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Guide to Resource Planning with Energy Efficiency

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Guide to Resource Planning with Energy Efficiency Guide to Resource Planning with Energy Effi ciency A RESOURCE OF THE NATIONAL ACTION PLAN FOR ENERGY EFFICIENCY NOVEMBER 2007 About This Document This Guide to Resource Planning with Energy Effi ciency is pro­ vided to assist gas and electric utilities, utility regulators, and others in the implementation of the recommendations of the National Action Plan for Energy Effi ciency (Action Plan) and the pursuit of its longer-term goals. This Guide describes the key issues, best practices, and main process steps for integrating energy effi ciency into resource planning. The intended audience for this Guide is any stakeholder inter­ ested in learning more about how to promote energy effi cien­ cy resource decisions. Utility resource planners who are early in the process of integrating energy effi ciency into resource planning may turn to the Guide to address their questions about how to proceed. Those overseeing utilities, such as public utility commissions and city councils, can use the Guide to help ask the right questions and understand the key issues when reviewing utility resource planning decisions. Guide to Resource Planning with Energy Effi ciency A RESOURCE OF THE NATIONAL ACTION PLAN FOR ENERGY EFFICIENCY NOVEMBER 2007 The Guide to Resource Planning with Energy Effi ciency is a product of the National Action Plan for Energy Effi ciency Leadership Group and does not refl ect the views, policies, or otherwise of the federal government. The role of the U.S. Department of Energy and the U.S. Environmental Protection Agency is limited to facilitation of the Action Plan. This document was fi nal as of December 2007 and incorporates minor modifi cations to the original release. If this document is referenced, it should be cited as: National Action Plan for Energy Effi ciency (2007). Guide to Resource Planning with Energy Effi ciency. Prepared by Snuller Price et al., Energy and Environmental Economics, Inc. <www.epa.gov/eeactionplan> For More Information Regarding the Guide to Resource Planning with Energy Effi ciency, please contact: Katrina Pielli U.S. Environmental Protection Agency Offi ce of Air and Radiation Climate Protection Partnerships Division Tel: (202) 343-9610 E-mail: [email protected] Regarding the National Action Plan for Energy Effi ciency, please contact: Stacy Angel Larry Mansueti U.S. Environmental Protection Agency U.S. Department of Energy Offi ce of Air and Radiation Offi ce of Electricity Delivery and Energy Reliability Climate Protection Partnerships Division Tel: (202) 586-2588 Tel: (202) 343-9606 E-mail: [email protected] E-mail: [email protected] or visit www.epa.gov/eeactionplan Table of Contents List of Figures ......................................................................................................................................................................i List of Tables ......................................................................................................................................................................ii List of Abbreviations and Acronyms...................................................................................................................................iii Acknowledgements ..........................................................................................................................................................vi Executive Summary ................................................................................................................................. ES-1 1: Introduction ............................................................................................................................................ 1-1 1.1 About the Guide ............................................................................................................................................... 1-1 1.2 Structure of the Guide ....................................................................................................................................... 1-3 1.3 Development of the Guide ................................................................................................................................ 1-4 1.4 Notes ................................................................................................................................................................ 1-4 2: Potential Studies.................................................................................................................................... 2-1 2.1 Determining Energy Effi ciency Potential ............................................................................................................. 2-1 2.2 Types of Potential Studies .................................................................................................................................. 2-2 2.3 Resources on Energy Effi ciency Potential ............................................................................................................ 2-4 2.4 Notes ................................................................................................................................................................ 2-9 3: Development of Energy Efficiency Avoided Costs .............................................................................. 3-1 3.1 Overview........................................................................................................................................................... 3-1 3.2 Components of Avoided Costs .......................................................................................................................... 3-1 3.3 Considerations When Developing Avoided Costs ............................................................................................... 3-2 3.4 Forecasting Methodologies and Data Sources .................................................................................................... 3-9 3.5 Integration with Supply-Side Capital Planning.................................................................................................. 3-10 3.6 Resources on Energy Effi ciency Avoided Costs ................................................................................................. 3-13 3.7 Resources on Energy Effi ciency and Greenhouse Gases .................................................................................... 3-14 3.8 Notes .............................................................................................................................................................. 3-14 4: Development of Energy Effi ciency Measures ..................................................................................... 4-1 4.1 Developing Energy Effi ciency Measures .............................................................................................................. 4-2 4.2 Resources for Energy Effi ciency Measure Development ...................................................................................... 4-4 4.3 Notes ................................................................................................................................................................ 4-5 5: Determining Cost-Effectiveness ............................................................................................................ 5-1 5.1 Overview........................................................................................................................................................... 5-1 5.2 Use of Discount Rates ....................................................................................................................................... 5-4 National Action Plan for Energy Effi ciency Table of Contents (continued) 5.3 Resources for Determining Cost-Effectiveness .................................................................................................... 5-5 5.4 Notes ................................................................................................................................................................ 5-6 6: Development of Energy Efficiency Programs and Portfolios.............................................................. 6-1 6.1 Types of Programs ............................................................................................................................................. 6-1 6.2 Criteria to Use in Developing Programs .............................................................................................................. 6-3 6.3 Resources for Developing Energy Effi ciency Programs and Portfolios .................................................................. 6-4 6.4 Notes ................................................................................................................................................................ 6-5 7: Estimating Energy Efficiency Impacts for Resource Planning ............................................................. 7-1 7.1 Overview........................................................................................................................................................... 7-1 7.2 Estimation of Energy Effi ciency Reductions ........................................................................................................ 7-1 7.3 Estimation of Peak Capacity Reductions............................................................................................................. 7-2 7.4 Energy Effi ciency and Greenhouse Gas Emissions ............................................................................................... 7-4
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