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Issue for RTF August 30, 2007. Cost-Effectiveness Screening. RTF Uses Total Resource Cost (& Benefits) Perspective. Best meets the requirements of the Regional Act Considers all quantifiable costs & benefits regardless of who accrues them - PowerPoint PPT Presentation
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Cost-Effectiveness Screening
Issue for RTF
August 30, 2007
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RTF Uses Total Resource Cost (& Benefits) Perspective
Best meets the requirements of the Regional Act Considers all quantifiable costs & benefits
regardless of who accrues them Ensures that conservation expenditures are good
for the power system, the customer and society Allows conservation to be compared to other
resources considered for development by including all quantifiable costs & benefits
Was strongly recommended by utilities in first Council Plan
3
Why RTF Uses TRC:Avoids Potential Double Counting of the Savings
Utility invest $2500 in efficient motor to acquire 5000 kWh/yr savings Levelized Cost = 3.4 cents/kWh B/C = 1.32
Customer matches $2500 utility investment to save the same 5000 kWh/yr Simple payback = 10 years, motor last 20
Total of all direct cost is $5000 for 5000 kWh/yr of savings Levelized cost = 6.8 cents/kWh B/C ratio = 0.66
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Why RTF Uses TRCDirects Funds Toward Measures That Optimize
Total Utility and Customer Investments
Utility invest $600 toward cost of $6000 solar PV system that saves 1200 kWh/yr Alternatively utility and consumer could:
• Invest $160 in 40 CFLs to save 1200, saving $440 • Invest $600 to buy 150 CFLs, saving 5000 kWh
Especially important when budgets are limited
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Why RTF Uses TRCAvoids promoting measures that may impose
non-energy costs on others
Act directs the Council give second priority to the use of renewable resources
Analysis in 1st Plan concluded that cost of using wood stoves to offset use of electric heat was below cost of electricity from new generating facilities
1st Plan excluded use of wood heat due to “non-energy” cost (air pollution) imposed on the region
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Why RTF Uses TRC:Expands list of conservation options by
considering quantifiable “non-energy” benefits
Energy Star Clothes Washer in Homes with Gas Water Heater and Dryer Present Value Capital Cost
= $58/MWh Present Value to Power System
= $17/MWh (B/C = 0.3) Value to Region/Society (includes natural gas, detergent &
water savings)= $110/MWh (B/C = 2.0)
Power system’s “willingness-to-pay” for these savings should be limited to its present value benefits Electric Utility could provide incentive up to $17/MWh for
washer in a home with gas water and dryer heat
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Application of TRC to Projects and Programs – “What’s the incremental
cost?”
It is not always practical and/or possible to quantify the incremental cost of energy efficiency improvements It is often impractical to obtain “with” and “without” cost
estimates, especially for large custom projects Many measures/projects have “joint” features/purposes,
so separating the cost imposed by higher efficiency from other features is often problematic
Incremental “cost” may be quite different than “incremental price”
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Joint Product Problem: Incremental Cost of Energy Efficiency Improvements, e.g.,
Dishwashers
R2 = 0.11
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
0.55 0.60 0.65 0.70 0.75 0.80 0.85 0.90 0.95Energy Factor (cycles/kWh)
Ret
ail P
rice
(200
4$)
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Joint Product Solution: Base Incremental Cost on “Minimum Cost to Achieve Efficiency”, e.g.,
Dishwashers
R2 = 0.91
R2 = 0.92
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
0.55 0.60 0.65 0.70 0.75 0.80 0.85 0.90 0.95
Energy Factor (cycles/kWh)
Min
imum
Ret
ail P
rice
(200
4$)
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Joint Product Problem: Incremental Cost of Clothes Washer Energy Efficiency Improvements
R2 = 0.11
$0
$400
$800
$1,200
$1,600
$2,000
1.4 1.5 1.6 1.7 1.8 1.9 2.0 2.1 2.2
Modified Energy Factor (cu.ft./kWh/cycle)
Ave
rage
Re
tail
Pric
e (2
004$
)
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Joint Product Solution: “Minimum Cost to Achieve Efficiency” Doesn’t Always Work, e.g., Clothes Washers
R2 = 0.09
$0
$400
$800
$1,200
$1,600
$2,000
1.4 1.5 1.6 1.7 1.8 1.9 2.0 2.1 2.2
Modified Energy Factor (cu.ft./kWh/cycle)
Min
imum
Re
tail
Pric
e (2
004
$)
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And . . .Sometimes Higher Efficiency Cost Less:Average Retail Price Of Energy Star Clothes
Washers
Energy Star Level Units*
Average Retail Price* MEF*
Water Factor*
Total Units 15,568 $839 1.78
6.72
Tier 1 Units 7,564 $856 1.60
7.72
Tier 2 Units 8,004 $823 1.94
5.78
*2004 Oregon Tax Credit Data
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Today’s Issue: “Cost vs. Price” – High Efficiency Heat Pumps
BPA has received comments that high efficiency air source heat pumps are costing considerably more than the RTF estimates
It appears there is a significant difference between incremental “cost” and incremental “retail price”
Issue: Which value should the RTF use for determining the cost-effectiveness of high efficiency heat pumps (and central AC)?
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Heat Pump Cost Estimates
Three Sources: Existing RTF cost estimate based on federal
Department of Energy data from standards setting process
STAC – Survey of regional HVAC contractors (preliminary returns from 23 contractors
Online HVAC equipment sales sites (“box cost” only)
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Cost to Consumers of HSPF 7.7/SEER 13 Three Ton Heat Pump
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
Low Mid-Point High
RTF
STAC
Online
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Cost to Consumers of HSPF 8.5/SEER 14 Three Ton Heat Pump
$0$1,000$2,000$3,000$4,000$5,000$6,000$7,000$8,000$9,000
$10,000
Low Mid-Point High
RTF
STAC
Online
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Cost to Consumers of HSPF 9.0/SEER 15 Three Ton Heat Pump
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
Low Mid-Point High
RTF
STAC
Online
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Incremental “Cost” to Consumers of HSPF 8.5/SEER 14 Three Ton Heat Pump
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
Low Mid-Point High
RTF
STAC
Online
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Incremental “Cost” to Consumers of HSPF 9.0/SEER 15 Three Ton Heat Pump
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
Low Mid-Point High
RTF
STAC
Online
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Incremental “Cost” to Consumers of PTCS System Commissioning
0
100
200
300
400
500
600
700
800
Low Mid-Point High
RTF
STAC
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So What’s Your Call
The incremental cost of high efficiency heat pumps (and central AC) should be based on: Current retail market prices (STAC?) Incremental equipment cost from online data sources?
• Adjusted for contractor markups?
Engineering estimates of incremental cost (DOE) Other?
