National Standard Practice Manual for Benefit-Cost Analysis of Distributed Energy Resources

Completed August 2020

Synapse worked for the National Energy Screening Project (NESP) with E4TheFuture as coordinator to develop a National Standard Practice Manual for Benefit-Cost Analysis of Distributed Energy Resources (NSPM). The purpose of the NSPM is to improve the way that utility customer-funded distributed energy resources are evaluated for cost-effectiveness throughout the United States, and to inform decision-makers regarding which resources are in the public interest and what level of investment is appropriate.

The NSPM provides a set of policy-neutral, unbiased, and economically sound principles, concepts, and methodologies to support benefit-cost analysis for distributed energy resources, including: energy efficiency, demand response, distributed generation, distributed storage, and building and transportation electrification. Synapse's primary role was as the lead technical consultant. The manual was developed with a Drafting Committee of five experts and incorporated input from a nation-wide Review Committee. The NSPM is available here.

Synapse was the lead author and editor of the Methods, Tools, and Resources Handbook for Quantifying Distributed Energy Resources Impacts for Benefit-Cost Analysis released in March 2022. This handbook, drafted for regulators, utilities, consumer advocates, and other distributed energy resource (DER) stakeholders, is a companion guide to the National Standard Practice Manual. It includes detailed guidance on how to calculate all the costs and benefits associated with DERs, including such important considerations as how to identify long-run marginal impacts, how to develop a Reference Case and a DER Case, how to account for temporal and locational impacts, how to distinguish between environmental compliance impacts and societal environmental impacts, how to consider energy equity in the context of benefit-cost analysis, and much more. Each section of the manual describes the impact, provides guidance on how to calculate the impacts using clear, step-by-step methods, and provides a set of documents, tools, and websites where readers can get more guidance and information.