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State and Local Climate and Energy Program

Assessing Electric System Benefits


More detailed information on Assessing Electric System Benefits, including guidance and how to information, is available in Chapter 3 of Assessing the Multiple Benefits of Clean Energy.

State Example: Georgia

Georgia conducted an assessment of the benefits of achieving energy efficiency improvements in the state and found it could reduce demand for electricity by 3,339 gigawatt hours (GWh) to 12,547 GWh in 2010.

In addition to these energy savings, the analysis showed that the improvements could benefit the overall electricity system and

  • Avoid generation in Georgia of 1,207 GWh to 4,749 GWh in 2010
  • Reduce regional wholesale electricity cost by 0.5 to 3.9 percent by 2015
  • Lower peak demand by 1.7 to 6.1 percent by 2015 and achieve a number of environmental and economic benefits

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What are Electric System Benefits?

Climate and clean energy programs and policies can help states provide a less polluting, more reliable, and more affordable electric system that addresses multiple challenges, including:

  • Lowering energy costs for customers and utilities, particularly during periods of peak electricity demand
  • Improving the reliability of the electricity system and averting blackouts at a lower cost
  • Reducing the need for new construction of generating, transmission, and distribution capacity
  • Providing targeted reductions in load in grid–congested areas

These benefits go beyond the direct energy savings and renewable energy generation impacts described in Calculating Energy Savings.

Primary and Secondary Electric System Benefits

Primary electric systems benefits are valued for their ability to reduce the overall cost of electric service over time. Primary benefits of clean energy include:

  • Avoided costs of electricity generation or wholesale electricity purchases
  • Deferred or avoided costs of power plant capacity
  • Avoided electric loss in transmission and distribution (T&D)
  • Deferred or avoided costs of T&D capacity

Secondary electric system benefits include benefits that are less frequently recognized than primary benefits and tend to be smaller and harder to quantify. Examples of secondary benefits include:

  • Avoided ancillary service costs, such as costs to run reserve generators continuously so that they are ready to take over if a load-serving generator fails
  • Reduced wholesale market clearing prices
  • Increased reliability and power quality
  • Avoided risks associated with long lead-time investments
  • Reduced risk from deferring investment in traditional, centralized resources until environmental and climate change policies take shape
  • Improved fuel diversity and energy security

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Estimating Electric System Benefits

Some states may be interested in estimating all types of electric system benefits, while others may be considering programs that deliver benefits in only some areas. It is generally common practice to evaluate all the primary benefits for clean energy projects or programs. The need to estimate secondary benefits varies and depends on several factors, including:

  • The type of clean energy resource (e.g. energy efficiency, renewable energy, combined heat and power, and clean distributed generation) being considered
  • Regulatory or system operator study requirements
  • Available resources (e.g., computers, staff, and data)
  • Whether certain needs or deficiencies have been identified for the existing electric system

Primary benefits are estimated using approaches that range in complexity from basic screening approaches to sophisticated models. These approaches essentially compare the net impact of each energy alternative on the cost of power over the lifetime of the resource. The alternative with the smallest net impact is typically the preferred choice, all other things being equal.

The ability to estimate the secondary benefits of clean energy policies and programs and the availability of methods vary depending on the benefit. These methods are less mature than those for primary benefits, and as such tend to rely more upon non-modeling estimation approaches than more sophisticated simulation modeling ones.

The following tables outline some of the factors that states can consider when deciding which electric system benefits to analyze, including available methods and examples, advantages, disadvantages, and purpose of analysis:

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Resources

Assessing the Multiple Benefits of Clean Energy

Assessing the Multiple Benefits of Clean Energy: A Resource for States provides an overview of the multiple benefits of clean energy and their importance. It includes information on:

  • The importance of and approaches to calculating or estimating energy savings as the foundation for deriving multiple benefits
  • A range of tools and approaches to estimating energy systems, environmental, and economic benefits across varying levels of rigor
  • How states have supported the use of clean energy through the estimation of multiple benefits

California Energy Efficiency Evaluation Methodology

Methodology and Forecast of Long Term Avoided Costs for the Evaluation of California Energy Efficiency Programs (PDF) Exit EPA disclaimer (290 pp, 2.74M) presents an avoided cost methodology most appropriate for evaluating resources that:

  • Reduce load or produce energy for hundreds of hours per year in a predictable pattern
  • Are relatively small (such that they can be installed behind the customer meter)
  • Are expected to be installed in large numbers

Energy Portfolio Management: Tools & Resources

Energy Portfolio Management: Tools & Resources for State Public Utility Commissions (PDF) Exit EPA disclaimer (83 pp, 607K) provides regulators with an overview of portfolio management tools and practices that could be applied to the procurement of electricity resources to serve retail customers.

Evaluating Displaced Emissions

Evaluating Simplified Methods of Estimating Displaced Emissions in Electric Power Systems: What Works and What Doesn't (PDF) Exit EPA disclaimer (18 pp, 219K) lays the groundwork for determining which non-modeling based method can provide the best estimates of displaced emissions and under what circumstances use of that method would be appropriate.

Guide to Resource Planning with Energy Efficiency

The National Action Plan for Energy Efficiency’s Guide to Resource Planning with Energy Efficiency (PDF) (112 pp, 1.7M) describes the key issues, best practices, and main process steps for integrating energy efficiency into resource planning. The guide details how to use a variety of methods to help ensure that energy efficiency programs provide a resource as dependable and valuable to utilities and their customers as any supply-side resource.

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Tools

Energy 2020 Model

Energy 2020 Exit EPA disclaimer is a simulation model that includes all fuel, demand, and supply sectors and simulates energy consumers and suppliers. This model can be used to capture the economic, energy, and environmental impacts of national, regional or state policies. Energy 2020 models the impacts of a clean energy measure on the entire energy system. User inputs include new technologies and economic activities such as tax breaks, rebates, and subsidies. Energy 2020 uses emission rates for NOX, CO2, SO2, and PM for nine plant types included in the model. It is available at the national, regional and state levels.

Integrated Planning Model (IPM®)

The Integrated Planning Model Exit EPA disclaimer (2 pp, 476K) simultaneously models electric power, fuel, and environmental markets associated with electric production. It is a capacity expansion and system dispatch model. Dispatch is based on seasonal, segmented load duration curves, as defined by the user. IPM® also has the capability to model environmental market mechanisms such as emission caps, trading, and banking. System dispatch and boiler and fuel-specific emission factors determine projected emissions. IPM® can be used to model the impacts of clean energy resources on the electric sector in the short and long term.

MARKet ALlocation (MARKAL) Model

MARKAL Exit EPA disclaimer, developed by the International Energy Agency, is a model that assists users in selecting appropriate technologies for maximum emissions control and cost effectiveness. Because the model gives results in terms of cost per unit of emissions abatement, this tool can be useful in determining the costs associated with certain policy measures. EPA has a nine region MARKAL technology database (EPANMD) in electronic format available to the public upon request.

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