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restrictions. Among many recent examples is Duke Power’s commitment to purchase carbon offsets to cover the difference in carbon emissions from its proposed new coal-fired power plant as compared to a cleaner combined-cycle natural gas turbine and also retire two older dirty coal-fired power plants. This increases the attractiveness of energy efficiency, because natural gas tends to be more expensive than coal and increasingly relies on imports with consequent price volatility. A second driver is that many states have passed or are considering passage of an RPS that sets a minimum requirement for renewable generation and, in many cases, includes energy efficiency as a means of meeting the RPS or as a separate requirement. A third driver is the probability that national cap- and-trade legislation for carbon emissions will be passed, which in effect raises electricity prices and hence makes efficiency more attractive. It may also be accompanied by a national RPS. A fourth driver is that state regulators are advancing policies to remove utility and customer disincentives to greater penetrations of energy efficiency. Related to these drivers is a growing recognition of the need to address key barriers to obtaining the large potential of the energy efficiency resource (EPA 2008; EPRI 2009; McKinsey & Company 2009). If the increased role of renewables and energy efficiency comes to pass, as seems increasingly likely, then the United States will need to make drastic changes in everything from its vehicles, buildings, and the way in which it generates electric power. One way to think about how this will affect utilities is introduced in Figure 3.1, which shows a well-known carbon supply curve (McKinsey & Company 2007). It shows the technical potentials of various carbon reduction technologies in the United States (the width of each bar) against their equivalent cost per ton of avoided CO2 (the height of each bar), ordered from the lowest to the highest cost. Figure 3.1. Carbon Cost Abatement Curve. Source: McKinsey & Company (2007) 3.6PDF Image | The Smart Grid: An Estimation of the Energy and CO2 Benefits
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