Findings from the 2021 Power Plan

At their February 2022 meeting the Council voted to approve the 2021 Northwest Power Plan. This culmination of years of work by staff, Council members, and many participants from around the region reveals very different results than we have seen in Plans past. The Northwest energy system is changing, and the Plan identifies those changes and outlines how the region can adapt in order to continue to provide an affordable and reliable power system. Energy efficiency has been a central tenant of the Council’s Power Plan since it was codified as a priority resource in the Northwest Power Act that originated the Council. But even this first choice resource is seeing new challenges to the way energy efficiency has been implemented in the past and the future of the resource in the region.

The world the Plan described saw clean policies across the west prompting coal retirements and lots of renewable resource builds. These policies paired with a decreased price of alternative resources, especially wind and solar, have made renewable resources cost competitive with energy efficiency in a way we haven’t seen in previous power plans. The addition of these renewable resources also drives down market prices, particularly in the middle of the day when solar resources are high. Additionally, after years of dedicated work building and supporting conservation as a resource, the region is seeing less available low-cost energy efficiency, furthering the competition. Another outcome of increased renewables is dispatchability of resources has already become and will continue to be increasingly important for the energy grid.  

This is the context that informed the conservation program and how the Council determined the amount of cost-effective energy efficiency recommended. When determining the cost-effective amount of energy efficiency and setting a target, the Council considered model results and energy efficiency’s many other values to the system. This overall target applied to the achievable technical potential dictated the cost effectiveness formulation that the RTF will use going forward to calculate energy efficiency measure cost effectiveness relative to the findings of the Plan.

Since the start of the year, the RTF has been having discussions about what the new Plan tells us about energy efficiency and how these findings will affect the RTF’s work going forward. Starting with a larger discussion of energy efficiency cost effectiveness criteria from the 2021 Power Plan and then diving deeper at the following meeting with a presentation about the updates made to RTF measure cost-effectiveness in alignment with the Plan. Those more detailed presentations are linked above.

The Council’s cost-effectiveness formulation provides the benefit/cost ratio of an energy efficiency measure, by placing a value on the energy and capacity EE provides so that it may be compared to other resources. That formulation provides a consistent approach to identifying which measures provide the greatest value to the grid based on findings from the plan, limited by the target levels. When looking at the B/C ratio across measures, the dynamics of the shifting electric grid are still very much at play. Capacity benefits, specifically the deferred resource benefits have become very important for efficiency value and are often more valuable than the energy benefits, due to those decreased market prices.

It is the RTF’s role to maintain a portfolio of energy efficiency measures consistent with the Council’s Plan. This means making updates to remain consistent when a new Plan is adopted. Since the 2021 Plan’s adoption, the RTF has converted all their workbooks to a new measure template and re-ran all those workbooks consistent with 2021 Plan findings through ProCost (the RTF’s cost-effectiveness tool). Those findings were reported out to the RTF at their April meeting. Through that conversion some illustrative themes emerged. As expected, these updates resulted in fewer measures being cost-effective relative to the alternative resources identified in the power plan. The residential sector was particularly hard hit, as historically that has been a big focus of regional programs and a lot of the remaining measures are more expensive. There are still some opportunities though they will perhaps take some innovation on the part of the region to pursue. Commercial, industrial, and agricultural measures still have many measure applications that remain cost effective, and there is even opportunity for the RTF to develop new measures of interest that were included in the Plan but aren’t yet in the RTF measure suite. While many were discouraged by the exercise, there is work to be done yet across sectors: finishing weatherization, even non-cost-effective weatherization for those home that have been left behind, pushing into new spaces in the commercial and industrial sectors, and working on shoring up measure savings shapes, costs, and savings data to maybe move the needle on those borderline cost-effective measures.

Even in the new landscape that the 2021 Power Plan describes, cost-effective energy efficiency is still the priority resource for the Pacific Northwest region and it still provides significant benefits, beyond cost, to the power system. It provides benefits in the morning and evening ramp periods and it provides flexibility, adequacy, and resilience to the grid. The region is going to have to be adaptive and thoughtful about how we continue to pursue this resource and these benefits. We will likely have to move past the one-size fits all ‘peanut butter’ approach to developing and implementing measures and get more targeted and intentional about what remaining savings opportunities to pursue and how. We will need better data and maybe a shift in how we have understood EE’s value to continue to build this resource and support programs. Folks in the region are already getting creative and looking for opportunities to work with stakeholders outside the energy sector who might have interest in energy efficiency and its many benefits. The energy grid is getting increasingly dynamic and complicated and energy efficiency will not be the same as it always has been but hopefully we can all be excited about the many opportunities for growth this brings.