Electric “Grid” Savings and Non-Electric Benefits for Residential HVAC-affected UES Measures

1. Electric “Grid” SavingsandNon-Electric BenefitsforResidential HVAC-affected UES Measures Regional Technical Forum March 20, 2013

2. Overview • For residential measures that effect heating and cooling usage: • RTF electric savings estimates should be reliable from an electric utility planning perspective (i.e. “Grid Savings”). • Measured Savings are considered reliable. • There appear to be non-electric benefits the RTF can account for in its cost-effectiveness tests. • Measured Savings < Engineering Savings. • Primary questions: • Is the following proposed framework for “Grid Savings” and NEB’s correct? • How should RTF monetize non-electric benefits?

3. Framework

4. Engineering Savings(“The Whole Pie”) • Definition: Estimated electric energy savings based on physics (lower UA = lower heating energy use). • Example: Engineering model assumes 100% electrically heated houses and “typical” usage.

5. Measured Electric Savings(a.k.a “Grid Savings”) • Definition: Electric energy savings for the population, measured through submetering or billing studies.

6. Non-Electric Benefits • Definition: Portion of the Engineering Savings that apply to the following two non-electric components: • Fuel Savings (Non-electric) • Example: Occupant stops using their wood stove in the efficient-case, in favor of the electric heating system. • Example: Occupant continues using their wood stove, but uses less wood because of the lower house heat loss. • Increased Comfort (a.k.a. “Takeback”) • Example: Occupants operate their house at a warmer (winter) and cooler (summer) temperature in the efficient-case.

7. Engineering Correction • Definition: Adjustment to engineering savings to account for non-typical usage. • Example: Partial Occupancy; occupants are away for the winter months and leave t-stat at a very low setting.

8. Not to Scale – These will vary by program, region, modeling method, etc. – Some slices of the pie could be zero (or negative).

9. Long-Term Effects • Non-Electric Fuel usage and “Comfort Level” varies depending on economic conditions and other factors. • Billing analyses & metering studies are “snapshots in time”. • For the same measure, the NEB’s could vary year-to-year. • Note how this could change Measured Electric Savings • Engineering Savings would see less change, if any. We’re not likely to solve this issue today. Instead, since the data sources will vary, corrections for “long-term effects” will need to be made on a measure-by-measure basis per RTF judgment.

10. Uncertainty • Engineering Savings and Measured Electric Savings carry with them uncertainty • If the uncertainty is large, it could (and should) call into question including Non-Electric Benefits. For Example: We’re not likely to solve this issue today. Instead, since the data sources will vary, decisions on including Non-Electric Benefits will need to be made on a measure-by-measure basis per RTF judgment.

11. Examples • DHP • Weatherization

12. Using DHP as an Example Non-Electric Benefits (need to monetize) Grid Savings (kWh) Notes: 1. All values in kWh/yr. 2. Values and method are for example only – we’ll discuss DHP measure specifics later. 3. Engineering Correction is assumed to be 0 kWh/yr based on design of Metering Study to include randomly selected sites.

13. Using Weatherization as an Example Note: This method is shown for illustration of the framework only; it has not been reviewed by the RTF and may not meet the RTF’s guidelines.

14. Next Steps • In both examples, Non-Electric Benefits are quantified in kWh’s. • We need to then monetize the Non-Electric Benefits • (assuming they’re not zero)

15. Data Source(s) ProCost Inputs kWh/$ Conversion

16. How to Monetizethe Non-Electric benefits? • Option 1: Convert each Non-Electric Benefits into Dollars • Non-Electric Fuel Savings • Convert kWh savings to cords of wood savings to dollar savings • Issue: Many assumptions needed (Btu/cord; efficiency of stove, $/cord, pollution benefit, etc.) • Increased Comfort • Value at the cost of electricity • Occupant chose to pay for more electricity, so value of comfort should be at least equivalent to the price of electricity, if not more. • Issue: Split between Increased Comfort and Non-Electric Fuel Savings is unknown. • Option 2: Value both Non-Electric Benefits at the cost of electricity • Same logic as for Increased Comfort above • The “many assumptions” for converting kWh savings to cords of wood to dollar savings would likely be “calibrated” to this value. • (Value of wood calibrated to be no lower than value of electricity.) • Issue: Use Retail or Wholesale cost of electricity? • Guidelines specify avoided costs (wholesale). • Which is a better proxy for consumer economic value of • non-electric fuel savings? • increased comfort?

17. Decisions 1. Adopt the presented framework for quantifying Measured Electric Savings and NEB’s? • Current Framework • NEB’s have not been (explicitly) included in the cost-effectiveness test. • Measured Electric Savings have sometimes included NEB’s. • “Long-term” savings. • Proposed Framework • Quantify Measured Electric Savings and NEB’s according to framework. • Any decision to adjust values for “long-term effects” or uncertainty would be explicit and measure-specific. • Include NEB’s in cost-effectiveness test. 2. How to Monetize NEB’s? • Which Option? • Option 1: Convert each Non-Electric Benefits into Dollars (wood & electricity); or • Option 2: Value both Non-Electric Benefits at the cost of electricity • Which value of electricity? • Retail? • Wholesale? • Other Options

18. Background Slides

19. Related slides from the January 2014 RTF Meeting (“SEEM 94 Calibration to RBSA Data” Presentation)