Improve Your Green Tech Efficiency
Posted December 17th, 2013
Cost-effectiveness screening is a critical part of the energy efficiency program planning process and there are well-established methodologies for conducting cost-effectiveness analysis.
There are several different tests that evaluate cost-effectiveness from a variety of perspectives. All of them compare the net present value (NPV) of the benefits of the energy efficiency resource with the net present value of the cost of the energy efficiency resource.
The most commonly used test is the Total Resource Cost (TRC) test. For the past two decades, this test has been the principal way of assessing energy efficiency program cost-effectiveness and approving utility funding.
However, the TRC has fundamental problems…it measures the total cost of an energy efficiency resource (incentives, homeowner contribution, program overhead, etc.) against what it would cost to generate power (i.e. the cost of a natural gas power plant).
This method completely ignores the non-energy benefits that are often critical to market acceptance of efficiency measures, such as comfort, health, durability and rebates.
One school of thought says that to fix this imbalance equation, we should put a value on the non-energy benefits (NEBs) associated with energy efficiency and factor them into the equation. While this makes sense at one level, it is a giant mess at another. How do you determine which benefits drive consumer decisions and estimate the value of comfort, health and safety, durability, etc?
While energy efficiency may be on a property owner’s checklist, it is usually not at the top of the list of reasons why upgrades are made.
Property owners are investing in modern equipment, or to solve a range of other problems where the primary benefit is often comfort, or better indoor air quality. The fact that a consumer may save a few dollars a month or get a rebate is great — and it can drive deeper energy-efficiency projects. But the rebate and the resulting energy savings often are not the primary reason why funds are being spent.
Are there other solutions? There are two:
- Several experts are pointing to the use of another test – the Program Administrator Cost (PAC) test. This test, which is relatively easy to administer, compares the cost of conserving energy to the cost of supplying the equivalent amount of energy.
- For commissions that cannot or do not wish to make the Program Administrator Cost (PAC) test their primary screening tool, however, the TRC test remains a widely-used alternative. If TRC is used, a series of best practices for implementation is recommended to enhance the test’s fairness and ensure that its application conforms as closely as possible to its stated intent. These best practices can be found at the NHPCI website (www.nhpci.org).
When you are ready to hire a green technology professional, Bayside Solutions can find the right person for you. We are the top green tech recruiters in California, so contact us today and let’s get to work. If you are looking for green tech recruiters in northern California, contact us today.
