Energy Efficiency

Pinnacle Economics is a leader in evaluating the economic and fiscal impacts of energy efficiency programs throughout the United States. Alec has contributed modeling, analysis, research, writing, and project management services for projects involving energy efficiency programs in Oregon, Washington, Idaho, Montana, Michigan, Hawaii, and nationally. Alec developed a state-of-the-art modeling approach that combines program surveys and input-output modeling techniques to measure the annual economic and fiscal impacts associated with the Energy Trust of Oregon’s residential, commercial, and industrial energy efficiency programs, as well as their portfolio of renewable energy projects.

Recently, after a survey and review of impact methodologies in the United States and Canada, the American Council for an Energy-Efficient Economy (“ACEEE”) recommended the hybrid modeling approach developed by Pinnacle Economics for the ex-post verification of energy efficiency job creation.

Bell, McNerney, and Barrett, “Verifying Energy Efficiency Job Creation: Current Practices and Recommendations,” American Council for an Energy-Efficient Economy, 529 14th Street NW, Suite 600, Washington, DC, 20045, September 2015.

Economic and Fiscal Impacts of Energy Efficiency and Renewable Energy Programs in Oregon

Since 2001, Josephson has quantified the annual economic and fiscal impacts of the Energy Trust of Oregon’s energy efficiency and renewable energy programs, including additional outside projects sponsored by the Energy Trust but conducted by others, such as the Northwest Energy Efficiency Alliance (NEEA). This comprehensive impact analysis uses a state-of-the-art, hybrid modeling approach that relies on an input-output modeling framework, with detailed data for program spending, incremental measures costs, energy savings, and incentive payments as the key inputs into that model. Economic and fiscal impact measures are reported for commercial, industrial, residential, and renewable energy programs on a gross and net basis. The net economic impacts are relative to a base case scenario that assumes that program spending (administrative/implementation costs and program incentives) are returned and spent by ratepayers. In addition, the analysis measured the cumulative, longer-term economic impacts by isolating energy savings for all program participants. Our findings also identified those measures, end uses, and programs with the greatest energy savings potential and the greatest net economic impacts. For example, we isolated and separately measured the net economic impacts directly attributable to the Energy Trust’s weatherization measures. By doing so, we were able to determine that these measures generated, depending on the economic impact measure, nearly twice the net economic impacts as other Energy Trust programs.

Regional Economic Impacts and Literature Review of Energy Efficiency Programs Throughout North America

Using the IMPLAN model and detailed program data, conducted a comprehensive economic impact analysis of the Bonneville Power Administration’s (“BPA”) electric energy efficiency programs in its service territories in Oregon, Washington, Idaho, and western Montana between 2007 and 2010. Impacts were measured for residential, commercial/industrial, and agricultural energy efficiency programs for each program year, as well as for future out-years when energy savings are expected to continue. This analysis used IMPLAN’s Multi-Region Input-Output (“MRIO”) component to measure program impacts that accrue to each state, as well as secondary spending impacts that spills over to other states in the four-state region. Impacts include changes in output, income, and employment. For this analysis, gross impacts are calculated and then compared against a Base Case spending scenario, which assumes that local funding used to support BPA’s program activities and incentives are returned and spent by ratepayers. The difference in economic impacts between the gross economic impacts attributed to BPA’s programs and the Base Case scenario are referred to as net impacts. This project also included a literature review of economic impact studies of electrical energy efficiency programs conducted within the last ten years. Studies were reviewed and ranked, with key information compiled into a database, including: type of analysis (ex ante or ex post), programs or sectors, modeling framework, modeling platform, gross or net impact analysis, inclusion of energy savings impacts in future out-years, economic impact multipliers, and normalized economic impacts per dollar spent and/or per aMW of energy savings.

Energy Efficiency Program Impacts in Michigan and Hawaii

For Consumers Energy of Michigan and the State of Hawaii Public Utilities Commission, measured the economic and fiscal impacts of their statewide energy efficiency programs using detailed program data and the IMPLAN input-output modeling system. Economic and fiscal impacts were reported on a gross and net basis for the following impact measures: output, personal income (wages and business income), jobs, and state and local tax and fee revenues. To better understand the distribution of impacts, net economic impacts were reported by major industry sector. Lastly, economic and fiscal impacts were reported for the most recent program year (with implementation adjustments to account for the timing of energy efficiency measure installations), as well as for future years based on participants’ expected future energy savings. These agencies have different energy efficiency program delivery systems as well as different data reporting requirements, and our economic impact modeling framework demonstrated a great deal of flexibility in exploring the complex linkages and economic impacts across a variety of energy efficiency programs.

Western Climate Initiative: Economic Impacts of Proposed Carbon Emissions Reduction Policies

For the Washington Department of Ecology, used the IMPLAN model to quantify the economic impacts associated with various carbon emissions reduction policies recommended by the Western Climate Initiative (“WCI”). The WCI policy recommendations included a cap-and-trade system as well as four other, complementary policies designed to increase energy efficiency. This net impact analysis included a well-developed counterfactual scenario which considered the economic consequences if the WCI were not implemented. Additional work was done to address alternative assumptions regarding initial carbon allocations. The analysis used inputs developed by WCI consultants using ENERGY 2020 model, including changes in spending on energy efficient equipment, changes in fuel prices, changes in spending on fuel, carbon allowance prices, and changes in carbon emissions. Due to the uncertainty of some assumptions, we developed best and worst case scenarios to bracket the plausible impacts, including the possibility of substantially higher future costs for energy. We also examined distributional effects by calculating potential energy savings realization rates across Washington industries.

Economic and Fiscal Impacts of the Business and Residential Energy Tax Credit Programs

Analyzed the gross and net economic impacts of the Oregon Department of Energy’s (“ODOE”) Business and Residential Energy Tax Credit (BETC and RETC) programs over two, two-year periods. These programs provide state income tax credits to promote investments in energy efficiency and renewable energy. ODOE supplied program costs, tax credit, energy savings, and detailed measure spending data, which were used as model inputs. Using an IMPLAN, input-output modeling framework, the analysis described the changes in industry output, value added, employment, and various categories of taxes for each program. The analysis also isolated the economic impacts of energy efficiency improvements in order to estimate the future benefits to the economy due to efficiency gains achieved in prior years. Lastly, the analysis team developed an emissions model to measure the reductions in CO2 emissions.

Economic Impacts of Property Assessed Clean Energy Programs (“PACE”)

For PACENow, measured the output, income, employment and tax impacts of purchase activity associated with PACE energy efficiency and renewable energy projects. Because PACE projects also have the potential to affect household spending, through reductions in energy costs, the impacts of that effect of the PACE projects were also examined. The analysis used the IMPLAN input-output model system and simulated the implementation of PACE projects in four cities, with computation of both local and national impacts. The analysis showed significant, positive economic and fiscal impacts are potentially associated with PACE energy efficiency and renewable energy projects.

Audit of Demand Side Management Programs

For almost eight years, Josephson was lead analyst in the California Public Utilities Commission’s (“CPUC”) annual evaluation of four California utilities’ reporting of forecasted and actual costs, benefits, and earnings for Demand Side Management Programs. His work included data and engineering reviews of sampled program participants, verification of load impact and measure retention studies, review of administrative cost allocations and procedures, verification of parameters and calculations in summary earnings tables, and presentation of findings and recommendations at DSM workshops and in annual Staff Reports for the Office of Ratepayer Advocates.