Energy Efficiency in the New Generation of IRP Modeling

Lauren Miller , Ken Seiden, and John Chamberlin, Quantec, LLC

Keywords

Abstract

In the 1980s and early 1990s, utilities utilized integrated resource planning (IRP) to make informed, cost-effective, long-term resource decisions. As utility restructuring proceeded over the last decade, the role of IRP was diminished as market forces were expected to create the most efficient resource portfolio. Recent energy shortages, and gas and electric market price volatility, have spawned renewed interest in IRP, especially in the West.

In the “new” generation of IRP, we have the ability to reflect on some of the first generation’s limitations, particularly in terms of quantifying the energy efficiency resource. Other benefits of energy efficiency such as reduced emissions, local employment increases, and risk mitigation were generally ignored. Moreover, energy-efficiency impacts were often just “subtracted” from the load forecast based upon marginal or avoided costs, and many industry professionals did not view this approach as truly “integrated.”

This paper discusses these key energy efficiency issues as they relate to new IRP methods and models. In particular, we focus on model simplicity and multiple decision-making criteria to develop a multi-dimensional approach to resource portfolio selection.