The Value of the DOE State Energy Program

Department of EnergyAs part of President Trump’s resolution to cut government spending, the White House has proposed drastic budget reductions for the United States Department of Energy (DOE) – and for its clean-energy office. These may affect the State Energy Program (SEP), which has yielded broad-ranging health and economic benefits.

Depending on the outcome of congressional negotiations, the Office of Energy Efficiency and Renewable Energy (EERE) might have a 69-percent reduction in funding for 2018. This would be only $636 million as compared to $2.069 billion in 2017, according to the 2018 budget documents.

However, it is entirely possible the final decision may reflect the priorities of other stakeholders – including citizens, politicians, lobbyists, businesses and workers.

One program that might be defunded due to the budget cuts is the SEP. The SEP provides grant funding and technical assistance to states and territories to improve energy security, advance energy initiatives, and decrease energy waste.

Value

Does this program add value nationally? To answer this question, Oak Ridge National Laboratory conducted a national, multi-year, peer-reviewed evaluation of the cost-effectiveness of the SEP program during 2008 and for a span of years from 2009 through 2013.

The comprehensive evaluation demonstrated that the dollar savings from SEP investments were substantially greater than the program costs. The program resulted in energy savings, job creation, emissions reductions, and economic and health benefits.

The review found that the SEP was very cost-effective. Projects were estimated to deliver $4.50 in energy cost savings per dollar invested, resulting in a lifetime energy savings of $95 million.

For project year 2008, the cumulative energy savings from the lifetime of SEP-funded projects was estimated at 9.7 MMBtu. That included 8.2 million MMBtu from energy savings and 1.45 million MMBtu from renewable energy generated.

In addition, for projects implemented in 2008, the study found that 2,044 full-time and/or part-time jobs were created. Data showed that 0.57 million metric tons of carbon equivalent (MMTCE) would be avoided over the projects’ lifetime. This result is equivalent to taking 120,400 cars off the road each year.

Department of Energy

Background

Congress created the SEP in 1996 by merging the State Energy Conservation Program (SECP) and the Institutional Conservation Program (ICP), which had both been in existence since 1975.

While the program goals have evolved over time, according to the program website, the SEP works with states to:

  1. increase energy efficiency;
  2. implement energy security, resiliency, and emergency preparedness plans;
  3. reduce energy costs and energy waste;
  4. increase investments to expand the use of energy resources abundant in states;
  5. promote economic growth with improved environmental quality.

From 2010 to 2016, the SEP invested $209 million in annual formula funds and $61 million in competitive funds for states.

States use their formula grants to develop state strategies and goals to address their energy priorities and are required to provide a 20-percent match.

A DOE representative said in an email interview that between 2010 and 2017, “states implemented SEP funding that resulted in a wide range of benefits.” These are listed below.

Benefits of the State Energy Program

  • Implementation of energy security, climate resilience, and emergency preparedness plans
  • Development of state-led strategic energy initiatives
  • Investments to expand use of state energy resources
  • Reduced energy waste in more than 20,000 buildings (125 million square feet) through energy-efficiency upgrades
  • Installation of more than 60,000 renewable-energy systems (8 million kWh)
  • Education of more than 2 million people in performing energy audits and upgrades
  • Pilots of innovative energy projects with the private sector, K-12 schools, and university campuses
  • Execution of energy savings performance contracts to undertake retrofit projects in public facilities
  • Development of implementation models that serve as ‘how-to’ guides for other states that wish to replicate the programs that are achieving energy-efficiency savings

Examples

Each state allocates SEP funds for projects specific to its own needs. Alabama invested SEP money in an energy-efficiency program that saved $7.4 million in energy costs in the first two years.

Nevada used these funds to help income-qualified seniors improve the energy efficiency of their homes, saving the customers an estimated $927 per home per year.

Minnesota used SEP funding to create a Guaranteed Energy Savings Program that provided energy-efficiency projects in more than 550 buildings. This program’s projected annual savings was $10.8 million.

States are required to provide a minimum of 20 percent matching funds for SEP grants.

In 2009, the American Recovery and Reinvestment Act (ARRA) provided $3.1 billion for SEP grants with no matching fund requirements. This allowed the program to support states even further in their energy conservation.

For the ARRA period, the combined energy impact from ARRA energy-efficiency and renewable-energy projects was calculated to save about 2.8 billion MMBtu from 2009 to 2050. Combined, this resulted in avoided carbon emissions from the ARRA period of 164.1 MMTCE. Overall, these projects are estimated to save a total of $7.8 billion in energy costs through 2050.

While political leanings vary by state, the benefits of the SEP program extend beyond state lines, delivering cost-effective economic, environmental and health benefits to the residential, commercial and public sectors. If funding is cut, these benefits will be as well.

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