Iowa Association for Energy Efficiency

Energy Efficiency Cost-Effectiveness Testing

Gregory EhrendreichThe Midwest has a long history of successful energy efficiency policies and programs. Yet, because of outdated cost-effectiveness testing (CET) approaches, many opportunities are being lost. CET measures the benefit-to-cost ratio of an efficiency program or measure. State regulators only approve efficiency programs that pass the state's required test(s). The current tests can marginalize the value of some efficiency measures, leaving them out of utility portfolios. This leads to these technologies being under-used in the construction and rehab of our built environment. 

The National Standards Practice Manual (NSPM) is a framework for modernizing CET. It provides guidance on building consistent tests that account for state and utility energy policies and goals. The NSPM process can identify impacts - such as health, environmental and resource savings - that current tests undervalue. Accounting for all relevant policies and impacts can help to better measure the value of energy efficiency. Refined and standardized methods and inputs can ensure that all utilities are testing efficiency the same way. 

As we change the way utilities, customers and buildings interact with energy markets, energy efficiency cost-effectiveness testing has to keep up. Otherwise, we will continue to make resource acquisition choices that do not optimize for all the benefits that we value as a society. 

This presentation will show that modernizing cost-effectiveness testing is a path toward achieving more than just increased energy savings. Efficiency’s impacts on society and the environment can be measured and included in how we value energy efficiency as a long-term resource. 

Greg Ehrendreich is the Senior Analyst at Midwest Energy Efficiency Alliance (MEEA), where he uses data and analysis to support MEEA's policy activities. He spent his early career in graduate study of cartilage and arthritis biochemistry. That transitioned to retail and service industry work, and then to labor organizing and activism. Before joining MEEA, Greg returned to school to study sustainable business. Greg holds a BS in Biochemistry with a minor in Environmental Studies from Beloit College. He earned an MS in Environmental Management from the Illinois Institute of Technology’s Stuart School of Business. 

© 2020 Iowa Association for Energy Efficiency. All rights reserved