator Net Study Period Impacts 2014 Employment (jobs) 15,203 Income ($2015 M) $1,353 Value Added ($2015 M) $1,975 Sales ($2015 M) $3,190 Michigan In-State Activity Impacts
- 29. Michigan Economic Indicator Net Study Period Impacts In-State Activity Impact Spillover Impact Total Impact Value % of Total Value % of Total Employment (jobs) 15,203 89% 1,909 11% 17,112 Income ($2015 M) $1,353 89% $164 11% $1,517 Value Added ($2015 M) $1,975 90% $216 10% $2,191 Sales ($2015 M) $3,190 90% $362 10% $3,551
- 30. Michigan
- 31. Economic Indicator Net Study Period Impacts 2014 Employment (jobs) 14,002 Income ($2015 M) $1,211 Value Added ($2015 M) $1,891 Sales ($2015 M) $3,277 Ohio In-State Activity Impacts
- 32. Ohio Economic Indicator Net Study Period Impacts In-State Activity Impact Spillover Impact Total Impact Value % of Total Value % of Total Employment (jobs) 14,002 88% 1,928 12% 15,930 Income ($2015 M) $1,211 88% $158 12% $1,369 Value Added ($2015 M) $1,891 88% $263 12% $2,153 Sales ($2015 M) $3,277 89% $423 11% $3,700
- 33. Ohio
- 34. Economic Indicator Net Study Period Impacts 2014 Employment (jobs) 6,238 Income ($2015 M) $513 Value Added ($2015 M) $804 Sales ($2015 M) $1,348 Indiana In-State Activity Impacts
- 35. Indiana Economic Indicator Net Study Period Impacts In-State Activity Impact Spillover Impact Total Impact Value % of Total Value % of Total Employment (jobs) 6,238 70% 2,631 30% 8,869 Income ($2015 M) $513 71% $214 29% $727 Value Added ($2015 M) $804 74% $285 26% $1,089 Sales ($2015 M) $1,348 72% $535 28% $1,882
- 36. Indiana
- 37. Rest of the Midwest Economic Indicator Net Study Period Impacts In-Region Activity Impact Spillover Impact Total Impact Value % of Total Value % of Total Employment (jobs) 60,007 95% 3,007 5% 63,014 Income ($2015 M) $4,959 96% $199 4% $5,158 Value Added ($2015 M) $7,896 95% $419 5% $8,315 Sales ($2015 M) $13,136 95% $722 5% $13,859
- 38. Rest of the Midwest
- 39. Economic Indicator Net Study Period Impacts Employment (jobs) 104,925 Income ($2015 M) $8,771 Value Added ($2015 M) $13,749 Sales ($2015 M) $22,992 Midwest Region Regional Activity Impacts
- 41. Study Conclusions • 2014 Midwest EE investments create jobs, boost personal income, and increase spending – Nearly 105,000 jobs created – Almost $8.8 billion boost to personal income – Over $13.7 billion of value to regional economy – About $23 billion in regional sales generated • Program-year activities generate substantial positive impacts, and additional positive impacts result from sustained energy savings lasting most of the study period • Most impacts are local, but neighboring economies benefit as well
- 42. Policy/Economics Correlation State Spending ($2015) GWh Saving s Therm Savings* Illinois $346,397,221 8,737 310,881,694 Indiana $126,920,331 6,894 21,437,150 Iowa $184,502,608 7,098 97,547,514 Kansas $510,605 9 NR Kentucky $48,073,549 3,767 15,519,685 Michigan $220,038,068 11,663 376,847,434 Minnesota $162,987,250 11,106 403,698,727 Missouri $36,957,959 4,415 NR Nebraska $20,281,045 2,351 NR North Dakota $385,457 25 NR Ohio $210,872,860 16,212 NR South Dakota $5,328,317 167 NR Wisconsin $92,937,455 6,055 222,781,830 Total $1,456,192,725 78,499 1,448,714,034 *Kansas, Missouri, Nebraska, North Dakota, Ohio, and South Dakota utilities do not report gas savings. Economic Indicator Net Study Period Impacts: Midwest Region Employment (jobs) 104,925 Income ($2015 M) $8,771 Value Added ($2015 M) $13,749 Sales ($2015 M) $22,992
- 44. Discussion
Editor's Notes
- Michigan Legislative With the House energy package (HB4297/HB4298) out of committee as of late 2015, the focus remains on the Senate package (SB437/SB438). The current Senate package makes some changes to the energy optimization (EO) planning requirements for MI utilities; the plans are still required, but beginning in 2020 the 1% annual target is removed and the MPSC can adjust plans above and below the PA295 annual savings targets. The bills as proposed remove the 2% spending cap on energy efficiency and impose a number of mechanisms designed to spur energy efficiency investment and savings, including electric decoupling, cost-recovery and tiered shared savings incentives. The current version of SB437 also proposes an integrated resource planning requirement for utilities. The current senate package is on the Senate floor and will likely be taken up again on November 9. Regulatory Rachael Eubanks was appointed by Governor Rick Snyder to the Michigan Public Service Commission for a term beginning August 2016 and expiring July 2, 2017. Eubanks is filling the vacancy left by the departure of John Quackenbush and will serve on the Commission as an independent. Ohio Legislative The Ohio General Assembly resumes session on November 15. If no bill is passed by December 31, both the energy efficiency and renewable energy standards kick back in on January 1, 2017, although the legislature is expected to pick this issue back up during the lame duck session. They will be discussing SB 320. This bill, which is rapidly evolving, proposes to make changes to the existing energy efficiency resource standard. That standard is currently frozen until the end of this year. One recent draft of the proposed bill implements a voluntary standard of 1% by removing penalties for energy efficiency and peak demand reduction noncompliance until 2020. Beginning in 2020, utilities would be subject to forfeitures for noncompliance every three years. Additionally, SB 320 proposes expand eligibility for industrial customers to opt-out of EE programs. Indiana Regulatory The Indiana Utility Regulatory Commission has issued the final draft rule in the ongoing rulemaking for the IRP/Energy Efficiency rules, and accepted a final round of comments. The IURC Director’s Final Report on the 2015 Integrated Resource Plans has been released. It is available at the IURC’s IRP page. MEEA Activities On August 5, 2016, MEEA submitted a final set of comments to the IURC in response to the final draft rule in the IRP/EE rulemaking. Multi family Joint REEO Multifamily Paper – includes a high level characterization of the national multifamily market, exploration of barriers, and case studies addressing many of the barriers. Will be released by end of year. MEEA Multifamily Paper – analysis of how electric multifamily program offerings have evolved over time in states that have experienced policy changes and those that have remained stable over time. Will be released by the end of the year. CPP
- Multi family Joint REEO Multifamily Paper – includes a high level characterization of the national multifamily market, exploration of barriers, and case studies addressing many of the barriers. Will be released by end of year. MEEA Multifamily Paper – analysis of how electric multifamily program offerings have evolved over time in states that have experienced policy changes and those that have remained stable over time. Will be released by the end of the year. CPP– 7 hour hearing held on September 27 in the DC Circuit Court. Both sides felt like the justices were very prepared and felt like the issues were given sufficient time for discussion. Comments on the Clean Energy Incentive Program are due to the EPA by November 1. I provided the link, where you can send your comments here.
- Electricity savings peaked in 2013 with 7.7 million MWh saved, dropping off to planned savings of 7.0 million MWh in 2015. Gas savings peaked in 2014 with 147.8 million therms saved, dropping off to planned savings of 136.1 million therms in 2015. (2014 values are based on actual savings where available, and planned savings where actuals have not yet been released. 2015 values are all based on planned savings. Based on historical data, actual savings have generally been slightly higher than planned savings due to strong performances in EERS states but as programs mature in ramp-up states that may even out.)
- Spending and savings data from E Source DSM Insights Database and EIA 861 data Emissions factors (tons/mmBtu) from EIA state profile data
- Program Spending and Incentives: developed spending breakouts using information and data from “The Total Cost of Saving Electricity through Utility Customer-Funded Energy Efficiency Programs: Estimates at the National, State, Sector, and Program Level” (Lawrence Berkeley National Laboratory, April 2015). Bill Reductions: used measure life data from 2014 EIA 861 report and rate forecasts developed from EIA 1997-2014 annual average retail rates by fuel type and end-use sector Avoided Utility Costs: used state-level supply mix forecasts and Levelized Avoided Cost of Energy forecasts from the 2015 EIA Annual Energy Outlook report
- More than 18,000 jobs the first year (18% of study period total) Result from increased sales of EE equipment and program services More than half of these near-term employment effects in manufacturing and professional services sectors Simple annual average of over 3,500 jobs per year from 2015 through 2038 Due to ongoing energy/cost savings
- Almost $1.2 billion of net personal income the first year (13% of study period total) Simple annual average of about $317 million per year from 2015 through 2038
- Over $1.8 billion of net economic value added the first year (13% of study period total) Simple annual average of about $496 million per year from 2015 through 2038
- Over $3.3 billion of net sales generated the first year (15% of study period total) Simple annual average of about $819 million per year from 2015 through 2038
- This is how the total economic impacts of each of the priority states and Midwest region are broken down.
- I will now walk through each of the geographic sectors, beginning with priority states, in some additional detail as well as provide policy context. First, I wanted to put up this slide showing reported actual spending per state in 2014 (adjusted to 2015 dollars) as well as actual energy savings for 2014.
- Based on utility investments, including municipal and cooperative utilities, as well as resulting savings in 2014, we see the above positive economic impacts. The figures listed are forecasted totals for the entire 25-year period.
- This slide and the next slide show spillover impacts, which are the impacts realized in Michigan from activities, including EE investments, that take place in neighboring states. Tyler is available to answer any questions you may have on how we calculated spillover.
- The orange indicates spillover impacts. Tyler is available to answer any questions you may have on how we calculated spillover.
- Like the michigan slide to this point, this slide and the next slide show spillover impacts, which are the impacts realized in Ohion from activities, including EE investments, that take place in neighboring states. We can see that Ohio, like Michigan, sees a spillover benefit of around 11-12%.
- This slide and the next slide show spillover impacts to Indiana, which are significantly different from the 11-12% we see in MI and OH, which can be attributed to the significant investments being made in neighboring states like MI, OH and IL.
- Here is a breakdown of the economic impacts across all midwest states not included as a priority state – all states except Indiana, Michigan and Ohio.
- Finally, this is the midwest region taken as a whole to show the economic impact of all utility investment in energy efficiency throughout the midwest.
- This last slide if you take some time once you get access to these slides to walk through, there is a correlation between investment, savings and economic impacts and long-term statewide energy efficiency standards, showing the significant benefits states and the entire region see when states prioritize energy savings targets through statewide energy efficiency policy.