Economics of Electrification

EPRI has an Efficient Electrification research initiative underway to help the electric power sector and related stakeholders identify cost-effective and resilient strategies to produce and use clean energy. This study evaluates the potential for efficient electrification in Ohio, assesses key drivers, and identifies opportunities and challenges. Funding for this Ohio Efficient Electrification Study was provided by Ohio Edison Company, The Cleveland Electric Illuminating Company, and The Toledo Edison Company.

Over the past several years, EPRI has undertaken an Efficient Electrification research initiative to help the electric power sector and related stakeholders identify cost-effective and resilient strategies to produce and use clean energy. In 2018, the potential for electrification in the entire United States was assessed as part of the U.S. National Electrification Assessment (US NEA), which highlighted the role that increased adoption of electric end-use technologies across the building (residential and commercial), industrial, and transport sectors could play in creating new value for consumers, businesses, and communities throughout the country.

Over the past several years, EPRI has undertaken an Efficient Electrification research initiative to help the electric power sector and related stakeholders identify cost-effective and resilient strategies to produce and use clean energy. In 2018, the potential for electrification in the entire United States was assessed as part of the U.S. National Electrification Assessment (US NEA), which highlighted the role that increased adoption of electric end-use technologies across the building (residential and commercial), industrial, and transport sectors could play in creating new value for consumers, businesses, and communities throughout the country.

Great River Energy and the Electric Power Research Institute (EPRI) have undertaken a collaborative research initiative to help the electric power sector and related stakeholders identify cost-effective and resilient strategies to produce and use clean energy in Minnesota. This research evaluates potential decarbonization pathways for the state’s electric sector and energy system, and the potential for efficient electrification, i.e., electrification that is cost-effective for the state’s citizens and beneficial for the environment. In this study, we evaluate potential future Minnesota electricity capacity, generation, and end-use demand for three potential types of Minnesota state policies—increasing renewables, zero electric sector CO2 emissions by 2040, and an 80% CO2 reduction economy-wide by 2050. We also evaluate the implications of alternative assumptions regarding the use of inter-state power imports for policy compliance, expected natural gas prices, future vehicle battery costs, the use of gas turbines for capacity reserves, and the counting of CO2 emissions from gas turbines. We find that Minnesota’s future electricity system will depend on Minnesota’s climate policy type and design features, both of which are uncertainties for utility planning and imply significant investment, operations, emissions, power price, and cost transition uncertainties. Reducing CO2 emissions by 80% by 2050 across Minnesota’s economy is consistent with international global climate ambitions; however, it will be challenging with major energy system transformation. Decarbonizing Minnesota’s electricity alone by 2040 could help reduce state emissions, but also could result in increased emissions outside the electric sector, with emissions economy-wide falling well short of an 80% reduction by 2050. The electric sector could substantially support CO2 reductions in other parts of the Minnesota economy with the appropriate policy, but deployment will depend on incentives outside the electric sector for using low-carbon electricity. Finally, regardless of climate policy, Minnesota’s energy system will need plan for market and technology uncertainties. In addition to this study, the initiative also produced a second technical assessment – Minnesota Efficient Electrification Study: Task 2 – Utility-Level Assessment and Implementation Plan (3002023161).

The Canadian National Electrification Assessment builds upon research at the Electric Power Research Institute (EPRI) on the economic and technical potential for electrification—the adoption of advanced electric end-use technologies in place of fossil-fueled alternatives. Given Canadian emissions reductions initiatives at the federal, provincial, territorial, and municipal levels, the analysis investigates electrification opportunities across the buildings, transportation, and industrial sectors over the next three decades, along with implications for the environment and the electric grid.

EPRI’s Efficient Electrification Initiative explores electrification in the context of the broader energy system, analyzing the customer value, societal benefits, and technical aspects of using electric end-use technologies with low-emitting generation to decarbonize other sectors. Coupling EPRI’s modeling capabilities with its extensive research on end-use technologies, the analysis finds that deep decarbonization pathways entail significant electrification, increases in energy efficiency, decarbonization of electricity, and carbon capture and removal, especially when reaching net-zero emissions targets.

The pace and extent of electricity demand growth across scenarios—ranging from 29% to 51% above current levels by 2050—depend on policy and technology uncertainties. These changes to load present opportunities and challenges for electric sector planning and operations, including increases in peak demand, more flexible loads, higher winter peaks in many regions, and changes to daily and seasonal load shapes, which have important effects on reliability and resilience. Energy efficiency, structural change, and fuel switching contribute to economy-wide CO2 emissions falling between 47% and 80% by 2050 and to keeping energy service costs flat (or even declining) as economic activity grows. Electrification opportunities saturate or become expensive after CO2 emissions decline by approximately 80%, so additional options such as carbon removal, low-carbon fuel pathways, and demand-side approaches become increasingly valuable in reaching net-zero emissions goals.

Given the uncertain course to 2050, the Canadian National Electrification Assessment provides value to stakeholders by informing decarbonization efforts and implementation. This includes identifying pathways, consumer impacts, infrastructure needs, and implications for power sector planning.

This study evaluates the potential for efficient electrification in Georgia and Alabama, assesses key drivers, and identifies opportunities and challenges. Using the U.S. Regional Economy, Greenhouse Gas, and Energy (US-REGEN) model, the analysis highlights the economic potential for electrification across residential, commercial, industrial, and transport sectors and corresponding impacts on the electric sector and emissions through 2050 under a range of scenarios. The study suggests that electrification, driven by technological change and consumer choice, leads to load growth across a range of scenarios, but the extent of system changes depends on a range of technological, market, and policy factors.

Air quality is a serious health risk for Californians; the California Air Resources Board recently estimated that approximately 5,400 premature deaths per year are due to fine particulate matter exposure alone. Electrification has important co-benefits for air quality, and studying the effects of potential electrification strategies on California’s ability to meet its air quality standards requires careful examination.

To explore this, EPRI linked an electric sector and energy end-use model to a chemical transport model to evaluate the air quality co-benefits of efficient electrification in California. This study examines the potential for efficient electrification in California to meet the state’s decarbonization targets and quantifies the air quality co-benefits of such a strategy, specifically for ozone and fine particulate matter in the South Coast Air Basin.

In partnership with Duke Energy and the North Carolina Electric Membership Corporation (NCEMC), the Electric Power Research Institute (EPRI) investigated, under multiple scenarios, the potential for adoption of electric technologies in three end-use sectors – buildings, transportation, and industry – and the corresponding impact on electricity generation and carbon dioxide (CO2) emissions in North Carolina during the period from 2015 to 2050. Using the United States Regional Economy, Greenhouse Gas and Energy (US-REGEN) model, EPRI conducted a state-wide analysis of the potential for efficient electrification – the economic adoption of electric end-use technologies – under nine scenarios. The study finds that key electrification outcomes, such as load growth and reductions in final energy and economy-wide CO2 emissions, depend on a range of policy, economic, and technology factors.

In this study, the Electric Power Research Institute (EPRI) builds upon its U.S. National Electrification Assessment of the economic potential for electrification—the adoption of electric end-use technologies in place of fossil-fueled alternatives—with an in-depth exploration of state-specific opportunities across the buildings, transportation, and industrial sectors of New York State over the next three decades, along with key implications for efficiency, the environment, and the grid.

EPRI’s Efficient Electrification Initiative explores electrification in the context of the broad energy system—analyzing the customer value of advanced, end use technologies that efficiently amplify benefits of cleaner power generation. Coupling EPRI’s modeling capabilities with its extensive research on end-use technologies, the analysis finds that electrification outcomes in New York, including the extent and timing of adoption, infrastructure and investment needs, and associated economy-wide emission reductions, will vary depending on a range of policy, economic, and technology factors.

This analysis was conducted prior to the enactment of the state’s Climate Leadership and Community Protection Act and is not intended to make policy recommendations or identify specific pathways to achieving the state’s greenhouse gas targets. Instead, it illustrates that a portfolio of electric technologies could play a significant role in reaching the state’s energy goals. Furthermore, this initial assessment focuses attention on needed research and development and frameworks that will guide the transition, helping to identify the areas in which legislators, regulators, utilities, grid operators, customers, and other stakeholders can work together on the next chapter of New York’s clean energy future.

VIEW EXECUTIVE SUMMARY

This report presents the Total Value Test (TVT) as a metric for the cost-effectiveness of energy efficiency measures and programs, inclusive of electrification. The TVT represents an amalgam of the best attributes of the standard practice tests for energy efficiency that have been implemented by utilities and state regulatory bodies for decades, adapted and refined to include a more comprehensive set of benefits and costs characteristic of electrification considerations, including environmental impacts.  The TVT can be applied to objectively compare the cost-effectiveness of electric, natural gas, or other options, and is not disposed to favor any particular technology based on how it is powered or fueled. The report provides a review and critique of the energy efficiency standard practice tests, presents the rationale and methodology of the TVT, and illustrates the use of the TVT in three case studies.