Prepared for the BC Sustainable Energy Association. Expanding Energy Efficiency for BC Hydro: Lessons from Industry Leaders.

Transcription

1 Prepared for the BC Sustainable Energy Association Expanding Energy Efficiency for BC Hydro: Lessons from Industry Leaders June 19, 2012

2 Overview 1. Key Terms and Concepts 2. BC Hydro s IRP 3. US Data on Energy Efficiency 4. GEEG s Empirical Research and Analysis 5. Predicting Efficiency Costs for BC Hydro 6. Impact of Expanded Efficiency for BC Hydro 7. Program Enhancements 2

3 1. Key Terms and Concepts 3

4 kw Types of Savings Usage before EE Usage after EE Annual Energy Savings (kwh-yr) Annual Peak Demand Savings (kw-yr) Year 1 Year 2 Year 3 4

5 kwh-yr Savings Depth (%) Sales Savings Annual Savings Annual Sales Year 1 Year 2 Year 3 5

6 Why Use Sales as Basis for Depth? Why not use sales growth rate as basis for savings depth? 1) Annual sales correlates more closely to the size of efficiency opportunities. 1) Growth rates more volatile. 6

7 Savings Tiers Tier Tier 1 Tier 2 Tier 3 Tier 4 Definition Savings Depth 1.5% Target = 2% 1.5% > Savings Depth 0.67% Target = 1% 0.67% > Savings Depth 0.33% Target = 0.5% 0.33% > Savings Depth Target = 0.25% 7

8 Unit Costs vs Levelized Costs Initial Cost $$$ = Divide cost by annual savings to get Unit Costs ($/kwh-yr) Levelized Costs ($/kwh) kwh -yr Year 1 kwh -yr Year 2 kwh -yr Year 3 Many years of savings kwh -yr Year N Amortize the cost over the period of savings to get 8

9 Cost-effectiveness Tests TRC = Total Resource Cost Test PAC = Program Administrator Cost Test ( Utility Cost Test ) Benefit/Co st Description TRC PAC Avoided Electric Benefit X X Benefit/Co Costs Description TRC PAC Benefit st Avoided Gas Costs X X Cost Administration Costs X X Cost Participant Costs X Cost Customer Incentives X 9

10 Cost of Energy Savings TRC vs PAC 10

11 2. BC Hydro s Latest IRP 11

12 GWh MW BCHydro Projected Savings BCH Planned Energy-Focused DSM Program Cumulative Savings (From F2012) 6, ,000 4,000 GWh MW , , , F2014 F2015 F2016 F2017 F2018 F2019 F2020 F2021 F

13 BCHydro Savings % of Sales 1.0% Energy-Focused DSM Incremental Savings % of Sales 0.9% 0.8% 0.7% 0.6% 0.5% 0.4% 0.3% 0.2% 0.1% 0.0% F2013 F2014 F2015 F2016 F2017 F2018 F2019 F2020 F

14 Budgets (millions 2011$) $/kwh-yr BCHydro Projected Costs $ Energy-Focused DSM Program Spending and Savings $0.90 $ $0.80 $0.70 $ $0.60 $ $0.50 $ $ $50.00 Budgets $/kwh-yr $0.40 $0.30 $0.20 $0.10 $- F2013 F2014 F2015 F2016 F2017 F2018 F2019 F2020 F2021 $- 14

15 3. US Data on Energy Efficiency 15

16 GWh Electric Energy Savings in the US by Sector (from US EIA) 9,000 8,000 7,000 6,000 Industrial Commercial Residential 5,000 4,000 3,000 2,000 1, Year 16

17 Unit Cost 2011$ (2011$/kWh-yr) / kwh -yr ACEEE Costs and Savings for States, 2006 and 2007 $0.70 $0.60 $0.50 Tier 4 Tier 3 Tier 2 Grouping in Tiers 2 & 4 Tier $0.40 $0.30 $0.20 $0.10 General range of $ $0.30 $ % 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% Savings as % of Sales Source: American Council for an Energy Efficient Economy 17

18 4. GEEG s Empirical Research and Analysis 18

19 Data Collected Incremental annual energy savings and spending for residential and nonresidential sectors where possible Covering: 23 States and 2 Canadian Provinces 37 Program Administrators 470 Program Years of Data $25 Billion of Spending (2011$) 105,000 GWh/y of Cumulative Annual Savings 19

20 Collected Data by Savings Tier Tier Definition Observations Tier 1 Tier 2 Tier 3 Tier 4 Savings 1.5% Target = 2% 1.5% > Savings 0.67% Target = 1% 0.67% > Savings 0.33% Target = 0.5% 0.33% > Savings > 0 Target = 0.25% Includes 9 program-years since 2005 from VT, CA, and CT. 60 program-years fall in this tier, including IA, ME, MA, NV, NY, RI, HI, the Pacific Northwest, British Columbia, and Nova Scotia States in this tier include AR, NJ, and WI States in this tier include OK and TX. 20

21 Economies of Scale vs. Diminishing Returns Economies of Scale Lower fixed costs as a percentage of total spending Diminishing Returns More expensive measures for deeper savings Higher incentives required for everyone to get additional participants 21

22 Economies of Scale vs. Diminishing Returns (cont.) As a portfolio ramps up, economies of scale drive down costs Cost of Energy Savings Savings as a Percentage of Sales Beyond a certain point, the law of diminishing returns pushes costs up 22

23 Unit Cost (2011$/kWh-yr) Historic Values Most in Tier 2 Convergence 23

24 Unit Cost (2011$/kWh-yr) Planned Values Trend higher 24

25 Regression Model Conducted multiple regression on dataset testing correlation between resource acquisition costs and: Savings Depth (% Savings) Time Customer Sector Location Results: Adjusted R 2 = (model accounts for all but 13.5% of sample variance in costs) Highly statistically significant variables ( 99.9% confidence-level) 25

26 Effects of Savings Depth on Resource Acquisition Costs 26

27 Diminishing Returns over Time Each additional year of maturity adds $0.075/kWh-y to the costs Planned savings add $0.072/kWh-y to costs Some locations have higher acquisition costs. Being in California adds $0.17/kWh-y New England adds $0.20/kWh-y 27

28 5. Predicting Efficiency Costs for BC Hydro 28

29 Overview of Approach 29

30 General Assumptions Ramp up to 2.0% by 2014 Load forecast from IRP Savings as a % of Sales Savings Goals 30

31 2011$ per kwh/yr Efficiency Resource Acquisition Costs Tier 1 Spending per kwh-yr Savings $0.50 $0.45 $0.40 $0.35 $0.30 $0.25 $0.20 $0.15 $0.10 Residential C&I $0.05 $

32 6. Impact of Expanded Efficiency for BC Hydro 32

33 Tier 1 Savings Scenario Year Incremental GWh Savings Incremental MW Savings Budgets (Millions 2011$) Incremental Annual $ , $ , $ , $ , $ , $ , $ , $ , $ , $

34 Tier 1 Savings Scenario Year Cumulative GWh Savings Cumulative MW Savings Cumulative Budgets (Millions 2011$) Cumulative Annual , $ , $ , $ , $ 1, ,481 1,005 $ 1, ,514 1,195 $ 1, ,465 1,369 $ 2, ,371 1,535 $ 2, ,228 1,693 $ 3, ,017 1,837 $ 3,

35 Energy-Focused DSM (Millions 2011$) Cumulative Budgets $4,000 $3,500 Tier 1 Cumulative Spending $3,000 $2,500 BCH Planned Energy- Focused DSM $2,000 $1,500 $1,000 $500 $

36 Energy Requirements vs. Supply Resources GWh 92,500 82,500 72,500 62,500 52,500 42,500 32,500 22,500 12,500 2,500 Forecasts (with line losses) Base Case (w/o Energy-Focused DSM) Base Case (w/ BCH Planned DSM) Including DSM: Tier 1 Supply Resources FISCAL YEAR 36

37 Peak Requirements vs. Supply Resources 16,500 Forecasts (with line losses) 14,500 12,500 MW 10,500 8,500 6,500 4,500 2,500 Base Case (w/o Energy-Focused DSM) Base Case (w/ BCH Planned DSM) Including DSM: Tier 1 Supply Resources (Net of Reserves) FISCAL YEAR 37

38 Energy-Focused DSM Program Savings (GWh) Cumulative Energy Savings 12,000 Cumulative GWh Savings 10,000 Tier 1 8,000 BCH Energy-Focused Planned DSM 6,000 4,000 2,

39 Levelized Costs Sector Levelized Cost 2012$/MWh Min (F2014) Max (F2032) Residential $40.8 $60.8 Non- Residential $23.0 $38.0 Total $29.3 $

40 7. Program Enhancements 40

41 Scale up Savings Increase pace and scale Target customer sectors Maximize net benefits 41

42 Avoid 1. Cream-skimming = 2. Lost-opportunities 42

43 Encourage Integration of program design and delivery Across fuels and service areas. 43

44 Go Deeper Enhance programs to get as much a savings per project as economically possible Important sectors include: 1. Low-income 2. Residential 3. Small-to-medium Commercial 44

45 Redesign Incentives 45

46 Convert Street Lighting LED Street Lights in Foshan, China 46

47 Lead by Example Long-term capital plan to capture all costeffectively achievable efficiency 47

48 Questions? John Plunkett 48