Aggressive Energy Efficiency Programs Could Save Michiganders a Cool $13 Billion

Michigan homes, businesses, and industries could save nearly $7 billion on their electricity and natural gas bills over the next five years – and a whopping $13 billion over the next decade – by taking advantage of cost-effective, energy-saving opportunities, a new analysis shows.

That’s huge. In fact, it would translate to $1,315 in savings over the next 10 years for every man, woman, and child in the Great Lakes State. What’s more, Michigan utility customers would save $2.55 for every $1 invested in their many energy efficiency options. That’s better than a 2-to-1 return!

Energy Efficiency’s Potential

The analysis performed by GDS Associates found that technically Michiganders could run their homes and businesses using nearly 40 percent less electricity by making improvements to their building’s performance through upgrades in areas such as lighting,Thumbnail image for Weatherizing heating, cooling, insulation, and windows.

When that technical potential was narrowed to take into account real-world barriers to embracing cost-effective energy efficiency measures over the next 10 years such as market penetration, the researchers concluded that lowering electricity use by 17% would be achievable, and would save customers $2.55 for every dollar spent on energy efficiency programs. The benefits for customers add up to $13 billion.

Moreover, in just five years, Michigan could lower electricity use by 11 percent through energy efficiency, and doing so would avoid $6.9 billion in unnecessary energy costs.

The analysis has been submitted to Governor Rick Snyder’s panel of officials studying energy policy options in anticipation of his energy policy announcement in early 2014. 

Following the governor’s 2013 address on Energy and the Environment, Michigan Public Service Commission Chairman John Quackenbush and Michigan Energy Office Director Steve Bakkal were tasked with amassing material for informational reports to help ready Michigan to make good energy decisions.  As part of that process, Michigan’s Public Service Commission asked GDS Associates to develop estimates of the cost-effective potential for energy efficiency stretching our energy dollars without sacrificing our comfort.

When we increase our energy efficiency, we can spend the resulting utility bill savings in our local economy  and generate more jobs. And, if as a result we need less power, then we can help avoid dirty power generation that harms our air and families.

We Can Do Even More

The GDS study, released last week, first looked at a less aggressive energy efficiency scenario, and found the potential to reduce energy use by 15% over 10 years with a net benefit of $10 billion. We at NRDC believe so strongly in capturing all affordable energy efficiency that we asked GDS to study a more aggressive but still cost-effective approach, and they found that by eliminating an arbitrary limit on how much incentive a utility can offer customers who participate in its energy efficiency programs (such the amount of rebate for upgrading a heating system) the actual potential was higher than the previous estimates suggested.

Taken together, the energy efficiency report and a companion renewable energy report conclude that increases in both are feasible and affordable -- and ultimately support a move away from the unnecessary construction of polluting fossil fuel plants like the 700-megawatt natural gas plant proposed by Consumers Energy in Thetford Township near Flint in Eastern Michigan.

These reports can serve as a roadmap toward aggressively scaling up energy efficiency and renewable energy policy in Michigan and helping to generate new jobs, cleaner energy, and billions of dollars in savings. If Michigan is assertive in take advantaging of these opportunities, don’t be surprised to see other states similarly inspired as we come together to fight climate change.

About the Authors

Ariana Gonzalez

Energy Policy Analyst, Midwest program

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