Clean Energy and the
Assessing the
of State and Local
Clean Energy Initiatives
Multiple Benefits of
Clean Energy Initiatives
Reducing energy demand and/
or increasing renewable energy
generation from state and local
clean energy initiatives—such as
goals, standards, codes, funds and
programs—can generate many
benefits including:
• Security, diversity,
and overall reliability
improvements for the
electric system.
• Improved environmental
quality, human health, and
quality of life.
• Positive economic gains
through energy costs saved,
avoided medical costs,
higher disposable incomes,
increased labor productivity,
and more jobs.
This brochure is part of a series and
focuses on electric system benefits.
What's Inside:
O Why assess electric system
benefits?
o How can state and local
governments estimate potential
electric system benefits?
O Quantitative examples of how
clean energy initiatives result in
direct energy benefits.
O How to find more information.
dEPA
What are clean energy initiatives?
Clean energy initiatives are policies and
programs that state and local govern-
ments are using to save energy, improve
air quality, reduce carbon emissions,
support electric system reliability and
security, and improve economic devel-
opment. Examples include:
Energy efficiency policies that reduce
demand for energy, such as:
Building codes for energy efficiency
in both commercial and residential
buildings; energy efficiency portfolio
standards; public benefit funds for
energy efficiency; and appliance
efficiency standards.
Energy supply policies that increase the
use of renewables and clean sources,
such as:
Clean distributed generation and
net metering interconnection
standards; output-based
environmental regulations; public
benefit funds for clean energy
supply; combined heat and power;
and renewable portfolio standards.
Greenhouse gas (GHG) related policies
that measure or limit emissions, such as:
GHG registries, mandatory GHG
reporting; CO2 offset requirements;
GHG performance standards; and
power sector GHG cap-and-trade
policies.
Planning and incentive structures
that advance clean energy, such as:
Clean energy goals for public
facilities; energy efficiency and
alternative fuel goals for public
fleets; energy efficiency in public
facilities; and climate change
action plans.
State and local governments
can analyze their clean energy
initiatives using methods
and tools described in EPA's
Assessing the Multiple Benefits
of Clean Energy: A Resource
for States.
How do clean energy initiatives benefit
the electric system?
United States
Environmental Protection
Agency
Slate and Local
Climate and Energy Program
Clean energy initiatives reduce demand
for fossil-fuel powered electricity and
increase electricity generated with
clean, renewable energy, contributing
to a less polluting, more reliable and
affordable electric system. Specifically,
energy efficiency and/or renewable
energy are resources that can:
Avoid costs typically associated with
conventional generation, including:
Fuel, variable operation, and
maintenance costs; emissions
allowances; costs of emission
control equipment; and/or
wholesale electricity purchases.
Defer or avoid costs of power plants
and/or transmission and distribution
(T&D), including:
Capital costs; operation and
maintenance costs; upgrade and
construction costs.
Electricity losses associated with
transmission and distribution.
continued on page 2
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Continued from page 1
Georgia found that through different levels of energy
efficiency improvements, the state could:
• Reduce demand for electricity by 3,000-12,500
GWh in 2010;
« Avoid generation of 1,200-4,700 GWh in 2010;
• Reduce regional wholesale electricity costs by
0.5 to almost 4 percent by 2015;
• Lower peak demand by 1.5 to 6 percent by 2015;
and
• Achieve a number of environmental and
economic benefits.
Source: Jensen, V., and E. Lounsbury. 2005.
A Massachusetts study explored the potential
benefits of photovoltaic, energy efficiency (EE),
combined heat and power (CHP) and combined EE
and CHP scenarios and found that:
• Each of the alternative scenarios would reduce
CO2 emissions relative to the reference case.
• EE and CHP combined could reduce more than
2 million short tons CO2/year in 2020
• The 250MW of PV is expected to displace more
than 350 GW of purchases from the wholesale
market and reduce prices by 0.4 percent.
• EE is expected to reduce prices by 1.6 percent
• EE and CHP combined would produce at least a
5 percent reduction in prices.
Source: Synapse Energy Economics. 2008.
During a weeklong heat wave in the Northeast in
August 2006, PJM used demand response (i.e., load
control) programs to reduce 520MW of peak load
reductions. While total payments to all demand
response providers were $5 million for the highest
demand hours of the heat wave, the reductions
saved $650 million for energy purchasers and
prices were $300/MWh cheaper than they would
have been otherwise.
Sources: PJM, 2006a, PJM, 2006b.
Energy efficiency programs in California have cost
the state 2-3 cents per kWh on average—much less
than the cost of new generation, which can be more
than 6 cents per kWh for new natural gas combined-
cycle plants—while reducing the need for new
power plants and increasing reliability.
Source: NRDC. 2006.
Other benefits of clean energy to the electric system
that aren't easy to quantify but are valuable nonetheless
include:
Increasing reliability and power quality due to lower
loads, an increase in electricity supply and enhanced
technology.
Avoiding ancillary service costs (i.e., costs to maintain
system stability) due to increased reliability.
Reducing wholesale market clearing prices as electricity
demand decreases and supply increases.
Avoiding or reducing risks associated with long lead-
time investment or from deferring investment in tra-
ditional centralized resources until environmental and
climate change policies take shape.
Improving fuel diversity and energy security through
the use of varied and domestically available clean energy
resources.
To learn more about how the electricity system operates,
please see Assessing the Multiple Benefits of Clean Energy:
A Resource for States, Section 3.1.1, "The Structure of the
U.S. Energy System."
Why assess electric system
benefits?
Clean energy is often cheaper than, or just as cost-
effective as, other energy options, while also delivering
important electric system, environmental, and economic
benefits to the state. Typically, however, only the costs—
not the benefits— of clean energy are considered during
policy decisions.
By quantifying and comparing the electric system ben-
efits of clean energy initiatives to traditional grid electric-
ity, policy makers can:
Identify opportunities to use clean energy to minimize
costs, losses and risks and support reliability and diver-
sity in the electric system
Understand the magnitude of the potential for clean en-
ergy co-benefits across the electric system as well as ben-
efits to the economy, environment, and human health.
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Finding Data for Estimating Benefits
Increase recognition of the synergies between clean energy
initiatives, the electric system and other state or local priori-
ties, such as economic development and environmental
quality.
Communicate clearly the comprehensive impacts of clean
energy initiatives to their partners and stakeholders.
Demonstrate the full value of a clean energy program.
Information about clean energy benefits, as well as costs, is
useful in planning and decision-making, including:
• Developing state and local energy plans and establishing
clean energy goals.
• Conducting resource planning (by public utility
commissions or utilities).
Designing demand-side management (DSM) programs.
• Performing electric system planning, including new
resource additions, T&D capacity, and interconnection
policies.
Planning and regulating air quality, water quality,
and land use.
Obtaining support for specific initiatives.
Fine-tuning policy and program design.
There are many sources of data and completed
analyses states can use to estimate the electric
system benefits of clean energy, including:
• utilities
• public utility commissions
• state energy offices
• U.S. DOE's Energy Information Agency
• U.S. Federal Regulatory Commission
• National Renewable Energy Laboratory
• U.S. EPA's e-GRID database
• regional transmission organizations
• independent system operators
• power pools
• regional reliability organizations
• Bureau of Economic Analysis
• Securities and Exchange Commission
• state studies and databases
To learn more about specific data sources for
estimating benefits, see Assessing the Multiple
Benefits of Clean Energy: A Resource for States,
"Chapter 3: Assessing the Electric System Benefits
of Clean Energy."
How can state and local governments estimate potential
electric system benefits?
The most straightforward and easily quantifiable benefits to
assess are avoided or deferred costs of generation and ca-
pacity and avoided transmission losses. State and local gov-
ernments can estimate these electric system benefits using a
range of basic approaches or sophisticated approaches.
Basic approaches provide relatively simple approximations of
the impact of clean energy initiatives on the electric system.
These basic estimates provide reasonable approximations for
preliminary assessments or screening exercises or when time,
budget and access to data are limited.
Sophisticated analyses are conducted using state-of-the-art
power sector models that simulate and project power plant
operations, additions and costs. These approaches are more
complex and require additional inputs. They do, however, add
the ability to estimate how the current system will respond
and adapt to an initiative in both the short and long term.
References:
• Jensen, V., and E. Lounsbury. 2005. Assessment of Energy Efficiency Potential in Georgia. Prepared for the Georgia Environmental Facilities
Authority by ICF Consulting. May.
• NERC. 2009. North American Electric Reliability Corporation Web Site: Key Players - Regions.
• NRDC. Chang, Audrey. California's Sustainable Energy Policies Provide A Model for the Nation. March 2006.
• PJMLLC, RTO. 2006(a). "PJMRegion Sets Summer's Third Energy-Use Record: Energy Conservation Request Continues East." August 2, 2006.
• PJMLLC, RTO. 2006(b). "Early Aug. Demand Response Produces $650 Million Savings in PJM: Reducing Electricity Use Stretches Power
Supplies, Lowers Wholesale Electricity Supplies." August 17, 2006.
Synapse Energy Economics. 2008. Impacts of Distributed Generation on Wholesale Electric Prices and Air Emissions in Massachusetts,
March 31.
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Where can state and local governments and policy makers
go for more information about tools, methods, and resources
available to estimate the benefits of clean energy initiatives?
Assessing the Multiple Benefits of Clean Energy: A Resource for States, an essential manual to help
estimate and communicate the benefits of clean energy, provides tools and approaches for state and
local governments.
v What the Guide includes:
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A framework for determining which benefits to
estimate and how.
Tools and methods for estimating energy systems and
environmental economic benefits across varying levels
of rigor.
Easy-to-read tables that present the range of tools
and approaches, their strengths and limitations, and
suggestions on when to use them.
Benefits estimates
derived using various
methods.
Analyses that illustrate
benefits to promote clean
energy.
Case studies that profile how states use available
tools to develop and implement clean energy policies
and programs.
Multiple Benefits
of Clean Energy
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How the Guide is organized:
Chapter 1 introduces the assessment of multiple
benefits of clean energy and highlights the
relationships between energy savings and other
benefits of clean energy initiatives. Included in the
chapter are discussions of what the multiple benefits
of clean energy are, why states should assess the many
benefits of clean energy, and how states can assess the
multiple benefits of clean energy.
Chapter 2 provides policy makers with methods
to estimate the potential direct energy impacts of
electricity-related clean energy initiatives and policies
for planning:
Steps to estimates energy impacts of clean energy.
- Sample framework for developing an energy forecast.
- Energy data sources.
- Comparisons of basic and sophisticated forecasting
methods and tools.
- Resources for retrospective data and potential studies.
~ Available tools for estimating impacts.
• Chapter 3 presents detailed information about the
energy system to help policy makers understand how
to identify and assess the benefits of clean energy
initiatives on electricity systems based on their state's
needs and resources:
~ An overview of how the electricity system operates.
- Information on how to select which benefits to evaluate.
Steps for estimating electricity system benefits.
- Descriptions and comparisons of basic and
sophisticated forecasting methods and tools.
- Considerations for determining whether to analyze
the various benefits, who typically estimates the
specific benefits, and when it is the most effective time
is to do undertake.
Chapter 4 provides help for agencies to assess the
greenhouse gas, air pollution, air quality, and human
health benefits of clean energy options:
Various methods to estimate air and health benefits.
- Comparisons of different models and tools, including
advantages, disadvantages, and when to use them.
Data needs and data sources.
Chapter 5 presents simple to sophisticated methods
and tools for assessing the economic benefits of clean
energy options so that state and local governments
may:
Conduct and manage analyses.
- Review cost-and-benefit estimates.
- Understand the potential job effects of clean energy
initiatives.
- Make recommendations about clean energy options
and appropriate evaluation approaches and tools.
How to access the Guide and get more information:
o Assessing the Multiple Benefits of Clean Energy: A Resource for States Web site:
http://www.epa.gov/statelocalclimate/resources/benents.html
o State and Local Climate and Energy Program Web site: http://www.epa.gov/statelocalclimate/
o State and Local Climate and Energy Listserv: http://www.epa.gov/statelocalclimate/listservs/index.html
o Contact Information: Denise Mulholland • mulholland.denise@epa.gov • 202-343-9274
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