[BETA] Fortnightly

For more than two decades, the six New England states have made significant investments to advance energy efficiency in the region. State spending on energy efficiency (EE) in New England reaches hundreds of millions of dollars annually, with almost $1.2 billion spent on state-sponsored EE from 2008 through 2011. And it’s estimated that from 2015 through 2021, nearly $5.7 billion will be available to fund energy-efficiency programs.

Backed by the public policies that have spurred this financial commitment, energy efficiency comprises an increasingly important part of the New England electric energy resource mix. For 2015 to 2016, more than 1,500 MW of EE is committed to provide capacity, representing 4.5 percent of the region’s total power system requirement of 34,000 MW.

It’s clear that New England’s state-sponsored EE programs are having an effect on electricity usage in the region, but until recently the magnitude of the long-term impact wasn’t fully quantified. Rapid increases in EE investments have raised important questions about how to measure and incorporate the demand-reducing effect of these EE programs into the 10-year power system planning process. Since 2009, ISO New England, state regulators, and other regional stakeholders—including market participants with EE programs—have been working together intensively to find the answers.

Figure 1 - Production Costs (Of Energy Efficiency Savings) Over Forecast Period ($/MWh)

For the short term, ISO New England knows how much EE is committed through the annual Forward Capacity Market (FCM) auctions, which procure generation and demand-side capacity, including energy efficiency, to meet the region’s resource needs three years into the future.

Historically, the ISO’s traditional long-term load forecast incorporated EE by virtue of the fact that the baseline load level was lower than it would have been absent these energy-saving programs. The ISO’s load forecast also included the future impacts of federal appliance-efficiency standards. However, the amount of EE procured in the FCM was held constant past the third year in the 10-year load forecast, so incremental growth in EE wasn’t estimated for years four through 10 of the load forecast or transmission needs assessments.

Because the New England states and other regional stakeholders believed that the growing effect of EE on demand—beyond the three-year FCM timeframe—should be accounted for, the question became, how can energy-efficiency savings be predicted so far into the future? And if a forecast methodology could be developed, would it estimate energy and peak demand savings with enough accuracy to be used in planning for a reliable power system? The challenge in this process is magnified by the diversity of the dozens of unique EE programs in the six states, differing state priorities, and a variety of methods of reporting performance in New England.

The answers to these questions can be found with New England’s first forecast of long-term energy-efficiency savings—believed to be the first multistate EE forecast in the nation. Developed after three years of research and data collection, the forecast uses a model that factors