A Cost-Saving Two-fer: Efficiency Reduces Total Electricity Needs & Peak Demand By The Electricity Markets & Policy Department at Berkeley Lab

Study by Natalie Mims Frick, Sean Murphy, Chandler Miller, Greg Leventis, Kristina Hamachi LaCommare, Charles A Goldman, Lisa C Schwartz
Article originally published by the Electricity Markets & Policy Department at Berkeley Lab
​December 16 2020

Electricity systems are designed to meet peak demand — the maximum load during a specified period, typically in summer — even if that demand occurs only a few hours in a year. Yet most evaluations of electricity efficiency programs focus on reductions in annual energy use. However, these efficiency programs are also delivering peak demand savings at an affordable cost.

A new study, Peak Demand Savings From Energy Efficiency: Practices and Opportunities (link is external), by the Department of Energy’s Lawrence Berkeley National Laboratory (Berkeley Lab) explores the program administrator (PA) cost – or the cost to implement an energy efficiency program to a utility or third party administrator – of saving peak demand through efficiency programs for electric utility customers.

Read more to learn about the findings on how peak demand savings vary by region and sector (low-income, residential, commercial & industrial, cross cutting)

A free webinar on January 7, 2020, 3 p.m. to 4 p.m. Eastern, will discuss the findings. Register for the webinar here (link is external). Slides will be posted several days in advance of the webinar here (link is external).
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Berkeley Lab collected data on costs, annual energy savings, and peak demand savings for electricity efficiency programs for 52 utilities and other program administrators in 15 states between 2014 and 2018. The analysis focused on eight program types that represent 68% of the peak demand savings for the utilities and program administrators studied. The findings improve our understanding of which energy efficiency programs produce the most peak demand savings and their cost performance.
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The study found that about half of all peak demand reductions from the efficiency programs studied have a levelized PA cost of less than $100 per kilowatt (kW) saved, and three-quarters cost less than $200 per kW saved. (Levelized costs take into account the economic lifetime of actions taken as a result of a program.) Which efficiency programs deliver the most peak demand savings varies by region (see figure). In the Midwest and Northeast, commercial and industrial (C&I) efficiency programs have made the greatest contribution to reported demand reductions, but in the South the largest reductions came from residential programs. In the West, efficiency programs supporting codes and standards have had the largest impact on peak demand. 
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​Program types accounting for the largest share of portfolio demand reductions also vary by state. Residential behavioral and C&I custom programs have produced the most peak demand reductions — 19-41% and 19-46%, respectively — in eight of the states included in the study (AR, IL, MI, NC, NY, PA, SC, TX). Residential lighting programs accounted for more than 10% of demand savings in eight states (AR, AZ, CO, MA, MD, MI, MN, PA), and commercial lighting programs accounted for more than 10% of demand savings in six states (CO, FL, IL, MN, NC, SC).
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Among other study findings:

• The levelized cost of saving peak demand and cost of saving electricity generally have a linear relationship, meaning that programs that have a low cost of saving electricity typically have a low cost of saving peak demand as well.
• Among residential programs studied, lighting had the lowest cost of saving peak demand and saving electricity.
• For the C&I sector, custom programs have the lowest cost of saving peak demand, and prescriptive programs have the lowest cost of saving electricity.
• Low-income programs cost more than programs for other market sectors, for both energy and demand savings.
• Defining key characteristics and metrics for reporting peak demand savings can improve understanding of energy efficiency's value to provide peak demand. The study introduces a new typology that utilities and state regulators can consider for reporting peak demand impacts from efficiency programs.

Study authors are Natalie Mims Frick, Sean Murphy, Chandler Miller, Chuck Goldman, Greg Leventis, Kristina LaCommare and Lisa Schwartz in the Electricity Markets and Policy Department at Berkeley Lab. The U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy supported this work. 
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Photo courtesy of Source

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About the Study Authors

• Natalie Mims Frick
• Sean Murphy
• Chandler Miller
• Chuck Goldman
• Greg Leventis
• Kristina LaCommare
• Lisa Schwatrz

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Natalie Mims Frick is an Assistant Leader and Energy Efficiency Program Manager in the Electricity Markets and Policy Department at Lawrence Berkeley National Laboratory. Natalie conducts research and manages projects on energy efficiency technical assistance, policy, program design, implementation and evaluation.

Prior to joining LBNL, Natalie was the principal at Mims Consulting, LLC, where she served as an expert witness in demand-side management regulatory proceedings across the country. Before starting her company, Ms. Mims Frick was the Energy Efficiency Director at the Southern Alliance for Clean Energy (SACE) and, prior to that, a Senior Consultant at Rocky Mountain Institute. During her work at both of these non-profit organizations she focused on regulatory issues pertaining to clean energy adoption, most recently on planning, portfolio design and integrated resource planning for utility energy efficiency programs.

Read more here

Sean Murphy is a Scientific Engineering Associate in the Electricity Markets and Policy Department at Lawrence Berkeley National Laboratory. Sean’s research focuses on the Energy Services Company (ESCO) industry, utility-administered energy efficiency programs, and property assessed clean energy financing. Prior to joining the Lab, he studied the urban photovoltaic potential in India as a visiting researcher at CEPT University in Ahmedabad, Gujarat and worked on energy efficiency policy and evaluation at National Grid. Sean holds a B.S in Environmental Engineering from Johns Hopkins University.

Chandler Miller is a Program Manager in the Electricity Markets and Policy Department at Lawrence Berkeley National Laboratory. He focuses on energy efficiency and distributed energy resources research and technical assistance projects in the areas of policy, program design, implementation, and evaluation.

Prior to joining LBNL, Chandler held consulting roles with Enovation Partners and DNV GL, where he supported energy storage and other DER projects for utilities, independent power producers, and investors in design, evaluation, and implementation stages. Projects included asset acquisitions, energy storage solicitations, asset valuation, and due diligence studies. Prior to that, Chandler was an analyst in Pacific Gas and Electric’s Program Management Office, overseeing demonstration projects funded through the Electric Program Investment Charge. He also worked at Enphase Energy, where he developed a technoeconomic model and supported market strategies for a residential energy storage product.

Charles Goldman is a staff scientist since 1982 in the Energy Analysis and Environmental Impacts Division at Lawrence Berkeley National Laboratory, a Department of Energy (DOE) national laboratory. He works on electricity markets and policy issues for DOE’s Offices of Electricity Delivery and Energy Reliability and Energy Efficiency and Renewable Energy. Mr. Goldman has published ~175 articles and reports on utility integrated resource planning, energy efficiency policy, programs, and technology analysis, design and evaluation of innovative DSM and demand response programs, dynamic pricing, coordination of energy efficiency and demand response, Smart Grid implementation issues, competitive bidding for supply and demand-side resources, and energy service company (ESCO) industry and market trends.  

​He is currently Principal Investigator supporting the DOE technical assistance effort to state regulators on energy efficiency policy, programs, utility/regulatory business models, and grid modernization implementation issues. He also is the technical team lead for Institutional Support projects in the DOE’s Grid Modernization Initiative and Grid Management Lab Consortium (GMLC). He holds an M.S. degree from the University of California Berkeley, Energy and Resources Group.

​Greg Leventis is a Program Manager in the Electricity Markets and Policy department at Lawrence Berkeley National Laboratory. He conducts research and analysis of demand side efficiency. His focus includes efficiency finance, cost of saving energy, and incentive program design and analysis. He has consulted with the California Public Utilities Commission's Policy and Planning Division and the Water Branch of its Division of Ratepayer Advocates, and has advised the San Francisco Public Utilities Commission on alternative approaches for setting an environmental enhancement surcharge on their wholesale and retail water. He is a member of the Finance Subcommittee of the Alliance to Save Energy's Policy and Programs Committee and the Research Advisory Council for LIFT Solar. Greg holds a Master of Public Policy from the Goldman School of Public Policy at the University of California, Berkeley, a BA in Economics from the University of Florida and studied the General Course at the London School of Economics.

Kristina LaCommare is a Program Manager with Electricity Markets & Policy at Lawrence Berkeley National Laboratory. She works with multiple groups in the Energy Technologies Area to manage finances, subcontracts, budgets, proposals and reporting requirements. On the research side, she explores trends in electricity reliability in the U.S. and ways to improve reporting of reliability metrics by utilities to improve regional and national assessments. Her research also explores the economic value of power interruptions in the U.S. Kristina holds a M.S. in Atmospheric Science from the University of California, Davis and has been with the Lab since 1999.

Lisa Schwartz is Deputy Leader of the Electricity Markets and Policy Department at Lawrence Berkeley National Laboratory. She manages work spanning utility regulation, electricity system planning, energy efficiency and other distributed energy resources, and leads training for states on distribution system planning. She received the 2018 Mary Kilmarx Award from the National Association of Regulatory Utility Commissioners, in recognition of individuals “who have gone above and beyond in the name of good governance, clean energy, and the environment.”

​Read more here