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1 Executive Summary In August 2009, the California Public Utilities Commission (CPUC) adopted a cost-benefit methodology for evaluating distribution generation. In the final decision adopting the methodology, the Energy Division was directed to hire an independent entity to perform a cost- benefit analysis of the Self-Generation Incentive Program (SGIP) and California Solar Initiative (CSI) using the methodology adopted in the decision.1 The purpose of this study is to evaluate the cost-effectiveness of distributed generation (DG) technologies using an economic model based on the adopted cost-benefit methodology. Results from the cost-effectiveness evaluation provide the framework and model to help the CPUC in identifying DG technologies eligible for the SGIP.2 In accordance with the adopted decision, DG cost-effectiveness is examined from three perspectives: society, participants, and Program Administrators.3 These perspectives are based on cost tests originally developed for evaluating cost-effectiveness of energy efficiency technologies, as outlined in the CPUC’s Standard Practice Manual. The CPUC’s 2009 adopted methodology modifies the cost tests so they can be used for evaluating DG technologies. The societal version of the Total Resource Cost (STRC) test looks at the overall cost- effectiveness of DG technologies to society. Societal test results are examined at the current time (2010) and at 2016 (when the SGIP is designated to expire). The CPUC has directed that only DG technologies in which the societal benefits outweigh societal costs will be eligible for SGIP incentives. The Participant Cost test (PCT) examines the cost-effectiveness of the DG technology to the participant. If costs outweigh benefits, the technology is not cost-effective to the participant. The PCT can be used to help design an approach on incentives to be paid to the participant. The Program Administrator (PA) Cost test identifies the cost-effectiveness of DG technologies to the PAs. 1 2 3 California Public Utilities Commission, Decision 09-08-026, August 2009, pg. 4 from http://docs.cpuc.ca.gov/word_pdf/FINAL_DECISION/105926.pdf CPUC, “Self-Generation Incentive Program (SGIP) Staff Proposal,” September 2010. The CPUC specifically excludes use of the Ratepayer Impact Measure (RIM) test in evaluating the cost- effectiveness of DG technologies in its decision (see D.09-08-026, pg. 25). Itron, Inc. 1-1 Executive SummaryPDF Image | Cost-Effectiveness of Distributed Generation Technologies
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