Mind the Electric Gap

Thirty percent of U.S. electricity consumption could be erased through gains in energy productivity, according to the Rocky Mountain Institute. (Related: see R.M.I. chairman Amory Lovins‘s recent guest post.) The institute’s analysis arrived at electricity productivity stats for all 50 states by dividing each state’s G.D.P. by the kilowatt hours of electricity it consumed.

New York state topped its list. For each kilowatt hour of electricity (the equivalent of burning one 100-watt light bulb for 10 hours) the Empire State consumes, it generates $7.18 in G.D.P. Mississippi, squarely on the bottom of the electric productivity list, generates just over $3 per kilowatt hour. The R.M.I. claims significant cutbacks in carbon emissions could be made (pdf) if all 50 states could increase their productivity to match the top 10 most productive states (in descending order: New York, Alaska, Connecticut, Delaware, California, New Jersey, Massachusetts, Rhode Island, New Hampshire, and Colorado). They call it “closing the efficiency gap.”

See for yourself. To visualize its data, R.M.I. has launched a cool interactive map, where you can see how your state stacks up in energy productivity, and the potential carbon savings it could make through productivity enhancements alone.

The institute is currently at work on a follow-up paper that will offer some solutions for closing that gap. What kinds of strategies should they use?

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  1. Bruno says:

    I’m disappointed to see an example of terrible economics on this site.

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  2. AR says:

    For those complaining about the advantage to states with northern climates – if you follow the links to profiles of individual states, you will see that they include an adjustment for climate. So states in the humid south receive a boost of as much as $.50 per kilowatt hour, while states with moderate climates like Washington, Oregon, and California receive no handicap.

    And then for those complaining about the comparison of economic mixes in various states, they also include an adjustment for commercial vs. industrial economic production. California actually loses $.17, while Kentucky gains $.52.

    Don’t assume that a study isn’t rigorous just because an unaffiliated blog post doesn’t mention all variables considered. You can quibble with the way they calculated these adjustments – I feel like there are some northern states that receive a rather large climate boost, personally – but you can’t argue that they didn’t even consider them.

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  3. Natalie Mims & Mathias Bell, RMI says:

    As the authors of the paper, we would like to clear up a few things. Our findings are based on months of work normalizing the data. Many of you are correct to point out that an analysis based on unadjusted $GDP/kWh would be far too simple. To better understand electric productivity, we normalized for climate and GDP factors.

    The findings of the analysis have been a surprise to many. Who would think that the productivity gap between states could be 1.2 million GWh? Even if you threw countless variables into the analysis in a “kitchen-sink” approach to explain the disparity, the productivity gap still exists.

    A couple of surprises to us:

    The state of New York has one of the most “productive” industrial sectors in the US. One would think that this is caused by the fact that New York has far less “intensive” industry than the rest of the nation. To the contrary, 63 percent of New York’s industrial electricity is used for “intensive” industries, such as manufacturing cement, concrete, paper, steel, glass, iron, aluminum and chemicals. This is just one example of a state with high electric productivity that also having industrial electric productivity. In contrast, Mississippi only uses 40 percent of its industrial electricity on these intensive industries.

    Climate certainly does affect electricity consumption, but not to the effect one might think. If you took a house built to code in Alabama and then moved it to the temperate California climate, energy consumption would only decrease by 20 percent.

    There’s no doubt that the cost of electricity affects electricity consumption. States with expensive rates have been motivated to emphasize efficiency to reduce costs (though Texas and Hawaii are clear outliers). Since it is in the near-term control of states to set electricity rates (unlike climate and most of GDP), we decided rates would be better used to determine how states can cost-effectively use efficiency to close the gap rather than explain why the gap is marginally smaller.

    The intent of this analysis was not to call out under performing states, but to show the efficiency potential that exists if all the states performed similarly to what the top states are doing today.

    We are working on the solutions to cost-effectively close the electric productivity gap for each state, and it is likely that our recommendations will include simple solutions such as updating building energy codes and providing electric utilities with appropriate compensation for using energy efficiency.

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  4. B White says:

    This relationship is normal. Poorer countries (or states) burn more electricity per unit of GDP. E.g. China and India produce twice as much as unit of GDP compared with the USA. If one looks at the most efficient states mentioned, one will also see they are the richest, whereas Missasippin is one of the poorest states in the union and therefore the dirtyest.

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  5. Andrew Fiebert says:

    Interesting, I just calculated out the savings per year for the country if all states achieve the average. $132 billion per year savings. That could definitely help in cutting a chunk out of that oh so tiny deficit we run.

    1.2 million gigawatts to kilowatt (google) = 1,200,000,000,000

    Average household kWh cost = 11 cents [Source: http://michaelbluejay.com/electricity/cost.html

    1 200 000 000 000 x 0.11 = $132 000 000 000

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  6. Rob says:

    This method of measure seems to favor states in northern climates with high population density. It also seem not to favor states in which agriculture is a major player in the economy.

    It also appears that many of the states with the most favorable GDP/Kwh balance are also states with serious air quality problems Go figure.

    Any suggestions for how to make Mississippi more like New York? It will be interesting to see if anything positive comes from this data or if it will just be used to advance a political agenda loosely tied to the study.

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  7. Jim says:

    What this doesn’t take into account is that it’s unlikely to even be possible for some states to improve it’s efficiency to the degree that the top 10 have. The top 10 states are generally states with higher loads, more congestion, and fewer cheap generators. The less efficient states generally have cheap power, less infrastructure, and spend more power on electricity intensive industry by nature.

    Further, even if New York’s industrial electricity is more efficient, there is no comparison of that nature.

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  8. Steve says:

    Just sell Mississippi, Alabama, Arkansas, Louisiana, and several other low productivity southern states to Mexico. Their energy use will decline rapidly once the subsidies end. Any auto plants there, will relocate back to the US too, once their ability to gain subsidies to employ low productivity workers stops with the end of federal largess. Once the cretins in these places start to earn Mexican wages, they’ll be plenty of work for them. They may eventually regret their lack of interest in education, but there is no guarantee of that.

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