Transcript Benefit/Cost Analysis of Boston Gas Energy Efficiency Programs

Benefit/Cost Analysis for Energy
Efficiency Programs
July 11, 2008
Presentation to VEPGA
By Richard Spellman
GDS Associates
1
Topics To Be Discussed
 Benefit/Cost Tests for energy efficiency
projects
 Data Sources
 Avoided Costs Overview
 Questions and Answers
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Benefit/Cost Tests
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Participant Test
Utility Test
Total Resource Cost Test (TRC)
Rate Impact Measure Test (RIM)
Societal Test
Electric System Test
All Ratepayers Test
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General Assumptions
for Benefit/Cost Analysis
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• Avoided Costs of
Period of analysis
Electricity, Natural
Start year of analysis
Gas, etc.
End year of analysis
• Retail Rates
Inflation forecast
• Discount rate
• Non energy benefits
4
Program or Measure Specific
Data Needed
 Description of energy efficiency
measures included in each project or
program
 Measure energy savings
 Measure costs
 Measure life assumptions
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Key Information Sources
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Electric and gas utilities
Federal government agencies (DOE, EPA, NREL)
Energy Star web site
State government agencies (NYSERDA,
Wisconsin Focus on Energy, etc.)
• Equipment manufacturers and distributors
• National Labs (ORNL, PNL, LBL, etc.)
• National non profit organizations
– ACEEE, CEE, Alliance to Save Energy, GAMA, GTRI
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Valuing Energy Savings
• Avoided Costs – these are costs avoided on an
electric or gas supply system due to the
adoption of energy efficiency measures –
generally used for TRC Test, Utility Test and
Societal Test
• Retail rates – retail rates are used in the
benefit/cost analysis when the Participant test
is being calculated
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CFL Example
• The cost of a CFL is $1.65 at Walmart
• A CFL bulb will last 7.5 years if used 1,000 hours
a year
• Electricity savings are 50 kWh a year
• At $.08 per kWh for avoided costs (busbar cost),
savings to the electric utility are $4.00 per year, or
$30 over the life of the bulb
• At $.10 per kWh for retail rates, savings to the
participant are $5.00 per year, plus participant
avoids purchases of 10 incandescent bulbs
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Summary – B/C Analysis
• Are benefits greater than
costs?
• Need to consider costs and
benefits over the life of
the equipment – not just
the “first” cost
• Several B/C models exist
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Question & Answer Session
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