Energy and Emissions Benefits From Minnesota Energy Efficiency Investments

The Union of Concerned Scientists (UCS) analyzed three methods for valuing energy efficiency in Minnesota: a coal proxy, a gas proxy, and an AVERT/gas blend. The study found that traditional utility dispatch models and locational marginal pricing (LMP) often undervalue energy efficiency by incorrectly designating low-cost renewable resources as the marginal resource, even when expensive fossil-fuel plants are operating. The analysis shows that while avoided energy costs are similar across methods ($24–$27/MWh), avoided emissions benefits vary significantly, being highest when displacing coal ($39/MWh) and lowest when displacing gas ($14–$15/MWh). UCS recommends that regulators adopt transparent, auditable methodologies and remove 'must run' constraints from dispatch models to ensure energy efficiency displaces the most expensive and polluting resources.

• Traditional utility dispatch models and locational marginal pricing (LMP) frequently undervalue energy efficiency by treating zero-marginal-cost renewable energy as the marginal resource, which ignores the potential to displace more expensive and carbon-intensive fossil-fuel generation.
• The use of 'must run' designations in utility optimization software creates a bias that prevents energy efficiency from displacing company-owned resources, leading to results that are not fully optimized.
• Three tested methods for calculating avoided energy costs produced similar results, ranging from $24 to $27 per megawatt-hour (MWh).
• Avoided emissions benefits vary significantly by the resource displaced, with the highest value associated with coal displacement and the lowest with gas.
• The coal proxy method yielded the highest overall avoided costs, while the gas proxy method yielded the lowest, with the AVERT/gas blend method falling in between.
• The AVERT/gas blend method uses a behavioral simulator to predict the displacement of a mix of coal, gas, and oil resources in the short term before switching to a gas proxy for the long term.
• Minnesota's regulatory framework requires the quantification of environmental externalities, with carbon dioxide (CO2) representing the largest component of these costs.

APA

Daniel, J., & Gignac, J. (2020). Energy and Emissions Benefits From Minnesota Energy Efficiency Investments. Union of Concerned Scientists. https://www.ucs.org/sites/default/files/2020-08/mn-emissions-benefites.pdf

Chicago

Daniel, Joe, and James Gignac. Energy and Emissions Benefits From Minnesota Energy Efficiency Investments. Union of Concerned Scientists, 2020. https://www.ucs.org/sites/default/files/2020-08/mn-emissions-benefites.pdf.

Wikipedia

{{cite report |last1=Daniel |first1=Joe |last2=Gignac |first2=James |title=Energy and Emissions Benefits From Minnesota Energy Efficiency Investments |publisher=Union of Concerned Scientists |date=August 2020 |url=https://www.ucs.org/sites/default/files/2020-08/mn-emissions-benefites.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{daniel2020energy, author = {Daniel, Joe and Gignac, James}, title = {{Energy and Emissions Benefits From Minnesota Energy Efficiency Investments}}, institution = {Union of Concerned Scientists}, year = {2020}, month = aug, url = {https://www.ucs.org/sites/default/files/2020-08/mn-emissions-benefites.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }