Midwest Energy Efficiency Investment Economic Impact

MEEA Policy Committee Quarterly Call

October 24, 2016

Call Agenda

• 12:00 pm – 12:10 Update on MEEA’s State

Efficiency Policy Work, Nick Dreher

• 12:10 – 12:45 Economic Impacts of Energy Efficiency Report, Tyler Browne

and Nick Dreher

• 12:45 – 1:00pm Discussion

The Trusted Source on Energy EfficiencyAbout MEEA

We are a nonprofit membership organization with 160+ members, including: • Utilities• Research institutions and advocacy organizations• State and local governments• Energy efficiency-related businesses

As the key resource and champion for energy efficiency in the Midwest, MEEA helps a diverse rangeof stakeholders understand And implement cost-effective energy efficiency strategies that provide economic and environmental benefits.

Energy Efficiency Policy State Update

• Michigan• Ohio• Indiana

Energy Efficiency Policy Update

• Multifamily Energy Efficiency– Joint REEO Multifamily Paper– MEEA Multifamily Paper

• Clean Power Plan– Comments on the Clean Energy

Incentive Program are due to the EPA by November 1. Link to information on submitting comments:• https://www.epa.gov/cleanpowerplan/how-

comment-proposed-design-details-clean-energy-incentive-program-ceip

6

Economic Impacts of Energy Efficiency Analyzing the Effects of Regional and State-Level Investments

Agenda

• Background• Analysis Method • Findings• Conclusions

Section 1: Background

To explore current clean energy employment in the Midwest region as well as jobs created, energy saved,

greenhouse gas emissions avoided, and the impacts on the regional income as a

result of utility investment in energy efficiency

Project Goal

Study OverviewMEEA commissioned a study of the economic impacts of energy efficiency investments• Analyzed regional and state-level

program activities– Midwest Region– Michigan, Ohio, Indiana

• Estimated impacts on four economic indicators– Employment– Income– Economic Value Added– Sales

Earlier Statewide EE • MN

1983 – Pilot legislation1991 – CIP requirement adopted

$0.0$200,000,000.0$400,000,000.0$600,000,000.0$800,000,000.0

$1,000,000,000.0$1,200,000,000.0$1,400,000,000.0$1,600,000,000.0$1,800,000,000.0$2,000,000,000.0

$1,396,695,724.82

$415,680,150.96

$1,812,375,875.78

$Billi

ons

EERS Legislation• IL Gas Admin

Order• IN Electric

Voluntary Standard Legislation• MO Electric

Legislative Committee•WI EERS adjusted

Legislation• IN EERS overturned• OH EERS frozen

EERS Legislation• IL

Electric• MN

Electric, Gas

EERS Legislation• MI

Electric, Gas• OH

Electric Exec Order• IA Gas,

Electric

Admin Order• WI Elec,

Gas

Earlier Statewide EE • WI

1999 - Public Benefit Fund Adopted

Earlier Statewide EE • IA

1990 – Initial legislation1996 – Legislation updated

Estimated Annual Utility Investment in EE

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

01,000,0002,000,0003,000,0004,000,0005,000,0006,000,0007,000,0008,000,0009,000,000

020,000,00040,000,00060,000,00080,000,000100,000,000120,000,000140,000,000160,000,000180,000,000

729,601.0

7,260,196.2

3,389,425.9

159,476,641.9

Year

Elec

tric

- M

illio

n M

Wh

Save

d

Nat

ural

Gas

- M

illio

n Th

erm

s Sa

ved

Midwest Energy Savings through Utility Energy Efficiency

MIDWEST• 13 states• Investment is

growing• 2000=$151 M• 2014=$1.5 B• 2016=$1.8 B

MICHIGAN• Annual targets

• 1% (electric)• 0.75% (gas)

• Legislature considering voluntary standards

OHIO• Legislature

imposed two-year freeze on EE standard in 2014

• Future of EE policy currently under debate

INDIANA• Legislature

repealed statewide EE mandate in 2014

• EE now pursued voluntarily

EE Investments in Context

Section 2: Analysis Method

15

Tyler R. BrowneSenior Analyst, Energy Services Division

tyler.browne@cadmusgroup.com(630) 292-9016

Linkedin.com/company/the-cadmus-group

@CadmusGroup

Facebook.com/CadmusGroup

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Input Data Overview

Model Region

EE Spending ($2015 M)

GWh Savings

therm Savings

Avoided CO2

(tons)

Avoided SO2

(tons)

Avoided NOX

(tons)Michigan $220 11,663 376,847,434 21,303,908 64,534 23,625

Ohio $211 16,212 NR* 13,029,988 62,886 13,863

Indiana $127 6,894 21,437,150 7,481,057 23,281 7,266

Rest of MW $898 43,730 1,050,429,450 69,815,427 127,847 67,988

TOTAL $1,456 78,499 1,448,714,034 111,630,380 278,548 112,742

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Program-Related Cash FlowsUsed REMI PI+ to model annual impacts on employment, income, economic value

added, and sales from energy efficiency program-related cash flows

Analysis Method

19

Key Economic Indicators

EMPLOYMENT PERSONAL INCOME

ECONOMIC VALUE ADDED SALES GENERATED

Section 3: Findings

Summary Findings

Economic IndicatorNet Study Period Impacts

Michigan Ohio Indiana Rest of Midwest

Midwest Region*

Employment (jobs) 17,112 15,930 8,869 63,014 104,925

Income ($2015 M) $1,517 $1,369 $727 $5,158 $8,771

Value Added ($2015 M) $2,191 $2,153 $1,089 $8,315 $13,749

Sales ($2015 M) $3,551 $3,700 $1,882 $13,859 $22,992

*Totals may not sum due to rounding.

Employment

2014 2015–20380

20,000

40,000

60,000

80,000

100,000

18,605

86,319

Annual Average =3,597 Jobs

Personal Income

2014 2015–2038$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$1,169

$7,603

Annual Average =

$317 million

Economic Value Added

2014 2015–2038$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$1,840

$11,909

Annual Average =

$496 million

Sales Generated

2014 2015–2038$0

$2,500

$5,000

$7,500

$10,000

$12,500

$15,000

$17,500

$20,000

$3,346

$19,646

Annual Average =

$819 million

Findings by Model Sub-Region

Summary Findings

Economic IndicatorNet Study Period Impacts

Michigan Ohio Indiana Rest of Midwest

Midwest Region*

Employment (jobs) 17,112 15,930 8,869 63,014 104,925

Income ($2015 M) $1,517 $1,369 $727 $5,158 $8,771

Value Added ($2015 M) $2,191 $2,153 $1,089 $8,315 $13,749

Sales ($2015 M) $3,551 $3,700 $1,882 $13,859 $22,992

*Totals may not sum due to rounding.

Economic IndicatorNet Study Period

Impacts

2014

Employment (jobs) 15,203

Income ($2015 M) $1,353

Value Added ($2015 M) $1,975

Sales ($2015 M) $3,190

Michigan

In-State Activity Impacts

Michigan

Economic Indicator

Net Study Period Impacts

In-State Activity Impact Spillover Impact Total Impact

Value % of Total Value % of Total

Employment (jobs) 15,203 89% 1,909 11% 17,112

Income ($2015 M) $1,353 89% $164 11% $1,517

Value Added ($2015 M) $1,975 90% $216 10% $2,191

Sales ($2015 M) $3,190 90% $362 10% $3,551

Michigan

Economic IndicatorNet Study Period

Impacts

2014

Employment (jobs) 14,002

Income ($2015 M) $1,211

Value Added ($2015 M) $1,891

Sales ($2015 M) $3,277

OhioIn-State Activity Impacts

Ohio

Economic Indicator

Net Study Period Impacts

In-State Activity Impact Spillover Impact Total Impact

Value % of Total Value % of Total

Employment (jobs) 14,002 88% 1,928 12% 15,930

Income ($2015 M) $1,211 88% $158 12% $1,369

Value Added ($2015 M) $1,891 88% $263 12% $2,153

Sales ($2015 M) $3,277 89% $423 11% $3,700

Ohio

Economic IndicatorNet Study Period

Impacts

2014

Employment (jobs) 6,238

Income ($2015 M) $513

Value Added ($2015 M) $804

Sales ($2015 M) $1,348

IndianaIn-State Activity Impacts

Indiana

Economic Indicator

Net Study Period Impacts

In-State Activity Impact Spillover Impact Total Impact

Value % of Total Value % of Total

Employment (jobs) 6,238 70% 2,631 30% 8,869

Income ($2015 M) $513 71% $214 29% $727

Value Added ($2015 M) $804 74% $285 26% $1,089

Sales ($2015 M) $1,348 72% $535 28% $1,882

Indiana

Rest of the Midwest

Economic Indicator

Net Study Period Impacts

In-Region Activity Impact Spillover Impact Total Impact

Value % of Total Value % of Total

Employment (jobs) 60,007 95% 3,007 5% 63,014

Income ($2015 M) $4,959 96% $199 4% $5,158

Value Added ($2015 M) $7,896 95% $419 5% $8,315

Sales ($2015 M) $13,136 95% $722 5% $13,859

Rest of the Midwest

Economic Indicator Net Study Period Impacts

Employment (jobs) 104,925

Income ($2015 M) $8,771

Value Added ($2015 M) $13,749

Sales ($2015 M) $22,992

Midwest Region

Regional Activity Impacts

Section 4: Conclusions

Study Conclusions• 2014 Midwest EE investments create

jobs, boost personal income, and increase spending– Nearly 105,000 jobs created– Almost $8.8 billion boost to personal income– Over $13.7 billion of value to regional

economy– About $23 billion in regional sales generated

• Program-year activities generate substantial positive impacts, and additional positive impacts result from sustained energy savings lasting most of the study period

• Most impacts are local, but neighboring economies benefit as well

Policy/Economics Correlation

State Spending ($2015)

GWh Savin

gs

Therm Savings*

Illinois $346,397,221 8,737 310,881,694

Indiana $126,920,331 6,894 21,437,150

Iowa $184,502,608 7,098 97,547,514

Kansas $510,605 9 NR

Kentucky $48,073,549 3,767 15,519,685

Michigan $220,038,068 11,663 376,847,434

Minnesota $162,987,250 11,106 403,698,727

Missouri $36,957,959 4,415 NR

Nebraska $20,281,045 2,351 NR

North Dakota $385,457 25

NR

Ohio $210,872,860 16,212 NR

South Dakota $5,328,317 167 NR

Wisconsin $92,937,455 6,055 222,781,830

Total $1,456,192,725 78,499 1,448,714,034

*Kansas, Missouri, Nebraska, North Dakota, Ohio, and South Dakota utilities do not report gas savings.

Economic IndicatorNet Study Period Impacts: Midwest

Region

Employment (jobs) 104,925Income ($2015 M) $8,771Value Added ($2015 M) $13,749Sales ($2015 M) $22,992

Discussion