The Value of Demand Reduction Induced Price Effects (DRIPE)
Energy efficiency programs reduce utility bills, reduce emissions of multiple pollutants, and reduce the overall cost of delivering electricity services. Measuring and considering the full spectrum of benefits delivered by energy efficiency is pivotal to capturing all cost-effective efficiency resources. One such benefit—the Demand Reduction Induced Price Effects (DRIPE) resulting from efficiency programs—is difficult to quantify, and experts disagree on when to include it in cost-effectiveness tests.
In a webinar held on March 18th, 2015, RAP explored the DRIPE effect in Illinois and the impact of its inclusion in cost-effectiveness tests. Resource Insight’s Paul Chernick and Energy Futures Group’s Chris Neme discuss the potential price suppression effects of efficiency programs on market clearing prices for electricity in Illinois based on the study “Analysis of Electric Energy DRIPE in Illinois.” The study examines ComEd in PJM and Ameren Illinois in the Midcontinent Independent System Operator (MISO) market and establishes several key variables for determining the value of DRIPE for typical energy efficiency measures.