March 2007

Potential for Energy Efficiency, Demand Response, and Onsite Renewable Energy to Meet Texas’s Growing Electricity Needs

In the immediate and long-term future, energy efficiency, demand response, and onsite renewable energy resources can meet the growing demand for electricity in Texas. Efficiency and renewable energy resources, combined with a significantly expanded demand response, can meet 107% of the projected growth in summer peak demand by 2013, heading off the reserve margin crisis that is forecast for the state and actually reducing the overall summer peak demand in key years. These goals can be accomplished at a lower cost than by constructing new conventional generation resources, thus enhancing the energy security and sustaining the state’s economic growth.

Policy Recommendations

We have assembled a portfolio of nine policies that our analysis suggests are both effective and potentially politically viable in Texas:

  1. Expanded Utility-Sector Energy Efficiency Improvement Program
  2. New State-Level Appliance and Equipment Standards
  3. More Stringent Building Energy Codes
  4. Advanced Energy-Efficient Building Program
  5. Energy-Efficient State and Municipal Buildings Program
  6. Short-Term Public Education and Rate Incentives
  7. Increased Demand Response Programs
  8. Combined Heat and Power (CHP) Capacity Target
  9. Onsite Renewable Energy Incentives


Figure ES-1. Fraction of Summer Peak Demand that Can Be Met with Demand Response, Efficiency, and Renewable Resources

Figure ES-2. Share of Future Electricity Consumption that Can Be Met with Efficiency and Renewables Resources


Importance of the Clean Energy Path for Texas’s Energy Future

Policy action to adopt the energy efficiency and renewable energy policies described in this report would set Texas on a course to avoid near- and long-term electricity supply crises, while helping to stabilize energy prices. Efficiency and onsite renewables, when combined with expanded demand response programs, can also resolve concerns about meeting peak summer demands in the next few years, thus answering the question of where the state will get the electricity it needs to sustain its growing economy. While no single policy solution will address the state’s longer-term energy challenges, the portfolio of policies proposed in this report will go a long way toward meeting Texas’s future energy needs while ensuring its continued economic health.