Benefits Of Energy Conservation and MN’s Conservation Improvement Program

Summary:

This white paper offers an overview of the benefits associated with energy conservation, categorized by:

• benefits that accrue to the utility, 
• benefits that accrue to the participants of energy conservation, and 
• benefits that accrue to society. 

Minnesota’s Conservation Improvement Program (CIP) is the state’s primary energy conservation program and has long been a cornerstone of the state’s energy policy. CIP helps Minnesota households and businesses conserve electricity and natural gas. Minnesota statute states that “cost-effective energy savings are preferred over all other energy resources,” and “cost-effective energy savings should be procured systematically and aggressively.” Minnesota’s statutory emphasis on the importance of energy conservation is a testament to the robust and meaningful benefits that result from energy conservation. 

Energy conservation results in a multitude of benefits that accrue on multiple levels — to the person or entity who makes the energy efficiency upgrade (the “participant”), the utility system, the utility business, other utility ratepayers, and society more broadly. The benefits are generally defined and quantified as the costs that the utility, participants, ratepayers, and society avoid by pursuing and achieving energy savings, generally referred to as avoided costs. 

Minnesota’s CIP cost-effectiveness framework captures and quantifies many energy conservation benefits within each of these categories. However, some benefits of energy conservation are not easily quantified, and are therefore not included in the state’s cost-effectiveness model. 

This white paper provides a description of the types of value and benefits included in each category of energy conservation benefits, as well as a brief description of whether and how those benefits are incorporated into the state’s cost-effectiveness model.