# Negawatt market

A negawatt-hour is a unit of energy saved as a direct result of energy conservation measures, such as reducing the use of heat or electricity. The concept was developed after Amory Lovins authored an article published in the March 21, 1985 issue of Public Utilities Fortnightly arguing that utility companies will sell less electricity and more efficiency by marketing 'negawatts'. In Lovins' opinion, utility customers don't want kilowatt-hours of electricity; they want energy services such as hot showers, cold beer, lit rooms, and spinning shafts, which can come more cheaply if electricity is used more efficiently. Lovins credited the term to a typo in a document by the Colorado Public Utilities Commission in which the word "megawatt" was misspelled.
Negawatts are intended to be a form of encouragement to motivate consumers to conserve energy. Lovins considers the concept of conservation a change in behavior based on the attitude 'Do Less to Use Less.' He makes a distinction between conservation and efficiency by defining efficiency as "the application of technologies and best practices to eliminate waste based on the attitude, 'Do the same or more with less.'"
Cost for negawatt power can be calculated using cost-effectiveness analysis or CEA. For energy efficiency investments a CEA calculation produces the value of saved energy or negawatts in $/kWh. Such a valuation allows comparing the price of negawatts with price of energy such as electricity from the grid or the cheapest renewable alternative.
Lovins explains that many companies are already enjoying the financial and other rewards that come from saving electricity. Yet progress in converting to electricity saving technologies has been slowed by the indifference or outright opposition of some utilities. A second obstacle to efficiency is that many electricity-using devices are purchased by people who won't be paying their running costs and thus have little incentive to consider efficiency. Lovins also believes that many customers "don't know what the best efficiency buys are, where to get them, or how to shop for them".
In 2003, in France, under the guide of Thierry Salomon, 14 scientists wrote "Le manifeste Négawatt." Megawatt and negawatt seem to be reminiscent to the larger concept of ecological footprint, and by following this line of thought toward compatibility and comparability a second frame of concept seems appropriate: the impact in another frame or setting where units or numbers cannot be compared (see paradigm shift). See association négaWatt.

## Market

Lovins has advocated a "negawatt revolution", arguing that utility customers don't want kilowatt-hours (kWh) of electricity; they want energy services such as hot showers, cold beer, lit rooms, and spinning shafts, which can come more cheaply if electricity is used more efficiently. Lovins defines the negawatt market as a way to reduce the gap between the cost of making and saving electricity.
The negawatt market can be thought of as a secondary market where electricity is allocated from areas of less use to areas of greater use. This would be a secondary market, due to the fact that it would reallocate electricity from one consumer to another within the already existing energy market. Some feel that to establish a viable market, legislation and cooperation between primary producers, distributors, traders and consumers, may be required. This proposal would encourage the market to have legislative regulations, while still allowing the market to work within itself to set prices and allocate resources.
A negawatt market would allow "demand side resources" to participate in wholesale energy markets. These markets are commonly referred to as a demand response. Demand response can be defined as enrolling large users of energy in programs to lower their usage in return for compensation, which helps take pressure off the grid. This market would help take pressure off the grid, because electricity could be treated as a commodity just like copper or sowbellies, and therefore traded to areas that need it more than others. As any commodity, negawatts would have to be tradable across time and space to be an effective market. Being able to trade negawatts across time and space would allow for an international trading system. To create a market for negawatts, energy companies will need to put more focus toward energy efficiency. This shift in focus would require a new business structure that will thrive in the 'negawatt market', which has not yet been developed. Market possibilities are being implemented internationally, implying that one day an official negawatt market will become a reality.

## Implementation
### Government implementation

Negawatt power is being implemented in many states in the U.S. and is emerging as an international strategy to reduce energy consumption. "Test negawatt auctions began in 1999 in Connecticut and Georgia and more than a dozen utility exchanges were in existence" in 2000. In an effort to move toward energy efficiency, New York has created programs "supported through Energy $mart, which is run by the New York State Energy Research and Development Authority (NYSERDA), with money from a small surcharge on utility bills." Negawatt power is implemented in California as well as Texas. "Some Texas congressmen and energy companies are trying to help California avert blackouts and utility price shocks this summer with 'negawatts'.
On January 1, 2009, the states of South Australia and Victoria (Australia) became the first in Australia to offer "householders energy efficiency incentives programs delivered via local electricity retailers."
The British transmission system operator incentivizes off-peak use.

### Private implementation

The negawatt market is being used by governments and companies. Aluminum manufacturers in the Pacific Northwest shut down their power plants and sold the unused energy because selling the negawatts was more profitable for the company than selling the aluminum product. This was possible because "The smelters hold power contracts with the federal Bonneville Power Administration that contain clauses allowing them to market the electricity."
The Associated Electric company in rural Missouri is implementing the usage and spreading the knowledge of negawatts by performing energy audits at their customer's homes to show them where they could be saving electricity. Rebates are being given to help customers pay for more energy-efficient, Energy Star appliances. Keith Hartner, the CEO of Associated Electric Cooperative Inc., feels that negawatts are generating savings for their customers and for the company as well: “The goal of this program is to save money not only at the generator but also at the meter for the members.”
Individual households can practice negawatts through using energy-efficient lighting and Energy Star appliances as well as simply reducing standby power. The resulting savings sometimes offset the investment in new high-efficiency light bulbs and appliances. These efficiencies can offset a portion of the cost of a residential photovoltaic system. Negawatts reduces the overall size of the photovoltaic system required for the household, because they are consuming less electricity. This results in a faster payback period for the photovoltaic system. The City of San Diego has created a negawatts initiative called "Reduce then Produce" to promote this idea.

## Advantages
### Cost

If a consumer conserves a substantial amount of energy, then there can be an allowance for a tax deduction. According to the Negawatt Power Solutions Group, a "building that achieved a 50% energy cost reduction may be eligible for tax deduction up to $1.80 per square foot."

### Local deregulation

Some conservatives claim that the negawatt market could help nations or states have a deregulated electricity system. This would allow a nation or a state to experiment with "electricity deregulation," in which demand reductions could be purchased with a minimum of disruption to businesses, workers and the economy. California could achieve the goal of deregulation by allowing a deficit area to purchase an emergency supply from anywhere within with West in which "the ultimate purpose of deregulation was to allow competition in the electricity market and consumer choice of electricity providers.

## Drawbacks
### Difficulty in creating a negawatt market

Currently, there is no way to precisely measure the amount of energy saved in negawatts; it can only be theoretically determined based on the consumer's history of energy use. Without the visualization of the energy use, it is difficult to conceptualize negawatts because the consumer cannot see a precise value of the amount of saved energy. Smart meters are becoming a more developed technology to measure energy usage, but consumers are calling on state regulators to move cautiously on smart meters, citing complaints in some states that the meters are raising electric bills rather than lowering them.
Some municipally owned utilities and cooperatives argue that negawatt power lets consumers treat electricity as a property right rather than a service [...giving them] legal entitlement to power [that they] don't consume. This would indicate that consumers would treat electricity as a property, not a service. Some people, including the senior vice president Joe Nipper from the American Public Power Association, oppose the idea that people would receive money for power that they did not even spend.
Electricity price caps may also need to be implemented in order for the emerging negawatts market to function correctly.

### Expense of efficiency

Saving energy by the negawatt and creating a negawatt market can present several drawbacks for manufacturers and electricity providers. Manufacturers are less inclined to make energy-efficient devices which meet a specific standard, such as Energy star's standard, because of increased time and cost, while receiving minimal profit. Overall, electricity providers may not want customers to use less energy due to the loss of profit. Some even argue that producing energy-efficient products, such as light bulbs, actually simulate more demand, “resulting in more energy being purchased for conversion into light."
Customers may also be less inclined to buy products that are more energy efficient due to the increase in cost and time spent. Even when the information is known and, despite the overall long-term cost-saving potential, the price of energy is too low for individuals to justify the initial cost of energy efficiency measures. Not only are energy efficient devices more expensive, but consumers are poorly informed about the savings on offer. Even when they can do the sums, the transaction costs are high: it is a time-consuming chore for someone to identify the best energy-saving equipment, buy it and get it installed.
The technology used to measure the amount of energy that a consumer uses and saves, known as smart meters, grid systems, or energy dashboards, require time for the consumer to understand. Some argue that people need to have access to simple yet effective information systems to help users understand their energy without having to become technology experts.