Dollar and Energy
Savings Loan Program



Program Evaluation of:
Energy Savings
Dollar Savings
Greenhouse Gas Emission Reductions
Economic Benefits



February 14, 1997
Nebraska Energy Office




Table of Contents





Introduction


A. Description of the Dollar and Energy Savings Loan Program



The Dollar and Energy Savings Loan Program was approved by the U.S. Department of Energy in March 1990, pilot tested, and announced to the general public by the Nebraska Energy Office in July 1990. This program provides low-interest loans to Nebraskans to finance home, building and system energy improvements. Participating lenders have provided financing at five or six percent interest for up to ten years on loans for pre-qualified energy improvement projects. Other energy improvements require an energy audit to determine eligibility. Loans are available for homes, multi-family dwellings, small businesses and non-profit organizations, farms and ranches, subdivisions of local government, and rural nursing homes. Through June 30, 1996 11,150 projects have been funded.

In late January, 1992 the decision was made to implement the first phase of an evaluation to determine how successful the program has been in terms of saving energy and dollars. It was decided that the initial evaluation efforts would be concentrated in the Omaha area. This came about primarily because of the expressed interest of the Metropolitan Utilities District and the Omaha Public Power District of Omaha on the impact of the program on energy consumption. Also of consideration, was the simplified logistics of collecting and evaluating data from a restricted area of the state that only involved three utilities. To further restrict the scope of the evaluation, only those loans approved prior to November 1, 1990 were selected for the initial study. This was necessitated by the fact that loans approved later would not have the necessary energy consumption data available after completion of the loan projects needed for analysis. After completion of the initial study in September, 1992 it was decided to continue the evaluation by taking a sample of loans on a quarterly basis from all locations across Nebraska. These samples began in October, 1992 and continued through October, 1994. Many of the loans approved in the October, 1994 sample were not completed until March, 1995, thus billing data on some loans continued into April, 1996.

Including the pilot study in Omaha a total of 1,092 loans were selected for evaluation. This evaluation report includes all usable data from these loans to compare weather adjusted energy consumption in the 12 months prior to project completion to energy consumption in 12 months after project completion.

In April, 1994 a decision was reached to contract with the American Council for an Energy-Efficient Economy of Washington, DC to perform an analysis of the economic impacts of the Dollar and Energy Savings Loan Program. The results of this analysis are included in this report.

When applying for a loan, each borrower was required to sign a release granting the Nebraska Energy Office access to their utility and/or fuel bills. Without the cooperation and hard work of staff of the state's electric and gas utilities and other fuel suppliers, the following analysis would not have been possible. The assistance of these staff members is very much appreciated.



B. Assumptions and Methodology



Several basic assumptions were made to simplify the analysis. Among these were:
Processes and logic used to prepare and select the data for analysis include:

Residential Sector


A total of 892 projects were sampled for analysis in the residential sector, of which energy consumption of 593 were used in the evaluation. Through June 30, 1996 10,279 residential projects have been financed through the Dollar and Energy Saving Loan Program. Of these, 6,740 replaced an old heating system with a new one and 4,971 replaced or installed a new cooling system. Also, 2,937 installed thermal windows; 1,436 added wall insulation; 1,092 added ceiling insulation; 1,249 replaced one or more doors; 1,128 installed storm windows and/or storm doors; 930 installed a programmable thermostat; and 834 replaced the water heating system.



A. Impact on Heating Fuels


The impact of fuel switching projects on heating fuels is discussed in Section C below and the impact of projects in all-electric homes is discussed in Section D.

  1. Natural Gas

    A total of 454 loans were evaluated for their impact on natural gas consumption for the 12 month periods before and after the completion of loan financed energy efficiency improvements. Total weather adjusted natural gas consumption for the 454 residences for the 12 months prior to participation in the Dollar and Energy Savings Loan Program was 570,905 therms at a cost of $286,023. (Note: all costs in this report are based on average Nebraska fuel prices for 1992 to 1995.) Total estimated savings was 90,164.4 therms of natural gas at a cost of $45,172 annually. On average, these homes consumed 1,257.5 therms of natural gas prior to program participation and saved 198.6 therms (or $99.50) annually. For these 454 loans, natural gas consumption was reduced by 15.79%.

    Of these 454 loans, 323 included the replacement of an old natural gas furnace with at least an 80% efficient natural gas furnace as part or all of the work financed by the loan. These homes used an average 1,278.1 therms of natural gas in the year prior to program participation and saved an average of 238.2 therms (or $119.34) annually. For these 323 loans, natural gas consumption was reduced by 18.63%.

    The remaining 131 loans which did not include a furnace replacement used an average of 1,205.3 therms of natural gas in the year prior to program participation and saved an average of 100.8 therms (or $50.50) annually. For these 131 loans, natural gas consumption was reduced by 8.36%.

    The overall impact of the loan program on natural gas consumption as well as some project specific impacts are summarized in Table 1 below:

    Table 1. Average Annual Natural Gas Savings per Loan

    Description of Group No. of Loans Prior Use Therms Saved % Saved $ Saved
    All loans affecting natural gas 454 1,257.5 198.6 15.79 99.50
    Loans including a furnace project 323 1,278.1 238.2 18.63 119.34
    Loans without a furnace project 131 1,205.3 100.8 8.36 50.50
    Furnace only/Furnace & AC only 232 1,270.6 228.3 17.97 114.38
    --80% Furnace 118 1,206.8 178.4 14.79 89.38
    --90%+ Furnace 114 1,336.7 280.0 20.95 140.28
    Windows only 42 1,257.4 90.9 7.23 45.54
    Insulation only 20 1,160.3 155.7 13.42 78.01
    --Without Siding 10 1,393.0 194.5 13.96 97.44
    --With Siding 10 927.5 116.9 12.60 58.57

    1. Furnace Projects

      It has already been noted above that 323 of the loans evaluated included the replacement of a natural gas furnace with a more efficient model. Average reduction in natural gas usage was found to be 18.63% after completion of the financed work.

      Of these, 232 loans only financed the replacement of a natural gas furnace or financed the replacement of a natural gas furnace and replacement or upgrade of the air conditioning system. It has been assumed that the air conditioning system has no impact on natural gas consumption. These homes used an average 1,270.6 therms of natural gas in the year prior to program participation and saved an average of 228.3 therms (or $114.38) annually. For these 232 loans, natural gas consumption was reduced by 17.97%.

      These 232 loans were further studied to determine the effect of furnace efficiency on natural gas consumption. Of these, 118 loans financed a furnace rated at an efficiency of 80- 83% and 114 loans financed a furnace rated at an efficiency of 90% or higher. The homes installing an 80% efficient furnace used an average of 1,206.8 therms of natural gas in the year prior to program participation and saved 178.4 therms (or $89.38) annually. For these 118 loans, natural gas consumption was reduced by 14.78%. For the 114 homes installing at least a 90% efficient furnace, natural gas consumption in the year prior to program participation was 1,336.7 therms and savings were 280.0 therms (or $140.28) annually. For these 114 loans, natural gas consumption was reduced by 20.95%.

      In addition, a life cycle cost analysis comparing installation of an 80% vs a 90% efficient furnace finds that the additional cost of the 90% unit has a simple payback in 10 years, or a discounted payback in 13 years. Since a new furnace has an expected useful life of 20 years, the 90% efficient furnace is more cost effective.

      A review of the 893 loans selected for this evaluation found that for the 430 loans that financed the replacement of a natural gas furnace with a new natural gas furnace that 216 (50.2%) had an efficiency rating of 80-83% and 214 (49.8%) had an efficiency rating of 90% or above.

    2. Window Projects

      There were 42 loans which financed only window replacement projects in buildings heated with natural gas. These homes used an average of 1,257.4 therms of natural gas in the year prior to program participation and saved an average of 90.9 therms (or $45.54) annually. For these 42 loans, natural gas consumption was reduced by 7.23%. It should be noted that a wide variety of window projects were financed, from replacing only one or two windows to replacing all windows in the home. No effort has been made to distinguish between the extent of work performed. In addition, it is expected that some window replacements were made for appearance reasons rather than energy efficiency.

    3. Insulation Projects

      There were 20 loans which financed only insulation projects in buildings heated with natural gas. These homes used an average of 1,160.3 therms of natural gas in the year prior to program participation and saved an average of 155.7 therms (or $78.01) annually. For these 20 loans, natural gas consumption was reduced by 13.42%. The small number of loans available in this group prevented any differentiation between types and amounts of insulation.

      Further, of these 20 loans, 10 included siding as part of the work and 10 did not. Of the 10 insulation loans which did not include siding, the homes used an average of 1,393.0 therms of natural gas in the year prior to program participation and saved an average of 194.5 therms (or $97.44) annually. For these 10 homes, natural gas consumption was reduced by 13.96%. For the 10 loans which included siding, these homes used an average of 927.5 therms of natural gas in the year prior to program participation and saved an average of 116.9 therms (or $58.57) annually. For these 10 homes, natural gas consumption was reduced by 12.60%.

      It should be noted that, while there is little difference between the percent savings in natural gas consumption whether or not siding was part of the project, two other factors are very important. First, the homes improved with loans which did not include siding used 50% more natural gas in the year prior to insulating. Second, the loans which included siding cost on average 45% more than those which did not include siding. Although a sample of 10 in each group is somewhat small, it is still evident that siding is included in a project primarily to improve the appearance of a home and not for energy efficiency reasons.

  2. Propane

    Only eight loans were evaluated for their impact on propane consumption for the 12 month periods before and after the completion of the loan financed energy efficiency improvements. While not an adequate sample to stand alone, the results are presented here because they are consistent with the findings in the natural gas evaluation above. Total weather adjusted propane consumption for the eight residences for the 12 months prior to participation in the Dollar and Energy Savings Loan Program was 8,459 gallons at a cost of $4,898. Total estimated savings were 1,627 gallons of propane at a cost of $942 annually. On average, these homes consumed 1,057.4 gallons of propane prior to program participation and saved 203.4 gallons (or $117.77) annually. For these eight loans, propane consumption was reduced by 19.23%.

    Of these eight loans, a furnace or furnace and air conditioning was financed by four loans, insulation was the only project for three loans, and one loan financed insulation, windows and other small projects. The four homes which financed a furnace project used an average 1,257.5 gallons of propane in the year prior to program participation and saved an average of 293.0 gallons (or $169.65) annually. For these four loans, propane consumption was reduced by 23.30%. The other four loans which financed insulation projects used an average of 857.3 gallons of propane in the year prior to program participation and saved an average of 113.8 gallons (or $65.89) annually. For these insulation and window loans, propane consumption was reduced by 13.27%.

    A review of the 893 loans selected for this evaluation found that for the 32 loans that financed the replacement of a propane furnace with a new propane furnace that 5 (15.6%) had an efficiency rating of 80-83% and 27 (84.4%) had an efficiency rating of above 90%.

  3. Other Heating Fuels

    Furnaces using other heating fuels such as heating oil and wood could only be installed in emergency situations or if an energy audit found sufficient savings (that is, a simple payback of 15 years or less) to qualify for the Dollar and Energy Savings Loan Program. No evaluation was completed for these fuels due to the small number of projects financed and the lack of reliable data.



B. Impact on Electricity


A total of 343 loans were evaluated for their impact on electricity consumption for the 12 month periods before and after the completion of loan financed energy efficiency improvements in non-electric heated homes. Homes which changed from room air conditioning or no air conditioning to a central air conditioning are evaluated separately. Total weather adjusted electricity consumption for the 343 residences for the 12 months prior to participation in the Dollar and Energy Savings Loan Program was 4,133,615 kilowatthours (kwh) at a cost of $259,868. Total estimated savings was 218,025 kwh of electricity at a cost of $13,707 annually. On average, these homes consumed 12,051.4 kwh of electricity prior to program participation and saved 635.6 kwh (or $39.96) annually. For these 343 loans, electricity consumption was reduced by 5.27%.

Of these 343 loans, 212 included the replacement of an old central air conditioning system with a new system with at least a 10.00 SEER rating as part or all of the work financed by the loan. These homes used an average 11,439.7 kwh of electricity in the year prior to program participation and saved an average of 906.4 kwh (or $56.98) annually. For these 212 loans, electricity consumption was reduced by 7.34%.

The remaining 131 which did not include an air conditioning replacement used on average 11,574.3 kwh of electricity in the year prior to program participation and saved and average of 197.4 kwh (or $12.41) annually. For these 131 loans, electricity consumption was reduced by 1.71%.

The overall impact of the loan program on electricity consumption as well as some project specific impacts are summarized in Table 2 below:

Table 2. Average Annual Electricity Savings per Loan


Description of Group No. of Loans Prior Use KWH Saved % Saved $ Saved
All loans affecting electricity* 343 12,051.4 635.6 5.27 39.96
Loans replacing central AC with central AC 212 12,346.2 906.4 7.34 56.98
Loans without an AC project 131 11,574.3 197.4 1.71 12.41
AC only/Furnace and AC only 153 12,309.9 959.8 7.80 60.34
Windows only 40 11,194.0 88.5 0.79 5.56
Insulation only 17 13,665.9 790.4 5.34 49.69
--Without Siding 9 14,754.1 1,317.2 8.93 82.81
--With Siding 8 12,441.8 70.3 0.56 4.42
* - does not include loans to all-electric homes, loans for fuel switching, or loans to add central air conditioning

  1. Central Air Conditioning Projects

    It has been noted above that 212 of the loans evaluated included the replacement of a central air conditioning system with a more efficient system. Average reduction in electricity usage was found to be 7.34% after completion of the financed work.

    Of these, 153 loans only financed the replacement of a central air conditioning system or financed the replacement of a central air conditioning system and a furnace. It has been assumed that the furnace has no impact on electricity consumption, though it may have a minor impact through the furnace blower fan. These homes used an average 12,309.9 kwh of electricity in the year prior to program participation and saved an average of 959.8 kwh (or $60.34) annually. For these 153 loans, electricity consumption was reduced by 7.80%

  2. Upgrade from No AC or Room AC to Central Air Conditioning

    Also having an impact on electricity consumption were loans which financed an upgrade from having no air conditioner or room air conditioner(s) to having a central air conditioner. It would appear that allowing such projects to be financed is opposed to the objectives of the Dollar and Energy Savings Loan Program to promote energy efficient home improvements. A central air conditioner will obviously use more electricity than no air conditioner and in most cases will use more electricity than when one or more room air conditioners are in use. The loan program is also intended to be restitutionary, and by allowing these projects we would affect the consumers buying decision for more energy efficient equipment.

    Borrowers who replaced a central air conditioner were required to install a new central air conditioner with a SEER rating of at least 10.00. However, borrowers who previously had no air conditioner or a room air conditioner were required to install a central air conditioner with a minimum SEER rating of 12.30 or 11.30, respectively. A review of the 893 loans selected for this evaluation found that for the 293 loans that financed the replacement of a central air conditioner, the average SEER rating of the new air conditioner was 10.76. Similarly, for the 78 loans that financed an upgrade to central air conditioning, the average SEER rating of the new air conditioner was 11.93. Or, due to the higher standards an efficiency gain of 10.9% was realized due to these standards. This is estimated to save an average of 336.4 kwh (or $21.15) annually per loan.

  3. Window Projects

    There were 40 loans which financed only window replacement projects. These homes used an average of 11,194.0 kwh of electricity in the year prior to program participation and saved an average of 88.5 kwh (or $5.56) annually. For these 40 loans, electricity consumption was reduced by 0.56%. It should be noted that a wide variety of window projects were financed, from replacing only one or two windows to replacing all windows in the home. No effort has been made to determine the extent of work performed. It is expected some window replacements were made for comfort or aesthetics rather than energy efficiency.

  4. Insulation Projects

    There were 17 loans which financed only insulation projects. These homes used an average of 13,665.9 kwh of electricity in the year prior to program participation and saved an average of 790.4 kwh (or $49.69) annually. For these 17 loans, electricity consumption was reduced by 5.34%.

    Further, of these 17 loans, 8 included siding as part of the work and 9 did not. Of the 9 insulation loans which did not include siding, these homes used 14,754.1 kwh of electricity in the year prior to program participation and saved an average of 1,317.2 kwh (or $82.81) annually. For these 9 homes, electricity consumption was reduced by 8.93%. For the 8 loans which included siding, these homes used an average of 12,441.8 kwh of electricity in the year prior to program participation and saved an average of 70.3 kwh (or $4.42) annually. For these 8 homes, electricity consumption was reduced by 0.56%.

    It has not been determined why there is such a difference between those homes which were sided and those which were not. However, one possibly is that those that were sided were already adequately insulated and the addition of more insulation with the siding did not greatly impact energy use.


C. All Electric Homes


A total of 19 loans to all electric homes were evaluated for their impact on electricity consumption for the 12 month periods before and after the completion of loan financed energy efficiency improvements. Of these loans, 13 financed only projects that replaced the heating and cooling system with a new system. The other 6 loans financed various projects.

Of the 13 loans which replaced the heating and cooling system, average electricity consumption was 29,895.6 kwh of electricity in the year prior to program participation and savings average 7,096.1 kwh (or $446.11) annually. For these 13 loans, electricity consumption was reduced by 23.74%.

Of these, 8 loans financed the replacement of an electric furnace with an electric heat pump. These homes used an average 31,828.9 kwh of electricity in the year prior to program participation and saved and average of 8,668.6 kwh (or $544.97). For these 8 loans, electricity consumption was reduced by 27.24%.

The other 5 loans financed the replacement of an electric heat pump with a more efficient heat pump. These homes used an average of 26,802.4 kwh of electricity in the year prior to program participation and saved and average of 4,580.0 kwh (or $287.93) annually. For these 5 loans, electricity consumption was reduced by 17.09%.

For the 6 loans that financed a variety of projects, average consumption was 33,626.5 kwh of electricity in the year prior to program participation. Average savings was 5,776.2 kwh (or $363.13) annually. For these six loans, electricity consumption was reduced by 17.18%.

The results for all electric homes should be used cautiously because of the small sample that the results are based on. In addition, dollar savings are based on the average cost of a kwh of electricity and the savings are from the lowest priced block of usage for these customers. Thus the dollar savings should probably be reduced by up to 30-35% depending on a borrowers specific rate schedule for electricity.



D. Fuel Switching Projects


A variety of loan financed projects involved changing from one energy source to another, primarily for heating, but occasionally for cooling and water heating as well. Unfortunately, very few of these project categories have enough representatives with adequate data for reliable evaluation. A number of examples are presented here for illustrative purposes, but the results should be used with caution.

  1. Natural Gas to Electric Air Conditioner

    There were three loans evaluated which replaced a natural gas furnace and air conditioner with a natural gas furnace and an electric central air conditioner. These homes used an average 2,829.7 therms of natural gas and 13,410.7 kwh of electricity in the year prior to participation in the loan program. Natural gas consumption decreased 1,114.3 (39.38%) therms annually at a cost savings of $558.26, while electricity consumption increased 2090.7 (15.59%) kwh at a cost increase of $131.44. Net savings for these three loans averaged $426.82. Net energy consumption decreased by an average of 21.17% for these three loans.

  2. Single Natural Gas Furnace to Multiple Natural Gas Furnaces

    There were two loans evaluated which replaced a single natural gas furnace with two natural gas furnaces, presumably to allow conditioning of separate zones. These homes used an average of 2,745.5 therms of natural gas in the year prior to participation in the loan program and achieved savings of 783.5 therms (or $392.53) annually. For these two loans, natural gas consumption was reduced by 28.54%.

  3. Natural Gas Furnace and Electric Air Conditioner to Electric Heat Pump

    There were eight loans evaluated which replaced a natural gas furnace and electric air conditioner with an electric heat pump. Four of these loans retained natural gas for auxiliary heating. These homes used an average of 1,570.1 therms of natural gas and 16,502.8 kwh of electricity in the year prior to participation in the loan program. Natural gas consumption decreased 1,099.1 therms annually at a cost savings of $550.65, while electricity consumption increased 6,062.0 kwh annually at a cost increase of $381.10. Net savings for these eight loans averaged $169.55. Net energy consumption decreased by 31.44% for these eight loans.

  4. Electric Heat Pump to Natural Gas Furnace and Electric AC

    There were two loans evaluated which replaced an electric heat pump with a natural gas furnace and an electric air conditioner. These homes used an average of 30,567.0 kwh of electricity in the year prior to participation in the loan program. Electricity consumption decreased 16,718.5 kwh annually at a cost savings of $1,051.00, while natural gas consumption averaged 911.5 therms annually at a cost increase of $456.66. Net savings for these two loans averaged $594.34. Net energy consumption decreased by 26.16% for these two loans.

  5. Electric Furnace and AC to Natural Gas Furnace and Electric AC

    There were 14 loans evaluated which replaced an electric furnace and air conditioner with a natural gas furnace and a more efficient electric air conditioner. These homes used an average of 33,265.1 kwh of electricity in the year prior to participation in the loan program. Electricity consumption decreased 16,950.5 kwh annually at a cost savings of $1,065.53, while natural gas consumption averaged 721.2 therms annually at a cost increase of $361.32. Net savings for these 14 loans averaged $704.21. Net energy consumption decreased by 30.21% for these 14 loans.

  6. Fuel Switching Summary

    In addition to the above five groups, projects have been financed through the Dollar and Energy Savings Loan Program which involve switches from heating oil or wood to natural gas, electricity or propane; and nearly all possible combinations between natural gas, electricity and propane. Although, in each case above the sample of loans was quite small, in all cases we see a reduction in total energy use as well as a reduction in total energy costs. The important factor to remember here, is not that the source of energy being used was changed, but that more efficient equipment was installed which led to the dollar and energy savings for these projects. It should also be noted that minimum eligibility requirements were higher when replacing equipment that used a different fuel source than when the replacement equipment used the same fuel.


Other Sectors


A total of 199 projects were sampled for analysis in all other sectors, of which energy consumption of only 48 was suitable for evaluation. While suitable for analysis in the residential sector where energy use is quite similar from home to home, in many situations in the other loan sectors many problems arise. Some of the problems encountered were:



A. Agriculture



In the agriculture sector of the loan program 78.63% of the dollars spent were for irrigation improvements. Energy consumption used for irrigation was adjusted for weather conditions through the following steps:
  1. For each rural electric district, average per well use was calculated for the period 1979 through 1995.
  2. Average use per well was calculated for each rural electric district for each year in this time period.
  3. A normalization factor was calculated for each rural electric district for each year by dividing the average calculated in (i) by the average per well for each year.
  4. Each irrigation loan is assigned to the rural electric district that it is located in, regardless of the fuel used for irrigation.
  5. Annual energy consumption from billing data was multiplied by the normalization factor found in (iii).
  6. The difference between before and after energy consumption as calculated in (iv) was used as the estimate of energy savings.

There were 13 loans that financed irrigation projects that were evaluated for their impact on energy consumption. Twelve of the irrigation pumps were powered by electricity and one by natural gas. Natural gas use was reduced by 32.37%, from 13,451 therms to 9,097 therms for an annual savings of 4,354 therms. Although not conclusive evidence since it is based on a sample of one, the results are consistent with the expected results for this type of project.

The 12 loans evaluated which used electric powered irrigation equipment used an average of 90,831.4 kwh in the year prior to participation in the loan program and saved 23,139.1 kwh annually. For these 12 loans, electricity consumption was reduced by 25.47%. Again, the results are consistent with the expected results for the type of projects financed.



B. Commercial (including Small Business, Government and Rural Nursing Homes)



The commercial sector is composed of three categories of the Dollar and Energy Savings Loan Program: Small Businesses, Government and Rural Nursing Homes. There were 33 loans that were evaluated for their impact on natural gas consumption, two on propane consumption, and 24 on electricity consumption. Types of projects financed include heating and/or cooling systems, windows, doors, insulation, lighting, and business specific equipment. The 33 commercial entities evaluated for natural gas consumption used an average of 11,591 therms of natural gas in the year prior to participation in the program and saved 2,271 therms (or $961) annually. For these 33 loans, natural gas consumption was reduced by 24.37%. The two commercial entities evaluated for propane consumption used an average of 3,319 gallons of propane in the year prior to participation in the program and saved 409 gallons (or $254) annually. For these two loans, propane consumption was reduced by 12.32%. The 24 commercial entities evaluated for electricity consumption used an average of 92,617 kwh of electricity in the year prior to participation in the program and saved 22,278 kwh (or $1,290) annually. For these 24 loans, electricity consumption was reduced by 24.05%.


Summary of Program Savings and Benefits



A. Program Energy Savings


Based on the energy savings estimates from 641 loans, many of which are summarized above, information on projects financed and fuels used from the total evaluation sample of 1,092 loans, and the June 30, 1996 summary report of loans financed by type of project, total energy savings estimates were developed. Energy savings by energy type are summarized in Table 3 below:

Table 3. Annual Energy Savings by Energy Type


Fuel - Units Physical Units million Btu
Natural Gas - therms 2,366,733.5 236,673.4
Electricity - kwh 26,396,919.6 275,847.8
Propane - gallons 138,046.9 12,608.2
Diesel Fuel/Heating Oil - gallons 605,835.0 84,150.5
Wood - tons 609.3 10,471.5
Total Annual Btu Savings - 619,751.4

It should be noted that propane savings appear low due to the number of borrowers switching from an electric or oil furnace to a propane furnace.



B. Program Dollar Savings



Dollar savings are calculated by multiplying the estimated energy savings by the Nebraska average price by fuel type by consuming sector for the years 1992 - 1995. It is realized that some dollar savings may be over-estimated since the units saved come from the least expensive rate block. In addition, one should not attempt to estimate when the cost of a project is recovered due to the dollars saved. To estimate the payback due to energy efficiency, one needs to know what part of the cost of a project is relevant to energy efficiency. For example, in replacing an old furnace with a new furnace the cost can be divided into two parts: one part equivalent to the cost of the lowest priced furnace on the market and a second part due to the additional cost due to the higher energy efficiency of the installed furnace. Each project needs to be looked at in a similar manner to determine the economic payback due to energy efficiency. Dollar savings by energy type are summarized in Table 4 below:

Table 4. Annual Dollar Savings by Energy Type

Energy Type Dollars
Natural Gas 1,127,160.22
Electricity 1,791,851.96
Propane 79,929.16
Diesel Fuel/Heating Oil 581,601.60
Wood 42,653.80
Total 3,623,196.74



C. Impact on Greenhouse Gas Emission Reductions



In addition to reducing their energy consumption and thus their energy bills, loan participants are also benefitting society because of the reduction in greenhouse emissions resulting from their reduced energy use. Coefficients to determine the reduction in emissions are presented in Table 5 below:

Table 5. Greenhouse Gas Emission Coefficients for Nebraska

Energy Type CO2 SO2
(pound/million Btu)
NOx
(pound/million Btu)
Natural Gas 12.0593 lb./therm 0.000462 0.09053
Electricity 1.288 lb./kwh 1.35652 2.20924
Propane 12.200 lb./gallon 0.000704 0.209132
Diesel/Heating Oil 22.384 lb./gallon 0.239756 0.13926
Wood 3814 lb./ton - -

Source for the coefficients for CO2 is Form EIA-1605 Voluntary Reporting of Greenhouse Gases, Instructions published by the Energy Information Administration (EIA), U.S. Department of Energy. Source for the coefficients for SO2 and NOx is the computer program BLCC4 developed by the National Institute of Standards, except those for electricity which were calculated based on emissions reported for Nebraska in the Electric Power Annual published by EIA.

The resulting emission reduction estimates are presented in Table 6 below:

Table 6. Annual Greenhouse Gas Emission Reductions


Energy Type CO2 (tons) SO2 (pounds) NOx (pounds)
Natural Gas 14,270.6 109.3 21,426.0
Electricity 16,999.6 122,212.5 199,036.4
Propane 842.1 8.9 2,636.8
Diesel/Heating Oil 6,780.5 20,175.6 11,718.8
Wood 1,161.9 -- --
Total 40,052.7 142,504.3 234,818.0



D. Program Economic Benefits


In the summer of 1994 a contract was entered into with the American Council for an Energy-Efficient Economy of Washington, DC to perform an analysis of the economic impacts of the Dollar and Energy Savings Loan Program. This study was based on the $43.9 million of projects financed through June 30, 1994.

Using standard input-output analysis this study estimated that through June 30, 1994 the Dollar and Energy Savings Loan Program created the equivalent of 789 years of employment from both the direct and indirect effects of the program over a ten year period. In addition, over this ten-year period the economy will support $17.26 million in added wage and salary compensation and contribute a total of $28.3 million to the Nebraska Gross State Product. These benefits are derived from both the money spent to make the energy efficiency improvements as well as the dollars saved in energy expenditures which can be used for other household purchases. The study also determined that the energy efficiency portion of the projects contribute 56% of the net benefits despite the fact that they constitute only 37% of the total investment in the projects. These estimates are also conservative because only a ten year life was assumed for the energy savings resulting from the projects, while in fact many of the projects can be assumed to result in energy savings for 20 years or more.

Projecting the above results through loans financed through June 30, 1996, the economic benefits are projected to be: 1,253 years of employment, $27.40 million in added wage and salary compensation, and $44.9 million to the Nebraska Gross State Product.


Conclusions



The above results show that low interest financing for energy efficiency improvements, can have a significant impact on reducing energy consumption and its related cost, improving the environment through reduced greenhouse gas emissions, and improving the state economy through job creation. These benefits have been realized over a period of generally stable energy prices, indicating that the economic benefits would be even greater in a period of rising energy prices such as is the case with heating fuel prices this winter of 1996-97.

Although there was initial concern among suppliers that efficiency requirements were set too high, there have not appeared to be any difficulties in obtaining equipment to meet the minimum standards set by the program. In fact, given that more than 50% of those replacing a furnace selected a model installed one rated with a 90% or higher efficiency when only 80% was required, indicates that standards could easily be set higher. In fact, higher standards were put into effect January 1, 1997.

No evidence was found to support one fuel source over another. In all project categories where borrowers switched from one fuel to another, measurable energy and dollar savings were found. This is because old less efficient equipment is being replaced with more efficient models.

All project categories that were evaluated reduced energy use. However, there are some projects that consistently perform better than others. Among the best performing projects are furnaces, air conditioners, insulation (without siding) and irrigation equipment.


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Nebraska Energy Office
P.O. Box 95085
Lincoln, NE 68509-5085
Phone: (402) 471-2867
FAX: (402) 471-3064
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