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Negawatt market

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Negawatt power is a theoretical unit of power representing an amount of energy (measured in watts) saved. The energy saved is a direct result of energy conservation or increased efficiency. The term was coined by the Chief Scientist of the Rocky Mountain Institute and environmentalist, Amory Lovins in 1989. Negawatts currently cannot be precisely measured, only theoretically. However there is some controversy surrounding the negawatt Market.

A negawatt market can be thought of as a Secondary market, in which electricity is allocated from one consumer to another consumer within the Energy market. In this market, negawatts could be treated as a Commodity. Commodities have the ability to be traded across time and space, which would allow negawatts to be incorporated in the international trading system. However, creating negawatt markets would be very difficult to achieve on a large-scale[citation needed].

The concept of negawatt power is being implemented in several states in the United States and is emerging as an international strategy to reduce energy consumption. Electric companies motivated by various factors, including significant capital costs required to add new capacity, have begun to inform customers on how to use energy more efficiently, resulting in a theoretical increase the amount of negawatts. The negawatt market has gained some recognition on an international scale; however, the market is still a controversial proposal that has not yet fully developed.

Many argue positively for the negawatt market by taking note of the incentives: receiving money, reduction of national energy dependency, and the local electricity deregulation within certain nations or states. As for the cost incentive; those who produce negawatts or simply conserve energy can earn money by selling the saved energy. Some argue that negawatts can potentially help a country decrease its dependency on oil. The negawatt market could help nations or states obtain a deregulated electricity system by creating another market to purchase electricity from.

The negawatt market also has many drawbacks. Some of these drawbacks include the difficulty of creating a negawatt market and the expense of Efficiency. Due to the inability of measuring a negawatt, lack of negawatt measuring devices, and the potential necessity of electricity price caps, some argue that a negawatt market would be very difficult to implement. There are also negative cost, technical, and time implications on manufacturers, electricity providers, and the consumers. Some argue that a negawatt market would allow electricity to be treated as a product rather than a service, in which consumers would get paid for not using something that they do not own.


Definition

Negawatt power is a theoretical unit of power representing an amount of energy (measured in Watts) saved. Energy is saved by either increased efficiency or reduced energy consumption; the conserved energy is a "negawatt". The concept of a negawatt is simply a measure of power that is not used. Negawatts are a form of encouragement to motivate consumers to conserve energy. [1] Amory Lovins considers the concept of conservation "a change in behavior based on the attitude 'Do Less to Use Less'". He makes a distinction between conservation and efficiency by defining efficiency as "the application of technologies and best practices to eliminate waste based on the attitude, 'Do the same or more with less.'" [2] Negawatts have the potential to be measured in the future with grid systems, smart meters, and other energy tracking devices; however, they currently cannot be accurately measured. Negawatts can only be theoretically determined based on the history of consumption.

Origin and development

The term negawatt is derived from megawatt and was created by Amory Lovins. Lovins saw a typo — "negawatt" instead of "megawatt" — in a Colorado Public Utilities Commission report in 1989. [3] He adopted the term to describe electricity was not created using energy efficiency and conservation. [4] Dr. Lovins was concerned with the large inefficiencies of energy use and came up with ways to remedy the problem. Lovins advocated for more efficient light bulbs and reflective metals that increase the intensity of light produced. He wanted consumers to use the energy produced in a smarter way by "wringing more work from the electricity we already have."[5] Lovins felt an international behavioral change was necessary in order to decrease countries' dependence on excessive amounts of energy. The concept of a negawatt could influence a behavioral change in consumers by encouraging them to think about the energy that they spend.

Market

Those who know of negawatts argue that creating a negawatt market would be very difficult to achieve on a large-scale, and may only have a "modest chance" of succeeding. [6] The creator of the term negawatt, Lovins, defines the negawatt market as a way to reduce the gap between the cost of making and saving electricity.[7] The negawatt market can be thought of as a secondary market where electricity is allocated from areas of less use to areas of greater use. [8] This would be a secondary market, due to the fact that it would reallocate electricity from one consumer to another within the already existing Energy market. Some feel that in order to establish a viable market, legislation and cooperation between primary producers, distributers, traders and consumers, may be required. This proposal would encourage the market to have legislative regulations, while still allowing the market to work within itself to set prices and allocate resources. [9]. Emerging markets in carbon trading may ultimately provide a model.[citation needed].

A negawatt market would allow "demand side resources" to participate in wholesale energy markets. These markets are commonly referred to as a demand response. Demand response can be defined as "enrolling large users of energy in programs to lower their usage in return for compensation, which helps take pressure off the grid" [10] This market would help take pressure off the grid because electricity could "be treated as a commodity just like copper or sowbellies," and therefore traded to areas that need the it more than others. [11] Just as any commodity, negawatts would have to be "tradable across time and space" in order to be an effective market. [12]. Being able to trade negawatts across time and space would allow for an international trading system. In order to create a market for negawatts, energy companies will need to put more focus towards energy efficiency. [13] This shift in focus would require a new "business structure that will thrive in the 'negawatt market'", which has not yet been developed. Market possibilities are being implemented internationally, implying that one day an official negawatt market will become a reality. [14]

Implementation

Government implementation

Negawatt power is currently being implemented in many states in the U.S. and is emerging as an international strategy to reduce energy consumption. "Test negawatt auctions began in 1999 in Connecticut and Georgia and more than a dozen utility exchanges were in existence [in 2000]." In an effort to move towards energy efficiency, New York has created programs "supported through Energy $mart, which is run by the New York State Energy Research and Development Authority (NYSERDA), with money from a small surcharge on utility bills"[15] Negawatt power is currently implemented in California as well as Texas. "Some Texas congressmen and energy companies are trying to help California avert blackouts and utility price shocks this summer with [...] 'negawatts' [16].

On January 1, 2009, the states of South Australia and Victoria (Australia) became the first in Australia to offer "householders energy efficiency incentives programs delivered via local electricity retailers." [17] The UK is looking to balance the demand of electricity by proposing a bill in which "the government may pay major users for each “negawatt” of capacity they switch off" during high use. Payment may also be issued for supplying the grid.[18]

Private Implementation

The negawatt market is not only being used by governments, but by companies as well. Aluminum manufacturers in the Pacific Northwest shut down their power plants and sold the unused energy because selling the negawatts was more profitable for the company than selling the aluminum product. This was possible because "The smelters hold power contracts with the federal Bonneville Power Administration that contain clauses allowing them to market the electricity" [19] The Associated Electric company in rural Missouri is implementing the usage and spreading the knowledge of negawatts by performing energy audits at their customer's homes to show them where they could be saving electricity. Rebates are also being given to help cutomers pay for more energy efficient, energy star appliances. Keith Hartner, the CEO of Associated Electric Cooperative Inc, feels that negawatts are not only generating savings for their customers, but for the company as well;“The goal of this program is to save money not only at the generator but also at the meter for the members.” [20]. Google is making it easier for comsumers to limit their energy consumption with the launch of Google PowerMeter.[21] Google PowerMeter has partnered with electric companies across the U.S. to give customers "a history of consumption every 15 minutes, allowing consumers to compare electricity consumption data by the day, week or month."[22]

Advantages

Cost

The most noteworthy advantage in creating a negawatt market is the cost incentive. As many will say, "The cheapest watt is the one that's never created" [23] In this market, the consumers who increase their home efficiency, or decrease their energy consumption, can earn money by selling the saved elecricity. This is similar to an emissions trading or a cap and trade system, in which the energy that is not used can be bought from the consumers who saved the energy and sold to those who need to purchase the extra energy. Providers of electricity can encourage consumers to sell back their unused energy, or negawatts, especailly during peak hours. A major question that electric companies need to ask themselves, is whether it is less expensive to pay consumers to reduce consumption for a few instances a year, or to build and maintain a side-supply resource that would only be used a few times a year. Many argue that the "cost of foregone consumption is less than the cost of increasing the supply of electricity." [24]

If a consumer conserves a substantial amount of energy then there can even be an allowance for a tax deduction. According to the Negawatt Power Solutions Group [25], a "building that achieved a 50% energy cost reduction may be eligible for tax deduction up to $1.80 per square foot" [26]. Negawatts can help alleviate some of the costs of constructing new, efficient buildings. "The negawatt revolution now provides a way to cut construction costs, capture big returns on capital in renovations, [and] dramatically cut operating expenses" [27]. Existing buildings can be made more efficient by renovationg the insulation to cut back on electricity used for heating, installing more efficient light fixtures, and an upgraded HVAC design. Renovating an existing building to be more energy efficient will cost less than creating entirely new, more efficient buildings.

Reduction of national energy dependency

The reduction of the amount of energy that a region emits can slowly separate a nation from a high energy consumption of oil. The desire to become a less energy dependent country may promote behavioral changes and a different societal outlook on energy usage. These potential societal perspective changes could lead to an overall more sustainable country. The reduced consumption of energy would also produce less Greenhouse gases, which could have positive outcomes on the economy, political parties, and interest groups, such as environmentalists, of a particular country. According to Lovins, improvements in energy efficiency and conservation, due to a change in behavioral attitudes, have a huge potential to reduce a country's "long-term energy needs," such as the United States. [2]

Local deregulation

Some conservatives claim that the negawatt market could help nations or states have a deregulated electricity system. This would allow a nation or a state to experiment with "electricity deregulation," in which "demand reductions could be purchased with a minimum of disruption to businesses, workers and the economy" [28] In the United States, for instance, the negawatt market could assist California with rolling blackouts by making more power available from consumers who choose to conserve energy, or increase their negawatts. California could achieve the goal of deregulation by allowing a deficit area to "purchase an emergency supply from anywhere within with West" [29] In which "the ultimate purpose of deregulation was to allow competition in the electricity market and consumer choice of electricity providers" [30] Negawatt power would allow the consumers in a country's economy to decide how the energy will be distributed; essentially benefitting regions that hope to have a deregulated electricity system.

Drawbacks

Difficulty in Creating a Negawatt Market

Currently, there is no way to precisely measure the amount of energy saved in negawatts, it can only be theoretically determined based on the consumer’s history of energy use. Visualizing has a very important role in “enabling residents to understand and manage their energy use,” which serves as a form of encouragement for consumers to conserve energy. [31] Without the visualization of the energy use, it is difficult to conceptualize negawatts because the consumer cannot see a precise value of the amount of saved energy. Smart meters are becoming a more developed technology to measure energy usage, but "consumers are calling on state regulators to move cautiously on smart meters, citing complaints in some states that the meters are raising electric bills rather than lowering them".[32]

Some municipally owned utilities and cooperatives argue that negawatt power "lets consumers treat electricity as a property right rather than a service [...giving them] legal entitlement to power [that they] don't consume.” [16] This would indicate that consumers would treat electricity as a property, not a service. Some people, including the Senior Vice President Joe Nipper from the American Public Power Association, oppose the idea that people would receive money for power that they did not even spend. Due to the imprecision of measuring negawatts, some argue that people may receive more money than they should for something that is not even theirs in the first place.

Electricity price caps may also need to be implemented in order for the emerging negawatts market to function correctly. [19] To some, government limitations on markets are unfavorable. There is a current view that negawatts are worth pursuing, but that they are unlikely to satisfy the world's thirst for energy to the extent their advocates assume. [33]

Expense of Efficiency

Saving energy by the negawatt and creating a negawatt market, can present several drawbacks for manufacturers and electricity providers. Manufacturers are less inclined to make energy efficient devices which meet a specific standard, such as Energy star's standard, because of increased time and cost, while receiving minimal profit. Overall, electricity providers may not want customers to use less energy due to the loss of profit. Some even argue that producing energy efficient products, such as light bulbs, actually simulate more demand, “resulting in more energy being purchased for conversion into light” of the same strength. [34]

Customers may also be less inclined to buy products that are more energy efficient due to the increase in cost and time spent. "Even when the information is known and, despite the overall long-term cost-saving potential, the price of energy is too low...for individuals to justify the initial cost of energy efficiency measures" [35] Not only are energy efficient devices more expensive, but "consumers are poorly informed about the savings on offer. Even when they can do the sums, the transaction costs are high: it is a time-consuming chore for someone to identify the best energy-saving equipment, buy it and get it installed." [33]

The technology used to measure the amount of energy that a consumer uses and saves, know as Smart meters, grid systems, or energy dashboards, require time for the consumer to understand. Some argue that people need to have access to “simple yet effective information systems to help users understand their energy without having to become technology experts” [36] The current visual energy measuring devices could be made simpler and less expensive, which may encourage customers to save more energy thus increasing their negawatts.

References

  1. ^ Bartram, Rodgers, & Muise (2010).
  2. ^ a b Knickerbocker. (2001).
  3. ^ (2008). "[1]"
  4. ^ Kolbert, (2007). p.1-22
  5. ^ Lovins, (1989). "The negawatt revolution-solving the co2 problem."
  6. ^ Jim, (2001).
  7. ^ Rochlin,(2009). “http://www.sciencedirect.com/science/article/B6VSS-4XHT4CJ-1/2/bd40582ccab039609079cc8751ad2ecd."
  8. ^ Rochlin, (2009). "http://www.sciencedirect.com/science/article/B6VSS-4XHT4CJ-1/2/bd40582ccab039609079cc8751ad2ecd."
  9. ^ Fotopoulos, (2007).
  10. ^ Gulyas, (2008).
  11. ^ Fickett, Gellings, & Lovins, (1990)."http://www.nature.com/scientificamerican/journal/v263/n3/pdf/scientificamerican0990-64.pdf".
  12. ^ Lovins, (1989). "The negawatt revolution-solving the co2 problem."
  13. ^ (2010, May)."Generating "negawatts"".
  14. ^ Weinberg, (2001).
  15. ^ Alliance for clean energy, New York. (2008). "Energy Efficieny"
  16. ^ a b Jim, (2001).
  17. ^ Energy Matters.(2008, December 31).
  18. ^ (Airlie, 2010)
  19. ^ a b Jim,(2001).
  20. ^ McCarty, (2008)."[2]"
  21. ^ http://www.google.com/powermeter/about/index.html
  22. ^ MIT Portugal, (2010)."[3]".
  23. ^ Bartram, Rodgers, & Muise, (2010). P. 8-14.
  24. ^ Rochlin, (2009). "http://www.sciencedirect.com/science/article/B6VSS-4XHT4CJ-1/2/bd40582ccab039609079cc8751ad2ecd."
  25. ^ http://gonegawatts.com/incentives.php
  26. ^ NegaWatt Power Solutions Group.(2009). "http://gonegawatts.com/incentives.php"
  27. ^ Lovins, & Browning, (1992) "Negawatts for buildings"
  28. ^ Jim, (2001).
  29. ^ Jim, (2001).
  30. ^ "[4]".
  31. ^ Bartram, Rodgers, & Muise, (2010). P. 8-14.
  32. ^ Peters, (2010). "Comsumers wary of smart meters."
  33. ^ a b Economist, (2008). P. 78.
  34. ^ The Economist, (2010). "Energy Conservation: Not Such a Bright Idea."
  35. ^ (2010). "Generating "negawatts"."
  36. ^ Bartram, Rodgers, & Muise, (2010). P. 8-14.

Works cited

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