Energy Efficiency and Photovoltaic Energy in the residential sector: why they should be mandatory together

In recent years, some companies and consumers have adopted residential solar energy only—that is, installing solar systems without paying much attention to energy efficiency. This strategy has been encouraged in the United States in part by tax credits for solar projects and by regulations on microgeneration and grid injection in force in most states.

The availability of financing that includes or eliminates the initial purchase price also encourages this strategy by replacing the initial cost with monthly payments over years. To explore this issue more closely, ACEEE conducted two analyses. The first compares the advertised cost per kWh of energy efficiency or solar generation separately and in combination. The second compares the technical potential of solar generation and the electricity consumption of homes, with or without efficiency. The conclusion is that when efficiency and solar are implemented together, costs are lower, and solar generation can meet the demand of a larger number of homes. The results are presented in the table below. A solar PV system costs between 17 and 23 cents per kWh of energy produced in the United States (the lowest figure is in sunny Las Vegas, while the highest is in Washington). Energy efficiency costs less – about 8 cents per kWh. But when both are used, the cost is 3 to 6 cents per kWh less than using PV alone. Energy efficiency is less expensive, and it also reduces both the cost and the size of PV systems.

This analysis leaves out tax credits for solar projects and also ignores public incentives that are typically available for energy efficiency measures. If tax credits were included, the overall result would be more or less the same – a combined strategy makes kWh cheaper than using PV generation alone. This is just a simple analysis of common measures and is therefore only useful for comparison purposes.

PV production related to residential electricity consumption

For this analysis, the estimated potential for rooftop PV panels in each US state was compared with residential electricity consumption. States were evaluated where PV potential was at least 50% of current residential consumption, or residential consumption if renewed energy efficiency had already been reduced by at least 30%.

This analysis covers 24 states, and these data are presented in the RECS (Residential Energy Consumption Survey). The results are shown in the map below. With efficiency, 23 of the 24 states could reach 50% of the solar limit, including six that have reached 75% of solar capacity (California, Colorado, Kansas, Nebraska, New Mexico and Nevada). Without energy efficiency, only nine of the 24 states could reach less than half of homes with solar panels. Only two states (California and Colorado) have solar potential exceeding 75% of residential consumption. In other words, solar generation could reach a much larger proportion of homes if energy efficiency were included in the process.

This analysis does not include the potential for growth in electricity demand, such as increased vehicle use, or conversion of gas and oil heating systems to heat pumps. Details of this analysis, including a case where all heating systems were converted to heat pumps, can be found here. In this alternative scenario, only two states would reach 50% without energy efficiency, while 12 of them would reach potential with efficiency.

As in the first analysis, this is an ideal scenario where all potential is realized and all homes implement energy efficiency measures. Furthermore, this simple analysis ignores the fact that some homes would be capable of producing more solar energy than they would use, while others would not be suitable for PV generation, such as those heavily shaded by trees or those that do not face south. This analysis should be considered as a parameter and not as a definitive study.

Conclusion

Energy efficiency is generally cheaper per KWh than photovoltaic generation. And because it reduces consumption, energy efficiency can guarantee more resources for expanding the number of homes with solar panels, allowing more homes to absorb solar energy and requiring smaller and cheaper photovoltaic systems. These are two simple analyses, but they point to the fact that efficiency is necessary for solar energy to give its best.

Source: American Council for an Energy-Efficient Economy (ACEEE)