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Demand-Side Energy Efficiency Technical Support Document August 2015

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Demand-Side Energy Efficiency Technical Support Document August 2015 Demand-Side Energy Efficiency Technical Support Document August 2015 Contents Page List of Figures .................................................................................................................................v List of Tables ..................................................................................................................................v 1. Introduction.............................................................................................................................1 2. Background .............................................................................................................................1 2.1 EE Technologies and Practices ................................................................................2 2.2 Barriers to EE Investment ........................................................................................3 2.3 EE Policies ...............................................................................................................5 2.3.1 Objectives and Role in Reducing CO 2 Emissions from the Power Sector .......................................................................................................... 5 2.3.2 Policy Types................................................................................................ 7 3. History of EE Policies in the United States ..........................................................................9 4. EE Programs .........................................................................................................................15 4.1 EE Programs ..........................................................................................................15 4.1.1 Administrators........................................................................................... 16 4.1.2 Policy Drivers ........................................................................................... 16 4.1.3 Funding Sources........................................................................................ 17 4.2 The Demand-Side EE Opportunity ........................................................................17 4.2.1 Rapid Growth in Demand-Side EE ........................................................... 17 4.2.2 EE Program Impacts ................................................................................. 18 4.2.2.1 Impacts to-date .................................................................................... 18 4.2.2.2 Projected Impacts ................................................................................ 22 4.2.3 EE Potential .............................................................................................. 23 4.2.3.1 Evaluations of EE Potential ................................................................ 23 4.2.3.2 Overview of Results ............................................................................ 25 4.3 Costs and Cost-Effectiveness of State EE Policies ................................................26 4.3.1 EE Cost-Effectiveness .............................................................................. 26 4.3.2 Costs of Saved Energy .............................................................................. 28 5. Other EE Strategies ..............................................................................................................30 5.1 Building Energy Codes ..........................................................................................30 5.1.1 Overview ................................................................................................... 30 5.1.2 Authority / Obligated Parties .................................................................... 31 5.1.3 Building Code Regulations Over Time..................................................... 31 5.1.4 Remaining Market Potential ..................................................................... 33 5.2 State Appliance Standards .....................................................................................33 ii Contents (Continued) Page 5.2.1 Overview ................................................................................................... 33 5.2.2 Authority / Obligated Parties .................................................................... 34 5.2.3 Appliance Standards over Time ................................................................ 34 5.2.4 Remaining Market Potential ..................................................................... 35 5.3 Energy Service Performance Contracting ..............................................................36 5.3.1 Overview ................................................................................................... 36 5.3.2 History of ESPC Programs and the ESCO Business Model ..................... 37 5.3.3 Remaining Market Potential ..................................................................... 38 5.4 Volt/VAR Optimization .........................................................................................39 5.4.1 Overview ................................................................................................... 39 5.4.2 History of VVO Programs ........................................................................ 41 5.4.3 VVO Market Potential .............................................................................. 42 6. Utility Regulatory Models for Supporting Demand-Side EE ...........................................42 7. Energy Efficiency Certificates .............................................................................................45 8. Demand-Side EE Plan Scenario: Magnitude and Timing of Savings ..............................48 8.1 Approach ................................................................................................................48 8.2 Inputs......................................................................................................................49 8.2.1 Step 1: Determine Current Level of Demand-Side EE Performance ....... 49 8.2.2 Step 2: Determine EE Plan Scenario Level of Performance ..................... 50 8.2.3 Step 3: Determine Start Year for EE Plan Scenario ................................. 53 8.2.4 Step 4: Determine Start Year Level of Performance ................................ 53 8.2.5 Step 5: Determine Pace of Improvement from Start Year to EE Plan Scenario Level of Performance ................................................................. 53 8.2.6 Step 6: Determine Average Portfolio Measure Life and Distribution of Measure Lives....................................................................................... 54 8.2.7 Step 7: Determine Sustainability of EE Plan Scenario Level of Performance .............................................................................................. 56 8.2.8 Summary of the Demand-Side EE Plan Scenario Construction ............... 58 8.3 Calculations............................................................................................................58 8.3.1 Step 1: Determine Annual Business as Usual (BAU) Sales ..................... 59 8.3.2 Step 2: Determine Annual Incremental EE Savings as a Percentage of Sales .......................................................................................................... 59 8.3.3 Step 3: Determine Annual Incremental EE Savings (GWh) ..................... 60 8.3.4 Step 4: Determine Annual Expiring EE Savings (GWh) .......................... 60 8.3.5 Step 5: Determine Net Cumulative EE Savings (GWh) ........................... 61 8.3.6 Step 6: Determine Sales after Net EE (GWh) ........................................... 61 iii Contents (Continued) Page 8.3.7 Step 7: Determine Net Cumulative EE Savings as a Percentage of BAU Sales ................................................................................................. 61 8.3.8 Summary of Calculation Formulas and Results by Step for South Carolina ..................................................................................................... 62 8.4 Results ....................................................................................................................62 8.4.1 Summary of Results .................................................................................. 62 8.4.2 Results in Context ..................................................................................... 64 9. Demand-Side EE Plan Scenario: Assessment of Costs ......................................................66 9.1 Approach ................................................................................................................66 9.2 Inputs......................................................................................................................66 9.2.1 Step 1: Determine Incremental Electricity Savings .................................. 67 9.2.2 Step 2: Determine First-Year Program Costs and Cost Factors ............... 67 9.2.3 Step 3: Determine the Ratio of Program to Participant Costs .................. 69 9.2.4 Summary of Inputs for Demand-Side EE Cost Analysis .......................... 69 9.3 Calculations............................................................................................................70 9.3.1 Step 1: Calculate Annual First-Year Costs ............................................... 70 9.3.2 Step 2: Calculate Levelized Cost of Saved Energy .................................. 71 9.3.3 Step 3: Calculate Annualized Costs .......................................................... 72 9.3.4 Summary
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