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Cost-Effectiveness of Distributed Generation Technologies 2.2.3 DG Cost-Effectiveness Project As the contribution of DG resources increases and policy makers continue to look for ways to promote DG, it becomes increasingly important to understand the relationship between costs and benefits of DG technologies. For technologies funded through SGIP, cost-effectiveness evaluations such as this study help policy makers review how rate payers’ funds are being used and contribute to the analysis of the program’s success. In late 2009, the CPUC adopted a common methodology for evaluating the cost-effectiveness of DG technologies.15 The DG cost-effectiveness methodology is derived from the Standard Practice Manual (SPM) that has been used for several decades to successfully evaluate energy efficiency technologies and programs. The DG cost-effectiveness methodology adopted by the CPUC looks at whether a DG program is cost-effective from a variety of perspectives: society, ratepayers and participants. In 2010, the CPUC commenced oversight over two projects to look at the cost-effectiveness of existing CPUC programs. One project is designed to review the cost-effectiveness of the CSI program, and that project is applying the CPUC methodology to the CSI program. The second project, reported herein, is applying the CPUC methodology to the SGIP program. Both projects use the CPUC methodology as the framework, but rely on quantitative models to analyze all of the relevant data inputs and present summary results. The DG cost-effectiveness tests adopted by the CPUC use a variety of variables and inputs. One important input to the models includes the avoided costs developed by Energy and Environmental Economics, Inc. (E3). These avoided costs were originally developed by E3 to apply during the cost-effectiveness reviews of energy efficiency programs. E3 also developed a set of other model inputs, such as utility rates and forecasts of those rates, financing and tax assumptions, etc. for use in the CSI cost-effectiveness model. The SGIP cost-effectiveness model (called SGIPce) incorporates work undertaken by E3, and adds to it the SGIP program- specific information. Examples of SGIP program-specific information include energy use and energy savings assumptions that are derived from SGIP rules and SGIP metered site-level data. The SGIPce model used in the evaluation of the cost-effectiveness of DG technologies applies the values of critical inputs and the various cost-effectiveness equations to calculate an estimate of the current and future cost-effectiveness of DG technologies in California from the three alternative perspectives. The SGIPce model also includes possible market transformation effects of the SGIP program on the future costs of the technology, thereby enabling the model to project cost-effectiveness on a prospective and not just retrospective basis. 15 California Public Utilities Commission, Decision 09-08-026, August 2009 from http://docs.cpuc.ca.gov/word_pdf/FINAL_DECISION/105926.pdf Itron, Inc. 2-6 Introduction and BackgroundPDF Image | Cost-Effectiveness of Distributed Generation Technologies
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