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Report: Tennessee, Southeast lag nation in energy efficiency ahead of growing energy demand

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Report: Tennessee, Southeast lag nation in energy efficiency ahead of growing energy demand

By Cassandra Stephenson
Report: Tennessee, Southeast lag nation in energy efficiency ahead of growing energy demand
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The Tennessee Valley Authority's Sequoyah Nuclear Plant in Chattanooga. (Photo: Facebook)

NASHVILLE — Utility companies in the Southeast lag behind the national energy efficiency average, and Tennessee’s comparatively low energy savings are partially to blame, according to a new report.

A report exploring energy efficiency in the Southeast published by the Southern Alliance for Clean Energy in January compares energy saved by a utility through efficiency measures to the energy sold by that utility, resulting in a percentage that can be used to compare energy savings among utility companies of different sizes.

When energy efficiency performance is measured this way, the national average is .50%. The Southeast — comprising Tennessee, Alabama, Florida, Georgia, Mississippi, South Carolina and North Carolina — has an average of 0.21%, the lowest of any region in the country, according to the report. Tennessee comes in at 0.08%.

“Historic underinvestment in efficiency in the Southeast means that utilities in the region still have abundant, low-cost efficiency resources available now,” the report states.

“We’re entering a period that may be the largest expansion of the power system seen since it was first built,” SACE Decarbonization Director Eddy Moore said in a Wednesday webinar. “The data center growth, particularly in the Southeast, is adding thousands of megawatts of load equal in size to a small- to moderate-size utility in individual states. In that context, it’s particularly valuable to reduce loads through efficiency.”

Tennessee is served by the Tennessee Valley Authority, established by the federal government 90 years ago to serve about 10 million people across seven Southeastern states.

Historic underinvestment in efficiency in the Southeast means that utilities in the region still have abundant, low-cost efficiency resources available now.

– Southern Alliance for Clean Energy report

TVA and Florida Light & Power are the largest utilities in the Southeast region, and their low performance drives down the Southeast regional average, Heather Pohnan, SACE’s senior energy policy manager and the report’s chief author, said Wednesday.

TVA representative Scott Brooks said the utility cannot directly address comparisons and claims made in the report, “because we weren’t asked to verify any of the data or information cited.”

TVA points to recent energy efficiency investments 

Brooks pointed to energy efficiency investments and programs TVA announced in 2023, and the utility’s inclusion of efficiency measures in its 2025 Integrated Resource Plan, which examines future energy needs through 2050.

“We believe the cleanest megawatt is the one that isn’t generated,” Brooks wrote in an email. “With that in mind, TVA developed one of the industry’s largest programs to improve the energy efficiency of homes, schools, and small businesses and incentivize lower usage for larger customers.”

TVA’s $1.5 billion Energy Efficiency and Demand Response Program will offset an estimated 30% of anticipated increased demand in the next decade. From October 2023 to May 2024, 12,400 homeowners received more than $2.5 million in rebates toward efficiency upgrades like new central air units, insulation and new energy efficient heat pumps. This will ultimately save customers around $6 million over the life of those improvements, Brooks stated.

TVA is also working with more than 1,700 businesses to reduce energy use, saving them around $115 million in electric bills.

SACE analysts noted they’ve seen “some positive changes” in TVA’s efficiency plans, but cautioned that utilities may set plans and then fall short. 

SACE Decarbonization Director Eddy Moore recognized TVA’s recent partnership with wholesale distributors and major retailers of heat pump hot water heaters, “a very significant technology that’s only recently become easily available for customers in the Southeast,” Moore said.

The impact of programs like that takes time to show up in the numbers, so the report’s figures may not reflect improved performance that could be occurring now thanks to more recent initiatives, he said.

But the report also criticizes TVA for falling short of its potential to enhance industrial energy savings.

“A large portion of TVA’s load falls into the industrial category, and industrial energy efficiency can often be the most cost-effective to implement. Yet that category is surprisingly small in the IRP,” the report states.

Offering energy efficiency programs is often a cheaper way to address rising energy needs by helping customers cut energy waste instead of building new power plants to meet demand, according to the report.

Home efficiency programs are falling short for nearly half of Memphians, data shows

“What we’re seeing in TVA is discounting the ability to reach the commercial and industrial sector, and under-counting what’s possible in the future,” Moore said. “And that matters, because if you don’t plan to save that energy, you have to plan to serve it.”

TVA’s latest growth forecast and new opportunities for funding “create the conditions for TVA to become the energy efficiency leader it once promised to be,” the report states.

But the report also cautions that the future of Home Efficiency Rebate funds available through outgoing President Joe Biden’s Inflation Reduction Act is on uncertain ground.

The funds cover whole-home energy efficiency measures that aren’t otherwise covered by tax credits or utility programs. This is crucial to help households — particularly those with lower income — pay for upgrades that will save at least 20% of their home’s energy use. 

The implementation of the program is left to each state, and Tennessee’s application and proposed program design is awaiting approval from the U.S. Department of Energy.

President-elect Donald Trump’s administration could pursue clawbacks of unspent IRA funds, leaving the program’s future unclear.