Energy Efficiency As A Resource Option Three Decades of PNW Experience

1
Energy Efficiency As A Resource OptionThree
Decades of PNW Experience

• Tom Eckman
• Northwest Power and Conservation Council

National Association of Regulatory
Commission Energy Resources and the Environment
Committee July 22, 2009
2
What Youre About To Hear

• What Weve Done
• 30 years of using energy efficiency as a resource
• Why We Did It
• Using Integrated Resource Planning to make the
  business case for utility reliance on energy
  efficiency as a resource
• How We Know What We Did
• Standardizing Evaluation, Measurement and
  Verification
• What Were About To Do
• Goals for the coming decade

3
Northwest Speak (Definitions)

• Average Megawatt (aMW) 8760 MWH
• Conservation Any reduction in electric power
  consumption as a result of increases in the
  efficiency of energy use, production or
  distribution.
• Curtailment Sitting in a dark, hot house,
  drinking warm beer

4
The Evolution of Energy Policy
October 11, 2002 President Carter Awarded Nobel
Peace Prize
April 18, 1977 Conservation means a cold dark
house President Carter announces we are engaged
in the moral equivalent of war (MEOW)
December 5, 1980 - Conservation declared a
resource equivalent to generation President
Carter signs Northwest Power and Conservation Act
5
Northwest Power and Conservation Planning Act of
1980 (PL96-501)

• Authorized States of ID, OR, MT and WA to form an
  interstate compact (aka, The Council)
• Directed the Council to develop 20-year load
  forecast and resource plan (The Plan) and
  update it every 5 years
• The Plan shall call for the development of the
  least cost mix of resources
• The Plan shall consider conservation (energy
  efficiency) its highest priority resource
  equivalent to generation with a 10 cost
  advantage over power generating resources
• Mandated public involvement in Councils planning
  process.

6
How Has It Worked?
7
Utility Reaction to Councils First Plan Was
Mixed
8
Three Decades of Utility Conservation
Acquisitions (aka Mr. Toads Wild Ride for
the PNWs Energy Efficiency Industry)
See http//en.wikipedia.org/wiki/Mr._Toad's_Wild_
Ride
9
Nevertheless Since the Late 70s
Since 1978 Utility BPA Programs, Energy Codes
Federal Efficiency Standards Have Produced Almost
3600 aMW of Savings.
Weve Accomplished Mass Quantities
10
So Whats 3600 aMW?

• Its enough electricity to serve more than the
  entire state of Idaho and all of Western Montana
• It saved the regions consumers nearly than 1.6
  billion in 2007
• It lowered 2007 PNW carbon emissions by an
  estimated 14.1 million tons.

11
Energy Efficiency Is The Regions Third Largest
Resource
Weve Saved The Equivalent to Almost Two Grand
Coulee Dams
12
So How Did We Make The Case ?
13
Two Methods

• Integrated Resource Planning (IRP)
• Systematic evaluation of the least cost/least
  risk portfolio of resource choices where energy
  efficiency is treated equivalent to generating
  resources
• Energy Efficiency Resource Portfolio Standards
• Mandated minimum share of energy efficiency
  resources

14
IRP Portfolio Analysis Determines How Much Energy
Efficiency to Develop in the Face of Uncertainty
Frequency Chart
1,000 Trials
1,000 Displayed
.043
43
Portfolio Analysis Model
.032
32.25
.022
21.5
.011
10.75
Mean 689
.000
0
(3,509)
(1,131)
1,247
3,625
6,003
Dollars
NPV System Cost
Efficient Frontier
15
Portfolio Analysis on One Slide
16
So How Do You Know You Did That?
17
The PNWs Approach To Standardization of
Savings Measurement Verification(Were Not
California)

• Established An Ongoing Centralized Process for
  Technical Review
• Carried out by Regional Technical Forum (RTF)
• RTF composed of utility and non-utility
  engineering and economic experts, staffed by
  Council
• Funded by Bonneville Power Administration,
  utilities and system benefits administrators
• Public process
• RTF builds on historical program experience and
  ongoing evaluations of regional acquisition
  programs

18
RTFs Major Functions

• Establish a Standardized Regional
  Cost-Effectiveness Methodology
• Public domain software for evaluating
  cost-effectiveness
• Recommend Measurement and Verification Protocols
• Use IPMVP, ASHRAE, FEMP, NAPEE Model Energy
  Efficiency Program Impact Evaluation Guide
• Develop tailored MV Protocols for custom, but
  recurring projects (e.g. grocery store
  refrigerated case retrofits)
• Develop and Maintain Internet-based System for
  Tracking and Reporting Regional Energy Efficiency
  Savings and Expenditures
• Deemed savings (with minimum technical
  specifications Q/C criteria)
• EMV protocols
• Default inputs for cost-effectiveness evaluations
  (e.g., forecast of future energy prices, cost of
  deferrable distribution and transmission, value
  non-energy benefits such as water savings, etc.)
• Forecast CO2 content/kWh saved (based on load
  shape of savings)

19
RTFs Major Functions

• Process for updating deemed savings as technology
  and standard practices change.
• Appeals process
• Utilities or other parties, including vendors,
  can demonstrate that different savings and value
  estimates should apply
• Collaborative Development of EMV protocols for
  programs operated across multiple utility service
  areas

20
Measure Screening Process
Deemed Savings and Cost-Effectiveness
All Possible Measures
Online Planning, Tracking Reporting System Data
Base
Deemed Calculated Savings and Cost-Effectiveness
ScreeningCriteria Cost- Effectiveness Analysis
Custom Project Valuation, Measurement and
Verification Protocols
21
Online Planning, Tracking and Reporting System

• Designed to assist utilities and contractors
• Identify potential energy efficiency measures and
  programs eligible for utility and/or SBC
  administrator programs.
• Track progress toward savings goals using
  standardized values and protocols
• Report energy efficiency activity status to
  utility/SBC administrator management and
  regulators

22
Major Components of the PNW Online System

• Two-Way System
• Users download deemed savings, calculators
  protocols/custom project reports
• Users upload results
• Business Rules
• Reporting periods
• Verification requirements
• Software Platform

23
So Whats Next?
24
Energy Efficiency is Still the Cheapest Option
Assumptions Efficiency Cost Average Cost of
All Conservation in Draft 6th Power Plan Under
100 MWh Transmission cost losses to point of
LSE wholesale delivery 2020 service - no federal
investment or production tax credits Baseload
operation (CC - 85CF, Nuclear 87.5 CF, SCPC
85) Medium NG and coal price forecast (6th Plan
draft) 6th Plan draft mean value CO2 cost
(escalating, 8 in 2012 to 47 in 2029).
25
Theres Still Mass Quantities To Do6th Plan
Technically Achievable Conservation Potential by
Sector
26
Draft 6th Plan Calls for A Doubling of Annual
Energy Efficiency Savings the Over Next Decade
27
Draft 6th Plan Goal Meet 85 of Load Growth
with Conservation
28
Impact on Regional Revenue Requirement
29
Estimated Cumulative Impact on Regional Revenue
Requirement to Achieve Proposed Conservation
Targets
30
Impact of The Plan

• Meet Nearly All of Load Growth Over the Next 20
  Years With Energy Efficiency at an Average Cost
  of Less Than 40 MWH
• This Will Require Sustained and A Much Larger
  (2x-3x) Investment In Cost-Effective Energy
  Efficiency
• Over the first five-years it will reduce regional
  revenue requirements by 1 - 1.5 as a result of
  reduced power market purchases
• Accomplishing the Almost Draft 6th Plans
  Conservation Goals Will Stretch the Columbia
  River
• In five years well build the equivalent of
  another Chief Joseph dam,
• In 12 years, well build the equivalent of Chief
  Joseph, plus Grand Coulee dams
• In 20 years, we will have added the equivalent of
  50 to the output of all hydroelectric
  resources in the PNW

31
Carbon Emissions From the Northwest Power System
Will Be Below 1990 Levels
1990 Level 44 Million Tons
32
Conservation Cheap, But Worth It?
Any Questions?