Hourly vs TOU Avoided Costs

1. Hourly vs TOU Avoided Costs Brian Horii, E3

2. TOU-based Impact Issues • TOU-based impacts assume the same coincidence of end use load reductions and area need. • TOU-based impacts can capture area T&D $/kW-yr differences, but cannot capture need (timing) differences. • Residential A/C example shows how TOU-based impacts could overestimate benefits in PG&E’s moderate areas. • Other example shows how TOU-based impacts could underestimate peak benefits.

3. PG&E Residential A/C

4. PG&E Commercial HVAC • Overestimate is less due to more uniform usage pattern

5. Using only TOU energy costs could underestimate the value of programs that provide generation peak kW reductions Theoretically, capacity cost could be netted out of the hourly energy costs Problem Overly large capacity cost would overvalue peak reduction programs High capacity costs increase the potential error introduced by inaccurate peak kW estimates Using TOU Impacts Has the Issue of Generation Capacity Costs

6. Residential Benefit as a Function of Generation Capacity Cost Levels

7. Next Steps? • DEER 2005 will produce hourly end use load shapes and should eliminate the TOU problem for most measures. • Some measures, however, may remain limited to TOU estimates. • Exclusion of capacity will provide conservative estimates of benefits