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Potential for Energy Efficiency, Demand Response, and Onsite Renewable Energy to Meet Texas’S Growing Electricity Needs

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Potential for Energy Efficiency, Demand Response, and Onsite Renewable Energy to Meet Texas’S Growing Electricity Needs Potential for Energy Efficiency, Demand Response, and Onsite Renewable Energy to Meet Texas’s Growing Electricity Needs R. Neal Elliott, Maggie Eldridge, Anna M. Shipley, John “Skip” Laitner, and Steven Nadel1 Alison Silverstein2 Bruce Hedman3 Mike Sloan4 March 2007 Report Number E073 ©American Council for an Energy-Efficient Economy 1001 Connecticut Avenue, N.W., Suite 801, Washington, D.C. 20036 (202) 429-8873 phone, (202) 429-2248 fax, http://aceee.org 1 American Council for an Energy-Efficient Economy 2 Independent consultant 3 Energy and Environmental Analysis, Inc. 4 Virtus Energy Research Associates, Inc. Potential for EE/RE to Meet Texas’s Growing Energy Demands, ACEEE CONTENTS Acknowledgments..................................................................................................................... v About the American Council for an Energy-Efficient Economy (ACEEE)............................ vi Executive Summary................................................................................................................ vii The Energy Challenge for Texas .................................................................................. vii Energy Efficiency, Demand Response, and Onsite Renewable Resources.................. vii Policy Recommendations.............................................................................................viii Importance of the Clean Energy Path for Texas’s Energy Future.................................. x Introduction............................................................................................................................... 1 Overview of Analysis ..................................................................................................... 4 Methodology............................................................................................................................. 4 Energy Demand Reference Case .................................................................................... 5 Residential Sector ....................................................................................................... 7 Commercial Sector...................................................................................................... 7 Industrial Sector.......................................................................................................... 7 The Potential for Cost-Effective Efficiency, Demand Response, and Onsite Renewable Energy Resources.................................................................................................................. 8 Residential Efficiency..................................................................................................... 8 Commercial Efficiency ................................................................................................. 10 Industrial Efficiency...................................................................................................... 11 Demand Response......................................................................................................... 13 Background—Demand Response in ERCOT........................................................... 13 Combined Heat and Power Systems............................................................................. 16 Onsite Renewables........................................................................................................ 18 Background for Economic Potential......................................................................... 18 Policy Potential for Efficiency, Demand Response, and Onsite Renewable Energy ............. 20 Summary of Achievable Potential ................................................................................ 21 Energy Efficiency and Conservation Policies............................................................... 23 Expanded Energy Efficiency Improvement Program............................................... 23 New State-Level Appliance and Equipment Standards............................................ 24 More Stringent Building Energy Codes.................................................................... 25 Advanced Energy-Efficient Building Program......................................................... 25 Energy-Efficient State and Municipal Buildings Program ....................................... 26 Short-Term Public Education and Rate Incentives................................................... 26 Increased Demand Response Programs........................................................................ 27 CHP Generation Target................................................................................................. 29 Onsite Renewable Energy Policies ............................................................................... 30 Investments, Costs, and Benefits of Energy Efficiency and Renewable Energy Resource Policies.................................................................................................. 33 Required Public Funding for Energy Efficiency and Renewable Energy Policies... 35 Summary and Conclusions ..................................................................................................... 36 References............................................................................................................................... 39 Appendix A: Policy Case Assessment.................................................................................... 47 Appendix B: Detailed Reference Case ................................................................................... 49 iii Potential for EE/RE to Meet Texas’s Growing Energy Demands, ACEEE Appendix C: Economic Potential Assessment Approach and Detailed Tables: Energy Efficiency............................................................................................................................ 51 C.1 Residential Efficiency ............................................................................................ 51 C.2. Commercial Efficiency ......................................................................................... 56 C.3. Industrial Efficiency Analysis............................................................................... 60 Overview of Approach.............................................................................................. 60 Methodology for Establishing the Baseline for Electric Savings Potential.............. 60 Market Characterizations.......................................................................................... 60 Industrial Electricity End uses .................................................................................. 62 Overview of Efficiency Measures Analyzed ............................................................ 65 Electricity Savings Potential: Potential for Energy Savings..................................... 65 Appendix D: Demand Response............................................................................................. 67 D.1.1 Background—Demand Response in ERCOT..................................................... 67 D.2. Estimating Potential Demand Response in ERCOT............................................. 70 D.3. Detailed Demand Response Policy Recommendations ........................................ 75 Appendix E: Economic Potential Assessment Approach and Detailed Tables: Combined Heat and Power Systems ............................................................................................................. 81 E.1. Introduction ........................................................................................................... 81 E.2. Energy Price Projections ....................................................................................... 88 E.3. CHP Technology Cost and Performance............................................................... 90 E.4. Market Penetration Analysis ................................................................................. 95 Appendix F: Onsite Renewables............................................................................................. 99 F.1. Introduction............................................................................................................ 99 Status of Renewable Energy in Texas: ..................................................................... 99 What is Possible in Texas? ..................................................................................... 100 Overarching threshold issues .................................................................................. 102 Emission Reductions from Renewables.................................................................. 102 Crafting a Successful Solar Program ...................................................................... 103 F.2. Recommended Incentives to Promote Onsite Renewable Energy in Texas........ 104 Specific Incentives to create Demand for Onsite Renewables: .............................. 104 Specific Incentives to lower the cost of Supply of Onsite Renewables:................. 104 Enabling Policies: Address Market Structural Issues:........................................... 105 iv Potential for EE/RE to Meet Texas’s Growing Energy Demands, ACEEE ACKNOWLEDGMENTS The authors express their appreciation to the Energy Foundation and Environmental Defense whose combined support made this report possible. We also express our appreciation to Ramon Alvarez of Environmental Defense and David Wooley of the Energy Foundation for their guidance in the planning and preparation of this
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