California Experience in Energy Efficiency: Lessons for Chile

Abstract

California is the leader state of the US in implementing successful energy efficiency programs. After the electricity crisis of 2000-2001, the government of California started an aggressive plan to encourage private institutions to implement energy efficiency programs. In particular, California was the first state in implementing an incentive mechanism that decouples the benefits of energy utilities from their sales. Such a mechanism is currently being implemented or under consideration in most of the states of the US. This paper analyzes the incentives mechanisms adopted in California in order to effectively promote the implementation of energy efficiency programs among the different stakeholders of the energy markets. The program-implementation details of such mechanisms provide important lessons for systems with no energy-efficiency programs in the electricity sector, like the Chilean electricity system, to design an incentive structure that effectively promote energy efficiency among the participants of the market.