Robustness of Energy Efficiency

For this scenario, the Council explored assumptions about the supply of energy efficiency and the drivers that impact acquiring more or less of this resource.

Specifically, the Council looked at the impacts of differing regional adequacy needs, including the contribution to regional capacity needs; rate of acquisition; the amount available; the impact of varying our treatment of emissions impact on portfolio costs; and, finally, how the Council collects supply curves for portfolio analysis to determine if the binning approach impacts the acquisition.

The results for the near-term (2027) and long-term (2041) acquisition of energy efficiency for the baseline conditions and across the varying sensitivity tests are provided in the table below.

Differing adequacy needs

When the Council increased or decreased the regional adequacy need, especially when testing an extremely high regional need to develop new generating resources, the energy efficiency resource acquired came close to doubling.

The contribution of energy efficiency to capacity needs is estimated using the best data that are available to the Council on the timing of the use of electricity. However, some of these data are outdated, and the region is currently conducting research that will allow for updated information to be used in the next power plan. The Council tested how resource additions would respond if the capacity contribution of energy efficiency was increased. In part, this test assumed that the updated data may show better alignment between peak electricity needs and energy efficiency. The test showed changes in other types of resources built in response to the overall change in system need based on the contribution of energy efficiency to the peak system need. However, the Council did not see additional acquisition of energy efficiency in this test.

Altering rate of acquisition

Altering the rate of acquisition of energy efficiency (the ramp rate) resulted in more and less energy efficiency acquired for faster and slower ramps, respectively. See more details on these altered supply curves. The increase or decrease of energy efficiency acquisition was driven by the differing availability of efficiency in the early years of the study. However, similar cost bins of energy efficiency were acquired in both tests. In other words, the increase - or decrease  was due to more – or less – availability in each cost bin, particularly in the early years, and not due to acquiring higher or lower costs of efficiency. In both cases the Council also observed an increase in the overall system cost. In the case where there was an increase in energy efficiency, the increased amount resulted in more money spent on the resource in total. In the case of decreasing energy efficiency acquisition, the increased costs manifested from purchasing more expensive alternate resources. While acquiring more energy efficiency absent other changes would increase the reliability of the system, the Council saw the faster acquisition of energy efficiency altered other resource decisions in a manner that resulted in no meaningful increase in the system reliability.

Amount available

The Council also constrained energy efficiency to look at the impact of suboptimal acquisition. Acquiring more energy efficiency than optimal led to a more expensive system by displacing less expensive resources and by acquiring more resource than needed. With less energy efficiency acquired, the result was a less reliable system.

Varying treatment of emissions

In our baseline for our analyses, the Council incorporated an emissions cost based on the Social Cost of Carbon from the Intergovernmental Panel on Climate Change into the portfolio cost. For this scenario the Council tested the impact of this on the acquisition of energy efficiency. When removing this impact on portfolio costs the Council saw reduction in the near- and long-term acquisition of energy efficiency.

Binning approach

Finally, in providing the energy efficiency supply curve data for the portfolio model, the total number of bins was limited to 14. The bins were primarily differentiated by levelized cost of energy by differences in bin sizes of $10 per megawatt-hour.[1] The amount of efficiency available in each bin varied, depending on the available measures at a given cost. To estimate the impact of this analytical decision, the Council reconfigured the bins so that they were relatively equal in magnitude but had unequal distribution in cost. This resulted in minimal reduction in the near-term acquisition of energy efficiency, but a larger reduction in the total energy efficiency acquired over the 20-year plan duration.

[1] The levelized costs ($/MWh) used to differentiate measures into bins were: <$0, $0-10, $10-20, $20-30, $30-40, $40-50, $50-60, $60-70, $70-80, $80-90, $90-100, $100-130, $130-170, and >$170, all per MWh