1. Estimating the Drivers of the Cost of Saved Electricity in Utility Customer-Funded Energy Efficiency Programs
- Author
-
Murphy, Sean and Frick, Natalie Mims
- Subjects
Engineering ,Built Environment and Design ,Physical Sciences ,Affordable and Clean Energy ,energy efficiency ,demand-side management ,energy economics ,energy policy ,Built environment and design ,Physical sciences - Abstract
Energy efficiency programs funded by utility customers provide an electricity resource in most U.S. states, but their scale and cost of saving electricity varies significantly by state. In this paper, we explore the drivers of the cost of saved electricity in these programs with an econometric model and nearly a decade of data reported by efficiency program administrators. We found strong evidence for economies of scale and weak evidence for diseconomies of scale, which suggests that states with low levels of efficiency savings relative to retail sales can increase the size of their efficiency programs without large increases to the cost of saved electricity. We discuss examples of energy efficiency forecasting and potential modeling in light our econometric analysis and identify methodological improvements relevant to utilities and grid operators. This paper provides insights into the economics of customer-funded efficiency programs that will support regulators, utilities, and policymakers to utilize energy efficiency as a resource.
- Published
- 2023