Minnesota’s Conservation Improvement Program (CIP), a nationally-recognized energy efficiency program, generates at least four dollars in benefits for every dollar invested, according to an independent analysis released today by the Minnesota Commerce Department.
With regulatory oversight and technical assistance from the Commerce Department, CIP is a statewide program funded and administered by more than 180 utilities to help Minnesota households and businesses reduce their consumption of electricity and natural gas.
“This comprehensive study makes it clear that energy efficiency is a smart, positive investment for our state,” said Commerce Commissioner Mike Rothman. “The Conservation Improvement Program not only saves energy and reduces utility bills for Minnesota consumers and businesses. It also creates jobs, boosts our economy and protects our environment.”
Conducted by an energy and environmental consulting firm, Cadmus, the study assesses the statewide economic impact of CIP activities completed from 2008 through 2013, including the energy savings that will result through 2032.
The study includes two types of analysis. A cost-effectiveness assessment found a total net benefit of approximately $3.3 billion from lower utility costs and avoided environmental damage. An economic impact assessment found a total net benefit of more than $5.9 billion in new economic output and nearly 55,000 job years. (A “job year” equals one job for one year.)
Combining both assessments, the report shows that every dollar invested in CIP provides $4.00 to $4.30 in energy savings, environmental benefits and new economic activity.
“The Conservation Improvement Program plays a vital role in helping Minnesota achieve our goals to address climate change and reduce our dependence on power that comes from burning fossil fuels,” said Rothman. “The cheapest and cleanest form of energy is the energy that we never use in the first place.”
Since the early 1980s, Minnesota has been a national leader in promoting energy efficiency. In 2007, the state also adopted the Next Generation Energy Act, landmark bipartisan legislation that requires electric and natural gas utilities to achieve energy savings of 1.5 percent of average annual retail sales each year. It is one of the most aggressive energy efficiency standards in the nation.
Through CIP, utilities offer services to their residential customers such as energy audits and incentives for energy-related improvements. These include rebates for high-efficiency lighting and appliances such as furnaces, air conditioners and water heaters, as well as insulation and air sealing.
For business customers, utilities offer rebates for high-efficiency boilers, chillers and rooftop units; lighting and lighting control systems; and motors. They also provide design assistance for energy-efficient buildings and technical assistance to reduce the energy intensity of manufacturing processes.
Investments in energy efficiency have positive effects on the economy in two ways. First, spending on energy efficiency projects supports jobs and business for contractors and suppliers directly involved in the projects. Second, the money that consumers save from lower utility bills can be spent on other goods and services.
In turn, both the initial investment and the re-spending of energy savings produce direct, indirect and induced economic effects (known as “multiplier effects”).
For example, a direct effect is the money that goes to workers employed on an energy efficiency project or to a store where consumers spend the money they saved on their utility bills. An indirect effect includes the money that then flows through the supply chain and supporting businesses (for example, a supplier to the contractor or store). Finally, an induced effect occurs when the money from the direct and indirect effects gets re-spent in the economy.
The study, The Aggregate Economic Impact of the Conservation Improvement Program 2008-2013, is available on the Commerce Department website. A webinar will be held on Friday, Oct. 30, from 11 a.m. to noon to review key findings of the report.
