Changing out one 60 watt incandescent bulb for an 18 watt compact fluorescent saves me about two cents a day. No, this won’t make me rich overnight. However, there are other potential monetary benefits than simply shaving my monthly energy bill. By lowering my energy consumption, I’ve created a ‘negawatt’ and an opportunity to be compensated for my unused power by utility companies, earning some extra income for my energy efficient initiative. This yet to be created market for unused energy and the adoption of the negawatt concept, first conceived in the 1980’s, will help fuel the smart grid evolution.

First, let’s address what’s being sold on this potential energy market – negawatts. By replacing my 60 watt bulb with one that uses only 18 watts of energy and produces the same amount of light, I’ve just created 42 negawatts. I am freeing up 42 watts of energy I would have otherwise consumed and am thereby allowing my power company to sell those 42 watts to someone else. I can create negawatts through a host of energy efficiency activities like upgrading to smart appliances, installing insulation and so forth.

The equation for determining how many negawatts you create is simple – for every watt of energy you save, you create a negawatt: 1 Watt of Energy Saved = 1 Negawatt

To put this equation into context, the table below shows how replacing common household appliances can create an abundance of negawatts:

Identifying and securing a supply of negawatts is simple, and for the frugal it could be a fun “treasure hunt.” To some, saving money is the new status symbol of choice.

In order to fully realize the negawatt potential a marketplace must be established. Lucky for us, this market is quite easy to create and a perfect mechanism is already in place: renewable energy targets. As of July 2010, 30 states and the District of Columbia have established mandatory renewable energy targets, and six others have voluntary targets, according to the Database of State Incentives for Renewables & Efficiency.

A mandatory renewable energy target is a government requirement to source proportions of total electricity from renewable energy sources. These targets are ambitious considering the current infrastructure in place. In the U.S. today, access to renwable energy is not widely available. And, these targets generally require huge sums of money to be spent building new sources of renewable energy, including wind and solar farms. To accomplish this we’ll need to put up money and set aside acres upon acres of land for the new solar and wind farms, as well as other renewables.

In the meantime, however, the negawatt provides a simple venue to reach the renewable energy targets. After all, the goal of the renewable targets is, in part, to utilize cleaner energy and reduce the amount of greenhouse gases (GHGs) pumped into the atmosphere. This same goal can be accomplished by reducing the amount of GHG-producing energy we consume. Significantly reducing energy consumption from our current ‘dirty’ sources will have a similar net effect as keeping overall consumption constant while utilizing clean energy sources.

So, what might the negawatt market look like?

If our negawatts were to count towards the power company’s clean energy targets, the utilities could purchase them from us through incentive programs designed to increase the energy efficiency of our homes. The process would begin with a quick audit of how much energy our household consumes to establish a baseline. Then, the utility would subsidize or perhaps pay for energy efficiency upgrades to our homes, allowing us to switch to smart appliances or improving our homes insulation. Following these improvements, another energy audit would take place and the difference in consumption – the negawatts created – would count towards the utility’s clean energy targets for a limited time.

Negawatts could even help the federal government meet their own energy goals. For example, the federal Energy Policy Act of 2005 set several goals and standards to reduce energy use in federal buildings. One particular section, Section 203, of the Act requires that the federal government consume a minimum of 7.5 percent renewable energy beginning in 2013. Utilizing negawatts to meet this renewable standard means the government could begin to work towards this target immediately, rather than waiting months or even years for renewables to come online en mass.

Similarly, allowing utility’s to purchase consumer negawatts frees up our own cash to be spent on other necessities – a very appealing opportunity in today’s economic climate.
In sum, negawatts have the potential to help our society move more quickly towards the cleaner energy future we all know must be attained.

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