Measuring the economic value of demand-side and supply resources in integrated resource planning models

When comparing the economics of alternative portfolios of supply and demand-side resources, utility planners should consider not only costs but also effects upon the benefits, or value, that electricity consumers receive. A method for including such effects in comprehensive resource planning models is presented. This method considers the value impacts of electric rate changes, takeback of energy savings in conservation programs, and increases in energy services provided by load building or valley-filling programs. In general, the method rewards resource portfolios that cause rates to move closer to marginal cost or increase the energy services provided. Applications of a net value objective in several resource planning models are summarized. They confirm that optimizing net value can yield different resource portfolios than minimizing cost.>