The Many Faces of "Negawatts"

  • The U.S. Supreme Court holds that demand response programs can participate in wholesale electricity markets in competition with wholesale power generators.
  • Software giant Oracle agrees to pay more than US$500 million for OPower, announcing that together they will provide “the most complete cloud platform for the entire utility value chain,” enabling utilities to “meet energy efficiency goals and lower operational costs.”
  • A major grid operator reports US$4 billion in capacity payment savings, in part as the result of more than 1,500 megawatts in energy efficiency bids.
  • A major electric utility agrees to expand its energy efficiency programs as part of an effort to induce legislators to provide support for existing nuclear power plants that are having trouble competing against cheap natural gas.
  • After making a number of strategic acquisitions in energy consulting, efficiency and engineering, energy procurement, and data analytics, another major electric utility has launched a new business venture aimed at providing "energy as a service" to the largest consumers of power to help them lower costs in managing their entire energy portfolio.
  • A major appliance manufacturer is fined more than US$5.3 million for selling refrigerator-freezers that did not meet applicable efficiency requirements.
  • Real estate developers tout green roofs, highly efficient heating and air conditioning systems, smart lighting, and smart windows as key amenities to attract new tenants.

In a time of change throughout the energy sector, one area that gets less attention than it deserves is energy efficiency. No longer does the concept conjure up pictures of an American President sitting in front of a fire wearing a sweater, but rather it brings to mind new tools for grid operation and residential and commercial energy management; demand side management as an alternative to new generating capacity; mandatory efficiency standards for buildings and equipment.

At Hogan Lovells, we have seen these emerging trends create new challenges and new opportunities not only for our traditional energy clients, but also for a far broader range of clients who are seeking to optimize their market positions, take advantage of new opportunities, save money on operations, make money in energy markets, and meet new energy efficiency compliance obligations.

Energy intensive industrials are happy about the cost savings. Electric utilities see it as a part of the way to meet carbon reduction obligations, but they are also looking for ways to thrive in a world of lower sales volumes. Equipment and appliance manufacturers see both new compliance burdens and opportunities for innovation and competitive advantage. Grid operators have an extra tool for ensuring reliability. Finally, tech savvy consumers like the idea that they can have “smart homes” and take control of their energy consumption. “Negawatts” offer something for almost everyone.

In a series of reports over the next several weeks, we are going to take a deeper look at what efficiency means around the globe for electricity generators and grid operators, and for the industrial and real estate sectors – who face significant new compliance standards for the energy-using equipment they manufacture and the buildings they construct. We will also consider what market opportunities are emerging out of the drive to efficiency.