Page 227 - Sustainable Cities and Communities Design Handbook

Life Cycle Analysis Chapter j 10 201

6. For DSM programs or program elements that reduce electricity and natural
gas consumption, costs and benefits from both fuels should be included.
7. The development and treatment of load impact estimates should distin-
guish between gross (i.e., impacts expected from the installation of a
particular device, measure, appliance) and net (impacts adjusted to account
for what would have happened anyway, and therefore not attributable to the
program). Load impacts for the Participant Test should be based on gross,
whereas for all other tests the use of net is appropriate. Gross and net
program impact considerations should be applied to all types of DSM
programs, although in some instances there may be no difference between
the gross and net.
8. The use of sensitivity analysis, i.e., the calculation of cost-effectiveness test
results using alternative input assumptions, is encouraged, particularly for
the following programs: new programs, programs for which authorization
to substantially change direction is being sought (e.g., termination, sig-
nificant expansion), and major programs that show marginal cost-
effectiveness and/or particular sensitivity to highly uncertain input(s).
The use of many of these guidelines is illustrated with examples of pro-
gram cost effectiveness contained in Appendix B.

Purpose
These worksheets, developed by the California Interagency Green Accounting
Working Group, are designed to calculate the various cost-benefit tests as prescribed
in the Standard Practice Manual: Economic Analysis of Demand-side Programs and
Projects (October, 2001).
Currently in place on the sheets are examples of the application of the cost
effectiveness tests to various self-generation and energy efficiency programs. Future
versions of this workbook may include sample calculations for load management
programs.
Using the Spreadsheet
The input values in the worksheets can be modified for those who wish to use these
worksheets to evaluate the cost-effectiveness of an actual energy efficiency or self-
generation program or project. All values that should be modified are in blue. Changes
in the input values on these worksheets to conduct analyses of actual programs will
produce cost-benefit results that conform with the SPM.
All other values in black or red; any changes to the formulas or values in the black
cells may produce cost-effectiveness results that do not conform with the SPM
Avoided Costs
The avoided cost values used in the analysis in this spreadsheet—the primary
parameter for establishing the benefits or reduced purchases of electricity from the
central grid–are based on long term forecasts developed in the year 2000, and are
currently used to estimate the lifecycle costs and benefits of energy efficiency and self
generation programs under the regulatory oversight of the California Public Utilities
Commission. When these avoided cost forecasts are updated, the updated forecasts
will be incorporated into this spreadsheet by replacing the values shown in the
Avoided Cost worksheet.