Modeling Energy Efficiency as a Supply Resource
Abstract
Energy efficiency may be an inexpensive way to meet future demand and reduce greenhouse gas emissions, yet little work has been attempted to estimate annual energy efficiency supply functions for electricity planning. The main advantage of using a supply function is that energy efficiency adoption can change as demand changes. Models such as Duke University’s Dynamic Integrated Economy/Energy/Emissions Model (DIEM) have had to rely on simplistic or fixed estimates of future energy efficiency from the literature rather than on estimates from energy efficiency supply curves. This paper attempts to develop a realistic energy efficiency supply curve and to improve on the current energy efficiency modeling. It suggests an alternative approach based on saved-energy cost data from program administrators and explains the methodologies employed to create the supply curve. It illustrates this approach with results from DIEM for various electricity demand scenarios. The analysis suggests that an additional 5%–9% of energy efficiency is deployed for every 10% increase in the cost of electricity. Therefore, DIEM “invested” in energy efficiency up to an inelastic point on the energy efficiency supply curve. By contrast, the U.S. Environmental Protection Agency’s energy efficiency approach assumes that realized energy efficiency is fixed, and has no elasticity, regardless of changes to marginal costs or constraints that affect emissions or economics.
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Gumerman, Etan, and Tibor Vegh (2017). Modeling Energy Efficiency as a Supply Resource. Retrieved from https://hdl.handle.net/10161/27120.
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Tibor Vegh
Tibor Vegh serves as a senior policy associate with the Nicholas Institute for Energy, Environment & Sustainability. He is an applied social scientist with a background in environmental planning and economics. Vegh’s applied and policy-relevant research centers on the resilience of coupled human and natural systems; the economic, social, and environmental implications within the context of coastal adaptation; and the reliance on natural systems to benefit communities in the face of uncertainty and environmental risks. Vegh is a lead or collaborator on a wide range of projects where he contributes his economic, financial, and policy analysis skills, as well as his understanding of environmental planning approaches to solve real-world problems.
Vegh’s most recent work focuses on the social and economic aspects of coastal and urban resilience and multidimensional adaptation to risks in coastal and ocean systems. He has also collaborated on projects spanning many other topics, including fisheries economics, plastics pollution mitigation, ecological restoration, ecosystem service markets, bioenergy, and more.
Vegh holds a PhD in city and regional planning with a focus on environmental planning from the University of North Carolina Chapel Hill. He earned his master's degree in forestry with a focus on economics from Northern Arizona University in 2011 and his bachelor's degree in economics with a minor in mathematics from North Carolina State University in 2008.
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