In a notable recovery from the initial declines seen during the COVID-19 pandemic, utility companies are reported to have invested an impressive $8.8 billion in energy efficiency initiatives in 2023. This information comes from a recent study released by the American Council for an Energy-Efficient Economy (ACEEE).
ACEEE highlights that energy efficiency stands out as the most cost-effective energy source, contributing to increased grid reliability and resilience. After a slowdown in investments from 2020 to 2022, 2023 marks a significant uptick in spending in this sector.
The breakdown of the investment reveals that $6.9 billion was allocated to electric efficiency, while $1.9 billion was directed towards gas efficiency. This represents a 16% increase compared to the low point in 2020 and a 6% rise from the previous peak observed in 2019, according to ACEEE.
Many states and utility providers are now shifting their attention from traditional efficiency programs—like upgrading lighting systems—to more innovative approaches. These include extensive energy upgrades for homes, the development of smart buildings, the growth of electric vehicle charging infrastructure, and the creation of zero-energy buildings. There’s also a push towards electrifying heating systems for both space and water.
However, the distribution of these investments is somewhat uneven. According to ACEEE’s “2025 State Energy Efficiency Scorecard,” just five states—Massachusetts, Missouri, New Jersey, New York, and Pennsylvania—accounted for 90% of the rise in spending on efficiency initiatives in 2023.
In light of soaring energy prices and electricity bills, several states are recognizing the vital role of energy efficiency in maintaining affordable energy. These measures not only help homeowners and businesses save money but also improve living standards and create job opportunities, all while aligning with increasingly ambitious targets for reducing carbon emissions.
The scorecard evaluates states based on their policies and initiatives to promote energy efficiency. California topped the list for the seventh consecutive time, followed by Massachusetts in second place, and New York in third. Maryland and Vermont shared the fourth spot.
Mark Kresowik, senior policy director at ACEEE and lead author of the scorecard, noted that while leading states are successfully reducing costs and emissions through energy-saving measures, many others are falling behind. He emphasized the need for relief for American families who have been facing rising expenses.
Louisiana made significant progress, ranking 37th and improving its position by nine places, thanks to a new building energy code introduced to address soaring insurance costs linked to severe weather conditions and climate change. Additionally, Colorado jumped six spots to rank at No. 7, thanks to new policies aimed at promoting clean vehicles and improving energy standards in buildings.