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Rethinking Energy Efficiency

This presentation by Michael Schilmoeller from the Northwest Power and Conservation Council discusses the multi-faceted value of energy efficiency (EE) in power markets. It explores deterministic sources of value such as capacity deferral, conservation shaping, and risk mitigation related to fuel price and carbon risk. The analysis highlights how energy efficiency measures can lead to significant cost reductions—even saving regions billions—independent of energy crises. By understanding the non-linear supply curve and market dynamics, stakeholders can better leverage EE for strategic planning.

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Rethinking Energy Efficiency

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  1. Rethinking Energy Efficiency Cost-Effectiveness Premium Sources of Value Michael Schilmoeller, Ph.D. Northwest Power and Conservation Council April 23, 2013 Future Energy Conference Red Lion Hotel on the River Jantzen Beach, Portland, Oregon

  2. Sources of Value(“deterministic”) • Capacity deferral and displacement • shape of conservation • for anticipated hourly peaks • freeing up flexible resources • Reducing Renewable Portfolio Standard (RPS) obligations • Potentially • cost reduction even for surplus utilities • opportunities to develop and resell • Purchases at below-average prices • the “constant-dollar averaging effect”

  3. Non-linear EE supply curve δ δ

  4. Sources of Value (risk mitigation) • “Strategic” risk mitigation • fuel price exposure • wholesale power prices • carbon risk • Superiority in both low-market and high-market futures relative to fuel-based resources • “Inverse elasticity” effect

  5. Annual Acquisition Utility programs only Response to West Coast Energy Crisis Short Term Memory Loss? Response to “Restructuring Discussions” and surplus Response to PNW Recession

  6. Modeled AcquisitionNo Cost-Effectiveness Premium

  7. Modeled AcquisitionWith Cost-Effectiveness Premium Smoothing Mr. Toad’s Wild Ride! Just the value of EE in the market would have saved the region $14.9 Billion! Even if the energy crisis had not occurred, the market value would have saved the region $8.9 Billion

  8. Effect of the Cost-Effectiveness PremiumWithout Energy Crisis

  9. Effect of the Cost-Effectiveness PremiumWithout Energy Crisis

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