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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) - PowerPoint PPT Presentation
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National Action Plan for Energy Efficiency
www.epa.gov/ eeactionplan
The Role of Energy Efficiency in Utility Energy Planning
Snuller PricePartnerEnergy 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– 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)
Portfolio Development and Reporting(Section 2 to 7)
Procurement, Measurement, and Verfication
(Section 8 and 9)
Development ofAvoided Costs
Development ofEE Measures
Determining Cost-Effectiveness
Development ofEE Programs and
Portfolios
Estimating EEImpacts for
Resource Panning
Procurement ofEE Services
Section 2 Section 3
Section 4
Section 5
Section 6
Section 8
Potential Studies
Section 1
Best Practices
Evaluation,Measurement and
Verification
Section 9
Section 10
Reporting EEImpacts for
Resource Planning
Section 7
Best Practices(Section 10)
Definitions of Energy Efficiency Potential
Program design, budget, staffing and time constraints
Market and adoption barriers
Not cost effective
Not technically feasible
Program Potential
Program design, budget, staffing and time constraints
Market and adoption barriers
Not cost effective
Not technically feasible
Program Potential
Market and adoption barriers
Not cost effective
Not technically feasible Market Potential
Not cost effective
Not technically feasible
Economic Potential
Not technically feasible
Technical 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
plan start date plan end date
Load
For
ecas
t
plan-period EE program impacts
status-quo EE program impacts
other EE impacts (e.g., codes, standards)
load met w ith supply-side resources(not to scale)
unadjusted loadforecast:
total resourcerequirements
netresourcesfor load
resource plan analysis period
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
ProgramDelivery &
Implementation
ProgramAdministration& Management
MarketAssessment &
ProgramEvaluation
ProgramDevelopment
ProcurementofEE Savings
ProcurementofEE Services
Competitivesolicitation
Partnershiparrangement
DSM bidding
Standard Performance Contract
Broad-based solicitation(covers all market segments)
Targeted solicitation for new program concepts
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
Katrina PielliPielli.Katrina@epa.gov(202) 343-9610
Larry Mansueti Lawrence.Mansueti@hq.doe.gov(202) 586-2588
www.epa.gov/eeactionplan
Speaker’s contact information
Snuller Pricesnuller@ethree.com(415)391-5100
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