Estimating the Drivers of the Cost of Saved Electricity in Utility Customer-Funded Energy Efficiency Programs

Sean Murphy () and Natalie Mims Frick
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Sean Murphy: Electricity Markets and Policy Department, Lawrence Berkeley National Laboratory, 1 Cyclotron Road, Berkeley, CA 94720, USA
Natalie Mims Frick: Electricity Markets and Policy Department, Lawrence Berkeley National Laboratory, 1 Cyclotron Road, Berkeley, CA 94720, USA

Energies, 2023, vol. 16, issue 5, 1-15

Abstract: Energy efficiency programs funded by utility customers provide an electricity resource in most U.S. states, but their scale and cost of saving electricity varies significantly by state. In this paper, we explore the drivers of the cost of saved electricity in these programs with an econometric model and nearly a decade of data reported by efficiency program administrators. We found strong evidence for economies of scale and weak evidence for diseconomies of scale, which suggests that states with low levels of efficiency savings relative to retail sales can increase the size of their efficiency programs without large increases to the cost of saved electricity. We discuss examples of energy efficiency forecasting and potential modeling in light our econometric analysis and identify methodological improvements relevant to utilities and grid operators. This paper provides insights into the economics of customer-funded efficiency programs that will support regulators, utilities, and policymakers to utilize energy efficiency as a resource.

Keywords: energy efficiency; demand-side management; energy economics; energy policy (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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