Methods to Incorporate Energy Efficiency in Electricity System Planning and Markets

Electric utilities, independent system operators and regional transmission operators (ISO/RTOs) have acquired significant levels of energy efficiency over several decades. The predominant approach utilities use to consider energy efficiency in electricity system planning and ISO/RTOs use in wholesale electricity markets is to reduce load forecasts to account for estimated impacts of relevant policies and programs. But an increasing number of states and utilities are interested in improved analysis of energy efficiency in electricity system planning and wholesale electricity markets. This report describes how to consider energy efficiency as a potential resource for the future by allowing it to compete with all other electricity system resources.

Increasing levels of wind and solar, growth in peak demand, and electrification of transportation and other new loads have increased the need for a more flexible and responsive electricity system. Considering energy efficiency as a resource option can support these and other electricity system objectives, including grid reliability, reduced electricity costs, energy efficiency targets, and lower air pollutant emissions.

The October 2019 slides were presented at the American Council for an Energy Efficient Economy Energy Efficiency as a Resource conference and provide an overview of the report. Portions of the report were included in the American Council for an Energy Efficient Economy Energy Efficiency 2020 Summer Study paper, Planning for the Grid of Tomorrow: Energy Efficiency as a Resource in Utility Resource Plans.