Integrating Energy Efficiency into

the Integrated Resource Plan

“Presented at the 2015 ACEEE National Conference

on Energy Efficiency as a Resource”

September 22, 2015

2

Agenda

• DTE Energy Overview

• Purpose and Background

• Assumptions

• Methodology

• Key Takeaways

DTE Energy Overview

3

DTE Energy

DTE Energy Co. is a diversified energy

company involved in the development and

management of energy-related businesses

and services nationwide

Our largest operating regulated subsidiaries

are DTE Electric and DTE Gas

Approx. $12B revenue, $28B assets

DTE Electric

Largest electric utility in Michigan and one of

the largest in the nation with 2.1M customers

DTE Gas

One of the largest US natural gas utility with

1.2 million customers

DTE Electric & Gas

Service Territory

4

Agenda

• DTE Energy Overview

• Purpose and Background

• Assumptions

• Methodology

• Key Takeaways

5

Purpose and Background

• The purpose of this presentation is to describe an approach to

integrate energy efficiency (EE) into the utility Integrated Resource

Planning (IRP) Process

• Being a low cost resource, Energy Efficiency (EE) is a key building

block in the IRP planning process

• The presentation gives a perspective on how EE savings, costs and

portfolio mix could be modeled based on available achievable EE

potential savings in the utility service territory

• We continue to refine our study by incorporating best practices

across the U.S.

6

Purpose and Background

Integrated

Resource

Planning

Energy Policy

Support

Clean Power

Plan

Our goal is to achieve a comprehensive resource plan that

addresses the key issues, mitigates customer impacts, meets

regulatory / environmental requirements and is flexible to adjust

under changing economic and regulatory environments

Energy

Efficiency

7

Purpose and Background

Comprehensive

Resource

Plan

IRP Team

Corporate

Strategy

Energy EfficiencyRenewables

Corporate Energy

Forecasting

Major Enterprise

Projects

Regulatory &

Government

Affairs

Environmental

Fossil Generation

Fuel Supply

8

Agenda

• DTE Energy Overview

• Purpose and Background

• Assumptions

• Methodology

• Key Takeaways

9

Assumptions

1. Data Source:

• Achievable potential (UCT) savings data from the Michigan EE

potential study conducted by GDS Associates Inc. (GDS) in 2013

• DTE Savings and Spend data obtained from plan filings

2. Time Frame:

• GDS study reports potential savings over two time periods:

5-year period from January 1, 2014 - December 31, 2018

10-year period from January 1, 2014 - December 31, 2023

• Start year selected as 2014; end year selected as 2030

• Since GDS data was only available through 2023, the potential

beyond years 2023 was estimated based on the growth assumptions

of individual end use applications

10

Assumptions

3. Allocation of EE Potential:

• DTE Energy EE potential estimated at 47% of Michigan EE potential

• GDS study reports potential savings by end use application,

whereas DTE Energy records savings and spend by program. This

was reconciled by allocating the GDS potential savings to DTE

programs appropriately based on the type of end use application

e.g. savings from the Lighting and Electronics from the GDS

study was allocated to DTE’s Energy Star Program

4. Other Assumptions:

• Program savings calculated as a percentage of future sales forecast

• Historical EE actual program cost data was used to model future

program cost increases

11

Agenda

• DTE Energy Overview

• Purpose and Background

• Assumptions

• Methodology

• Key Takeaways

12

4. Program Aggregation: Residential Categories

-

500

1,000

1,500

2,000

2,500

3,000

3,500

- 50,000 100,000 150,000 200,000 250,000

-

200

400

600

800

1,000

1,200

- 50,000 100,000 150,000 200,000 250,000

1. On-Line Energy Audit2. Residential ENERGY STAR 3. Behavior Programs4. Appliance Recycling5. School Program6. Home Energy Consultation 7. Multifamily8. Low Income9. HVAC

10. Audit and Weatherization

1 2 3 4 5 6 7 8

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C

A. Low Cost - High PotentialB. Mid Cost - Mid PotentialC. High Cost - Low Potential

A

B

10

$/MWh

Savings (MWh)

$/MWh

Savings (MWh)

Step 1: Aggregate Program Portfolio

Illustration

Illustration

13

Step 2: Determine Future Program Mix

20%

30%

40%

50%

60%

70%

80%

2011 2013 2015 2017 2019 2021 2023 2025 2027 2029

Portfolio Mix %

DTE Residential Savings % DTE C&I Savings %

Current DTE portfolio

Savings Potential

% of portfolio

Illustration

14

Step 3: Determine Future Savings Target

-

100,000

200,000

300,000

400,000

500,000

600,000

2011 2013 2015 2017 2019 2021 2023 2025 2027 2029

MWh

Savings Target

Residential C&I Total Illustration

15

Step 4: Allocate aggregated programs based

on growth assumptions in potential study

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

2014 2016 2018 2020 2022 2024 2026 2028 2030

Portfolio Mix %

Low Cost - High Potential % Mid Cost - Mid Potential %High Cost - Low Potential %

Current DTE Residential portfolio% of

portfolio

Illustration

16

Step 5: Maximize available savings potential

-

50,000

100,000

150,000

200,000

250,000

300,000

2014 2016 2018 2020 2022 2024 2026 2028 2030

Savings Target

Low Cost - High Potential Mid Cost - Mid Potential

High Cost - Low Potential Target Savings

MWh

63%100%100%

High Cost - Low Potential

Mid Cost - Mid Potential

Low Cost - High Potential

Illustration

17

0

50

100

150

200

250

300

350

2011 2013 2015 2017 2019 2021 2023 2025 2027 2029

Program Cost

Historical and Planned Future

$MM

Step 6: Model Future Program Costs

Illustration

18

Step 7: Repeat process by running scenarios

No EE

Low Case

Base Case

Mid-High Case

High Case

1

2

3

4

5

19

0

200

400

600

800

1,000

1,200

2011 2014 2017 2020 2023 2026 2029

Energy Savings

Historical Scenario 1Scenario 2 Scenario 3Scenario 4

Step 7: Repeat process by running scenarios

GWh

0

100

200

300

400

500

600

2011 2014 2017 2020 2023 2026 2029

Program Costs

Historical Scenario 1Scenario 2 Scenario 3Scenario 4

$MM

Illustration Illustration

20

Step 8: Compare the scenarios

Scenario 1 Scenario 2 Scenario 3 Scenario 4

Levelized First Year Savings

Scenario 1 Scenario 2 Scenario 3 Scenario 4

Levelized Cost

Scenario 1 Scenario 2 Scenario 3 Scenario 4

Levelized Cost per First Year Savings ($/MWh)

Illustration

21

Step 9: Verify Feasibility

-

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

2014 2016 2018 2020 2022 2024 2026 2028 2030

Savings vs. Available Potential

Scenario 1 Scenario 2

Scenario 3 Scenario 4

Potential Extrapolated Potential Actual

GWh

Illustration

22

Step 10: Determine Best Scenario

Load Shapes

Rate Impact

Financial Impact

Feasibility

Stakeholder Impact

Consistency with other

requirements

23

Agenda

• DTE Energy Overview

• Purpose and Background

• Assumptions

• Methodology

• Key Takeaways

24

Key Takeaways

Below are some best practices that we learnt from this study:

• Aggregate EE programs into “tranches”

• Benchmark EE costs and review historical utility EE costs

• Run scenarios and sensitivities

• Determine feasibility via potential study

• Use the right tools to model data

• Assess financial, customer and stakeholder impact

• This is a team effort!