{"id":1136,"date":"2014-06-16T12:51:12","date_gmt":"2014-06-16T17:51:12","guid":{"rendered":"https:\/\/allenergyconsulting.com\/blog\/?p=1136"},"modified":"2014-06-19T08:06:44","modified_gmt":"2014-06-19T13:06:44","slug":"3-clean-power-plan-assessment","status":"publish","type":"post","link":"https:\/\/allenergyconsulting.com\/blog\/2014\/06\/16\/3-clean-power-plan-assessment\/","title":{"rendered":"#3 Clean Power Plan Assessment"},"content":{"rendered":"

Let me note a couple points of reflections from my\u00a0last review of the Clean Power Plan<\/a>\u00a0before I proceed with the next portion of the plan.\u00a0 The choices made by human civilization over time typically revolved around resources.\u00a0 Certain groups became experts at their region and learned how to extract and use their resources (e.g. Coastline habitats typically became expert fisherman and trades people).\u00a0 The US unlike many other nations is a large conglomerate of vast and different regions.\u00a0\u00a0 For the most part, the US respected the states\u2019 rights, and each state grew to maximize their resources without much force to do it one cerain way.\u00a0 Renewable generation is not a universal accessible.\u00a0 There are regions that clearly will have better performance in certain renewable generation (e.g. Solar \u2013 Arizona, Wind \u2013 West Texas, etc\u2026).\u00a0 The EPA tried to balance that by using the state RPS programs.\u00a0 However, the state RPS programs became a political tool rather rooted in economics and science.\u00a0 To substantiate that point, many RPS programs offer an escape clause (e.g. Alternative Compliance Payment) so the politicians can take credit for promoting without having necessarily to commit. This made it much easier for some to pick catch phrase policy such as 20 by 20 (20% renewable by 2020).\u00a0<\/span><\/p>\n

To have solar mandates greater than states such as Arizona, in the end, offers a huge subsidy to those states with high solar intensity.\u00a0\u00a0 Natural economic evolution would produce solar cost savings and technology improvements driven from states such as Arizona, which would then roll those gains into less sunny states.\u00a0 Arizona 2012 average retail rate ranks 19 out of the 50 states at 9.71 cents\/kWh.\u00a0\u00a0 The top state is Hawaii \u2013 another very sunny state who is limited in resources and whose rate averages 31.59 cents\/kWh.\u00a0 If solar was so easy and economical, these states would be far ahead of their current levels – Hawaii less than 0.5% and Arizona slightly under 2% as percentage of total energy in 2013.\u00a0 Obviously, there are some economic advantages of being able to build and design effective solar technology to export to areas of need.\u00a0\u00a0 To extract this value, it does not necessarily require the host state to have policies exceeding other states.\u00a0 A difference of 10% capacity factor (12% to 22%) can produce a swing of over 10 cents\/kWh.\u00a0 I mentioned all this to point out the concern that EPA used the state RPS program as their guide to the level of renewable.\u00a0 However the economics and science to these RPS programs may not be reality, as politics can defy reality.<\/span><\/p>\n

The final recommended Best System of Emission Reduction (BSER) from the EPA in the Clean Power Plan is \u201c4. Reducing emissions from affected EGUs in the amount that results from the use of demand-side energy efficiency that reduces the amount of generation required.\u201d\u00a0 This is the 3rd\u00a0\u00a0most impactful out of the 4 programs in terms of reducing CO2 rates.<\/span><\/p>\n

I have worked and reviewed many demand-side energy efficiency programs.\u00a0 I had the opportunity to work with the Northwest Power and Conservation Council (NWPCC) and review their data, which is impressive.\u00a0\u00a0 Demand-side energy efficiency programs should be evaluated as a resource.\u00a0\u00a0 I have helped many utilities in enabling their power models to do this.\u00a0 Unlike the other 3 BSER, this one is very dependent on human behavior, and because of that, much more detail and thought needs to be examined.\u00a0 EPA did not go into detail. \u00a0\u201cWe have not assumed any particular type of demand-side energy efficiency policy.\u201d<\/span><\/p>\n

The issue with demand-side energy efficiency program can be summed up with EPA\u2019s own words \u201cRegardless of how the energy savings of an energy efficiency measure are determined, all energy savings values are\u00a0estimates\u00a0<\/em>of savings and not directly measured\u201d\u00a0 EPA spent much time talking about evaluation, measurement, and verification (EM&V) industry given the reliance on estimates.\u00a0\u00a0 The problem I have noticed here is we have an industry that has grown significantly from $1.6 billion in 2006 to $5.9 billion in 2011 and projected to be over $8 billion per the American Council for an Energy-Efficient Economy.\u00a0 As with all industry that grows that quickly there will be growing pains.\u00a0\u00a0 The first one that comes to mind is that there are certain companies who are in all three spaces, \u00a0Evaluation, Measurement, and Verification.\u00a0\u00a0 You can see there are many companies who evaluate in one state and verify in another.\u00a0\u00a0 This should be unacceptable practice and the commissions need better oversight of these companies.\u00a0 Too many incentives exist to support the ever growing DSM-EE industrial complex regardless of actual results when this happens.\u00a0\u00a0 It is important that there are checks and balances in the EMV space to minimize these practices.<\/span><\/p>\n

The goals set forth by EPA are done so by assuming a best practice standard for each state and then targeting that rate.\u00a0 \u201cFor the best practices scenario, we have therefore estimated that each state\u2019s annual incremental savings rate increases from its 2012 annual saving rate to a rate of 1.5 percent over a period of years starting in 2017.\u201d\u00a0 I am sure this is conservative for many states, but at the same time I expect just as many, if not more states, to have a much harder time hitting target.\u00a0 Based on their spreadsheet, by 2030, demand-side energy efficiency programs will total 380,569,493 MWh.\u00a0 To put that number in perspective, this is more energy used by the state of Texas, state of California, or the United Kingdom.\u00a0 Using the average retail rate of electricity of 9.9 cents\/kWh \u2013 this would amount to over $38 billion dollars a year \u201cwasted\u201d by society.\u00a0 It is an astronomical number to imagine that society would be that inefficient on a business as usual path.\u00a0<\/span><\/p>\n

It is true, that as whole, there are energy savings that an individual consumer could not realize or value without a collective saving mechanism. The difference can typically be traced down to the value of capital and the fact that a personal decision is not always economically rationale as other factors such as feeling good, to peer pressure, are very hard to economically quantify.\u00a0 In these cases, programs can be developed to add more value to savings to even nudging the consumer to act good for the whole.<\/span><\/p>\n

The extrapolation from one state to another state needs to be carefully balanced given the human connection to these programs.\u00a0 As I\u00a0noted before<\/a>, DSM is a detailed\u00a0process since it\u00a0focuses in on what your customer uses energy for.\u00a0\u00a0If\u00a0your customer uses\u00a0heat pumps to stay warm as their primary energy usage, implementing a large light bulb program will only get you so far compare to places like California.\u00a0\u00a0 As weather becomes more temperate, it is easier to modify behavior since human life is not harmed.\u00a0\u00a0 However in extreme cold or heat, energy efficiency becomes limited.\u00a0 The successful California experience in energy efficiency just cannot be extrapolated one for one to other states.<\/span><\/p>\n

Programs do naturally have a natural end life.\u00a0\u00a0 As a simple example, consider the conversion of lighting.\u00a0 It eventually ends.\u00a0 In fact, the big gains end quite soon, as you think about where and how you use lighting.\u00a0\u00a0 Eventually the incremental lighting updates occur in less used areas such as garages to closets.\u00a0 The initial lighting change will be in the most used area, but the incremental change much less so.\u00a0\u00a0 An extrapolation of those impacts needs to be carefully considered.\u00a0 Many EMV companies understand this so it is worrisome to extrapolate savings for so many years.<\/span><\/p>\n

Let me pause here before I go into a can of worms in dealing with cost and benefit.<\/span><\/p>\n

If you need help in designing and modeling your DSM programs I can help you.\u00a0 In addition if you need a third party to help discuss with regulators and commission your decision criteria for DSM, I can also assist in this.<\/span><\/p>\n

Policy discussions can be beneficial when coming from a factual context without significant biases or agenda.\u00a0 There is no doubt in my mind policy can be an effective tool in producing positive societal benefits \u2013 it is all in the design, implementation, and regulation.<\/span><\/p>\n


\n<\/span><\/p>\n

Please contact us 614-356-0484 ordkb@allenergyconsulting.com<\/a><\/span><\/p>\n

\n


\n<\/span><\/p>\n

Your Inspired Energy Consultant,<\/span><\/p>\n

\u00a0<\/span><\/p>\n

David<\/span><\/p>\n<\/div>\n


\n<\/span><\/div>\n
David K. Bellman
\nFounder & Principal
\nAll Energy Consulting LLC
\n“Independent analysis and opinions without a bias.”
\n614-356-0484
\ndkb@allenergyconsulting.com<\/a>
\nblog:\u00a0https:\/\/allenergyconsulting.com\/blog\/category\/market-insights\/<\/a><\/span><\/div>\n","protected":false},"excerpt":{"rendered":"

Let me note a couple points of reflections from my\u00a0last review of the Clean Power Plan\u00a0before I proceed with the next portion of the plan.\u00a0 The choices made by human civilization over time typically revolved around resources.\u00a0 Certain groups became experts at their region and learned how to extract and use their resources (e.g. Coastline […]<\/p>\n","protected":false},"author":1,"featured_media":216,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,6,17],"tags":[279,19,234,232,282,45],"class_list":["post-1136","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-market-insights","category-power","category-renewables","tag-clean-power-plan","tag-co2","tag-demand-side-management","tag-dsm","tag-ee","tag-energy-efficiency"],"_links":{"self":[{"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/posts\/1136","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/comments?post=1136"}],"version-history":[{"count":5,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/posts\/1136\/revisions"}],"predecessor-version":[{"id":1149,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/posts\/1136\/revisions\/1149"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/media\/216"}],"wp:attachment":[{"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/media?parent=1136"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/categories?post=1136"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/tags?post=1136"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}