Can We Actually Reduce Energy Usage without Hurting GDP?

I was thinking today, in cleantech we often talk a lot about energy efficiency. Californians often cite that this state has grown its economy for the last 20 years without a significant increase in energy usage per capita, compared to the rest of the country, where GDP per capita goes up, and energy usage goes up just as much. But of course, California has lost much of its manufacturing sector over that same 20 year period, too. Perhaps no coincidence?

But if we wanted to actually do it, where could we actually save energy without impacting GDP growth, make a serious difference in our power bill, and do it in a big way – targeting say, 50% of our total power usage on a per capita basis?

  • CFLs & LEDs – We are already moving aggressively towards compact flourescent light bulbs, and the penetration rates are still low. As that trend continues, and LEDs come into the mix for more and more applications, our lighting bills should trend straight downward for the next decade. Now if we can just stop cringing at the thought of a $3 lightbulb!
  • Heating and Air Conditioning – I know whenever my power bill goes higher than I like, I just watch how often I turn the heater on, and adjust the thermoset a bit. The answer here has always been some combination of improved technology, smart metering and more transparency in billing and usage, and energy prices rising high enough for consumers to feel the pinch. Oh, and did I mention insulation, California?
  • Hotwater heaters – Can anybody say, “tankless”?
  • Power generation -If every power plant was upgraded to the latest generation of technology – in the power generation world – newer tends to equal more efficient all else being equal – the impact could be staggering. But bottom line, this means our regulators would have to approve the increase in utility capital expenditures and pass those costs on through to us in the short term. That’s about as likely as George W announcing a plan to tax every SUV Detroit makes and give the money to the poor to buy solar systems.
  • Solar – As for solar – which is typically sold on a “reduce your energy bill” pitch, not a chance. At $0.15 to $1.00/kwh (depending on who’s counting and how they count), if we actually reduced a significant amount of our building load with solar power we’d likely send our GDP plummeting. There are lots of reasons to love solar, but decreasing energy usage per unit of GDP is not one of them. At least, not yet.

These aren’t new ideas. But definitely worth repeating until we learn the lesson.

Neal Dikeman is a founding partner at Jane Capital Partners LLC, a boutique merchant bank advising strategic investors and startups in cleantech. He is founding contributor of Cleantech Blog, a Contributing Editor to Alt Energy Stocks, and a blogger for CNET’s Cleantech blog.

5 replies
  1. DaveMart
    DaveMart says:

    When you dismiss solar, you are presumably referring to PV power, which I agree is uneconomic.Solar thermal panels though are a whole different ball game, and much cheaper.You could also install an air heat pump, which will shortly be able to operate down to -15C (Already selling in quantity in Japan, the Eco-cute) and multiplies the efficiency of electricity to heat or cooling.There are a lot of alternatives out there

  2. Jeff Dinkle
    Jeff Dinkle says:

    I believe we can. I am a high performance home builder in Atlanta, and have committed ourselves in building all of our homes with 50% less usage.(HERS ratings in the 40’s) This can be achieved very easily in our climate by doing the following. Upgrading a home’s insulation to icynene on the house bands and roof rafters, and using JM Spider in wall assemblies. ( $4k to $8K upgrade depending on home size)Upgrading the HVAC system to a 96% Furnace and a 23 SEER AC compressor. (This adds approx $3000 per ton, or ($4K to $10K per home) We actually use less tonnage because of the better insulationWe also change all bulbs to CFL’s ($400 to $800 per home)Lastly we upgrade the windows to a lower Solar Heat Gain. (Usually a 15% upgrade)In summary it costs anywhere from $10K to $23K, depending on the size of the home, to achieve a 50% reduction in energy usage. This up charge is more than offset by the monthly savings in energy. I think the problem regarding GDP comes into play when a government body mandates these changes. The better way is to educate consumers and provide incentives to minimize these costs, such as a discount on their mortgage rate. Thus keeping the monthly cost of said home the same as a non performance home.

  3. Dan Lyke
    Dan Lyke says:

    Someone still needs to sell me on tankless hot water heaters for residential use. I'm in the process of deciding on a replacement for a hot water heater that's insufficient for our new house, and as we work this house to be the one we want to live in for the next few decades, we're doing lots of things that don't make immediate economic sense, but that we're willing to accept because we're willing to have "self-imposed taxes" on things like water use and energy use.So far as I can tell, tankless hot water heaters would cost 2-3 times for installation, would have a shorter life-span, would cost roughly the same amount to operate, but would have us wasting an additional three quarters to a full gallon every time we turned on the hot water (and would give us problems with recirculators if we try to reclaim that water).And, unless we bought something way oversized that cost us more in energy to run, wouldn't give us the full 120 degrees F on the cold days.Frankly, photovoltaics make more sense.I can see tankless for commercial installations, but I'm just not seeing it for residential.

  4. Eco Custom Homes
    Eco Custom Homes says:

    Dan, I am a firm believer in Tankless hot water heaters. The only issue we have had with them, is the fact that they do not turn on on low flow situations. Under 1/2 gpm. We design the systems in our homes with a recirculation pump and a 10 gal electric hot water heater (120 volt). This heater takes care of the low flow issue and the heating for the recirculation pump. The main benefits of tankless are: Endless hot water. When you have family or guests in for the holiday, you will have plenty of hot water for them. When you are away from home, the units use no energy. They last up to 20 plus years. Finally they heat water only up to the temp. you need. Now this is for a natural gas unit. Electric units demand alot of power well over 100 amps per unit. I have not investigated propane units yet, but gas storage may be an issue.

  5. Tony
    Tony says:

    Here's an easy water conservation tip. Install a Hot Water Lobster instant hot water valve! It’s a recirculation system that will save water, time, and energy! In many homes it takes a long time for hot water to circulate to the faucet or shower. Waiting for the water “to heat up” wastes water. The Hot Water Lobster is an electricity free solution. Installation is quick. It can be installed in less than ten minutes and it only costs $179.95.The Hot Water Lobster was developed and is manufactured in the United States. The Lobster is designed according to strict manufacturing standards to ensure easy installation and long maintenance free operation.Check it out at

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