Blog Post

Utilities can do more to reap energy-water nexus benefits

January 24, 2018

Many utilities are missing out on additional energy and water savings—and related benefits—despite beginning to place more value on the link between water and energy, according to our new report, Saving Watts to Save Drops: Inclusion of Water Efficiency in Energy Efficiency Programs. The report examines energy utilities’ efforts to capture and value the water savings achieved through their energy efficiency programs. It builds on earlier ACEEE research regarding best practices for jointly managed energy and water programs and energy intensity of water and wastewater services.

Although the policy world often considers energy and water to be two independent and distinct areas of resource management, they are inextricably linked. It takes water to provide energy for cooling and heating our homes, and it takes energy to transport and treat the water we drink. This relationship means that energy efficiency and water conservation go hand in hand, with energy savings translating to water savings and vice-versa. Typically referred to as the energy-water nexus, this dynamic is the subject of our new report.

Making progress, with room for more

While still relatively limited in practice, utilities in at least a dozen states are accounting for avoided costs or indirect energy savings from reduced water consumption achieved through their energy efficiency programs. However we find that many energy utilities are estimating these water savings conservatively.  

Stakeholders in places like California, Wisconsin, and the District of Columbia, meanwhile, are digging deeper to incorporate the full energy intensity of water into their valuation of energy efficiency portfolios. These efforts are typically spurred by a mix of utility commission-level leadership, availability of data, and competition for water resources. But many energy utilities do not track or value avoided costs from water savings, missing out on the opportunity to account for and promote the full benefits of their energy efficiency programs.

Utility efforts to pursue savings at the energy-water nexus come in a variety of forms, depending on local conditions and customers served. These include calculating savings from measures directly installed by utilities in homes and businesses, forming innovative partnerships to address hard-to-reach customers, and more advanced efforts to utilize smart technologies that promote water-saving behavior changes by accessing real-time consumption data. A number of utilities, particularly in California, even operate joint energy-water programs that leverage the respective strengths of the energy and water utilities. By combining programs and defining roles and responsibilities through a memorandum of agreement, these utilities reduce their administrative costs.  

How utilities can seize additional savings

States and utilities are increasingly making an effort to fully assess and value the energy embedded in water use, and many utilities are indeed making progress in integrating the value of water into their programs in ways that work for them. However significant challenges — such as data limitations; variations in water quality, abundance, and infrastructure; and the need to build consensus among the many players involved in making decisions about data collection and policy approaches — still remain. If states, utilities, and other stakeholders can work together to overcome these challenges, they can more effectively track and maximize the benefits of water savings in their energy efficiency portfolios. 

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