Virtue and energy efficiency

Benjamin K. Sovacool; Michael H. Dworkin

doi:10.1017/CBO9781107323605.003

3 - Virtue and energy efficiency

Published online by Cambridge University Press: 05 October 2014

Benjamin K. Sovacool and

Michael H. Dworkin

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Benjamin K. Sovacool: Affiliation:
Aarhus Universitet, Denmark
Michael H. Dworkin: Affiliation:
Vermont Law School

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Summary

Pretend that the management committee of a large electric utility is reaching a point where standard projections indicate that demand from customers will soon exceed their ability to provide power. Two options have been presented to senior management. One is to spend $3 billion to build a new generating station which is expected to produce enough energy to meet demand growth for ten years at a cost of approximately 5 cents per kWh at the busbar, which would mean a cost delivered to consumers of about 8 cents per kWh. Another option is to invest $2 billion in insulating the homes and businesses of customers, which is expected to avoid the otherwise anticipated increase in demand for at least ten years, at a cost of approximately 3 to 4 cents per kWh, which with overhead will equal 4 to 5 cents per kWh on customer bills.

Which of these alternatives would you choose? Should you be affected by the fact that traditional rulemaking will grant your shareholders a high probability of earning an 8 to 10 percent return on the $3 billion investment in the power plant, while the direct expenses of insulation are recovered, but generate no return on investment?

Type: Chapter
Information: Global Energy Justice
Problems, Principles, and Practices
, pp. 88 - 124

DOI: https://doi.org/10.1017/CBO9781107323605.003 [Opens in a new window]

Publisher: Cambridge University Press

Print publication year: 2014

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