Incorporating DSM into a Long-term Sales Forecast. Frank A. Monforte, Ph.D. Energy Forecasting Group March 24, 2009.

Transcription

1 Incorporating DSM into a Long-term Sales Forecast Part 1: DSM Primer Frank A. Monforte, Ph.D. Energy Forecasting Group March 24, 2009

2 The Forecasting Challenge: Add Measured Load with DSM added back Measured PastPgms Load + DSM Forecast No DSM NoDSM Fcst Lo oad History Before DSM DSM Begins Measured Load Forecast without Future DSM Fcst NoDSM DSM PastPgms Forecast with Future DSM Fcst NoDSM DSM DSM PastPgms FuturePgms Historical Period Forecast Period

3 The Language of DSM To understand a DSM Planner you must speak their language

4 Utility DSM Program Categories Energy Efficiency Programs reduce energy use (e.g. lighting, high-efficiency HVAC systems or control modification, efficient i building design, advanced d electric motor drives, and heat recover programs) while maintaining service levels Energy Conservation Property reduces of energy use and may reduce service levels Load Growth Programs (e.g. plug-in vehicles, fuel switching) Load Management Programs > Demand response > TOU > Interruptible Rates

5 Why Demand-Side Management? Provide cost-effective energy and capacity resources to help defer the need for new sources of power, including generating facilities, power purchases, and T&D capacity additions.

6 The Case for DSM Reduces energy bills Reduces need for supply-side resources Stimulates local economic development Reduces maintenance and equipment replacement costs Increases the competitiveness of local businesses Reduces local air pollution Reduces reliance on foreign oil Create market transformations with long-term benefits

7 Range of Utility Activity Own the technology Install units Offer ongoing rate incentives Offer financing Provide cash incentives (rebates) Incent deal/builders Consumer awareness/education campaigns

8 Approaches to Resource Planning Demand-Side Planning, a state typically mandates a load reduction target 15-by-15/20-by-20. The net savings results in adjustment t to the utility s load forecast Integrated Resource Planning (IRP), demand- and supply-side side resources are simultaneously evaluated Competitive Bidding, where a utility s short- and longterm needs are acquired through competitive solicitations or auctions. Supply-Side Planning, utility plans its next generator based on long-term forecasts that usually internalize demand-side effects.

9 Integrated Resource Planning Evaluate all options for meeting future demand, from both supply and demand side Minimize the costs to all stakeholders Create a flexible plan that allows for uncertainty and permits adjustment in response to changed circumstances

10 IRP Process Steps Identify plan objectives (e.g. meet future demand) Collect data to support analyses Develop one or more demand forecasts Identify demand- and supply-side resources Select the most cost-effective resources Stress test the plan Implement, monitor, evaluate the plan and revise as necessary

11 Technology Adoption Modeling Concepts Applicable Market End-Use Saturations Fuel Shares Feasible Market Product-Class Shares % Aware Market Willing Market Economic Physical Barriers Practical Barriers Information Costs Diffusioni Non-Cost Attributes Attitudes & Inertia Cost or Payback Availability Equipment Costs Energy Savings

12 Cost-Effectiveness Tests (NPV) Program Administrator Cost Test measures the net costs of a program based on the administrator s costs excluding any participant i t costs. Total Resource Cost Test measures the net costs of a program as a resource option based on participant s and utility s costs Ratepayer Impact Measure Test - measures what happens to customer bills or rates due to changes in utility revenues and operating costs due to the program Participant Test measures the benefits/costs to the consumer due to participating in the program

13 DSM Cost Components Energy Efficiency & Demand Response Program Costs: > Administrative costs > Marketing and advertising costs > Incentive or rebate payments > Participant costs Demand Response Programs also have: > Capital costs > Operating and maintenance costs > Increased supply costs (resulting from energy shifting from on-peak to off-peak)

14 Measure Life Assumptions Effective Useful Life - the length of time over which a DSM measure produces savings Equipment Life - the number of years that a measure is installed and will operate until failure Measure Persistence - takes into account business turnover, early retirement of installed equipment, and other reasons for removal

15 Program & Market Induced Savings Program Direct or Gross Savings Savings tied to participants in a program that are directly claimed by the program Free Rider A program participant that would have implemented without the incentive Program Net Savings Total change in load attributable to a program Program Indirect Savings Savings without direct program enrollment

16 Program & Market Induced Savings Market Effects Changes in market behavior due to the program Savings from Market Effects Savings due to market effects Standards Savings Savings due to standards Market-Driven or Baseline Savings Savings attributed to efficiency improvements independent of program effects Price Induced Savings Committed Savings Future savings from funded and authorized programs

17 Ex Post Analysis Evaluation studies provide ex post determination of program savings Realization Rate is the ratio of measured savings to claimed savings Persistence measures the program s life cycle savings and takes into account measure retention and technical degradation.

18 DSM and Forecasting What does DSM mean in the Language of End-Use Forecasting?

19 Marginal Efficiency -- Pacific CAC The Regional Marginal Efficiency for Central Air Conditioners can be computed by taking a weighted average across SEER ratings, using the purchase shares as the weights Marginal Eff Calc 82% * % * % * % * 19.5 = 13.3 SEER Less Efficient More Efficient Less Efficient More Efficient

20 Marginal Efficiency -- Pacific CAC Computing the Weighted Average in each year produces Marginal Efficiencies that feed the Stock Accounting Model Standard raises minimum efficiency to 13 SEER 2006 Standard raises minimum efficiency to 13 SEER Marginal and daverage Efficiencies Marginal come Efficiencies from EIA baseline come from Forecast EIA baseline Forecast

21 Marginal & Average Efficiency -- Pacific CAC The Stock Accounting Engine ultimately produces a stock average efficiency for each appliance that flows into the Appliance Sales/Customer Index Calculation. Blue line Represents the Average Efficiency Computed by the Stock Accounting Model

22 01 Avg Efficiency Sales/Customer Index -- CAC The 2001 Avg Efficiency Scenario holds 01 Average Efficiency Levels constant in the Forecast The estimated energy savings between the Orange and Blue Lines quantifies the energy impacts of efficiency gains in the EIA Baseline forecast relative to the 2001 stock average efficiency.

23 01 Marginal Efficiency Sales/Customer Index -- CAC The 2001 Marginal Efficiency Scenario holds the 01 Marginal Efficiencies Constant in the Forecast The majority of this delta is attributable to the 2006 CAC Standard

24 Maximum Efficiency Sales/Customer Index -- CAC The difference between the Blue and Green Scenarios indicates The Maximum Efficiency maximum potential t incremental e Scenario assumes a 100% energy savings from Appliance purchase share on the most Efficiency DSM programs. efficient technology option.

25 Maximum Incremental Energy Savings/ Customer -- CAC The Maximum Incremental Savings Curve provides a range for Energy Savings associated with Appliance Efficiency Programs.

26 Constructing a DSM Scenario The table shows purchase shares for Baseline and DSM scenarios. As a result of DSM programs, the most efficient technology option is expected to have a 25% Purchase Share. Less Efficient More Efficient Less Efficient More Efficient

27 DSM Scenario Sales/Customer Index -- CAC The difference between the Baseline and DSM Scenario can be attributed to incremental e energy e savings associated with Appliance Efficiency Demand Response Programs

28 Central Air Conditioner Incremental Energy Savings The dark green area shows the estimated Incremental Savings from the DSM Appliance Efficiency Programs

29 The Forecasting Challenge: Add Measured Load with DSM added back Measured PastPgms Load + DSM Forecast No DSM NoDSM Fcst Lo oad History Before DSM DSM Begins Measured Load Forecast without Future DSM Fcst NoDSM DSM PastPgms Forecast with Future DSM Fcst NoDSM DSM DSM PastPgms FuturePgms Historical Period Forecast Period

30 Next Steps Develop an EFG sponsored position paper on Incorporating DSM into a Long-term Forecast The paper should address: > Utilities that t are just starting ti DSM programs > Utilities that have a long history of offering DSM programs > Econometric versus SAE approaches > Incorporating DSM & Standards At the EFG Meeting in April, we will present preliminary thoughts on how to do this