Doing business in US energy markets

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Courtesy of Energy Efficiency Markets LLC

Doing business in the US can be a crazy venture if you’re an international company trying to make inroads. Europeans often say it’s like learning the rules of 50 different countries. This is because important energy policy decisions are often made by state governments. It looks like the emerging “white tag” market for energy efficiency may be no different. So far, Congress has resisted the idea of a national energy efficiency portfolio standard, which would set uniform energy savings requirements for utilities nationwide. But several states are moving ahead with their own standards. Often the standards allow trading of white tags, or energy efficiency certificates. The tags are proof that an entity reduced consumption through energy efficiency.

A manufacturer might earn the tags by upgrading motors, a store might install more efficient refrigeration, a hospital could add cogeneration. The business or institution can then sell the tags to utilities who use them to show they (or a surrogate) met the state’s efficiency requirement.

Which states should you watch for white tag business? A useful starting place is “Renewable Portfolio Standards in the United States: A Status Report with Data through 2007,” which can be found at http://eetd.lbl.gov/ea/ems/reports/lbnl-154e.pdf. Released in early April 2008 by the Lawrence Berkeley National Laboratory, the report focuses more on renewable energy, but includes an informative section on efficiency. Connecticut has taken the lead in white tag trading. Pennsylvania and Nevada are not far behind. Other states that have created efficiency portfolio standards are Colorado, Illinois, Minnesota, New Jersey, New Mexico, and Texas. Meanwhile, Hawaii, Nevada, and North Carolina have melded efficiency requirements in with broader renewable energy goals, according to the report.

Cogeneration developers might take a particularly close look at Colorado, Connecticut, Hawaii, Illinois, Maine, Nevada, North Carolina, since they specifically count the high efficiency plants toward their green goals. Meanwhile, still more states are taking a hard look at creating efficiency portfolio standards. The New York Public Service Commission, for example, is well on its way. The good news for energy efficiency companies is that portfolio standards are catching on. The bad news is there may be 50 different sets of rules to learn.

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