Portfolio theory points to energy efficiency as invaluable in resource planning.
Hossein Haeri, Aaron Jenniges and Paul Youchak work for The Cadmus Group, an energy and natural resources consultancy. The work referred to in this article is based in part on a project funded by NV Energy.
In the world of ratepayer-funded energy efficiency, every once in a while comes a sea change and prompts a few basic questions: What is the value of ratepayer-funded energy efficiency? What is its role in utility resource planning? How much should we invest in it?
The latest waves spread from the recent seismic shifts in natural gas supply, caused by the discovery of new conventional gas reserves and advances in extraction techniques that have opened vast supplies of shale gas and forced a sharp drop in natural gas commodity prices. Natural gas prices dropped to a historically low level of $2.75 per million Btu in 2012 and, according to recent forecasts by the Energy Information Administration (EIA), are projected to grow by no more than two 2% per year, on average, for the foreseeable future (see Figure 1).