1. What’s better than using lots of
cheap natural gas? Here’s what.
Why energy efficiency is an
essential complement to the current
natural gas boom
Carl Nelson
Center for Energy and Environment
EI Natural Gas Forum St. Paul, MN
September 21, 2012

2. Efficiency is Minnesota’s Preferred Resource
+ Strong MN leadership in energy efficiency policy
+ Experienced energy-efficiency workforce
+ Strong economic benefits
+ Cheapest resource option in the long run
+ Provides in-state jobs
+ Lowers customers’ energy bills
+ Benefits of utility programs exceeded costs by 3 times in 2011
+ 2.3 million Dth saved in 2011 (25,000 households)
+ Lowered demand = lower prices
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3. Electric efficiency also decreases NG demand
MN avoids building new gas plants with least-cost resource
Levelized
cost
of
new
electric
resources
Page 3
Source:
ACEEE,
adapted
from
Lazard
2009
and
ACEEE,
2009

4. Do low gas prices mean we don’t need
efficiency?
(Hint,
answer
is
no)
+ Efficiency is cost-effective now even with relatively low
gas prices
+ We need to be cautious in using natural gas price
projections to look at long-term energy efficiency policy
+ Energy-efficiency requires long-term view
+ Significant risk in disrupting programs (stop/start)
+ Natural gas price projections have been fairly inaccurate in long-
term, while actual prices have been fairly volatile
+ Many reasons to think there may be significant upward pressure
on prices
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5. AEO projections vs. actual natural gas prices
Page 5 Source:
AEO,
2012

6. One upward pressure on prices: US
markets out of synch with world
Page 6 Source:
PIRA,
2012

7. Strong efficiency policy is good
compliment to natural gas boom
+ Help to hedge against impacts of price volatility
+ Can help to further lower the long-term price of natural gas
+ Provides strong economic benefits as a native energy source
Recent report provides more detail:
Saving Money and Reducing Risk: How Energy Efficiency Enhances
the Benefits of the Natural Gas Boom
ACEEE, Sept. 2012 http://aceee.org/white-paper/saving-money-and-reducing-risk
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