Energy Efficiency Standards and Targets

Energy efficiency can be a cost-effective strategy to reduce emissions associated with electricity and natural gas generation and consumption. An Energy Efficiency Resource Standard (EERS) or energy efficiency target is a mechanism to encourage more efficient generation, transmission, and use of electricity, and in some cases natural gas.

In the United States there are currently 22 states with a mandatory EERS and 4 states with a voluntary EERS (non-binding). Two states have combined their EERS with their Renewable Portfolio Standards (RPS).

An EERS is similar in concept to renewable portfolio standards (RPS) and alternate energy portfolio standards (AEPS). The RPS or AEPS requires that utilities generate a certain percentage of electricity from renewable sources. An EERS requires that they achieve a percentage of electricity and/or natural gas reduction in energy sales from energy efficiency measures.

There are a variety of ways an EERS policy can be implemented. Some states have a stand-alone EERS policy, while others do not have an EERS policy per se, but combine the mechanisms by allowing energy efficiency to meet a part or all of an RPS or AEPS. Learn more about states with RPS and AEPS here.

Efficiency reduction requirements or targets may also be established by state public utility commissions. In some states, public utility commissions determine savings requirements through a collaborative process with utilities.

An EERS does not mandate a specific efficiency measure or a set of measures, but rather sets a minimum amount of savings and allows utilities to choose how to best achieve those savings. These savings can be in a percentage form, or in megawatt, gigawatt, or kilowatt hours. Some states specify cumulative savings by a certain period, some establish incremental (annual) savings targets, and some states specify both an incremental and cumulative savings target in their EERS. All EERS include end-use energy savings. The options provided to electric and natural gas utilities include: demand-side management (DSM) incentives, peak demand reductions, building codes, and consumer self-direction. In some cases, distribution system efficiency improvements, combined heat and power (CHP) systems and other high-efficiency distributed generation systems are also included. Some states also have the flexibility to use a market-based trading system of energy savings certificates to meet the standards.

Last updated March 2019