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

Figure 4.3. Efficient Frontier of Feasibility Space
Source: NWPCC 2005, p.6-13.
The NWPCC’s Power Plans have historically found that energy efficiency is the most
valuable resource for the region in its risk-constrained, least-cost planning. The NWPCC
states this point as follows:
The Council’s power plan addresses the risks these uncertainties pose for the
region’s electricity future and seeks an electrical resource strategy that minimizes
the expected cost of, and risks to, the regional power system over the next 20
years. Across multiple scenarios considered in the development of the plan, one
conclusion was constant: the most cost-effective and least risky resource for the
region is improved efficiency of electricity use … In each of its power plans, the
Council has found substantial amounts of conservation to be cheaper and more
sustainable than most other types of generation. In this Sixth Power Plan,
because of the higher costs of alternative generation sources, rapidly developing
technology, and heightened concerns about global climate change, conservation
holds an even larger potential for the region … The plan finds enough
conservation to be available and cost-effective to meet 85 percent of the region’s
load growth for the next 20 years. (NWPCC 2010, page 3)
Other Options to Account for Risk Benefits
Options for accounting for risk benefits when using avoided costs for screening include:
using a cost adjustment factor, an additional risk hedge value, adjusting the discount
rates, and applying a qualitative approach.
Some states account for this benefit of energy efficiency directly in their screening
criteria. For example, Vermont applies a 10 percent cost adjustment factor to its energy
efficiency program screening to account for the risk benefits. In this process, costs of
efficiency measures are decreased by 10 percent.
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