Monetizing Energy Efficiency: Implementation Strategies for Kentucky

Policymakers have used a variety of approaches to achieve greater implementation and reporting of energy efficiency. Among these are approaches that create or expand opportunities for voluntary, market-based transactions involving energy efficiency byenabling public agencies to enter into long-term energy savings performance contracts; providing financing or tax incentives for energy efficiency investments; permitting energy efficiency resources to compete in and receive compensation via forward capacity markets; allowing energy efficiency resources to receive tradable credits for reducing the emissions of greenhouse gases under an emissions trading program; or allowing energy efficiency resources to receive tradable credits under a resource portfolio standard, among other strategies. 

In this report, we consider how markets for energy efficiency might incentivize the implementation and reporting of energy efficiency in Kentucky, and the strategies that the Commonwealth might employ in order to promote participation in these markets. We focus specifically on the PJM capacity market, the market for CO2 offset allowances under the Regional Greenhouse Gas Initiative (RGGI), and the market for energy efficiency credits that may be traded and used towards compliance with state portfolio standards.

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