Implementing energy efficiency measures and technologies has the potential to boost energy reliability and affordability. Energy efficiency is the reduction of energy use while maintaining the same level of service. Energy efficiency is often coordinated with energy conservation, which focuses on using less energy, or with demand-response programs that seek to lower the use of energy at specific times of the day or year when high energy demand may adversely affect system reliability.

In 2017, the Electric Power Research Institute analyzed the extent to which states are taking advantage of the cost-effective electricity efficiency potential available to them. The figure below shows a comparison of state-level efficiency potential to the savings that could be captured if states continue to achieve their average historical, incremental energy efficiency savings. This analysis shows which states are already on a trajectory to take advantage of this cost-effective potential, and which states have yet to develop programs and policies that will allow them to use energy efficiency as a low-cost resource.

States use energy planning to set strategic goals, develop programs, and measure progress toward a shared vision of a desired energy future. As of 2017, the two most cited goals among the forty states with active energy plans are to:

• Ensure a reliable supply of energy
• Manage costs so energy is affordable for businesses and residents.

Energy efficiency is an important strategy for achieving both goals. Energy efficiency policies include energy code updates, lead-by-example policies for state operations, utility and public benefit programs, and combined heat and power. 

By nature, state energy planning is an iterative process. The National Association of State Energy Officials (NASEO), in its State Energy Planning Guidelines, identified 10 common steps used in developing state energy plans (Figure 1). While certain steps (i.e., goals and actions) represent more concrete opportunities to define and prioritize cost-effective energy savings, the planning process is not always comprised of discrete steps, with overlapping discussions and input.

State Examples

• Vermont’s 2016 Comprehensive State Energy Plan emphasizes energy-saving strategies that, upon implementation, are expected to provide quantifiable cost-savings for consumers and businesses.³
• In developing its 2016 plan, the Iowa Economic Development Authority Energy Office determined that Iowa had high energy imports relative to neighboring states. As a result, the final plan prioritized energy efficiency to lower the "leakage of funds outside of the state that pay for imported energy”.⁴

References

¹Campbell, Josh. Missouri Energy Initiative, 2017 Update: 2014 white paper. 2017. The Impacts of State Energy Plans. http://www.moenergyplan.org/resources.html.

²Marks, Kate, and Julia Friedman. 2014. State Energy Planning Guidelines: A Guide to Develop a Comprehensive State Energy Plan Plus Supplemental Policy and Program Options. NASEO.

³Vermont Comprehensive State Energy Plan, December 2016. Section 10.2.2 Impact of Electric Efficiency Investments, Page 204. https://outside.vermont.gov/sov/webservices/Shared%20Documents/2016CEP_Final.pdf.

⁴Iowa Energy Plan, December 2016. See http://iowaenergyplan.org/.

The most effective way to prioritize deployment of energy efficiency in state energy plans is through both executive and legislature branches of state government. In many cases, the directive to create an energy plan originates from the state legislature. In other cases, the governor calls for the establishment of a plan via an executive order.

State Examples

• In Missouri, Executive Order 14-06 issued in 2014, directed the Department of Economic Development’s Division of Energy to develop a comprehensive state energy plan. The final plan recognized that efficiently using available energy resources is the most cost-effective first step to optimize meeting the state’s energy needs.
• In West Virginia, energy planning is required every 5 years by legislative code. The length of time between plans affords the state energy office (SEO), in partnership with the legislature, the opportunity for state planners to educate stakeholders on a wide swath of innovative energy-saving measures. The 2013–2017 energy plan included a detailed discussion on how performance-based rate making and rate design can support energy-savings benefits for the state. In July 2017, West Virginia’s SEO helped develop a progress report highlighting energy efficiency initiatives underway since the release of the state’s current energy plan.

Of the existing state energy plans (both active and inactive), over 80% were authorized by legislative action. In most cases, the state energy office played a leading role in drafting the plan, even in lieu of a formal mandate to do so. The table below details state energy plan authorities. 

State Energy Planning Authority by State (2016)

Tip: State energy plans that represent a collaboration between the governor and legislature may help states foster internal and external support for ongoing or periodic updates to the plan.

Stakeholder engagement is a critical component in the state energy plan development process. The stakeholder engagement process often begins with identifying two teams: a planning team and a leadership team. 

The planning team advances the day-to-day activities of the state energy plan development. It provides direction, manages external stakeholders, and maintains the timeline and budget. The leadership team is typically composed of senior public officials, such as agency directors with authority to make policy or regulatory changes that impact the energy system.

State Example

• In 2012, the Idaho Legislature’s Committee on Energy, Environment and Technology led development of the state’s first integrated energy plan. The committee worked in partnership with the Idaho Strategic Energy Alliance, which was comprised of about 200 state, local, business, and nonprofit stakeholders as well as energy efficiency trade associations.  

Tip: States should consider partnerships between executive agencies to help ensure energy plans align with priorities across state government.  

Tip: State planners may find it helpful to identify a neutral facilitator with expertise in energy policies and regulations to manage stakeholder discussions on energy efficiency.

Effective state energy plans incorporate measurable goals to ensure a data-driven strategy for saving energy. To incorporate energy efficiency data into plans, states may do one or more of the following:

• Collect data to develop a baseline and projections of energy supply and demand.
• Develop an energy-efficiency potential study to illuminate future saving opportunities in programs or sectors.
• Use modeling to compare multiple options for future energy policies.

State Example

• In developing the state’s 2015 energy plan, Rhode Island’s team modeled three scenarios to identify how to maximize security, cost-effectiveness, and sustainability of the state’s energy sector. Results indicated that by extending the state’s least-cost procurement requirement for electric utilities through 2035, Rhode Island could reduce electricity consumption by 20% and provide net economic benefits to consumers of more than $1 billion.

• Energy Information Administration’s (EIA) State Energy Data System provides access to sector-specific energy data for all states and territories at no cost. EIA data can serve as a useful starting point to help states understand sectors with the highest energy intensity, which could be good candidates for energy efficiency investments. EIA’s State Energy Data System looks at state level energy consumption for all sectors. See SEDS updates by energy source.
• DOE’s State and Local Energy Data (SLED) contains state and local energy efficiency data. The tool aggregates information on electricity generation, fuel sources and costs, and applicable policies, regulations, and financial incentives at the city and state levels. SLED also provide data on energy consumption trends over time.
• DOE hosts a catalog of over 80 state- and utility-level energy efficiency potential studies, which can provide helpful background for planning. While these exercises involve complex forecasts, they can help states understand the size of potential state energy savings. See Energy Efficiency Potential Studies Catalog.

Most state energy plans include a vision for success and measurable goals related to the vision. The vision is typically a high-level, aspirational summation of the objectives of the state energy plan. Understanding how and where energy is consumed will assist in informing a vision statement for the state energy plan that prioritizes energy efficiency. In some cases, the vision statement may need modification throughout the planning process.¹

Once a vision is developed, the state planning team should seek to discuss and define tangible goals for the state’s plan.² Some states have energy-savings goal defined in statute or legislation as part of an energy efficiency resource standard, which are long-term energy-savings targets for utilities or program administrators. While important, an energy efficiency resource standard does not preclude additional programs that may complement these energy-saving targets. Examples include energy-saving pilots for multifamily housing and energy-saving performance contracts for public buildings or building energy code improvements.

At the goal stage, states may wish to conduct economic modeling to help improve understanding of energy efficiency opportunities under consideration by stakeholders.

State Examples

• New Hampshire has established statewide energy goals through a statewide energy efficiency resource standard. Between 2018 and 2020, New Hampshire utilities must achieve cumulative energy savings of 3.1% of the electric utilities delivery sales and 2.25% of natural gas delivery sales, from a 2014 baseline.
• Vermont’s 2016 state energy plan contains a goal to support energy affordability in part by reducing energy consumption by more than one-third by 2050, from a 2011 baseline. To meet this goal, the state plan defines a set of strategies focused on deployment of cost-effective, demand-side thermal and electric efficiency in residential and commercial buildings, including the expanded use of heat pumps to replace oil-fired boilers.

DOE compiled roughly 80 energy efficiency potential studies published between 2007 and 2016. These studies, completed by states, utilities, and nongovernmental organizations, represent information from 44 states. The individual state energy-efficiency potential studies are available on the DOE website. Two-thirds (66%) found an average annual savings rate of 1% to 2.5% from prior year electricity sales in economic or achievable potential. These existing studies can provide a useful starting point for states, but the assumptions and details need to be understood before a state uses any of the numbers for planning purposes. Figure 3 below categorizes energy efficiency potential studies as a resource for energy planners and as a baseline for future analyses.

In 2017, the Electric Power Research Institute analyzed the extent to which states are taking advantage of the cost-effective electricity efficiency potential available to them. Figure 4 above shows a comparison of state-level efficiency potential to the savings that could be captured if states continue to achieve their average historical, incremental energy efficiency savings. This analysis gives a sense of which states are already on a trajectory to take advantage of this cost-effective potential and which states have yet to develop programs and policies that will allow them to use energy efficiency as a low-cost resource.

The comparison shows that 22 states have developed policies or programs that, if continued at the same pace, would capture 100% of the Electric Power Research Institute model’s projected cost-effective savings by 2035. Another 20 states are poised to achieve less than 50% of the energy efficiency savings modeled by Electric Power Research Institute. It is important to note that the Electric Power Research Institute model has limitations in quantifying energy efficiency savings. For example, the model does not cover the full suite of energy efficiency options; it does not account for technology innovations (e.g., the rapid deployment of new or improved smart home thermostats) and does not account for potential for improvements in program operations (e.g., better marketing, lower administrative costs). The limitations of the model mean the state-level estimates cited above may represent a more conservative savings projection.

Tip: Selecting an appropriate tool or model for data collection depends on a combination of states’ policy priorities and available resources (e.g., budget and in-house capabilities). States should identify question(s) or need(s) first and then pick the tool that will most effectively provide this information while also regarding key constraints (e.g., timeframe and available resources).

References

¹ Marks, Kate, and Julia Friedman. 2014. State Energy Planning Guidelines: A Guide to Develop a Comprehensive State Energy Plan Plus Supplemental Policy and Program Options, 31–32.

²Ibid, 35.

Once there is a clear vision for the state energy plan, along with broad goals to achieve the vision, it is important to generate opportunities for public input to guide the development of the plan and help ensure transparency and accountability of state plans. Ideally, in-person forums and web platforms should also be used to solicit input.

State Example

During Iowa’s energy planning process, the planning team solicited extensive stakeholder and public input. The state held over 30 workshops, hosted six public forums, and received and responded to over 100 public comments. Based on input from these efforts, the state confirmed the value of focusing efforts on energy-saving actions in rural and underserved communities.

Tip: The National Coalition for Dialogue and Deliberation Resource Guide on Public Engagement offers dozens of examples of well-practiced public engagement techniques.

DOE has also developed several stakeholder engagement guides focused on energy efficiency planning. These guides may be useful to planners during this step in the planning process.  They include:

• Energy Data Accelerator: Stakeholder Engagement Guide - helps utilities and local governments design a stakeholder engagement process to improve energy data access
• Energy Efficiency Collaboratives:highlights common elements of stakeholder collaborative efforts developed by utilities or public utility commissions that support state energy efficiency programs.

Tip: Public input should ideally be solicited at least three places during the energy planning process. First, focused public input should be sought on the plan’s goals (Step 4); second, the public should be engaged during development of the draft plan (Step 7); and third, public sector stakeholders should be contacted before the energy plan is released and publicized (Step 8). 

Once the state has received public feedback, it is important to develop a set of actions—i.e., policies, programs, and regulations—that collectively will help achieve the goals laid out in the state energy plan. Energy plans typically contain sector-specific, energy-saving goals along with relevant actions to meet those goals—e.g., update building codes, create a financing program, etc.—that align with sector goals.

State Example

• In South Carolina, the state’s 2017 energy plan, Energy in Action: South Carolina State Energy Plan, prioritized eight actions for the Office of Regulatory Staff to take to increase energy savings. These include: finance options for statewide energy efficiency initiatives; increased access to high-quality energy audits for state agencies; and investigations into adopting the most current building energy efficiency codes and standards. 

Tip: At this stage, states may wish to conduct further modeling to compare or evaluate the benefits (or costs) of one policy or a combination of policies. Further analysis should build on modeling in Step 3.

DOE has numerous free tools that can help states identity, design, and implement energy-savings programs to meet plan goals, including:

• Energy Efficiency Opportunities and Benefits—contains energy-savings potential estimates (economic and technical) from seven different pathways in the residential, commercial, and industrial sectors.
• State and Local Energy Efficiency Action Network (SEE Action)—provides resources, discussion forums, and technical assistance to state and local decision makers as they provide low-cost, reliable energy to their communities through energy efficiency. It also has resources on combined heat and power (CHP).
• State and Local Solution Center—provides searchable resources to advance successful, high-impact energy policies, programs, and projects. As of November 2017, it  identifies nearly 40 resources (e.g., reports, case studies, tools, etc.) from DOE and partners that can help state and local governments incorporate energy efficiency into plans.
• Better Buildings Solution Center—advances proven efficiency solutions by challenging market leaders to accelerate the pace of energy efficiency adoption, highlighting partner success stories and industry best practices, and encouraging the latest technological innovation.
•  CHP Technical Assistance Partnerships—promote and assist in transforming the market for CHP, waste heat-to-power, and district energy technologies through the United States, including market opportunity analyses, education and outreach, and technical assistance.
• Energy Savings Performance Contracting  Guidelines for Developing, Staffing, and Overseeing a State Program—provides information, best practices, and resources for state and local governments on how to develop an energy savings performance contract (ESPC). It also contains examples of successful state and local ESPC programs and a toolkit containing replicable solutions for state and local governments. See ESPC toolkit.
• State and Local Solution Center: Establish Financing—provides an overview of financing and program design options for states implementing clean energy financing programs or projects, including bonding tools, ESPCs, and power purchase agreements.
• Residential Programs Solution Center—provides examples of marketing and outreach campaigns used to target audiences to build awareness and drive residents toward investing in home energy upgrades.

Reference

¹Energy in Action: South Carolina State Energy Plan, South Carolina Office of Regulatory Staff, Energy Office. 2016. http://energy.sc.gov/energyplan.

After developing a state energy plan’s goals and action, the leadership team should draft the plan for consideration by public and state stakeholders. In some cases, the structure of the plan is defined in statute. However, in most cases, states have flexibility when outlining their plans, often with stakeholder and public input. 

State Example

• New Mexico has drafted a State Energy Roadmap that will update the state’s 2015 Energy Plan. In drafting the roadmap, the state team—led by the state’s Department of Energy, Minerals and Natural Resources—engaged state and local government agencies, representatives from the energy sector, trade associations, and others with expertise in energy efficiency.¹

References

¹ New Mexico Energy Roadmap project. 2016. http://www.emnrd.state.nm.us/ECMD/energyroadmap.html.

During this step, states may wish to share their plans with senior decision-makers across the state government, and ensure the legislature is engaged in an appropriate way. For energy efficiency components, state planners may wish to share proposed policies with economic development, environmental executive agencies, and utility commissions to ensure policies and program are aligned with existing or future job creation goals as well as goals for environmental protection, and energy affordability and resilience.

State Examples

• In Connecticut, the state energy office (SEO) collaborated with the Office of Policy and Management to align the 2013 state energy plan with the 2015 Economic Development Plan. The Office of Policy and Management’s Economic Development Plan outlines priorities for state and local governments to foster growth across six key industry clusters, including a “green technology” cluster.
• Utah’s 2014 Energy and Conservation Plan identified over two dozen strategies for how energy efficiency programs can improve both air and water quality. The plan referenced past efforts by Dallas-Fort Worth, Texas, and Washington, D.C., respectively, to explore how energy efficiency actions could qualify for credit under a state implementation plan.

State air regulators are required to develop state implementation plans that detail how the state will meet the National Ambient Air Quality Standards for six "criteria pollutants," as set forth by the Clean Air Act. The U.S. Environmental Protection Agency has created a roadmap for incorporating energy efficiency policies and programs in state implementation plans.¹

Related to the roadmap, the National Association of State Energy Officials (NASEO) has developed templates based on SEO efforts in Illinois, Minnesota, and Virginia to engage state air quality regulators on the use of energy efficiency programs to support air quality improvements.² The templates provide case studies that summarize key elements of energy efficiency programs and policies, such as goals, authorities, funding, and implementation strategies. 

References

¹ U.S. EPA. 2012. Roadmap for Incorporating Energy Efficiency/Renewable Energy Policies and Programs into State and Tribal Implementation Plans. https://www.epa.gov/energy-efficiency-and-renewable-energy-sips-and-tips/energy-efficiencyrenewable-energy-roadmap.

²NASEO. 2016. Energy Efficiency Pathways. http://www.naseo.org/ee-pathways.

The state team that drafted the plan often serves as the lead implementing agency. In this role, responsibilities may include outreach or technical assistance to executive agencies, the legislature or local government in support of implementation.

State Examples

• The Idaho Office of Energy Resources has worked in partnership with local stakeholders to implement the plan as part of the state’s focus on keeping energy costs low. In that respect, one priority is the adoption of a statewide Lead by Example program to help officials in rural communities reduce energy use in public buildings.
• In Wyoming, the Energy Conservation Improvement Program directed implementation of the 2013 state energy plan. The plan required new, renovated, or retrofitted state-owned buildings to employ best-in-class methods to achieve measurable reductions in energy consumption.

DOE’s Better Buildings Network has developed a robust set of partnerships and programs to help states implement plans, including:

• Better Building Challenge— helps state and local government leaders and other stakeholders develop and meet commitments to save 20% energy savings over ten years.
• Better Buildings Accelerators—demonstrates specific innovative policies and approaches, which will accelerate investment in energy efficiency upon successful demonstration.
• Better Buildings Residential Network— connects energy efficiency programs and partners to share best practices and learn from one another to increase the number of homes that are energy efficient.
• Better Plants— helps manufacturers and industrial-scale, energy-using organizations demonstrate their commitment to improving energy performance by signing a voluntary pledge to reduce their energy intensity by 25% over a 10-year period.

Tip: The National Association of State Energy Officials, National Governors Association, and National Conference of State Legislators all manage networks that may support state outreach and implementation of energy plans.

A comprehensive state energy plan benefits from continual monitoring of progress and, as needed, refinement of goals and approaches. States have taken different approaches to updating energy plans. Some face formal requirements for periodic updates while others seek more targeted energy-saving efforts in key sectors or programs.

State Examples

• The Minnesota 2025 Energy Plan identifies priority strategies for statewide action, with actionable steps and progress indicators for each strategy through 2025. One example is a state-led program to integrate energy efficiency into local economic development plans by creating planning tools to help smaller, rural communities align energy goals with comprehensive community plans.
• Rhode Island’s Office of Energy Resources created an Energy 2035 Implementation Matrix to track progress that prioritizes implementation of clean energy strategies, including least-cost procurement of energy efficiency resources through 2035. For each strategy, the matrix identifies the key agency leads and responsibilities along with interim and final timeframes for implementation.
• In 2018, Virginia released an Energy Efficiency Roadmap that outlines plans for energy efficiency actions including benchmarking, building codes, commercial property assessed clean energy financing, and utility programs.

Tip: State energy office updates should be offered to stakeholders, participants, and the public to track progress on actions taken and to maintain momentum.

The Office of State and Community Energy Programs (SCEP) has created an energy project map that identifies state-led energy initiatives across the country that can reduce energy waste and associated consumer costs. As state energy plans are adopted by states they will be posted on the map. View the SCEP project map.