1.1. Purpose

While the NSPM can be used to determine which DER costs and benefits to include in DER BCAs, this MTR handbook can help determine how to calculate the values of those costs and benefits.

The National Standard Practice Manual for Benefit-Cost Analysis of Distributed Energy Resources (see NSPM 2020) provides guidance on how to determine primary and secondary tests to assess the cost-effectiveness of distributed energy resources (DERs). It provides a framework for determining which DER costs and benefits should be included in benefit-cost analyses (BCAs) given a jurisdiction’s policy goals and includes guidance on conducting BCAs of single and multiple types of DERs.

This Methods, Tools & Resources Handbook (‘MTR handbook’) builds on the NSPM as a companion document by helping users identify and understand the methods, tools, and resources that can be used to calculate the benefits and costs of DERs. While NSPM can be used to determine which DER costs and benefits to include in DER BCAs, this MTR handbook can be used to determine how to calculate the values of those costs and benefits.

This MTR handbook is intended to be a reference guide for anyone preparing a BCA for DERs, including utilities, regulators and regulatory staff, state energy offices, evaluators, practitioners, consultants, and other stakeholders in the DER regulatory process. It is also intended to provide guidance for parties that review, critique, and comment on utility BCAs.

The methods, tools, and resources provided in this MTR handbook are based on currently available resources and information, which are likely to evolve over time. The National Energy Screening Project intends to update this MTR handbook periodically as new materials become available.

1.2. Applicability

Consistent with the NSPM, this MTR handbook is intended to be relevant to a variety of DER programs, procurements, or pricing mechanisms that are funded, acquired, or otherwise supported by utilities or other entities on behalf of electric or gas customers (see NSPM 2020, pages ii-iii). The document is intended to be applicable to DER programs being deployed in many organizational and jurisdictional contexts, including:

  1. Any jurisdiction where DERs are implemented by utilities or other entities.
  2. All ownership models of electric and gas utilities, including investor-owned, publicly owned, and cooperative utilities.
  3. All types of electric utilities regardless of the services provided, including utilities that are vertically integrated, transmission- and distribution-only, distribution-only, or those serving as a distribution platform for host customers to access a variety of energy services and DERs from third parties.
  4. Other entities using utility customer funds or other public funds to implement DERs, such as state energy offices and third-party program administrators.

1.3. Overview

Table 1 provides an overview of the information presented in this MTR handbook.

Table 1. Summary of chapter information
Chapter Description
Introduction The purpose and applicability of this MTR handbook
Key Steps for Calculating BCA Impacts An overview of the key steps that can be used to calculate BCA inputs; describes important concepts such as how to develop Reference and DER Cases and why it is important to use long-run marginal impacts of DERs
Electric Utility System Impacts How to calculate DER impacts that affect the electric utility system; these can be the result of an electric DER or of a gas DER that affects electric end-uses
Gas Utility System Impacts How to calculate DER impacts that affect the gas utility system; these can be the result of a gas DER or of an electric DER that affects gas end-uses
Other Fuel System Impacts How to calculate the impacts on other fuels (e.g., oil, propane, wood, gasoline) that result from electric or gas DERs
Host Customer Impacts How to calculate the impacts of DERs on the customers who install them
Societal Impacts How to calculate the societal impacts of electric or gas DERs
Reliability and Resilience How to account for reliability and resilience for electric or gas DERs
Energy Equity A conceptual framework for how to combine BCAs with distributional equity analyses to assess equity in DER investment decisions
Risk A conceptual framework for how to account for risk and uncertainty when conducting a BCA for DERs
DER Load Impact Profiles How to calculate load impact profiles, i.e., operating profiles, for DERs, which are necessary for determining many of the DER impacts
Resources A list of all the tools, websites, and documents cited in this MTR handbook

Chapters 3 through 10 follow the same structure. For each impact addressed in each chapter, the following information is provided:

  • A brief description of the impact.
  • A discussion of the methods that can be used to calculate the value of the impact.
  • A set of references and resources available for further information on those methods. This includes only the references specific to the relevant impact. A full list of all the references used in this MTR handbook is presented in Chapter 12.