Utility Energy Efficiency Programs Research Articles

Technological Trends Driving Utility Residential Energy Efficiency Program Savings

ABSTRACTIn 2023, with increasingly broad adoption of conventional utility energy efficiency programs such as rebates or customer incentives on water heaters, furnaces, and home insulation levels, new and next‐generation energy efficiency programs will likely involve increasingly connected devices and technological interventions. This article identifies four technological trends driving utility residential energy efficiency programs for the future. These trends include: (1) home energy reports (or comparative usage efficiency reports); (2) connected reinforced programs including utility pledge programs and demand response programs; (3) smart thermostats; and (4) smart lighting. This article indicates that ultimately, greater convergence around technology is likely to persist given utility investment in Automated Meter Integration (AMI) systems and broader customer‐driven technological adoption. Ultimately, this article advocates for continued broad‐based adoption of these programs to save energy and mitigate the impacts of climate change.

Discounting the Benefits for Natural Gas Utility Energy Efficiency Programs

Throughout the United States, utilities frequently offer incentives and rebates to customers to upgrade equipment and install improved building measures on homes and businesses to reduce energy consumption. For utilities to offer such programs, per regulatory and legal requirements, they often must follow guidelines to be cost‐effective running through cost‐benefit tests. The costs to operate such programs are straightforward and most often entail just a one‐time expenditure. In contrast, the benefits can vary widely depending on discount rate, projected fuel costs, societal impacts from less consumption, and the life‐cycle of the program.

Focusing and improving traditional energy efficiency strategies

Energy efficiency can get us about half of the way to long-term climate goals. Traditional energy efficiency strategies — vehicle and appliance efficiency standards, building energy codes, utility energy efficiency programs and Energy Star — can provide about half the achievable efficiency savings (i.e., savings of about one-quarter of projected 2050 energy use). However, these strategies can benefit from a variety of improvements, and other programs and policies addressing buildings, transportation and industry can achieve substantial additional savings. These efficiency policies can be combined with strategies involving no- and low-carbon energy sources to put the United States on a trajectory toward meeting long-term energy and climate targets.

Advances in Evaluating Energy Efficiency Policies and Programs

This paper reviews the recent evidence on the effectiveness and cost-effectiveness of energy efficiency interventions. After a brief review of explanations for the energy efficiency gap, we explore key issues in energy efficiency evaluation, including the use of randomized controlled trials and incentives faced by those performing evaluations. We provide a summary table of energy savings results by type of efficiency intervention. We also develop an updated aggregate estimate of 2.8 cents per kilowatt hour (kWh) of net savings from utility energy efficiency programs but note that this estimate is based on aggregate utility-reported energy savings. Our review of the economics literature suggests that energy savings are often smaller than implied by utility-reported results, but some interventions appear to be cost-effective relative to the marginal cost of electricity supply.

Accuracy of automated measurement and verification (M&V) techniques for energy savings in commercial buildings

Trustworthy savings calculations are critical to convincing investors in energy efficiency projects of the benefit and cost-effectiveness of such investments and their ability to replace or defer supply-side capital investments. However, today’s methods for measurement and verification (M&V) of energy savings constitute a significant portion of the total costs of efficiency projects. They also require time-consuming manual data acquisition and often do not deliver results until years after the program period has ended. The rising availability of “smart” meters, combined with new analytical approaches to quantifying savings, has opened the door to conducting M&V more quickly and at lower cost, with comparable or improved accuracy. These meter- and software-based approaches, increasingly referred to as “M&V 2.0”, are the subject of surging industry interest, particularly in the context of utility energy efficiency programs. Program administrators, evaluators, and regulators are asking how M&V 2.0 compares with more traditional methods, how proprietary software can be transparently performance tested, how these techniques can be integrated into the next generation of whole-building focused efficiency programs.This paper expands recent analyses of public-domain whole-building M&V methods, focusing on more novel M&V 2.0 modeling approaches that are used in commercial technologies, as well as approaches that are documented in the literature, and/or developed by the academic building research community. We present a testing procedure and metrics to assess the performance of whole-building M&V methods. We then illustrate the test procedure by evaluating the accuracy of ten baseline energy use models, against measured data from a large dataset of 537 buildings. The results of this study show that the already available advanced interval data baseline models hold great promise for scaling the adoption of building measured savings calculations using Advanced Metering Infrastructure (AMI) data. Median coefficient of variation of the root mean squared error (CV(RMSE)) was less than 25% for every model tested when twelve months of training data were used. With even six months of training data, median CV(RMSE) for daily energy total was under 25% for all models tested. These findings can be used to build confidence in model robustness, and the readiness of these approaches for industry uptake and adoption.

Thermostat metrics derived from HVAC cycling data for targeted utility efficiency programs

New data streams of household energy consumption offer opportunities for utilities to understand their customer base and differentiate between customers. From residential HVAC cycling data and weather data, we derive metrics that can be used to indicate out of a population which households are most likely to have extraordinarily high or low thermostat setpoints, which households are most likely to have thermostat setpoints that change at fixed times each day, and which households could benefit from a change in the hysteresis setting of a thermostat. We demonstrate these metrics using air conditioner data from a set of houses in Austin, Texas. With surveys as validation, we show metrics with accuracy greater than 70% that can be used for targeting utility energy efficiency programs. We show two examples where targeting based on these metrics can substantially increase the mean percentage energy savings achieved for a fixed cost.

Raising the stakes for energy efficiency: A qualitative case study of California's risk/reward incentive mechanism

This article examines California's experience implementing the Risk/Reward Incentive Mechanism (RRIM) between 2007 and 2012. RRIM is a system of financial rewards and penalties designed to motivate California's investor-owned utilities to expand their energy efficiency programs and meet ambitious energy-savings targets. The RRIM is credited with achieving a substantial amount of cost-effective energy savings. Nevertheless, a dispute over the savings attained and the subsequent impact on ratepayers led the California Public Utilities Commission (CPUC) to pause halfway through the implementation period and overhaul the incentive system. The following policy recommendations flow from the analysis. First, in terms of incentive design, avoid sharp payment distinctions that do not reflect meaningful differences in program performance and do not expect an incentive to single-handedly shift the balance between investment in new electricity generation and investment in programs to reduce energy consumption. Second, in terms of institutional factors, expect that incentives will put pressure on evaluation processes and engender new disputes, and implement a high-stakes incentive only if institutional arrangements for savings measurement and dispute resolution are in place and accepted by all parties. Third, in terms of implementation, put incentives in place before utility energy efficiency programs are designed and implemented and design incentives to be as predictable and repeatable as possible.

Addressing data center efficiency: lessons learned from process evaluations of utility energy efficiency programs

This paper summarizes the unique challenges related to addressing energy efficiency in the data center industry and lessons learned from original research and two process evaluations of energy efficiency programs with components that specifically target data centers. The lessons learned include: creating program opportunities specifically focused on data centers; clearly identifying target data centers able to implement energy efficiency programs; understanding decision making in these facilities; and effectively communicating the program opportunities to the target market. The growing energy use of data centers has drawn international attention from policy makers, regulators, industry consortiums, and electric utilities. Any program effective at improving the energy performance of data centers must include specific strategies and processes aimed at confronting a number of challenges specific to this industry, including: the concentrated and rapidly growing energy use of these facilities; the rapid pace of innovation; the extremely high reliability requirements; and the significant split incentives due to the typical data center management structure. The process evaluations covered in this paper are the Pacific Gas and Electric (PG&E) High-Tech program and the Silicon Valley Power (SVP) Public Benefits Program. While the PG&E evaluation was a more complete process evaluation, the SVP evaluation focused specifically on participation from co-location facilities. These process evaluations together included interviews with program participants, nonparticipants and utility staff and also included outreach to a large variety of industry stakeholders. In addition, the PG&E evaluation included detailed process-mapping used to identify the necessity and importance of all program processes. The insights gathered from these evaluations are not only applicable to US electrical utilities but can also be applied to any international organization looking to create incentives for energy efficiency or demand reduction in this industry.

Public Benefit Funds: A Key Strategy for Advancing Energy Efficiency

Although many programs have been dramatically scaled back, utility energy efficiency programs are by no means dead or dying. A federal public benefit matching fund would provide incentive to get more states involved.

96/03454 - Major changes ahead for Dutch energy sector

Increases in energy-use efficiency have made impressive contributions to both economy and environment over the last two decades, but the rate of improvement has slowed and energy-efficiency continues to be a controversial subject. We explore the genesis and character of the energy-efficiency debate and assess the roles of market forces, government intervention, and technological innovation in determining future progress. We discuss the prognosis for utility energy-efficiency programs, which are imperiled by the current trend to utility deregulation. We note that decreasing energy prices have weakened the earlier economic stimulus to energy efficiency and discuss the strong driving force that has arisen from environmental issues. We examine the proposition that innovation stimulated by R&D investment has been a key ingredient in the development of energy-efficient technologies and assert that the continuing development of a knowledge base to assure future innovation requires a strong government/private-sector partnership.

Energy-efficiency: Issues for the decade

Increases in energy-use efficiency have made impressive contributions to both economy and environment over the last two decades, but the rate of improvement has slowed and energy-efficiency continues to be a controversial subject. We explore the genesis and character of the energy-efficiency debate and assess the roles of market forces, government intervention, and technological innovation in determining future progress. We discuss the prognosis for utility energy-efficiency programs, which are imperiled by the current trend to utility deregulation. We note that decreasing energy prices have weakened the earlier economic stimulus to energy efficiency and discuss the strong driving force that has arisen from environmental issues. We examine the proposition that innovation stimulated by R&D investment has been a key ingredient in the development of energy-efficient technologies and assert that the continuing development of a knowledge base to assure future innovation requires a strong government/private-sector partnership.

Regulatory and mixed policy options for reducing energy use and carbon emissions

This article discusses non-fiscal policy options to reduce energy demand and the resulting environmental impacts, and it reviews experiences with these options to date. Such policies include accelerating technology development and demonstration, stimulating product demand via procurement policies, applying efficiency standards to information-poor end-use sectors, and encouraging utility energy-efficiency programs. Efforts to implement such measures are underway in several industrialised countries and have begun in developing countries. Increasing energy efficiency is an important area for near-term carbon emission reductions, and a key strategy for cost-effective mitigation of global climate change. However, little of the energy-efficiency potential identified by technical studies will be realised in the absence of policies to reduce barriers to energy-efficiency investments. Performance standards can overcome the lack of information on the part of energy users, while technology procurement helps overcome the view of manufacturers that introducing efficient products is risky. The effects of these policy options on product markets are characterised, showing the synergy between different instruments and their potential to create and transform markets for energy-efficient products, systems and services. The existence of such energy-efficiency markets can stimulate new progress and innovation, providing the conditions in which the continuous process of technical improvement is significantly accelerated. Most policy analysis and discussions regarding climate-change mitigation have centred on various forms of carbon emission taxes and to some extent on tradable emission offsets or permits. This article concludes with an examination of why non-fiscal options are mostly absent from energy-economic models and climate-change policy studies, and we suggest approaches to include them more fully in energy-policy analysis and implementation.

Regulatory and Mixed Policy Options for Reducing Energy Use and Carbon Emissions

This article discusses non-fiscal policy options to reduce energy demand and the resulting environmental impacts, and it reviews experiences with these options to date. Such policies include accelerating technology development and demonstration, stimulating product demand via procurement policies, applying efficiency standards to information-poor end-use sectors, and encouraging utility energy-efficiency programs. Efforts to implement such measures are underway in several industrialised countries and have begun in developing countries.

Three Biases in Cost-Efficiency Tests of Utility Energy Efficiency Programs*

Electric utilities in a number of American states devote significant portions of their resources to demand-side management (DSM) programs designed to reduce their customers' electricity consumption. As other jurisdictions consider similar programs, the public policy cost-efficiency criteria for determining how much utilities should pay for DSM remain controversial. This paper develops the appropriate measure of the economic benefits and costs of DSM, using a conventional economic welfare framework, and compares it to the standard cost-effectiveness tests used in most jurisdictions today. The standard tests are found to be incomplete, suffering from three potential biases. Modifications to the standard tests are suggested to address each of the biases. A numerical example is used to illustrate the nature and potential magnitude of the bias in the current tests.