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Financial impact of energy efficiency under a federal combined efficiency and renewable electricity standard: Case study of a Kansas "super-utility"

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  • Cappers, Peter
  • Goldman, Charles

Abstract

Historically, local, state and federal policies have separately promoted the generation of electricity from renewable technologies and the pursuit of energy efficiency to help mitigate the detrimental effects of global climate change and foster energy independence. Federal policymakers are currently considering and several states have enacted a combined efficiency and renewable electricity standard which proponents argue provides a comprehensive approach with greater flexibility and at lower cost. We examine the financial impacts on various stakeholders from alternative compliance strategies with a Combined Efficiency and Renewable Electricity Standard (CERES) using a case study approach for utilities in Kansas. Our results suggest that an investor-owned utility is likely to pursue the most lucrative compliance strategy for its shareholders--one that under-invests in energy efficiency resources. If a business model for energy efficiency inclusive of both a lost fixed cost recovery mechanism and a shareholder incentive mechanism is implemented, our analysis indicates that an investor-owned utility would be more willing to pursue energy efficiency as a lower-cost CERES compliance strategy. Absent implementing such a regulatory mechanism, separate energy efficiency and renewable portfolio standards would improve the likelihood of reducing reliance on fossil fuels at least-cost through the increased pursuit of energy efficiency.

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  • Cappers, Peter & Goldman, Charles, 2010. "Financial impact of energy efficiency under a federal combined efficiency and renewable electricity standard: Case study of a Kansas "super-utility"," Energy Policy, Elsevier, vol. 38(8), pages 3998-4010, August.
    • Handle: RePEc:eee:enepol:v:38:y:2010:i:8:p:3998-4010
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    References listed on IDEAS

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    Cited by:

    1. Heeter, Jenny & Bird, Lori, 2013. "Including alternative resources in state renewable portfolio standards: Current design and implementation experience," Energy Policy, Elsevier, vol. 61(C), pages 1388-1399.
    2. Satchwell, Andrew & Cappers, Peter & Goldman, Charles, 2018. "Customer bill impacts of energy efficiency and net-metered photovoltaic system investments," Utilities Policy, Elsevier, vol. 50(C), pages 144-152.
    3. Engelken, Maximilian & Römer, Benedikt & Drescher, Marcus & Welpe, Isabell M. & Picot, Arnold, 2016. "Comparing drivers, barriers, and opportunities of business models for renewable energies: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 60(C), pages 795-809.

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