NEWS: Energy and environmental policy
Water-Energy Avoided Cost Framework

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July 9, 2014

Eric Cutter, Ben Haley, Jim Williams and C.K. Woo of E3 were coauthors on a recent article describing a water-energy avoided cost framework published online in the Electricity Journal.

Energy embedded in the provision of water has been the subject of numerous water-energy nexus studies that are nearly unanimous in recommending integrated evaluation of energy and water savings from demand-side management (DSM). Joint implementation of DSM, however, remains a rare exception. The recommendations and tools developed to date are either overly broad or too specific to readily implement across multiple utilities.

In this article, we link a forward-looking marginal water supply approach and the well-established energy avoided cost framework to jointly value water and energy efficiency savings. As a case study set in the San Francisco Bay Area of California, we evaluate cold water, hot water and energy efficiency measures. Avoided costs for water are far more impactful than embedded energy for efficiency measure cost-effectiveness. While several measures fail cost-effectiveness tests when viewed from an energy or water utility perspective alone, they pass under an integrated approach. Thus, the integrated approach supports rational cost sharing between energy and water utilities and facilitates cooperation and increased funding for DSM.

filed under: Energy and environmental policy