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Cost-Effectiveness of Distributed Generation Technologies There are two goals to this cost-effectiveness evaluation: 1) help identify those DG technologies whose societal benefits are close to or exceed their societal costs; and 2) review how the relationship between these benefits and costs is forecast to develop over time. Societal cost/benefit evaluation helps to ensure that ratepayer dollars for rebates are used effectively and efficiently. Although actual cost-effectiveness for each DG project is truly site-specific, an overall participant cost/benefit analysis can help the CPUC and program administrators design appropriate rebate levels and program rules. As noted above, cost-effectiveness evaluations review costs and benefits from a variety of perspectives, depending on who is paying and who is benefiting. For example, capital investment in a DG technology is considered to be a cost in the Total Resource Cost Test (TRC or TRC Test), the Societal Total Resource Cost Test (STRC or STRC Test), and the Participant Cost Test (PCT) but not in the Program Administrator Test (PA Test). Rebates received are a benefit within the PCT and rebates paid are a cost in the PA Test. Rebates are a transfer payment within the TRC and the STRC and therefore do not have a first order impact on the test value.16 The monetary value of a cost or a benefit will also depend on the test that is being evaluated. Within the TRC and the STRC the benefit of the avoided electricity production is valued at the avoided costs while these benefits are valued at the bill rate within the PCT. The cost-effectiveness methodology employed in this report clearly describes the benefits and the costs of DG technologies from the perspectives of society, the participant, and the utility. The report presents the critical inputs to the alternative cost-effectiveness tests, including a full description of the inputs, information on how the values of the inputs were developed, and tables illustrating the input values. In addition, the report outlines the mathematical equations undertaken to calculate the various cost-effectiveness tests, with a description of the critical inputs that contribute to each test. 16 The taxable nature of rebates and the CPUC’s decision to incorporate federal income tax benefits into the calculation of the TRC leads program rebates to have a second order impact on the TRC and the STRC. If tax effects are not incorporated into these tests, rebates do not impact the calculation of the TRC or the STRC. Itron, Inc. 2-7 Introduction and BackgroundPDF Image | Cost-Effectiveness of Distributed Generation Technologies
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