Dive Brief:

• Integrating energy efficiency programs into a utility's broader demand-side management (DSM) portfolio can optimize their benefits to the grid, but experts warn the integration also introduces equity concerns and the potential that low- and middle-income customers may not fully benefit.
• Efficiency programs for low-income customers are often among the least cost effective of utility programs and may not offer the same grid benefits as load management approaches like managed electric vehicle charging or controllable heating, experts said Tuesday at the National Association of Regulatory Utility Commissioners' (NARUC) Winter Policy Summit.
• Energy efficiency should be integrated into DSM portfolios "as much as possible," Steve Schiller, a senior advisor affiliate to the Lawrence Berkeley National Laboratory, said. But, he added, "there may be times when we really need to make sure we benefit those who need it the most."

Dive Insight:

The continued growth of variable generation is altering the cost structure of maintaining a reliable and resilient grid, making the location and time of energy savings more important than ever, Schiller said. In practice, that means the energy savings of an efficiency program may not offer the same grid benefits of controllable distributed energy resources (DER).

"So we're seeing an increasing need for a more flexible and resilient energy system. And this is changing the value of efficiency and other DER that reduce the demand on the electricity system," he said.

In an integrated portfolio, experts warn those changes could mean utilities favor programs that rely on more expensive technologies, shifting investment away from traditional efficiency and weatherization.

There are benefits to integrating efficiency in with demand response and storage, said Mike Specian, utilities manager for the American Council for an Energy-Efficient Economy. Right now, these resources are siloed in different utility programs with different budgets, he said, pointing as an example to grid-interactive heat pump water heaters that can save energy and provide demand flexibility to reduce peaks.

"You often have these lack of interactions, a lack of holistic coupling optimizations that can occur, because we treat them separately," Specian said.

Utilities must find a balance, the NARUC panelists agreed. 

"I do worry a little bit that if you aren't thoughtful enough upfront, you could suddenly have your entire **[what?]** program be an electric vehicle adoption program. Which may have some benefit, arguably, but it depends what you're looking for," said Emily Levin, the principal consultant for Vermont Energy Investment Corporation, which administers the state's efficiency programs.

Some states are taking steps to ensure efficiency programs reach low- and middle-income customers, but efforts are uneven, said Levin.

In states without a strong focus on greenhouse gas reductions and energy equity, "we are seeing a lot of interest in integrating energy efficiency and demand response ... just because of the opportunity to provide so much more value to the grid through a coordinated approach," Levin said.

But if you are looking for equity, direct benefits to customers and homes, and assistance with energy burden, "energy efficiency is an amazing resource for those," she said.

Utilities must remember to reach the customers most in need, said Schiller. "And that might just start with a weatherization program."