Best Practices in Energy Efficiency Program Screening - Synapse ...

the goal of achieving key public policy objectives with the goal of ensuring a net
reduction in costs to utility customers.
Illustrative Example of the Impacts of Best Practices
Figure ES.2 provides an illustration of how different methodologies and assumptions can
affect the cost-effectiveness of energy efficiency programs. The screening results
presented below for the best practices are for an actual utility in New England that we
use throughout this study to illustrate the potential impact of different screening
approaches and assumptions. The data presented in Figure ES.2 result from applying
the TRC test.
Figure ES.2. Cost-Effectiveness Under Best Practices and Not-Best Practices
The best practices case (blue bars) includes all the avoided costs described above, the
OPIs that are currently used in Massachusetts, a risk-adjusted discount rate of 3.2
percent, and a study period of 30 years to capture all or most of the efficiency measure
lives. In contrast, the not-best practices case (red bars) includes all the same
assumptions except that the discount rate is based on a utility weighted average cost of
capital (8.5 percent), the study period is limited to 15 years, and all OPIs are excluded.
As the figure illustrates, cost-effectiveness is reduced significantly when the not-best
screening practices are applied. The low-income programs are most affected, primarily
because the OPIs are excluded. The residential new construction and retrofit programs
are also heavily affected, primarily because the other fuel savings are not accounted for
in the not-best practices case. The impacts on the commercial and industrial sector are
primarily due to the change in discount rate.
In the sections below we provide similar illustrative examples, wherein we indicate the
separate effects of different approaches and assumptions.
| 8 Best Practices in Energy Efficiency Program Screening | www.nhpci.org