northwest power and conservation council slide 1 energy efficiency as a resource option three...
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Northwest Power and ConservationCouncil
Slide 1
Energy Efficiency As A Resource Energy Efficiency As A Resource OptionOption
Three Decades of PNW ExperienceThree Decades of PNW Experience
National Association of Regulatory CommissionEnergy Resources and the Environment Committee
July 22, 2009
Tom EckmanTom EckmanNorthwest Power and Northwest Power and Conservation CouncilConservation Council
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Northwest Power and ConservationCouncil
Slide 2
What You’re About To HearWhat You’re About To Hear What We’ve DoneWhat We’ve Done
– 30 years of using energy efficiency as a resource30 years of using energy efficiency as a resource
Why We Did ItWhy We Did It
– Using Integrated Resource Planning to make the Using Integrated Resource Planning to make the business casebusiness case for for
utility reliance on energy efficiency as a resourceutility reliance on energy efficiency as a resource
How We Know What We DidHow We Know What We Did
– Standardizing Evaluation, Measurement and VerificationStandardizing Evaluation, Measurement and Verification
What We’re About To DoWhat We’re About To Do
– Goals for the coming decadeGoals for the coming decade
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Northwest Power and ConservationCouncil
Slide 3
Northwest Speak (Definitions)Northwest Speak (Definitions)
Average Megawatt (aMW)Average Megawatt (aMW) = 8760 = 8760 MWHMWH
ConservationConservation = Any reduction in = Any reduction in electric power consumption as a result electric power consumption as a result of increases in the of increases in the efficiencyefficiency of energy of energy use, production or distribution. use, production or distribution.
CurtailmentCurtailment = Sitting in a dark, hot = Sitting in a dark, hot house, drinking warm beerhouse, drinking warm beer
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Northwest Power and ConservationCouncil
Slide 4
The Evolution of Energy PolicyThe Evolution of Energy Policy
April 18, 1977 – Conservation means a cold dark house
President Carter announces we are engaged in the moral equivalent of war (MEOW)
December 5, 1980 - Conservation declared a resource equivalentto generation
President Carter signs Northwest Powerand Conservation Act
October 11, 2002
President Carter Awarded Nobel Peace Prize
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Northwest Power and ConservationCouncil
Slide 5
Northwest Power and Conservation Northwest Power and Conservation Planning Act of 1980 (PL96-501)Planning Act of 1980 (PL96-501)
Authorized States of ID, OR, MT and WA to form an Authorized States of ID, OR, MT and WA to form an “interstate compact” (aka, “The Council”)“interstate compact” (aka, “The Council”)
Directed the Council to develop 20-year load forecast and Directed the Council to develop 20-year load forecast and resource plan (“The Plan”) and update it every 5 – yearsresource plan (“The Plan”) and update it every 5 – years
– ““The Plan” shall call for the development of the The Plan” shall call for the development of the least costleast cost mix of resourcesmix of resources
– ““The Plan” shall considerThe Plan” shall consider conservation (energy efficiency) conservation (energy efficiency) its highest priority resourceits highest priority resource equivalent to generation with a equivalent to generation with a 10% cost advantage over power generating resources10% cost advantage over power generating resources
Mandated Mandated public involvementpublic involvement in Council’s planning process. in Council’s planning process.
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Northwest Power and ConservationCouncil
Slide 6
How Has It Worked?How Has It Worked?
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Northwest Power and ConservationCouncil
Slide 7
Utility Reaction to Council’s First Utility Reaction to Council’s First Plan Was “Mixed”Plan Was “Mixed”
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Northwest Power and ConservationCouncil
Slide 8
Three Decades of Utility Conservation Three Decades of Utility Conservation AcquisitionsAcquisitions
(aka “Mr. Toad’s Wild Ride”* for the PNW’s Energy Efficiency Industry)(aka “Mr. Toad’s Wild Ride”* for the PNW’s Energy Efficiency Industry)
0
50
100
150
200
250
1978 1982 1986 1990 1994 1998 2002 2006
Conse
rvati
on A
cquis
itio
ns
(aM
W)
See: http://en.wikipedia.org/wiki/Mr._Toad's_Wild_Ride
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Northwest Power and ConservationCouncil
Slide 9
NeverthelessNevertheless Since the Late 70’s Since the Late 70’s
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Avera
ge M
egaw
att
s
1978 1982 1986 1990 1994 1998 2002 2006
BPA and Utility Programs Alliance Programs State Codes Federal Standards
Since 1978 Utility & BPA Since 1978 Utility & BPA Programs, Energy Codes & Programs, Energy Codes & Federal Efficiency Standards Have Federal Efficiency Standards Have Produced Produced Almost Almost 3600 aMW of 3600 aMW of Savings.Savings.
We’ve Accomplished “Mass Quantities”We’ve Accomplished “Mass Quantities”
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Northwest Power and ConservationCouncil
Slide 10
So What’s 3600 aMW?So What’s 3600 aMW?
It’s enough electricity to serve more It’s enough electricity to serve more than the than the entireentire state of Idahostate of Idaho and and all all of Western Montanaof Western Montana
It saved the region’s consumers nearly It saved the region’s consumers nearly than than $1.6 billion$1.6 billion in 2007 in 2007
It lowered 2007 PNW carbon emissions It lowered 2007 PNW carbon emissions by an estimated by an estimated 14.1 million14.1 million tons. tons.
Energy Efficiency Is The Region’s Energy Efficiency Is The Region’s Third Largest ResourceThird Largest Resource
Energy Efficiency12%
Hydro55%
Coal18%
Biomass1%
Wind1%
Nuclear4%
Natural Gas9%
Petroleum & Pet Coke0%
We’ve Saved The Equivalent to Almost Two Grand Coulee Dams
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Northwest Power and ConservationCouncil
Slide 12
So How Did We Make “The Case” ?So How Did We Make “The Case” ?
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Northwest Power and ConservationCouncil
Slide 13
Two MethodsTwo Methods
Integrated Resource Planning (IRP)Integrated Resource Planning (IRP)– Systematic evaluation of the least Systematic evaluation of the least
cost/least risk portfolio of resource choices cost/least risk portfolio of resource choices where energy efficiency is treated where energy efficiency is treated equivalent to generating resourcesequivalent to generating resources
Energy Efficiency Resource Portfolio Energy Efficiency Resource Portfolio StandardsStandards– Mandated minimum share of energy Mandated minimum share of energy
efficiency resourcesefficiency resources
IRP Portfolio Analysis Determines How Much Energy IRP Portfolio Analysis Determines How Much Energy Efficiency to Develop in the Face of UncertaintyEfficiency to Develop in the Face of Uncertainty
0%
2%
4%
6%
8%
10%
12%
14%
16%
0.0% 1.0% 2.0% 3.0% 4.0% 5.0%
Annual Load Growth
Pro
bab
ilit
y (
%)
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
0% 1% 2% 3% 4% 5%
Real Natural Gas Escalation Rate% )
Pro
bab
ilit
y (
%)
0%
5%
10%
15%
20%
25%
30%
3.27% 3.80% 3.85% 3.93% 2.50%
Nominal Annual Electricity Price Escalation Rate
Pro
bab
ilit
y (
%)
0
20
40
60
80
100
120
98
467
705
842
1,06
9
1,19
1
1,28
3
1,33
5
1,35
3
1,37
3
1,65
0
Resource Potential
Levelize
d C
ost
0%2%4%6%8%
10%12%14%16%18%20%
Carbon Tax Implementation Date
Pro
bab
ilty
(%
)
0
5000
10000
15000
20000
25000
1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975
Hydrosytem Year
Cap
acit
y (
MW
)
0%2%4%6%8%
10%12%14%16%18%20%
Pro
bab
ilit
y
$0 $6 $12 $18 $24 $30 $36
Carbon Tax
Frequency Chart
Dollars
Mean = $689.000
.011
.022
.032
.043
0
10.75
21.5
32.25
43
($3,509) ($1,131) $1,247 $3,625 $6,003
1,000 Trials 1,000 Displayed
Portfolio Portfolio Analysis Analysis ModelModel
$35,500
$36,000
$36,500
$37,000
$37,500
$23,500 $24,000 $24,500 $25,000
NPV System Risk (2004$Millions)
NPV
Syst
em
Cost
(2
00
4$
Mill
ion
s)
Efficient FrontierEfficient Frontier
NPV System Cost
Portfolio Analysis on Portfolio Analysis on OneOne Slide Slide
$0
$50
$100
$150
$200
$250
$300
$350
$400
0 2000 4000 6000 8000 10000 12000 14000 16000
MWa
20
06
$/M
Wh
Coal ConservationGasRenewablesNuclear
Generic coal, gas and nuclear units are shown at typical project sizes - more units could be built at comparable cost.
So How Do You Know You Did That?So How Do You Know You Did That?
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Northwest Power and ConservationCouncil
Slide 17
The PNW’s Approach To “Standardization” of Savings The PNW’s Approach To “Standardization” of Savings Measurement & VerificationMeasurement & Verification
(We’re Not California)(We’re Not California)
Established An Ongoing Centralized Established An Ongoing Centralized Process for Technical ReviewProcess for Technical Review– Carried out by Carried out by Regional Technical Forum (RTF)Regional Technical Forum (RTF)– RTF composed of utility and non-utility RTF composed of utility and non-utility
engineering and economic experts, staffed by engineering and economic experts, staffed by CouncilCouncil
– Funded by Bonneville Power Administration, Funded by Bonneville Power Administration, utilities and system benefits administratorsutilities and system benefits administrators
Public processPublic process RTF builds on historical program RTF builds on historical program
experience and ongoing evaluations of experience and ongoing evaluations of regional acquisition programsregional acquisition programs
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Northwest Power and ConservationCouncil
Slide 18
RTF’s Major FunctionsRTF’s Major Functions Establish a Standardized Regional Cost-Establish a Standardized Regional Cost-
Effectiveness MethodologyEffectiveness Methodology
– Public domain software for evaluating cost-effectivenessPublic domain software for evaluating cost-effectiveness
Recommend Measurement and Verification Recommend Measurement and Verification ProtocolsProtocols– Use IPMVP, ASHRAE, FEMP, Use IPMVP, ASHRAE, FEMP, NAPEE NAPEE Model Energy Efficiency Model Energy Efficiency
Program Impact Evaluation GuideProgram Impact Evaluation Guide– Develop “tailored” M&V Protocols for custom, but “recurring” projects Develop “tailored” M&V Protocols for custom, but “recurring” projects
(e.g. grocery store refrigerated case retrofits)(e.g. grocery store refrigerated case retrofits) Develop and Maintain Internet-based System for Develop and Maintain Internet-based System for
Tracking and Reporting Regional Energy Tracking and Reporting Regional Energy Efficiency Savings and ExpendituresEfficiency Savings and Expenditures– Deemed savings (with minimum technical specifications & Q/C criteria)Deemed savings (with minimum technical specifications & Q/C criteria)– EM&V protocolsEM&V protocols– Default inputs for cost-effectiveness evaluations (e.g., forecast of future Default inputs for cost-effectiveness evaluations (e.g., forecast of future
energy prices, cost of deferrable distribution and transmission, value non-energy prices, cost of deferrable distribution and transmission, value non-energy benefits such as water savings, etc.)energy benefits such as water savings, etc.)
– Forecast CO2 content/kWh saved (based on load shape of savings)Forecast CO2 content/kWh saved (based on load shape of savings)
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Northwest Power and ConservationCouncil
Slide 19
RTF’s Major FunctionsRTF’s Major Functions
Process for updating deemed Process for updating deemed savingssavings as technology and standard as technology and standard practices changepractices change..
Appeals processAppeals process– Utilities or other parties, including vendors, can Utilities or other parties, including vendors, can
demonstrate that different savings and value demonstrate that different savings and value estimates should applyestimates should apply
Collaborative Development of EM&V Collaborative Development of EM&V protocols for programs operated protocols for programs operated across multiple utility service areasacross multiple utility service areas
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Northwest Power and ConservationCouncil
Slide 20
Measure Screening Measure Screening ProcessProcess
All All Possible Possible MeasuresMeasures
ScreeningScreeningCriteria &Criteria &
Cost-Cost-EffectivenessEffectiveness
AnalysisAnalysis
““Deemed” Deemed” Savings and Savings and
Cost-Cost-EffectivenessEffectiveness
““Deemed Deemed Calculated” Calculated” Savings and Savings and
Cost-Cost-EffectivenessEffectiveness
““Custom Project” Custom Project” Valuation, Valuation,
Measurement and Measurement and Verification Verification ProtocolsProtocols
Online Online Planning, Planning, Tracking Tracking & & Reporting Reporting System System Data BaseData Base
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Northwest Power and ConservationCouncil
Slide 21
Online Planning, Tracking and Online Planning, Tracking and Reporting SystemReporting System
Designed to assist utilities and Designed to assist utilities and contractors:contractors:– Identify potential energy efficiency Identify potential energy efficiency
measures and programs eligible for utility measures and programs eligible for utility and/or SBC administrator programs.and/or SBC administrator programs.
– Track progressTrack progress toward savings goals toward savings goals using standardized values and protocolsusing standardized values and protocols
– ReportReport energy efficiency activity status to energy efficiency activity status to utility/SBC administrator management and utility/SBC administrator management and regulatorsregulators
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Northwest Power and ConservationCouncil
Slide 22
Major Components of the PNW Major Components of the PNW Online SystemOnline System
Two-Way SystemTwo-Way System– Users Users downloaddownload deemed savings, deemed savings,
calculators & protocols/custom project calculators & protocols/custom project reportsreports
– Users Users uploadupload results results Business RulesBusiness Rules
– Reporting periodsReporting periods– Verification requirementsVerification requirements
Software PlatformSoftware Platform
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Northwest Power and ConservationCouncil
Slide 23
So So What’s What’s Next?Next?
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Northwest Power and ConservationCouncil
Slide 24
Energy Efficiency is Still the Cheapest OptionEnergy Efficiency is Still the Cheapest Option
Assumptions :
Efficiency Cost = Average Cost of All Conservation in Draft 6th Power Plan Under $100 MWh
Transmission cost & losses to point of LSE wholesale delivery
2020 service - no federal investment or production tax credits
Baseload operation (CC - 85%CF, Nuclear 87.5% CF, SCPC 85%)
Medium NG and coal price forecast (6th Plan draft)
6th Plan draft mean value CO2 cost (escalating, $8 in 2012 to $47 in 2029).
$0
$50
$100
$150
$200
$250
$300
Energ
y Effic
iency
Geothe
rmal
Combin
ed C
ycle
Col. B
asin
Wind
AB Wind
Advan
ced N
uclea
r
Super
critic
al Coa
l (No C
SS)
IGCC (N
o CSS)
Recipr
ocat
ing E
ngine
Woo
d Res
idue
(No C
HP)
MT
Wind
WY W
ind
CSP Par
aboli
c Tro
ugh
Utility
Photo
volta
ic
Leve
lized
Life
cycl
e C
ost
(200
6$/M
Wh)
Emission (CO2) costTransmission & Losses
System IntegrationPlant costs
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Northwest Power and ConservationCouncil
Slide 25
There’s Still “Mass Quantities” To There’s Still “Mass Quantities” To DoDo
6th Plan Technically Achievable Conservation Potential by Sector6th Plan Technically Achievable Conservation Potential by Sector
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
< 0
<20
<40
<60
<80
<10
0
<12
0
<14
0
<16
0
<18
0
<20
0
Real Levelized Cost (2006$/MWh)
Tech
nic
alll
y A
chie
vable
Pote
nti
al (M
Wa) Utility Distribution
AgricultureIndustrialCommercialConsumer ElectronicsResidential
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Northwest Power and ConservationCouncil
Slide 26
Draft 6Draft 6thth Plan Calls for A Doubling of Plan Calls for A Doubling of Annual Energy Efficiency Savings the Annual Energy Efficiency Savings the
Over Next DecadeOver Next Decade
0
50
100
150
200
250
300
350
400
2005 2010 2015 2020
Annual S
avi
ngs
(MW
a)
Plan Goals
Historical Savings
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Northwest Power and ConservationCouncil
Slide 27
Draft 6Draft 6thth Plan Goal: Plan Goal: Meet 85% of Load Growth with Meet 85% of Load Growth with
ConservationConservation
0
1000
2000
3000
4000
5000
6000
7000
2010 2015 2020 2025
Ave
rage M
egaw
att
s
Residual Load Growth - Medium Forecast
Cumulative Savings
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Northwest Power and ConservationCouncil
Slide 28
Impact on Regional Impact on Regional “Revenue Requirement”“Revenue Requirement”
$0
$100
$200
$300
$400
$500
$600
$700
2010 2011 2012 2013 2014
Regio
nal R
eve
nue R
equir
em
ent
(Mill
ion 2
006$)
Cumulative Conservation Cost/Expenses
Cumulative Cost of Equivalent Market Purchases
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Northwest Power and ConservationCouncil
Slide 29
Estimated Cumulative Impact on Regional Estimated Cumulative Impact on Regional “Revenue Requirement” to Achieve “Revenue Requirement” to Achieve
Proposed Conservation TargetsProposed Conservation Targets
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
2010 2011 2012 2013 2014
Year
Cum
mula
tive
Change
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Northwest Power and ConservationCouncil
Slide 30
Impact of The PlanImpact of The Plan Meet Nearly All of Load Growth Over the Next 20 YearsMeet Nearly All of Load Growth Over the Next 20 Years With With
Energy Efficiency at an Average Cost of Less Than $40 MWHEnergy Efficiency at an Average Cost of Less Than $40 MWH
This Will Require Sustained and A Much Larger (2x-3x) This Will Require Sustained and A Much Larger (2x-3x) Investment In Cost-Effective Energy EfficiencyInvestment In Cost-Effective Energy Efficiency
Over the first five-years it will Over the first five-years it will reduce reduce regional revenue regional revenue requirements by 1% - 1.5% as a result of reduced power requirements by 1% - 1.5% as a result of reduced power market purchasesmarket purchases
Accomplishing the “Almost” Draft 6Accomplishing the “Almost” Draft 6thth Plan’s Conservation Goals Plan’s Conservation Goals Will “Will “Stretch”Stretch” the Columbia River the Columbia River
» In five years we’ll build the equivalent of another Chief In five years we’ll build the equivalent of another Chief Joseph dam,Joseph dam,
» In 12 years, we’ll build the equivalent of Chief Joseph, In 12 years, we’ll build the equivalent of Chief Joseph, plus Grand Coulee damsplus Grand Coulee dams
» In 20 years, we will have added the equivalent of 50% to In 20 years, we will have added the equivalent of 50% to the “output” of all hydroelectric resources in the PNWthe “output” of all hydroelectric resources in the PNW
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Northwest Power and ConservationCouncil
Slide 31
Carbon Emissions From the Northwest Carbon Emissions From the Northwest Power System Will Be Below 1990 LevelsPower System Will Be Below 1990 Levels
0
10
20
30
40
50
60
70
Mill
ion
To
ns
CO
2 P
er
Ye
ar
1990 Level: 44 Million Tons
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Northwest Power and ConservationCouncil
Slide 32
Conservation – Cheap, But Worth It?Conservation – Cheap, But Worth It?
Any Any Questions?Questions?