Energy efficiency resources save energy and may reduce peak demand.
July 7, 2017
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Energy efficiency resources save energy and can reduce peak power demand. Typically, however, efforts to quantify energy efficiency benefits have not focused on how efficiency savings are more valuable at certain times of the day and year—namely summer peaks—as a result of the time-varying upstream value of energy savings for the larger grid system. Because many grid investments are driven by when consumers use energy, it’s not possible to accurately assess the upstream grid benefits of energy savings without knowing when energy savings are occurring.
To help fill this knowledge gap, and to better understand the full economic impact of energy efficiency measures, BTO recently sponsored a Lawrence Berkeley National Laboratory (LBNL) analysis and new report evaluating the time-varying value of efficiency measures for five electricity end-uses—residential lighting, residential water heating, residential air conditioning, commercial lighting, and exit signs—in the Pacific Northwest, California, Massachusetts, and Georgia.
LBNL will be hosting a free webinar to discuss this new report on Monday, July 10, 2017.
Figure 1. This figure shows the ratio of the value of energy efficiency when time-dependent capacity benefits are included versus when only energy-related benefits are included.
In addition to reviewing existing literature on the time-varying value of energy efficiency savings, this study provides examples in four geographically diverse locations of how consideration of the time-varying value of efficiency savings impacts the calculation of power system benefits. For example, the figure above shows that improving the efficiency of air conditioning is up to three times more valuable when time-dependent capacity benefits are included, because investments in expensive new power plants and power lines are often driven by high demand for air conditioning on the hottest days of the year.
The study also identifies future research needs that can enhance the consideration of the time-varying value of energy efficiency in cost-effectiveness screening analysis.
Findings from this study include:
- The time-varying value of individual energy efficiency measures varies across the locations studied because of the physical and operational characteristics of the individual utility system (e.g., summer or winter peaking, load factor, reserve margin) as well as the time periods during which savings from measures occur.
- Across the four locations studied, some of the largest capacity benefits from energy efficiency are derived from the deferral of transmission and distribution system infrastructure upgrades. However, the deferred cost of such upgrades also exhibited the greatest range in value of all the components of avoided costs across the locations studied.
- Of the five energy efficiency measures studied, those targeting residential air conditioning in summer-peaking electric systems have the most significant added value when the total time-varying value is considered.
- The increased use of rooftop solar systems, storage, and demand response, and the addition of electric vehicles and other major new electricity-consuming end uses are anticipated to significantly alter the load shape of many utility systems in the future. Data used to estimate the impact of energy efficiency measures on electric system peak demands will need to be updated periodically to accurately reflect the value of savings as system load shapes change.
- Publicly available components of electric system costs avoided through energy efficiency are not uniform across states and utilities. Inclusion or exclusion of these components and differences in their value affect estimates of the time-varying value of energy efficiency.
- Publicly available data on end-use load and energy savings shapes are limited, concentrated regionally, and should be expanded.
LBNL selected the geographic regions studied based on their differing power system load shapes, market structures, approach to, and experience with energy efficiency valuation, as well as the availability of data. Because this study relied on publicly available data, caution should be used when comparing the time-varying value of energy efficiency across the four regions.