Utility Demand-side Management Research Articles

Evaluating the Energy-Saving Effects of a Utility Demand-Side Management Program: A Difference-in-Difference Coarsened Exact Matching Approach

This paper seeks to estimate the energy-saving effect of a Demand-Side Management program, specifically Gainesville Regional Utility’s (GRU) high-efficiency central Air Conditioner (AC) rebate program in which GRU offers incentives to its customers to replace their old, low-efficiency AC unit with a high-efficiency model. We use a difference-in-difference coarsened exact matching approach to reduce the imbalance of pre-treatment characteristics between treated and control households. We find substantial annual energy savings of the high-efficiency AC program. We disaggregate the energy-saving effects into summer peak effects, winter peak effects, and non-peak effects. The results indicate that the summer peak effects are substantial and statistically significant while there are little or no statistically significant effects of the program on winter peak demand. Also, by following program participants over a three-year period, we find that there is no statistically significant rebound effect of the high-efficiency AC rebate program.

Defeat the Peak: Behavioral insights for electricity demand response program design

Electric utilities and regulators primarily rely on rate design strategies and economic incentives to achieve customer load malleability at the residential level. However, demand-side management strategies are broadening to incorporate new motivational cues based on pro-social impulses to reduce negative environmental impact and contribute meaningfully to local communities. This evolving relationship between residential customers and utilities is explored to better understand the potential for load malleability achieved through non-economic incentive structures and rate design. Following a review of interdisciplinary perspectives on pro-social behavior and utility demand-side management strategies, we analyze the impact of a pro-social demand response program on the energy use of over 16,000 households served by a municipally owned electric utility in Burlington, Vermont, USA. Results indicate that the program achieved a 13.5% decrease in energy use during the peak annual event in August 2018 with a return on investment of 11 to 1 for the distribution utility. This study builds on the work of other researchers studying individual energy behavior change and supports the argument that pro-social incentives can improve the effectiveness of demand response programs.

From utility demand side management to low-carbon transitions: Opportunities and challenges for energy efficiency governance in a new era

Demand side management (DSM) programs operating within utility systems have played an important role in energy efficiency program delivery. In recent years, utility DSM institutions have been challenged to consider the implications of low-carbon transitions and the wider benefits of energy efficiency. In this perspectives paper we trace the historical evolution from utility DSM frameworks primarily focused on economic efficiency objectives towards consideration of the larger transitions in energy demand required to create a low-carbon society. We highlight the opportunities a low-carbon transition agenda creates to deliver more comprehensive energy efficiency strategies, as well as strengths of the utility DSM framework that new low-carbon institutions might be challenged to emulate. We conclude by calling for a new research program on institutional design to promote sustainable energy demand in a low-carbon transitions era.

Effects of Electric Utility Decoupling on Energy Efficiency

Most economists agree that revenue decoupling eliminates utilities’ incentives to encourage overconsumption of energy, but critics argue that decoupled utilities have no incentive to promote energy efficiency. This paper models the repeated game between regulator and utility and shows that decoupled utilities have greater equilibrium utility demand-side management (DSM) investment in the presence of DSM-related shareholder incentives. It then shows empirically that decoupling is historically associated with significant residential electricity consumption reductions, augmented DSM spending levels, and increased DSM investment efficacy.

Multifamily energy-efficiency retrofit programs: a Florida case study

Multifamily buildings are an important target for efficiency improvements because of their energy savings potential and housing market share. Yet few multifamily retrofit projects have been completed in hot-humid regions and even fewer studies have measured and verified savings from such projects. Addressing this gap, the purpose of our research is to assess the impacts of energy-efficiency upgrades to multifamily buildings in Orlando, FL. Specifically, we measure the first-year electricity savings from retrofits to 232 units in four apartment complexes. Annual savings per unit averaged 2094 kWh (22 %) and ranged from 1700 kWh (18 %) to 3811 kWh (29 %) across complexes. Monthly savings ranged from 48 kWh (9.4 %) in December to 340 kWh (31 %) in August. From these core findings, we estimate that tenants in treatment units saved an average of $272 on their electric bills. We also find evidence to support a strategy of targeting upgrades to improve overall savings and program cost-effectiveness. Results are being used to guide development of a utility demand-side management program for multifamily property owners. Progress in this market requires additional pilot projects, access to utility data, reliable measurement and verification of savings, and innovative financing structures.

Growing summer energy conservation through residential tree planting

Energy conservation strategies are now at the forefront of electrical utility demand-side management planning. Residential shade trees extenuate the heating of buildings in the summertime by intercepting insolation and by evapotranspirative cooling of their immediate surroundings. By modifying location-specific climate data and tree growth characteristics, we adapt the Sacramento Municipal Utility District's (SMUD) Tree Benefits Estimator for application in Toronto, Canada. We then use our tool to model the air conditioning energy conservation savings delivered by 577 trees planted in Toronto backyards between 1997 and 2000. In urban residential neighbourhoods, where houses are closely spaced, the energy conservation benefits of planting a tree depend on species, on pre-existing canopy, and on placement of the tree with respect to distance and orientation from buildings. Study trees contributed 77,140kWh (167kWh/tree) of electricity savings as of 2009, 54.4% of which was due to shading of neighbouring houses. Twenty-five years following planting, we estimate that each study tree will have delivered, on average, between 435 and 483kWh in energy conservation benefit. Our findings indicate that residential tree-planting programmes in densely settled urban areas should not focus exclusively on location-driven strategic planting to yield large energy conservation benefits. Instead, we argue that priority should be given to selecting planting locations that will maximize tree survival as neighbourhood energy conservation benefits of a tree that achieves mature stature often outweigh the homeowner-specific benefits of a strategically planted tree.

Electric Utility Demand Side Management in Canada

Government, utility, and private subsidies for energy efficiency play a prominent role in current efforts to reduce greenhouse gas emissions, yet the effectiveness of this policy approach is in dispute. One opportunity for empirical analysis is provided by the past energy efficiency subsidies, called demand-side management programs, offered by electric utilities in North America over several decades. Between 1990 and 2005, most electric utilities in Canada administered such programs, with total spending of $2.9 billion (CDN$2005). This paper uses the significant inter-annual variation in demand side management spending during this period to econometrically estimate the effectiveness of these subsidies. The resulting estimates indicate that these programs have not had a substantial impact on overall electricity consumption in Canada. doi: 10.5547/ISSN0195-6574-EJ-Vol32-No4-5

The costs and benefits of white certificates schemes

White certificate schemes mandate energy companies to promote energy efficiency with flexibility mechanisms, including the trading of energy savings. A unified framework is used to estimate the costs and benefits of the schemes implemented in Great Britain in 2002, in Italy in 2005 and in France in 2006. Negawatt-hour cost estimates reach €0.009 per kWh saved in Great Britain and €0.037 per kWh saved in France, which compares favourably to energy prices in those countries. Moreover, the benefits of reduced energy bills and CO2 emissions saved exceed the costs, thus white certificate schemes pay for themselves. Overall, the policy instrument is cost-effective and economically efficient. A closer look at the differences among countries provides general insights about the conceptualization of the instrument : (i) compared to utility demand-side management, to which they are related, white certificate schemes provide more transparency about energy savings, but less transparency around costs ; (ii) the substantial efficiency discrepancy between the British scheme and its French counterpart can be explained by differences in technological potentials, coexisting policies and supply-side systems in these countries ; (iii) the nature and amount of costs influence compliance strategies. Notably, if energy suppliers are allowed to set their retail price freely, they tend to grant subsidies to end-use consumers for energy efficient investments.

Utility DSM: Off the Coasts and into the Heartland

Utility demand-side management efforts began on the coasts but have recently spread to the “heartland.” The authors review efforts to develop DSM programs and policies in states that are now ramping up programs, identifying key practices that are often linked with progress in states that are new to DSM and discussing the implications for the 18 states that currently lack significant DSM programs.

Implementing energy efficiency: Challenges and opportunities for rural electric co-operatives and small municipal utilities

Challenges in implementing demand side management (DSM) programs in rural electric co-operatives and small municipal utilities are not well understood, yet these organizations sell roughly 15% of electricity in the US, many are more coal-intensive than investor-owned utilities (IOUs), and they are politically important—rural electric co-operatives cover about 75% of the US land area and municipal utilities are found in every state except Hawaii. We provide a background on rural co-operatives and municipal utilities in the context of the US electric sector and highlight the challenges and opportunities of implementing DSM programs in these institutions. Where past studies of utility DSM have mostly focused on IOUs or consisted of qualitative case studies of municipal utilities with exemplary DSM performance, this study makes a unique contribution to the DSM literature by systematically analyzing an entire co-operative and municipal utility population in Minnesota through the use of a survey. In doing so, we provide policy recommendations relevant to energy planners and policy makers to support DSM in rural electric co-operatives and municipal utilities.

Demand-Side Management and Energy Efficiency Revisited

The key finding of an influential paper that received the International Association for Energy Economists' Best Paper Award (2004) is that utilities have been overstating electricity savings and underestimating costs associated with energy efficiency demand side management (DSM) programs. This claim is based on point estimates of average DSM-related savings and costs implied by an econometric model of residential electricity demand. In this response we first argue that the choice of test statistics, by not weighting estimated savings and costs by utility electricity sales and DSM expenditures respectively, biases results in favor of rejecting the null hypothesis that utility-reported electricity savings reflect true values. We also note that utility estimates of average program savings and costs are rejected based on point estimates alone; no attempt is made to evaluate the uncertainty surrounding these estimates. We use the same data and econometric model to estimate the appropriate test statistics. We then construct nonparametric bootstrap confidence intervals. We fail to reject the average electricity savings and DSM program costs reported by utilities using both the weighted and unweighted test statistics. Our results suggest that the evidence for rejecting utility estimates of DSM savings and costs should be re-interpreted.

Electricity Intensity in the Commercial Sector: Market and Public Program Effects

Publicly-funded energy efficiency programs have grown in number, size, and scope in the past two decades. The focus of many of these programs is the commercial buildings sector, which purchases approximately one-third of all the electricity produced in the United States. Using a fixed effects panel model, this study analyzes commercial sector electricity intensity across 42 states from 1989 to 2001; in aggregate, these states account for between 90 and 95 percent of U.S. commercial sector electricity sales. The analysis separates market effects from public program effects, finding that electric utility demand side management programs were responsible for reducing commercial sector electricity intensity in 2001 by 1.9 percent relative to the 1989 level. Further, rapidly expanding market transformation programs were responsible for reducing electricity intensity in this sector by 5.8 percent relative to the 1989 level. The findings suggest that in 2001 the combined effects of these public programs reduced commercial sector retail electricity sales by 77.1 million MWh, representing about 2.3 percent of total U.S. retail electricity sales.

Energy conservation in electric utilities: an opportunity for restorative economics at SaskPower

Utilities can profit through direct financial and environmental benefits, and increased shareholder and customer value. Where demand side management (DSM) programs cost less per kilowatt-hour than it would cost to generate the same amount of electricity, energy conservation offers a viable supply option, reducing the need for large capital expenditures in generating capacity. It may also improve the efficiency of transmission and distribution assets and reduce operating and maintenance costs. To deliver DSM, utilities can employ awareness/information programs, energy management and technical and training services, financial incentives and tax measures, which may be implemented through voluntary programs, regulation and government expenditures, financial incentives or new business ventures. The lower discount rate in electric utilities, when compared to most customer businesses, makes utility DSM more cost effect than alternative business models. Using SaskPower, a vertically integrated electric utility in Saskatchewan, Canada as an example, this paper demonstrates how selling efficiency rather than power offers utilities both a supply option and a business opportunity. SaskPower can accrue financial and environmental benefit, while meeting and exceeding customer and stakeholder expectations. This paper discusses the challenges and opportunities energy conservation represents for electric utilities.

Where Did the Money Go? The Cost and Performance of the Largest Commercial Sector DSM Programs

Spending on electricity energy-efficiency programs was responsible for most of the growth (and decline), and almost all of the energy savings from U.S. utility demand-side management (DSM) programs between 1990 and 1998. As a result of restructuring, utilities may never again assume such an important role in promoting electricity energy efficiency. However, as governments consider future domestic policies to promote energy efficiency in response to global environmental commitments, the potential of large-scale energy efficiency programs will likely be discussed. This article presents new information on a critical issue that will surely arise in these discussions: how much does it cost to save energy through programs that use monetary incentives and targeted information to influence individual customer decisions? We present findings from a detailed examination of the complete costs and measured energy savings from the largest commercial sector DSM programs operated by U.S. electric utilities in 1992. We extend the methodological considerations first identified by Joskow and Marron (1992) regarding differences among utility cost accounting conventions and savings evaluation methods. We quantify the impact of missing and incomplete data and, to the extent they can be assessed, demonstrate that our assumptions to address them are conservative in that they err on the side of overstating the apparent cost of saved energy. We find that the programs, as a whole, have saved energy at a cost of 3.2C/kWh. When compared to the cost of the energy they allowed the sponsoring utilities to avoid generating or purchasing (in the absence of these programs), we find that the programs, as a whole, are cost effective.

Improving Compressed Air System Efficiency—Know What You Really Need

ABSTRACT Compressed air is often the most expensive utility in an industrial facility, and cost-effective efficiency opportunities in both the production and use of compressed air are often ignored by facility operators. Leaks, inappropriate uses of compressed air, poor choice of compressors and ancillary equipment, pressure problems and poor attempts to solve them, and inefficient controls are among the many contributors to compressed air inefficiency in many industrial facilities. Through utility demand-side management (DSM) programs as well as their own efforts, Wisconsin Power and Light customers have been able to improve compressed air system efficiency over the past few years. One customer reduced compressed air operating costs by one third ($17,000/year saved) by reducing air use without reducing production. Another, by monitoring air production and energy requirements of the system, selected a properly sized 75 hp compressor to replace a worn-out 250 hp compressor and paid for the new compressor in less than three years from the energy savings. Many customers reduced air use by replacing open tube blow-offs with air amplification nozzles. Another customer installed a sophisticated multiple compressor control system, saving the cost of the control system in less than four years of reduced energy costs.

Prospects for Cool Thermal Storage in a Competitive Electric Power Industry

During the 1980s and early 1990s, the use of cool thermal energy storage (TES) in commercial, institutional, and industrial facility air-conditioning systems became widespread in the United States. The growth of TES was driven by electric utility demand-side management (DSM) programs, which provided capital incentives and rate structures favorable to TES. The success of DSM and the pending deregulation of electric power production have all but eliminated external support for TES. Unless TES can adapt to the new economic climate, its use is likely to decline significantly. The market forces behind the TES boom and recent changes in these forces are reviewed. Strengths and weaknesses of TES are discussed relative to these redefined space conditioning market priorities. Potential future roles for TES are considered, and new developments in TES technology that may contribute to its sustainability are described. Although the future use of TES is likely to be focused more narrowly in its most competitive niches, it can survive and continue to play an important role in HVAC systems despite recent developments.

Carbon Dioxide Emissions from the U.S. Electricity Sector

Abstract

Energy Conservation in Typical Asian Countries

Various policies and programs have been created to promote energy conservation in Asia. Energy conservation centers, energy conservation standards and labeling, commercial building codes, industrial energy use regulations, and utility demand-side management (DSM) are but a few of them. This article attempts to analyze the roles of these different policies and programs in seven typical Asian countries: China, Indonesia, Japan, Pakistan, South Korea, the Philippines, and Thailand. The conclusions show that the two most important features behind the success policies and programs are (1) government policy support and (2) long-run self-sustainability of financial support to the programs.

電力規制緩和とDSM

電力規制緩和とDSM

Estimation of Avoided Costs for Electric Utility Demand-Side Planning

Avoided costs originated with federal laws designed to encourage renewable energy and small power production. When estimated properly, they provide an unbundled characterization of the short- and long-run cost structure of a utility. We review current practices for estimating avoided costs for use in electric utility demand-side management (DSM) resource planning. For large DSM resource options, using avoided costs to estimate value is more accurate than using short-run marginal costs; avoided costs are simpler to use than traditional supply planning methods. We describe various administrative approaches for estimating avoided power generation costs and discuss modeling issues that arise in the estimation process. We also discuss emerging, market-based approaches for estimating avoided costs and describe current estimation practices for the additional, often substantial, non-generation-related costs avoided by DSM programs. Finally, we discuss special considerations in using avoided costs to estimate the ...