Presentation on theme: "1 Cost-Effectiveness Screening Issue for RTF August 30, 2007."— Presentation transcript:
1 Cost-Effectiveness Screening Issue for RTF August 30, 2007
2 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
4 Why RTF Uses TRC Directs 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
5 Why RTF Uses TRC Avoids 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 1 st Plan concluded that cost of using wood stoves to offset use of electric heat was below cost of electricity from new generating facilities 1 st Plan excluded use of wood heat due to “non- energy” cost (air pollution) imposed on the region
6 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
7 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”
8 Joint Product Problem: Incremental Cost of Energy Efficiency Improvements, e.g., Dishwashers
9 Joint Product Solution: Base Incremental Cost on “Minimum Cost to Achieve Efficiency”, e.g., Dishwashers
10 Joint Product Problem: Incremental Cost of Clothes Washer Energy Efficiency Improvements
12 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
13 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)?
14 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)
15 Cost to Consumers of HSPF 7.7/SEER 13 Three Ton Heat Pump
16 Cost to Consumers of HSPF 8.5/SEER 14 Three Ton Heat Pump
17 Cost to Consumers of HSPF 9.0/SEER 15 Three Ton Heat Pump
18 Incremental “Cost” to Consumers of HSPF 8.5/SEER 14 Three Ton Heat Pump
19 Incremental “Cost” to Consumers of HSPF 9.0/SEER 15 Three Ton Heat Pump
20 Incremental “Cost” to Consumers of PTCS System Commissioning
21 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?
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