Valuing Residential Energy Efficiency: Analysis for a Prototypical Southeastern Utility

The increasing amount of variable renewable energy resources and shifts towards more end-use and vehicle electrification suggests profound changes to power system planning and operation.  Specifically, renewable energy is expected to shift net peak demand from late afternoon to early evening and end-use electrification may significantly increase winter peak demand.  Residential energy efficiency is likely to align well with these shifts as it tends to produce savings in the early evening (e.g., from lighting measures) and coincident with heating loads (e.g., from envelope and space conditioning measures). Despite the opportunity to decrease system costs and emissions, residential energy efficiency is often limited by static valuation methods and its economic potential is considerably less than its technical potential.

Using hourly residential energy efficiency characterizations, utility program cost data, and a capacity expansion model, we estimate the benefits of residential energy efficiency for a prototypical, summer-peaking utility in the Southeastern region.  We first establish the cost-effective residential energy efficiency portfolio through “competition” with supply-side resources in a forward-looking capacity expansion model.  Importantly, we then evaluate several scenarios intended to drive an increasing amount of cost-effective residential energy efficiency through measure cost reductions, increased customer adoption, policy goals (e.g., carbon price), and delivery of an integrated package of measures.  The results quantify total system cost and emissions reductions, fossil-fuel plant retirements, and peak demand reductions.  Results suggest the design and prioritization of policies and programs to access the untapped amount of cost-effective residential energy efficiency.