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

Table of Contents
EXECUTIVE SUMMARY ......................................................................................................... 1
1. INTRODUCTION ............................................................................................................... 9
2. TESTS FOR SCREENING ENERGY EFFICIENCY PROGRAMS ............................................. 12
2.1 Description of the Cost-Effectiveness Tests ............................................. 12
2.2 Implications of the Cost-Effectiveness Tests ............................................ 14
2.3 Deciding Whether to Apply the PAC, TRC or Societal Test ...................... 17
2.4 Recommendations for Which Tests to Apply ............................................ 19
3. CALCULATION OF AVOIDED COSTS ............................................................................... 22
3.1 Introduction ................................................................................................... 22
3.2 Avoided Energy Costs ................................................................................. 22
3.3 Avoided Capacity Costs .............................................................................. 23
3.4 Avoided Transmission and Distribution Costs .......................................... 24
3.5 Avoided Environmental Compliance Costs ............................................... 26
3.6 Price Suppression Effects in Wholesale Electricity Markets ................... 29
3.7 Line Losses ................................................................................................... 30
3.8 Illustrative Example ...................................................................................... 30
4. CAPTURING ALL THE IMPACTS OF ENERGY EFFICIENCY ................................................ 33
4.1 Other Program Impacts ................................................................................ 33
4.2 Free-Riders, Spillover and Market Transformation ................................... 41
4.3 The Risk Benefits of Energy Efficiency ...................................................... 45
5. EFFICIENCY SCREENING METHODOLOGICAL ISSUES ..................................................... 50
5.1 Discount Rate ............................................................................................... 50
5.2 Study Period ................................................................................................. 54
5.3 Screening Level ............................................................................................ 55
6. SUMMARY OF RECOMMENDATIONS ............................................................................... 58
REFERENCES .................................................................................................................... 62
APPENDIX A – ILLUSTRATIVE EXAMPLE AND AVOIDED COSTS............................................ 67
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