Energy Efficiency Yields System-wide Benefits in New England

Challenge:

ISO-New England (ISO-NE) oversees the region’s wholesale electricity markets and seeks to improve the ability of the power system to meet ever-increasing demand in a cost-effective way. In the past decade, ISO-New England recognized that in order to guarantee adequate electric capacity and meet peak demand, they would need to create a system for utilities and other resource providers to commit, in advance, to supplying power.

Solution:

As an answer to this need, ISO-NE established a Forward Capacity Market (FCM). Through the FCM, all of New England’s power providers are invited to offer bids on how much electricity they can supply – or reduce – in the future. Power providers determine how much they can feed into the grid; they enter the auction; and they are paid a guaranteed price.

In part through the advocacy of VEIC, ISO-NE recognized that reducing demand through energy efficiency can have exactly the same result as increasing electric supply. Consequently, the ISO-NE FCM was the first wholesale energy market to allow energy efficiency programs, like those developed by VEIC, to auction savings from energy efficiency measures.

In order to participate in the FCM, VEIC developed a qualifications package and evaluation plan—a plan that continues to meet with the approval of ISO-NE. The evaluation plan that is required for FCM inclusion specifies the energy investment that VEIC is bidding and proves that the investment is measurable and will be available at the time of commitment.

VEIC delivers energy efficiency services to all Vermonters through the Efficiency Vermont contract. By providing education, incentives, technical assistance, and support for residents, businesses, and trade allies, Efficiency Vermont helps Vermont’s utility customers make efficiency investments and reduce their energy use.

Vermont rate-payers benefit from the system-wide savings of the FCM and the individual savings of their own efficiency investments.

Results:

  • Revenues from the FCM are used to support thermal (non-electric) efficiency projects—those that save fuel oil and propane.
  • Increased revenues help expand the reach of Efficiency Vermont’s and provide support for new efficiency projects that might not be funded otherwise.
  • Efficiency Vermont’s efforts have established it as the second largest FCM capacity provider in Vermont.