How Do We Measure Market Effects? Counting the Ways, and Why It Matters

Elizabeth Titus and Julie Michals, Northeast Energy Efficiency Partnerships
Monica Nevius, Consortium for Energy Efficiency

Keywords

Abstract

Recent work in energy efficiency evaluation shows that market transformation programs are best documented by measuring market effects, and that non-energy effects are also important. Thus far there is no consensus in the energy efficiency community on how market and nonenergy effects should be included in the cost-effectiveness evaluation of market transformation programs. This lack of consensus could jeopardize policymakers’ abilities to document the full impact of market transformation programs as well as compare results across states and regions.

This paper provides an overview of current approaches to measuring market effects, nonenergy effects, and cost-effectiveness by energy efficiency organizations in the U.S. It summarizes primary and secondary research on how market transformation program results are captured in cost-effectiveness analysis. The results show that organizations in approximately one fourth of 19 states with active efficiency efforts are estimating long-term market effects. Versions of the TRC or Societal cost-effectiveness tests are most widely used, but approximately one-third of the states use multiple tests. In roughly one fifth of the states, the Utility or RIM tests are used. There are many challenges to reaching consensus on the measurement of market and non-energy effects and their inclusion in cost-effectiveness analysis. The paper identifies some positive trends toward consensus on approaches and coordination of measurement among utilities and program administrators within states and at the regional level, and offers some suggestions for accelerating these trends.