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5 Special Considerations for Energy Efficiency and Renewable Energy Systems This section is included to identify special situations that might occur during an EE analysis and to provideguidancewhenthesesituationsarise. RememberalsothattheSelectionCriteriaGuide,Section3, offers krther advice concerning which economic measures are appropriate to use, given some of these same special considerations. This section will address system boundaries, optimal sizing, externalities, government investments, backup and hybrid systems, storage, O&M expense, capacity and energy values, major repairs and replacements, salvage value, unequal lifetimes, retrofits, electricity rates, and program evaluation. System Boundaries Many times it is necessary to include the entire system in an analysis. For example, suppose the analyst mustcompareawindsystemwithaconventionalpeak-loadgeneratingsystem. Thesealternativesoffer potentially different services, and in order for the comparison to make sense the entire utility system may have to be evaluated. The need to extend a system’s boundary beyond the direct boundary may occur in end use markets as well as in utility investments. For example, a daylighting system will have different impacts on the space heating and cooling requirements of a building than those of a conventional lighting system. These different impacts can be addressed either by including the entire heating, ventilating, and air conditioning systems in the analysis (which may, in turn, require that the building shell be included) or, more simply, by including only the value of the impacts (determined exogenously from the lighting analysis). A dollar value credit or cost can be appended to the annual operating cost of the daylighting system to account for these space conditioning impacts. Sizing a System Equipment sizes for most systems should be individually designed to fit the particular situation. As such, the particular parameters and concerns relevant to the sizing of conservation and renewable energy technologyequipmentwillnotbediscussedhere. Iftheengineeringanalysishasbeendonecorrectly,then the economic analysis for determining optimum size is simply the same as the economic analysis used in makingothermutuallyexclusivedecisions. Oncetherangeofacceptablealternativeshasbeenestablished, the various sizes are compared one with another. It is important to include the cost of backup systems, shouldtheybenecessaryforaparticulartechnology. Thestandardmeasuresusedforanalysisarethe levelized cost of energy (LCOE) and the savingdinvestment ratio (SIR). Externalities As mentioned in the Integrated Resource Plaming/DSM Ratio Test subsection in Section 4, utilities in at least 46 states, as of June 1993, were engaged in some form of formal IRP planning in the regulatory setting. ManyoftheserecentIRPplanningguidelinesincludeinstsuctionsonhowtohandleexternalities. Some assign costs to specific externalities, which can be used in analyses. The analyst should consult the applicablepublicutilitycommissiontoseehowexternalitiesarehandledinthatparticularstate. Agood source of information has been developed by Koomey (July 1990), which outlines how different analysts and state regulatory agencies have treated externalities and compared them on a consistent basis. 73PDF Image | A Manual for the Economic Evaluation of Energy Efficiency and Renewable Energy Technologies
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