economy, energy efficiency can offset the typically higher costs of energy from cleaner, mostly renewable, generation technologies.

Consider for example, the state of Hawaii, which intends to reduce electricity usage by 30 percent by 2030 while providing 40 percent of the remaining generation through renewable resources. If current energy use is 14,300 GWh, the 2030 goal would be met by reducing annual consumption by 4,300 GWh, and by serving 40 percent of the remaining load (4,000 GWh of 10,000 GWh total) through renewable power generation. Aligning energy efficiency strategies with longer term renewable energy goals effectively increases the share of renewables in the generation portfolio. Unless the rising demand for energy is addressed, increases in renewables and other clean energy options could be offset by even more rapid increases in primary energy demand, with the balance being met by fossil fuels.

China has put energy efficiency at the forefront of its policies to improve energy security, alleviate pressure on domestic resources (particularly coal and water for thermal power generation), and reduce environmental impacts as its economy expands. Energy efficiency and conservation are now a top priority in its energy planning and industrial development strategies, as reflected in its goals to reduce energy intensity (energy consumed per unit of GDP) by 20 percent from 2005 by the year 2020. Each province and major municipality has been assigned a reduction target ranging from 12 to 30 percent.

China has recognized that more efficient use of energy at the household and company levels translates into financial savings over time. Such savings could offer a significant offset to the higher cost of generating renewable energy (NAS/ NAE/NRC, 2010a). In other words, if energy efficiency technologies can capture cost savings in the near term, they can act as a bridge to the deployment of more costly renewable energy technologies that could ultimately supplant conventional fossil-fuel generation.

Modernizing the Grid

A modernized grid is widely considered an essential component of a sustainable energy infrastructure (see Chapter 3 for a technical discussion of devices that comprise a modernized grid). The existing grids in both the United States and China are typically considered impediments to the accelerated deployment of renewables, because it is expensive to upgrade them in order to accept and balance large shares of electricity from variable-output sources like solar and wind energy. Both countries continue to make sizeable public investments (more than $7 billion each for 2010 [Zprýme, 2010]) in next-generation grid technologies, and China is spending nearly 10 times that amount ($70 billion from its economic recovery package) on new high-voltage transmission infrastructure (Robins et al., 2009). In addition, because a substantial portion of China’s electricity grid has yet to be built, certain regions in China could potentially “leapfrog” to a modern

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