New England’s Maximum AchievableEnergy Efficiency Potential

Presented to MA Restructuring RoundtablePresented to MA Restructuring RoundtableNovember 17, 2004November 17, 2004

The Economically The Economically AchievableAchievable Energy Efficiency Energy Efficiency Potential in Potential in New EnglandNew England

By: Susan Coakley - NEEPBy: Susan Coakley - NEEP

Northeast Energy Efficiency Partnerships, Inc.

Overview

1. What is the Economically Achievable Energy Efficiency (EE) Potential?

2. How much is available in New England?

3. What are the major “reservoirs” of EE potential?

4. How can New England capture this EE potential?

5. What are the costs and benefits?

6. What are the environmental benefits?

7. What impact on power plant demand for natural gas?

8. Recommendations to New England policymakers.

What is Economically AchievableEnergy Efficiency Potential?

The potential for maximum market penetration of energy efficient measures…

Cost-effective based on the Total Resource Cost test…

Adopted through a concerted, sustained campaign…

Using proven programs and market interventions…

Not bound by any budget constraints.

How Much EE is Available in New England?

10-year analysis timeframe: 2004 to 201310-year analysis timeframe: 2004 to 2013 Results:Results:

By 2008:By 2008: Savings of 17,103 GWH - Savings of 17,103 GWH - annual electricity needs of 2.4 annual electricity needs of 2.4

million households, million households, 4,317 MW4,317 MW - 14 combined cycle gas units @ 300 MW - 14 combined cycle gas units @ 300 MW

By 2013:By 2013: Savings of 34,375 GWH - Savings of 34,375 GWH - annual electricity needs of CT and annual electricity needs of CT and

NH householdsNH households 8,383 MW 8,383 MW 28 combined cycle gas units @ 300 MW28 combined cycle gas units @ 300 MW

How Much EE is Available in New England?

Existing and New EE Strategies Can Offset ISO Forecasted Energy Requirements (GWH) and Beyond

100,000

105,000

110,000

115,000

120,000

125,000

130,000

135,000

140,000

145,000

150,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

GW

h

ISO GWh Forecast (w/out DSM) 1.2% Avg. Annual Increase at

Actual Energy Requirement (2003)

Addt'l EE Can Offset Growth

Total Achievable Energy Savings Potential -1.38% Avg. Annual Reduction Total EE

Potential in 2013 Can Reduce

Energy Req. to 1993 Level

16,500 GWH _Savings

What are the Major “Reservoirs” of Achievable EE Potential in 2013?

#1: By Sector

Residential Savings = 12,745 GWH C&I Savings = 21,630 GWH

Residential= 37%

Commercial & Industrial = 63%

What are the Major “Reservoirs” of Achievable EE Potential in 2013?

#2: By End Use

Pool 1%

Cooling 3%

Water Heating 20%

Heating 15%

Lighting 49%

Miscellaneous 10%

Clothes Washer 2%

HVAC 25%

Other 35%Lighting 40%

Residential Savings C&I Savings

What are the Major “Reservoirs” of Achievable EE Potential in 2013?

#3: By Market

Retrofit = 69%

Lost Opportunites =

31%

Lost Opportunities

= 27%

Retrofit = 73%

Residential Savings C&I Savings

Existing Strategies Will Capture Less Than20% of Achievable Potential Savings by 2013

Continue Existing EE Programs

17% Building Energy Codes3%

Appliance Standards

7%

Addt'l EE Needed to

Offset Load Growth

21%

Achievable Savings Beyond Offsetting Load

Growth

52%

Existing and New EE Strategies Can Offset ISO Forecasted Energy Requirements (GWH) and Beyond

100,000

105,000

110,000

115,000

120,000

125,000

130,000

135,000

140,000

145,000

150,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

GW

h

ISO GWh Forecast (w/out DSM) 1.2% Avg. Annual Increase at

Marginal Avoided Energy Supply Cost of 9.4¢/kWh

Actual Energy Requirement (2003)

Existing EE Programs at

3.1¢/kWh

Building Codes at 2.9¢/kWh

Standards at 1.0 ¢/kWh

Addt'l EE Can Offset Growth (at 3.1¢/kWh)

Total Achievable Energy Savings Potential -1.38% Avg. Annual Reduction

Addt'l Savings Opport. Beyond

Offsetting Growth (at 3.1¢/kWh)

Total EE Potential in 2013 Can Reduce

Energy Req. to 1993 Level

Existing and New EE Strategies Can More Than Offset ISO Forecasted Summer Peak Demand (MW)

20000

21000

22000

23000

24000

25000

26000

27000

28000

29000

30000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

MW

Addt'l EE Strategies Can Offset Peak

Demand Growth

ISO Forecasted Summer Peak MW (w/ DSM) 1.23% Average Annual Growth Rate

Existing EE Programs

Building Energy Codes

Standards

Actual Summer Peak Demand (2003)

Total Achievable Demand Savings Potential -2.15% Avg. Annual Reduction

Addt'l Peak Demand Savings Opport.

Energy Efficiency is 67% Cheaper Than Supply

$0.000

$0.020

$0.040

$0.060

$0.080

$0.100

$0.120

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

$/kW

h

Levelized Avoided Electric Supply Cost in New England (includes generation, T&D capacity and line losses)

Levelized Total Resource Cost of Energy Efficiency

11-17-0411-17-04 1313

Northeast Energy Efficiency Partnerships, Inc.

What are the Costs vs. Benefits of the Economically Achievable EE Potential?

(Using Modified Total Resource Cost Test)

Benefits (Billions)

Costs(Billions)

Net Benefits (Billions) BCR

Continue Existing EE Programs $5.9 $1.9 $4.0 3.1Building Energy Codes $4.1 $0.5 $3.6 8.3

Proposed Appliance Standards $2.1 $0.2 $1.8 8.7Addt'l Strategies to Offset Forecasted Growth $7.9 $2.6 $5.4 3.1Savings Beyond Offsetting Forecasted Growth $14.8 $5.8 $9.0 2.5

Combined $34.7 $11.0 $23.7 3.2

Benefits and Costs of Achievable Potential Savings

Present Value 2004 through 2013

2004-2013

How Much More Investment in EE Is Needed to Offset Load Growth in New England?

Current/pending policies can offset 50% of growth:Current/pending policies can offset 50% of growth:• New England electric ratepayer funding for EE:New England electric ratepayer funding for EE:

$200 million/year $200 million/year $2 billion over next 10 years.$2 billion over next 10 years.

• Building energy codes and proposed state standards:Building energy codes and proposed state standards: $700 million over 10 years.$700 million over 10 years.

Additional investment to offset load growth:Additional investment to offset load growth:• Additional $2.6 billion needed from 2004-2013 (Additional $2.6 billion needed from 2004-2013 (more more

than doublethan double current SBC funding levels). current SBC funding levels).

How Much Could EE Help Reduce Power How Much Could EE Help Reduce Power Plant Emissions in New England?Plant Emissions in New England?

Emissions Reductions from Achievable Potential Savings2008

CO2

(1000s)NOX SO2

CO2

(1000s)NOX SO2

Continue Existing EE Programs 1,923 1,653 4,701 3,846 3,306 9,401 Building Energy Codes 341 293 833 729 627 1,782 Proposed Appliance Standards 430 370 1,051 1,528 1,313 3,735 Other EE Strategies to Offset Load Growth 2,595 2,230 6,342 4,935 4,242 12,063 Addt'l Savings Beyond Offsetting Load Growth 6,152 5,288 15,037 11,956 10,277 29,223 Combined 11,440 9,834 27,963 22,994 19,766 56,204

Emissions Reductions (Tons)

2013

New England Governors’ Conference Climate Change Action Plan Goal: Stabilize CO2 Emission at

1990 Levels by 2010 Focus on Focus on New EnglandNew England Stationary Combustion Sector Stationary Combustion Sector (fuel (fuel

burning in power plants, factories, homes and buildings).burning in power plants, factories, homes and buildings).

Stationary Combustion CO2 Emissions Growth:Stationary Combustion CO2 Emissions Growth:• 1990 – 103 mm tons actual1990 – 103 mm tons actual

• 2000 – 116 mm tons actual 2000 – 116 mm tons actual

• 2010 – 138 mm tons projected2010 – 138 mm tons projected

• 2010 – 114 mm tons projected with full EE potential2010 – 114 mm tons projected with full EE potential

EE can provide 68% of NEGC 2010 carbon reduction goal EE can provide 68% of NEGC 2010 carbon reduction goal for stationary combustionfor stationary combustion

Cumulative Impact of Achievable Electric EE Potential on Reducing Natural Gas Demand for

Electric Generation in New England

0

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

400,000,000

450,000,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Mil

lio

n B

tus

EIA 2004 Forecast of Natural Gas Demand for Electricity Generation

Continue Existing EE Programs

Building Energy Codes

Appliance Standards

Addt'l EE to Offset Electric Energy Growth

Addt'l Savings Beyond Opport. Beyond Offsetting Energy Growth

Current EE policies over next 10 years would get less than 20% of EE Current EE policies over next 10 years would get less than 20% of EE potential.potential.

EE is 67% cheaper than the cost of electric power supply and could EE is 67% cheaper than the cost of electric power supply and could save New England $23.7 billion (net benefits) by 2013.save New England $23.7 billion (net benefits) by 2013.

EE can more than offset projected electric energy and peak demand EE can more than offset projected electric energy and peak demand growth, deferring the need for up to 8,383 MW.growth, deferring the need for up to 8,383 MW.

EE is abundant in all customers sectors, end uses, and markets.EE is abundant in all customers sectors, end uses, and markets.

EE investments can meet up to 68% of the NEGC climate change goals EE investments can meet up to 68% of the NEGC climate change goals for the Stationary Combustion sector by 2010. for the Stationary Combustion sector by 2010.

EE investments can reduce projected New England power plan natural EE investments can reduce projected New England power plan natural gas demand by 33% in 2008 or 68% by 2013.gas demand by 33% in 2008 or 68% by 2013.

Economically Achievable Energy Efficiency:Findings and Conclusions

Recommendations to New England Policymakers

Increase funding for EE investments as a clean and Increase funding for EE investments as a clean and cheap energy supply resource.cheap energy supply resource.

Integrate EE into regional system and distribution Integrate EE into regional system and distribution company planning and resource procurement.company planning and resource procurement.

Link energy planning with environmental and economic Link energy planning with environmental and economic goals. goals.

Use electric EE to relieve gas supply constraints and help Use electric EE to relieve gas supply constraints and help mitigate energy price volatility.mitigate energy price volatility.

More Recommendations to New England Policymakers

Give high priority to building energy code updates and Give high priority to building energy code updates and high levels of compliance.high levels of compliance.

Continue to adopt state appliance efficiency standards.Continue to adopt state appliance efficiency standards.

Support strong and timely adoption of federal appliance Support strong and timely adoption of federal appliance efficiency standards.efficiency standards.

Adopt or expand EE procurement rules for state and Adopt or expand EE procurement rules for state and municipal buildings.municipal buildings.

Establish common, regional methods and assumptions Establish common, regional methods and assumptions for measuring EE savings in New England.for measuring EE savings in New England.

Northeast Energy Efficiency Partnerships, Inc.

www.neep.org

5 Militia Drive, Lexington MA  02421ph: 781-860-9177 fax: 781-860-9178

scoakley@neep.org