It's About Time: Energy Efficiency's Value Depends on Timing of Savings

April 5, 2018

Using electricity more efficiently benefits both consumers that install energy efficiency measures, from utility bill savings, and utility customers as a whole, from avoided utility system costs. Historically, quantification of efficiency's benefits has largely focused on the economic value of the energy savings. Far less attention has been paid to the peak demand impacts of efficiency, which make it more valuable and increase electric system reliability.

In an earlier analysis, Berkeley Lab calculated the time-varying value of energy efficiency in several U.S. regions (California, Georgia, Massachusetts, Pacific Northwest) for five electricity end-uses - residential lighting, water heating, and air conditioning, commercial lighting, and exit signs. A new study by Berkeley Lab for the Michigan Public Service Commission applied this approach to the service areas of two Michigan utilities, Consumers Energy and DTE Energy, and conducted additional analysis that advances research into efficiency's time-sensitive value. A technical brief, Time-Varying Value of Energy Efficiency in Michigan, summarizes the study's findings.   

The brief provides insights on assessing the time-varying value of energy efficiency that may be applicable to other states. First, statistically-representative metered data on end-use load shapes (hourly consumption of end uses such as residential lighting and water heating) are critical for accurate assessment of savings by time of day. Second, until metered data are available, data from regions with similar energy consumption characteristics should be considered. For example, the Berkeley Lab study for Michigan used end-use load shapes from the Pacific Northwest because they are based on metered data and are very similar to the load shapes for some measures from the Electric Power Research Institute (EPRI) End Use Load Shape Library that are applicable to Michigan.

The figure shows residential air-conditioning load shapes from DSMore (a modeling tool used by the Michigan utilities), the Pacific Northwest metered load shapes and EPRI. The DSMore load shapes are scaled from whole house demand in Michigan, rather than an individual end use. The end-use load shapes from the Pacific Northwest are from two programs that provided residential metered data. The figure shows that the Pacific Northwest metered data are far more similar to the EPRI data than the DSMore modeled data.

Another conclusion of Berkeley Lab's new study is that investigation of all value streams for energy efficiency - for example, avoided risk that future generating fuel prices might be higher or more volatile than forecast, avoided air pollution, demand reduction induced price effect, and avoided compliance costs for Renewable Portfolio Standards - are important for appropriately valuing this resource.

The U.S. Department of Energy's Office of Electricity Delivery and Energy Reliability supported this work.

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