Issue for rtf august 30 2007
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Issue for RTF August 30, 2007. Cost-Effectiveness Screening. 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

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Cost-Effectiveness Screening

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Issue for RTF

August 30, 2007

Cost-Effectiveness Screening


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


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


Why RTF Uses TRCDirects 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


Why RTF Uses TRCAvoids 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 1st Plan concluded that cost of using wood stoves to offset use of electric heat was below cost of electricity from new generating facilities

  • 1st Plan excluded use of wood heat due to “non-energy” cost (air pollution) imposed on the region


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


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”


Joint Product Problem: Incremental Cost of Energy Efficiency Improvements, e.g., Dishwashers


Joint Product Solution: Base Incremental Cost on “Minimum Cost to Achieve Efficiency”, e.g., Dishwashers


Joint Product Problem: Incremental Cost of Clothes Washer Energy Efficiency Improvements


Joint Product Solution: “Minimum Cost to Achieve Efficiency” Doesn’t Always Work, e.g., Clothes Washers


And . . .Sometimes Higher Efficiency Cost Less:Average Retail Price Of Energy Star Clothes Washers

*2004 Oregon Tax Credit Data


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)?


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)


Cost to Consumers of HSPF 7.7/SEER 13 Three Ton Heat Pump


Cost to Consumers of HSPF 8.5/SEER 14 Three Ton Heat Pump


Cost to Consumers of HSPF 9.0/SEER 15 Three Ton Heat Pump


Incremental “Cost” to Consumers of HSPF 8.5/SEER 14 Three Ton Heat Pump


Incremental “Cost” to Consumers of HSPF 9.0/SEER 15 Three Ton Heat Pump


Incremental “Cost” to Consumers of PTCS System Commissioning


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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