Valuing Resilience Benefits in Utility Building Retrofit Programs

Suggested Citation

Rohini Srivastava, Emily Garfunkel, and Amber Wood. 2024. Valuing Resilience Benefits in Utility Building Retrofit Programs. Washington, DC: ACEEE. www.aceee.org/research-report/b2402.

Executive Summary

Key Findings Building resilience benefits attributable to utility demand-side programs are often undervalued or missing from program evaluation and selection processes. The data on these benefits are often not collected, as most state utility regulators do not require that this information be reported. Where resilience benefits from energy efficiency programs are included in utility planning, outreach, and evaluation processes, they are included as improved system reliability benefits and avoided risk categories. By including the resilience benefits of enhanced energy performance, passive survivability, and system recovery, utilities can more accurately capture the additional value streams from building energy resilience in programmatic and regulatory approaches. Among those utilities that do value or include building energy resilience, there are qualitative and quantitative approaches to valuing building energy resilience benefits from energy efficiency projects. Qualitative approaches are often illustrated in marketing and outreach materials. Examples include descriptions of the resilience benefits of microgrid and battery storage programs and how they limit the length and frequency of outages. Quantitative valuation approaches are used in cost-effectiveness analysis at both the project and program level. Examples include cost-benefit analysis with a net present value (NPV) calculation based on costs and savings from resilient infrastructure, and the use of metrics such as standard effective temperature (SET) to measure the passive survivability benefits of a building.

To prepare for the impacts of future climate events, enhancing the resilience of buildings can allow residents to shelter in place for longer, and critical facilities to operate for longer. Studies have demonstrated that building energy efficiency programs yield resilience benefits by improving the passive survivability of buildings.[1] However, utilities undervalue these resilience benefits. 

Incorporating resilience benefits into utility program cost-effectiveness analysis can improve program decision making and promote investment into demand-side resources, and it can inform utility program screening and selection processes. In order to develop recommendations for valuation of resilience benefits, we surveyed existing methods in the literature and conducted expert interviews. In this report, we identify benefits from enhanced building energy resilience, present building technologies that increase resilience, and discuss current qualitative and quantitative approaches for valuing resilience. 

Building energy resilience and resulting benefits

While there are varying definitions of resilience, most refer to the ability to maintain operations through, and recover from, major disruptive events. Building energy resilience is related both to energy system resilience and community resilience, among other systems, as it is interconnected with building energy efficiency. Building energy resilience can be enhanced through utility retrofit programs. 

A multitude of benefits from utility retrofit programs accrue to building occupants, utilities, and wider communities when building energy resilience is enhanced. For example, enhanced building energy resilience can help increase occupant comfort and safety, and improve the operational quality of buildings, allowing people to shelter in place during extreme events and accompanying outages. Building owners and occupants can also receive financial benefits such as revenue from demand response program participation, reduced disruption, and enhanced building value. Utilities benefit from a lower risk of grid overload, which reduces the probability of power quality problems, disruptions from demand spikes, and damage to grid components. Resilient buildings may support more orderly restoration of service if there is a disruption, and are likely to be suitable candidates for participating in utility demand response programs. For more details refer to table 1 in the full paper.

Demand-side management technologies

Many energy-efficient technologies included in utility programs can increase building energy resilience, priming utilities to lead building energy resilience efforts. Envelope measures, building control systems, and connected devices can improve the capacity of a building to retain livable conditions for longer during extreme temperatures, hurricanes, and wildfires. Distributed energy generation resources like solar and energy storage can also increase building energy resilience by protecting occupants and power-dependent building systems, enhancing system recovery by providing a reliable source of backup power, and reducing disruptions due to demand spikes.

Valuation approaches

While there are many resilience benefits of utility energy efficiency programs, utilities currently undervalue these benefits. However, a few utilities have begun to consider resilience benefits in their energy efficiency program planning and evaluation processes. At the program level, resilience can be valued both qualitatively and quantitatively. Qualitative approaches are largely used for outreach and marketing; for example, Pacific Gas & Electric Company (PG&E) and Commonwealth Edison Company (ComEd) highlight the resilience benefits of their microgrid and battery storage programs, respectively. 

There are a few quantitative approaches, including cost-benefit analysis methods like the net present value (NPV) calculation proposed by Efficiency Vermont, which integrates resilience infrastructure benefits; tracking discrete metrics like those in Leadership in Energy and Environmental Design (LEED) to measure passive survivability; and a risk assessment approach used in a Department of Energy Building Technologies Office (DOE BTO) analysis. 

Existing utility cost-based valuation approaches, such as avoided cost and value of lost load, can be further leveraged for valuing resilience benefits. Furthermore, a small number of jurisdictions have used the National Standard Practice Manual for Benefit-Cost Analysis of Distributed Energy Resources (NSPM for DERs), a comprehensive framework for cost-effectiveness assessment of DERs to incorporate resilience into program-level cost-effectiveness evaluations (NESP 2020). For example, Minnesota currently acknowledges resilience as an impact, while Maryland has included resilience in its estimation of risk.

Key stakeholder actions and recommendations

By taking the following actions, utilities, regulatory agencies, states, and other stakeholders can all work to expand the valuation of resilience benefits in energy efficiency programs. 

• Utilities can develop and formalize approaches for valuing resilience at the project and program level to inform investments in energy efficiency. 
• Regulators can help to standardize methodologies for quantifying resilience to enable more widespread consideration of resilience benefits. 
• State and local jurisdictions can incorporate building energy resilience in emergency planning efforts and work with utilities to foster a supportive environment for greater consideration of resilience benefits.
• Advocates including building owners and tenants can help prioritize the resilience benefits alongside other types of benefits to advocate for policies and programs that help scale building retrofits.

Advancing the valuation of the resilience benefits of building energy efficiency and other demand-side measures can help increase investment in resilient retrofits and will enable more homes and businesses to better withstand climate impacts, avoid outages, and support more orderly restoration of services. This can help communities, especially disadvantaged populations, to adapt to more frequent and intense climate events.

 

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Energy Efficiency Strategies and Upgrades Energy Efficiency and Climate Change Evaluation, Measurement, and Verification (EM&V)