Dive Brief:

• New research from Lawrence Berkeley National Laboratory finds energy efficiency can help utilities meet peak demand at a low cost relative to the capital cost of other resources.
• Efficiency benefits are typically quantified based on the economic value of annual energy reductions across the life of the program or action. But with rising peak demand in many regions, researchers say the utility sector is increasingly interested in demand savings as well.
• Berkeley Lab's research focuses on a new metric, the program administrator cost of saving peak demand (PA CSPD). Based on a survey of three dozen investor-owned utilities in nine states, it found the savings averaged $1,483/kW.

Dive Insight:

There are variations between how states and utilities define "peak demand," which created challenges for researchers. And they say there is additional work necessary to determine the impact of local climate and different savings methodologies on demand savings.

But Berkeley Lab's analysis report concludes "electricity efficiency programs appear to be a relatively low-cost way for utilities to meet peak demand, compared to the capital cost of other resources that can be used to meet peak demand."

There are limitations. Many energy efficiency technologies are not dispatchable, and so the report concedes that in some cases efficiency resources cannot provide the same services as a natural gas peaking turbine, "making comparisons between these resources complex."

But researchers also said the results suggest efficiency programs that reduce peak "demand merit strong consideration by utilities and regional grid operators." And active efficiency measures like lighting controls can "enable active management of efficiency resources, offering additional grid services."

Berkeley Lab found savings-weighted PA CSPD averaged $1,483/kW but varied more than four-fold across the survey, from $568/kW to $2,353/kW.

According to the U.S. Energy Information Administration, 2015 data showed about 1.5 GW combustion turbine gas plants were installed at an average cost of $779/kW. Gas plants with internal combustion engines were more expensive, averaging $1,798/kW.

Researchers say the new PA CSPD metric is important to help ensure reliability at the most affordable cost, as part of resource adequacy planning and implementation. The new metric can also project the impact of energy efficiency on load forecasts.

"Energy efficiency programs on their own can offer potentially cost effective ways to reduce peak demand," said Rachel Gold, senior manager of the utilities program at the American Council for an Energy-Efficient Economy.

Gold presented the findings and discussed their significance in a recent webinar alongside the study's authors. Along with the benefits of efficiency programs, she also said there are opportunities to combine efficiency with demand response to deliver "controllable demand reductions."

Pre-cooling of buildings, for example, can combine more-efficient HVAC equipment with smart grid load control.

Widespread use of the new metric would also allow for program results to be benchmarked with regional and national estimates, and PA CSPD could also be used to do an initial screen of resource alternatives.

Berkeley Lab is conducting additional research on the topic, and plans to collect data for new states and analyze a broader dataset along with examining state and program administrator approaches on a range of topics. Further analysis could focus on winter peak programs, peak-to-energy ratios and lifetime demand peak savings, said the report's authors.