Transcript Introduction to the ERG Team Outreach Services for the

National
Action
Plan for
Energy
Efficiency
www.epa.gov/
eeactionplan
The Role of Energy
Efficiency in Utility
Energy Planning
Snuller Price
Partner
Energy and Environmental Economics, Inc.
Key Challenges/Steps in Integrating
EE into Resource Plan
• Determining the value of EE
– Energy procurement (estimating and valuing savings)
– Capacity benefits (estimating and valuing savings, factors
in achieving benefits)
– Incorporating non-energy benefits (such as reductions in
GHG emissions)
• Setting targets and allocating budgets
–
–
–
–
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Quantity of EE to implement
Estimating program effectiveness
Institutional difficulty in reallocating budget
Cost expenditure timing vs. benefits
Ensuring program costs are recaptured
• Measuring impacts and adjusting resource plans
Efficiency Benefits Shown to
Exceed Costs
Primary driver for EE in planning is the low cost of energy
savings.
– Utility cost of EE = $0.01/kWh to $0.03/kWh
– Utility program costs and customer costs = $0.03/kWh to $0.05/kWh
– Benefits for electric EE = $0.06/kWh to $0.08/kWh
Levelized Costs and Benefits from Four Regions
Overall Organization of the Guide
Potential Studies
(Section 1)
Potential Studies
Section 1
Portfolio Development and Reporting
(Section 2 to 7)
Development of
Avoided Costs
Development of
EE Measures
Section 2
Section 3
Determining CostEffectiveness
Section 4
Procurement, Measurement,
and Verfication
(Section 8 and 9)
Procurement of
EE Services
Section 8
Evaluation,
Measurement and
Verification
Section 9
Development of
EE Programs and
Portfolios
Section 5
Estimating EE
Impacts for
Resource Panning
Best Practices
(Section 10)
Best Practices
Section 6
Section 10
Reporting EE
Impacts for
Resource Planning
Section 7
Definitions of Energy Efficiency
Potential
Not technically
feasible
Technical Potential
Not technically
feasible
Not cost
effective
Not technically
feasible
Not cost
effective
Market and
adoption
barriers
Not technically
feasible
Not cost
effective
Market and
adoption
barriers
Economic Potential
Market Potential
Program design,
budget, staffing and
time constraints
Program
Potential
Typical Components of Avoided Costs
Avoided Component
• Electricity Energy (with losses)
• Electricity Capacity (with losses)
• Natural Gas Commodity (with losses)
• Natural Gas Capacity (with storage, and compression)
Other Components
• Ancillary Services
• Transmission and Distribution Capacity
• Air Emissions (including greenhouse gas emissions)
• Hedge of Fossil Fuel Prices
• Price Effect of Demand Reduction
• Savings in water, fuel oil, or other value streams
Standard Practice Manual Cost Tests
• Utility Cost Test (Program Administrator Cost)
– Change in Revenue Requirement
• Ratepayer Impact Measure
– Impact on rates and non-participants
• Total Resource Cost
– Total monetized community costs
• Societal Cost Test
– Total monetized and non-monetized costs
• Participant Cost Test
– Participant finanical picture
Allocating Budgets
• Common barrier to EE is developing a budget to fund
programs.
• Action Plan Recommendation:
– Provide sufficient, timely, and stable program funding to
deliver EE where cost-effective.
• Two common approaches for funding EE:
– Resource planning processes
• If EE is a resource, the EE funding will be allocated through
planning process based on cost-effectiveness, portfolio risk,
energy and capacity benefits, etc.
• Cost recovery mechanism should be included to ensure
recover EE spending.
– Public goods-funded charges
• Collected in rates.
• Separates the EE budget from the planning process.
Tracking Energy Efficiency Resources
in Load Forecasts
resource plan analysis period
Load Forecast
unadjusted load
forecast:
total resource
requirements
plan-period EE program impacts
net
resources
for load
plan start date
status-quo EE program impacts
other EE impacts (e.g., codes, standards)
load met with supply-side resources
(not to scale)
plan end date
Note: Energy Efficiency in Western Utility Resource Plans: Impacts on
Regional Resource Assessment and Support for WGA Policies can
be downloaded at http:eetd.lbl.gov/ea/EMS/rplan-pubs.html
Potential Roles of Third-Party Contractors in
Providing Energy Efficiency Services and
Savings
Program
Development
Program
Administration
& Management
Program
Delivery &
Implementation
Market
Assessment &
Program
Evaluation
Broad-based solicitation
(covers all market segments)
Procurement
of
EE Services
Targeted solicitation for new program concepts
Competitive solicitation
Partnership
arrangement
Procurement
of
EE Savings
DSM bidding
Standard Performance Contract
Competitive
solicitation
Evaluation, Measurement and
Verification (EM&V)
• Evaluation, measurement, and verification (EM&V) is
the process of determining and documenting the
results, benefits, and lessons learned from an
energy-efficiency program.
• A rough rule of thumb is to spend 2-5% of the energy
efficiency budget on EM&V activities. The specific
funding level is a function of the scope and purpose
of EM&V and the scale of the efficiency program. It
also depends on whether EM&V is conducted at the
level of the individual utility or statewide.
Resources and Next Steps
• National Action Plan for Energy Efficiency: The Report
– Covers key barriers and policy options for EE in resource planning, utility
revenue requirements, rate design and program implementation.
– Chapter 3: Energy Resource Planning Processes.
• Guidebook on Energy Resource Planning and Procurement
Processes: Integrating Energy Efficiency (Forthcoming – Spring 07)
– A ‘How-to-Guide’ that walks through important methodology and data
input assumptions for incorporating EE in the resource planning
process.
– Will list important sources of data that are commonly used to develop
the necessary data and information.
• Clean Energy-Environment Guide to Action
– A resource document for state air, energy and utility officials and other
stakeholders that details 16 policies and strategies that are delivering
economic and environmental results for states
– Chapter 6.1: Portfolio Management Strategies.
– www.epa.gov/cleanenergy/stateandlocal/guidetoaction.htm
For More Information
www.epa.gov/eeactionplan
Speaker’s contact information
Snuller Price
[email protected]
(415)391-5100
Katrina Pielli
[email protected]
(202) 343-9610
Larry Mansueti
[email protected]
(202) 586-2588