In October, I shared a panel at ACEEE’s Energy Efficiency as a Resource conference in Philadelphia with Mohit Chhabra of NRDC. I spoke about how states and utilities in the Midwest have started to apply the principles of the NSPM Benefit Cost Analysis (BCA) framework to cost-effectiveness testing. Mohit spoke about a metric in use in California called the Total System Benefit (TSB), which measures the economic value of efficiency programs for the electric grid.
Mohit’s presentation left me thinking about how a metric like the TSB would fit in with the NSPM’s Jurisdiction Specific Test (JST). I wasn’t the only one, because Julie Michals from E4TheFuture sat down with Mohit and wrote about it in the latest NESP News:
Last month, I had the opportunity to chat with Mohit Chhabra of NRDC about the total system benefits (TSB) metric, adopted by California, vis a vis the NSPM BCA framework. Mohit had just given an excellent presentation on the TSB metric at ACEEE’s Efficiency as a Resource conference in Philly, after which we discussed the distinction between the TSB metric and a jurisdiction specific test (or JST), developed using NSPM BCA framework and foundational principles. With the help of Chris Neme (Energy Futures Group), we compared the relationship between the TSB metric and a JST, listing distinctions reflected in the table below.
In sum, the TSB and the JST are both necessary. They help policymakers answer different critical questions: The TSB metric measures DER benefits from a utility point of view; this includes contribution towards complying with mandatory clean energy goals. The JST brings clarity to assessing the amount and mix of DERs that is consistent with state policy goals.
Both the TSB and the JST support consistent valuation of all DERs, thereby reducing inefficiencies and potential misallocation of resources otherwise caused by fragmented DER valuation and procurement.
Read the rest, including a comparison of how TSB and JST address equity and low-income customers, in the NESP News for November 2023.
We are probably not going to see the TSB in the Midwest soon. We have just barely gotten started with exploring updated cost-effectiveness metrics and adopting JSTs, as noted in my presentation linked above. However, just like many utilities nationwide, Midwestern utilities often struggle with cost-effectiveness of energy efficiency programs and demonstrating how these programs help meet broader state energy goals. The TSB, or a metric like it, makes a lot of sense for this reason. We will see the TSB replace energy savings and peak demand savings as metrics for evaluating whether utilities are meeting their goals in California, as the utilities 2024 program year begins. Energy efficiency is vital for our region’s energy future, and the Total System Benefit could help us better tell the full story of its value and impacts.