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Avoided Cost and E3 Calculator Workshops. Energy and Environmental Economics, Inc. October 4, 2005. Total Electric Avoided Costs. Shape is Based on PG&E’s San Jose Planning Division. Refinements in Avoided Cost. Background Overview of Title 24 DR Progress Focus on demand response measures

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Avoided cost and e3 calculator workshops

Avoided Cost and E3 Calculator Workshops

Energy and Environmental Economics, Inc.

October 4, 2005

Total electric avoided costs
Total Electric Avoided Costs

Shape is Based on PG&E’s San Jose Planning Division

Refinements in avoided cost
Refinements in Avoided Cost

  • Background

  • Overview of Title 24 DR Progress

  • Focus on demand response measures

    • Programmable Communicating Thermostat example

  • Capacity and Energy Value Refinement

    • Existing CPUC and CEC TDV Values are based on 1998 and 1999 PX market data

    • Proposed new method modifies the PX market shape based on a ‘CT Backstop’ approach

    • Creates a ‘peakier’ value curve


  • 2005 Title 24 Building Standards adopted ‘Time-dependent Valuation’ methodology

  • Analysis was completed in 2003, and much information was used in the CPUC Avoided Cost proceeding started in 2004

  • 2008 Title 24 Building Standards are evaluating a new TDV curve for demand response

    • Refinement in energy and capacity valuation

Overview of title 24 dr progress
Overview of Title 24 DR Progress

  • 3 Public Meetings Completed

  • Methodology Components

    • Energy, reliability, and capacity most difficult

    • T&D, environment, other pieces adopted from prior CEC Title 24 TDV and CPUC Avoided Costs

  • Attempt at party consensus of approach

    • CEC, SCE, PG&E, SDG&E

    • Public comment also requested

  • Proposal for complete methodology has been developed – remainder of presentation

Title 24 2008 energy and capacity value

Title 24 2008 Energy and Capacity Value

Method and results in this slide are preliminary.

Value of energy capacity reliability

Resource Planning


  • Class Average VOS $25/kWh

  • -Productivity -$5/kW

  • Net Reliability $20/kWh

Value of Energy, Capacity, Reliability



DkW of Equivalent Capacity

in Each Hour

Additional DkW of Equivalent Capacity

Achieved During Stage 3

Ct backstop method
CT Backstop Method

  • Modifies the historical market price shape to reflect avoiding the need to add capacity

  • Assumes that the backstop technology to add capacity in the State is a CT

  • Observed market prices will pay for part, but not the total costs of a new CT

    • Differe

Cec price shape 2004 iepr
CEC Price Shape – 2004 IEPR

Note these shapes are from 2004 IEPR.

Forecast market price 2008

Price Duration Curve

CEC Shape

Scaled to All-in Combined Cycle Cost

Forecast Market Price - 2008

Calculation of residual capacity value

Uses $72/kW-year Fixed Cost of a CT Assumption (levelized real)

$85/kW-year (levelized nominal) approx. the same value.

Result is approximately $20/kW-yr

High number of operating hours

Similar analyses for other cases / utilities show approximately 700-900 hours operation

Few hours results in a larger residual capacity value

Calculation of Residual Capacity Value

Allocation of residual capacity
Allocation of Residual Capacity real)

Control Area Load

1999 Example

Resulting Allocators

Energy and capacity curve example from 2008
Energy and Capacity Curve real)(Example from 2008)

Residual Capacity – 100 Hours

Residual Capacity – 250 Hours