Energy Efficiency

Marilyn Brown
Marilyn Brown
Brook Byers Chaired Professor for the Institute of Sustainable Systems, Professor

How would you define this Big Idea?

Energy Efficiency: Generator of Local Jobs

Planners and policymakers have many options at their disposal to meet the expanding demand for energy services. There are utility-scale supply-side options (coal, gas, nuclear, renewables); there are demand-side options (efficiency and demand-response), and there are distributed generation options (rooftop solar PV, storage devices, and combined heat and power). What combination of these resources is best for delivering reliable and affordable energy services while being good stewards of the environment and promoting economic progress? Using energy more efficiently appears on most “short lists.” Of current interest is the possibility that an expansion of demand-side investments could generate jobs more rapidly that an expansion of supply-side resources.

A great deal of rhetoric has addressed the ambiguous goal of growing “green energy jobs.” The School of Public Policy recently completed a systematic evaluation of the jobs generated by subsidies for combined heat and power in U.S. industry. We introduced a hybrid analysis approach combining simulations using NEMS with Input–output modeling. We identify first-order employment impacts by creating “bill of goods” expenditures for the installation and operation of energy-efficiency systems. Second-order impacts are then estimated based on the redirection of energy-bill savings accruing to consumers; these include jobs across the economy created by the lower electricity prices that would result from increased reliance on energy-efficiency. On a jobs-per-GWh basis, we find that the second-order impacts are approximately twice as large as the first-order impacts in one major application, combined heat and power.

This “big idea” would build on this body of research to create a more comprehensive narrative of job growth prompted by the U.S. shift to clean energy. By undertaking a more strategic and complete analysis, we will examine how the clean energy transition will impact overall employment trends. The research design will involve comparing estimates of employment from the Energy Information Administration (EIA) forecasts with estimates from Georgia Tech scenarios with larger portfolios of energy efficiency and renewables – key ingredients of the new energy economy.

Many have claimed that reducing carbon pollution will saddle American families with higher electricity bills and will hurt the economy. In contrast, an increasing number of independent studies, including research by Georgia Institute of Technology, show that if states choose low-cost approaches to limit pollution with an emphasis on energy efficiency, they can reduce electricity bills and grow the economy. Jobs would grow because energy efficiency is a labor intensive enterprise, and more of these jobs would be local.

Rates, consumption, and bills are also influenced by increased energy efficiency. When combining energy efficiency with distributed solar, the fixed costs of utilities must be distributed over a smaller volume of sales,
reducing the bill savings enabled by improved energy efficiency. These findings suggest the need for increased attention and analysis to understand the potential impact of alternative rate structures and the apportionment of fixed and volumetric costs.  It is becoming clear that current pricing policies are imperfect reflections of economic pricing principles, such as aligning charges with cost causation.  Utilities across the country are considering a variety of alternative pricing schemes to enable them to adequately recover fixed costs under increasing amounts of self-generation and energy efficiency. Alternatives include the use of minimum bills, straight fixed variable rates with dynamic pricing, time of use pricing, demand charges for residential customers, various net metering rate structures, and differential charges for distributed generation participants and non-participants. Pricing options are hampered in the short run by the limited penetration of smart metering that is required to measure maximum demand and to move to time-of-use pricing to better reflect long-run marginal costs. As distributed resources such as energy efficiency and solar become more prevalent and in anticipation of universal smart meters, the pros and cons of alternative pricing strategies require further analysis. This will include an assessment of distributional and environmental justice issues elaborated n the context of sustainable communities.

How is this Big Idea included in your work?

Articulating the jobs impacts of transitioning to a clean energy economy has significant implications for sustainable communities. Energy efficiency is a job-intensive way to meet the energy service requirements of cities, and one that involves the growth of local jobs and affordable energy. How utilities would respond to such a future is an open issue, given their need to distribute operational costs across a declining rate base.

Learn more:

Stern, Paul C., Kathryn B. Janda, Marilyn A. Brown, Linda Steg, Edward L.Vine, and Loren Lutzenhiser. 2016. “Opportunities and insights for Reducing Fossil Fuel Consumption by Households and Organizations” Nature Energy, May.

Brown, Marilyn A. and Sovacool, Benjamin K. 2017. Energy Efficiency: The Value-Action Gap” Energy and Society Handbook, Oxford University Press, Co-Editors: Debra J. Davidson and Matthias Gross, forthcoming.

Brown, Marilyn A. 2014. “Enhancing Efficiency and Renewables With Smart Grid Technologies and Policies,” Futures: The Journal of Policy, Planning and Futures Studies, 58: 21-33.

Brown, M. A. and Wang, Y. (2015). Green Savings: How Policies and Markets Drive Energy Efficiency, Praeger Press.

Baer, Paul, Marilyn A. Brown, and Gyungwon Kim. 2015. “The Job Generation Impacts of Expanding Industrial Cogeneration,” Ecological Economics, 110 (2015) 141–153.