Xcel Energy says it has surpassed its goal of selling less electricity and natural gas in Minnesota for the third year in a row.
The Minneapolis-based utility said in regulatory filings that it spent $95 million in 2013 on gas and electric conservation programs, reducing its power sales by 1.7 percent and its gas sales by 1.1 percent.
Under state law, Xcel is required to reduce electric sales by 1.5 percent and gas sales by 1 percent each year. Xcel, the state's largest utility, has 1.2 million electric customers and 437,000 natural gas customers in Minnesota.
"Over time, this drives an incredible amount of efficiency," said Deb Sundin, director of demand-side management for Xcel. "It really helps us contain growth, which means we don't have to build new power plants out in the future."
Participating customers save money through lower bills, but the company still makes a profit because it gets a return on its conservation investments.
Energy efficiency is a growing business because investments to conserve energy can offer better returns for utilities than investments to produce it.
"That kilowatt-hour that you don't use is always the cheapest," said Will Nissen, a policy associate for Fresh Energy, a St. Paul nonprofit that advocates for green energy.
According to Navigant Research, a clean technology market research firm, the worldwide market for energy-efficiency retrofits in commercial and public buildings will grow from $68.2 billion in 2014 to $127.5 billion by 2023.
The bulk of Xcel's conservation came from subsidizing compact fluorescent and LED light bulbs at retailers. The program has existed for years, but many customers are unaware of it. The program accounted for a quarter of the conservation gains among residential electric customers.
Other conservation efforts, including refrigerator recycling and rebates for high-efficiency furnaces, also helped reduce residential customers' energy use, Xcel said in its filing with regulators. State-mandated subsidies for rooftop solar panels were funded under the program, as well.
Xcel also has conservation programs targeting commercial customers. The Minneapolis Institute of Arts, for example, recently finished installing energy-efficient LED lights in its galleries. Xcel offered the institute $170,000 in rebates over three years. "They're expected to save about $150,000 per year in energy savings," said Sundin.
Overall, Xcel's 2013 conservation results were slightly less than in 2012, but in line with recent years, the utility said. Energy-saving programs since 1990 have avoided the need for 10 modest-sized power plants, said Xcel spokeswoman Patti Nystuen.
Tougher goals ahead
Since Xcel's energy reduction goals are reset every year, the company must develop new lines of attack to hit the targets in 2014 and beyond.
A 2007 federal law has effectively banned the manufacture of many incandescent light bulbs. As those bulbs disappear from the market, customers have fewer of them to replace for conservation gains.
"Light bulbs were considered the low-hanging fruit initially," said Nissen.
Looking ahead, Xcel expects to get less savings from its bulb-replacement efforts. "Our baseline was the incandescent bulb," said Sundin. "Now it's a bulb that's 30 percent more efficient than the incandescent bulbs."
Xcel is rolling out a program to influence the behavior of homeowners. Xcel sends out reports with monthly bills comparing a customer's energy use to neighbors like them, and accompanied by tips on how to improve energy savings.
"We can save about 2 percent on a customer's energy use, on average, with this program," said Sundin.
Steve Fischer is a University of Minnesota student reporter on assignment for the Star Tribune.