State Energy Programs and Their Economic Impacts

A study by Oak Ridge National Laboratory concluded that for every federal dollar invested in SEP, the energy savings were over $7 and the leverage of non-federal funds was approximately $11. Examples of projects funded by the SEP include a lighting retrofit for Rochester General Hospital in New York, which will save more than $80,000 per year in energy costs; the diversification of Michigan automotive manufacturer Merrill Technologies Group to manufacture wind turbine systems, creating up to 165 jobs; efficiency upgrades at Des Moines Area Community College that will reduce energy use by 16 percent and energy costs by $280,000 per year; Kentucky’s Energy in Education Collaborative which offers efficiency programs in all 174 school districts that can reduce energy use by 10 percent or more; and the Texas LoanSTAR revolving loan program, which has saved more than $316 million in energy costs and reduced carbon dioxide emissions by 3.2 million tons over the last 20 years.

More than six million households have been served by the Weatherization Assistance Program since its inception in 1972. Families receiving weatherization services see their annual energy bills reduced by an average of about $437, depending on fuel prices.

On February 2, 2011, the Environmental and Energy Study Institute (EESI) held a briefing on how state governments have implemented energy programs, and the economic development activities associated with those programs. State officials discussed the State Energy Program (SEP) and the Weatherization Assistance Program (WAP), and how these programs have helped create jobs and reduce energy bills for Americans.

• Senator Jeanne Shaheen (D-NH) remarked, “In many, many cases it’s the states that are out there being innovative and coming up with new initiatives, and we at the federal level adopt those because they work so well in the states.”
• The State Energy Program (SEP) provides federal funding to states to be allocated for energy efficiency and renewable energy projects. It provides great flexibility for creating unique programs at the state level while improving the economy on a national level.
• SEP allowed the State of New York to develop biofuels blending and storage infrastructure which helped move the state’s transportation sector further away from its dependence on petroleum.
• Flex Tech – a New York program that provides energy audits to local businesses, governments, and non-profits, enabling them to make important energy efficiency decisions – leveraged $17 of private sector investment for every $1 of SEP funding. This program saved $5 for each shareholder for every $1 invested.
• SEP funding is often used to support collaborative efforts. The Iowa Office of Energy Independence garnered a lot of visibility for wind energy projects through the placement of wind turbines in school districts.
• The American Recovery and Reinvestment Act (ARRA) allocated $5 billion to Weatherization Assistance Program over three years; in November 2010, WAP reached 300,000 homes nationwide, the halfway mark of the program. An estimated 15,439 jobs have been created by the ARRA weatherization program funding, with more jobs and local economies sustained through the purchases of supplies and materials from local businesses.
• WAP provides training on latest diagnostic techniques and skills to perform home energy audits and retrofits, creating new markets while reducing residential energy costs and dependence on foreign oil.
• Middle class families spend 3.3 percent of their income on energy costs while low income families pay 14.4 percent of their income. In Kentucky there are 105,000 families with incomes less than 50 percent of the poverty level; home energy costs absorb an average of 47.7 percent of these families’ incomes.
• The LoanSTAR (loans to Save Taxes and Resources) Program in Texas helps public entities finance retrofits, allowing these institutions to pay back their loans with the money saved from lower utility bills. Within the loan term of ten years or less, retrofit projects pay for themselves entirely.
• Since 1990, the LoanSTAR Program has saved $316 million in energy costs which translates to 2.7 billion kilowatt hours of electricity, or enough to power 12,000 average homes in the state of Texas every year. Natural gas savings from the program could run 1,000 commercial businesses a year.
• Energy savings does more than save dollars, as Dub Taylor says, because “each unit we’re saving here is a unit of fuel we’re not combusting at the power plant and a unit of emissions associated with that fuel that doesn’t go into the air.”
• In Michigan, SEP has facilitated loans to manufacturers transitioning to clean energy products. The program has leveraged $27 million and created over 2,000 jobs. In one case, the Michigan Office of Energy provided a loan for a business to manufacture more energy efficient commercial windows.