Energy Equity and BCA

As jurisdictions increasingly center energy equity as an overarching goal in a transition to a cleaner energy industry, many are creating goals that address equity in all aspects of their distributed energy resource (DER) investments and other strategies. This requires affirming equity in decision-making tools and understanding the extent to which benefit-cost analyses (BCAs) address equity.

A new guide on conducting distributional equity analysis (DEA) is available for state energy regulators and key stakeholders to help inform equity implications of DER investment decisions. Download the DEA guide below and see NESP Events for DEA webinars and trainings.

Distributional Equity Analysis for Energy Efficiency and Other DERs:
A Practical Guide
(May 2024)

Distributional Equity Analysis - DEA Guide - cover image

Why This DEA Guide?

In applying the NSPM since 2017, it became clear that BCAs do not adequately address equity in terms of the distribution of cost and benefits to different types of utility customers – in particular those that a state defines as “priority”, e.g., vulnerable or under-served populations.

To address this gap, E4TheFuture teamed with Lawrence Berkeley National Laboratory and Synapse Energy Economics to expand NESP’s 2022 conceptual framework and develop comprehensive guidance on conducting a DEA.

  • While a BCA looks at whether a proposed DER investment will provide net benefits for all customers on average, it does not consider the distribution of costs and benefits to priority populations relative to other customers.
  • The guide describes 7 stages for conducting a DEA, provides definitions of “priority” populations from across the country, describes a range of distributional equity metrics, and provides data sources and opportunities to streamline the analysis. It also addresses how to combine distributional equity analysis with BCA results to inform decision-making.

The DEA Guide explains how a DEA (alongside a BCA) relates to other important dimensions of equity: recognition, procedural, and restorative – where DEAs can serve as a tool to address some aspects of equity but not all dimensions, as shown below.

Venn diagram showing relationship of equity aspects and how BCA and Distributional Equity Analysis are separate from the larger Distributional Equity component

Jointly funded by NESP (a project of E4TheFuture) and LBNL (via US DOE EERE), creation of the DEA Guide was informed by an advisory committee with a broad representation of stakeholders.

Questions about this project? Contact NSPM@nationalenergyscreeningproject.org.

Other national efforts on energy equity include: