Negawatt Power

Negawatt power is a theoretical unit of power representing an amount of energy (measured in watts) saved. The energy saved is a direct result of energy conservation or increased efficiency. The term was coined by the chief scientist of the Rocky Mountain Institute and environmentalist Amory Lovins in 1989. Roughly 10% of all U.S. electrical generating capacity is in place to meet the last 1% of demand and there is where the immediate efficiency opportunity exists. Negawatts currently cannot be precisely measured, only theoretically. However, there is some controversy surrounding the negawatt market.

A negawatt market can be thought of as a secondary market, in which electricity is allocated from one consumer to another consumer within the energy market. In this market, negawatts could be treated as a commodity. Commodities have the ability to be traded across time and space, which would allow negawatts to be incorporated in the international trading system.

On March 15, 2011, the Federal Energy Regulatory Commission (FERC), the agency that regulates the U.S. electrical grid, approved a rule establishing the approach to compensation for demand response resources intended to benefit customers and help improve the operation and competitiveness of organized wholesale energy markets. This means that negawatts produced by reducing electrical use can demand the same market prices as real megawatts of generated electricity.

The incentives for a negawatt market include receiving money, reduction of national energy dependency, and the local electricity deregulation within certain nations or states. As for the cost incentive, those who produce negawatts or simply conserve energy can earn money by selling the saved energy. The negawatt market could help nations or states obtain a deregulated electricity system by creating another market to purchase electricity from.

The negawatt market also has many drawbacks. Some of them include the difficulty of creating a negawatt market and the expense of efficiency. There are negative cost, technical, and time implications on manufacturers, electricity providers, and the consumers.