New National Standard Practice Manual for Benefit-Cost Analysis of Distributed Energy Resources - Released
by Joe Cullen, Director of Policy & State Outreach
 

On August 19, 2020, the National Energy Screening Project published the new and expanded National Standard Practice Manual for Benefit-Cost Analysis of Distributed Energy Resources (NSPM for DERs).

Image cover of National Standard Practice Manual

The NSPM for DERs provides a comprehensive framework, supporting concepts, and guidance for sound, consistent, and balanced benefit-cost analysis (BCA) of DERs, including energy efficiency. The manual can help jurisdictions identify the full range of DERs where benefits exceed their costs and develop BCA practices that align with their goals and objectives.

The NSPM for DERs can serve as an objective, technology-neutral and economically sound guidance document for regulators, utilities, consumer advocates, DER proponents, state energy offices, and other stakeholders interested in comprehensively assessing the impacts of DER investments. The NSPM for DERs can help jurisdictions assess the cost-effectiveness of a wide variety of new investments by consistently comparing the benefits and costs associated with alternative sources of energy, energy efficiency and systemic management of energy resources.

The DERs covered in the new NSPM for DERs include energy efficiency, demand response, distributed generation, distributed storage, electric vehicles, and increased electrification of buildings (e.g., heating and cooling systems). The manual includes case examples that illustrate BCA for various DER combinations and applications.

The emergence of DERs, combined with the continuing, overall growth in renewable energy, has begun to alter utilities’ approach to ensuring reliability. Three major factors driving DER growth are:

  • Customer awareness. A growing number of utility customers are demanding more choices for their energy needs. They are installing Wi-Fi-enabled thermostats, electric vehicle chargers, energy storage, and many other devices behind the meter.
  • Integration of renewable resources onto the grid. The growth of lower cost solar and wind power has increased variability in the power supply, necessitating flexible resources for reliable integration. Many types of DERs can effectively balance renewable resources.
  • Changes to wholesale power market rules. The Federal Energy Regulatory Commission and numerous balancing authorities have been modifying rules to accommodate new companies that are bringing DER technologies to energy markets.

As utility business models continue to evolve, as new energy efficiency technologies and products enter into the marketplace, and as consumers become more and more sophisticated in the consumption of energy at home and at work, the NSPM for DERs allows for a more comprehensive approach to evaluating the costs and benefits of a growing number of options and approaches. The NSPM for DERs expands upon, and incorporates, content from the 2017 National Standard Practice Manual for Assessing Cost-Effectiveness of Energy Efficiency Resources.

Building Performance Association continues to be highly active in promoting cost-effectiveness testing reforms in numerous states. For example, BPA filed a series of comments recommending cost-effectiveness testing reforms in New Jersey, which culminated in final comments filed on August 4, 2020. In response, the New Jersey Board of Public Utilities (NJ BPU) adopted a significantly improved New Jersey Cost Test at its meeting on August 24th, 2020. The NJ BPU also suggested that it will incorporate additional NSPM-informed reforms in the future.

BPA will continue to encourage jurisdictions and stakeholders to reform state approaches to cost-effectiveness testing and will promote the use of the NSPM for DERs to guide BCA efforts in their jurisdictions. To learn more about the NSPM for DERS:

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