MICHIGAN ELECTRIC AND NATURAL GAS

ENERGY EFFICIENCY POTENTIAL STUDY

FINAL REPORT

Prepared for:

MICHIGAN PUBLIC SERVICE COMMISSION

November 5, 2013

GDS ASSOCIATES, INC.

1850 PARKWAY PLACE

SUITE 800

MARIETTA, GA 30067

770.425.8100

770.426.0303 (FAX)

WWW.GDSASSOCIATES.COM 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

i | Page

TABLE OF CONTENTS

1 EXECUTIVE SUMMARY ................................................................................................................1

1.1 Background ...........................................................................................................................................................1

1.2 Study Scope ...........................................................................................................................................................2

1.3 Summary of Results.............................................................................................................................................3

1.4 Energy Efficiency Potential Savings Detail By Sector....................................................................................8

1.5 Cost Effectiveness Findings...............................................................................................................................8

1.6 Report Organization ............................................................................................................................................9

2 GLOSSARY OF TERMS ................................................................................................................10

3 INTRODUCTION........................................................................................................................15

3.1 Introduction to Energy Efficiency ..................................................................................................................15

3.1.1 General Benefits of Energy Efficiency........................................................................................................15

3.2 The Michigan Context.......................................................................................................................................16

3.2.1 Continuing Customer Growth ..................................................................................................................16

3.2.2 Energy Efficiency Activity........................................................................................................................16

3.2.3 Recent Energy Efficiency Potential Studies................................................................................................17

3.3 Cost-effectiveness Findings..............................................................................................................................18

4 CHARACTERIZATION OF ELECTRICITY AND NATURAL GAS CONSUMPTION IN MICHIGAN......20

4.1 Michigan Electric and Natural Gas Utilities...................................................................................................20

4.1.1 Detroit Edison Energy Company (DTE) ................................................................................................21

4.1.2 Consumers Energy ...................................................................................................................................21

4.2 Economic/Demographic Characteristic.........................................................................................................21

4.3 Commercial and Industrial Sector Baseline Segmentation Findings..........................................................23

4.3.1 Electricity Sales by Sector, by EDC.........................................................................................................23

4.3.2 Natural Gas Sales by Sector, by EDC....................................................................................................25

4.3.3 Electricity Consumption by Market Segment ............................................................................................26

4.3.4 Electric Consumption by End-Use ...........................................................................................................28

4.3.5 Natural Gas Consumption by Market Segment.......................................................................................32

4.3.6 Natural Gas Consumption by End-Use ..................................................................................................34

4.4 Current Michigan EDC Energy Efficiency Programs..................................................................................37

4.4.1 Current DTE Energy Efficiency Programs ..............................................................................................37

4.4.2 Current Consumers Energy Efficiency Programs.......................................................................................38

5 POTENTIAL STUDY METHODOLOGY ........................................................................................39

5.1 Measure List Development...............................................................................................................................39

5.2 Measure Characterization..................................................................................................................................40

5.3 Forecast Disaggregation For the Commercial and Industrial sectors........................................................41

5.4 Role of Naturally Occurring Conservation ....................................................................................................42

5.5 Potential Savings Overview..............................................................................................................................42

5.6 Technical Potential.............................................................................................................................................42

5.7 Core Equation for the Residential Sector.......................................................................................................44

5.8 Core Equation for the Commercial Sector ....................................................................................................46
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

ii | Page

5.9 Core Equation for the Industrial Sector.........................................................................................................47

5.10 Industrial Sector Segmentation & End Use Breakdown..............................................................................48

5.11 Development of Potential Estimates..............................................................................................................48

5.12 Economic Potential............................................................................................................................................49

5.13 Determining Cost-Effectiveness......................................................................................................................49

5.14 Achievable Potential ..........................................................................................................................................52

5.15 Market penetration methodology ....................................................................................................................53

6 RESIDENTIAL ELECTRIC AND NATURAL GAS ENERGY EFFICIENCY POTENTIAL ESTIMATES..57

6.1 Residential Electric Potential............................................................................................................................57

6.1.1 Energy Efficiency Measures Examined.....................................................................................................57

6.1.2 Overview of Residential Electric Energy Efficiency Potential .....................................................................58

6.1.1 Achievable Electric Potential Savings in the Residential Sector .................................................................62

6.1.2 Annual Achievable Electric Savings Potential..........................................................................................66

6.1.3 Residential Electric Savings Summary by Measure Group.......................................................................70

6.2 Residential Natural Gas Potential....................................................................................................................73

6.2.1 Energy Efficiency Measures Examined.....................................................................................................73

6.2.2 Overview of Residential Natural Gas Energy Efficiency Potential.............................................................74

6.2.3 Achievable Natural Gas Potential Savings in the Residential Sector.........................................................77

6.2.4 Annual Achievable Natural Gas Savings Potential .................................................................................80

6.2.5 Residential Gas Savings Summary by Measure Group .............................................................................83

6.3 Achievable Potential Benefits & Costs...........................................................................................................86

7 COMMERCIAL ELECTRIC AND NATURAL GAS ENERGY EFFICIENCY POTENTIAL ESTIMATES..88

7.1 Commercial Electric Energy Efficiency Potential.........................................................................................88

7.1.1 Electric Energy Efficiency Measures Examined........................................................................................88

7.1.2 Technical and Economic Potential Electric Savings...................................................................................90

7.1.3 Achievable Potential Savings in the Commercial Sector.............................................................................94

7.1.4 Cumulative Annual Achievable Electric Savings Potential .......................................................................97

7.1.5 Commercial Electric Savings Summary by Measure Group.....................................................................104

7.2 Commercial Sector Natural Gas Energy Efficiency Potential ..................................................................109

7.2.1 Natural Gas Energy Efficiency Measures Examined.............................................................................109

7.2.2 Technical and Economic Potential Natural Gas Savings........................................................................110

7.2.3 Achievable Potential Savings in the Commercial Sector...........................................................................113

7.2.4 Annual Achievable Natural Gas Savings Potential ...............................................................................116

7.2.5 Commercial Savings Summary ...............................................................................................................119

7.3 Achievable Potential Benefits & Costs.........................................................................................................123

8 INDUSTRIAL SECTOR ELECTRIC AND NATURAL GAS ENERGY EFFICIENCY POTENTIAL 

ESTIMATES..............................................................................................................................126

8.1 Industrial Electric Energy Efficiency Potential ...........................................................................................126

8.1.1 Electric Energy Efficiency Measures Examined......................................................................................126

8.1.2 Technical and Economic Potential Electric Savings.................................................................................129

8.1.3 Achievable Potential Savings in the Industrial Sector..............................................................................133

8.1.4 Annual Achievable Electric Savings Potential........................................................................................137
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

iii | Page

8.1.5 Industrial Electric Savings Summary by Measure Group........................................................................143

8.2 Industrial Natural Gas Potential ....................................................................................................................150

8.2.1 Natural Gas Energy Efficiency Measures Examined.............................................................................150

8.2.2 Technical and Economic Potential Natural Gas Savings........................................................................152

8.2.3 Achievable Potential Savings in the Industrial Sector..............................................................................155

8.2.4 Annual Achievable Natural Gas Savings Potential ...............................................................................158

8.2.5 Industrial Savings Summary ..................................................................................................................161

8.3 Achievable Potential Benefits & Costs.........................................................................................................165

APPENDIX A: RESIDENTIAL MEASURE DETAIL ............................................................................168

APPENDIX B: COMMERCIAL MEASURE DETAIL............................................................................168

APPENDIX C:INDUSTRIAL MEASURE DETAIL ..............................................................................168

APPENDIX D: GLOBAL ASSUMPTIONS ...........................................................................................168
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

iv | Page

LIST OF FIGURES

Figure 1-1: Types of Energy Efficiency Potential ...................................................................................................................................... 3

Figure 1-2: Electric & Gas Energy Efficiency Potential Savings Summary........................................................................................... 4

Figure 4-1: Michigan Electric Utility Service Territories......................................................................................................................... 20

Figure 4-2: Michigan Natural Gas Utility Service Territories................................................................................................................. 21

Figure 4-3: Michigan Annual Electric Sales............................................................................................................................................... 24

Figure 4-4: Michigan Natural Gas Sales Forecast (MMBtu)................................................................................................................... 25

Figure 4-5: 2014 Commercial Electricity Consumption by Market Segment...................................................................................... 27

Figure 4-6: 2014 Electric Industrial Energy Consumption by Market Segment................................................................................. 27

Figure 4-7: Natural Gas Commercial Energy Consumption by Market Segment.............................................................................. 32

Figure 4-8: Natural Gas Industrial Energy Consumption by Market Segment................................................................................... 33

Figure 5-1: Types of Energy Efficiency Potential .................................................................................................................................... 42

Figure 5-2: Residential Sector Savings Methodology - Bottom Up Approach ................................................................................... 43

Figure 5-3: Generic Example of a Supply Curve...................................................................................................................................... 46

Figure 5-4: Example Residential Maximum Adoption Rates – Based on Incentive .......................................................................... 54

Figure 6-1: Summary of Residential Electric Energy Efficiency Potential as a % of 2018 and 2023 Sales Forecasts................. 59

Figure 6-2: Residential Sector 2023 Constrained UCT Electric Potential Savings, by End Use ..................................................... 65

Figure 6-3: Residential Constrained Achievable Savings in 2023, by Housing Type, Low-Income Designation and New 

Construction Measures....................................................................................................................................................................... 66

Figure 6-4: Summary of Residential Energy Efficiency Potential as a % of 2018 and 2023 Sales Forecasts................................ 74

Figure 6-5: Residential Sector 2023 Achievable Potential Savings for the Constrained UCT Scenario, by End Use.................. 79

Figure 6-6: Residential Constrained UCT Achievable Savings in 2023, by Housing Type, Low-Income Designation and New 

Construction Measures....................................................................................................................................................................... 80

Figure 7-1: Summary of Commercial Electric Energy Efficiency Potential as a % of Sales Forecasts.......................................... 90

Figure 7-2: Commercial Sector 2023 Constrained UCT Potential Savings by End Use ................................................................... 97

Figure 7-3: Commercial Constrained UCT Savings in 2023 by Building Type................................................................................... 97

Figure 7-4: Summary of Commercial Natural Gas Energy Efficiency Potential as a % Sales Forecasts..................................... 111

Figure 7-5: Commercial Sector 2023 Constrained UCT Achievable Potential Natural Gas Savings by End Use ..................... 115

Figure 7-6: Commercial Constrained UCT Achievable Natural gas Potential Savings in 2023 by Building Type ..................... 116

Figure 8-1: Summary of Industrial Electric Energy Efficiency Potential as a % of Sales Forecasts............................................. 129

Figure 8-2: Industrial Sector 2023 Constrained UCT Potential Savings by End Use...................................................................... 136

Figure 8-3: Industrial Constrained UCT Savings in 2023 by Industry................................................................................................ 137

Figure 8-4: Summary of Industrial Natural Gas Energy Efficiency Potential as a % Sales Forecasts.......................................... 153

Figure 8-5: Industrial Sector 2023 Constrained UCT Achievable Potential Savings by End Use................................................. 157

Figure 8-6: Industrial Constrained UCT Achievable Potential Savings in 2023 by Industry ......................................................... 158

LIST OF EQUATIONS

Equation 5-1: Core Equation for Residential Sector Technical Potential............................................................................................ 44

Equation 5-2: Core Equation for Commercial Sector Technical Potential ......................................................................................... 46
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

v | Page

LIST OF TABLES

Table 1-1: Summary of Technical, Economic and Achievable Electric and Gas Energy Savings for 2018.................................... 4

Table 1-2: Summary of Technical, Economic and Achievable Electric and Gas Energy Savings for 2023.................................... 6

Table 1-3: Achievable Potential Scenarios; Budgets and Acquisition Costs Per Unit of Energy Saved – Electric Savings 

(Budgets Are Not in Present Value Dollars).................................................................................................................................... 7

Table 1-4: Achievable Potential Scenarios; Budgets and Acquisition Costs Per Unit of Energy Saved – Natural Gas Savings 

(Budgets Are Not in Present Value Dollars).................................................................................................................................... 7

Table 1-5: Achievable Potential Scenarios; Total Budgets for Electric and Natural Gas Savings Combined (Budgets Are Not 

in Present Value Dollars)..................................................................................................................................................................... 7

Table 1-6: Annual Program Budgets Associated with the Achievable UCT Scenario (in millions).................................................. 8

Table 1-7: Annual Program Budgets Associated with the Achievable TRC Scenario (in millions) .................................................. 8

Table 1-8: Annual Program Budgets Associated with the Constrained UCT Scenario (in millions)................................................ 8

Table 1-9: Benefit-Cost Ratios for Achievable Potential Scenarios For 2014 to 2018 Time Period ................................................ 9

Table 1-10: Benefit-Cost Ratios for Achievable Potential Scenarios For 2014 to 2023 Time Period .............................................. 9

Table 3-1: Results of Recent Energy Efficiency Potential Studies in the US...................................................................................... 17

Table 3-2: Scenario #1: Utility Cost Test Benefit-Cost Ratios for the Achievable Potential Scenario Based on UCT Screening 

(50% Incentives) For 5-Year and 10-Year Implementation Periods......................................................................................... 18

Table 3-3: Scenario #2: TRC Test Benefit-Cost Ratios for the Achievable Potential Scenario Based on TRC Screening For 5-

Year and 10-Year Implementation Periods.................................................................................................................................... 19

Table 3-4: Scenario #3: Benefit-Cost Ratios for the Constrained Achievable Potential Scenario Based on the UCT Test for 5-

Year and 10-Year Implementation Periods.................................................................................................................................... 19

Table 4-1: Number of Electric Customers by Market Sector ................................................................................................................ 22

Table 4-2: Number of Natural Gas Customers by Market Sector ........................................................................................................ 22

Table 4-3: Michigan Actual and Projected Electric GWh Sales by Sector........................................................................................... 24

Table 4-4: Michigan Actual and Projected Natural Gas Sales by Sector (MMBtu)............................................................................ 26

Table 4-5: 2014 Electric Industrial Energy Consumption by Segment................................................................................................ 28

Table 4-6: Breakdown of Michigan Commercial Electricity Sales by Market Segment and End-Use............................................ 29

Table 4-7: Electric Industrial Energy Consumption by End Use (Table 1 of 3)................................................................................ 29

Table 4-8: Electric Industrial Energy Consumption by End Use (Table 2 of 3)................................................................................ 30

Table 4-9: Electric Industrial Energy Consumption by End Use (Table 3 of 3)................................................................................ 31

Table 4-10: Natural Gas Industrial Energy Consumption by Market Segment.................................................................................. 33

Table 4-11: Natural Gas Commercial Energy Consumption by End-Use .......................................................................................... 35

Table 4-12: Natural Gas Industrial Energy Consumption by End-Use (Table 1 of 3)...................................................................... 35

Table 4-13: Natural Gas Industrial Energy Consumption by End-Use (Table 2 of 3)...................................................................... 36

Table 4-14: Natural Gas Industrial Energy Consumption by End-Use (Table 3 of 3)...................................................................... 36

Table 5-1: Key Assumptions Used by GDS in the Development of Measure-Level Screening...................................................... 50

Table 5-2. CFL vs. LED Market Penetration Share of Anticipated High Efficiency Residential Lighting Installations........... 55

Table 5-3. Adoption Factors by Equipment and Incentive Level......................................................................................................... 55

Table 5-4: Path to Achieving Long Term Market Penetration .............................................................................................................. 55

Table 6-1: Measures and Programs Included in the Electric Residential Sector Analysis................................................................. 57

Table 6-2: Residential Sector Technical Potential Energy Savings by End Use ................................................................................. 60

Table 6-3: Residential Sector Technical Potential Demand Savings...................................................................................................... 61

Table 6-4: Residential Sector Economic Potential (UCT) Energy Savings by End Use ................................................................... 61

Table 6-5: Residential Sector Economic Potential (UCT) Demand Savings....................................................................................... 62

Table 6-6: Residential Sector Economic Potential (TRC) Energy Savings by End Use.................................................................... 62

Table 6-7: Residential Sector Economic Potential (TRC) Demand Savings........................................................................................ 62

Table 6-8: Residential Achievable UCT Potential Electric Energy Savings by End Use .................................................................. 63

Table 6-9: Residential Achievable UCT Potential Demand Savings..................................................................................................... 63
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

vi | Page

Table 6-10: Residential Achievable TRC Potential Electric Energy Savings by End Use ................................................................ 64

Table 6-11: Residential Achievable TRC Potential Demand Savings.................................................................................................... 64

Table 6-12: Residential Constrained Achievable Savings Potential Energy Savings by End Use ........................................................ 64

Table 6-13: Residential Constrained Achievable Potential Demand Savings.......................................................................................... 65

Table 6-14: Cumulative Annual Residential Energy Savings in the Achievable UCT Potential Scenario, by End Use for 

Michigan................................................................................................................................................................................................ 67

Table 6-15: Cumulative Annual Residential Energy Savings in the Achievable TRC Potential Scenario, by End Use for 

Michigan................................................................................................................................................................................................ 67

Table 6-16: Cumulative Annual Residential Energy Savings in the Constrained UCT Potential Scenario, by End Use for 

Michigan................................................................................................................................................................................................ 68

Table 6-17: Cumulative Annual Residential Demand Savings in the Achievable UCT Potential Scenario, by End Use for 

Michigan................................................................................................................................................................................................ 68

Table 6-18: Cumulative Annual Residential Demand Savings in the Achievable TRC Potential Scenario, by End Use for 

Michigan................................................................................................................................................................................................ 69

Table 6-19: Cumulative Annual Residential Demand Savings in the Constrained UCT Potential Scenario, by End Use for 

Michigan................................................................................................................................................................................................ 69

Table 6-20: Breakdown of Residential Cumulative Annual Electric Savings Potential for Technical, Economic and Achievable 

Potential, by End Use for Michigan................................................................................................................................................. 70

Table 6-21: Top 10 Residential Electric Savings Measures in the Achievable UCT Scenario.......................................................... 73

Table 6-22: Measures and Programs Included in the Gas Residential Sector Analysis...................................................................... 73

Table 6-23: Residential Sector Technical Potential MMBtu Savings by End Use.............................................................................. 75

Table 6-24: Statewide Residential Sector Economic Potential (UCT) MMBtu Savings by End Use ............................................. 76

Table 6-25: Statewide Residential Sector Economic Potential (TRC) MMBtu Savings by End Use.............................................. 76

Table 6-26: Residential Achievable UCT Natural Gas Potential Savings by End Use ...................................................................... 77

Table 6-27: Residential Achievable TRC Potential Natural Gas Savings by End Use ...................................................................... 78

Table 6-28: Residential Constrained Achievable Potential Natural Gas Savings by End Use.............................................................. 78

Table 6-29: Cumulative Annual Residential Energy Savings in the Achievable UCT Potential Scenario, by End Use for

Michigan................................................................................................................................................................................................ 81

Table 6-30: Cumulative Annual Residential Energy Savings in the Achievable TRC Potential Scenario, by End Use for

Michigan................................................................................................................................................................................................ 81

Table 6-31: Cumulative Annual Residential Energy Savings in the Constrained UCT Potential Scenario, by End Use for

Michigan................................................................................................................................................................................................ 82

Table 6-32: Breakdown of Residential Cumulative Annual Gas Savings Potential for Technical, Economic and Achievable 

Potential, by End Use for Michigan................................................................................................................................................. 83

Table 6-33: Top 10 Residential Gas Savings Measures in the Achievable UCT Scenario ................................................................ 85

Table 6-34: 5-Year Benefit-Cost Ratios for Achievable UCT vs. Achievable TRC Scenarios – Residential Sector Only .......... 86

Table 6-35: 10-Year Benefit-Cost Ratios for Achievable UCT vs. Achievable TRC Scenarios – Residential Sector Only........ 86

Table 6-36: 5-Year Benefit-Cost Ratios for Achievable UCT vs. Constrained UCT Scenarios – Residential Sector Only ........ 86

Table 6-37: 10-Year Benefit-Cost Ratios for Achievable UCT vs. Constrained UCT Scenarios– Residential Sector Only ....... 86

Table 6-38: Annual Program Budgets Associated with the Achievable UCT Scenario (in millions).............................................. 87

Table 6-39: Annual Program Budgets Associated with the Achievable TRC Scenario (in millions) .............................................. 87

Table 6-40: Annual Program Budgets Associated with the Constrained UCT Scenario (in millions)............................................ 87

Table 6-41: Annual Achievable Scenario Budgets as a % of Annual Sector Revenue....................................................................... 87

Table 7-1: Types of Electric Energy Efficiency Measures Included in the Commercial Sector Analysis......................................... 88

Table 7-2: Commercial Sector Technical Potential Electric Energy Savings by End Use ................................................................ 91

Table 7-3: Commercial Sector Technical Potential Electric Demand Savings..................................................................................... 92

Table 7-4: Commercial Sector Economic Potential (UCT) Electric Energy Savings by End Use.................................................. 92

Table 7-5: Commercial Sector Economic Potential (UCT) Electric Demand Savings....................................................................... 93

Table 7-6: Commercial Sector Economic Potential (TRC) Electric Savings by End Use ................................................................ 93

Table 7-7: Commercial Sector Economic Potential Electric Demand Savings.................................................................................... 93
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

vii | Page

Table 7-8: Commercial Achievable UCT Potential Electric Energy Savings by End Use................................................................ 94

Table 7-9: Commercial Achievable UCT Potential Electric Demand Savings ................................................................................... 95

Table 7-10: Commercial Achievable TRC Potential Electric Energy Savings by End Use .............................................................. 95

Table 7-11: Commercial Achievable TRC Potential Electric Demand Savings................................................................................... 95

Table 7-12: Commercial Constrained Achievable Electric Energy Efficiency Savings by End Use............................................... 96

Table 7-13: Commercial Constrained Achievable Electric Demand Savings...................................................................................... 96

Table 7-14: Cumulative Annual Commercial Sector Electric Energy Savings in the Achievable UCT Potential Scenario by 

End Use (MWH)................................................................................................................................................................................. 98

Table 7-15: Cumulative Annual Commercial Sector Electric Energy Savings in the Achievable TRC Potential Scenario by 

End Use (MWH)................................................................................................................................................................................. 99

Table 7-16: Cumulative Annual Commercial Sector Electric Energy Savings in Constrained UCT Potential Scenario by End 

Use (MWH)........................................................................................................................................................................................100

Table 7-17: Cumulative Annual Commercial Sector Electric Demand Savings in the Achievable UCT Potential Scenario by 

End Use (MW)...................................................................................................................................................................................101

Table 7-18: Cumulative Annual Commercial Sector Electric Demand Savings in the Achievable TRC Potential Scenario by 

End Use (MW)...................................................................................................................................................................................102

Table 7-19: Cumulative Annual Commercial Sector Electric Demand Savings in Constrained UCT Potential Scenario by End 

Use (MW) ...........................................................................................................................................................................................103

Table 7-20: Commercial Sector Cumulative Annual Electric Savings Potential by End-Use and Measure by 2023................. 105

Table 7-21: Top 10 Commercial Sector Electric Savings Measures in the Achievable UCT Scenario by 2023......................... 109

Table 7-22: Natural Gas Energy Efficiency Measures and Programs Included in the Commercial Sector Analysis................. 110

Table 7-23: Commercial Sector Natural Gas Technical Potential MMBtu Savings by End Use................................................... 112

Table 7-24: Commercial Sector Economic Natural Gas UCT Savings by End Use........................................................................ 112

Table 7-25: Commercial Sector Economic Natural Gas TRC Savings by End Use........................................................................ 113

Table 7-26: Commercial Achievable UCT Natural Gas Potential Savings by End Use.................................................................. 113

Table 7-27: Commercial Achievable TRC Natural Gas Potential Savings by End Use .................................................................. 114

Table 7-28: Commercial Constrained UCT Natural Gas Achievable Energy Savings by End Use.............................................. 115

Table 7-29: Cumulative Annual Commercial Natural Gas Savings in the Achievable UCT Potential Scenario, by End Use for

Michigan..............................................................................................................................................................................................117

Table 7-30: Cumulative Annual Commercial Natural Gas Savings in the Achievable TRC Potential Scenario, by End Use for

Michigan..............................................................................................................................................................................................117

Table 7-31: Cumulative Annual Commercial Natural Gas Savings in Constrained Achievable Potential Scenario by End Use 

for Michigan.......................................................................................................................................................................................118

Table 7-32: Cumulative Annual Natural Gas Potential by End-Use and Measure by 2023........................................................... 120

Table 7-33: Top 10 Commercial Natural Gas Savings Measures in the Achievable UCT Scenario............................................. 123

Table 7-34: 5-Year Benefit-Cost Ratios for Achievable Potential Scenarios – Commercial Sector Only ..................................... 124

Table 7-35: 10-Year Benefit-Cost Ratios for Achievable Potential Scenarios– Commercial Sector Only.................................... 124

Table 7-36: 5-Year Benefit-Cost Ratios for Achievable Potential Scenarios – Commercial Sector Only..................................... 124

Table 7-37: 10-Year Benefit-Cost Ratios for Achievable Potential Scenarios– Commercial Sector Only .................................... 124

Table 7-38: Year By Year Budgets for Achievable Potential TRC Scenarios– Commercial Sector Only ........................................ 124

Table 7-39: Year By Year Budgets for Achievable Potential UCT Scenarios– Commercial Sector Only........................................ 124

Table 7-40: Year By Year Budgets for Cost Constrained UCT Scenarios– Commercial Sector Only............................................. 125

Table 7-41: Utility Energy Efficiency Budgets per Scenario as a % of Sector Revenues................................................................ 125

Table 8-1: Types of Electric Measures Included in the Industrial Sector Analysis.......................................................................... 126

Table 8-2: Industrial Sector Technical Potential Savings By End Use ............................................................................................... 130

Table 8-3: Industrial Sector Technical Potential Demand Savings.....................................................................................................131

Table 8-4: Industrial Sector Economic Potential (UCT) Savings By End Use ................................................................................. 131

Table 8-5: Industrial Sector Economic Potential (UCT) Demand Savings....................................................................................... 132

Table 8-6: Industrial Sector Economic Potential (TRC) Savings By End Use ................................................................................. 132

Table 8-7: Industrial Sector Economic Potential Demand Savings....................................................................................................132
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

viii | Page

Table 8-8: Industrial Achievable UCT Potential Electric Energy Savings by End Use................................................................... 133

Table 8-9: Industrial Achievable UCT Potential Demand Savings.....................................................................................................133

Table 8-10: Industrial Achievable TRC Potential Electric Energy Savings by End Use................................................................. 134

Table 8-11: Industrial Achievable TRC Potential Demand Savings ...................................................................................................134

Table 8-12: Industrial Constrained Achievable Energy Savings by End Use.................................................................................... 135

Table 8-13: Industrial Constrained Achievable Demand Savings.......................................................................................................135

Table 8-14: Cumulative Annual Industrial Energy Savings in the Achievable UCT Potential Scenario by End Use................ 138

Table 8-15: Cumulative Annual Industrial Energy Savings in the Achievable TRC Potential Scenario by End Use................ 138

Table 8-16: Cumulative Annual Industrial Energy Savings in Constrained UCT Potential Scenario by End Use .................... 139

Table 8-17: Cumulative Annual Industrial Demand Savings in the Achievable UCT Potential Scenario by End Use............. 140

Table 8-18: Cumulative Annual Industrial Demand Savings in the Achievable TRC Potential Scenario by End Use ............. 141

Table 8-19: Cumulative Annual Industrial Demand Savings in Constrained UCT Potential Scenario by End Use.................. 142

Table 8-20 Electric Potential by End-Use and Measure .......................................................................................................................144

Table 8-21: Top 10 Industrial Electric Savings Measures in the Achievable UCT Scenario ......................................................... 150

Table 8-22: Measures and Programs Included in the Industrial Sector Analysis.............................................................................. 151

Table 8-23: Industrial Sector Technical Potential MMBtu Savings By End Use.............................................................................. 154

Table 8-24: Industrial Sector Economic Natural Gas UCT Savings By End Use............................................................................ 154

Table 8-25: Industrial Sector Economic Natural Gas TRC Savings By End Use ............................................................................ 155

Table 8-26: Industrial Achievable UCT Natural Gas Potential Savings by End Use ...................................................................... 155

Table 8-27 Industrial Achievable TRC Natural Gas Potential Savings by End Use........................................................................ 156

Table 8-28: Industrial Constrained UCT Natural Gas Achievable Energy Savings by End Use .................................................. 156

Table 8-29: Cumulative Annual Industrial Natural Gas Savings in the Achievable UCT Potential Scenario, by End Use for 

Michigan..............................................................................................................................................................................................159

Table 8-30: Cumulative Annual Industrial Natural Gas Savings in the Achievable TRC Potential Scenario, by End Use for 

Michigan..............................................................................................................................................................................................159

Table 8-31: Cumulative Annual Industrial Natural Gas Savings in Constrained Achievable Potential Scenario by End Use for 

Michigan..............................................................................................................................................................................................160

Table 8-32: Natural Gas Potential by End-Use and Measure ..............................................................................................................162

Table 8-33: Top 10 Industrial Gas Savings Measures in the Achievable UCT Scenario................................................................ 165

Table 8-34: 5-Year Benefit-Cost Ratios for Achievable Potential Scenarios – Industrial Sector Only.......................................... 165

Table 8-35: 10-Year Benefit-Cost Ratios for Achievable Potential Scenarios– Industrial Sector Only......................................... 165

Table 8-36: 5-Year Benefit-Cost Ratios for Achievable Potential Scenarios – Industrial Sector Only.......................................... 166

Table 8-37: 10-Year Benefit-Cost Ratios for Achievable Potential Scenarios– Industrial Sector Only......................................... 166

Table 8-38: Annual Program Budgets Associated with the Achievable UCT Scenario (in millions)............................................ 167

Table 8-39: Annual Program Budgets Associated with the Achievable TRC Scenario (in millions) ............................................ 167

Table 8-40: Annual Program Budgets Associated with the Constrained UCT Scenario (in millions).......................................... 167

Table 8-41: Revenue Requirements per Scenario as a % of sector sales............................................................................................ 167
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

1 | Page

1 EXECUTIVE SUMMARY

1.1 BACKGROUND

The Michigan Public Service Commission, DTE Energy and Consumers Energy worked together to

complete this 2013 study of energy efficiency potential in the state of Michigan. This energy efficiency 

potential study provides a roadmap for policy makers and identifies the energy efficiency measures 

having the greatest potential savings and the measures that are the most cost effective. In addition to 

technical and economic potential estimates, the development of achievable potential estimates for a 

range of feasible energy efficiency measures is useful for program planning and modification purposes. 

Unlike achievable potential estimates, technical and economic potential estimates do not include 

customer acceptance considerations for energy efficiency measures, which are often among the most 

important factors when estimating the likely customer response to new programs. For this study, GDS 

Associates, the consulting firm retained to conduct this study, produced the following estimates of 

energy efficiency potential:

 Technical potential

 Economic potential

 Achievable potential

Definitions of the types of energy efficiency potential are provided below. 

1. TECHNICAL POTENTIAL is the theoretical maximum amount of energy use that could be

displaced by efficiency, disregarding all non-engineering constraints such as cost-effectiveness 

and the willingness of end-users to adopt the efficiency measures. It is often estimated as a 

“snapshot” in time assuming immediate implementation of all technologically feasible energy 

saving measures, with additional efficiency opportunities assumed as they arise from activities 

such as new construction. 

2. ECONOMIC POTENTIAL refers to the subset of the technical potential that is economically 

cost-effective as compared to conventional supply-side energy resources. Both technical and 

economic potential are theoretical numbers that assume immediate implementation of efficiency 

measures, with no regard for the gradual “ramping up” process of real-life programs. In addition, 

they ignore market barriers to ensuring actual implementation of efficiency. Finally, they only 

consider the costs of efficiency measures themselves, ignoring any programmatic costs (e.g., 

marketing, analysis, administration) that would be necessary to capture them. 

3. ACHIEVABLE POTENTIAL is the amount of energy use that efficiency can realistically be 

expected to displace assuming different market penetration scenarios for cost effective energy 

efficiency measures. An aggressive scenario, for example, could, provide program participants 

with payments for the entire incremental cost of more energy efficient equipment). This is often 

referred to as “maximum achievable potential”. Achievable potential takes into account realworld barriers to convincing end-users to adopt cost effective energy efficiency measures, the 

non-measure costs of delivering programs (for administration, marketing, tracking systems, 

monitoring and evaluation, etc.), and the capability of programs and administrators to ramp up 

program activity over time.1 Achievable savings potential savings is a subset of economic 

potential.

This potential study evaluates three achievable potential scenarios:

1) Scenario #1: For the first scenario, achievable potential represents the amount of energy use 

that efficiency can realistically be expected to displace assuming incentives equal to 50% of the 

 1 These definitions are from the November 2007 National Action Plan for Energy Efficiency “Guide for Conducting Energy 

Efficiency Potential Studies”
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

2 | Page

incremental measure cost and no spending cap. Cost effectiveness of measures was determined 

with the Utility Cost Test. 

2) Scenario #2: For the second scenario, achievable potential is based on measure cost 

effectiveness screening using the Total Resource Cost Test with utility incentives again equal to 

50% of measure costs. 

3) Scenario #3: The third scenario is a subset of Achievable Scenario #1(based on UCT). While 

scenario #1 assumed no spending cap on efficiency measures, Achievable Scenario #3 assumed 

a spending cap of approximately 2% of annual utility revenues. The third scenario assumes a 

spending cap of 2% of annual utility revenue in order to align the scenario with the existing 

legislation in the state of Michigan. According to Public Act 295 of 2008, gas and electric utilities 

are not permitted (without specific approval from the Commission) to spend more than 2.0% of 

retail sales in attempting to comply with the energy optimization performance standard. 

The purpose of this energy efficiency potential study is to provide a foundation for the continuation of 

utility-administered energy efficiency programs in Michigan and to determine the remaining 

opportunities for cost effective electricity and natural gas energy efficiency savings for the state of 

Michigan. This detailed report presents results of the technical, economic, and achievable potential for 

electric and natural gas efficiency measures in Michigan for two time periods:

 The five-year period from January 1, 2014 through December 31, 2018

 The ten-year period from January 1, 2014 through December 31, 2023

All results were developed using customized residential, commercial and industrial sector-level potential 

assessment analytic models and Michigan-specific cost effectiveness criteria including the most recent 

Michigan-specific avoided cost projections for electricity and natural gas. To help inform these energy 

efficiency potential models, up-to-date energy efficiency measure data were primarily obtained from the 

following recent studies and reports:

1) Michigan Energy Measures Database (MEMD)

2) Energy efficiency baseline studies conducted by DTE Energy and Consumers Energy

3) 2009 EIA Residential Energy Consumption Survey (RECS)

4) 2007 American Housing Survey (AHS)

5) 2003 EIA Commercial Building Energy Consumption Survey (CBECS)2

The above data sources provided valuable information regarding the current saturation, costs, savings 

and useful lives of electric and natural gas energy efficiency measures considered in this study.

The results of this study provide detailed information on energy efficiency measures that are the most 

cost effective and have the greatest potential electric and natural gas savings for the State of Michigan. 

The data used for this report were the best available at the time this analysis was developed. As building 

and appliance codes and energy efficiency standards change, and as energy prices fluctuate, additional 

opportunities for energy efficiency may occur while current practices may become outdated. 

1.2 STUDY SCOPE

The study examines the potential to reduce electric consumption and peak demand and natural gas 

consumption through the implementation of energy efficiency technologies and practices in residential, 

commercial, and industrial facilities in Michigan. This study assesses electric and natural gas energy 

efficiency potential in Michigan over ten years, from 2014 through 2023.

The study had the following main objectives:

 2 This is the latest publicly available CBECS data released by the Energy Information Administration (EIA). 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

3 | Page

 Evaluate the electric and natural gas energy efficiency technical, economic and achievable 

potential savings in the State of Michigan;

 Calculate the economic and achievable potential energy efficiency savings based upon cost 

effectiveness screening with both the TRC and UCT benefit/cost ratios.

As noted above, the scope of this study distinguishes among three types of energy efficiency potential; 

(1) technical, (2) economic, and (3) achievable potential. The definitions used in this study for energy 

efficiency potential estimates were obtained directly from a 2007 National Action Plan for Energy 

Efficiency (NAPEE) report. Figure 1-1 below provides a graphical representation of the relationship of 

the various definitions of energy efficiency potential.

Figure 1-1: Types of Energy Efficiency Potential3

Not 

Technically 

Feasable

Not 

Technically 

Feasable

Not Cost 

Effective

Not 

Technically 

Feasable

Not Cost 

Effective

Market & 

Adoption 

Barriers

 

 

Technical Potential

Economic Potential

Achievable Potential

Limitations to the scope of study: As with any assessment of energy efficiency potential, this study necessarily 

builds on a large number of assumptions and data sources, including the following:

 Energy efficiency measure lives, measure savings and measure costs 

 The discount rate for determining the net present value of future savings

 Projected penetration rates for energy efficiency measures

 Projections of Michigan specific electric and natural gas avoided costs

 Future changes to current energy efficiency codes and standards for buildings and equipment

While the GDS Team has sought to use the best and most current available data, there are many 

assumptions where there may be reasonable alternative assumptions that would yield somewhat different 

results. Furthermore, while the lists of energy efficiency measures examined in this study represent most 

commercially available measures, these measure lists are not exhaustive. 

With respect to non-energy benefits of energy efficiency programs, GDS did include an adder of $9.25 

per ton of carbon for reduced emissions of CO2. This is the expected value for reduced carbon 

emissions based upon equal weighting of a scenario with no carbon taxes and a scenario where a carbon 

tax of $18.50 per ton is implemented in the future.

Finally there was no attempt to place a dollar value on some difficult to quantify benefits arising from 

installation of some measures, such as increased comfort or increased safety, which may in turn support 

some personal choices to implement particular measures that may otherwise not be cost-effective or only 

marginally so. 

1.3 SUMMARY OF RESULTS

This study examined 1,417 electric energy efficiency measures and 922 natural gas measures in the 

residential, commercial and industrial sectors combined.

 3 Reproduced from “Guide to Resource Planning with Energy Efficiency” November 2007. US EPA. Figure 2-1.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

4 | Page

Figure 1-2 below shows that cost effective electric energy efficiency resources can play a significantly 

expanded role in Michigan’s energy resource mix over the next five and ten years. For the State of 

Michigan overall, the achievable potential for electricity savings based on the UCT in 2023 is 15.0% of 

forecast kWh sales for 2023. For the State overall, the achievable potential for natural gas savings based 

on the UCT in 2023 is also 13.4% of forecast MMBtu sales for 2023. 

Figure 1-2: Electric & Gas Energy Efficiency Potential Savings Summary

Tables 1-1 and 1-2 present additional detail, providing the energy efficiency savings potential for all 

scenarios over a period of 5 and 10 years, respectively.

Table 1-1: Summary of Technical, Economic and Achievable Electric and Gas Energy Savings for 2018

END USE TECHNICAL 

POTENTIAL

ECONOMIC 

POTENTIAL 

(UCT)

ECONOMIC 

POTENTIAL 

(TRC)

ACHIEVABLE 

POTENTIAL 

(UCT)

ACHIEVABLE 

POTENTIAL 

(TRC)

CONSTRAINED 

ACHIEVABLE 

(UCT)

Electric Sales MWh 

Savings % -

Residential 45.8% 41.3% 39.8% 10.7% 10.5% 4.3%

Savings % -

Commercial 48.5% 44.9% 37.4% 12.2% 10.5% 3.1%

Savings % -

Industrial 27.0% 21.0% 19.3% 4.9% 4.5% 2.3%

Savings % -

Total 40.7% 36.1% 32.4% 9.4% 8.6% 3.2%

Savings 

mWh -

Residential

15,481,730 13,967,946 13,466,463 3,622,394 3,549,596 1,465,036

Savings 

mWh - 18,525,217 17,186,647 14,282,862 4,651,994 4,004,548 1,188,821
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

5 | Page

END USE TECHNICAL 

POTENTIAL

ECONOMIC 

POTENTIAL 

(UCT)

ECONOMIC 

POTENTIAL 

(TRC)

ACHIEVABLE 

POTENTIAL 

(UCT)

ACHIEVABLE 

POTENTIAL 

(TRC)

CONSTRAINED 

ACHIEVABLE 

(UCT)

Commercial

Savings 

mWh -

Industrial

9,180,717 7,133,458 6,568,017 1,674,490 1,537,639 785,903

Savings 

mWh - Total 43,187,664 38,288,051 34,317,341 9,948,878 9,091,783 3,439,760

Electric Demand MW

Savings % -

Residential 42.7% 38.9% 41.0% 8.4% 8.9% 3.4%

Savings % -

Commercial 53.8% 49.9% 42.3% 12.2% 10.6% 3.1%

Savings % -

Industrial 40.6% 30.8% 27.4% 6.7% 6.3% 3.1%

Savings % -

Total 47.0% 42.1% 39.2% 9.7% 9.2% 3.2%

Savings MW 

- Residential 4,274 3,895 4,106 839 892 340

Savings MW 

-

Commercial

5,715 5,300 4,496 1,292 1,127 334

Savings MW 

- Industrial 1,790 1,360 1210 296 278.5 138

Savings MW 

- Total 11,779 10,555 9,812 2,426 2,298 812

Natural Gas Sales MMBtu

Savings % -

Residential 45.9% 34.8% 19.4% 9.4% 7.1% 3.8%

Savings % -

Commercial 34.6% 29.8% 24.2% 6.1% 5.4% 3.1%

Savings % -

Industrial 16.1% 13.0% 12.1% 2.7% 2.5% 0.7%

Savings % -

Total 35.2% 27.8% 18.8% 6.8% 5.5% 2.8%

Savings 

MMBtu -

Residential

136,706,666 103,587,007 57,885,592 27,930,065 21,296,093 11,332,060

Savings 

MMBtu -

Commercial

58,904,392 50,760,002 41,188,176 10,382,936 9,274,379 5,309,780

Savings 

MMBtu -

Industrial

26,183,022 21,190,526 19,611,597 4,451,220 3,986,192 1,070,312

Savings 

MMBtu -

Total

221,794,080 175,537,535 118,685,365 42,764,221 34,556,665 17,712,153
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

6 | Page

Table 1-2: Summary of Technical, Economic and Achievable Electric and Gas Energy Savings for 2023

END USE TECHNICAL 

POTENTIAL

ECONOMIC 

POTENTIAL 

(UCT)

ECONOMIC 

POTENTIAL 

(TRC)

ACHIEVABLE 

POTENTIAL 

(UCT)

ACHIEVABLE 

POTENTIAL 

(TRC)

CONSTRAINED 

ACHIEVABLE 

(UCT)

Electric Sales MWh 

Savings % -

Residential 39.7% 35.2% 33.7% 14.7% 14.3% 5.9%

Savings % -

Commercial 48.0% 44.5% 37.0% 20.8% 17.6% 6.0%

Savings % -

Industrial 26.4% 20.5% 18.9% 8.9% 8.1% 5.0%

Savings % -

Total 38.4% 33.8% 30.1% 15.0% 13.5% 5.7%

Savings 

mWh -

Residential

13,697,929 12,146,247 11,644,006 5,070,834 4,946,942 2,044,561

Savings 

mWh -

Commercial

18,601,147 17,251,862 14,344,326 8,057,699 6,835,102 2,326,054

Savings 

mWh -

Industrial

9,180,717 7,133,458 6,568,017 3,087,742 2,816,429 1,735,830

Savings 

mWh - Total 41,479,793 36,531,567 32,556,350 16,216,275 14,598,473 6,106,445

Electric Demand MW

Savings % -

Residential 40.5% 36.7% 38.9% 13.1% 14.1% 5.3%

Savings % -

Commercial 53.2% 49.3% 41.9% 22.6% 19.7% 6.8%

Savings % -

Industrial 39.7% 30.2% 26.9% 12.7% 12.0% 7.4%

Savings % -

Total 45.7% 40.9% 38.0% 17.0% 16.1% 6.3%

Savings MW 

- Residential 4,138 3,758 3,980 1,338 1,447 540

Savings MW 

-

Commercial

5,741 5,325 4,519 2,433 2,128 737

Savings MW 

- Industrial 1,790 1,360 1210 571 539.2 335

Savings MW 

- Total 11,669 10,442 9,709 4,342 4,114 1,613

Natural Gas Sales MMBtu

Savings % -

Residential 51.0% 38.9% 22.1% 18.9% 14.0% 7.7%

Savings % -

Commercial 34.9% 30.1% 24.4% 12.3% 11.0% 6.3%

Savings % -

Industrial 17.1% 13.8% 12.8% 4.4% 3.9% 1.3%

Savings % -

Total 37.9% 30.1% 20.4% 13.4% 10.6% 5.7%

Savings 

MMBtu -

Residential

143,271,591 109,298,652 62,091,152 53,178,705 39,326,470 21,495,414

Savings 

MMBtu -

Commercial

59,047,573 50,950,115 41,298,436 20,766,093 18,548,759 10,743,415

Savings 

MMBtu - 26,183,022 21,190,526 19,611,597 6,677,438 6,013,211 2,038,818
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

7 | Page

END USE TECHNICAL 

POTENTIAL

ECONOMIC 

POTENTIAL 

(UCT)

ECONOMIC 

POTENTIAL 

(TRC)

ACHIEVABLE 

POTENTIAL 

(UCT)

ACHIEVABLE 

POTENTIAL 

(TRC)

CONSTRAINED 

ACHIEVABLE 

(UCT)

Industrial

Savings 

MMBtu -

Total

228,502,186 181,439,293 123,001,185 80,622,236 63,888,440 34,277,647

Last, the five-year and ten-year budgets and acquisition costs for the achievable potential scenarios for 

electric and natural gas energy efficiency savings are shown in Table 1-3 and 1-4.

GDS is providing the information on the projected acquisition per first year unit of energy saved in 

order to provide program planners and decision-makers with the expected cost to utilities to acquire the 

electric and natural gas savings for the three achievable potential scenarios examined in this report. It is 

important for program planners and other decision-makers to have a good understanding of the cost to 

utilities to acquire these levels of energy efficiency savings.

Table 1-3: Achievable Potential Scenarios; Budgets and Acquisition Costs Per Unit of Energy Saved – Electric 

Savings (Budgets Are Not in Present Value Dollars)

ALL SECTORS COMBINED

5 - YEAR EE

BUDGET

10-YEAR EE

BUDGET

ACQUISITION 

COST PER FIRST 

YEAR KWH 

SAVED - 5 YEARS

ACQUISITION 

COST PER FIRST 

YEAR KWH 

SAVED - 10

YEARS

Achievable UCT $2,644,861,311 $5,019,681,110 $0.24 $0.22 

Achievable TRC $1,678,655,015 $3,285,131,139 $0.16 $0.16 

Constrained UCT $860,355,319 $1,774,960,027 $0.22 $0.20 

Table 1-4: Achievable Potential Scenarios; Budgets and Acquisition Costs Per Unit of Energy Saved – Natural 

Gas Savings (Budgets Are Not in Present Value Dollars)

ALL SECTORS COMBINED

5 - YEAR EE

BUDGET

10-YEAR EE

BUDGET

ACQUISITION 

COST PER FIRST 

YEAR MMBTU 

SAVED - 5 YEARS

ACQUISITION 

COST PER FIRST 

YEAR MMBTU 

SAVED - 10 YEARS

Achievable UCT $1,256,502,449 $2,506,262,004 $26.37 $25.57 

Achievable TRC $698,817,669 $1,395,301,521 $17.56 $16.86 

Constrained UCT $506,943,484 $1,031,893,201 $25.87 $24.92 

Table 1-5 presents the sum of the utility energy efficiency budgets (not present valued) for five and ten 

years for each achievable potential scenario for electric and natural gas measures combined. The net 

present value budgets for five and ten years are provided in Tables 1-9 and 1-10.

Table 1-5: Achievable Potential Scenarios; Total Budgets for Electric and Natural Gas Savings Combined 

(Budgets Are Not in Present Value Dollars)

ALL SECTORS COMBINED 5 - YEAR EE BUDGET 10-YEAR EE BUDGET

Achievable UCT $3,901,363,759 $7,525,943,114 

Achievable TRC $2,377,472,684 $4,680,432,660 

Constrained UCT $1,367,298,803 $2,806,853,228 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

8 | Page

Tables 1-6, 1-7 and 1-8 present the annual utility budgets in total and by sector required to achieve the 

savings levels in each achievable potential scenario. These tables also present annual information on the 

percent of annual utility revenues needed each year to fund acquiring the energy savings levels for each 

achievable potential scenario.

Table 1-6: Annual Program Budgets Associated with the Achievable UCT Scenario (in millions)

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Residential $310.3 $335.5 $339.7 $343.3 $344.6 $345.8 $345.6 $346.9 $346.1 $345.3 

Commercial $299.8 $363.6 $367.5 $367.6 $311.8 $318.5 $293.3 $298.1 $308.0 $307.0 

Industrial $72.4 $107.8 $125.1 $124.5 $87.7 $88.0 $69.4 $69.5 $70.4 $72.8 

Total Budgets $682.5 $807.0 $832.4 $835.4 $744.1 $752.2 $708.3 $714.5 $724.5 $725.1 

% of Annual 

Revenue 5.1% 6.0% 6.1% 6.1% 5.3% 5.3% 5.0% 5.0% 5.0% 4.9% 

Table 1-7: Annual Program Budgets Associated with the Achievable TRC Scenario (in millions)

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Residential $211.2 $236.4 $239.8 $242.6 $243.1 $243.7 $243.0 $243.8 $242.7 $241.7 

Commercial $138.8 $182.3 $198.1 $198.2 $162.8 $168.9 $152.9 $157.3 $166.2 $166.3 

Industrial $50.4 $66.2 $74.2 $74.3 $59.1 $59.6 $55.5 $52.0 $53.1 $56.2 

Total Budgets $400.4 $484.9 $512.1 $515.0 $465.0 $472.2 $451.3 $453.1 $462.1 $464.2 

% of Annual 

Revenue 3.0% 3.6% 3.8% 3.7% 3.3% 3.4% 3.2% 3.1% 3.2% 3.2% 

Table 1-8: Annual Program Budgets Associated with the Constrained UCT Scenario (in millions)

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Residential $136.3 $135.2 $135.5 $136.3 $137.0 $137.8 $138.6 $139.4 $140.2 $141.0 

Commercial $92.8 $93.7 $95.4 $96.9 $98.4 $100.0 $101.6 $103.2 $104.9 $106.5 

Industrial $40.7 $41.2 $42.0 $42.7 $43.2 $43.9 $44.5 $45.2 $46.0 $46.7

Total Budgets $269.8 $270.1 $272.9 $275.8 $278.7 $281.7 $284.7 $287.8 $291.0 $294.2 

% of Annual Revenue 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 

1.4 ENERGY EFFICIENCY POTENTIAL SAVINGS DETAIL BY SECTOR

Note that Sections 6, 7 and 8 of this report include additional detail about the electric and natural gas 

energy efficiency savings potential in Michigan by 2023. 

1.5 COST EFFECTIVENESS FINDINGS 

This study examines economic potential scenarios using the Total Resource Cost (TRC) test and the 

Utility Cost Test (UCT). This energy efficiency potential study concludes that significant cost effective 

electric and natural gas energy efficiency potential remains in in Michigan. Tables 1-9 and 1-10 show the 

preliminary present value benefits, costs and benefit-cost ratios for the Achievable Potential scenarios 

examined in this study. 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

9 | Page

Table 1-9: Benefit-Cost Ratios for Achievable Potential Scenarios For 2014 to 2018 Time Period

ACHIEVABLE POTENTIAL 

SCENARIOS

NPV $ BENEFITS NPV $ COSTS

BENEFIT/COST 

RATIO NET BENEFITS

Achievable UCT $8,819,456,909 $3,452,121,731 2.55 $5,367,335,178

Achievable TRC $9,090,916,601 $3,542,860,326 2.57 $5,548,056,275

Constrained UCT $3,134,114,985 $1,212,231,599 2.59 $1,921,883,386

Table 1-10: Benefit-Cost Ratios for Achievable Potential Scenarios For 2014 to 2023 Time Period

ACHIEVABLE POTENTIAL 

SCENARIOS

NPV $ BENEFITS NPV $ COSTS

BENEFIT/COST 

RATIO NET BENEFITS

Achievable UCT $15,854,685,097 $5,807,771,171 2.73 $10,046,913,925

Achievable TRC $16,434,033,885 $6,063,428,268 2.71 $10,370,605,616

Constrained UCT $5,996,092,253 $2,145,524,086 2.79 $3,850,568,167

In addition, GDS did calculate TRC and UCT benefit/cost ratios for each individual energy efficiency 

measure considered in this study. Only measures that had a benefit/cost ratio greater than or equal to 1.0 

were retained in the economic and achievable potential savings estimates. It is important to note that 

energy efficiency measures for low income households do not need to be cost effective in Michigan. 

However, for consistency in this report, GDS has excluded all non-cost effective measures from 

estimates of economic and achievable potential energy efficiency savings.

1.6 REPORT ORGANIZATION

The remainder of this report is organized as follows:

Section 2: Glossary of Terms defines key terminology used in the report.

Section 3: Introduction highlights the purpose of this study and the importance of energy efficiency.

Section 4: Characterization of Electric and Natural Gas Energy Consumption in Michigan provides an overview of 

the economic/demographic characteristics of Michigan and a brief discussion of the historical and 

forecasted electric and natural gas energy sales by sector as well as electric peak demand.

Section 5: Potential Study Methodology details the approach used to develop the estimates of technical, 

economic and achievable potential savings for electric and natural gas energy efficiency savings.

Section 6: Residential Electric and Natural Gas Energy Efficiency Potential Estimates (2013-2022) provides a 

breakdown of the technical, economic, and achievable energy efficiency savings potential in the 

residential sector.

Section 7: Commercial Sector Electric and Natural Gas Energy Efficiency Potential Estimates (2014-2023) provides a 

breakdown of the technical, economic, and achievable energy efficiency savings potential in the 

commercial sector.

Section 8: Industrial Sector Electric and Natural Gas Energy Efficiency Potential Estimates (2014-2023) provides a 

breakdown of the technical, economic, and achievable energy efficiency savings potential in the industrial 

sector.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

10 | Page

2 GLOSSARY OF TERMS4

The following list defines many of the key energy efficiency terms used throughout this energy efficiency 

potential study. 

ACHIEVABLE POTENTIAL: The November 2007 National Action Plan for Energy Efficiency “Guide for 

Conducting Energy Efficiency Potential Studies” defines achievable potential as the amount of energy 

use that energy efficiency can realistically be expected to displace assuming the most aggressive program 

scenario possible (e.g., providing end-users with payments for the entire incremental cost of more 

efficient equipment). This is often referred to as maximum achievable potential. Achievable potential 

takes into account real-world barriers to convincing end-users to adopt efficiency measures, the nonmeasure costs of delivering programs (for administration, marketing, tracking systems, monitoring and 

evaluation, etc.), and the capability of programs and administrators to ramp up program activity over 

time.

APPLICABILITY FACTOR: The fraction of the applicable housing units or businesses that is technically 

feasible for conversion to the efficient technology from an engineering perspective (e.g., it may not be 

possible to install CFLs in all light sockets in a home because the CFLs may not fit in every socket in a 

home).

AVOIDED COSTS: For purposes of this report, the electric avoided costs are defined as the generation, 

transmission and distribution costs that can be avoided in the future if the consumption of electricity or 

natural gas can be reduced with energy efficiency or demand response programs. For a natural gas utility, 

the avoided costs include the cost of the natural gas commodity and any other natural gas infrastructure 

costs that can be reduced with energy efficiency programs. 

BASE ACHIEVABLE POTENTIAL: For purposes of this study, an achievable potential scenario which 

assumes incentives are set to 50% of the incremental or full measure cost. 

BASE CASE EQUIPMENT END-USE INTENSITY: The electricity or natural gas used per customer per 

year by each base-case technology in each market segment. This is the consumption of the electric or 

natural gas energy using equipment that the efficient technology replaces or affects. For example, if the 

efficient measure is a high efficiency light bulb (CFL), the base end-use intensity would be the annual 

kWh use per bulb per household associated with an incandescent or halogen light bulb that provides 

equivalent lumens to the CFL. 

BASE CASE FACTOR: The fraction of the market that is applicable for the efficient technology in a given 

market segment. For example, for the residential electric clothes washer measure, this would be the 

fraction of all residential customers that have an electric clothes washer in their household.

CAPITAL RECOVERY RATE (CRR): The return of invested capital expressed as an annual rate; often 

applied in a physical sense to wasting assets with a finite economic life.5

COINCIDENCE FACTOR: The fraction of connected load expected to be “on” and using electricity 

coincident with the electric system peak period.

CONSTRAINED ACHIEVABLE: An achievable potential scenario which assumes a lower level of 

incentives or lower annual program budgets than in the base case scenario. 

 4 Potential definitions taken from National Action Plan for Energy Efficiency (2007). “Guide for Conducting Energy 

Efficiency Potential Studies.” Prepared by Philip Mosenthal and Jeffrey Loiter, Optimal Energy, Inc. 5 Accuval. http://www.accuval.net/insights/glossary/
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

11 | Page

COST-EFFECTIVENESS: A measure of the relevant economic effects resulting from the implementation 

of an energy efficiency measure or program. If the benefits are greater than the costs, the measure is said 

to be cost-effective.

CUMULATIVE ANNUAL: Refers to the overall annual savings occurring in a given year from both new 

participants and annual savings continuing to result from past participation with energy efficiency 

measures that are still in place. Cumulative annual does not always equal the sum of all prior year 

incremental values as some energy efficiency measures have relatively short lives and, as a result, their 

savings drop off over time.

COMMERCIAL SECTOR: Comprised of non-manufacturing premises typically used to sell a product or 

provide a service, where electricity is consumed primarily for lighting, space cooling and heating, office 

equipment, refrigeration and other end uses. Business types are included in Section 5 – Methodology.

DEMAND RESPONSE: Refers to electric demand resources involving dynamic hourly load response to 

market conditions, such as curtailment or load control programs. 

EARLY REPLACEMENT: Refers to an energy efficiency measure or efficiency program that seeks to 

encourage the replacement of functional equipment before the end of its operating life with higherefficiency units.

ECONOMIC POTENTIAL: The November 2007 National Action Plan for Energy Efficiency “Guide for 

Conducting Energy Efficiency Potential Studies” refers to the subset of the technical potential that is 

economically cost-effective as compared to conventional supply-side energy resources as economic 

potential. Both technical and economic potential are theoretical numbers that assume immediate 

implementation of efficiency measures, with no regard for the gradual “ramping up” process of real-life 

programs. In addition, they ignore market barriers to ensuring actual implementation of efficiency. 

Finally, they only consider the costs of efficiency measures themselves, ignoring any programmatic costs 

(e.g., marketing, analysis, administration, evaluation) that would be necessary to capture them. 

END-USE: A category of equipment or service that consumes energy (e.g., lighting, refrigeration, heating, 

process heat, cooling). 

ENERGY EFFICIENCY: Using less energy to provide the same or an improved level of service to the 

energy consumer in an economically efficient way. Sometimes “conservation” is used as a synonym, but 

that term is usually taken to mean using less of a resource even if this results in a lower service level (e.g., 

setting a thermostat lower or reducing lighting levels). 

ENERGY USE INTENSITY (EUI): A unit of measurement that describes a building’s energy use. EUI 

represents the energy consumed by a building relative to its size.6

FREE DRIVER: Individuals or businesses that adopt an energy efficient product or service because of an 

energy efficiency program, but are difficult to identify either because they do not receive an incentive or 

are not aware of the program. 

FREE RIDER: Participants in an energy efficiency program who would have adopted an energy efficiency 

technology or improvement in the absence of a program or financial incentive.

 6 See http://www.energystar.gov/index.cfm?fuseaction=buildingcontest.eui
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

12 | Page

GROSS SAVINGS: Gross energy (or demand) savings are the change in energy consumption or demand 

that results directly from program-promoted actions (e.g., installing energy-efficient lighting) taken by 

program participants regardless of the extent or nature of program influence on their actions. 

INCENTIVE COSTS: A rebate or some form of payment used to encourage people to implement a given 

demand-side management (DSM) technology.

INCREMENTAL: Savings or costs in a given year associated only with new installations of energy 

efficiency or demand response measures happening in that specific year.

INDUSTRIAL SECTOR: Comprised of manufacturing premises typically used for producing and 

processing goods, where electricity is consumed primarily for operating motors, process cooling and 

heating, and space heating, ventilation, and air conditioning (HVAC). Business types are included in 

section 5 – Methodology.

MAXIMUM (OR MAX) ACHIEVABLE: An achievable potential scenario which assumes incentives for 

program participants are equal to 100% of measure incremental or full costs. 

MEASURE: Any action taken to increase energy efficiency, whether through changes in equipment, 

changes to a building shell, implementation of control strategies, or changes in consumer behavior. 

Examples are higher-efficiency central air conditioners, occupancy sensor control of lighting, and retrocommissioning. In some cases, bundles of technologies or practices may be modeled as single measures. 

For example, an ENERGY STAR® TM home package may be treated as a single measure. 

MMBTU: A measure of power, used in this report to refer to consumption and savings associated with 

natural gas consuming equipment. One British thermal unit (symbol Btu or sometimes BTU) is a 

traditional unit of energy equal to about 1055 joules. It is the amount of energy needed to heat one 

pound of water by one degree Fahrenheit. MMBtu is defined as one million BTUs.

MW: A unit of electrical output, equal to one million watts or one thousand kilowatts. It is typically 

used to refer to the output of a power plant. 

MWH: One thousand kilowatt-hours, or one million watt-hours. One MWh is equal to the use of 

1,000,000 watts of power in one hour.

NET-TO-GROSS RATIO: A factor representing net program savings divided by gross program savings 

that is applied to gross program impacts to convert them into net program load impacts

NET SAVINGS: Net energy or demand savings refer to the portion of gross savings that is attributable to 

the program. This involves separating out the impacts that are a result of other influences, such as 

consumer self-motivation. Given the range of influences on consumers’ energy consumption, attributing 

changes to one cause (i.e., a particular program) or another can be quite complex. 

NON INCENTIVE COST: Costs incurred by the utility that do not include incentives paid to the customer 

(i.e.: program administrative costs, program marketing costs, data tracking and reporting, program 

evaluation, etc.)

NONPARTICIPANT SPILLOVER: Savings from efficiency projects implemented by those who did not 

directly participate in a program, but which nonetheless occurred due to the influence of the program.

PARTICIPANT COST: The cost to the participant to participate in an energy efficiency program.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

13 | Page

PARTICIPANT SPILLOVER: Additional energy efficiency actions taken by program participants as a result 

of program influence, but actions that go beyond those directly subsidized or required by the program.7

PORTFOLIO: Either a collection of similar programs addressing the same market, technology, or 

mechanisms; or the set of all programs conducted by one energy efficiency organization or utility.

PROGRAM: A mechanism for encouraging energy efficiency that may be funded by a variety of sources 

and pursued by a wide range of approaches (typically includes multiple energy efficiency measures).

PROGRAM POTENTIAL: The November 2007 National Action Plan for Energy Efficiency ‘Guide for 

Conducting Energy Efficiency Potential Studies” refers to the efficiency potential possible given specific 

program funding levels and designs as program potential. Often, program potential studies are referred 

to as “achievable” in contrast to “maximum achievable.” In effect, they estimate the achievable potential 

from a given set of programs and funding. Program potential studies can consider scenarios ranging 

from a single program to a full portfolio of programs. A typical potential study may report a range of 

results based on different program funding levels.

REMAINING FACTOR: The fraction of applicable units that have not yet been converted to the electric 

or natural gas energy efficiency measure; that is, one minus the fraction of units that already have the 

energy efficiency measure installed.

REPLACE-ON-BURNOUT: An energy efficiency measure is not implemented until the existing 

technology it is replacing fails or burns out. An example would be an energy efficient water heater being 

purchased after the failure of the existing water heater at the end of its useful life.

RESOURCE ACQUISITION COSTS: The cost of energy savings associated with energy efficiency 

programs, generally expressed in costs per first year or per lifetime MWH saved ($/MWh), kWh 

($/kWh), or MMBtu ($/MMBtu) in this report.

RETROFIT: Refers to an efficiency measure or efficiency program that seeks to encourage the 

replacement of functional equipment before the end of its operating life with higher-efficiency units (also 

called “early retirement”) or the installation of additional controls, equipment, or materials in existing 

facilities for purposes of reducing energy consumption (e.g., increased insulation, low flow devices, 

lighting occupancy controls, economizer ventilation systems). 

SAVINGS FACTOR: The percentage reduction in electricity or natural gas consumption resulting from 

application of the efficient technology. The savings factor is used in the formulas to calculate energy 

efficiency potential.

SOCIETAL COST TEST: Measures the net benefits of the energy efficiency program for a region or 

service area as a whole. Costs included in the SCT are costs to purchase and install the energy efficiency 

measure and overhead costs of running the energy efficiency program. The SCT may also include nonenergy costs, such as reduced customer comfort levels. The benefits included are the avoided costs of 

energy and capacity, plus environmental and other non-energy benefits that are not currently valued by 

the market. 

TECHNICAL POTENTIAL: The theoretical maximum amount of energy use that could be displaced by 

energy efficiency, disregarding all non-engineering constraints such as cost-effectiveness and the 

willingness of end-users to adopt the energy efficiency measures. It is often estimated as a “snapshot” in 

 7 The definitions of participant and nonparticipant spillover were obtained from the National Action Plan for Energy 

Efficiency Report titled “Model Energy Efficiency Program Impact Evaluation Guide”, November 2007, page ES-4.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

14 | Page

time assuming immediate implementation of all technologically feasible energy saving measures, with 

additional efficiency opportunities assumed as they arise from activities such as new construction. 

TOTAL RESOURCE COST TEST: The TRC measures the net benefits of the energy efficiency program 

for a region or service area as a whole from the combined perspective of the utility and program 

participants. Costs included in the TRC are costs to purchase and install the energy efficiency measure 

and overhead costs of running the energy efficiency program. Costs include all costs for the utility and 

the participants. The benefits included are the avoided costs of energy and capacity plus any quantifiable 

non-energy benefits (such as reduced emissions of carbon dioxide). 

UTILITY COST TEST: The UCT measures the net benefits of the energy efficiency program for a region 

or service area as a whole from the utility’s perspective. Costs included in the UCT are the utility’s costs 

to design, implement and evaluate a program. The benefits included are the avoided costs of energy and 

capacity. 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

15 | Page

3 INTRODUCTION

This report assesses the potential for electric and natural gas energy efficiency programs to assist 

Michigan in meeting future energy service needs. This section of the report provides the following 

information:

 Defines the term “energy efficiency”;

 Describes the general benefits of energy efficiency programs;

 Provides results of similar energy efficiency potential studies conducted in other states; and,

 Describes contents of the Sections of this report.

The purpose of this energy efficiency potential study is to provide a detailed assessment of the technical, 

economic and achievable potential for electric and natural gas energy efficiency Michigan. This study has 

examined a full array of energy efficiency technologies and energy efficient building practices that are 

technically achievable. The results of this study can be used to develop energy efficiency goals for 

Michigan in the short and long-term. The strategies that will be developed based on this potential study 

will guide direction and scope of utility administered energy efficiency programs in reducing electric and 

natural gas energy consumption in Michigan. 

3.1 INTRODUCTION TO ENERGY EFFICIENCY

Efficient energy use, often referred to as energy efficiency, is using less energy to provide the same level 

of energy service. An example would be insulating a home or business in order to use less heating and 

cooling energy to achieve the same inside temperature. Another example would be installing fluorescent 

lighting in place of less efficient halogen or incandescent lights to attain the same level of illumination. 

Energy efficiency can be achieved through more efficient technologies and/or processes as well as 

through changes in individual behavior.

3.1.1 General Benefits of Energy Efficiency 

There are a number of benefits that accrue to the State of Michigan due to electric and natural gas energy 

efficiency programs. These benefits include avoided cost savings, non-electric benefits such as water and 

fossil fuel savings, environmental benefits, economic stimulus, job creation, risk reduction, and 

energy security.

Avoided electric energy and capacity costs are based upon the costs an electric utility would incur to 

construct and operate new electric power plants or to purchase power from another source. These 

avoided costs of electricity include both fixed and variable costs that can be directly avoided through a 

reduction in electricity usage. The energy component includes the costs associated with the production 

of electricity, while the capacity component includes costs associated with the capability to deliver 

electric energy during peak periods. Capacity costs consist primarily of the costs associated with building 

peaking generation facilities. The forecasts of electric energy and capacity avoided costs and natural gas 

avoided costs used in this study were provided to GDS by the Michigan Public Service Commission. 

Avoided costs for natural gas include the avoided costs of the natural gas commodity and any other 

savings on the natural gas distribution system for operations and maintenance expenses or natural gas 

infrastructure expenditures. 

At the consumer level, energy efficient products often cost more than their standard efficiency 

counterparts, but this additional cost is balanced by lower energy consumption and lower energy bills. 

Over time, the money saved from energy efficient products will pay consumers back for their initial 

investment as well as save them money on their electric and natural gas bills. Although some energy 

efficient technologies are complex and expensive, such as installing new high efficiency windows or a 

high efficiency boiler, many are simple and inexpensive. Installing compact fluorescent lighting or lowflow water devices, for example, can be done by most individuals.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

16 | Page

Although the reduction in electric and natural gas costs is the primary benefit to be gained from 

investments in energy efficiency, the electric and natural gas utilities in Michigan, their consumers, and 

society as a whole can also benefit in other ways. Many electric efficiency measures also deliver nonenergy benefits. For example, low-flow water devices and efficient clothes washers also reduce water 

consumption.8 Similarly, weatherization measures that improve the building shell not only save on air 

conditioning costs in the summer, but also can save the customer money on space heating fuels, such as 

natural gas or propane. Reducing electricity consumption also reduces harmful emissions from power 

plants, such as SOX, NOX, CO2 and particulates into the environment.9

Energy efficiency programs create both direct and indirect jobs. The manufacture and installation of 

energy efficiency products involves the manufacturing sector as well as research and development, 

service, and installation of jobs. These are skilled positions that are not easily outsourced to other states 

and countries. The creation of indirect jobs is more difficult to quantify, but result from households and 

businesses experiencing increased discretionary income from reduced energy bills. These savings 

produce multiplier effects, such as increased investment in other goods and services driving job creation 

in other markets.

Energy efficiency reduces risks associated with fuel price volatility, unanticipated capital cost increases, 

environmental regulations, supply shortages, and energy security. Aggressive energy efficiency programs 

can help eliminate or postpone the risk associated with committing to large investments for generation 

facilities a decade or more before they are needed. Energy efficiency is also not subject to the same 

supply and transportation constraints that impact fossil fuels. Finally, energy efficiency reduces 

competition between states and utilities for fuels, and reduces dependence on fuels imported from other 

states or countries to support electricity production. Energy efficiency can help meet future demand 

increases and reduce dependence on out-of-state or overseas resources. 

3.2 THE MICHIGAN CONTEXT

3.2.1 Continuing Customer Growth

The annual kWh sales and electric system peak load for the State of Michigan is projected to increase 

over the next decade. From 2002 to 2011, the number of residential electric utility customers in Michigan

remained fairly constant, growing at a rate of approximately 0.1% annually.10 The electric load forecasts 

for Michigan developed by GDS indicates that the number of electric consumers in Michigan will 

continue to increase at a rate of 0.34% per year from 2014 through 2023 (the timeframe for this study) 

creating further growth in system electricity sales and peak demand. Natural gas sales, however, are 

projected to decrease slightly at a rate of -0.88% per year from 2014 to 2023. This report assesses the 

potential for electric and natural gas energy efficiency programs to assist the State of Michigan in meeting 

future electric and natural gas energy service needs.

3.2.2 Energy Efficiency Activity 

Making homes and buildings more energy efficient is seen as a key strategy for addressing energy 

security, reducing reliance on fossil fuels from other countries, assisting consumers to lower energy bills, 

and addressing concerns about climate change. Faced with rapidly increasing energy prices, constraints in 

 8 The ENERGY STAR web site (www.energystar.gov) states that “ENERGY STAR qualified clothes washers use about 37% 

less energy and use over 50% less water than regular washers”. 9 The 2012 ENERGY STAR Annual Report states that 18,000 organizations across the US partnered with the US 

Environmental Protection Administration to improve energy efficiency while also realizing significant environmental 

and financial benefits. These EPA partners and individuals helped achieve energy savings while preventing more than 

1.8 billion metric tons of GHG and saving over $230 billion on utility bills. Consumers and businesses that also 

partnered with ENERGY STAR also reduced their utility bills by $24 billion. With the help of ENERGY STAR, Americans 

were able to prevent 242 million metric tons of GHG during 2012, providing over $5.8 billion in benefits to society.

10 This is the compound average annual growth rate for residential electric customers in Michigan.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

17 | Page

energy supply and demand, and energy reliability concerns, states are turning to energy efficiency as the 

most reliable, cost-effective, and quickest resource to deploy.11

3.2.3 Recent Energy Efficiency Potential Studies 

Table 3-1 below provides the results from a GDS review of recent energy efficiency potential studies 

conducted throughout the United States. It is useful to examine these results to understand if they are 

similar to this latest study for Michigan. 

Table 3-1: Results of Recent Energy Efficiency Potential Studies in the US

STATE

STUDY 

YEAR

AUTHOR

STUDY 

PERIOD

# OF 

YEARS

ACHIEVABLE 

POTENTIAL

Missouri 2011 ACEEE ( 1) 2011-2020 10 6.4%

District of Columbia 2013 GDS (2) 2014-2023 10 29%

New Hampshire 2009 GDS ( 3) 2009-2018 10 20.5% 

Rhode Island 2008 KEMA (4) 2009-2018 10 9.0%

Vermont 2011 GDS/Cadmus ( 5) 2012-2021 10 14.3%

New York City 2010 Global Energy Partners (6) 2011-2018 8 15%

USA 2009 McKinsey & Company (7) 2011-2020 10 23.0%

Pennsylvania 2012 Statewide Evaluator (8) 2013-2023 10 17.3%

Note 1: The ACEEE energy efficiency potential study builds on several energy efficiency potential studies conducted in Missouri 

from 2008 through 2011 and analyzes a specific suite of energy efficiency policies and programs.

Note 2: The July 2013 District of Columbia potential study evaluated the maximum achievable potential scenario where 

incentives equaled 100% of measure incremental costs.

Note 3: The 2009 New Hampshire potential study figure presented here is maximum achievable potential. Maximum Achievable 

potential is defined in this study as the maximum penetration of an efficient measure that would be adopted absent consideration 

of cost or customer behavior.

Note 4: This 2010 KEMA report titled “Opportunity for Energy Efficiency That Is Cheaper Than Supply In Rhode Island” 

examined technical, economic and achievable potential for electric energy efficiency savings. Here is the definition of achievable 

potential used in that report: “Achievable program potential refers to the amount of cost-effective savings that are estimated to 

occur in response to a specific funded set of program activities. Achievable potential reflects net savings — in other words 

incremental savings over and above those projected to occur naturally from future changes in codes and standards or from other 

market activities outside of National Grid’s efficiency program interventions and efforts. Achievable potential is estimated at the 

program level – namely groups of measures are bundled into program offerings

Note 5: The 2011 Vermont study figure presented here is maximum achievable potential. Achievable potential in this study is 

defined as the amount of energy use that efficiency can realistically be expected to displace assuming the most aggressive program 

scenario possible (e.g., providing end-users with payments for the entire incremental cost of more efficiency equipment). 

Note 6: The 2010 New York City potential study figure provided here is maximum achievable potential.

Note 7: The 2009 McKinsey & Company potential study only includes energy efficiency measures that can be hard-wired and 

excludes the impacts of all behavior-based programs.

Note 8: The 2012 Pennsylvania potential study figure provided here is maximum achievable potential.

A 2012 report by the American Council for an Energy Efficient Economy (ACEEE) offers information 

regarding the current savings and spending related to energy efficiency by state.12 Based on self-reported 

 11 The December 2008 National Action Plan for Energy Efficiency (NAPEE) “Vision for 2025: A Framework for Change” 

states that “the long-term aspirational goal for the Action Plan is to achieve all cost-effective energy efficiency by the year 

2025. Based on studies, the efficiency resource available may be able to meet 50% or more of the expected load growth 

over this time frame, similar to meeting 20% of electricity consumption and 10 percent of natural gas consumption.The 

benefits from achieving this magnitude of energy efficiency nationally can be estimated to be more than $100 billion in 

lower energy bills in 2025 than would otherwise occur, over $500 billion in net savings, and substantial reductions in 

greenhouse gas emissions.” 12 American Council for an Energy Efficient Economy, “The 2010 State Energy Efficiency Scorecard”, Report #E107,

October 2010.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

18 | Page

data, the eleven states annually spent more than 2% of electric sales revenue on electric energy efficiency 

programs in 2011. GDS has also examined actual energy efficiency savings data for 2010 and 2011 from 

the US Energy Information Administration (EIA) on the top twenty energy efficiency electric utilities. 

These top twenty utilities saved over 2% of annual kWh sales in 2010 with their energy efficiency 

programs, and 3.8% of annual kWh sales in 2011. These percentage savings are attributable to energy 

efficiency measures installed in a one-year time frame and demonstrate what can be accomplished with 

full-scale and aggressive implementation of programs.

3.3 COST-EFFECTIVENESS FINDINGS

The Total Resource Cost Test and Utility Cost Test calculations in this study follow the prescribed 

methodology detailed in the latest version of the California Standard Practice Manual (CA SPM). The 

California Standard Practice Manual establishes standard procedures for cost-effectiveness evaluations 

for utility-sponsored or public benefits programs and is generally considered to be an authoritative 

source for defining cost-effectiveness criteria and methodology. This manual is often referenced by many 

other states and utilities.

The GDS cost effectiveness screening tool used for this study quantifies all of the benefits and costs 

included in these two tests (TRC and UCT tests). For purposes of this study, quantified benefits of the 

TRC Test include electric energy and capacity avoided supply costs, avoided electric transmission and 

distribution avoided costs, and alternative fuel and water savings. GDS has also included a risk adjusted 

value for reduced carbon emissions valued at $9.25 per ton of carbon emissions avoided.13 Costs include 

the specified measure cost (incremental or full cost, as applicable), any increase in supply costs (electric 

or fossil fuel), as well as operation and maintenance costs. In addition, the GDS screening tool is capable 

of evaluation of cost-effectiveness based on various market replacement approaches, including replaceon-burnout, retrofit, and early retirement.

The forecast of electric and natural gas avoided costs of energy and generation capacity were obtained 

from the Michigan PSC. The value for electric T&D avoided costs were obtained from a report from the 

New York Public Service Commission based on the upstate New York region.

This energy efficiency potential study concludes that there remains significant achievable cost effective 

potential for electric and natural gas energy efficiency measures and programs in Michigan. Tables 3-2, 3-

3 and 3-4 show benefit-cost ratios for the three scenarios examined in this study for the five and ten-year 

implementation periods starting in 2014. 

Table 3-2: Scenario #1: Utility Cost Test Benefit-Cost Ratios for the Achievable Potential Scenario Based on 

UCT Screening (50% Incentives) For 5-Year and 10-Year Implementation Periods

ACHIEVABLE POTENTIAL SCENARIOS UCT $ BENEFITS UCT $ COSTS

UCT

BENEFIT/COST 

RATIO

5-yr period $8,819,456,909 $3,452,121,731 2.55

10-yr period $15,854,685,097 $5,807,771,171 2.73

 13 This value represents the expected value for reduced carbon emissions based on an equal weighting of a scenario with 

no carbon taxes and a scenario where carbon is valued at $18.50 per ton of reduced emissions. The $18.50 per ton figure 

was obtained from a recent filing by Commonwealth Edison in Illinois.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

19 | Page

Table 3-3: Scenario #2: TRC Test Benefit-Cost Ratios for the Achievable Potential Scenario Based on TRC

Screening For 5-Year and 10-Year Implementation Periods

ACHIEVABLE POTENTIAL SCENARIOS TRC $ BENEFITS TRC $ COSTS

TRC

BENEFIT/COST 

RATIO

5-yr period $9,090,916,601 $3,542,860,326 2.57

10-yr period $16,434,033,885 $6,063,428,268 2.71

Table 3-4: Scenario #3: Benefit-Cost Ratios for the Constrained Achievable Potential Scenario Based on the 

UCT Test for 5-Year and 10-Year Implementation Periods

ACHIEVABLE POTENTIAL SCENARIOS UCT $ BENEFITS UCT $ COSTS

UCT

BENEFIT/COST 

RATIO

5-yr period $3,134,114,985 $1,212,231,599 2.59

10-yr period $5,996,092,253 $2,145,524,086 2.79
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

20 | Page

4 CHARACTERIZATION OF ELECTRICITY AND NATURAL GAS

CONSUMPTION IN MICHIGAN

This chapter provides up-to-date historical and forecast information on electricity and natural gas 

consumption, consumption by market segment and by energy end use, and electric and natural gas 

customers in the State of Michigan. This chapter also provides an overview of the number of households 

and housing units in Michigan. Developing this information is a fundamental part of any energy 

efficiency potential study. It is necessary to understand how energy is consumed in a state or region 

before one can assess the energy efficiency savings potential that remains to be tapped.

4.1 MICHIGAN ELECTRIC AND NATURAL GAS UTILITIES 

There are multiple utilities that provide electric and natural gas to Michigan customers. According to data 

from the Michigan Public Service Commission, Michigan has 8 investor-owned electric utilities, 41 

municipal electric utilities, and 10 electric distribution cooperatives. There are 6 utilities in Michigan that 

provide piped natural gas to consumers. The two largest electric utilities are DTE Energy Company 

(DTE) and Consumers Energy. These two utilities provide approximately 92% of electric energy sales in 

the State.

Figure 4-1 shows the service areas for electric distribution utilities in Michigan, with the largest two 

companies, DTE and Consumers Energy taking up much of the geographic region of the state. Note 

that the size of utility service areas varies greatly. Figure 4-2 displays the service areas of the utilities that 

distribute piped natural gas throughout the state.

Figure 4-1: Michigan Electric Utility Service Territories
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

21 | Page

Figure 4-2: Michigan Natural Gas Utility Service Territories

Map prepared by Michigan Public Service Commission May, 1999 - Revised January, 2011

4.1.1 Detroit Edison Energy Company (DTE)

The DTE Energy provides electricity mainly in southeastern Michigan and provides natural gas services 

throughout the state of Michigan. DTE supplies electricity and natural gas to 2.1 million and 1.2 million 

customers respectively throughout the entire state.

4.1.2 Consumers Energy

Consumers Energy is one of the largest combined utilities (electric and natural gas) in the country, 

providing services to a population of 6.8 million of the 10 million citizens in the states. 

4.2 ECONOMIC/DEMOGRAPHIC CHARACTERISTIC

Michigan is located in the Great Lakes and the Midwestern region of the United States. It is the 11th

largest state. It borders Wisconsin, Ohio, Indiana, Minnesota, and Canada. Michigan is 96,810 square 

miles, bordering four of the Great Lakes: Lake Michigan, Lake Superior, Lake Huron, and Lake Erie. 

Michigan’s population is 9,883,635 residents14, ranking Michigan as the 8th most populated state in the 

country. 

According to an estimate done by the Census Bureau, during the year 2012, there were about 175 people 

per square mile in the state of Michigan. The state’s population distribution by age is as follows:

 Under 5 – 7.6%

 Ages 5-19 – 22.6% 

 Ages 19-65 - 46.8% 

 Above 65 – 23%

 14 U.S. Department of Commerce, Bureau of the Census, at www.census .gov on October 7, 2013.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

22 | Page

The estimated number of Michigan housing units from the 2010 census was 4,532,233. Table 4-1 and 

Table 4-2 provides historical and forecast data for the number of electric and natural gas customers by 

sector in Michigan.

Table 4-1: Number of Electric Customers by Market Sector

YEAR

RESIDENTIAL 

ELECTRIC 

CUSTOMERS

COMMERCIAL 

ELECTRIC 

CUSTOMERS

INDUSTRIAL 

ELECTRIC 

CUSTOMERS

TOTAL ELECTRIC 

CUSTOMERS

2003 4,216,573 483,168 14,224 4,713,965

2004 4,248,920 504,754 14,322 4,767,996

2005 4,284,083 509,964 13,390 4,807,437

2006 4,299,273 514,049 13,317 4,826,639

2007 4,298,455 518,058 13,227 4,829,740

2008 4,290,313 518,776 12,776 4,821,865

2009 4,253,786 520,551 13,065 4,787,402

2010 4,245,158 520,233 12,827 4,778,218

2011 4,249,136 521,322 12,961 4,783,419

2012 4,249,100 520,674 12,829 4,782,603

2013 4,251,335 522,599 13,070 4,787,004

2014 4,258,028 524,034 13,108 4,795,170

2015 4,266,512 525,411 13,127 4,805,050

2016 4,277,366 526,820 13,139 4,817,325

2017 4,289,689 528,188 13,146 4,831,023

2018 4,305,113 529,714 13,153 4,847,980

2019 4,321,703 531,212 13,160 4,866,075

2020 4,338,945 532,660 13,166 4,884,771

2021 4,356,733 534,067 13,171 4,903,971

2022 4,375,466 535,463 13,177 4,924,106

2023 4,395,035 536,848 13,183 4,945,066

2024 4,415,254 535,425 13,189 4,963,868

Table 4-2: Number of Natural Gas Customers by Market Sector

YEAR

RESIDENTIAL 

NATURAL GAS 

CUSTOMERS

COMMERCIAL 

NATURAL GAS 

CUSTOMERS

INDUSTRIAL 

NATURAL GAS 

CUSTOMERS

TOTAL NATURAL 

GAS CUSTOMERS

2002 3,110,743 247,818 10,468 3,369,029

2003 3,140,021 246,123 10,378 3,396,522

2004 3,161,370 246,991 10,088 3,418,449

2005 3,187,583 253,415 10,049 3,451,047

2006 3,193,920 254,923 9,885 3,458,728

2007 3,188,152 253,139 9,728 3,451,019

2008 3,172,623 252,382 10,563 3,435,568

2009 3,169,026 252,017 18,186 3,439,229
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

23 | Page

YEAR

RESIDENTIAL 

NATURAL GAS 

CUSTOMERS

COMMERCIAL 

NATURAL GAS 

CUSTOMERS

INDUSTRIAL 

NATURAL GAS 

CUSTOMERS

TOTAL NATURAL 

GAS CUSTOMERS

2010 3,152,468 249,309 9,332 3,411,109

2011 3,153,895 249,456 9,088 3,412,439

2012 3,163,925 249,850 8,833 3,422,609

2013 3,173,955 250,245 8,579 3,432,779

2014 3,183,986 250,639 8,324 3,442,949

2015 3,197,789 251,082 8,287 3,457,158

2016 3,213,198 251,775 8,250 3,473,222

2017 3,228,297 251,653 8,212 3,488,162

2018 3,243,686 253,195 8,175 3,505,055

2019 3,258,606 253,389 8,152 3,520,147

2020 3,273,842 253,972 8,120 3,535,934

2021 3,289,150 254,559 8,087 3,551,796

2022 3,304,524 255,350 8,064 3,567,938

2023 3,319,876 255,751 8,035 3,583,663

2024 3,335,417 256,451 8,005 3,599,873

4.3 COMMERCIAL AND INDUSTRIAL SECTOR BASELINE SEGMENTATION FINDINGS

This section provides detailed information on the breakdown of commercial and industrial electricity and 

natural gas sales in Michigan by market segment and end use.

4.3.1 Electricity Sales by Sector, by EDC

Figure 4-3 and Table 4-3 show historical and forecast electricity sales by sector (in millions of kWh) for 

the State of Michigan for the period 2002 to 2024. Both DTE Energy and Consumers Energy do not 

have electric sales and peak load forecasts that exclude all impacts of their current energy efficiency 

programs. As a result, the forecast of annual electric sales for Michigan shown below do reflect the 

impacts of current energy efficiency programs.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

24 | Page

Figure 4-3: Michigan Annual Electric Sales

0

20000

40000

60000

80000

100000

120000

Year

Industrial

Commercial

Residential

Table 4-3: Michigan Actual and Projected Electric GWh Sales by Sector

YEAR RESIDENTIAL COMMERCIAL INDUSTRIAL TOTAL

2002 34,336 35,880 33,537 103,753

2003 33,669 35,391 39,813 108,873

2004 33,104 38,632 34,867 106,603

2005 36,095 39,600 34,745 110,440

2006 34,622 39,299 34,093 108,014

2007 35,366 40,047 33,879 109,292

2008 34,297 38,974 32,505 105,776

2009 32,854 37,870 27,391 98,115

2010 34,681 38,123 30,841 103,645

2011 34,811 38,613 31,624 105,048

2012 34,400 38,367 31,305 104,072

2013 33,812 38,289 30,669 102,770

2014 33,775 38,075 31,795 103,645

2015 33,726 37,822 32,582 104,130

2016 33,797 37,807 32,987 104,591

2017 33,780 38,114 33,380 105,274
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

25 | Page

YEAR RESIDENTIAL COMMERCIAL INDUSTRIAL TOTAL

2018 33,804 38,236 34,022 106,062

2019 33,903 38,349 34,149 106,401

2020 34,073 38,458 34,370 106,901

2021 34,239 38,561 34,548 107,348

2022 34,390 38,660 34,637 107,687

2023 34,503 38,789 34,746 108,038

2024 34,612 38,947 34,928 108,487

4.3.2 Natural Gas Sales by Sector, by EDC

Figure 4-4 presents historical and forecast natural gas sales by sector for the State of Michigan (in 

MMbtu) for the period 2002 to 2022. The commercial sector is the largest sector of natural gas sales, 

followed by residential and industrial. Table 4-4 presents historical and forecast data in numerical format

for natural gas sales in Michigan by sector for the period 2002 to 2024. Both DTE Energy and 

Consumers Energy do not have natural gas sales forecasts that exclude all impacts of their current energy 

efficiency programs. As a result, the forecast of annual natural gas sales for Michigan shown below do 

reflect the impacts of current energy efficiency programs. GDS also points out that the forecast of 

natural gas sales for Michigan does not include natural gas used for electric generation.

Figure 4-4: Michigan Natural Gas Sales Forecast (MMBtu)

0

100,000,000

200,000,000

300,000,000

400,000,000

500,000,000

600,000,000

700,000,000

800,000,000

900,000,000

Industrial

Commercial

Residential
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

26 | Page

Table 4-4: Michigan Actual and Projected Natural Gas Sales by Sector (MMBtu)

YEAR RESIDENTIAL COMMERCIAL INDUSTRIAL TOTAL

2002 376,223,595 180,058,230 241,564,059 797,845,884

2003 394,436,064 190,409,967 218,156,796 803,002,827

2004 370,350,552 179,219,370 215,342,523 764,912,445

2005 366,871,329 178,641,375 216,404,397 761,917,101

2006 323,031,687 157,435,608 192,843,684 673,310,979

2007 335,985,936 167,506,020 149,956,455 653,448,411

2008 349,614,342 176,066,484 144,429,186 670,110,012

2009 334,636,599 167,447,709 131,459,592 633,543,900

2010 311,329,590 155,854,050 146,648,073 613,831,713

2011 325,318,092 167,329,041 154,557,909 647,205,042

2012 289,473,172 149,024,502 157,851,969 596,349,643

2013 323,647,940 169,062,257 176,487,735 669,197,931

2014 313,567,812 168,397,349 170,990,963 652,956,125

2015 311,401,049 171,899,663 169,809,411 653,110,123

2016 307,589,232 172,012,348 167,730,797 647,332,377

2017 302,872,404 171,290,048 165,158,674 639,321,127

2018 297,889,970 170,273,089 162,441,714 630,604,773

2019 293,841,544 169,924,537 160,234,076 624,000,158

2020 290,497,097 169,632,911 158,410,323 618,540,331

2021 287,348,809 169,585,551 156,693,537 613,627,897

2022 284,092,085 169,475,200 154,917,620 608,484,904

2023 280,795,642 169,324,020 153,120,044 603,239,706

2024 277,777,232 169,401,943 151,474,082 598,653,258

4.3.3 Electricity Consumption by Market Segment

Figure 4-5 shows the breakdown of electricity consumption by building type for the commercial sector. 

Figure 4-6 shows a similar breakdown of sales by industrial market segment for the industrial sector. The 

Office market sector (29%) consumes the largest share of commercial electricity consumption, followed 

by Other (21%) and Retail (11%). In the industrial sector, Transportation Equipment (25% of annual 

industrial electricity sales) is the largest sector, followed by Primary Metals (20%) and Chemistry (10%). 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

27 | Page

Figure 4-5: 2014 Commercial Electricity Consumption by Market Segment

Figure 4-6: 2014 Electric Industrial Energy Consumption by Market Segment
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

28 | Page

Table 4-5: 2014 Electric Industrial Energy Consumption by Segment

SEGMENT CONSUMPTION (MWH) ELECTRICITY SHARE

Food 1,944,291 6%

Beverage 171,696 1%

Textile Mills 3,070 0%

Textile Mill Products 51,185 0%

Apparel & Leather 19,863 0%

Wood 551,294 2%

Paper 1,871,906 6%

Printing 383,711 1%

Petroleum 378,873 1%

Chemicals 3,238,019 10%

Plastics & Rubber 2,481,706 8%

Nonmetallic Minerals 1,342,118 4%

Primary Metals 6,515,086 20%

Fabricated Metals 2,102,667 7%

Machinery 1,321,084 4%

Computer & Electronics 368,783 1%

Electric Equipment 380,700 1%

Transportation Equipment 7,904,144 25%

Furniture 492,726 2%

Miscellaneous 271,813 1%

Total 31,794,736 100%

4.3.4 Electric Consumption by End-Use

Table 4-6 shows the breakdown of electric energy consumption by commercial market segment by end 

use. Tables 4-7, 4-8, and 4-9 show the same breakdown for the industrial sector by market segment. 

Lighting is the largest end use for the commercial sector (37% of commercial sector electricity 

consumption), followed by cooling (14%), and then by ventilation (13%). As for the industrial sector, 

machine drives represent the largest end use, followed by process heating and facility HVAC. 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

29 | Page

Table 4-6: Breakdown of Michigan Commercial Electricity Sales by Market Segment and End-Use 

WAREHOUSE RETAIL GROCERY OFFICE LODGING HEALTH RESTAURANT EDUCATION OTHER TOTAL

Lighting 54% 42% 22% 39% 54% 42% 19% 31% 32% 37%

Cooling 6% 15% 6% 14% 10% 14% 13% 21% 17% 14%

Ventilation 8% 9% 3% 9% 6% 16% 11% 22% 24% 13%

Water Heating 1% 5% 1% 1% 4% 1% 5% 3% 1% 2%

Refrigeration 14% 7% 55% 5% 4% 3% 32% 5% 9% 12%

Space Heating 1% 8% 3% 5% 6% 3% 5% 4% 4% 4%

Office Equipment 3% 2% 3% 15% 3% 5% 2% 9% 2% 7%

Miscellaneous 13% 12% 6% 13% 12% 15% 13% 6% 11% 12%

Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

Table 4-7: Electric Industrial Energy Consumption by End Use (Table 1 of 3)

FOOD BEVERAGE TEXTILE MILLS

TEXTILE MILL 

PRODUCTS

APPAREL

&

LEATHER

WOOD PAPER

Conventional Boiler Use 3% 2% 1% 1% 1% 1% 2%

Process Heating 5% 6% 7% 9% 6% 6% 3%

Process Cooling and Refrigeration 28% 26% 9% 6% 4% 1% 1%

Machine Drive 43% 34% 54% 47% 36% 72% 75%

Electro-Chemical Processes 0% 0% 1% 1% 1% 1% 1%

Other Process Use 1% 2% 3% 1% 2% 1% 4%

Facility HVAC (g) 8% 10% 12% 16% 26% 6% 4%

Facility Lighting 8% 8% 8% 15% 16% 8% 4%

Other Facility Support 2% 2% 2% 3% 4% 2% 1%

Onsite Transportation 0% 0% 0% 0% 0% 0% 0%

Other Non-process Use 0% 0% 0% 0% 0% 1% 0%

End Use Not Reported 2% 9% 3% 1% 4% 2% 4%

Total Industrial 100% 100% 100% 100% 100% 100% 100%
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

30 | Page

Table 4-8: Electric Industrial Energy Consumption by End Use (Table 2 of 3)

PRINTING PETROLEUM CHEMICALS

PLASTICS &

RUBBERS

NONMETALLIC 

MINERAL

PRIMARY METALS

Conventional Boiler Use 1% 1% 1% 1% 0% 0%

Process Heating 4% 0% 4% 18% 26% 32%

Process Cooling and Refrigeration 5% 5% 8% 11% 3% 1%

Machine Drive 46% 83% 59% 43% 54% 28%

Electro-Chemical Processes 1% 0% 15% 0% 1% 26%

Other Process Use 1% 2% 1% 3% 2% 3%

Facility HVAC (g) 24% 4% 6% 10% 6% 4%

Facility Lighting 9% 3% 4% 8% 5% 3%

Other Facility Support 3% 1% 1% 2% 1% 1%

Onsite Transportation 0% 0% 0% 0% 0% 0%

Other Non-process Use 1% 0% 0% 0% 0% 0%

End Use Not Reported 4% 2% 1% 2% 1% 0%

Total Industrial 100% 100% 100% 100% 100% 100%
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

31 | Page

Table 4-9: Electric Industrial Energy Consumption by End Use (Table 3 of 3)

FABRICATED 

METALS

MACHINERY

COMPUTERS &

ELECTRONICS

ELEC.

EQUIP.

TRANS 

EQUIP. FURNITURE MISC. TOTAL INDUSTRIAL

Conventional Boiler Use 0% 1% 1% 1% 1% 1% 1% 277,716

Process Heating 21% 11% 10% 15% 11% 5% 11% 4,816,452

Process Cooling and Refrigeration 3% 3% 9% 4% 5% 1% 5% 1,868,622

Machine Drive 41% 40% 23% 37% 36% 47% 30% 13,500,396

Electro-Chemical Processes 3% 0% 2% 5% 2% 1% 5% 2,521,134

Other Process Use 3% 3% 5% 4% 4% 2% 3% 889,721

Facility HVAC (g) 9% 20% 30% 15% 19% 18% 25% 3,445,271

Facility Lighting 11% 15% 12% 10% 15% 17% 14% 2,754,603

Other Facility Support 2% 4% 5% 7% 3% 4% 4% 716,870

Onsite Transportation 0% 0% 0% 0% 1% 1% 0% 93,715

Other Non-process Use 0% 1% 1% 0% 1% 1% 0% 175,298

End Use Not Reported 6% 1% 4% 0% 3% 4% 1% 734,938

Total Industrial 100% 100% 100% 100% 100% 100% 100% 31,794,736
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

32 | Page

4.3.5 Natural Gas Consumption by Market Segment

Figure 4-7 shows the breakdown of Michigan natural gas sales by commercial market segment. Figure 4-

8 and Table 4-10 show a similar breakdown for the industrial market segment. The Other segment (23%) 

consumes the largest share of the commercial sector natural gas consumption, followed by the Office

(21%) and Education (15%) market segments. In the industrial sector, the Chemicals (21%) market 

segment consumes the largest amount of natural gas, followed by Transportation Equipment (19%) and 

Primary Metals (13%). 2010 EIA MECS End Use Data was used to obtain end use percentage 

breakdowns of electricity and natural gas use for each major industrial NAICS category at the national 

level. 2011 Census data for each major industrial NAICS category was used to obtain electricity use and 

fuel consumption as well as value of product shipments for each category. This was used to generate 

MWh of electricity per dollar of product shipped and MMBtu of natural gas per dollar of product 

shipped for each NAICS category, and these ratios were multiplied by the Michigan-specific values of 

product shipped per NAICS category to obtain estimated 2011 MWh of electricity consumption and 

MMBtu of natural gas consumption per NAICS category in Michigan and percent of total industrial 

electricity and natural gas consumption represented by each NAICS category. These NAICS category 

percentages were then multiplied by forecasted Michigan Industrial electricity and gas consumption for 

2014 and 2023 to assign the forecasted consumption to each NAICS category. The end use percentage 

breakdowns were then applied to forecast total consumption for each SIC category to obtain estimated 

electricity and natural gas consumption for each end use in each Industrial NAICS category for 2014 and 

2023.

Figure 4-7: Natural Gas Commercial Energy Consumption by Market Segment
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

33 | Page

Figure 4-8: Natural Gas Industrial Energy Consumption by Market Segment

Table 4-10: Natural Gas Industrial Energy Consumption by Market Segment

SEGMENT CONSUMPTION (MWH) ELECTRICITY SHARE

Food 16,642,808 10%

Beverage 1,224,421 1%

Textile Mills 13,049 0%

Textile Mill Products 274,779 0%

Apparel & Leather 104,123 0%

Wood 331,865 0%

Paper 5,978,556 3%

Printing 1,635,620 1%

Petroleum 3,749,816 2%

Chemicals 36,124,119 21%

Plastics & Rubber 8,302,233 5%

Nonmetallic Minerals 12,978,192 8%

Primary Metals 21,883,749 13%

Fabricated Metals 14,532,992 8%

Machinery 7,828,921 5%

Computer & Electronics 1,082,742 1%

Electric Equipment 2,198,993 1%

Transportation Equipment 33,526,892 19%

Furniture 2,534,560 1%

Miscellaneous 1,212,561 1%
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

34 | Page

SEGMENT CONSUMPTION (MWH) ELECTRICITY SHARE

Total 172,160,990 100%

4.3.6 Natural Gas Consumption by End-Use

Table 4-11 shows the breakdown of natural gas consumption by commercial market segment by end use. 

Tables 4-12, 4-13, and 4-14 show the same breakdown for the industrial sector. The largest natural gas 

end use in the commercial sector is space heating, followed by water heating and cooking. In the 

industrial sector, the largest end use is process heating. 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

35 | Page

Table 4-11: Natural Gas Commercial Energy Consumption by End-Use

WAREHOUSE RETAIL GROCERY OFFICE LODGING HEALTH RESTAURANT EDUCATION OTHER

Space Heating 84% 71% 69% 86% 30% 56% 27% 77% 85%

Water Heating 3% 7% 5% 5% 58% 30% 23% 14% 4%

Cooking 0% 9% 21% 1% 7% 4% 45% 2% 8%

Other 13% 13% 5% 9% 6% 9% 6% 7% 0%

Total 100% 100% 100% 100% 100% 100% 100% 100% 98%

Table 4-12: Natural Gas Industrial Energy Consumption by End-Use (Table 1 of 3)

FOOD BEVERAGE

TEXTILE 

MILLS

TEXTILE MILL 

PRODUCTS

APPAREL &

LEATHER

WOOD PAPER

Conventional Boiler Use 28% 24% 26% 25% 25% 6% 13%

Process Heating 30% 24% 35% 38% 25% 62% 30%

CHP and/or Cogeneration Process 29% 41% 29% 25% 25% 18% 48%

Facility HVAC (g) 6% 11% 6% 13% 25% 12% 4%

Process Cooling and Refrigeration 0% 0% 0% 0% 0% 0% 0%

Machine Drive 1% 0% 0% 0% 0% 3% 3%

Other Process Use 1% 0% 0% 0% 0% 0% 1%

End Use Not Reported 1% 0% 3% 0% 0% 0% 2%

Other Facility Support 3% 0% 0% 0% 0% 0% 0%

Other Non-process Use 0% 0% 0% 0% 0% 0% 0%

Total Industrial 100% 100% 100% 100% 100% 100% 100%
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

36 | Page

Table 4-13: Natural Gas Industrial Energy Consumption by End-Use (Table 2 of 3)

PRINTING PETROLEUM CHEMICALS

PLASTICS &

RUBBERS

NONMETALLIC 

MINERALS

PRIMARY METALS

Conventional Boiler Use 10% 12% 17% 19% 1% 4%

Process Heating 45% 56% 35% 35% 87% 75%

CHP and/or Cogeneration Process 13% 22% 39% 24% 3% 8%

Facility HVAC (g) 29% 0% 1% 22% 6% 7%

Process Cooling and Refrigeration 0% 1% 0% 0% 0% 1%

Machine Drive 3% 2% 4% 0% 1% 2%

Other Process Use 0% 3% 3% 0% 0% 3%

End Use Not Reported 0% 4% 0% 0% 2% 0%

Other Facility Support 0% 0% 0% 1% 0% 1%

Other Non-process Use 0% 0% 0% 0% 0% 0%

Total Industrial 100% 100% 100% 100% 100% 100%

Table 4-14: Natural Gas Industrial Energy Consumption by End-Use (Table 3 of 3)

FABRICATED 

METALS

MACHINERY

COMPUTERS &

ELECTRONICS

ELEC.

EQUIP.

TRANS 

EQUIP. FURNITURE MISC. TOTAL INDUSTRIAL

Conventional Boiler Use 8% 4% 27% 11% 11% 0% 13% 20,759,627

Process Heating 63% 41% 12% 54% 35% 46% 27% 79,914,353

CHP and/or Cogeneration Process 7% 4% 7% 9% 14% 8% 20% 33,762,602

Facility HVAC (g) 20% 48% 44% 20% 33% 46% 40% 26,638,960

Process Cooling and Refrigeration 0% 0% 0% 0% 0% 0% 0% 362,627

Machine Drive 1% 1% 0% 0% 0% 0% 0% 2,515,680

Other Process Use 1% 0% 2% 0% 6% 0% 0% 4,008,079

End Use Not Reported 0% 0% 5% 3% 1% 0% 0% 1,165,518

Other Facility Support 1% 1% 2% 3% 2% 0% 0% 1,754,341

Other Non-process Use 0% 0% 0% 0% 0% 0% 0% 109,175

Total Industrial 100% 100% 100% 100% 100% 100% 100% 170,990,963
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

37 | Page

4.4 CURRENT MICHIGAN EDC ENERGY EFFICIENCY PROGRAMS

4.4.1 Current DTE Energy Efficiency Programs

DTE Energy provides several energy efficiency programs to Michigan electric and natural gas customers 

in the residential, commercial and industrial markets.

4.4.1.1 Residential Programs 

Residential Energy Efficiency Program (Electric) 

DTE offers energy audit discounts and rebates for the installation of energy efficiency 

improvements. Eligible measures and equipment includes: programmable thermostats, energy audits, 

insulation, central ac systems, appliance recycling, and air sealing.

Residential Energy Efficiency Program (Gas) 

Rebate levels vary according to whether the customer receives MichCon gas, DTE electric service, or

both. Eligible measures and equipment include the following high efficiency appliances: clothes washers, 

dehumidifiers, programmable thermostats, energy audits, insulation, high efficiency room air 

conditioners, appliance recycling, furnaces, boilers, air sealing, and energy audit. Rebate amounts can also 

vary based on equipment size and efficiency level. Participation is first come-first serve, and an energy 

audit should be completed prior to equipment installations. 

4.4.1.2 Commercial/ Industrial Programs 

Commercial and Industrial Energy Efficiency Program (Electric) 

DTE Energy's commercial ‘Your Energy Savings Program’ provides incentives to commercial and 

industrial customers who utilize energy efficiency upgrades in their facilities. Some energy efficient 

technologies eligible for this program include refrigerators, heat pumps, programmable thermostats, 

vending machine controls, and LED lighting. Custom incentives are based on estimated annual energy 

savings. Final applications are to be received within 60 days after project completion or by November 30 

of the program’s year, whichever comes first. 

Commercial and Industrial Energy Efficiency Program (Gas) 

DTE Energy's commercial ‘Your Energy Savings Program’ provides prescriptive incentives, mainly on a 

per unit basis. Some energy efficient technologies eligible for this program include water heaters, 

equipment insulations, boilers, tankless water heaters, steam system upgrades, windows/roofs, and 

several other pieces of equipment. Custom incentives are based on annual energy savings and apply to all 

energy efficiency improvement measures that are not eligible for a prescriptive incentive. The New 

Construction and Remodeling Program provide assistance in design and incentives for more efficient 

buildings that purchase and install energy-efficiency equipment. 

Participants qualifying for energy efficiency measures in the DTE's service area can participate in the 

program only by having these measures installed in a business facility. This energy program will only pay 

incentives for energy saved in facilities in the DTE service areas. Final applications received within 60 

days after project completion or by December 15 of the program year, whichever comes first.

Commercial New Construction Energy Efficiency Program 

New construction and remodeling projects must entail a facility improvement that verifiable electrical 

savings (kWh) and/or natural gas energy savings (MCF). This utility rebate program provides incentives 

for comprehensive measures/whole buildings applicable in commercial, industrial, and construction 

sectors. Some incentives include: 10% - 20% energy savings: $0.08 per kWh and $4.00 per MCF, 20% -

30% energy savings: $0.10 per kWh and $6.00 per MCF, 30% or more energy savings: $0.12 per kWh 

and $8.00 per MCF. All non-prescriptive measures must pass a Total Resource Cost (TRC) Test. 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

38 | Page

4.4.1.3 Solar Programs 

Solar Current Programs 

Incentives through the Solar Currents program are offered to electric customers that install photovoltaic 

systems that have capacities within the range 1kW-20kW. For residential customers, the program offers 

both an up-front rebate of $0.20 per DC watt and a production incentive of $0.03 per kilowatt-hour 

(kWh) for the renewable energy credits (RECs) until August 31, 2029. Non-residential customers are 

eligible for incentives for photovoltaic equipment that are $0.13/Watt upfront and $0.02/Watt for the 

payment of Renewable Energy Credits (RECs). 

This program is being offered as part of DTE Energy's compliance plan under the state Renewable 

Portfolio Standard. Funding for this will be in four rounds, with 500 kW of installations expected per 

round. Pricing is reviewed after each offering. For the first round of offerings, 1.5 MW is reserved for 

residential systems, and 0.5 MW is reserved for non-residential. The four application periods will open 

according to the following dates, respectively: 01/07/2013, 06/24/2013, 01/2014, and 06/2014. 

4.4.2 Current Consumers Energy Efficiency Programs

Consumer Energy provides several energy efficiency programs regarding electric and gas for both 

commercial and residential markets.

4.4.2.1 Residential Programs 

Residential Energy Efficiency Program (Electric) 

Customers must install equipment in the Consumers Energy service area and receive electric service

from Consumers Energy for the appliance purchased in order to apply for rebates. Heat pumps, central 

air conditioners, building insulation, and clothes washers are just several eligible pieces of equipment that 

can receive incentives. 

Residential Energy Efficiency Program (Gas) 

High efficiency furnaces, boilers, water heating units, insulation, windows, doors, energy audits and 

comprehensive improvements are eligible under this program. Residential Gas customers will be eligible 

to apply for a range of rebates.

4.4.2.2 Commercial Programs 

Commercial Energy and Efficiency (Electric) 

Incentives are available for energy efficiency equipment upgrades and are paid based on quantity, size, 

and efficiency of the equipment. Incentives are available for projects where the payback period is within 

1 to 10 years. A bonus incentive of 15% may be available to customers who purchase equipment 

manufactured in Michigan.

Commercial Energy and Efficiency (Gas) 

Incentives are available for energy efficiency equipment upgrades and are paid based on the quantity, size 

and efficiency of the equipment. Energy efficiency projects that have a payback year between 1-10 years 

may receive an incentive. A bonus incentive of 15% may be available to customers who purchase 

equipment manufactured in Michigan. Equipment measures not available for incentives are as follows: 

fuel switching, projects that involve peak-seeking, and changes in operational and/or maintenance 

practices.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

39 | Page

5 POTENTIAL STUDY METHODOLOGY

This section describes the overall methodology that was utilized by GDS to develop the energy efficiency 

potential study for the State of Michigan. The main objective of this energy efficiency potential study is 

to quantify the technical, economic and achievable potential for electric and natural gas energy efficiency 

savings in Michigan. This report provides estimates of the potential kWh and kW electric savings and 

MMBtu gas savings for each level (technical, economic and achievable potential) of energy efficiency 

potential. This document describes the general steps and methods that were used at each stage of the 

analytical process necessary to produce the various estimates of energy efficiency potential. GDS did not 

examine delivery approaches for energy efficiency programs as this task was not included in the scope of 

work for this study.

Energy efficiency potential studies involve a number of analytical steps to produce estimates of each type 

of energy efficiency potential: technical, economic, and achievable. This study utilizes benefit/cost 

screening tools for the residential and non-residential sectors to assess the cost effectiveness of energy 

efficiency measures. These cost effectiveness screening tools are Excel-based models that integrate 

technology-specific impacts and costs, customer characteristics, utility avoided cost forecasts and more. 

Excel was used as the modeling platform to provide transparency to the estimation process and allow for 

simple customization based on Michigan’s unique characteristics and the availability of specific model 

input data. The major analytical steps and an overview of the potential savings are summarized below, 

and specific changes in methodology from one sector to another have been noted throughout 

this section.

 Measure List Development

 Measure Characterization

 Load Forecast Development and Disaggregation 

 Potential Savings Overview

 Technical Potential

 Measure Cost-Effectiveness Screening

 Economic Potential

 Achievable Potential

5.1 MEASURE LIST DEVELOPMENT

The energy efficiency measures included in this study cover energy efficiency measures included in the 

Michigan energy measures database (MEMD), additional measures suggested by interested stakeholders, 

as well as other measures based on the GDS Team’s existing knowledge and current databases of electric 

and natural gas end-use technologies and energy efficiency measures. The study scope includes measures 

and practices that are currently commercially available as well as emerging technologies. The 

commercially available measures are of the most immediate interest to DSM program planners in 

Michigan. However, a small number of well documented emerging technologies were considered for 

each sector. Emerging technology research was focused on measures that are commercially available but 

may not be widely accepted at the current time. In June 2013, the GDS Team provided the energy 

efficiency measure lists for each sector to interested stakeholders for review and comment. These 

measure lists were then reviewed, discussed and updated as necessary. A complete listing of the energy 

efficiency measures included in this study is provided in the Appendices of this report.

In addition, this study includes measures that could be relatively easily substituted for, or applied to, 

existing technologies on a retrofit or replace-on-burnout basis. Replace-on-burnout applies to equipment 

replacements that are made normally in the market when a piece of equipment is at the end of its useful 

life. A retrofit measure is eligible to be replaced at any time in the life of the equipment or building. 

Replace-on-burnout measures are generally characterized by incremental measure costs and savings (e.g.

the costs and savings of a high-efficiency versus standard efficiency air conditioner); whereas retrofit 

measures are generally characterized by full costs and savings (e.g. the full costs and savings associated 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

40 | Page

with adding ceiling insulation into an existing attic). For new construction, energy efficiency measures 

can be implemented when each new home or building is constructed, thus the rate of availability is a 

direct function of the rate of new construction.

5.2 MEASURE CHARACTERIZATION

A significant amount of data is needed to estimate the kWh, kW and MMBtu savings potential for 

individual energy efficiency and demand response measures or programs across the entire existing 

residential and non-residential sectors in Michigan. GDS used Michigan specific data wherever it was 

available and up-to-date. Considerable effort was expended to identify, review, and document all 

available data sources.15 This review has allowed the development of reasonable and supportable 

assumptions regarding: measure lives; measure installed incremental or full costs (as appropriate); and 

electric and natural gas savings and saturations for each energy efficiency measure included in the final 

list of measures in this study. 

Costs and savings for new construction and replace on burnout measures are calculated as the 

incremental difference between the code minimum equipment and the energy efficiency measure. This 

approach is utilized because the consumer must select an efficiency level that is at least the code 

minimum equipment. The incremental cost is calculated as the difference between the cost of high

efficiency and standard (code compliant) equipment. However, for retrofit measures, the measure cost 

was considered to be the “full” cost of the measure, as the baseline scenario assumes the consumer 

would do nothing. In general, the savings for retrofit measures are calculated as the difference between 

the energy use of the removed equipment and the energy use of the new high efficiency equipment (until 

the removed equipment would have reached the end of its useful life).

 

Savings: Estimates of annual measure savings as a percentage of base equipment usage were developed 

from a variety of sources, including:

 Michigan Energy Measures Database

 Secondary sources such as the American Council for an Energy-Efficient Economy (“ACEEE”), 

Department of Energy (“DOE”), Energy Information Administration (“EIA”), ENERGY 

STAR, Air Conditioning Contractors of America (“ACCA”) and other technical potential studies 

and Technical Reference Manuals

Measure Costs: Measure costs represent either incremental or full costs, and typically include the 

incremental cost of measure installation. For purposes of this study, nominal measures costs were held 

constant over time. This general assumption is being made due to the fact that historically many measure 

costs (e.g., CFL bulbs, Energy Star appliances, etc.) have declined over time, while some measure costs 

have increased over time (e.g., fiberglass insulation). The one exception to this general assumption was 

that LED bulb costs were assumed to decline over time. This exception was included as directed by the 

Public Staff of the Michigan Public Service Commission (MPSC), and is grounded by the observation of 

rapidly declining LED bulb costs over the last several years, as well as the relatively high contribution of 

LED bulbs to the overall estimates of savings potential. Cost estimates were obtained from the following 

types of data sources:

 Michigan Energy Measures Database

 Secondary sources such as ACEEE, ENERGY STAR, NREL, NEEP Incremental Cost Study 

Report, and other technical potential studies and Technical Reference Manuals

 Retail store pricing (such as web sites of Home Depot and Lowe’s) and industry experts

 15 The appendices and supporting databases to this report provide the data sources used by GDS to obtain up-to-date data 

on energy efficiency measure costs, savings, useful lives and saturations.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

41 | Page

Measure Life: Represents the number of years that energy-using equipment is expected to operate. Useful 

life estimates have been obtained from the following data sources: 

 Michigan Energy Measures Database

 Manufacturer data

 Savings calculators and life-cycle cost analyses

 Secondary sources such as ACEEE, ENERGY STAR, and other technical potential studies

 The California Database for Energy Efficient Resources (“DEER”) database

 Evaluation reports

 GDS and other consultant research or technical reports

Baseline and Efficient Technology Saturations: In order to assess the amount of electric and natural gas 

energy efficiency savings still available, estimates of the current saturation of baseline equipment and 

energy efficiency measures, or for the non-residential sector the amount of energy use that is associated 

with a specific end use (such as HVAC) and percent of that energy use that is associated with energy 

efficient equipment are necessary. Up-to-date measure saturation data were primarily obtained from the 

following recent studies:

 2011 Michigan Residential Baseline Study conducted by the MPSC

 Energy efficiency baseline studies conducted by DTE Energy and Consumers Energy

 2011 Michigan Commercial Baseline Study conducted by the MPSC

 2009 EIA Residential Energy Consumption Survey (RECS)

 2007 American Housing Survey (AHS)

 2010 EIA Manufacturing Energy Consumption Survey (MECS)

 2003 EIA Commercial Building Energy Consumption Survey (CBECS)

Further detail regarding the development of measure assumptions for energy efficiency in the residential 

and non-residential sectors are provided in this report in later sections. Additionally, as noted above, the 

appendices of the report provide a comprehensive listing of all energy efficiency measure assumptions 

and data sources. 

5.3 FORECAST DISAGGREGATION FOR THE COMMERCIAL AND INDUSTRIAL SECTORS

For the commercial sector, the baseline electric and natural gas load forecasts were disaggregated by 

combining sales breakdowns by business type provided by DTE Energy with regional energy use 

estimates by business type available from the U.S. Energy Information Administration (EIA)16 The 

forecasts were then further disaggregated by end use based on end use consumption estimates for the 

East North Central Region (Michigan, Wisconsin, Ohio, Indiana, Illinois). The disaggregated electric 

and natural gas sales forecasts provide the foundation for the development of energy efficiency potential 

estimates for the commercial sector. It was not necessary to develop a disaggregated residential sales 

forecast because a bottom-up approach was used for the residential sector.

For the industrial sector, the baseline electric and natural gas demand forecasts were disaggregated by 

industry type and then by end use. The industry type breakdowns are based on Michigan value of 

shipments data and U.S. energy intensity data (consumption per $ of value shipped) by industry from the 

U.S. Census Bureau’s Annual Survey of Manufacturers. Further dis-aggregation by end use is based on 

data from the EIA’s 2010 Manufacturing Energy Consumption Survey (MECS) The disaggregated 

forecast data provides the foundation for the development of energy efficiency potential estimates for 

the industrial sector. 

 16 2003 EIA Commercial Building Energy Consumption Survey (CBECS), East North Central and Midwest Regions.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

42 | Page

5.4 ROLE OF NATURALLY OCCURRING CONSERVATION

Naturally occurring conservation exists through government intervention, improved manufacturing 

efficiencies, building energy codes, market demand, and increased energy efficiency implementation by

early adopters, who will implement measures without explicit monetary incentives. The impacts of new 

Federal government mandated energy efficiency standards have already been reflected in the baseline 

data for equipment unit energy consumption being used for this potential study. These new government 

standards, such as the new standards included in the Federal government’s December 2007 Energy 

Independence and Security Act (EISA)17, can significantly increase naturally occurring potential through 

tax incentives, stimulus funding or stricter manufacturing standards. These forces cause certain sector 

end-use energy consumption values to improve across the baseline forecast. It is important to account 

for these forces as thoroughly as possible to ensure the energy efficiency potential is not double-counted, 

by over-stating the potential that could occur for end-uses where codes and standards are reducing 

baseline unit energy consumption. In addition, GDS has reflected the impacts of new EISA lighting 

standards that went into effect starting in 2012, as well as changes to other federal baseline standards 

across a variety of end uses. These adjustments reduce energy efficiency potential starting in the years 

these standards come into effect, and in subsequent years.

5.5 POTENTIAL SAVINGS OVERVIEW

Potential studies often distinguish between several types of energy efficiency potential: technical, 

economic, and achievable. However, because there are often important definitional issues between 

studies, it is important to understand the definition and scope of each potential estimate as it applies to 

this analysis. The first two types of potential, technical and economic, provide a theoretical upper bound 

for energy savings from energy efficiency measures. Still, even the best designed portfolio of programs is 

unlikely to capture 100 percent of the technical or economic potential. Therefore, achievable potential 

attempts to estimate what may realistically be achieved, when it can be captured, and how much it would

cost to do so. Figure 5-1 below illustrates the three most common types of energy efficiency potential.

Figure 5-1: Types of Energy Efficiency Potential18

Not 

Technically 

Feasable

Not 

Technically 

Feasable

Not Cost 

Effective

Not 

Technically 

Feasable

Not Cost 

Effective

Market & 

Adoption 

Barriers

 

 

Technical Potential

Economic Potential

Achievable Potential

5.6 TECHNICAL POTENTIAL

The GDS Team has used the energy efficiency potential definitions included on pages 2-4 of the 

November 2007 National Action Plan for Energy Efficiency (NAPEE) Guide for Conducting Energy 

Efficiency Potential Studies. Technical potential is the theoretical maximum amount of energy use that 

could be displaced by efficiency, disregarding all non-engineering constraints such as cost-effectiveness 

and the willingness of end-users to adopt the efficiency measures. It is often estimated as a “snapshot” in 

time assuming immediate implementation of all technologically feasible energy saving measures, with 

additional efficiency opportunities assumed as they arise from activities such as new construction.19

 17 PUBLIC LAW 110–140—DEC. 19, 2007. Energy Independence and Security Act of 2007 18 Reproduced from “Guide to Resource Planning with Energy Efficiency” November 2007. US EPA. Figure 2-1. 19 National Action Plan for Energy Efficiency, “Guide for Conducting Energy Efficiency Potential Studies”, page 2-4
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

43 | Page

In general, this study utilizes a “bottom-up” approach in the residential sector to calculate the potential 

of an energy efficiency measure or set of measures as illustrated in Figure 5-2 below. A bottom-up 

approach was used for the residential sector due to the amount of data available for this sector from

DTE Energy and Consumers Energy, from Federal government surveys and research done in nearby 

states. A bottom-up approach first starts with the savings and costs associated with replacing one piece 

of equipment with its high efficiency counterpart, and then multiplies these values by the number of 

measures available to be installed throughout the life of the program. The bottom-up approach is 

applicable in the residential sector because of better secondary data availability and greater homogeneity 

of the building and equipment stock to which measures are applied, compared to the non-residential 

sector. However, this methodology was not utilized in the non-residential sector. For the non-residential 

sector, a “top-down” approach was used for developing the technical potential estimates. The “top 

down” approach builds an energy use profile based on estimates of kWh sales by business segment and 

end use. Savings factors for energy efficiency measures are then applied to applicable end use energy 

estimates after assumptions are made regarding the fraction of sales that are associated with inefficient 

equipment and the technical/engineering feasibility of each energy efficiency measure.

Figure 5-2: Residential Sector Savings Methodology - Bottom Up Approach

As shown in Figure 5-2, the methodology starts at the bottom based on the number of residential 

customers (splitting them into single-family, multi-family and manufactured housing types as well as 

existing homes vs. new construction). From that point, estimates of the size of the eligible market in 

Michigan were developed for each energy efficiency measure. For example, energy efficiency measures 

that affect electric space heating are only applicable to those homes in Michigan that have electric space 

heating. 

As noted previously, to obtain up-to-date appliance and end-use saturation data, the study made 

extensive use of the energy efficiency baseline studies provided by the MPSC, DTE Energy and 

Consumers Energy. The study relied primarily on the statewide baseline studies completed by Cadmus in 

2011 for the commercial and residential sectors. The DTE and Consumers Energy baseline studies for 

the residential sector were used in a few instances because the utility baseline studies contained some 

details lacking in the statewide residential study. The surveys collected detailed data on the current 

saturation of electricity and natural gas consuming equipment in the DTE Energy and Consumers 

Energy service areas and the energy efficiency level of HVAC equipment, appliances, and building shell 

characteristics. Estimates of energy efficient equipment saturations were based on several sources, 

including data collected from the 2009 RECS and the baseline studies provided by the Michigan utilities.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

44 | Page

The goal of the approach is to determine how many households that a specific measure applies to (base 

case factor), then of that group, the fraction of households/buildings which do not have the energy 

efficient version of the measure being installed (remaining factor). In instances where technical reasons 

do not permit the installation of the efficient equipment in all eligible households an applicability factor 

is used to limit the potential. Alternative water heating technologies (efficient water heater tanks, heat 

pump water heaters or solar water heating systems) are then utilized to meet the remaining market 

potential. The last factor to be applied is the savings factor, which is the percentage savings achieved 

from installing the efficient measure over a standard measure.

In developing the overall potential electricity savings, the analysis accounts for the interactive effects of 

measures designed to impact the same end-use. For instance, if a home were to properly seal all 

ductwork, the overall space heating and cooling consumption in that home would decrease. As a result, 

the remaining potential for energy savings derived from a heating/cooling equipment upgrade would be 

reduced. In instances where there are two (or more) competing technologies for the same electrical (or 

natural gas) end use, such as heat pump water heaters, water heater efficiency measures and highefficiency electric storage water heaters, in most cases an equal percentage of the available population is 

assigned to each measure using the applicability factor20. In the event that one of the competing 

measures is not found to be cost-effective, the homes/buildings assigned to that measure are 

transitioned over any of the remaining cost effective alternatives. 

The savings estimates per base unit are determined by comparing the high-efficiency equipment to 

current installed equipment for existing construction retrofits or to current equipment code standards for 

replace-on-burnout and new construction scenarios. 

5.7 CORE EQUATION FOR THE RESIDENTIAL SECTOR

The core equation used in the residential sector energy efficiency technical potential analysis for each 

individual efficiency measure is shown below in Equation 5-1 below.

Equation 5-1: Core Equation for Residential Sector Technical Potential

Where:

 Total Number of Households = the number of households in the market segment (e.g. the 

number of households living in detached single-family buildings)

 Base Case Equipment End-use Intensity = annual energy consumption (kWh or MMBtu) 

used per customer, per year, by each base-case technology in each market segment. This is the 

consumption of energy using equipment that efficient technology replaces or affects. This 

variable fully accounts for any known building characteristics in the service area, such as average 

square footage of homes in Michigan. 

 Saturation Share = this variable has two parts: the first is the fraction of the end use energy 

that is applicable for the efficient technology in a given market segment. For example, for natural 

gas residential water heating, this would be the fraction of all residential gas customers that have 

gas water heating in their household; the second is the share of the end use gas energy that is 

applicable for the efficient technology that has not yet been converted to an efficient technology. 

 20 GDS used its professional judgment in some cases to assign unequal applicability factors to attempt to avoid overstating 

or understating the potential of the set of competing technologies.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

45 | Page

 Applicability Factor = this factor ensures that a household cannot receive two of the same type 

of measure. For example, if we assume there are two tiers of efficient natural gas furnaces, one 

which yields 10% savings and another which yields 20% savings, a household that needs to 

replace its inefficient natural gas furnace could either receive the unit which yields 10% savings 

or the unit which yields 20% savings, but could not receive both units. In general, GDS applies 

an even distribution to the same type of measure across eligible households when applying this 

factor. GDS may, in some cases, assign unbalanced applicability factors, if it believes an even 

distribution is inappropriate21. The applicability factor also captures the fraction of applicable 

units technically feasible for conversion to the efficient technology from an engineering 

perspective (e.g., it may not be possible to add wall insulation in all homes because the original 

construction of some homes does not allow for wall insulation to be installed without requiring 

major reconstruction of the house, which would be an additional cost that does not yield any 

energy benefits).

 Savings Factor = the percentage of energy consumption reduction resulting from application of 

the efficient technology. The savings factor is a general term used to illustrate the calculation of a 

measure’s technical potential. The Excel-based model GDS uses fully integrates the necessary 

assumptions to determine the measure-level savings, given the Base Case Equipment End-use 

Intensity, and the expected savings of each technology.

Technical energy efficiency potential in the residential sector is calculated in two steps. In the first step, 

all measures are treated independently; that is, the savings of each measure are not reduced or otherwise 

adjusted for overlap between competing or interacting measures. By analyzing measures independently, 

no assumptions are made about the combinations or order in which they might be installed in customer 

buildings. However, the cumulative technical potential cannot be estimated by adding the savings from 

the individual savings estimates because some savings would be double-counted. For example, the 

savings from a measure that reduces heat loss from a building, such as insulation, are partially dependent 

on other measures that affect the efficiency of the system being used to heat the building, such as a highefficiency furnace; the more efficient the furnace, the less energy saved from the installation of the 

insulation. In the second step, adjustments are made to account for such interactive effects. The 

adjustments for interactive effects were made by upgrading the baseline conditions while holding the 

savings percentages constant. The upgraded baseline conditions vary by measure and assume some 

measures (such as weatherization measures) are installed to increase the building efficiency prior to the 

installation of the measure that is subject to the baseline adjustment (ex. high efficiency furnaces).

Finally, the GDS Team has developed a supply curve to show the amount of energy efficiency savings 

available at different cost levels. The residential sector supply curve is included in an appendix of this 

report. A generic example of a supply curve is shown in Figure 5-3. As shown in the figure, a supply 

curve typically consists of two axes; one that captures the cost per unit of saving a resource (e.g., dollars 

per lifetime kWh or MMBtu saved) and another that shows the amount of savings that could be 

achieved at each level of cost. The curve is typically built up across individual measures that are applied 

to specific base-case practices or technologies by market segment. Savings measures are sorted based on 

a metric of cost. Total savings available at various levels of cost are calculated incrementally with respect 

to measures that precede them. Supply curves typically, but not always, end up reflecting diminishing 

returns, i.e., costs increase rapidly and savings decrease significantly at the end of the curve.

 21 For example, if historical data indicates a technology has been able to garner a large share of the market GDS may 

assign a higher applicability factor to this technology in order to properly reflect this knowledge. 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

46 | Page

Figure 5-3: Generic Example of a Supply Curve

As noted above, the cost portion of this energy efficiency supply curve is represented in dollars per unit 

of lifetime energy savings. Costs are annualized (often referred to as levelized) in supply curves. For 

example, electric energy efficiency supply curves usually present levelized costs per lifetime kWh saved 

by multiplying the initial investment in an efficient technology or program by the capital recovery rate 

(CRR), and then dividing that amount by annual kWh savings:

Therefore,

Levelized Cost per lifetime kWh Saved = Initial Cost x CRR/Annual kWh Savings

5.8 CORE EQUATION FOR THE COMMERCIAL SECTOR

The core equation utilized in the commercial sector technical potential analysis for each individual 

efficiency measure is shown below in Equation 5-2. 

Equation 5-2: Core Equation for Commercial Sector Technical Potential

Where: 

 Total end-use kWh or natural gas sales by commercial sector and by building type = the 

forecasted electric or natural gas sales level for a given end use (e.g., space heating) in a 

commercial or industrial industry type (e.g., office buildings or fabricated metals).

 Base Case factor = the fraction of end-use energy applicable for the efficient technology in a 

given commercial sector type. For example, with fluorescent lighting, this would be the fraction 

of all lighting kWh in a given industry type that is associated with fluorescent fixtures.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

47 | Page

 Remaining factor = the fraction of applicable kWh or natural gas sales associated with 

equipment not yet converted to the electric or natural gas energy efficiency measure; that is, one 

minus the fraction of the industry type with energy efficiency measures already installed.

 Convertible factor = the fraction of the equipment or practice that is technically feasible for 

conversion to the efficient technology from an engineering perspective (e.g., it may not be 

possible to install variable-frequency drives (VFDs) on all motors.

 Savings factor = the fraction of electric or natural gas consumption reduced by application of 

the efficient technology.

For the commercial sector, the development of the energy efficiency technical potential estimate begins 

with a disaggregated energy sales forecast over the ten year forecast horizon (2013 to 2022). The 

commercial sector energy sales forecast is broken down by building type, then by electric or natural gas 

end use. Then a savings factor is applied to end use electricity or natural gas sales to determine the 

potential electricity or natural gas savings for each end use. The commercial sector, as defined in this 

analysis, is comprised of the following business segments:

 Warehouse

 Retail

 Grocery

 Office

 Lodging

 Healthcare

 Restaurant

 Institutional, including education

 Other

Similar to the residential sector, technical electric or natural gas energy efficiency savings potential in the 

commercial sector is calculated in two steps. In the first step, all measures are treated independently; that is, 

the savings of each measure are not reduced or otherwise adjusted for overlap between competing or 

synergistic measures. By treating measures independently, their relative economics are analyzed without 

making assumptions about the order or combinations in which they might be implemented in customer 

buildings. However, the total technical potential across measures cannot be estimated by summing the 

individual measure potentials directly because some savings would be double-counted. For example, the 

savings from a weatherization measure, such as low-e ENERGY STAR windows, are partially dependent 

on other measures that affect the efficiency of the system being used to cool or heat the building, such as 

high-efficiency space heating equipment or high-efficiency air conditioning systems; the more efficient 

the space heating equipment or electric air conditioner, the less energy saved from the installation of 

low-e ENERGY STAR windows. Accordingly, the second step is to rank the measures based on a 

metric of cost-effectiveness (using the Total Resource Cost test and Utility Cost Test cost effectiveness 

tests) and adjust savings for interactive effects so that total savings are calculated incrementally with 

respect to measures that precede them.

5.9 CORE EQUATION FOR THE INDUSTRIAL SECTOR

Estimating energy efficiency potential for the industrial sector can be more challenging than it is for the 

residential and commercial sectors because of the significant differences in the way energy is used across 

manufacturing industries (or market segments). How the auto industry uses energy is very different from 

how a plastics manufacturer does. Further, even within a particular industrial segment, energy use is 

influenced by the particular processes utilized, past investments in energy efficiency, the age of the 

facility, and the corporate operating philosophy. 

Recognizing the variability of energy use across industry types and the significance of process energy use 

in the industrial sector, GDS employed a top-down approach that constructed an energy profile based 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

48 | Page

on local economic data, national energy consumption surveys and any available Michigan studies related 

to industrial energy consumption. 

5.10 INDUSTRIAL SECTOR SEGMENTATION & END USE BREAKDOWN 

Estimates of energy efficiency potential were developed employing a top-down approach using 

economic data for key industrial segments (Primarily 3 digit NAICS codes) in Michigan to develop 

industry-specific energy use estimates based on national energy intensities for each industry. Value of 

shipments data for Michigan is available from the U.S. Census Bureau. This economic data was used in 

conjunction with energy use estimates from the 2010 Manufacturing Energy Consumption Survey22

which is produced by the Energy Information Administration (EIA), to develop estimates of industrial 

electric and natural gas energy use by industry type and end use. 

Industrial baseline energy consumption data was advanced to 2013 and future years based upon the 

observed historical trend in Michigan’s industrial consumption and EIA’s industrial electricity and 

natural gas consumption forecast for the U.S. (i.e., Annual Energy Outlook 2013). 

End use electric and natural gas energy consumption estimates were calculated for the following end use 

categories for specific manufacturing segments: 

 Indirect Uses – Boilers

 Conventional boiler use

 Direct Uses - Process

 Process heating (e.g., kilns, furnaces, ovens, strip heaters)

 Process cooling & refrigeration

 Machine drive

 Electro-chemical processes

 Other direct process use

 Direct Uses – Non-process

 Facility heating, ventilation and air conditioning

 Facility lighting

 Other facility support (e.g., cooking, water heating, office equipment)

 Other Non-process Use

5.11 DEVELOPMENT OF POTENTIAL ESTIMATES

Estimates of industrial energy use by industry type and end use served as the foundation upon which 

energy efficiency potential estimates were calculated. The basic equation for determining technical 

potential is shown below. 

The core equation for estimating technical potential in the industrial sector analysis for each measure is 

provided below:

Where: 

 22 http://www.eia.gov/emeu/mecs/contents.html
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

49 | Page

 Total end-use sales by industry type = the forecasted electric or natural gas sales level for a given 

end use (e.g., space heating) by industrial industry type (e.g., fabricated metals, automobile 

manufacturing, paper and allied products, etc.).

 Base Case factor = the fraction of end-use energy applicable for the efficient technology in a 

given industry type. For example, with fluorescent lighting, this would be the fraction of all 

lighting kWh in a given industry type that is associated with fluorescent fixtures.

 Remaining factor = the fraction of applicable sales associated with equipment not yet converted 

to the electric energy-efficiency measure; that is, one minus the fraction of the industry type with 

energy-efficiency measures already installed.

 Convertible factor = the fraction of the equipment or practice that is technically feasible for 

conversion to the efficient technology from an engineering perspective (e.g., it may not be 

possible to install variable-frequency drives (VFDs) on all motors.

 Savings factor = the fraction of energy consumption reduced by application of the efficient 

technology.

5.12 ECONOMIC POTENTIAL

Economic potential refers to the subset of the technical potential that is economically cost-effective 

(based on screening with the cost effectiveness tests utilized for this Michigan study) as compared to 

conventional supply-side energy resources. GDS has calculated the benefit/cost ratios for this study 

according to the cost effectiveness test definitions provided in the November 2008 National Action Plan 

for Energy Efficiency (NAPEE) guide titled “Understanding Cost Effectiveness of Energy Efficiency 

Programs”. Both technical and economic potential are theoretical numbers that assume immediate 

implementation of energy efficiency measures, with no regard for the gradual “ramping up” process of 

real-life programs. In addition, they ignore market barriers to ensuring actual implementation of energy 

efficiency. Finally, they typically only consider the costs of efficiency measures themselves, ignoring any programmatic costs 

(e.g., marketing, analysis, administration, program evaluation, etc.) that would be necessary to capture them.

Furthermore, all measures that were not found to be cost-effective based on the results of the measurelevel cost effectiveness screening were excluded from the economic and achievable potential. Then 

allocation factors were re-adjusted and applied to the remaining measures that were cost effective.

5.13 DETERMINING COST-EFFECTIVENESS

GDS Team examined measure cost effectiveness scenarios based on the Total Resource Cost (TRC) test 

and the Utility Cost Test.

Total Resource Cost Test23

The TRC measures the net benefits of the energy efficiency program for the region as a whole. Costs 

included in the TRC are costs to purchase and install the energy efficiency measure and overhead costs 

of running the energy efficiency program, regardless of who pays these costs. The benefits included are 

the avoided costs of energy (as with the Utility Cost Test and the Rate Impact Measure Test) as well as 

non-energy benefits. GDS did include a benefit of $9.25 per ton of reduced carbon emission. This risk 

adjusted value represents the expected value of a scenario with no carbon taxes and a scenario with 

carbon taxes of $18.50 per ton.

The primary purpose of the TRC test is to evaluate the net benefits of energy efficiency measures to the 

region or State as a whole. Unlike the Utility Cost Test, the Rate Impact Measure (RIM) test or the

Participant Cost Test (PCT), the TRC does not take the view of individual stakeholders. It does not 

 23 It is important to note that the Michigan PSC staff, GDS Associates and staff from DTE Energy and Consumers Energy 

decided not to include any unquantifiable non-energy benefits in the calculation of the TRC Test (beyond savings water, 

avoided carbon emissions, and O&M savings). While other non-energy benefits may be present, they have not been 

quantified in the state of Michigan and were not available for inclusion in this study.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

50 | Page

include bill savings and incentive payments, as they yield an intra-regional transfer of zero (“benefits” to 

customers and “costs” to the utility that cancel each other on a regional level). For some utilities, the 

region considered may be limited strictly to its own service territory, ignoring benefits (and costs) to 

neighboring areas (a distribution-only utility may, for example, consider only the impacts to its 

distribution system). In other cases, the region is defined as the state as a whole, allowing the TRC to 

include benefits to other stakeholders (e.g., other utilities, water utilities, local communities). The TRC is 

useful for jurisdictions wishing to value energy efficiency as a resource not just for the utility, but for the 

entire region. Thus the TRC is the most frequently used primary test in the United States. The TRC may 

be considered the sum of the PCT and RIM, that is, the participant and non-participant costeffectiveness tests. The TRC is also useful when energy efficiency might fall through the cracks taken 

from the perspective of individual stakeholders, but would yield benefits on a wider regional level

Utility Cost Test 

The Utility Cost Test (UCT) examines the costs and benefits of an energy efficiency program from the 

perspective of the entity implementing the program (utility, government agency, nonprofit, or other third 

party). GDS set incentives at 50% of measure costs when calculating the UCT. When conducting 

screening at the measure level, GDS only included utility costs relating to the equipment cost. For 

program or portfolio screening, GDS included all costs incurred by the utility. Overhead costs include

the utility’s administration, marketing, research and development, evaluation, and measurement and 

verification costs. Incentive costs are payments made to the utility’s customers to offset purchase or 

installations costs. The benefits from the utility perspective are the savings derived from not delivering 

the energy to customers. Depending on the jurisdiction and type of utility, the “avoided costs” can 

include avoided or reduced wholesale electricity or natural gas purchases, generation costs, power plant 

construction, transmission and distribution facilities, ancillary service and system operating costs, and 

other components. 

Table 5-1 below shows the key assumptions used by GDS in the development of the economic and 

achievable potential estimates based upon cost effectiveness screening using the Total Resource Cost

(TRC) test and the Utility Cost test (UCT):

Table 5-1: Key Assumptions Used by GDS in the Development of Measure-Level Screening

KEY ASSUMPTION

USED IN UCT

SCREENING

USED IN TRC

SCREENING

Utility weighted average cost of capital for the discount rate Yes Yes

Forecasts of electric and natural gas energy and capacity avoided 

costs provided to GDS by the staff of the Michigan Public Service 

Commission

Yes Yes

Forecast of electric T&D avoided costs per kW/year based on 2009 

study by the New York Public Service Commission Yes Yes

Average line losses provided by Michigan utilities Yes Yes

MISO planning reserve margin Yes Yes

Electricity and natural gas savings benefits both valued in the cost 

effectiveness test for electric or natural gas energy efficiency 

programs

Yes Yes

Value of avoided bulb purchases for high efficiency light bulbs No Yes

Water savings where applicable No Yes
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

51 | Page

KEY ASSUMPTION

USED IN UCT

SCREENING

USED IN TRC

SCREENING

Tax credits No Yes

Non-energy benefits (adder of $9.25 per ton of carbon emissions 

avoided) No Yes

Based on discussions with DTE Energy, Consumers Energy and staff of the Michigan Public Service 

Commission during October 2013, GDS has used average line losses to adjust kWh and kW savings at 

the customer meter to the generation level of the electric grid. DTE Energy and Consumers Energy 

recognize that in theory it would be appropriate to use marginal line losses instead of average line losses 

for this adjustment of savings. Because no studies or data exist at DTE Energy or Consumers Energy 

relating to marginal line losses on the Michigan electric grid, the study Team decided to use average line 

losses.

Financial Incentives for Program Participants 

There are several reasons why an incentive level of 50% of measure costs (and not 100% of measure 

costs) was assumed for the three achievable potential scenarios examined for this study:

1. First, an incentive level of 50% of measure costs assumed in this study for the three achievable 

potential scenarios is a reasonable target based on the current financial incentive levels for 

program participants used by DTE Energy and Consumers Energy for their existing energy 

efficiency programs. 

2. Second, GDS has reviewed other energy efficiency potential studies conducted in the US. The 

incentive levels used in several studies reviewed by GDS as well as actual experience with 

incentive levels in other states confirm that an incentive level assumption of 50% or below is 

commonly used.24 Also, the majority of energy efficiency programs offered by NYSERDA offer 

no incentives to consumers. In addition, the NYSERDA electric energy efficiency achievable 

potential study completed by Optimal Energy in 2006 assumed incentive levels in the range of 

20% to 50%.

3. Third, and most important, the highly recognized 2004 National Energy Efficiency Best 

Practices Study concluded that use of an incentive level of 100% of measure costs is not 

recommended as a program strategy.25 This national best practices study concluded that it is 

very important to limit incentives to participants so that they do not exceed a pre-determined 

portion of average or customer-specific incremental cost estimates. The report states that this 

step is critical to avoid grossly overpaying for energy savings. This best practices report also 

notes that if incentives are set too high, free-ridership problems will increase significantly. Free 

riders dilute the market impact of program dollars. 

4. Fourth, financial incentives are only one of many important programmatic marketing tools. 

Program designs and program logic models also need to make use of other education, training 

and marketing tools to maximize consumer awareness and understanding of energy efficient 

products. A program manager can ramp up or down expenditures for the mix of marketing tools 

to maximize program participation and savings. The February 2010 National Action Plan for 

Energy Efficiency Report titled “Customer Incentives for Energy Efficiency Through Program 

 24 GDS Associates October 25, 2013 survey of financial incentives used in energy efficiency programs implemented by 

Consumers Energy, DTE Energy, Ameren-Illinois, Efficiency Maine, Wisconsin Focus on Energy, and Xcel Energy 

(Minnesota). 

25 See “National Energy Efficiency Best Practices Study, Volume NR5, Non-Residential Large Comprehensive Incentive 

Programs Best Practices Report”, prepared by Quantum Consulting for Pacific Gas and Electric Company, December 

2004, page NR5-51.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

52 | Page

Offerings” states on page 1 that “Incentives can be used in conjunction with other program 

strategies to achieve market transformation, whereby there is a lasting change in the availability 

and demand for energy-efficient goods and services.” On page 11 of this report it is stated that 

“Well-designed incentives address the key market barriers in the target market. Financial 

incentives are designed to be just high enough to gain the desired level of program participation. 

In some cases, financial incentives can be bundled with financing, information, or technical 

services to reach program participation and energy savings goals at lower total program cost than 

using financial incentives alone.”

5.14 ACHIEVABLE POTENTIAL

Achievable potential was determined as the amount of energy and demand that can realistically be saved 

assuming an aggressive program marketing strategy and with three scenarios. Achievable potential takes 

into account barriers that hinder consumer adoption of energy efficiency measures such as financial, 

political and regulatory barriers, and the capability of programs and administrators to ramp up activity 

over time. This potential study evaluates three achievable potential scenarios:

4) Scenario #1: For the first scenario, achievable potential represents the amount of energy use 

that efficiency can realistically be expected to displace assuming incentives equal to 50% of the 

incremental measure cost and no spending cap. Cost effectiveness of measures was determined 

with the Utility Cost Test. The long-term market penetration for Scenario #1 was estimated 

based on the utilities paying incentives equal to 50% of measure costs. Year-by-year estimates of 

achievable potential for the period 2014 to 2023 were estimated by applying market penetration 

curves to this long-term penetration rate estimate. In general, these curves were developed based 

on willingness to pay data collected through survey research. Although this simplifies what an 

adoption curve would look like in practice, it succeeds in providing a concise method for 

estimating achievable savings potential over a specified period of time.

5) Scenario #2: For the second scenario, achievable potential is based on measure cost 

effectiveness screening using the Total Resource Cost Test with utility incentives again equal to 

50% of measure costs. GDS calculated the savings and costs associated with the 50% incentive 

level. Year-by-year estimates of achievable potential for the period 2014 to 2023 were estimated 

by applying market penetration curves to this long-term penetration rate estimate. Any 

differences between Achievable Scenario #1 and Achievable Scenario #2 result from the varied 

measures that pass the Utility Cost Test compared to the Total Resource Cost Test

6) Scenario #3: The third scenario is a subset of Achievable Scenario #1(based on UCT). While 

scenario #1 assumed no spending cap on efficiency measures, Achievable Scenario #3 assumed 

a spending cap of approximately 2% of utility revenues. Revenues are apportioned across each 

customer sector to prevent cross-subsidization of energy efficiency savings. GDS has not 

attempted to define specific program plans. Instead the market adoption assumptions from 

Achievable Scenario #1 have been scaled down to fit within the spending parameters. 

While many different incentive scenarios could be modeled, the number of achievable potential scenarios 

that could be developed was limited to three scenarios due to the available budget for this potential 

study26.

For new construction, energy efficiency measures can be implemented when each new home or building 

is constructed, thus the rate of availability is a direct function of the rate of new construction. For 

existing buildings, determining the annual rate of availability of savings is more complex. Energy 

 26 None of the three scenarios is considered a “maximum” achievable scenario. Maximum achievable scenarios assume 

100% incentives. The three scenarios included in the report assume 50% incentives. This approach approximates the 

level incentives currently offered by Michigan utilities.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

53 | Page

efficiency potential in the existing stock of buildings can be captured over time through two principal 

processes: 

1) As equipment replacements are made normally in the market when a piece of equipment is at the 

end of its effective useful life (referred to as “replace-on-burnout”)

2) At any time in the life of the equipment or building (referred to as “retrofit”)

For the replace-on-burnout measures, existing equipment is assumed to be replaced with high-efficiency 

equipment at the time a consumer is shopping for a new appliance or other energy consuming 

equipment, or if the consumer is in the process of building or remodeling. Using this approach, only 

equipment that needs to be replaced in a given year is eligible to be upgraded to energy efficient 

equipment. For the retrofit measures, savings can theoretically be captured at any time; however, in 

practice, it takes many years to retrofit an entire stock of buildings, even with the most aggressive of 

energy efficiency programs.

5.15 MARKET PENETRATION METHODOLOGY

GDS assessed achievable potential on a measure-by-measure basis. In addition to accounting for the 

natural replacement cycle of equipment in the achievable potential scenario, GDS estimated measure 

specific maximum adoption rates that reflect the presence of possible market barriers and associated 

difficulties in achieving the 100% market adoption assumed in the technical and economic scenarios. 

The methodology utilized to forecast participation within each customer sector is described below.

RESIDENTIAL

As noted earlier in the report, there are approximately 1,900 residential measures included in this study. 

Due to the wide variety of measures across multiple end-uses, GDS employed varied, measures-specific 

maximum adoption rates versus a singular universal market adoption curve. These long-term market 

adoption estimates were based on publicly available DSM research including market adoption rate 

surveys and other utility program benchmarking.27 GDS acknowledges that reliance on additional studies 

and alternate methods could produce different estimates of achievable potential.

For the majority of residential measures, the analysis assumes that increased incentives and reduced 

participant costs will also reduce the simple payback period of energy efficiency measures. As incentives 

increase and payback periods decline, maximum market adoption rates will increase. Based on available 

market adoption surveys with program administrators in the Northeast, GDS assigned end-use specific 

market adoption curves to the residential measures included in this analysis.28 Examples of the impact 

of incentives on payback and maximum market adoption rates are demonstrated in the table below. 

These curves reflect measures that have significant gas and electric achievable potential over the next 10 

years.29

Once the long-term market adoption rate was determined, GDS estimated the time interval required to 

reach the ultimate maximum adoption rate. In general, measures that required less up-front cost from 

 27 Massachusetts Multifamily Market Characterization and Potential Study Volume I. May 2012. Cadmus Group. & 

Appliance Recycling Program Process Evaluation and Market Characterization. Volume I. CALMAC Study ID# 

SCE0337.01. September 2012. Cadmus.

28 Massachusetts Multifamily Market Characterization and Potential Study Volume I. May 2012. Cadmus Group.

This study presents market adoption curves based on the perspective of both multifamily property managers as well 

as utility energy efficiency program administrators. Both groups of study participants provide support for the 

contention that increased incentives/reduced payback result in higher maximum adoption rates. GDS selected the 

adoption curves based on the feedback of program administrators.... GDS encourages Michigan to conduct similar 

research with program participants and program administrators to refine these market adoption estimates in future 

analyses.

29 Where current energy efficiency saturation data exceeded the estimated maximum market adoption, GDS assumed 

future efficiency installations would occur at the current EE saturation percentage so that the long-term market 

saturation of energy efficiency measures would not decrease over the study time-frame.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

54 | Page

the participant reached their maximum adoption rate over a period of 2-3 years, and continued at the 

maximum rate for the remainder of the study. Measures with a more substantial cost to the participant 

required more time to ramp-up, and would not reach their maximum adoption rate until later in the 

study period. GDS exercised its professional judgment in estimating the time to reach the ultimate 

market adoption rate. 

Figure 5-4: Example Residential Maximum Adoption Rates – Based on Incentive

One caveat to this approach is that the ultimate long-term adoption rate is generally a simple function of

incentive levels and payback. There are many other possible elements that may influence a customer’s 

willingness to purchase an energy efficiency measure. For example, increased marketing and education 

programs can have a critical impact on the success of energy efficiency programs. Additionally, other 

perceived measure benefits, such as increased comfort or safety as well as reduced maintenance costs 

could also factor into a customer’s decision to purchase and install energy efficiency measures. Although 

these additional elements are not explicitly accounted for under this incentive/payback analysis, the 

estimated adoption rates and penetration curves provide a concise method for estimating achievable 

savings potential over a specified period of time.

The market penetration of residential lighting was also strategically adjusted to account for the expected 

decline in LED bulbs costs over the next decade and an anticipated shift in market adoption from CFL 

bulbs to LED bulbs. Because LED bulb prices are expected to decline significantly over the next 

several years, decreasing to typical CFL bulb incremental cost levels, GDS assumed the maximum 

adoption rate for LED bulbs to be similar to those used for CFL bulbs. Additionally, GDS relied on 

future unit penetration rates for various lighting sources to model the long term shift towards increased 

market penetration of LED bulbs compared to CFL bulbs.30 The table below shows the year-by-year 

shifting market penetration of CFL and LED bulbs estimated in this analysis. By 2018, LED bulbs are 

expected to be installed at a greater rate than their CFL counterparts. 

 30 Fox, Jamie. Does LED Lighting Have a Tipping Point? IMS Research. April 2012.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

55 | Page

Table 5-2. CFL vs. LED Market Penetration Share of Anticipated High Efficiency Residential Lighting 

Installations

2014 2015 2106 2017 2018 2019 2020 2021 2022 2023

CFL 32% 39% 45% 50% 53% 58% 64% 66% 68% 70%

LED 68% 61% 55% 50% 47% 42% 36% 34% 32% 30%

Last, for appliance recycling measures GDS compared the harvest rate (total number of recycled 

appliances relative to the total residential population) of several utility appliance recycling programs 

nationwide. Based on each utilities most successful reported year, an average harvest rate for various 

appliance recycling measures was estimated. GDS then calculated a long-term market adoption rate for 

the appliance recycling measures that would create a similar harvest rate for Michigan’s appliance 

recycling programs. Because appliance recycling programs do not require any participants costs and 

require customer willingness to remove secondary, operational equipment from their homes, this 

approach was selected in favor of the incentive/payback curves utilized for the more traditional rebated 

measures included in the analysis.

NON-RESIDENTIAL

The non-residential approach for estimating market adoption rates is very similar to the residential sector 

approach. GDS employed varied, measures-specific maximum adoption rates versus a singular universal 

market adoption curve. These long-term market adoption estimates were based on the following survey 

results reported in the 2010 DTE Electric and Natural Gas Potential Study.31 That study reported the 

following results:32

Table 5-3. Adoption Factors by Equipment and Incentive Level

EQUIPMENT TYPE 0% 50% 75% 100%

Lighting 54% 66% 70% 75%

AC / HVAC 49% 63% 68% 74%

Motors 58% 69% 73% 77%

Variable Speed 47% 66% 67% 69%

Refrigeration 57% 65% 71% 76%

Energy Mgmt System 44% 59% 67% 74%

Food Service 49% 66% 69% 73%

Process Measures 57% 65% 67% 69%

Water Heating 56% 67% 74% 80%

Overall 52% 65% 69% 74%

GDS used the data shown above to estimate long term market penetration for commercial and industrial 

(process) measures based on the assumed incentive level stated as a percent of incremental cost. GDS 

assumed two different paths to achieving long term market penetration, one for full cost measures such 

as insulation and another for incremental cost measures such as energy efficient fluorescent lighting. 

Those paths are shown below in Table 5-4.

Table 5-4: Path to Achieving Long Term Market Penetration

(% of Long Term Market Potential)

 31 Assessment of Nonresidential Electric and Natural Gas Energy Efficiency Potential (2010–2029), Prepared for 

DTE Energy by The Cadmus Group, Inc. 

32 Ibid., p. 35.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

56 | Page

YEAR 1 2 3 4 5 6 7 8 9 10

Full Cost Measure 5% 15% 20% 20% 10% 10% 5% 5% 5% 5%

Incremental Cost Measure 10% 10% 10% 10% 10% 10% 10% 10% 10% 10%

As with the residential approach, the non-residential market penetration methodology uses the 

relationship between incentives and program participation as a concise quantitative method for 

estimating achievable savings potential over a specified period of time. While there are many other 

elements that may influence a business customer’s willingness to install an energy efficiency measure, 

such as access to capital, corporate policy or reduced maintenance costs, these factors are difficult to 

quantify and fit into a forecasting approach. 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

57 | Page

6 RESIDENTIAL ELECTRIC AND NATURAL GAS ENERGY

EFFICIENCY POTENTIAL ESTIMATES

This section provides electric and natural gas energy efficiency potential estimates for the residential

sector in Michigan which includes all residential buildings. Estimates of technical, economic and 

achievable potential are provided. Electric and natural gas potential are presented as separate sections, 

but interactive effects and measures that yield both electric and natural gas savings are fully accounted

for in the analysis.

6.1 RESIDENTIAL ELECTRIC POTENTIAL

According to 2011 historical sales data, the residential sector accounts for approximately 89% of total 

customers and 33% of total energy sales. The average residential consumer uses approximately 7,900

kWh per year. From 2002-2011, the residential sector sales and customers have experienced minimal 

growth. This analysis assumes residential MWh sales increase at roughly 0.25% annually based upon the 

based on Michigan utility load forecasts. The residential electric potential calculations are based upon 

these approximate consumption values and sales forecast figures over the time horizon covered by the 

study. The potential is calculated for the entire residential sector and includes breakdowns of the 

potential associated with each end use.

6.1.1 Energy Efficiency Measures Examined

For the residential sector, there were 1119 total electric savings measures included in the potential energy

savings analysis33. Table 6-1 provides a brief description of the types of measures included for each end 

use in the residential model. The list of measures was developed based on a review of the 

Michigan Energy Measure Database (MEMD) and measures found in other residential potential studies 

and TRMs from the Midwest. Measure data includes incremental costs, electricity energy and demand 

savings, gas and water savings, and measure life.

Table 6-1: Measures and Programs Included in the Electric Residential Sector Analysis

END USE TYPE END USE DESCRIPTION MEASURES INCLUDED

HVAC 

Envelope

Building Envelope Upgrades • Air/duct Sealing

• Duct Insulation

• Improved Insulation (Wall, Ceiling, and Floor)

• Efficient Windows

• Window Film

• ENERGY STAR Doors

• Cool Roofs

• Low Income Weatherization Package

HVAC 

Equipment

Heating/Cooling/Ventilation Equipment • Existing Central AC Tune-Up

• Efficient Air-Source Heat Pump

• Dual Fuel Heat Pumps

• Geothermal Heat Pumps

• Ductless Mini-split Systems 

• Efficient Central AC Systems

• Programmable Thermostats

• Efficient Room Air Conditioners

• Room Air Conditioner Recycling

 33 This total represents the number of unique electric energy efficiency measures and all permutations of these unique 

measures. For example, there are 76 permutations of the “Improved Duct Sealing” measure to account for the various 

housing types, heating/cooling combinations, and construction types.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

58 | Page

END USE TYPE END USE DESCRIPTION MEASURES INCLUDED

• Whole House Fans

• Efficient Chillers

• Chiller Controls

• Efficient Furnace Fans

Water Heating Domestic Hot Water • Heat Pump Water Heater

• Solar Water Heater

• Low Flow Showerhead/Faucet Aerator

• Gravity Film Heat Exchangers

• Pipe Wrap

• Tank Wrap

Lighting Interior/Exterior Lighting • Specialty CFLs

• Standard CFLs

• LED Lighting

• Efficient Exterior Lighting

• Efficient Torchiere Lamps

• Efficient Fluorescent Tube Lighting

• LED Night Lights

• Occupancy Sensors

• Holiday Lighting

• Efficient Multifamily Common Area Lighting

Appliances High-Efficiency Appliances / Retirement 

of Inefficient Appliances

• ENERGY STAR Clothes Washers

• ENERGY STAR Refrigerator

• ENERGY STAR Freezers

• ENERGY STAR Dishwashers

• ENERGY STAR Dehumidifiers

• Heat Pump Dryers

• Secondary Refrigerator/Freezer Turn-In

• 2nd Dehumidifier Turn-In

Electronics High Efficiency Consumer Electronics • Controlled Power Strips

• Efficient Set-Top Boxes

• ENERGY STAR Desktops

• Efficient Laptops

• Efficient Televisions

• LCD Monitors

Behavioral Consumer Response to Feedback from 

Utility

• Direct (Real-Time) Feedback

• Indirect Feedback

Other Efficient Pool Equipment • Efficient Pool Pump Motors

6.1.2 Overview of Residential Electric Energy Efficiency Potential

This section presents estimates for electric technical, economic, and achievable potential for the 

residential sector. Each of the tables in the technical, economic and achievable sections present the 

respective potential for efficiency savings expressed as cumulative annual energy savings (MWh),

percentage of savings by end use, and savings as a percentage of forecast sales. Data is provided on a 5-

year and 10-year time horizon for Michigan.

This energy efficiency potential study considers the impacts of the Energy and Independence and 

Security Act (EISA) as an improving code standard for the residential sector. The EISA improves the 

baseline efficiency of several types of lighting products, including CFL or LED bulbs. Other known 

increases to federal minimum efficiency standards over the time period studied have also been 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

59 | Page

accounted for in the analysis. These included changes to the efficiency standards central air 

conditioners, electric water heaters, and appliances.

There are a variety of factors which contribute to uncertainty surrounding the savings estimates 

produced by this energy efficiency potential study. These factors can include the following:

 Uncertainty about economic and fuel price forecasts used as inputs to the electric and 

natural gas sales forecasts

 The accuracy of results generated by building energy simulation modeling software

 The lack of availability of up-to-date efficiency saturation data for Michigan

 Changes to codes and standards in the future which cannot be anticipated at the present 

time, and

 Uncertainty regarding the future adoption of energy efficiency technologies which have 

minimal market share at the present time, such as LED lighting. 

GDS has addressed the areas of uncertainty as robustly as possible given the time and budget 

constraints of this project. For example, GDS assumes increasing market adoption of LEDs over 

the life of the study because LED costs are expected to decrease over time. GDS also assimilated 

baseline study data into the estimates of weather sensitive measure savings where possible to 

adjust values acquired from the MEMD. These adjustments apply to measures such as insulation, 

for which savings are provided on a square footage basis in the MEMD. Weather-sensitive 

measure savings estimates from the MEMD were also adjusted to account for known changes to 

federal standards.

SUMMARY OF FINDINGS

Figure 6-1 illustrates the estimated savings potential for each of the scenarios included in this study.

Figure 6-1: Summary of Residential Electric Energy Efficiency Potential as a % of 2018 and 2023 Sales 

Forecasts
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

60 | Page

The potential estimates are expressed as cumulative 5-year and 10-year savings, as percentages of the 

respective 2018 and 2023 sector sales. The technical potential is 45.8% in 2018 and 39.7% in 2023.34 The

5-year and 10-year economic potential is 41.3% and 35.2% based on the Utility Cost Test (UCT) screen, 

assuming an incentive level equal to 50% of the measure cost. Based on a measure-level screen using the 

TRC Test, the economic potential is 39.8% in 2018 and 33.7% in 2023. The slight drop from technical 

potential to economic potential indicates that most measures are cost-effective, particularly when 

screening based on the UCT. 

The 5-year and 10-year achievable potential savings are: 10.7% and 14.7% for the Achievable UCT 

scenario; 10.5% and 14.3% for the Achievable TRC scenario; and 4.3% and 5.9% for the Constrained 

Achievable scenario. The Achievable UCT scenario assumes 50% incentives and includes measures 

that passed the UCT Test. The Achievable TRC scenario also assumes 50% incentives but includes 

only measures that passed the cost-effectiveness screen based on the TRC Test. Last, the Constrained 

Achievable scenario is a subset of Achievable UCT scenario, assuming a spending cap on DSM 

approximately equal to 2% of future annual residential revenue from electric and gas retail sales. 

TECHNICAL POTENTIAL

Technical potential represents the quantification of savings that can be realized if all technologically 

available energy-efficiency measures are immediately adopted in all feasible instances, regardless of cost.

Table 6-2 shows that it is technically feasible to save nearly 15.5 million MWh in the residential

sector between 2014 to 2018, as well as approximately 13.7 million MWh during the 10 year period from

2014 to 2023 statewide, representing 45.8% of 5-year residential sales, and 39.7% of 10-year 

residential sales.35 Lighting represents the greatest contributor to the potential at 42-33% of savings, 

while Appliances, Electronics, and HVAC Equipment end uses each contribute 9-21% of the savings. 

Table 6-3 shows the demand savings potential in 2018 and 2023. The five and ten year summer peak 

demand savings potential is 4,274 MW and 4,138 MW, respectively, which is 42.7% and 40.5% of the 

peak forecast.

Table 6-2: Residential Sector Technical Potential Energy Savings by End Use

END USE

2018

ENERGY (MWH)

% OF 2018

SAVINGS

2023

ENERGY (MWH)

% OF 2023

SAVINGS

Appliances 1,915,506 12% 1,931,055 14%

Electronics 1,354,281 9% 1,392,980 10%

Lighting 6,561,055 42% 4,567,580 33%

Water Heating 1,350,089 9% 1,393,193 10%

Other 178,956 1% 182,695 1%

HVAC (Envelope) 888,701 6% 914,396 7%

HVAC (Equipment) 2,806,002 18% 2,879,504 21%

Behavioral Programs 427,140 3% 436,525 3%

Total 15,481,730 100% 13,697,929 100%

% of Annual Sales 

Forecast 45.8% 39.7%

 34 Technical and Economic Potential may decrease in 2023, relative to 2018, due to the expected impacts of EISA and a 

2020 provision that is expected to make CFL bulbs, or technology of similar efficacy, the baseline. As a result, all savings 

associated with CFL bulbs replacing general service incandescent were modeled to decrease to 0 kWh by 2021. 35 Technical potential represents the potential for all inefficient measures to be implemented “over-night.” The only 

growth in potential over the 5 and 10 year time period is related to new construction. As noted in the prior footnote, CFLs 

were expected to become the baseline after 2020. As a result, lighting potential decreases between 2018 and 2023.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

61 | Page

Table 6-3: Residential Sector Technical Potential Demand Savings

SUMMER PEAK DEMAND

2018 2023

Summer MW MW

Total 4,274 4,138

% of Peak 42.7% 40.5%

ECONOMIC POTENTIAL

Economic potential is a subset of technical potential, which only accounts for measures that are costeffective. This analysis includes two estimates of economic potential. One cost-effectiveness screen 

is based on the UCT and a second economic potential scenario was screened using the TRC Test. 

In both scenarios, the utility incentive was assumed to be equal to 50% of the measure incremental 

cost. The UCT was used for this study because it is mandated in Michigan to be the primary costeffectiveness test used when considering energy efficiency programs. Because the TRC includes 

participant costs, it goes beyond utility resource acquisition and looks at the measure/program from a 

more broad perspective. 79% of all measures that were included in the electric potential analysis passed 

the UCT and 68% of all measures passed the TRC Test.

Table 6-4 indicates that the economic potential based on the UCT screen is nearly 14.0 million MWh

during the 5 year period from 2014 to 2018, and the economic potential more than 12.1 million MWh

during the 10 year period from 2014 to 2023. This represents 41.3% and 35.2% of residential sales 

across the respective 5-year and 10-year timeframes. Similar to the technical potential scenario, lighting 

represents the greatest contributor to the potential at 43-33% of savings, while the HVAC Equipment, 

appliances, electronics, and water heating end uses each contribute between 9-20% of the savings. Table 6-

5 shows the demand savings potential in 2018 and 2023. The five and ten year summer peak demand 

savings potential is 3,895 MW and 3,758 MW, respectively, which is 38.9% and 36.7% of the peak 

forecast.

Table 6-4: Residential Sector Economic Potential (UCT) Energy Savings by End Use

END USE

2018

ENERGY (MWH)

% OF 2018

SAVINGS

2023

ENERGY (MWH)

% OF 2023

SAVINGS

Appliances 1,786,674 13% 1,796,237 15%

Electronics 1,287,615 9% 1,325,226 11%

Lighting 6,049,085 43% 4,043,252 33%

Water Heating 1,346,481 10% 1,390,609 11%

Other 178,956 1% 182,695 2%

HVAC (Envelope) 585,197 4% 597,812 5%

HVAC (Equipment) 2,306,799 17% 2,373,890 20%

Behavioral Programs 427,140 3% 436,525 4%

Total 13,967,946 100% 12,146,247 100%

% of Annual Sales 

Forecast 41.3% 35.2%
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

62 | Page

Table 6-5: Residential Sector Economic Potential (UCT) Demand Savings

SUMMER PEAK DEMAND

2018 2023

Summary MW MW

Total 3,895 3,758

% of Peak 38.9% 36.7%

Table 6-6 demonstrates that the economic potential based on the TRC screen is lower than the 

economic potential based on the UCT screen. In 2023, economic potential based on the TRC costeffectiveness screening is approximately 500,000 MWh lower than the economic potential based on the 

UCT. The biggest decline in economic potential between the two screens occurred in the HVAC 

(Equipment) end-use where measure costs are high and incentive amounts can significantly impact costeffectiveness.

Table 6-6: Residential Sector Economic Potential (TRC) Energy Savings by End Use

END USE

2018

ENERGY (MWH)

% OF 2018

SAVINGS

2023

ENERGY (MWH)

% OF 2023

SAVINGS

Appliances 1,786,674 13% 1,796,237 15%

Electronics 1,287,615 10% 1,325,226 11%

Lighting 5,944,376 44% 3,938,543 34%

Water Heating 1,346,481 10% 1,390,609 12%

Other 178,956 1% 182,695 2%

HVAC (Envelope) 502,389 4% 511,252 4%

HVAC (Equipment) 2,021,744 15% 2,092,466 18%

Behavioral Programs 398,228 3% 406,978 3%

Total 13,466,463 100% 11,644,006 100%

% of Annual Sales 

Forecast 39.8% 33.7%

Table 6-7: Residential Sector Economic Potential (TRC) Demand Savings

SUMMER PEAK DEMAND

2018 2023

Summary MW MW

Total 4,106 3,980

% of Peak 41.0% 38.9%

6.1.1 Achievable Electric Potential Savings in the Residential Sector

Achievable potential is a refinement of economic potential that takes into account the estimated market 

adoption of energy efficiency measures based on the incentive level and measure payback, the natural 

replacement cycle of equipment, and the capabilities of programs and administrators to ramp up 

program activity over time. Achievable potential also takes into account the non-measure costs of 

delivering programs (for administration, marketing, monitoring and evaluation, etc.). For purposes of 

this analysis, administrative costs were assumed to be equivalent to 20% of incremental measures costs. 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

63 | Page

This is based on a published review of typical program administrator costs of several utility energy 

efficiency programs nationwide.36

This study estimated achievable potential for three scenarios. The Achievable UCT Scenario 

determines the achievable potential of all measures that passed the UCT economic screening 

assuming incentives equal to 50% of the measure cost.37 The second scenario, Achievable TRC, also 

assumes incentives set at 50% of the measure incremental cost, but only includes measures that 

passed the TRC Test economic screening. The third scenario, Constrained UCT, assumes a spending 

cap equal to 2% of utility revenues, thereby limiting utilities from reaching the ultimate potential 

estimated in the Achievable UCT scenario. 

6.1.1.1 Achievable UCT vs. Achievable TRC 

Tables 6-8 through Table 6-11 show the estimated savings for the Achievable UCT and Achievable TRC

scenarios over 5 and 10 year time horizons. As noted above, both scenarios assume an incentive level 

approximately equal to 50% of the incremental measure cost and include an estimate 10-year market 

adoption rates based on incentive levels and equipment replacement cycles. However, because more 

measures pass the UCT relative to the TRC Test, the Achievable UCT scenario is able to include 

additional measures that would result in greater savings potential over the next five and ten years. 

Overall the Achievable UCT scenario results in an achievable potential that is roughly 125,000 MWh 

greater, over the next decade, than the achievable TRC scenario.

Table 6-8: Residential Achievable UCT Potential Electric Energy Savings by End Use

END USE

2018

ENERGY (MWH)

% OF 2018

SAVINGS

2023

ENERGY (MWH)

% OF 2023

SAVINGS

Appliances 366,811 10% 673,510 13%

Electronics 749,078 21% 854,883 17%

Lighting 1,386,345 38% 1,493,016 29%

Water Heating 262,683 7% 594,697 12%

Other 43,585 1% 96,303 2%

HVAC (Envelope) 196,173 5% 395,204 8%

HVAC (Equipment) 344,252 10% 679,549 13%

Behavioral Programs 273,467 8% 283,672 6%

Total 3,622,394 100% 5,070,834 100%

% of Annual Sales 

Forecast 10.7% 14.7%

Table 6-9: Residential Achievable UCT Potential Demand Savings

SUMMER PEAK DEMAND

2018 2023

Summary MW MW

Total 839 1,338

% of Peak 8.4% 13.1%

 36 PacifiCorp Assessment of Long-Term, System-Wide Potential for Demand-Side and Other Supplemental Resources. 

Volume II. Prepared by Cadmus. March 2013. Appendix B-4. 37 Traditional low income measures associated with Michigan’s Weatherization Assistance Program were evaluated using 

100% incentives across all three achievable potential scenarios. All other measures were evaluated at the 50% incentive 

level.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

64 | Page

Table 6-10: Residential Achievable TRC Potential Electric Energy Savings by End Use

END USE

2018

ENERGY (MWH)

% OF 2018

SAVINGS

2023

ENERGY (MWH)

% OF 2023

SAVINGS

Appliances 366,811 10% 673,510 14%

Electronics 749,078 21% 854,883 17%

Lighting 1,353,255 38% 1,440,074 29%

Water Heating 262,683 7% 594,697 12%

Other 43,585 1% 96,303 2%

HVAC (Envelope) 170,658 5% 344,028 7%

HVAC (Equipment) 339,401 10% 670,349 14%

Behavioral Programs 264,123 7% 273,098 6%

Total 3,549,596 100% 4,946,942 100%

% of Annual Sales 

Forecast 10.5% 14.3%

Table 6-11: Residential Achievable TRC Potential Demand Savings

SUMMER PEAK DEMAND

2018 2023

Summary MW MW

Total 892 1,447

% of Peak 8.9% 14.1%

The 5-year and 10-year Achievable UCT potential savings estimates are approximately 3.62 million MWh 

and 5.07 million MWh. This equates to 10.7% and 14.7% of sector sales in 2018 and 2023. By 

comparison, the respective 5-year and 10-year Achievable TRC potential savings estimates are 

approximately 3.55 million MWh and 4.95 million MWh. This equates to 10.5% and 14.7% of sector 

sales in 2018 and 2023. The five and ten year demand savings estimates in the Achievable UCT and 

Achievable TRC scenarios are depicted in Tables 6-9 and 6-11, respectively.

6.1.1.1 Achievable UCT vs. Constrained UCT 

Although the Achievable UCT assumes incentives are set and capped at 50% of the incremental measure 

cost, and that measures are typically replaced at the end of their useful life, the Achievable UCT scenario 

also assumes no DSM spending cap to reach all potential participants. In the constrained UCT scenario, 

the analysis assumes a spending cap roughly equal to 2% of Michigan utility revenue. 

Table 6-12 shows the estimated savings for the Constrained UCT scenario over 5 and 10 year time 

horizon. The 5-year and 10-year Achievable UCT potential savings estimates are approximately 1.5 

million MWh and 2.04 million MWh. This equates to 4.3% and 5.9% of sector sales in 2018 and 2023. 

The five and ten year demand savings estimates in the Constrained UCT scenario are depicted in Table 

6-13.

Table 6-12: Residential Constrained Achievable Savings Potential Energy Savings by End Use

END USE

2018

ENERGY (MWH)

% OF 2018

SAVINGS

2023

ENERGY (MWH)

% OF 2023

SAVINGS

End Use Energy (MWh) Savings Energy (MWh) Savings

Appliances 148,073 10% 270,375 13.2%
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

65 | Page

END USE

2018

ENERGY (MWH)

% OF 2018

SAVINGS

2023

ENERGY (MWH)

% OF 2023

SAVINGS

Electronics 302,513 21% 344,280 16.8%

Lighting 561,760 38% 600,765 29.4%

Water Heating 106,457 7% 240,207 11.7%

Other 17,662 1% 38,902 1.9%

HVAC (Envelope) 79,846 5% 160,036 7.8%

HVAC (Equipment) 139,962 10% 274,607 13.4%

Behavioral Programs 108,763 7% 115,389 5.6%

Total 1,465,036 100% 2,044,561 100.0%

% of Annual Sales Forecast 4.3% 5.9%

Table 6-13: Residential Constrained Achievable Potential Demand Savings

SUMMER PEAK DEMAND

2018 2023

Summary MW MW

Total 340 540

% of Peak 3.4% 5.3%

Figure 6-2 shows the percentage of electric savings by each end use for the Constrained UCT scenario. 

The lighting end use shows the largest potential for savings with 29.4% of total electric savings, followed 

by the appliances and HVAC Equipment end uses at 16.8% and 13.4%, respectively.

Figure 6-2: Residential Sector 2023 Constrained UCT Electric Potential Savings, by End Use

Figure 6-3 shows the breakdown of estimated savings in 2023 by housing type, low-income designation 

and new construction measures, for the Achievable UCT potential scenario. The savings are largely 

coming from existing/turnover measures, meaning energy efficient equipment is installed in replacement 

of existing equipment that has failed. The existing single-family housing and existing multi-family 

housing types lead the way with 75% of savings and 15% savings, respectively, followed by and 6% 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

66 | Page

coming from existing manufactured homes. New construction measures account for 3% of total savings 

and low-income measures account for 1% of total savings. The low-income measures represent only 

those measures typically included in the Michigan Weatherization Assistance Program to low-income 

households, and do not represent the combined “low-income potential” in Michigan. There is also lowincome potential that is subsumed by the other 99% of the savings associated with the “non-lowincome” measures. For example, low income households could realize additional LED lighting and/or 

behavioral program energy efficiency savings, even though they may not be offered under the traditional 

umbrella of low-income programs.

Figure 6-3: Residential Constrained Achievable Savings in 2023, by Housing Type, Low-Income Designation 

and New Construction Measures

6.1.2 Annual Achievable Electric Savings Potential

Table 6-14, Table 6-15 and Table 6-16 shows cumulative annual energy savings (MWh) for all three 

achievable potential scenarios for each year across the 10-year time horizon for the study, broken out by 

end use. The year by year associated incentive and administrative costs to achieve these savings are 

shown later, in Section 6.3. Table 6-17, Table 6-18 and Table 6-19 shows cumulative annual demand 

(MW) savings for all three achievable potential scenarios for each year across the 10-year time horizon 

for the study, broken out by end use. The year by year associated incentive and administrative costs to 

achieve these savings are shown later, in Section 6.3.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

67 | Page

Table 6-14: Cumulative Annual Residential Energy Savings in the Achievable UCT Potential Scenario, by End Use for Michigan

END USE 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Appliances 42,168 121,659 202,452 284,548 366,811 449,136 531,497 613,886 661,226 673,510

Electronics 122,694 286,807 451,582 616,766 749,078 830,288 849,138 851,396 853,258 854,883

Lighting 216,439 517,636 810,134 1,098,793 1,386,345 1,668,918 1,944,916 1,247,934 1,411,284 1,493,016

Water Heating 41,463 89,732 142,629 200,126 262,683 329,925 396,279 462,138 528,285 594,697

Other 6,869 14,716 23,561 33,393 43,585 54,095 64,621 75,160 85,721 96,303

HVAC (Envelope) 38,831 77,884 117,126 156,545 196,173 235,906 275,673 315,469 355,316 395,204

HVAC (Equipment) 64,568 131,910 201,006 272,172 344,252 412,858 481,800 551,056 620,301 679,549

Behavioral Programs 97,238 192,172 225,558 254,177 273,467 283,188 283,367 283,463 283,567 283,672

Total 630,268 1,432,515 2,174,047 2,916,521 3,622,394 4,264,314 4,827,291 4,400,502 4,798,958 5,070,834

% of Annual Forecast Sales 1.9% 4.2% 6.4% 8.6% 10.7% 12.6% 14.2% 12.9% 14.0% 14.7%

Table 6-15: Cumulative Annual Residential Energy Savings in the Achievable TRC Potential Scenario, by End Use for Michigan

END USE 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Appliances 42,168 121,659 202,452 284,548 366,811 449,136 531,497 613,886 661,226 673,510

Electronics 122,694 286,807 451,582 616,766 749,078 830,288 849,138 851,396 853,258 854,883

Lighting 209,821 504,401 790,281 1,072,322 1,353,255 1,629,211 1,898,592 1,194,991 1,358,341 1,440,074

Water Heating 41,463 89,732 142,629 200,126 262,683 329,925 396,279 462,138 528,285 594,697

Other 6,869 14,716 23,561 33,393 43,585 54,095 64,621 75,160 85,721 96,303

HVAC (Envelope) 33,749 67,712 101,852 136,158 170,658 205,263 239,901 274,566 309,277 344,028

HVAC (Equipment) 62,694 128,578 196,755 267,562 339,401 407,578 475,809 544,059 612,183 670,349

Behavioral Programs 98,489 193,009 222,067 247,183 264,123 272,657 272,818 272,905 273,001 273,098

Total 617,947 1,406,612 2,131,178 2,858,058 3,549,596 4,178,152 4,728,653 4,289,102 4,681,294 4,946,942

% of Annual Forecast Sales 1.8% 4.2% 6.3% 8.5% 10.5% 12.3% 13.9% 12.5% 13.6% 14.3%
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

68 | Page

Table 6-16: Cumulative Annual Residential Energy Savings in the Constrained UCT Potential Scenario, by End Use for Michigan

END USE 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Appliances 18,519 50,537 82,767 115,359 148,073 180,880 213,908 247,006 264,976 270,375

Electronics 53,883 119,986 185,719 251,295 302,513 333,331 338,776 339,966 341,858 344,280

Lighting 95,053 216,372 332,853 447,415 561,760 674,378 785,076 503,705 569,614 600,765

Water Heating 18,209 37,651 58,753 81,579 106,457 133,253 159,820 186,276 213,074 240,207

Other 3,017 6,177 9,706 13,609 17,662 21,851 26,071 30,305 34,582 38,902

HVAC (Envelope) 17,053 32,784 48,438 64,087 79,846 95,680 111,627 127,614 143,751 160,036

HVAC (Equipment) 28,356 55,481 83,045 111,297 139,962 167,136 194,776 222,610 250,681 274,607

Behavioral Programs 42,704 77,924 90,646 101,108 108,763 112,752 113,383 113,707 114,526 115,389

Total 276,794 596,912 891,927 1,185,749 1,465,036 1,719,262 1,943,438 1,771,191 1,933,063 2,044,561

% of Annual Forecast Sales 0.8% 1.8% 2.6% 3.5% 4.3% 5.1% 5.7% 5.2% 5.6% 5.9%

Table 6-17: Cumulative Annual Residential Demand Savings in the Achievable UCT Potential Scenario, by End Use for Michigan

END USE 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Appliances 6 17 28 39 51 63 74 86 98 98

Electronics 23 52 82 111 139 158 163 164 164 164

Lighting 25 60 94 128 162 194 227 135 161 161

Water Heating 6 13 21 29 39 48 57 64 80 80

Other 4 9 15 21 27 34 41 47 61 61

HVAC (Envelope) 32 65 97 130 163 196 228 261 327 327

HVAC (Equipment) 42 84 128 172 217 255 292 329 403 403

Behavioral Programs 16 30 35 39 41 43 43 43 43 43

Total 154 331 499 670 839 991 1,124 1,129 1,338 1,338

% of Annual Forecast Sales 1.5% 3.3% 5.0% 6.7% 8.4% 9.9% 11.1% 11.1% 13.1% 13.1%
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

69 | Page

Table 6-18: Cumulative Annual Residential Demand Savings in the Achievable TRC Potential Scenario, by End Use for Michigan

END USE 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Appliances 6 17 28 39 51 63 74 86 94 98

Electronics 23 52 82 111 139 158 163 164 164 164

Lighting 25 60 94 128 162 194 227 135 153 161

Water Heating 6 13 21 29 39 48 57 64 72 80

Other 4 9 15 21 27 34 41 47 54 61

HVAC (Envelope) 30 60 90 120 151 181 211 242 272 303

HVAC (Equipment) 54 109 166 225 284 335 386 437 487 538

Behavioral Programs 16 31 35 39 41 42 42 42 42 42

Total 165 352 531 712 892 1,056 1,201 1,217 1,339 1,447

% of Annual Forecast Sales 1.6% 3.5% 5.3% 7.1% 8.9% 10.5% 11.9% 12.0% 13.1% 14.1%

Table 6-19: Cumulative Annual Residential Demand Savings in the Constrained UCT Potential Scenario, by End Use for Michigan

END USE 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Appliances 3 7 11 16 21 25 30 34 38 40

Electronics 10 22 34 45 56 64 65 65 66 66

Lighting 11 25 39 52 65 79 91 55 62 65

Water Heating 3 6 9 12 16 19 23 26 29 32

Other 2 4 6 9 11 14 16 19 22 24

HVAC (Envelope) 14 27 40 53 66 79 92 106 119 132

HVAC (Equipment) 18 35 53 70 88 103 118 133 148 163

Behavioral Programs 7 12 14 15 16 17 17 17 17 17

Total 68 138 206 273 340 400 453 455 500 540

% of Annual Forecast Sales 0.7% 1.4% 2.0% 2.7% 3.4% 4.0% 4.5% 4.5% 4.9% 5.3%
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

70 | Page

6.1.3 Residential Electric Savings Summary by Measure Group

Table 6-20 provides an end-use breakdown of the residential electric savings potential estimates for 

technical and economic potential, and each of the three achievable potential scenarios. The table 

indicates how the savings potential decreases systematically from the technical potential scenario to the 

Constrained UCT potential scenario as additional limiting factors such as cost-effectiveness requirements 

and anticipated market adoption at given funding levels are introduced.

Table 6-20: Breakdown of Residential Cumulative Annual Electric Savings Potential for Technical, Economic 

and Achievable Potential, by End Use for Michigan

END USE

TECHNICAL 

POTENTIAL 

(MWH)

ECONOMIC 

POTENTIAL

-UCT-

(MWH)

ECONOMIC 

POTENTIAL

-TRC-

(MWH)

ACHIEVABLE 

POTENTIAL

-UCT-

(MWH)

ACHIEVABLE 

POTENTIAL

-TRC-

(MWH)

CONSTRAINED 

ACHIEVABLE

–UCT-(MWH)

Appliances

ENERGY STAR 

Refrigerators 177,216 177,216 177,216 35,527 35,527 14,321 

ENERGY STAR 

Freezers 68,256 68,256 68,256 20,772 20,772 8,377 

ENERGY STAR 

Clothes Washers 36,910 0 0 0 0 0 

ENERGY STAR 

Dishwashers 33,314 0 0 0 0 0 

ENERGY STAR 

Dehumidifiers 115,083 115,083 115,083 55,602 55,602 22,468 

Heat Pump Dryer 64,594 0 0 0 0 0 

2nd Refrigerator 

Turn-In 1,338,562 1,338,562 1,338,562 523,648 523,648 209,987 

2nd Freezer Turn-In 94,465 94,465 94,465 36,956 36,956 14,820 

2nd Dehumidifier 

Turn-In 2,654 2,654 2,654 1,004 1,004 403 

Electronics

Controlled Power 

Strips 99,152 0 0 0 0 0 

Efficient Set Top 

Box 184,053 184,053 184,053 114,535 114,535 46,146 

Efficient Desktop 

PCs 325,626 325,626 325,626 178,022 178,022 71,920 

Efficient Laptop 

PCs 49,906 81,304 81,304 35,185 35,185 14,215 

Efficient Televisions 617,351 617,351 617,351 447,761 447,761 180,017 

Efficient Computer 

Monitors 116,891 116,891 116,891 79,380 79,380 31,982 

Lighting

Specialty CFL Bulbs 1,697,182 1,697,182 1,697,182 632,114 632,114 253,403 

Standard Screw-In 

CFL Bulbs 74,338 74,338 74,338 33,798 33,798 13,499 

LED Screw-In Bulbs 505,347 505,347 505,347 261,450 261,450 105,624 

Specialty LED 

Bulbs 810,552 810,552 810,552 136,979 136,979 55,304 

Exterior Lighting -

CFL Bulbs 0 0 0 0 0 0 

Exterior Lighting -

LED Bulbs 358,353 358,353 358,353 210,558 210,558 84,985 

Efficient Torchiere 

Floor Lamps 421,159 421,159 421,159 117,308 117,308 47,380 

Efficient 

Fluorescent Tube 181,345 0 0 0 0 0 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

71 | Page

END USE

TECHNICAL 

POTENTIAL 

(MWH)

ECONOMIC 

POTENTIAL

-UCT-

(MWH)

ECONOMIC 

POTENTIAL

-TRC-

(MWH)

ACHIEVABLE 

POTENTIAL

-UCT-

(MWH)

ACHIEVABLE 

POTENTIAL

-TRC-

(MWH)

CONSTRAINED 

ACHIEVABLE

–UCT-(MWH)

Lighting

LED Night Lights 27,001 27,001 27,001 15,178 15,178 6,124 

Occupancy Sensors 212,086 0 0 0 0 0 

Holiday Lights 97,240 0 0 0 0 0 

Multifamily 

Common Areas 182,976 149,320 44,611 85,632 32,689 34,445 

Water Heating

Heat Pump Water 

Heater 575,030 1,150,060 1,150,060 415,300 415,300 167,673 

Solar Water Heating 450,528 0 0 0 0 0 

Gravity Film Heat 

Exchanger 127,171 0 0 0 0 0 

Pipe Wrap 15,019 15,019 15,019 10,714 10,714 0 

Low Flow 

Showerheads 93,813 93,813 93,813 71,455 71,455 4,307 

Shower Starters 

(with LF 

Showerheads)

25,983 25,983 25,983 17,834 17,834 28,899 

Low Flow Faucet 

Aerators 105,649 105,733 105,733 79,394 79,394 7,212 

Other

Efficient Pool Pump 

Motors 182,695 182,695 182,695 96,303 96,303 38,902

HVAC (Envelope)

Ceiling/Attic 

Insulation 87,119 68,141 60,096 53,344 47,041 21,604 

Wall Insulation 63,858 16,044 7,950 9,892 5,844 4,004 

Floor Insulation (33,946) 437 25 101 6 41 

Basement Wall 

Insulation (7,331) 7,049 1,535 4,932 1,087 1,997 

Crawlspace Wall 

Insulation (1,220) 4,146 418 1,220 102 494 

Air Sealing 50,656 35,864 37,192 26,851 27,996 10,867 

Duct Sealing 16,540 17,273 14,747 12,450 10,331 5,039 

Duct Insulation 7,465 8,203 8,757 5,798 6,235 2,344 

Duct Location 

(move into 

conditioned space)

30,081 40,917 17,712 16,967 5,934 6,867 

ENERGY STAR 

Windows 263,771 270,538 306,702 177,032 201,379 71,698 

Window Film 122,980 118,769 49,196 78,143 32,367 31,648 

ENERGY STAR 

Doors 65,374 0 0 0 0 0 

Cool Roof 95,434 462 462 68 68 27 

Low Income 

Weatherization 

Package

155,032 11,385 7,876 8,998 6,230 3,644 

Steam Pipe 

Insulation (1,417) (1,417) (1,417) (591) (591) (238)

HVAC (Equipment)

ENERGY STAR Air 

Source Heat Pumps 38,547 40,843 40,595 9,444 9,449 3,820 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

72 | Page

END USE

TECHNICAL 

POTENTIAL 

(MWH)

ECONOMIC 

POTENTIAL

-UCT-

(MWH)

ECONOMIC 

POTENTIAL

-TRC-

(MWH)

ACHIEVABLE 

POTENTIAL

-UCT-

(MWH)

ACHIEVABLE 

POTENTIAL

-TRC-

(MWH)

CONSTRAINED 

ACHIEVABLE

–UCT-(MWH)

ENERGY STAR 

Dual Fuel Heat 

Pumps

29,542 29,542 30,259 7,348 7,599 2,971 

Geothermal Heat 

Pumps 16,061 0 0 0 0 0 

ENERGY STAR 

Central Air 

Conditioners

1,045,448 1,045,448 1,050,054 203,190 204,230 82,278 

ENERGY STAR 

Room Air 

Conditioners

60,860 60,860 60,860 11,537 11,537 4,664 

Room Air 

Conditioner 

Recycling

13,412 13,412 13,412 4,937 4,937 1,980 

Central AC Tune-Up 82,810 82,810 81,905 21,261 24,153 8,566 

Ductless Mini-Split 

Systems 215,552 15,740 17,044 4,166 4,533 1,684 

Thermostat setback 

strategies 230,904 210,221 210,221 109,911 109,911 44,099 

Whole House Fans 264,362 0 0 0 0 0 

Efficient Chillers 44,659 44,659 44,659 11,791 11,791 4,730 

Chiller Controls 679 679 679 364 364 147 

Efficient Furnaces 775,125 762,124 0 249,211 0 100,908 

Efficient Furnace 

Fans 112,094 136,841 614,917 67,086 303,764 27,139 

Efficient Boilers (49,097) (67,818) (69,788) (19,940) (20,744) (8,073)

Boiler Controls (1,452) (1,472) (2,351) (758) (1,174) (307)

Behavioral Programs

Direct Feedback 

(In-Home Energy 

Display)

229,932 229,932 191,825 129,116 112,531 52,290 

Indirect Feedback 

(Monthly Energy 

Use Reports)

206,593 206,593 215,153 154,556 160,568 63,099 

Total 13,697,929 12,146,247 11,644,006 5,070,834 4,946,942 2,044,561

% of Annual 2022 

Sales Forecast 39.7% 35.2% 33.7% 14.7% 14.3% 5.9%

Note: Measures in the above Table with “0” achievable potential are ones that did not pass the Economic 

screening 

Table 6-21 provides a list of the Top 10 residential electric savings measures for the Achievable UCT 

scenario. The table provides the measures ranked according to the electric savings potential. The column 

to the far right shows the results of the measure level cost-effectiveness screening test using the UCT to 

screen the measures. The measures in the table are representative of a group of comparable measures 

falling under the umbrella of the measure categories provided in the table. This means that there are a 

range of UCT ratios for measure iterations that fall into a single measure category. For example, 

“Specialty LED Bulbs” is a measure category which consists of several measure iterations to account for 

bulb type and wattage and housing type. The table presents an average of the UCT ratios for all 

measures which are part of the measure categories in the Top 10.

The Top 10 measures combine to yield an estimated 3.3 million MWh savings. This accounts for nearly 

65% of the total residential electric savings in the Achievable UCT scenario.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

73 | Page

Table 6-21: Top 10 Residential Electric Savings Measures in the Achievable UCT Scenario

MEASURE

2023 ENERGY 

(MWH)

% OF SECTOR 

SAVINGS

UCT RATIO

1 Specialty CFL Bulbs 632,114 12.5% 3.78

2 2nd Refrigerator Turn-In 523,648 10.3% 5.56

3 Efficient Televisions 447,761 8.8% 114.97

4 Heat Pump Water Heater 415,300 8.2% 5.43

5 LED Screw-In Bulbs 251,464 5.0% 2.92

6 Efficient Furnaces (Furnace Fans) 249,211 4.9% 21.32

7 Exterior Lighting - LED Bulbs 210,558 4.1% 8.11

8

ENERGY STAR Central Air 

Conditioners 203,190 4.0% 2.72

9 Efficient Desktop PCs 178,022 3.5% 4.00

10 ENERGY STAR Windows 177,032 3.5% 2.12

Total 3,288,300 64.8%

6.2 RESIDENTIAL NATURAL GAS POTENTIAL

Natural gas consumption forecasts for the residential, commercial and institutional segments of the 

Michigan economy indicate that natural gas demand will decrease from nearly 653 million MMBTu in 

2014 to 603 million MMBTu in 2023 (representing a compound average annual rate of growth of 

-0.9%)38. The residential sector is expected to decline more rapidly compared to the state as a whole, 

with a forecasted average annual growth rate for 2014 to 2023 of -1.2%. The residential gas potential 

calculations are based upon these approximate consumption values and sales forecast figures over the 

time horizon covered by the study. The potential is calculated for the entire residential sector and 

includes breakdowns of the potential associated with each end use.

6.2.1 Energy Efficiency Measures Examined

For the residential sector, there were 791 natural gas savings measures included in the potential gas

savings analysis39. Table 6-22 provides a brief description of the types of measures included for each end 

use in the residential model. The list of measures was developed based on a review of the MEMD and 

measures found in other residential potential studies and TRMs in the Midwest. Measure data includes 

incremental costs, electricity energy and demand savings, gas and water savings, and measure life.

Table 6-22: Measures and Programs Included in the Gas Residential Sector Analysis

END USE TYPE END USE DESCRIPTION MEASURES INCLUDED

HVAC 

Envelope

Building Envelope Upgrades • Air/duct Sealing

• Duct Insulation

• Improved Insulation (Wall, Ceiling, and Floor)

• Efficient Windows

• Window film

• ENERGY STAR doors

• Cool Roofs

• Low Income Weatherization Package

 38 Estimated for statewide sales based on Michigan utility load forecast data and historical sales. 39 This total represents the number of unique energy efficiency measures and all permutations of these unique measures. 

For example, there are 15 permutations of the “Setback Thermostat” measure to account for the various housing types, 

heating/cooling combinations, and construction types.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

74 | Page

END USE TYPE END USE DESCRIPTION MEASURES INCLUDED

HVAC 

Equipment

Heating/Cooling/Ventilation Equipment • Existing Gas Furnace/Boiler Tune-up

• Efficient Gas Furnaces

• Efficient Gas Boilers

• Boiler Controls

• Set Back Thermostats

Water Heating Domestic Hot Water • Efficient Gas Storage Tank WH

• Tankless Gas WH

• Low Flow Showerhead/Faucet Aerator

• Pipe Wrap

• Gravity Film Heat Exchangers

Appliances High-Efficiency Appliances / Retirement of 

Inefficient Appliances

• ENERGY STAR Clothes Washers

• ENERGY STAR Dishwashers

Behavioral Consumer Response to Feedback from Utility • Direct (Real-Time) Feedback

• Indirect Feedback

6.2.2 Overview of Residential Natural Gas Energy Efficiency Potential

This section presents estimates for gas technical, economic, and achievable potential for the residential 

sector. Each of the tables in the technical, economic and achievable sections present the respective

potential for efficiency savings expressed as cumulative annual energy savings (MMBtu), percentage of 

savings by end use, and savings as a percentage of forecast sales. Data is provided on a 5-year and 10-

year time horizon for Michigan.

SUMMARY OF FINDINGS

Figure 6-4 illustrates the estimated savings potential for each of the scenarios included in this study.

Figure 6-4: Summary of Residential Energy Efficiency Potential as a % of 2018 and 2023 Sales Forecasts

The potential estimates are expressed as cumulative 5-year and 10-year savings, as percentages of the 

respective 2018 and 2023 sector sales. The technical potential is 45.9% in 2018 and 51.0% in 2023. The 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

75 | Page

5-year and 10-year economic potential is 34.8% and 38.9% based on the Utility Cost Test (UCT) screen, 

assuming an incentive level equal to 50% of the measure cost. Based on a measure-level screen using the 

TRC Test, the economic potential is 19.4% in 2018 and 22.1% in 2023. The significant drop from 

technical between the two economic potential scenarios indicates that most measures are cost-effective 

when screening based on the UCT, but fall below the threshold of cost-effectiveness when screening 

based on the TRC Test.

The 5-year and 10-year achievable potential savings are: 9.4% and 18.9% for the Achievable UCT 

scenario; 7.1% and 14.0% for the Achievable TRC scenario; and 3.8% and 7.7% for the Constrained 

Achievable scenario. The Achievable UCT scenario assumes 50% incentives and includes measures 

that passed the UCT Test. The Achievable TRC scenario also assumes 50% incentives but includes 

only measures that passed the cost-effectiveness screen based on the TRC Test. Last, the Constrained 

Achievable scenario is a subset of Achievable UCT scenario, assuming a spending cap on DSM 

approximately equal to 2% of future annual residential revenue. 

TECHNICAL POTENTIAL

Technical potential represents the quantification of savings that can be realized if all technologically 

available energy-efficiency measures are immediately adopted in all feasible instances, regardless of cost. 

Table 6-23 shows that it is technically feasible to save about 136.7 million MMBtu in the residential 

sector between 2014 and 2018 and approximately 143.3 million MMBtu during the 10 year period from 

2014 to 2023 across Michigan, representing 45.9% of 2018 residential sales, and 51.0% of 2023 

residential sales. The HVAC Envelope end use represents the greatest contributor to the potential at 

44% of 10-yr savings, while the HVAC Equipment end use contributes 40% of the 10-yr savings, and 

the Water Heating end use contributes 19% of the 10-yr savings. Conversely, the lighting end use yields a 

5% gain in consumption. While there is significant potential for electric savings in the lighting end use, 

this potential would produce a negative impact on natural gas potential, due to increased heating 

requirements associated with efficiency lighting.40 Other measures such as efficient air conditioners and 

efficient electric water heaters also increase heating requirements due to the minor reductions in heat 

losses associated with these measures.

Table 6-23: Residential Sector Technical Potential MMBtu Savings by End Use

END USE

2018

SAVINGS (MMBTU)

% OF 2018

SAVINGS

2023

SAVINGS 

(MMBTU)

% OF 2023

SAVINGS

Appliances 1,338,540 1% 1,370,972 1%

Electronics 0 0% 0 0%

Lighting -10,132,368 -7% -7,413,995 -5%

Water Heating 25,653,133 19% 26,569,703 19%

Other 0 0% 0 0%

HVAC (Envelope) 61,077,744 45% 62,401,101 44%

HVAC (Equipment) 55,510,229 41% 57,012,809 40%

Behavioral Programs 3,259,386 2% 3,331,000 2%

Total 136,706,666 100% 143,271,591 100%

% of Annual Sales 

Forecast 45.9% 51.0%

 40 High efficiency lighting reduces the amount of waste heat that is released during hours of lighting operation. The 

reduction in waste heat places a greater burden on heating equipment (electric and gas) to meet the winter heating load 

requirements.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

76 | Page

ECONOMIC POTENTIAL

Economic potential is a subset of technical potential, which only accounts for measures that are costeffective. This analysis includes two estimates of economic potential. One cost-effectiveness screen is 

based on the UCT and a second economic potential scenario was screened using the TRC Test. In both 

scenarios, the utility incentive was assumed to be equal to 50% of the measure incremental cost. The 

UCT was used for this study because it is mandated in Michigan to be the primary cost-effectiveness test 

used when considering energy efficiency programs. Because the TRC includes participant costs, it goes 

beyond utility resource acquisition and looks at the measure/program from a more broad perspective. 

77% of all measures that were included in the electric potential analysis passed the UCT and 62% of all 

measures passed the TRC Test.

Table 6-24 indicates that the economic potential based on the UCT screen is nearly 103.4 million 

MMBtu during the 5 year period from 2014 to 2018. The economic potential increases to nearly 109.3 

million MMBtu during the 10 year period from 2014 to 2023. This represents 34.8% and 38.9% of 

residential sales across the respective 2018 and 2023 sales. The HVAC Equipment end use represents the 

greatest contributor to the potential at 52% of the 10-yr savings, while the HVAC Envelope and Water 

Heating end use contributes 31% and 20% of the 10-yr savings.

Table 6-24: Statewide Residential Sector Economic Potential (UCT) MMBtu Savings by End Use

END USE

2018

SAVINGS (MMBTU)

% OF 2018

SAVINGS

2023

SAVINGS 

(MMBTU)

% OF 2023

SAVINGS

Appliances 0 0% 0 0%

Electronics 0 0% 0 0%

Lighting -8,860,565 -9% -6,116,785 -6%

Water Heating 21,196,030 20% 21,902,671 20%

Other 0 0% 0 0%

HVAC (Envelope) 32,652,145 32% 33,635,009 31%

HVAC (Equipment) 55,340,011 53% 56,546,757 52%

Behavioral Programs 3,259,386 3% 3,331,000 3%

Total 103,587,007 100% 109,298,652 100%

% of Annual Sales 

Forecast 34.8% 38.9%

Table 6-25 demonstrates that the economic potential based on the TRC screen is lower than the 

economic potential based on the UCT screen. In 2023, economic potential based on the TRC costeffectiveness screening is approximately 47 million MMBtu lower than the economic potential based on 

the UCT. The biggest decline in economic potential between the two screens occurred in the HVAC 

(Equipment) end-use where measure costs are high and incentive amounts can significantly impact costeffectiveness.

Table 6-25: Statewide Residential Sector Economic Potential (TRC) MMBtu Savings by End Use

END USE

2018

SAVINGS (MMBTU)

% OF 2018

SAVINGS

2023

SAVINGS 

(MMBTU)

% OF 2023

SAVINGS

Appliances 0 0% 0 0%

Electronics 0 0% 0 0%

Lighting -8,684,361 -15% -5,940,582 -10%
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

77 | Page

END USE

2018

SAVINGS (MMBTU)

% OF 2018

SAVINGS

2023

SAVINGS 

(MMBTU)

% OF 2023

SAVINGS

Water Heating 8,100,414 14% 8,425,883 14%

Other 0 0% 0 0%

HVAC (Envelope) 28,284,493 49% 28,933,758 47%

HVAC (Equipment) 27,188,515 47% 27,609,723 44%

Behavioral Programs 2,996,531 5% 3,062,371 5%

Total 57,885,592 100% 62,091,152 100%

% of Annual Sales 

Forecast 19.4% 22.1%

6.2.3 Achievable Natural Gas Potential Savings in the Residential Sector

Achievable potential is a refinement of economic potential that takes into account the estimated market 

adoption of energy efficiency measures based on the incentive level and measure payback, the natural 

replacement cycle of equipment, and the capabilities of programs and administrators to ramp up 

program activity over time. Achievable potential also takes into account the non-measure costs of 

delivering programs (for administration, marketing, monitoring and evaluation, etc.). As noted in 

Section 6.1.3, administrative costs were assumed to be equivalent to 20% of incremental measures 

costs. 

 

This study estimated achievable potential for three scenarios. The Achievable UCT Scenario 

determines the achievable potential of all measures that passed the UCT economic screening 

assuming incentives equal to 50% of the measure cost. The second scenario, Achievable TRC, also 

assumes incentives set at 50% of the measure incremental cost, but only includes measures that 

passed the TRC Test economic screening. The third scenario, Constrained UCT, assumes a spending 

cap equal to 2% of utility revenues, thereby limiting utilities from reaching the ultimate potential 

estimated in the Achievable UCT scenario. 

 

6.2.3.1 Achievable UCT vs. Achievable TRC 

Tables 6-26 and 6-27 show the estimated savings for the Achievable UCT and Achievable TRC scenarios

over 5 and 10 year time horizons. As noted above, both scenarios assume an incentive level 

approximately equal to 50% of the incremental measure cost and include estimated 10-year market 

adoption rates based on incentive levels and equipment replacement cycles. However, because more 

measures pass the UCT relative to the TRC Test, the Achievable UCT scenario is able to include 

additional measures that would result in greater savings potential over the next five and ten years. 

Overall the Achievable UCT scenario results in an achievable potential that is 13.8 million MMBTu

greater, over the next decade, than the achievable TRC scenario.

Table 6-26: Residential Achievable UCT Natural Gas Potential Savings by End Use

END USE

2018

ENERGY (MMBTU)

% OF 2018

SAVINGS

2023

ENERGY 

(MMBTU)

% OF 2023

SAVINGS

Appliances 0 0% 0 0%

Electronics 0 0% 0 0%

Lighting -2,078,125 -7% -2,129,625 -4%

Water Heating 5,487,630 20% 9,244,933 17%

Other 0 0% 0 0%

HVAC (Envelope) 10,288,230 37% 20,959,241 39%
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

78 | Page

END USE

2018

ENERGY (MMBTU)

% OF 2018

SAVINGS

2023

ENERGY 

(MMBTU)

% OF 2023

SAVINGS

HVAC (Equipment) 12,193,400 44% 22,978,405 43%

Behavioral Programs 2,038,931 7% 2,125,751 4%

Total 27,930,065 100% 53,178,705 100%

% of Annual Sales 

Forecast 9.4% 18.9%

Table 6-27: Residential Achievable TRC Potential Natural Gas Savings by End Use

END USE

2018

ENERGY (MMBTU)

% OF 2018

SAVINGS

2023

ENERGY 

(MMBTU)

% OF 2023

SAVINGS

Appliances 0 0% 0 0%

Electronics 0 0% 0 0%

Lighting -2,022,443 -9% -2,040,534 -5%

Water Heating 4,218,934 20% 6,659,203 17%

Other 0 0% 0 0%

HVAC (Envelope) 9,276,023 44% 18,911,780 48%

HVAC (Equipment) 7,875,910 37% 13,772,046 35%

Behavioral Programs 1,947,669 9% 2,023,974 5%

Total 21,296,093 100% 39,326,470 100%

% of Annual Sales 

Forecast 7.1% 14.0%

The 5-year and 10-year Achievable UCT potential savings estimates are approximately 27.9 million

MMBtu and 53.2 million MMBtu. This equates to 9.4% and 18.9% of sector sales in 2018 and 2023. By 

comparison, the respective 5-year and 10-year Achievable TRC potential savings estimates are 

approximately 21.3 million MMBtu and 39.3 million MMBtu. This equates to 7.1% and 14.0% of sector 

sales in 2018 and 2023.

6.2.3.2 Achievable UCT vs. Constrained UCT 

Although the Achievable UCT assumes incentives are set and capped at 50% of the incremental measure 

cost, and that measures are typically replaced at the end of their useful life, the Achievable UCT scenario 

also assumes no DSM spending cap to reach all potential participants. In the constrained UCT scenario, 

the analysis assumes a spending cap roughly equal to 2% of Michigan utility revenue. 

Table 6-28 shows the estimated savings for the Constrained UCT scenario over 5 and 10 year time 

horizons. The 5-year and 10-year Achievable UCT potential savings estimates are approximately 11.4 

million MMBTu and 21.5 million MMBTu. This equates to 3.8% and 7.7% of sector sales in 2018 and 

2023.

Table 6-28: Residential Constrained Achievable Potential Natural Gas Savings by End Use

END USE

2018

ENERGY (MMBTU)

% OF 2018

SAVINGS

2023

ENERGY 

(MMBTU)

% OF 2023

SAVINGS

Appliances 0 0% 0 0%

Electronics 0 0% 0 0%
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

79 | Page

END USE

2018

ENERGY (MMBTU)

% OF 2018

SAVINGS

2023

ENERGY 

(MMBTU)

% OF 2023

SAVINGS

Lighting -842,158 -7% -856,494 -4%

Water Heating 2,226,078 20% 3,733,128 17%

Other 0 0% 0 0%

HVAC (Envelope) 4,184,483 37% 8,483,866 39%

HVAC (Equipment) 4,952,718 44% 9,270,666 43%

Behavioral Programs 810,938 7% 864,248 4%

Total 11,332,060 100% 21,495,414 100%

% of Annual Sales Forecast 3.8% 7.7%

Figure 6-5 shows the estimated 10-year cumulative efficiency savings for the Constrained UCT 

Achievable potential scenario, broken out by end use across the entire residential sector. The HVAC 

Equipment end use shows the largest potential for savings at nearly 9.3 million MMBtu, or 43% of total

savings. This figure also illustrates the negative impact on natural gas potential, due to increased heating 

requirements associated with efficiency lighting.

Figure 6-5: Residential Sector 2023 Achievable Potential Savings for the Constrained UCT Scenario, by End 

Use

Figure 6-6 shows the breakdown of estimated savings in 2023 by housing type, low-income designation 

and new construction measures, for the Base Achievable potential scenario. The savings are largely 

coming from existing/turnover measures, meaning energy efficient equipment is installed in replacement 

of existing equipment that has failed. The existing single-family housing and existing multi-family 

housing types lead the way with 73% of savings and 11% savings, respectively, followed by and 7% 

coming from manufactured. New construction measures account for 3% of total savings and lowincome measures account for 6% of total savings. As noted in the electric potential portion of this 

section, the low-income measures represent only those measures typically included in the Michigan 

Weatherization Assistance Program to low-income households, and do not represent the combined 

“low-income potential” in Michigan. There is also low-income potential that is subsumed by the other 

93% of the savings associated with the “non-low-income” measures. For example, low income 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

80 | Page

households could realize additional behavioral program energy efficiency savings, even though they may 

not be offered under the traditional umbrella of low-income programs.

Figure 6-6: Residential Constrained UCT Achievable Savings in 2023, by Housing Type, Low-Income 

Designation and New Construction Measures

6.2.4 Annual Achievable Natural Gas Savings Potential

Table 6-29, Table 6-30 and Table 6-31 shows cumulative annual energy savings for all three achievable 

potential scenarios for each year across the 10-year time horizon for the study, broken out by end use. 

The year by year associated incentive and administrative costs to achieve these savings are shown later, in 

Section 1.3.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

81 | Page

Table 6-29: Cumulative Annual Residential Energy Savings in the Achievable UCT Potential Scenario, by End Use for Michigan

END-USE 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Appliances 0 0 0 0 0 0 0 0 0 0

Electronics 0 0 0 0 0 0 0 0 0 0

Lighting -327,250 -780,489 -1,218,481 -1,649,639 -2,078,125 -2,498,033 -2,906,848 -1,797,661 -2,031,566 -2,129,625

Water Heating 898,853 2,041,306 3,187,584 4,335,557 5,487,630 6,636,700 7,446,562 8,044,718 8,644,039 9,244,933

Other 0 0 0 0 0 0 0 0 0 0

HVAC (Envelope) 1,967,707 3,987,284 6,053,543 8,164,559 10,288,230 12,416,866 14,548,080 16,681,552 18,818,770 20,959,241

HVAC (Equipment) 2,402,498 4,942,165 7,495,237 9,836,729 12,193,400 14,506,779 16,828,641 19,159,724 21,496,017 22,978,405

Behavioral Programs 671,261 1,345,436 1,630,274 1,874,486 2,038,931 2,121,830 2,123,319 2,124,095 2,124,911 2,125,751

Total 5,613,070 11,535,702 17,148,156 22,561,693 27,930,065 33,184,142 38,039,753 44,212,427 49,052,171 53,178,705

% of Annual Forecast 

Sales 1.8% 3.7% 5.6% 7.4% 9.4% 11.3% 13.1% 15.4% 17.3% 18.9%

Table 6-30: Cumulative Annual Residential Energy Savings in the Achievable TRC Potential Scenario, by End Use for Michigan

END-USE 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Appliances 0 0 0 0 0 0 0 0 0 0

Electronics 0 0 0 0 0 0 0 0 0 0

Lighting -316,113 -758,216 -1,185,072 -1,605,093 -2,022,443 -2,431,214 -2,828,893 -1,708,570 -1,942,475 -2,040,534

Water Heating 651,832 1,544,678 2,437,437 3,327,692 4,218,934 5,106,002 5,653,199 5,988,148 6,323,308 6,659,203

Other 0 0 0 0 0 0 0 0 0 0

HVAC (Envelope) 1,768,472 3,587,495 5,451,406 7,358,198 9,276,023 11,198,197 13,122,719 15,049,208 16,979,017 18,911,780

HVAC (Equipment) 1,589,392 3,322,981 5,064,813 6,472,775 7,875,910 9,223,907 10,572,720 11,922,919 13,275,612 13,772,046

Behavioral Programs 675,726 1,341,107 1,588,993 1,803,290 1,947,669 2,020,431 2,021,757 2,022,455 2,023,207 2,023,974

Total 4,369,309 9,038,046 13,357,577 17,356,862 21,296,093 25,117,323 28,541,502 33,274,160 36,658,669 39,326,470

% of Annual Forecast 

Sales 1.4% 2.9% 4.3% 5.7% 7.1% 8.5% 9.8% 11.6% 12.9% 14.0%
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

82 | Page

Table 6-31: Cumulative Annual Residential Energy Savings in the Constrained UCT Potential Scenario, by End Use for Michigan

END-USE 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Appliances 0 0 0 0 0 0 0 0 0 0

Electronics 0 0 0 0 0 0 0 0 0 0

Lighting -143,718 -326,278 -500,661 -671,771 -842,158 -1,009,511 -1,173,483 -725,824 -820,140 -856,494

Water Heating 394,748 854,916 1,312,192 1,767,926 2,226,078 2,683,996 2,995,732 3,235,446 3,481,515 3,733,128

Other 0 0 0 0 0 0 0 0 0 0

HVAC (Envelope) 864,155 1,677,619 2,501,897 3,339,949 4,184,483 5,032,763 5,887,408 6,744,497 7,609,997 8,483,866

HVAC (Equipment) 1,055,101 2,078,052 3,096,531 4,016,679 4,952,718 5,872,321 6,804,229 7,741,775 8,689,787 9,270,666

Behavioral Programs 294,797 546,360 656,042 745,878 810,938 844,711 849,338 851,874 857,876 864,248

Total 2,465,083 4,830,669 7,066,001 9,198,660 11,332,060 13,424,280 15,363,223 17,847,768 19,819,035 21,495,414

% of Annual Forecast 

Sales 0.8% 1.6% 2.3% 3.0% 3.8% 4.6% 5.3% 6.2% 7.0% 7.7%
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

83 | Page

6.2.5 Residential Gas Savings Summary by Measure Group

Table 6-32 provides an end-use breakdown of the residential natural gas savings potential estimates for 

technical and economic potential, and each of the three achievable potential scenarios. The table 

indicates how the savings potential decreases systematically from the technical potential scenario to the 

Constrained Achievable potential scenario as additional limiting factors such as cost-effectiveness 

requirements and anticipated market adoption at given funding levels are introduced.

Table 6-32: Breakdown of Residential Cumulative Annual Gas Savings Potential for Technical, Economic and 

Achievable Potential, by End Use for Michigan

END USE

TECHNICAL 

POTENTIAL 

(MMBTU)

ECONOMIC 

POTENTIAL

-UCT-

(MMBTU)

ECONOMIC 

POTENTIAL

-TRC-

(MMBTU)

ACHIEVABLE 

POTENTIAL

-UCT-

(MMBTU)

ACHIEVABLE 

POTENTIAL

-TRC-

(MMBTU)

CONSTRAINED 

ACHIEVABLE

–UCT-

(MMBTU)

Appliances

ENERGY 

STAR Clothes 

Washers

1,234,592 0 0 0 0 0 

ENERGY 

STAR 

Dishwashers

136,380 0 0 0 0 0 

Lighting

Specialty CFL 

Bulbs (2,818,389) (2,818,389) (2,818,389) (1,049,706) (1,049,706) (420,809)

Standard ScrewIn CFL Bulbs (123,447) (123,447) (123,447) (56,126) (56,126) (22,416)

LED Screw-In 

Bulbs (839,194) (839,194) (839,194) (434,171) (434,171) (175,402)

Specialty LED 

Bulbs (1,346,026) (1,346,026) (1,346,026) (227,472) (227,472) (91,839)

Efficient 

Torchiere Floor 

Lamps

0 0 0 0 0 0 

LED Night 

Lights 0 0 0 0 0 0 

Occupancy 

Sensors (699,389) (699,389) (699,389) (194,805) (194,805) (78,681)

Multifamily 

Common Areas 0 0 0 0 0 0 

Water Heating

Heat Pump 

Water Heater (937,885) (1,875,770) (1,875,770) (677,363) (677,363) (273,478)

Solar Water 

Heating 6,308,684 0 0 0 0 0 

Efficient Gas 

Tank Water 

Heater

2,390,659 4,710,334 0 903,474 0 365,775 

Instant Gas 

Water Heater 4,449,282 8,766,454 0 1,682,256 0 681,066 

Gravity Film 

Heat Exchanger 3,654,347 0 0 0 0 0 

Tank Wrap 402,962 0 0 0 0 0 

Pipe Wrap 4,490,184 4,490,184 4,490,184 3,379,323 3,379,323 1,358,602 

Low Flow 

Showerheads 2,420,283 2,420,283 2,420,283 1,710,710 1,710,710 692,048 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

84 | Page

END USE

TECHNICAL 

POTENTIAL 

(MMBTU)

ECONOMIC 

POTENTIAL

-UCT-

(MMBTU)

ECONOMIC 

POTENTIAL

-TRC-

(MMBTU)

ACHIEVABLE 

POTENTIAL

-UCT-

(MMBTU)

ACHIEVABLE 

POTENTIAL

-TRC-

(MMBTU)

CONSTRAINED 

ACHIEVABLE

–UCT-

(MMBTU)

Shower Starters 

(with LF 

Showerheads)

670,558 670,558 670,558 381,890 381,890 154,602 

Low Flow 

Faucet Aerators 2,720,628 2,720,628 2,720,628 1,864,643 1,864,643 754,513 

HVAC (Envelope)

Ceiling/Attic 

Insulation 8,793,191 6,531,553 6,285,828 5,116,847 4,934,267 2,072,302 

Wall Insulation 6,478,320 1,467,957 967,501 897,835 741,842 363,387 

Floor Insulation 4,180,390 58,371 3,271 13,434 763 5,438 

Basement Wall 

Insulation 4,848,933 521,801 0 370,467 0 150,040 

Crawlspace Wall 

Insulation 732,748 234,277 131,712 69,809 39,036 28,272 

Air Sealing 5,055,511 3,890,293 4,134,004 2,912,164 3,106,999 1,178,685 

Duct Sealing 926,669 917,545 798,866 673,328 575,709 272,468 

Duct Insulation 1,283,485 817,873 499,623 515,340 264,091 208,544 

Duct Location 

(move into 

conditioned 

space)

2,731,764 5,070,233 494,952 2,206,441 109,957 893,602 

ENERGY 

STAR Windows 11,391,071 11,315,653 11,593,836 7,423,076 7,606,883 3,006,358 

Window Film (2,734,062) (2,490,902) (1,066,129) (1,638,868) (701,410) (663,746)

ENERGY 

STAR Doors 4,684,290 0 0 0 0 0 

Cool Roof (1,606,570) (3,109) (3,109) (455) (455) (183)

Low Income 

Weatherization 

Package

10,740,502 408,605 198,543 322,703 156,977 130,695 

Steam Pipe 

Insulation 4,894,860 4,894,860 4,894,860 2,077,121 2,077,121 838,004 

HVAC (Equipment)

ENERGY 

STAR Dual Fuel 

Heat Pumps

133,965 133,965 148,237 37,007 41,211 14,956 

Geothermal 

Heat Pumps 5 0 0 0 0 0 

ENERGY 

STAR Central 

Air Conditioners

(2,285,365) (2,285,365) (2,256,845) (445,214) (440,955) (180,282)

Thermostat 

setback 

strategies

18,747,726 17,176,758 17,176,758 9,046,475 9,046,475 3,629,645 

Whole House 

Fans (73,794) 0 0 0 0 0 

Efficient 

Furnaces 30,685,133 29,858,475 0 9,799,103 0 3,968,134 

Efficient 

Furnace Fans (145,631) (186,675) (825,900) (91,255) (407,667) (36,913)
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

85 | Page

END USE

TECHNICAL 

POTENTIAL 

(MMBTU)

ECONOMIC 

POTENTIAL

-UCT-

(MMBTU)

ECONOMIC 

POTENTIAL

-TRC-

(MMBTU)

ACHIEVABLE 

POTENTIAL

-UCT-

(MMBTU)

ACHIEVABLE 

POTENTIAL

-TRC-

(MMBTU)

CONSTRAINED 

ACHIEVABLE

–UCT-

(MMBTU)

Furnace TuneUp 1,314,898 1,333,155 1,979,372 677,252 1,057,878 274,277 

Efficient Boilers 5,018,901 6,941,197 6,728,478 2,129,003 2,098,723 862,039 

Boiler Tune-up 1,708,874 1,872,413 2,353,522 934,724 1,174,224 377,984 

Boiler Controls 1,908,098 1,702,834 2,306,100 891,310 1,202,157 360,825 

Behavioral Programs

Direct Feedback 

(In-Home 

Energy Display)

1,962,884 1,962,884 1,637,568 1,102,241 960,653 446,393 

Indirect 

Feedback 

(Monthly 

Energy Use 

Reports)

1,368,116 1,368,116 1,424,803 1,023,510 1,063,321 417,855 

Total 143,271,591 109,298,652 62,091,152 53,178,705 39,326,470 21,495,414

% of Annual 

2022 Sales 

Forecast

51.0% 38.9% 22.1% 18.9% 14.0% 7.7%

Note: Measures in the above table with “0” potential are ones that did not pass the economic screen. 

Table 6-33 provides a list of the Top 10 residential gas savings measures for the Achievable UCT 

scenario. The table provides the measures ranked according to the gas savings potential. The column to 

the far right shows the results of the measure level cost-effectiveness screening test using the UCT to 

screen the measures. The measures in the table are representative of a group of comparable measures 

falling under the umbrella of the measure categories provided in the table. This means that there are a 

range of UCT ratios for measure iterations that fall into a single measure category. For example, 

“ENERGY STAR Windows” is a measure category which consists of several measure iterations to 

account for various types of efficient windows options and housing types. The table presents an average 

of the UCT ratios for all measures which are part of the measure categories in the Top 10.

The Top 10 measures combine to yield an estimated 46 million MMBtu savings. This accounts for more 

than 85% of the total residential gas savings in the Achievable UCT scenario.

Table 6-33: Top 10 Residential Gas Savings Measures in the Achievable UCT Scenario

MEASURE

2023 ENERGY 

(MMBTU)

% OF SECTOR 

SAVINGS

UCT RATIO

1 Efficient Furnaces 9,799,103 18.4% 1.13

2 Thermostat setback strategies 9,046,475 17.0% 21.98

3 ENERGY STAR Windows 7,423,076 14.0% 2.12

4 Ceiling/Attic Insulation 5,116,847 9.6% 4.68

5 Pipe Wrap 3,379,323 6.4% 15.68

6 Air Sealing 2,912,164 5.5% 6.77

7 Duct Location (move into 

conditioned space) 2,206,441 4.1% 2.15

8 Efficient Boilers 2,129,003 4.0% 1.59

9 Steam Pipe Insulation 2,077,121 3.9% 2.80
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

86 | Page

MEASURE

2023 ENERGY 

(MMBTU)

% OF SECTOR 

SAVINGS

UCT RATIO

10 Low Flow Faucet Aerators 1,864,643 3.5% 12.71

Total 45,954,196 86.4%

6.3 ACHIEVABLE POTENTIAL BENEFITS & COSTS

The tables below provide the net present value (NPV) benefits and costs associated with the three 

achievable potential scenarios for the residential sector at the 5-year and 10-year periods. Table 6-34 and 

Table 6-35 compares the NPV benefits and costs associated with the Achievable UCT and Achievable 

TRC Scenarios. Both the UCT and TRC scenario benefits include avoided energy supply and demand 

costs, while the Achievable TRC scenario benefits also include O&M benefits, tax credits, water benefits

and a carbon tax adder. The NPV costs in the Achievable UCT scenario includes only program 

administrator costs (incentives paid, staff labor, marketing, etc.) whereas the Achievable TRC scenario 

costs include both participant and program administrator costs.

Table 6-34: 5-Year Benefit-Cost Ratios for Achievable UCT vs. Achievable TRC Scenarios – Residential Sector Only

5-YEAR NPV BENEFITS NPV COSTS B/C RATIO NET BENEFITS

Achievable UCT $3,432,366,723 $1,479,443,493 2.32 $1,952,923,230

Achievable TRC $3,914,509,646 $1,721,305,829 2.27 $2,193,203,817

Table 6-35: 10-Year Benefit-Cost Ratios for Achievable UCT vs. Achievable TRC Scenarios – Residential Sector Only

10-YEAR NPV BENEFITS NPV COSTS B/C RATIO NET BENEFITS

Achievable UCT $6,258,559,134 $2,603,870,491 2.40 $3,654,688,643

Achievable TRC $7,166,982,222 $3,032,912,928 2.36 $4,134,069,295

Table 6-36 and Table 6-37 compares the NPV benefits and costs associated with the Achievable UCT 

and Constrained UCT Scenarios. Both scenarios compared the benefits and costs based on the UCT. 

However the constrained scenario’s 2% of revenue spending cap on DSM results in reduced program 

participation and overall NPV benefits.

Table 6-36: 5-Year Benefit-Cost Ratios for Achievable UCT vs. Constrained UCT Scenarios – Residential Sector Only

5-YEAR NPV BENEFITS NPV COSTS B/C RATIO NET BENEFITS

Achievable UCT $3,432,366,723 $1,479,443,493 2.32 $1,952,923,230

Constrained UCT $1,397,166,850 $603,003,744 2.32 $794,163,107

Table 6-37: 10-Year Benefit-Cost Ratios for Achievable UCT vs. Constrained UCT Scenarios– Residential Sector Only

10-YEAR NPV BENEFITS NPV COSTS B/C RATIO NET BENEFITS

Achievable UCT $6,258,559,134 $2,603,870,491 2.40 $3,654,688,643

Constrained UCT $2,535,305,373 $1,055,704,104 2.40 $1,479,601,269

Year by year budgets for all three scenarios, broken out by incentive and administrative costs are 

depicted in Tables 6-38 through 6-40. Table 6-41 shows the revenue requirements for each scenario as a 

percentage of forecasted sector sales.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

87 | Page

Table 6-38: Annual Program Budgets Associated with the Achievable UCT Scenario (in millions)

ACHIEVABLE UCT 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Incentives $222.9 $241.4 $244.4 $247.0 $247.9 $248.8 $248.6 $249.6 $249.0 $248.4

Admin. $87.3 $94.1 $95.3 $96.3 $96.7 $97.0 $97.0 $97.4 $97.1 $96.9

Total Costs $310.3 $335.5 $339.7 $343.3 $344.6 $345.8 $345.6 $346.9 $346.1 $345.3

Table 6-39: Annual Program Budgets Associated with the Achievable TRC Scenario (in millions)

ACHIEVABLE TRC 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Incentives $171.0 $173.5 $175.4 $175.8 $176.2 $175.7 $176.3 $175.6 $174.8 $171.0

Admin. $65.4 $66.3 $67.1 $67.3 $67.4 $67.2 $67.5 $67.2 $66.9 $65.4

Total Costs $236.4 $239.8 $242.6 $243.1 $243.7 $243.0 $243.8 $242.7 $241.7 $236.4

Table 6-40: Annual Program Budgets Associated with the Constrained UCT Scenario (in millions)

CONSTRAINED 

UCT 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Incentives $97.3 $97.5 $98.1 $98.6 $99.1 $99.7 $100.3 $100.8 $101.4 $97.3

Admin. $37.9 $38.0 $38.2 $38.4 $38.7 $38.9 $39.1 $39.3 $39.6 $37.9

Total Costs $135.2 $135.5 $136.3 $137.0 $137.8 $138.6 $139.4 $140.2 $141.0 $135.2

Table 6-41: Annual Achievable Scenario Budgets as a % of Annual Sector Revenue

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Achievable UCT 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 4.9% 4.9% 5.0%

Achievable TRC 3.5% 3.5% 3.6% 3.5% 3.5% 3.5% 3.5% 3.5% 3.4% 3.5%

Constrained UCT 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

88 | Page

7 COMMERCIAL ELECTRIC AND NATURAL GAS ENERGY

EFFICIENCY POTENTIAL ESTIMATES

This section provides electric and natural gas energy efficiency potential estimates for the commercial

sector in Michigan. Estimates of technical, economic and achievable potential are provided in separate 

sections for electric and natural gas.

7.1 COMMERCIAL ELECTRIC ENERGY EFFICIENCY POTENTIAL

According to 2012 historical sales data41, the commercial sector accounts for approximately 37% of retail 

electric sales in Michigan, but only 11% of the total retail customers. The average commercial electric 

customer in Michigan consumes roughly 74,000 kWh annually. Comparatively, the average residential 

consumer in Michigan uses approximately 8,200 kWh per year. Commercial kWh sales over the period 

2002 to 2012 have increased by a total of 6.9%, peaking at 40,047 million kWh in 2007 and then 

declining to a 2012 level of 38,367 million kWh. For this study, commercial electric sales are estimated to 

remain relatively stable at their 2012 level over the 10 year study period of 2014 – 2023.42

7.1.1 Electric Energy Efficiency Measures Examined

For the commercial sector, there were 182 unique energy efficiency measures included in the electric 

energy savings potential analysis. Table 7-1 provides a brief description of the types of measures included 

for each end use in the commercial sector. The list of measures was developed based on a review of the 

Michigan Energy Measures Database (MEMD), measures found in other Technical Reference Manuals 

(TRMs) and measures included in other commercial energy efficiency potential studies. For each 

measure, the analysis considered incremental costs, energy and demand savings, and measure 

useful lives.

Table 7-1: Types of Electric Energy Efficiency Measures Included in the Commercial Sector Analysis

END USE TYPE END USE DESCRIPTION MEASURES INCLUDED

Appliances, Computers & 

Office Equipment

Office Equipment Improvements • Appliances

• High Efficiency Office Equipment

• Smart Power Strips

• Computer Energy Management Controls

Compressed Air

Compressor Equipment • Efficient Air Compressors

• Automatic Drains

• Cycling and High Efficiency Dryers 

• Low Pressure Drop-Filters

• Air-Entraining Air Nozzles

• Receiver Capacity Addition

• Compressed Air Audits, Leak Repair, and Flow Control

• Barrel Wraps

Cooking Cooking Equipment Improvements • Efficient Cooking Equipment

Envelope

Space Heating and Space Cooling • Building Envelope Improvements

• Cool Roofing

• Integrated Building Design

HVAC Controls

Space Cooling and Space Heating • Programmable Thermostats

• EMS Installation/Optimization 

• Hotel Guest Room Occupancy Control System

• Retrocommissioning & Commissioning

 41 U.S. Energy Information Administration 42 GDS forecast based on kWh sales forecasts provided by DTE Energy and Consumers Energy (CE) and historical 

commercial kWh sales trends for the state as a whole.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

89 | Page

END USE TYPE END USE DESCRIPTION MEASURES INCLUDED

Lighting

Lighting Improvements • Efficient Lighting Equipment

• Fixture Retrofits

• Ballast Replacement

• Premium Efficiency T8 and T5

• High Bay Lighting Equipment 

• LED Bulbs and Fixtures

• Light Tube

• CFL Retrofits

• Lighting Controls

• Efficient Design for New Construction

Other

Transformer Equipment

Other

• Efficient Transformers

• Vending Miser for Non-Refrig Equip

• Optimized Snow and Ice Melt Controls

• EC Plug Fans in Data Centers

• Engine Block Heater Timer

• NEMA Premium Efficiency Motors

Pools

Pool Equipment • Efficient Equipment and Controls

• Heat Pump Pool Heaters

• Solar Water Heating

Refrigeration

Refrigeration Improvements • Vending Misers 

• Refrigerated Case Covers

• Economizers 

• Efficient Refrigeration

• Upgrades Motors and Controls

• Door Heater Controls

• Efficient Compressors and Controls

• Door Gaskets and Door Retrofits

• Refrigerant Charging Correction 

• Ice-Makers

Space Cooling

Cooling System Upgrades • Efficient Chillers

• Efficient Cooling Equipment

• Ground/Water Source Heat Pump

• Chiller Tune-up/Diagnostics

• High Efficiency Pumps

Space Heating

Heating System Improvements • Efficient Heating Equipment

• Ground/Water Source Heat Pump

• Efficient Heating Pumps, Motors, and Controls

Ventilation

Ventilation Equipment • Enthalpy Economizer 

• Variable Speed Drive Controls

• Improved Duct Sealing

• Electronically-Commutated Permanent

Magnet Motors 

• Destratification Fans

• Controlled Ventilation Optimization

• Demand Controlled Ventilation

• High Performance Air Filters

Water Heating

Water Heating Improvements • Efficient Equipment

• High Efficiency HW Appliances

• Ozone Laundry System

• Low Flow Equipment

• Pipe and Tank Insulation

• Heat Recovery Systems

• Efficient HW Pump and Controls

• Solar Water Heating System
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

90 | Page

7.1.2 Technical and Economic Potential Electric Savings

This section presents estimates for electric technical, economic, and achievable savings potential for the 

commercial sector. Each of the tables in the technical, economic and achievable sections present the 

respective potential for efficiency savings expressed as cumulative annual savings (MWh) and percentage

of commercial sector forecast annual MWh sales. Data is provided for a 5 and 10-year horizon for 

Michigan

This energy efficiency potential study considers the impacts of the December 2007 Energy and 

Independence and Security Act (EISA) as an improving code standard for the commercial sector. EISA 

improves the baseline efficiency of compact fluorescent lamps (CFL), general service fluorescent lamps 

(GSFL), high intensity discharge (HID) lamps and ballasts and motors, all applicable in the commercial 

sector. 

SUMMARY OF FINDINGS

Figure 7-1 illustrates the estimated energy efficiency savings potential in Michigan for each of the 

scenarios included in this study. 

Figure 7-1: Summary of Commercial Electric Energy Efficiency Potential as a % of Sales Forecasts

The potential savings estimates are expressed as cumulative annual 5-year and 10-year savings, as 

percentages of the respective 2018 and 2023 commercial sector sales forecasts. The technical potential is

48.5% in 2018 and 48.0% in 2023. The 5-year and 10-year economic potential is 44.9% and 44.5% based 

on the Utility Cost Test (UCT) screen, assuming an incentive level equal to 50% of the measure cost.

Based on a measure-level screen using the TRC Test, the economic potential is 37.4% in 2018 and 37.0%

in 2023. The slight drop from technical potential to economic potential indicates that most measures are 

cost-effective.

The 5-year and 10-year achievable potential savings are: 12.2% and 20.8% for the Achievable UCT 

scenario; 10.5% and 17.6% for the Achievable TRC scenario; and 3.1% and 6.0% for the Constrained 

Achievable scenario. The Achievable UCT scenario assumes 50% incentives and includes measures 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

91 | Page

that passed the UCT Test. The Achievable TRC scenario also assumes 50% incentives but includes 

only measures that passed the cost-effectiveness screen based on the TRC Test. Last, the Constrained 

Achievable scenario is a subset of the Achievable UCT scenario, assuming a spending cap on nonresidential DSM approximately equal to 2% of future annual commercial and industrial revenue. The 

percent of the non-residential spending cap allocated to the commercial sector is based on the 

percentage of total non-residential UCT savings that the commercial sector represents. This presumes 

that the total non-residential spending cap will be allocated at the sector level based on where the 

savings opportunities are found. 

TECHNICAL POTENTIAL

Technical potential represents the quantification of savings that can be realized if energy-efficiency 

measures passing the qualitative screening are applied in all feasible instances, regardless of cost. Table 7-

2 shows that it is technically feasible to save approximately 18.5 million MWh annually in the

commercial sector by 2018, and approximately 18.6 million MWh annually by 2023 across Michigan,

representing 48.5% of the commercial sales forecast in 2018, and 48.0% of the commercial sales

forecast in 2023. Lighting represents the majority of the energy efficiency savings potential at over 40% 

of 10-yr savings, followed by Refrigeration and Ventilation at over 10% each, while cooking, pools, and 

space heating represent the smallest shares, each with 1 percent or less of 10-yr savings. Table 7-3 shows 

the demand savings potential in 2018 and 2023. The five and ten year summer peak demand savings 

technical potential is 5,715 MW and 5,741 MW, respectively, which is 53.8% and 53.2% of the peak 

forecasts for 2018 and 2023 respectively. 

Table 7-2: Commercial Sector Technical Potential Electric Energy Savings by End Use

END USE

2018

ENERGY 

SAVINGS 

(MWH)

% OF 2018

TOTAL

2023

ENERGY 

SAVINGS 

(MWH)

% OF 2023

TOTAL

Appliances, Computers, Office Equipment 928,899 5% 933,013 5%

Compressed Air 621,671 3% 621,671 3%

Cooking 128,779 1% 129,374 1%

Envelope 500,791 3% 512,810 3%

HVAC Controls 464,362 3% 465,570 3%

Lighting 7,967,141 43% 7,995,560 43%

Other 646,701 3% 649,564 3%

Pools 25,847 0% 25,946 0%

Refrigeration 3,466,859 19% 3,478,837 19%

Space Cooling 425,425 2% 426,706 2%

Space Heating 256,066 1% 256,850 1%

Ventilation 2,741,339 15% 2,752,763 15%

Water Heating 351,337 2% 352,481 2%

Total 18,525,217 100% 18,601,147 100%

% of Annual Sales Forecast 48.5% 48.0% 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

92 | Page

Table 7-3: Commercial Sector Technical Potential Electric Demand Savings

SUMMER PEAK DEMAND

2018 2023

Summary MW MW

Total 5,715 5,741

% of Forecast Peak 53.8% 53.2%

ECONOMIC POTENTIAL

Economic potential is a subset of technical potential and only includes measures that are cost-effective. 

This analysis includes two estimates of economic potential. One cost-effectiveness screen is based on the 

UCT and a second economic potential scenario was screened using the TRC Test. In both scenarios, the 

utility incentive was assumed to be equal to 50% of the measure incremental cost. The UCT was used 

for this study because it is mandated in Michigan to be the primary cost-effectiveness test used when 

considering energy efficiency programs. The TRC Test was also included because it also considers the 

cost assumed by the participant as well as all utility costs. Eighty seven percent of all measures that were 

included in the electric potential analysis passed the UCT and 76% of all measures passed the TRC Test.

Table 7-4 indicates that the economic potential based on the UCT screen is approximately 17.2 million

MWh annually by 2018, and the economic potential increases to 17.3 million MWh annually by 2023. 

This represents 44.9% and 44.5% of commercial sales in 2018 and 2023. Lighting, refrigeration, and 

ventilation make up a majority of the savings. Table 7-5 shows the peak demand savings economic 

potential in 2018 and 2023. The five and ten year summer peak demand savings economic potential is 

5,300 MW and 5,325 MW, respectively, which is 49.9% and 49.3% of the peak forecasts in 2018 and 

2013 respectively.

Table 7-4: Commercial Sector Economic Potential (UCT) Electric Energy Savings by End Use

END USE

2018 ENERGY 

SAVINGS (MWH)

% OF 

2018

TOTAL

2023 ENERGY 

SAVINGS 

(MWH)

% OF 2023

TOTAL

Appliances, Computers, Office Equipment 712,442 4% 715,598 4%

Compressed Air 620,398 4% 620,398 4%

Cooking 122,452 1% 123,019 1%

Envelope 221,331 1% 226,643 1%

HVAC Controls 464,362 3% 465,570 3%

Lighting 7,706,402 45% 7,733,891 45%

Other 646,701 4% 649,564 4%

Pools 25,847 0% 25,946 0%

Refrigeration 3,418,820 20% 3,430,632 20%

Space Cooling 277,063 2% 277,898 2%

Space Heating 175,846 1% 176,384 1%

Ventilation 2,453,815 14% 2,464,040 14%

Water Heating 341,168 2% 342,278 2%

Total 17,186,647 100% 17,251,862 100%

% of Annual Sales Forecast 44.9% 44.5% 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

93 | Page

Table 7-5: Commercial Sector Economic Potential (UCT) Electric Demand Savings

SUMMER PEAK DEMAND

2018 2023

Summary MW MW

Total 5,300 5,325

% of Peak 49.9% 49.3% 

Table 7-6 shows that the economic potential based on the TRC screen is nearly 14.3 million MWh

annually by 2018, and the economic potential increases less than 100,000 MWh by 2023. This represents 

37.4% of the commercial MWh sales forecast for 2018 and 37.0% for 2023. As with UCT economic 

potential, lighting, refrigeration, and ventilation again make up a majority of the economic TRC savings

potential. Table 7-7 shows the economic demand savings potential in 2018 and 2023. The five and ten 

year summer peak demand savings potential is 4,496 MW and 4,519 MW, respectively, which is 42.3% 

and 41.9% of the peak forecasts for the commercial sector for those years.

Table 7-6: Commercial Sector Economic Potential (TRC) Electric Savings by End Use

END USE

2018 ENERGY 

SAVINGS (MWH)

% OF 

2018

TOTAL

2023 ENERGY 

SAVINGS 

(MWH)

% OF 2023

TOTAL

Appliances, Computers, Office Equipment 693,228 5% 696,295 5%

Compressed Air 620,398 4% 620,398 4%

Cooking 108,343 1% 108,844 1%

Envelope 108,078 1% 113,390 1%

HVAC Controls 464,362 3% 465,570 3%

Lighting 5,389,648 38% 5,414,894 38%

Other 619,740 4% 622,524 4%

Pools 25,847 0% 25,946 0%

Refrigeration 3,376,105 24% 3,387,734 24%

Space Cooling 276,636 2% 277,469 2%

Space Heating 54,889 0% 55,480 0%

Ventilation 2,208,697 15% 2,217,793 15%

Water Heating 336,890 2% 337,989 2%

Total 14,282,862 100% 14,344,326 100%

% of Annual Sales Forecast 37.4% 37.0% 

Table 7-7: Commercial Sector Economic Potential Electric Demand Savings

SUMMER PEAK DEMAND

2018 2023

Summary MW MW

Total 4,496 4,519

% of Peak 42.3% 41.9% 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

94 | Page

7.1.3 Achievable Potential Savings in the Commercial Sector

Achievable potential is an estimate of energy savings that can feasibly be achieved given market barriers 

and equipment replacement cycles. This study estimated achievable potential for three scenarios. The 

Achievable UCT Scenario determines the achievable potential of all measures that passed the UCT 

economic screening assuming incentives equal to 50% of the measure cost. Unlike the economic 

potential, the commercial achievable potential takes into account the estimated market adoption of 

energy efficiency measures based on the incentive level and the natural replacement cycle of 

equipment. The second scenario, Achievable TRC, also assumes incentives set at 50% of the measure 

incremental cost, but only includes measures that passed the TRC Test economic screening. The third 

scenario, Constrained UCT, assumes a spending cap equal to 2% of annual utility revenues, thereby 

limiting utilities from reaching the ultimate potential estimated in the Achievable UCT scenario. 

7.1.3.1 UCT vs. TRC 

Tables 7-8 through 7-11 show the estimated cumulative annual savings for the Achievable UCT and 

Achievable TRC scenarios over 5 and 10 year time horizons. As noted above, both scenarios assume an 

incentive level approximately equal to 50% of the incremental measure cost and include estimated 10-

year market adoption rates based on incentive levels and equipment replacement cycles. However, 

because more measures pass the UCT relative to the TRC Test, the Achievable UCT scenario is able 

to include additional measures that would result in greater savings potential over the next five and ten 

years. Overall the Achievable UCT scenario results in an achievable potential that is approximately 1 

million MWh greater over the next decade, than the achievable TRC scenario.

Table 7-8: Commercial Achievable UCT Potential Electric Energy Savings by End Use

END USE

2018 ENERGY 

SAVINGS (MWH)

% OF 

2018

TOTAL

2023 ENERGY 

SAVINGS 

(MWH)

% OF 2023

TOTAL

Appliances, Computers, Office Equipment 185,083 4% 355,308 4%

Compressed Air 221,662 5% 329,391 4%

Cooking 32,946 1% 65,892 1%

Envelope 13,634 0% 20,618 0%

HVAC Controls 194,726 4% 278,618 3%

Lighting 1,850,030 40% 3,511,776 44%

Other 101,445 2% 185,126 2%

Pools 9,231 0% 15,656 0%

Refrigeration 1,242,660 27% 1,958,394 24%

Space Cooling 73,050 2% 112,157 1%

Space Heating 61,225 1% 89,739 1%

Ventilation 554,381 12% 963,128 12%

Water Heating 111,923 2% 171,896 2%

Total 4,651,994 100% 8,057,699 100%

% of Annual Sales Forecast 12.2% 20.8% 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

95 | Page

Table 7-9: Commercial Achievable UCT Potential Electric Demand Savings

SUMMER PEAK DEMAND

2018 2023

Summary MW MW

Total 1,292 2,433

% of Peak 12.2% 22.6% 

Table 7-10: Commercial Achievable TRC Potential Electric Energy Savings by End Use

END USE

2018

ENERGY 

SAVINGS 

(MWH)

% OF 2018

TOTAL

2023

ENERGY 

SAVINGS 

(MWH)

% OF 2023

TOTAL

Appliances, Computers, Office Equipment 183,669 5% 352,481 5%

Compressed Air 221,662 6% 329,391 5%

Cooking 29,293 1% 58,586 1%

Envelope 10,967 0% 16,213 0%

HVAC Controls 194,726 5% 278,618 4%

Lighting 1,328,909 33% 2,503,571 37%

Other 89,843 2% 168,312 2%

Pools 9,231 0% 15,656 0%

Refrigeration 1,229,658 31% 1,934,311 28%

Space Cooling 72,972 2% 112,002 2%

Space Heating 12,378 0% 19,957 0%

Ventilation 511,177 13% 876,720 13%

Water Heating 110,063 3% 169,284 2%

Total 4,004,548 100% 6,835,102 100%

% of Annual Sales Forecast 10.5% 17.6% 

Table 7-11: Commercial Achievable TRC Potential Electric Demand Savings

SUMMER PEAK DEMAND

2018 2023

Summary MW MW

Total 1,127 2,128

% of Peak 10.6% 19.7% 

7.1.3.2 Achievable UCT vs. Constrained UCT 

Although the Achievable UCT assumes incentives are set and capped at 50% of the incremental measure 

cost, and that measures are typically replaced at the end of their useful life, the Achievable UCT scenario 

also assumes no DSM spending cap to reach all potential participants. In the Constrained UCT scenario, 

the analysis assumes a utility spending cap approximately equal to 2% of Michigan annual utility 

revenues. The percent of the non-residential spending cap allocated to the commercial sector is based on 

the percentage of total non-residential UCT savings that the commercial sector represents. This 

presumes that the total non-residential spending cap will be allocated at the sector level based on where 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

96 | Page

the savings opportunities are found. To model the impact of a spending cap the market penetration of all 

cost effective measures was reduced by the ratio of capped spending to uncapped spending that would 

be required to achieve the Achievable UCT scenario savings potential. 

Tables 7-12 and 7-13 show the estimated savings for the Constrained UCT scenario over 5 and 10 year 

time horizons. The 5-year and 10-year Constrained UCT potential cumulative annual savings estimates 

are nearly 1.2 million MWh and just over 2.3 million MWh respectively. This equates to 3.1% and 6.0% 

of sector sales in 2018 and 2023. The five and ten year demand savings estimates in the Constrained 

UCT scenario are presented in Table 7-13.

Table 7-12: Commercial Constrained Achievable Electric Energy Efficiency Savings by End Use

END USE

2018 ENERGY 

SAVINGS (MWH)

% OF 

2018

TOTAL

2023 ENERGY 

SAVINGS 

(MWH)

% OF 2023

TOTAL

Appliances, Computers, Office Equipment 25,948 2% 53,848 2%

Compressed Air 48,550 4% 77,566 3%

Cooking 141,079 12% 272,520 12%

Envelope 15,300 1% 24,241 1%

HVAC Controls 313,066 26% 567,974 24%

Lighting 47,828 4% 114,952 5%

Other 3,418 0% 5,612 0%

Pools 28,098 2% 47,084 2%

Refrigeration 8,522 1% 18,977 1%

Space Cooling 477,777 40% 1,009,373 43%

Space Heating 2,342 0% 4,371 0%

Ventilation 58,556 5% 98,082 4%

Water Heating 18,338 2% 31,455 1%

Total 1,188,821 100% 2,326,054 100%

% of Annual Sales Forecast 3.1% 6.0% 

Table 7-13: Commercial Constrained Achievable Electric Demand Savings

SUMMER PEAK DEMAND

2018 2023

Summary MW MW

Total 334 737

% of Peak 3.1% 6.8% 

Figure 7-2 shows the estimated 10-year cumulative annual energy efficiency savings potential broken out

by end use across the entire commercial sector for the Constrained UCT scenario. The space cooling

end use shows the largest potential for energy efficiency savings by a wide margin at nearly 1,010,000

MWh annually, or 43% of total savings, in the Constrained UCT scenario, with HVAC Controls and 

Cooking end uses accounting for 24% and 12% respectively.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

97 | Page

Figure 7-2: Commercial Sector 2023 Constrained UCT Potential Savings by End Use

Figure 7-3 shows the breakdown of estimated savings in 2023 by building type for the Constrained UCT 

scenario. The vast majority of savings come from existing/turnover measures, meaning energy efficient

equipment is installed to replace existing equipment that has failed, with less than 1% of savings

potential coming from new construction. Approximately 24% of the potential savings are found in 

Offices, followed by 18% in Warehouses and 16% in Other building types.

Figure 7-3: Commercial Constrained UCT Savings in 2023 by Building Type

Education

7% Grocery

9% Health

4%

Lodging

3%

Office

24%

Other

16%

Restaurant

9%

Retail

10%

Warehouse

18%

7.1.4 Cumulative Annual Achievable Electric Savings Potential

Tables 7-14, Table 7-15 and Table 7-16 show cumulative annual electric energy savings for all

achievable scenarios for each year across the 10-year horizon for the study, broken out by end use. 

Table 7-17, Table 7-18 and Table 7-19 shows cumulative annual demand (MW) savings for all three 

achievable potential scenarios for each year across the 10-year time horizon for the study, broken out by 

end use.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

98 | Page

Table 7-14: Cumulative Annual Commercial Sector Electric Energy Savings in the Achievable UCT Potential Scenario by End Use (MWH)

END USE 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Appliances, Computers, 

Office Equipment 33,674 71,062 110,307 149,552 185,083 220,613 254,287 287,961 321,634 355,308

Compressed Air 18,698 65,878 127,300 188,723 221,662 254,601 273,298 291,996 310,694 329,391

Cooking 6,589 13,178 19,768 26,357 32,946 39,535 46,124 52,714 59,303 65,892

Envelope 1,230 4,124 7,848 11,573 13,634 15,696 16,927 18,157 19,388 20,618

HVAC Controls 14,007 55,724 111,294 166,865 194,726 222,588 236,596 250,603 264,611 278,618

Lighting 365,551 757,358 1,130,550 1,503,418 1,850,030 2,196,642 2,530,126 2,857,343 3,184,560 3,511,776

Other 16,292 37,025 59,979 82,932 101,445 119,957 136,249 152,541 168,834 185,126

Pools 1,215 3,131 5,398 7,665 9,231 10,797 12,011 13,226 14,441 15,656

Refrigeration 129,974 391,679 719,250 1,046,820 1,242,660 1,438,499 1,568,473 1,698,447 1,828,420 1,958,394

Space Cooling 6,973 22,431 42,133 61,834 73,050 84,265 91,238 98,211 105,184 112,157

Space Heating 4,885 17,948 35,099 52,251 61,225 70,199 75,084 79,969 84,854 89,739

Ventilation 78,109 192,626 325,347 458,068 554,381 650,694 728,802 806,911 885,019 963,128

Water Heating 10,696 34,379 64,556 94,733 111,923 129,112 139,808 150,504 161,200 171,896

Total 687,893 1,666,542 2,758,829 3,850,790 4,651,994 5,453,199 6,109,024 6,758,582 7,408,141 8,057,699

% of Annual Sales 

Forecast 1.8% 4.4% 7.3% 10.1% 12.2% 14.2% 15.9% 17.5% 19.2% 20.8% 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

99 | Page

Table 7-15: Cumulative Annual Commercial Sector Electric Energy Savings in the Achievable TRC Potential Scenario by End Use (MWH)

END USE 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Appliances, 

Computers, Office 

Equipment

33,391 70,496 109,458 148,421 183,669 218,917 252,308 285,699 319,090 352,481

Compressed Air 18,698 65,878 127,300 188,723 221,662 254,601 273,298 291,996 310,694 329,391

Cooking 5,859 11,717 17,576 23,435 29,293 35,152 41,011 46,869 52,728 58,586

Envelope 906 3,243 6,294 9,346 10,967 12,588 13,495 14,401 15,307 16,213

HVAC Controls 14,007 55,724 111,294 166,865 194,726 222,588 236,596 250,603 264,611 278,618

Lighting 251,108 528,472 804,297 1,079,731 1,328,909 1,578,087 1,814,138 2,043,949 2,273,760 2,503,571

Other 15,409 33,662 53,337 73,012 89,843 106,675 122,084 137,493 152,903 168,312

Pools 1,215 3,131 5,398 7,665 9,231 10,797 12,011 13,226 14,441 15,656

Refrigeration 127,805 386,862 711,545 1,036,227 1,229,658 1,423,089 1,550,895 1,678,700 1,806,506 1,934,311

Space Cooling 6,957 22,400 42,086 61,772 72,972 84,172 91,130 98,087 105,045 112,002

Space Heating 1,396 3,991 7,187 10,382 12,378 14,373 15,769 17,165 18,561 19,957

Ventilation 69,468 175,344 299,424 423,505 511,177 598,849 668,316 737,784 807,252 876,720

Water Heating 10,573 33,857 63,496 93,135 110,063 126,991 137,564 148,137 158,711 169,284

Total 556,793 1,394,779 2,358,693 3,322,217 4,004,548 4,686,880 5,228,615 5,764,110 6,299,606 6,835,102

% of Annual Sales 

Forecast 1.5% 3.7% 6.2% 8.7% 10.5% 12.2% 13.6% 14.9% 16.3% 17.6% 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

100 | Page

Table 7-16: Cumulative Annual Commercial Sector Electric Energy Savings in Constrained UCT Potential Scenario by End Use (MWH)

END USE 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Appliances, 

Computers, Office 

Equipment

9,670 18,462 27,764 37,212 47,828 60,243 74,541 88,791 101,390 114,952

Compressed Air 5,370 16,203 30,799 45,736 58,556 68,009 77,522 84,729 91,117 98,082

Cooking 1,892 3,442 5,004 6,590 8,522 10,439 12,574 14,718 16,825 18,977

Envelope 353 1,034 1,917 2,813 3,418 4,018 4,416 4,817 5,210 5,612

HVAC Controls 4,023 13,832 27,004 40,382 48,550 56,659 61,197 65,909 71,427 77,566

Lighting 104,979 197,115 284,957 374,791 477,777 579,870 689,041 796,729 901,243 1,009,373

Other 4,679 9,554 14,995 20,521 25,948 31,346 37,014 42,774 48,401 53,848

Pools 349 800 1,337 1,883 2,342 2,797 3,191 3,586 3,975 4,371

Refrigeration 37,326 98,867 176,504 255,365 313,066 374,510 425,146 475,781 520,452 567,974

Space Cooling 2,002 5,638 10,307 15,050 18,338 21,602 23,862 26,130 28,442 31,455

Space Heating 1,403 4,475 8,540 12,669 15,300 17,912 19,494 21,084 22,646 24,241

Ventilation 22,431 49,361 80,819 112,477 141,079 169,450 195,809 221,625 246,969 272,520

Water Heating 3,072 8,641 15,794 23,058 28,098 33,101 36,597 40,118 43,579 47,084

Total 197,549 427,423 685,739 948,548 1,188,821 1,429,958 1,660,405 1,886,791 2,101,676 2,326,054

% of Annual Sales 

Forecast 0.5% 1.1% 1.8% 2.5% 3.1% 3.7% 4.3% 4.9% 5.4% 6.0% 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

101 | Page

Table 7-17: Cumulative Annual Commercial Sector Electric Demand Savings in the Achievable UCT Potential Scenario by End Use (MW)

END USE 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Appliances, Computers, 

Office Equipment 99 199 298 398 497 597 696 796 895 994

Compressed Air 4 14 27 41 48 55 58 62 66 69

Cooking 2 5 7 9 11 14 16 18 21 23

Envelope 1 2 3 5 6 7 7 8 8 9

HVAC Controls 0 1 1 1 2 2 2 2 2 3

Lighting 74 156 233 310 380 450 516 581 645 710

Other 7 14 21 28 34 41 48 55 62 69

Pools 1 2 3 4 5 6 6 7 8 9

Refrigeration 13 39 71 102 122 141 155 168 182 195

Space Cooling 2 4 6 8 10 11 13 15 17 19

Space Heating 2 8 15 22 25 29 31 33 36 38

Ventilation 27 55 82 109 136 164 191 218 245 273

Water Heating 2 5 9 13 15 18 19 21 23 24

Total 234 501 775 1,050 1,292 1,534 1,760 1,984 2,209 2,433

% of Annual Demand 

Forecast 2.2% 4.7% 7.3% 9.9% 12.2% 14.4% 16.5% 18.5% 20.6% 22.6% 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

102 | Page

Table 7-18: Cumulative Annual Commercial Sector Electric Demand Savings in the Achievable TRC Potential Scenario by End Use (MW)

END USE 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Appliances, 

Computers, Office

Equipment

99 199 298 398 497 597 696 795 895 994

Compressed Air 4 14 27 41 48 55 58 62 66 69

Cooking 2 4 6 8 11 13 15 17 19 21

Envelope 0 1 3 4 5 5 6 6 6 7

HVAC Controls 0 1 1 1 2 2 2 2 2 3

Lighting 52 111 171 230 282 334 382 429 476 523

Other 7 14 21 28 34 41 48 55 62 69

Pools 1 2 3 4 5 6 6 7 8 9

Refrigeration 13 38 70 101 120 140 153 166 179 192

Space Cooling 2 4 6 8 10 11 13 15 17 18

Space Heating 1 1 2 2 3 3 4 4 5 5

Ventilation 19 39 58 78 97 117 136 155 175 194

Water Heating 2 5 9 13 15 17 19 20 22 24

Total 202 432 674 915 1,127 1,340 1,538 1,735 1,931 2,128

% of Annual Demand 

Forecast 1.9% 4.1% 6.4% 8.6% 10.6% 12.6% 14.4% 16.2% 18.0% 19.7% 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

103 | Page

Table 7-19: Cumulative Annual Commercial Sector Electric Demand Savings in Constrained UCT Potential Scenario by End Use (MW)

END USE 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Appliances, Computers, 

Office Equipment 29 52 76 100 129 164 205 245 282 322

Compressed Air 1 3 7 10 12 14 16 18 19 20

Cooking 1 1 2 2 3 4 4 5 6 7

Envelope 0 0 1 1 1 2 2 2 2 2

HVAC Controls 0 0 0 0 0 1 1 1 1 1

Lighting 21 41 59 77 98 119 141 163 183 205

Other 2 4 5 7 9 11 13 16 18 21

Pools 0 0 1 1 1 1 2 2 2 2

Refrigeration 4 10 17 25 31 37 42 47 52 57

Space Cooling 1 1 1 2 2 3 4 4 5 5

Space Heating 1 2 4 5 6 7 8 9 10 10

Ventilation 8 14 21 27 35 43 52 61 70 79

Water Heating 0 1 2 3 4 5 5 6 6 7

Total 67 130 195 261 334 411 495 578 656 737

% of Annual Demand 

Forecast 0.6% 1.2% 1.8% 2.5% 3.1% 3.8% 4.6% 5.4% 6.1% 6.8% 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

104 | Page

7.1.5 Commercial Electric Savings Summary by Measure Group

Table 7-20 below provides an end-use breakdown of the commercial electric savings potential estimates 

for technical and economic potential, and each of the three achievable potential scenarios. The table 

indicates how the savings potential decreases systematically from the technical potential scenario to the 

Constrained UCT potential scenario as additional limiting factors such as cost-effectiveness requirements 

and anticipated market adoption at given funding levels are introduced.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

105 | Page

Table 7-20: Commercial Sector Cumulative Annual Electric Savings Potential by End-Use and Measure by 2023

END USE

TECHNICAL 

POTENTIAL 

(MWH)

ECONOMIC 

UCT

(MWH)

ECONOMIC 

TRC

(MWH)

ACHIEVABLE 

UCT

(MWH)

ACHIEVABLE 

TRC (MWH)

CONSTRAINED 

ACHIEVABLE 

(MWH)

Appliances, Computers, Office Equipment

Office Equipment / Appliances 640,360 640,360 621,057 318,165 315,337 102,909

PC Network Energy Management Controls replacing no central 

control 75,238 75,238 75,238 37,143 37,143 12,044

"Smart" Power Strip/Monitor Power Management Software/UPS 217,415 0 0 0 0 0

Compressed Air

Barrel Wraps Inj Mold and Extruders 93,709 93,709 93,709 44,716 44,716 14,252

Compressed Air Audits & Leak Repair 155,844 155,844 155,844 100,609 100,609 32,850

Dryers/Receiver Capacity/Outdoor Air Intake 32,774 31,501 31,501 14,387 14,387 4,066

Efficient Air Compressors 81,772 81,772 81,772 26,103 26,103 7,518

Nozzles / Automatic Drains/Drop Filters/Flow Control 256,562 256,562 256,562 143,119 143,119 39,274

Variable Displacement Air Compressor 1,011 1,011 1,011 457 457 123

Cooking

HE Fryer 6,356 0 0 0 0 0

HE Griddle 11,074 11,074 0 5,620 0 1,619

HE Holding Cabinet 37,962 37,962 37,962 19,850 19,850 5,717

HE Oven 12,717 12,717 9,617 6,914 5,228 1,991

HE Steamer 57,242 57,242 57,242 31,122 31,122 8,963

Induction Cooktops 4,024 4,024 4,024 2,386 2,386 687

Envelope

Integrated Building Design 10,624 10,624 10,624 1,911 1,911 550

Windows, Insulation, Cool Roofing 502,187 216,019 102,766 18,708 14,302 5,062

HVAC Controls

EMS Installation / Optimization 239,210 239,210 239,210 147,259 147,259 39,523

Hotel Guest Room Occupancy Control System 2,546 2,546 2,546 1,531 1,531 460
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

106 | Page

END USE

TECHNICAL 

POTENTIAL 

(MWH)

ECONOMIC 

UCT

(MWH)

ECONOMIC 

TRC

(MWH)

ACHIEVABLE 

UCT

(MWH)

ACHIEVABLE 

TRC (MWH)

CONSTRAINED 

ACHIEVABLE 

(MWH)

Programmable Thermostats 92,486 92,486 92,486 48,493 48,493 13,110

Retrocommissioning / Commissioning 131,328 131,328 131,328 81,335 81,335 24,473

Lighting

CFL Lighting Efficiency 400,586 400,586 400,549 216,558 216,558 65,913

Fluorescent Tube Lighting Efficiency 2,541,825 2,541,825 970,283 802,591 222,908 229,439

LED Lighting Efficiency 809,494 567,337 550,531 255,499 244,584 74,053

Lighting Controls and Design 3,999,642 3,980,129 3,492,753 2,125,176 1,819,521 607,726

Other Lighting Efficiency 244,014 244,014 778 111,953 0 32,242

Other

Commercial Clothes washers - Non-Water Heating Savings 2,227 2,227 0 842 0 260

EC Plug Fans 16,065 16,065 16,065 6,914 6,914 1,991

Engine Block Heater Timer 30,710 30,710 30,710 19,825 19,825 6,291

NEMA Premium Transformer 531,700 531,700 531,700 113,135 113,135 32,582

Optimized Snow and Ice Melt Controls 44,049 44,049 44,049 28,437 28,437 7,632

Vendor Miser for Non-Refrig Equipment 24,813 24,813 0 15,971 0 5,090

Pools

Energy Efficient Pool Pump with controls 14,857 14,857 14,857 8,513 8,513 2,452

Heat Pump Pool Heater 6,978 6,978 6,978 4,505 4,505 1,209

High efficiency spas/hot tubs 222 222 222 127 127 37

Solar Pool Heating 3,889 3,889 3,889 2,511 2,511 674

Refrigeration

Commercial Ice-makers 26,532 0 0 0 0 0

Commercial Refrigerators/Freezers 93,160 93,160 58,023 51,181 31,879 14,740

Door Heater Controls 358,316 358,316 358,316 201,090 201,090 53,970

Efficient compressors/condensers 41,764 39,296 39,296 15,810 15,810 4,553

Fan motors & controls 1,073,482 1,068,494 1,060,703 588,324 583,523 162,134
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

107 | Page

END USE

TECHNICAL 

POTENTIAL 

(MWH)

ECONOMIC 

UCT

(MWH)

ECONOMIC 

TRC

(MWH)

ACHIEVABLE 

UCT

(MWH)

ACHIEVABLE 

TRC (MWH)

CONSTRAINED 

ACHIEVABLE 

(MWH)

Floating Head Pressure Control 79,686 79,686 79,686 52,245 52,245 14,022

Refrigerated Case Covers 22,698 22,698 22,698 14,993 14,993 4,861

Refrigeration Economizer, Refrigerant charging correction 15,932 1,715 1,745 1,133 1,152 366

Refrigeration Savings due to Lighting Savings 14,624 14,624 14,624 8,050 8,050 2,318

Refrigerator/Freezer Door Modifications 1,537,397 1,537,397 1,537,397 883,813 883,813 272,963

Vending Miser for Soft Drink Vending Machines 215,245 215,245 215,245 141,757 141,757 38,046

Space Cooling

Air-Cooled and Water-Cooled Chillers 72,219 72,219 72,219 15,502 15,502 4,465

Chilled Hot Water Reset 122,109 122,109 122,109 75,171 75,171 20,993

Ductless/GSHP/PTAC/WLHP 154,077 5,269 4,840 1,902 1,747 548

High Efficiency AC - Unitary & Split Systems 27,415 27,415 27,415 9,897 9,897 2,850

High Efficiency Pumps 50,886 50,886 50,886 9,685 9,685 2,599

Space Heating

Ductless/ASHP / GSHP/PTAC/WLHP Systems 226,055 145,590 24,686 77,347 7,565 20,907

ECM motors on furnaces 8,496 8,496 8,496 1,617 1,617 434

High Efficiency Pumps / VFD's on Pumps 22,298 22,298 22,298 10,775 10,775 2,900

Ventilation

Controlled Ventilation Optimization, Enthalpy Economizer, 

Improved Duct Sealing 1,395,267 1,134,696 888,449 466,907 380,498 134,467

Destratification Fan 28,152 0 0 0 0 0

Electronically-Commutated Permanent Magnet Motors (ECPMs) 170,724 170,724 170,724 68,995 68,995 19,870

High Performance Air Filters 554,183 554,183 554,183 63,142 63,142 20,467

Variable Speed Drive Control 604,438 604,438 604,438 364,084 364,084 97,716

Water Heating

Booster Water Heater 6,783 0 0 0 0 0

Clothes Washer/Ozone Commercial Laundry 2,969 1,055 1,711 462 898 142

Dishwasher 3,509 3,509 3,509 1,289 1,289 371
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

108 | Page

END USE

TECHNICAL 

POTENTIAL 

(MWH)

ECONOMIC 

UCT

(MWH)

ECONOMIC 

TRC

(MWH)

ACHIEVABLE 

UCT

(MWH)

ACHIEVABLE 

TRC (MWH)

CONSTRAINED 

ACHIEVABLE 

(MWH)

Efficient Hot Water Pump 30,449 30,449 30,449 9,553 9,553 2,564

Heat Pump Water Heater 69,588 69,588 69,588 30,662 30,662 8,830

Drainwater / Heat Recovery 4,946 4,946 0 3,048 0 824

High Efficiency Electric Water Heater 18,579 18,579 18,579 9,428 9,428 2,715

Insulation 128,833 128,833 128,833 84,797 84,797 22,758

Low Flow Measures 77,391 77,391 77,391 28,186 28,186 7,679

Hot Water Circulation Pump Time-Clock 443 443 443 205 205 55

Point of Use Water Heating 1,506 0 0 0 0 0

Solar Water Heating System 7,486 7,486 7,486 4,267 4,267 1,145

Total 18,601,147 17,251,862 14,344,326 8,057,699 6,835,102 2,326,054

% of Annual Sales Forecast 47.95% 44.48% 36.98% 20.77% 17.62% 6.00%

Note: Measures in the above Table with “0” achievable potential are ones that did not pass the SCT Test.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

109 | Page

Table 7-21 provides a list of the Top 10 commercial electric savings measures for the Achievable UCT 

scenario. The table provides the measures ranked according to the electric savings potential. The column to 

the far right shows the results of the measure level cost-effectiveness screening test using the UCT to screen 

the measures. The measures in the table are representative of a group of comparable measures falling under 

the umbrella of the measure categories provided in the table. This means that there are a range of UCT ratios 

for measure iterations that fall into a single measure category. For example, “Specialty LED Bulbs” is a 

measure category which consists of several measure iterations to account for bulb type and wattage and 

housing type. The table presents an average of the UCT ratios for all measures which are part of the measure 

categories in the Top 10.

The Top 10 commercial sector energy efficiency measures combine to yield an estimated 6.2 million MWh 

savings. This accounts for 77% of the total commercial electric savings in the Achievable UCT scenario.

Table 7-21: Top 10 Commercial Sector Electric Savings Measures in the Achievable UCT Scenario by 2023

MEASURE

2023

ENERGY 

(MWH)

% OF SECTOR 

SAVINGS

UCT RATIO

Lighting Controls and Design 2,125,176 26.4% 9.2

Refrigerator/Freezer Door Modifications 883,813 11.0% 4.0

Fluorescent Tube Lighting Efficiency 802,591 10.0% 2.3

Fan motors & controls 588,324 7.3% 6.9

Controlled Ventilation Optimization, Enthalpy 

Economizer, Improved Duct Sealing 466,907 5.8% 1.8

Variable Speed Drive Control 364,084 4.5% 2.6

Office Equipment / Appliances 318,165 3.9% 10.7

LED Lighting Efficiency 255,499 3.2% 5.4

CFL Lighting Efficiency 216,558 2.7% 16.6

Door Heater Controls 201,090 2.5% 4.8

Total 6,222,205 77.2% 6.5

7.2 COMMERCIAL SECTOR NATURAL GAS ENERGY EFFICIENCY POTENTIAL

The GDS Associates natural gas consumption forecasts for the residential, commercial and industrial

segments of the Michigan economy indicates that annual natural gas use will decrease by about 10% from 

669.2 trillion BTU in 2013 to 603.2 trillion BTU in 2023.43 Over that same period commercial natural gas use 

is expected to remain relatively stable varying annually between a range of 168.4 trillion BTU and 172.0 trillion 

BTU. 

7.2.1 Natural Gas Energy Efficiency Measures Examined

For the commercial sector, there were 86 unique natural gas energy efficiency measures included in the 

potential gas savings analysis. Table 7-22 provides a brief description of the types of natural gas energy 

efficiency measures included for each end use in the commercial sector. The list of measures was developed 

based on a review of the Michigan Energy Measures Database (MEMD), and measures found in other 

Technical Reference Manuals (TRMs) and measures listed in other commercial sector energy efficiency 

 43 GDS applied a forecast trends to actual deliveries by customer classes as reported by the U.S. Energy Information 

Administration (EIA). The annual sales forecast trends are based the EAI's Long term Reference Case forecast of natural gas 

consumption for the East North Central Region (Illinois, Indiana, Michigan, Ohio, and Wisconsin) as reported in the EIA 2013 

Annual Energy Outlook. 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

110 | Page

potential studies. For each measure, the analysis considered incremental costs, energy and demand savings, 

and useful measure life.

Table 7-22: Natural Gas Energy Efficiency Measures and Programs Included in the Commercial Sector Analysis

END USE TYPE END USE DESCRIPTION MEASURES INCLUDED

Building Envelope Space Heating • Building Envelope Improvements

• Integrated Building Design

Cooking Cooking Equipment Improvements • Efficient Cooking Equipment

HVAC Controls Space Heating 

• EMS Installation/Optimization

• Zoning

• Commissioning & Retrocommissioning

• Programmable Thermostats

Space Heating Heating System Improvements

• Efficient Heating Equipment 

• Improved Duct Sealing

• Pipe and Tank Insulation

• Heating System Controls & Tune-up

• Boiler Upgrades

• Steam Trap Repair

• Destratification Fans

• Ventilation Controls

• Heat Recovery

• Thermostat Upgrades and Controls

• Energy Recovery Ventilator

Space & Water 

Heating Equipment Improvements • High Efficiency Combined Space and Water Heating Equipment

Water Heating Water Heating Improvements

• Efficient Water Heating Equipment

• Heat Recovery Systems

• Pipe Insulation & Pool Covers

• Low Flow Equipment

• Water Heater Controls & Tune-ups

• Solar Water Heating System 

• Ozone Laundry System

• Efficient Pool Heaters

• Solar Pool Water Heater

• Efficient HW Appliances

7.2.2 Technical and Economic Potential Natural Gas Savings

This section presents estimates for natural gas energy efficiency technical, economic, and achievable potential 

for the commercial sector (commercial and institutional combined). Each of the tables in the technical,

economic and achievable sections present the respective potential for energy efficiency savings expressed as

cumulative annual savings (MMBtu) and percentage of forecast annual natural gas sales for the 

commercial sector. Data is provided for a 5 and 10-year horizon for Michigan.

SUMMARY OF FINDINGS

Figure 7-4 illustrates the estimated energy efficiency savings potential for each of all the scenarios included in 

this study.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

111 | Page

Figure 7-4: Summary of Commercial Natural Gas Energy Efficiency Potential as a % Sales Forecasts

The potential estimates are expressed as cumulative annual 5-year and 10-year savings, as percentages of the 

respective 2018 and 2023 commercial sector natural gas sales forecasts. The technical potential is 34.6% in 

2018 and 34.9% in 2023. The 5-year and 10-year economic potential is 29.8% and 30.1% based on the Utility 

Cost Test (UCT) screen, assuming an incentive level equal to 50% of the measure cost. Based on a measurelevel screen using the TRC Test, the economic potential is 24.2% in 2018 and 24.4% in 2023. The slight drop 

from technical potential to economic potential indicates that most measures are cost-effective.

The 5-year and 10-year achievable potential savings are: 6.1% and 12.3% for the Achievable UCT scenario; 

5.4% and 11.0% for the Achievable TRC scenario; and 3.1% and 6.3% for the Constrained Achievable 

scenario. The Achievable UCT scenario assumes 50% incentives and includes measures that passed the 

UCT Test. The Achievable TRC scenario also assumes 50% incentives but includes only measures that

passed the cost-effectiveness screen based on the TRC Test. Last, the Constrained Achievable scenario is 

a subset of Achievable UCT scenario, assuming a spending cap on non-residential DSM approximately 

equal to 2% of future annual commercial and industrial revenue. The percent of the non-residential 

spending cap allocated to the commercial sector is based on the percentage of total non-residential UCT 

savings that the commercial sector represents. This presumes that the total non-residential spending cap 

will be allocated at the sector level based on where the savings opportunities are found. 

TECHNICAL POTENTIAL

Technical potential represents the quantification of savings that can be realized if energy-efficiency measures

passing the qualitative screening are applied in all feasible instances, regardless of cost or cost effectiveness.

Table 7-23 shows that it is technically feasible to save nearly 58.9 million MMBtu (on a cumulative 

annual basis) in the commercial sector between 2014 and 2018 and approximately 59 million MMBtu during

the 10 year period from 2014 to 2023 across Michigan, representing approximately 34.6% of the

commercial sales forecast for 2018, and 34.9% of 10-year commercial sales forecast. HVAC Controls and 

Space Heating energy efficiency measures represent the majority of the potential at 36% and 27% of 10-yr 

savings, respectively, while cooking and space and water heating energy efficiency measures represent the 

smallest share each with 6% and 0.1% of 10-yr savings respectively.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

112 | Page

Table 7-23: Commercial Sector Natural Gas Technical Potential MMBtu Savings by End Use

END USE

2018 ENERGY 

SAVINGS 

(MMBTU)

% OF 2018

TOTAL

2023 ENERGY 

SAVINGS 

(MMBTU)

% OF 2023

TOTAL

Space Heating 15,624,610 27% 15,667,637 27%

Building Envelope 8,008,290 14% 8,008,290 14%

Water Heating 10,914,990 19% 10,945,006 19%

HVAC Controls 21,055,539 36% 21,116,594 36%

Space & Water Heating 49,645 0.1% 49,781 0.1%

Cooking 3,261,157 6% 3,270,105 6%

Lighting -9,838 0.0% -9,840 0.0%

Total 58,904,392 100% 59,047,573 100%

Percent of Annual Sales Forecast 34.6% 34.9% 

ECONOMIC POTENTIAL

Economic potential is a subset of technical potential only includes measures that are cost-effective. This 

analysis includes two estimates of economic potential. One cost-effectiveness screen is based on the UCT 

and a second economic potential scenario was screened using the TRC Test. In both scenarios, the utility 

incentive was assumed to be equal to 50% of the measure incremental cost. The UCT was used for this 

study because it is mandated in Michigan to be the primary cost-effectiveness test used when considering 

energy efficiency programs. Because the TRC includes participant costs as well as all utility costs, it goes 

beyond utility resource acquisition and looks at the measure/program from a broader perspective. 75% of all 

measures that were included in the natural gas potential analysis passed the UCT and 63% of all measures 

passed the TRC Test.

Table 7-24 indicates that the economic potential based on the UCT screen is more than 50.7 million MMBtu

by 2018, and the economic potential increases to 50.9 million MMBtu by 2023. This represents 29.8% and 

30.1% of commercial sales across the respective 5-year and 10-year timeframes. The HVAC Controls

measures make up a majority of the savings, followed by Space Heating.

Table 7-24: Commercial Sector Economic Natural Gas UCT Savings by End Use

END USE

2018 ENERGY 

SAVINGS 

(MMBTU)

% OF 2018

TOTAL

2023 ENERGY 

SAVINGS 

(MMBTU)

% OF 2023

TOTAL

Space Heating 13,752,800 27% 13,790,393 27%

Building Envelope 5,636,708 11% 5,710,915 11%

Water Heating 7,883,447 16% 7,905,197 16%

HVAC Controls 20,675,963 41% 20,724,787 41%

Space & Water Heating 49,645 0% 49,781 0%

Cooking 2,770,955 5% 2,778,558 5%

Lighting -9,516 0% -9,518 0%

Total 50,760,002 100% 50,950,115 100%

Percent of Annual Sales Forecast 29.8% 30.1% 

Table 7-25 shows that the economic potential based on the TRC screen is more than 41.1 million MMBtu

during the 5 year period from 2014 to 2018, and the economic potential increases slightly to 41.3 million

MMBtu during the 10 year period from 2014 to 2023. This represents 24.2% and 24.4% of commercial sales 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

113 | Page

across the respective 5-year and 10-year timeframes. Again Space Heating and HVAC Controls make up the 

majority of the Economic TRC savings with HVAC Controls representing the largest economic TRC 

potential.

Table 7-25: Commercial Sector Economic Natural Gas TRC Savings by End Use

END USE

2018 ENERGY 

SAVINGS 

(MMBTU)

% OF 2018

TOTAL

2023 ENERGY 

SAVINGS 

(MMBTU)

% OF 2023

TOTAL

Space Heating 13,287,678 32% 13,324,269 32%

Building Envelope 2,098,196 5% 2,098,196 5%

Water Heating 6,219,338 15% 6,236,441 15%

HVAC Controls 18,088,560 44% 18,141,011 44%

Space & Water Heating 49,645 0% 49,781 0%

Cooking 1,450,344 4% 1,454,324 4%

Lighting -5,585 0% -5,587 0%

Total 41,188,176 100% 41,298,436 100%

Percent of Annual Sales Forecast 24.2% 24.4% 

7.2.3 Achievable Potential Savings in the Commercial Sector

Achievable potential is an estimate of energy savings that can feasibly be achieved given market barriers and 

equipment replacement cycles. This study estimated achievable potential for three scenarios. The Achievable 

UCT Scenario determines the achievable potential of all measures that passed the UCT economic 

screening assuming incentives equal to 50% of the measure cost. Unlike the economic potential, the 

commercial achievable potential takes into account the estimated market adoption of energy efficiency 

measures based on the incentive level and the natural replacement cycle of equipment. The second 

scenario, Achievable TRC, also assumes incentives set at 50% of the measure incremental cost, but only 

includes measures that passed the TRC Test economic screening. The third scenario, Constrained UCT, 

assumes a spending cap equal to 2% of utility revenues, thereby limiting utilities from reaching the 

ultimate potential estimated in the Achievable UCT scenario. 

7.2.3.1 UCT vs. TRC 

Tables 7-26 and 7-27 show the estimated savings for the Achievable UCT and Achievable TRC scenarios

over 5 and 10 year time horizons. As noted above, both scenarios assume an incentive level approximately 

equal to 50% of the incremental measure cost and include an estimate 10-year market adoption rates based 

on incentive levels and equipment replacement cycles. However, because more measures pass the UCT 

relative to the TRC Test, the Achievable UCT scenario is able to include additional measures that would 

result in greater savings potential over the next five and ten years. Overall the Achievable UCT scenario 

results in an achievable potential that is 2.2 MMBtu greater, over the next decade, than the achievable TRC 

scenario.

Table 7-26: Commercial Achievable UCT Natural Gas Potential Savings by End Use

END USE

2018 ENERGY 

SAVINGS 

(MMBTU)

% OF 2018

TOTAL

2023 ENERGY 

SAVINGS 

(MMBTU)

% OF 2023

TOTAL

Space Heating 2,527,332 24% 5,083,771 24%

Building Envelope 235,323 2% 470,646 2%

Water Heating 1,409,729 14% 2,812,285 14%

HVAC Controls 5,438,920 52% 10,848,733 52%
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

114 | Page

END USE

2018 ENERGY 

SAVINGS 

(MMBTU)

% OF 2018

TOTAL

2023 ENERGY 

SAVINGS 

(MMBTU)

% OF 2023

TOTAL

Space & Water Heating 12,262 0% 24,525 0%

Cooking 760,904 7% 1,528,979 7%

Lighting -1,533 0% -2,846 0%

Total 10,382,936 100% 20,766,093 100%

Percent of Annual Sales Forecast 6.1% 12.3% 

Table 7-27: Commercial Achievable TRC Natural Gas Potential Savings by End Use

END USE

2018 ENERGY 

SAVINGS 

(MMBTU)

% OF 2018

TOTAL

2023 ENERGY 

SAVINGS 

(MMBTU)

% OF 2023

TOTAL

Space Heating 2,397,548 26% 4,795,096 26%

Building Envelope 81,778 1% 163,556 1%

Water Heating 1,131,606 12% 2,263,213 12%

HVAC Controls 5,260,279 57% 10,520,558 57%

Space & Water Heating 12,262 0% 24,525 0%

Cooking 391,666 4% 783,332 4%

Lighting -760 0% -1,520 0%

Total 9,274,379 100% 18,548,759 100%

Percent of Annual Sales Forecast 5.4% 11.0% 

7.2.3.2 Achievable UCT vs. Constrained UCT 

Although the Achievable UCT assumes incentives are set and capped at 50% of the incremental measure cost, 

and that measures are typically replaced at the end of their useful life, the Achievable UCT scenario also 

assumes no DSM spending cap to reach all potential participants. In the Constrained UCT scenario, the 

analysis assumes a spending cap roughly equal to 2% of Michigan annual natural gas utility revenue. The 

percent of the non-residential spending cap allocated to the commercial sector is based on the percentage of 

total non-residential UCT savings that the commercial sector represents. This presumes that the total nonresidential spending cap will be allocated at the sector level based on where the savings opportunities are 

found. To model the impact of a spending cap the market penetration of all cost effective measures was 

reduced by the ratio of capped spending to uncapped spending that would be required to achieve the 

Achievable UCT scenario savings potential. 

Table 7-28 shows the estimated savings for the Constrained UCT scenario over 5 and 10 year time horizons.

The 5-year and 10-year Constrained UCT potential savings estimates are approximately 5.3 million MMBtu 

and 10.7 million MMBtu. This equates to 3.1% and 6.3% of commercial sector natural gas sales in 2018 and 

2023.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

115 | Page

Table 7-28: Commercial Constrained UCT Natural Gas Achievable Energy Savings by End Use

END USE

2018 ENERGY 

SAVINGS 

(MMBTU)

% OF 2018

TOTAL

2023 ENERGY 

SAVINGS 

(MMBTU)

% OF 2023

TOTAL

Space Heating 1,292,370 24% 2,613,597 24%

Building Envelope 120,334 2% 243,240 2%

Water Heating 720,875 14% 1,457,290 14%

HVAC Controls 2,781,233 52% 5,630,643 52%

Space & Water Heating 6,270 0% 12,675 0%

Cooking 389,094 7% 786,784 7%

Lighting -397 0% -814 0%

Total 5,309,780 100% 10,743,415 100%

Percent of Annual Sales Forecast 3.1% 6.3% 

Figure 7-5 shows the estimated 10-year cumulative natural gas energy efficiency savings potential broken

out by end use across the entire commercial sector. HVAC Controls show the largest potential for savings 

at 5.6 million MMBtu, or 52% of total savings, in the Constrained UCT Achievable scenario.

Figure 7-5: Commercial Sector 2023 Constrained UCT Achievable Potential Natural Gas Savings by End Use

Figure 7-6 shows the breakdown of estimated natural gas savings in 2023 by building type for the 

Constrained UCT Achievable scenario. The vast majority of savings come from existing/turnover 

measures, meaning energy efficient equipment is installed in replacement of existing equipment that has

failed, with about 1% of savings potential coming from new construction. The ‘Offices’ and ‘Other’ 

categories represent the largest potential savings at 17% and 20% respectively.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

116 | Page

Figure 7-6: Commercial Constrained UCT Achievable Natural gas Potential Savings in 2023 by Building Type

7.2.4 Annual Achievable Natural Gas Savings Potential

Tables 7-29, Table 7-30 and Table 7-31 show cumulative energy savings for all achievable scenarios for

each year across the 10-year horizon for the study, broken out by end use.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

117 | Page

Table 7-29: Cumulative Annual Commercial Natural Gas Savings in the Achievable UCT Potential Scenario, by End Use for Michigan

END USE 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Space Heating 505,466 1,010,933 1,516,399 2,021,866 2,527,332 3,032,798 3,538,265 4,043,731 4,549,198 5,054,664

Building Envelope 47,065 94,129 141,194 188,258 235,323 282,387 329,452 376,516 423,581 470,646

Water Heating 281,946 563,891 845,837 1,127,783 1,409,729 1,691,674 1,973,620 2,255,566 2,537,511 2,819,457

HVAC Controls 1,087,784 2,175,568 3,263,352 4,351,136 5,438,920 6,526,704 7,614,488 8,702,272 9,790,056 10,877,840

Space & Water Heating 2,452 4,905 7,357 9,810 12,262 14,715 17,167 19,620 22,072 24,525

Cooking 152,181 304,361 456,542 608,723 760,904 913,084 1,065,265 1,217,446 1,369,627 1,521,807

Lighting -373 -746 -1,008 -1,271 -1,533 -1,796 -2,059 -2,321 -2,584 -2,846

Total 2,076,521 4,153,042 6,229,673 8,306,305 10,382,936 12,459,567 14,536,199 16,612,830 18,689,461 20,766,093

% of Annual Sales Forecast 1.2% 2.4% 3.6% 4.8% 6.1% 7.3% 8.6% 9.8% 11.0% 12.3% 

Table 7-30: Cumulative Annual Commercial Natural Gas Savings in the Achievable TRC Potential Scenario, by End Use for Michigan

END USE 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Space Heating 479,510 959,019 1,438,529 1,918,038 2,397,548 2,877,057 3,356,567 3,836,076 4,315,586 4,795,096

Building Envelope 16,356 32,711 49,067 65,422 81,778 98,133 114,489 130,845 147,200 163,556

Water Heating 226,321 452,643 678,964 905,285 1,131,606 1,357,928 1,584,249 1,810,570 2,036,891 2,263,213

HVAC Controls 1,052,056 2,104,112 3,156,167 4,208,223 5,260,279 6,312,335 7,364,390 8,416,446 9,468,502 10,520,558

Space & Water Heating 2,452 4,905 7,357 9,810 12,262 14,715 17,167 19,620 22,072 24,525

Cooking 78,333 156,666 235,000 313,333 391,666 469,999 548,333 626,666 704,999 783,332

Lighting -152 -304 -456 -608 -760 -912 -1,064 -1,216 -1,368 -1,520

Total 1,854,876 3,709,752 5,564,628 7,419,504 9,274,379 11,129,255 12,984,131 14,839,007 16,693,883 18,548,759

% of Annual Sales Forecast 1.1% 2.2% 3.2% 4.3% 5.4% 6.5% 7.7% 8.8% 9.9% 11.0% 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

118 | Page

Table 7-31: Cumulative Annual Commercial Natural Gas Savings in Constrained Achievable Potential Scenario by End Use for Michigan

END USE 2014 2015 2016 2017 2018 2018 2019 2020 2021 2023

Space Heating 256,489 510,744 767,133 1,027,653 1,292,370 1,560,633 1,833,429 2,095,955 2,354,082 2,613,597

Building Envelope 23,882 47,556 71,429 95,686 120,334 145,277 170,622 195,048 219,082 243,240

Water Heating 143,068 284,890 427,901 573,218 720,875 870,354 1,022,272 1,168,626 1,312,597 1,457,290

HVAC Controls 551,975 1,099,142 1,650,900 2,211,550 2,781,233 3,357,730 3,943,517 4,511,471 5,069,239 5,630,643

Space & Water Heating 1,244 2,478 3,722 4,986 6,270 7,570 8,891 10,164 11,416 12,675

Cooking 77,221 153,770 230,961 309,395 389,094 469,746 551,697 630,805 708,605 786,784

Lighting -107 -195 -257 -320 -397 -474 -559 -644 -728 -814

Total 1,053,773 2,098,385 3,151,789 4,222,167 5,309,780 6,410,836 7,529,869 8,611,423 9,674,293 10,743,415

% of Annual Sales Forecast 0.6% 1.2% 1.8% 2.5% 3.1% 3.8% 4.4% 5.1% 5.7% 6.3% 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

119 | Page

7.2.5 Commercial Savings Summary

Table 7-32 provides an end-use breakdown of the commercial natural gas savings potential estimates for 

technical and economic potential, and each of the three achievable potential scenarios. The table 

indicates how the savings potential decreases systematically from the technical potential scenario to the 

Constrained Achievable potential scenario as additional limiting factors such as cost-effectiveness 

requirements and anticipated market adoption at given funding levels are introduced.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

120 | Page

Table 7-32: Cumulative Annual Natural Gas Potential by End-Use and Measure by 2023

END USE

TECHNICAL 

POTENTIAL 

(MMBTU)

ECONOMIC 

POTENTIAL

-UCT-

(MMBTU)

ECONOMIC 

POTENTIAL

-TRC-

(MMBTU)

ACHIEVABLE 

POTENTIAL

-UCT-

(MMBTU)

ACHIEVABLE 

POTENTIAL

-TRC-

(MMBTU)

CONSTRAINED 

ACHIEVABLE

–UCT-

( MMBTU)

Building Envelope

Energy Efficient Windows 2,527,092 2,606,377 0 65,610 0 33,909

Greenhouse Curtains/Film 2,134,571 157,031 157,031 0 0 0

Insulation Upgrades 2,860,091 2,799,094 1,941,166 313,101 163,556 161,817

Integrated Building Design 148,413 148,413 0 91,935 0 47,514

Truck Loading Dock Seals 338,123 0 0 0 0 0

Space Heating

Boiler Modifications/Controls 2,024,237 1,289,152 1,204,178 501,466 478,001 260,085

Condensing Boiler & Efficiency Improvements 968,985 0 0 0 0 0

Demand Controlled Ventilation 5,798,651 5,798,651 5,798,651 2,345,939 2,345,939 1,212,432

Destratification Fans 2,030,198 2,030,198 2,030,198 799,636 799,636 413,269

Gas Furnace 1,003,319 1,003,319 1,003,319 373,864 373,864 193,221

Gas Unit Heater 534,530 534,530 534,530 162,375 162,375 83,919

Guest Room Energy Management 414,392 381,149 0 236,103 0 122,342

Heat Recovery/ERV 139,932 0 0 0 0 0

Infrared Heater 107,083 107,083 107,083 18,120 18,120 9,365

Makeup Air 1,215,491 1,215,491 1,215,491 332,415 332,415 171,799

Pipe Insulation/Duct Sealing 1,261,180 1,261,180 1,261,180 284,746 284,746 147,163

Tune-up/Steam Trap Repair 169,638 169,638 169,638 0 0 0

HVAC Controls

Commissioning/Retrocommissioning 4,766,120 4,766,147 4,773,400 2,952,390 2,956,883 1,533,321

EMS Install/Optimization 9,627,692 9,235,859 9,235,859 5,382,715 5,382,715 2,781,905

Programmable Thermostat 4,131,752 4,131,752 4,131,752 2,180,960 2,180,960 1,128,444

Zoning 2,591,030 2,591,030 0 361,775 0 186,973
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

121 | Page

END USE

TECHNICAL 

POTENTIAL 

(MMBTU)

ECONOMIC 

POTENTIAL

-UCT-

(MMBTU)

ECONOMIC 

POTENTIAL

-TRC-

(MMBTU)

ACHIEVABLE 

POTENTIAL

-UCT-

(MMBTU)

ACHIEVABLE 

POTENTIAL

-TRC-

(MMBTU)

CONSTRAINED 

ACHIEVABLE

–UCT-

( MMBTU)

Cooking

High Efficiency Fryer 876,851 719,773 0 476,733 0 246,386

High Efficiency Gas Broiler 93,600 69,879 0 50,889 0 26,301

High Efficiency Gas Ovens 588,015 266,094 109,725 161,582 61,761 83,509

High Efficiency Gas Griddle 214,275 0 0 0 0 0

High Efficiency Gas Steamer 1,327,180 1,327,180 1,327,180 721,571 721,571 372,924

Power Burner Range 170,183 142,194 0 111,031 0 57,664

Water Heating

Circulation Pump Time Clocks 749,404 749,404 749,404 346,537 346,537 179,098

Clothes Washer ENERGY STAR 306,521 0 100,427 0 60,087 0

Stand Alone Commercial Water Heaters 541,885 159,327 159,327 63,436 63,436 32,785

ES Dishwasher 489,713 489,713 489,713 179,857 179,857 92,954

Heat Recovery Water Heater/GFX 1,537,068 1,537,068 909,492 620,335 408,781 320,603

Indirect Water Heaters 451,984 451,984 0 174,093 0 89,975

Low Flow Aerators/Showerheads/Nozzles 973,772 973,772 973,772 73,273 73,273 38,002

On-Demand, Tankless Water Heater 1,901,498 933,988 726,976 310,415 241,614 160,429

Ozone Laundry System/Generator 776,210 776,210 776,210 344,634 344,634 178,114

Pipe wrap/Tune-up 714,609 219,165 219,165 71,576 71,576 36,992

Pool Measures (including Solar) 1,131,955 1,131,955 1,131,955 473,418 473,418 244,673

Solar Water Heating 887,777 0 0 0 0 0

Wastewater, Filtration/Reclamation 482,611 482,611 0 161,884 0 83,665

Space & Water Heating

Combination Water Heater/Boiler 45,063 45,063 45,063 24,525 24,525 12,675

Combination Water Heater/Furnace 4,718 4,718 4,718 0 0 0
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

122 | Page

END USE

TECHNICAL 

POTENTIAL 

(MMBTU)

ECONOMIC 

POTENTIAL

-UCT-

(MMBTU)

ECONOMIC 

POTENTIAL

-TRC-

(MMBTU)

ACHIEVABLE 

POTENTIAL

-UCT-

(MMBTU)

ACHIEVABLE 

POTENTIAL

-TRC-

(MMBTU)

CONSTRAINED 

ACHIEVABLE

–UCT-

( MMBTU)

Lighting

Lighting -9,840 -9,518 -5,587 -2,846 -1,520 -814

Total 59,047,573 50,950,115 41,298,436 20,766,093 18,548,759 10,743,415

% of Annual Sales Forecast 34.9% 30.1% 24.4% 12.3% 11.0% 6.3%

Note: Measures in the Table with "0" in the Economic or Achievable Potentials are ones that did not pass the TRC or UCT.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

123 | Page

Table 7-33 provides a list of the Top 10 commercial natural gas savings measures for the Achievable 

UCT scenario. The table provides the measures ranked highest to lowest according to the cumulative 

annual natural gas savings potential. The column to the far right shows the results of the measure level 

cost-effectiveness screening test using the UCT to screen the measures. The measures in the table are 

representative of a group of comparable measures falling under the umbrella of the measure categories 

provided in the table. This means that there are a range of UCT ratios for measure iterations that fall 

into a single measure category. For example, “Heat Recovery Water Heater/GFX” is a measure category 

which consists of water heater recovery systems including gray water heat exchangers. The table presents 

an average of the UCT ratios for all measures which are part of the measure categories in the Top 10.

The Top 10 measures combine to yield an estimated 16,400,000 MMBtu savings. This accounts for 

79.2% of the total commercial gas savings in the Achievable UCT scenario.

Table 7-33: Top 10 Commercial Natural Gas Savings Measures in the Achievable UCT Scenario

MEASURE

2023

ENERGY (MMBTU)

% OF SECTOR 

SAVINGS

UCT RATIO

EMS install/Optimization 5,382,715 25.9% 42.6

Commissioning/Retrocommissioning 2,952,390 14.2% 8.1

Demand Controlled Ventilation 2,345,939 11.3% 24.7

Programmable Thermostat 2,180,960 10.5% 33.7

Destratification Fans 799,636 3.9% 2.3

High Efficiency Gas Steamer 721,571 3.5% 2.7

Heat Recovery Water Heater/GFX 620,335 3.0% 3.4

Boiler Modifications/Controls 501,466 2.4% 2.1

High Efficiency Fryer 476,733 2.3% 1.3

Pool Measures (including Solar) 473,418 2.3% 4.0

Total 16,455,163 79.2% 12.5

7.3 ACHIEVABLE POTENTIAL BENEFITS & COSTS

The tables below provide the net present value (NPV) benefits and costs associated with the three 

achievable potential scenarios for the commercial sector at the 5-year and 10-year periods. Tables 7-34

and 7-35 compare the 5 and 10 year NPV benefits and costs associated with the Achievable UCT and 

Achievable TRC Scenarios. Both the UCT and TRC scenario benefits include avoided energy supply and 

demand costs, while the Achievable TRC scenario benefits also include water savings benefits, and 

carbon tax adder. The NPV costs in the Achievable UCT scenario includes only program administrator 

costs (incentives paid, staff labor, marketing, etc.) whereas the Achievable TRC scenario costs include 

both participant and program administrator costs.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

124 | Page

Table 7-34: 5-Year Benefit-Cost Ratios for Achievable Potential Scenarios – Commercial Sector Only

5-YEAR NPV BENEFITS NPV COSTS B/C RATIO NET BENEFITS

Achievable UCT $3,926,211,328 $1,514,585,402 2.59 $ 2,411,625,926 

Achievable TRC $3,590,040,097 $1,331,359,508 2.70 $ 2,258,680,589 

Table 7-35: 10-Year Benefit-Cost Ratios for Achievable Potential Scenarios– Commercial Sector Only

10-YEAR NPV BENEFITS NPV COSTS B/C RATIO NET BENEFITS

Achievable UCT $7,120,951,471 $2,506,173,980 2.84 $ 4,614,777,491 

Achievable TRC $6,556,350,912 $2,235,299,451 2.93 $ 4,321,051,461 

Tables 7-36 and 7-37 compare the NPV benefits and costs associated with the Achievable UCT and 

Constrained UCT Scenarios. Both scenarios compared the benefits and costs based the UCT. However 

the constrained scenario’s 2% of revenue spending cap on DSM results in reduced program participation 

and overall NPV benefits.

Table 7-36: 5-Year Benefit-Cost Ratios for Achievable Potential Scenarios – Commercial Sector Only

5-YEAR NPV BENEFITS NPV COSTS B/C RATIO NET BENEFITS

Achievable UCT $3,926,211,328 $1,514,585,402 2.59 $ 2,411,625,926

Constrained UCT $1,111,987,608 $422,340,965 2.63 $ 689,646,644

Table 7-37: 10-Year Benefit-Cost Ratios for Achievable Potential Scenarios– Commercial Sector Only

10-YEAR NPV BENEFITS NPV COSTS B/C RATIO NET BENEFITS

Achievable UCT $7,120,951,471 $2,506,173,980 2.84 $ 4,614,777,491

Constrained UCT $2,196,078,237 $757,273,804 2.90 $ 1,438,804,433

Year by year budgets for all three scenarios, broken out by incentive and administrative costs are 

presented in Tables 7-38 through 7-40. Table 7-41 shows the revenue requirements for each scenario as 

a percentage of forecasted sector sales.

Table 7-38: Year By Year Budgets for Achievable Potential TRC Scenarios– Commercial Sector Only

(Millions of Dollars)

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Admin $ 39.7 $ 52.1 $ 56.6 $ 56.6 $ 46.5 $ 48.3 $ 43.7 $ 45.0 $ 47.5 $ 47.5

Incentive $ 99.2 $130.2 $141.5 $141.6 $116.3 $120.7 $109.2 $112.4 $118.7 $118.8

Total $138.8 $182.3 $198.1 $198.2 $162.8 $168.9 $152.9 $157.3 $166.2 $166.3

Table 7-39: Year By Year Budgets for Achievable Potential UCT Scenarios– Commercial Sector Only

(Millions of Dollars)

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Admin $ 85.7 $103.9 $105.0 $105.0 $ 89.1 $ 91.0 $ 83.8 $ 85.2 $ 88.0 $ 87.7

Incentive $214.2 $259.7 $262.5 $262.6 $222.7 $227.5 $209.5 $212.9 $220.0 $219.3

Total $299.8 $363.6 $367.5 $367.6 $311.8 $318.5 $293.3 $298.1 $308.0 $307.0
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

125 | Page

Table 7-40: Year By Year Budgets for Cost Constrained UCT Scenarios– Commercial Sector Only

(Millions of Dollars)

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Admin $ 26.5 $ 26.8 $ 27.2 $ 27.7 $ 28.1 $ 28.6 $ 29.0 $ 29.5 $ 30.0 $ 30.4

Incentive $ 66.3 $ 66.9 $ 68.1 $ 69.2 $ 70.3 $ 71.4 $ 72.6 $ 73.7 $ 74.9 $ 76.1

Total $ 92.8 $ 93.7 $ 95.4 $ 96.9 $ 98.4 $ 100.0 $101.6 $103.2 $104.9 $106.5

Table 7-41: Utility Energy Efficiency Budgets per Scenario as a % of Sector Revenues

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Achievable 

UCT 6.5% 7.9% 7.8% 7.7% 6.4% 6.4% 5.8% 5.8% 5.9% 5.8%

Achievable 

TRC 3.0% 3.9% 4.2% 4.1% 3.3% 3.4% 3.0% 3.1% 3.2% 3.2%

Constrained 

UCT 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

126 | Page

8 INDUSTRIAL SECTOR ELECTRIC AND NATURAL GAS

ENERGY EFFICIENCY POTENTIAL ESTIMATES

This section provides electric and natural gas energy efficiency potential estimates for the industrial

sector in Michigan. Estimates of technical, economic and achievable potential are provided in separate 

sections for electric and natural gas.

8.1 INDUSTRIAL ELECTRIC ENERGY EFFICIENCY POTENTIAL

According to 2012 historical sales data44, the industrial sector accounts for approximately 30% of retail 

electric sales in Michigan. This sector is dominated by the transportation equipment industry which 

represents almost 25% of industrial electric retail sales. Other key industrial sectors are primary metals 

and chemicals. Industrial kWh sales over the period 2002 to 2012 reached their highest level in 2003 of 

almost 40,000 GWh and their lowest level in 2009 of about 27,000 GWh. Since 2009 Industrial sales 

have rebounded, increasing by 14% to 31,306 GWh in 2012. For this study, industrial electric sales are 

forecast to continue to increase reaching a level of almost 35,000 GWh in 2023, which represents a 

compound annual growth rate of slightly less than 1%.45

8.1.1 Electric Energy Efficiency Measures Examined

For the industrial sector, there were 116 unique energy efficiency measures included in the energy

savings potential analysis. Table 8-1 provides a brief description of the types of measures included for 

each end use in the industrial sector. The list of measures was developed based on a review of the 

Michigan Energy Measures Database (MEMD), and measures found in other Technical Reference 

Manuals (TRMs) and industrial potential studies. For each measure, the analysis considered incremental 

costs, energy and demand savings, and measure useful measure lives.

Table 8-1: Types of Electric Measures Included in the Industrial Sector Analysis

END USE TYPE END USE DESCRIPTION MEASURES INCLUDED

Building Envelope Building Envelope Improvements

• Wall Insulation R-7.5 to R13

• Below Grade Insulation

• Ceiling Insulation R-11 to R-42

• Roof Insulation R-11 to R-24

• Cool Roofing

• Energy Efficient Windows

Computers & Office 

Equipment Equipment Improvements

• Energy Star Office equipment including 

computers, monitors, copiers, multi-function 

machines

• PC Network Energy Management Controls 

replacing no central control

• Energy Star Compliant Single Door 

Refrigerator

• Energy Efficient “Smart” Power Strip for 

PC/Monitor/Printer

• EZ Save Monitor Power Management System

• Energy Star UPS

Lighting Lighting Improvements

• CFL Screw in Specialty (& Standard)

• CFL Screw-in, Fixtures, and Floods

• LED Exit Sign

• LED Pin Based Lamp & LED Screw-Ins

• Daylight Dimming

 44 U.S. Energy Information Administration 45 GDS forecast based on sales forecasts provided by DTE and CE and historical industrial sales trends for the state as a 

whole. 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

127 | Page

END USE TYPE END USE DESCRIPTION MEASURES INCLUDED

• HID Fixture Upgrade - Pulse Start Metal 

Halide

• Central Lighting Control

• High Intensity Fluorescent Fixture (replacing 

HID)

• Stairwell Bi-Level Control

• LED Wallpacks

• LED Downlights

• Remote Mounted Occupancy Sensor

• Switching Controls for Multilevel Lighting 

(Non-HID)

• LED Replacing Halogen Incandescent

• Controls for H.I.F.

• Controls for HID (Hi/Lo)

• New Fluorescent Fixtures T5/HP T8 

reduced wattage (replacing T12)

• Induction Fluorescent

• Fluorescent Fixture with Reflectors

• Lamp & Ballast Retrofit (HPT8 Replacing 

T12)

• Lamp & Ballast Retrofit (Low Wattage HPT8 

Replacing Standard T8)

• CFL Exterior Lighting

• LED Outdoor Area Fixture (Parking Light or 

Street Light)

• LED Specialty

• LED Screw-in

• T5 HP replacing T12

• Switch Mounted Occupancy Sensor

• Illuminated Signs to LED

• CFL Fixture

• CFL Flood

• 42W 8 lamp Hi Bay CFL

• Light Tube

• LED Exterior Flood and Spotlight

• Fluorescent Fixture with Reflectors

• Lamp & Ballast Retrofit (HPT8 Replacing 

Standard T8)

• Lamp & Ballast Retrofit (HPT8 Replacing 

Standard 12)

• New Fluorescent Fixtures T5/HP T8 

(replacing T8)

Machine Drive Machine Drive Improvements

• Compressed Air - Advanced Compressor 

Controls

• Advanced Lubricants

• Compressed Air System Management

• Pump System Efficiency Improvements

• Motor System Optimization (Including ASD)

• Electric Supply System Improvements

• Sensors & Controls

• Fan System Improvements

• Advanced Efficient Motors

• Industrial Motor Management

• Energy Information System

Other

• NEMA Premium Transformer, three-phase

• NEMA Premium Transformer, single-phase

• Optimized Snow and Ice Melt Controls

• Engine Block Heat Timer
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

128 | Page

END USE TYPE END USE DESCRIPTION MEASURES INCLUDED

• Electrically Commutated Plug Fans in Data 

Centers

• Vendor Miser for Non-Refrigerated 

Equipment

Process Cooling and 

Refrigeration

Process Cooling and Refrigeration 

Improvements

• Improved Refrigeration

• Electric Supply System Improvements

• Sensors & Controls

• Energy Information System

Process Heating Heating Improvements

• Electric Supply System Improvements

• Sensors & Controls

• Energy Information System

HVAC Controls HVAC Control Improvements

• EMS Optimization

• EMS install

• Programmable Thermostats

Space Cooling - Chillers Cooling System Upgrades

• Efficient Chilled water Pump

• Chilled Hot Water Reset

• Water-Cooled Screw Chiller > 300 ton

• Air-Cooled Recip Chiller

• Water-Cooled Centrifugal Chiller > 300 ton

• Air-Cooled Screw Chiller

• Water-Cooled Screw Chiller 150 – 300 ton

• Water-Cooled Centrifugal Chiller 150 – 300 

ton

• Water-Cooled Screw Chiller < 150 ton

• Water-Cooled Centrifugal Chiller < 150 ton

• High Efficiency Pumps

Space Cooling – Unitary 

and Split AC Cooling System Upgrades

• Water Loop Heat Pump (WLHP) – Cooling

• High Efficiency AC – Unitary & Split 

Systems

• Ductless (mini split) – Cooling

• Ground Source Heat Pump - Cooling

Space Heating Heating System Improvements

• VFD Pump

• High Efficiency Pumps

• ECM Motors on Furnaces

• Water Loop Heat Pump (WLHP) - Heating

• Ground Source Heat Pump – Heating

• High Efficiency Heat Pump

• Ductless (mini split) – Heating

Ventilation Ventilation Equipment

• Electronically-Commutated Permanent 

Magnet Motors (ECPMs)

• Demand-Controlled Ventilation

• High Performance Air Filters

• Variable Speed Drive Control, 15 HP

• Variable Speed Drive Control, 5 HP

• Variable Speed Drive Control, 40 HP

• Controlled Ventilation Optimization

• Improved Duct Sealing

• Enthalpy Economizer

• Destratification Fan

Water Heating Water Heating Improvements

• Low Flow Faucet Aerator

• Tank Insulation (electric)

• Heat Pump Water Heater

• Efficient Hot Water Pump

• Hot Water Circulation Pump Time-Clock

• Hot Water (DHW) Pipe Insulation

• High Efficiency Electric Water Heater

• Solar Water Heating System
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

129 | Page

END USE TYPE END USE DESCRIPTION MEASURES INCLUDED

• Drain Water Heat Recovery Water Heater

• Point of Use Water Heating

8.1.2 Technical and Economic Potential Electric Savings

This section presents estimates for electric technical, economic, and achievable savings potential for the 

industrial sector. Each of the tables in the technical, economic and achievable sections present the 

respective potential for energy efficiency savings expressed as cumulative annual savings (MWh) and 

percentage of annual kWh sales. Data is provided for a 5 and 10-year horizon for Michigan

This energy efficiency potential study considers the impacts of the December 2007 Energy and 

Independence and Security Act (EISA) as an improving code standard for the industrial sector. EISA 

improves the baseline efficiency of compact fluorescent lamps (CFL), general service fluorescent lamps 

(GSFL), high intensity discharge (HID) lamps and ballasts and motors, all applicable in the industrial 

sector. 

SUMMARY OF FINDINGS

Figure 8-1 illustrates the estimated savings potential in Michigan for each of the scenarios included in 

this study. 

Figure 8-1: Summary of Industrial Electric Energy Efficiency Potential as a % of Sales Forecasts
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

130 | Page

The potential estimates are expressed as cumulative annual 5-year and 10-year savings, as percentages of 

the respective 2018 and 2023 forecasts for industrial sector sales. The technical potential is 27.0% in 

2018 and 26.4% in 2023. The 5-year and 10-year economic potential is: 21% and 20.5% based on the 

Utility Cost Test (UCT) screen, assuming an incentive level equal to 50% of the measure cost. Based on 

a measure-level screen using the TRC Test, the economic potential is 19.3% in 2018 and 18.9% in 2023. 

The slight drop from technical potential to economic potential indicates that most measures are costeffective.

The 5-year and 10-year achievable potential savings are: 4.9% and 8.9% for the Achievable UCT

scenario; 4.5% and 8.1% for the Achievable TRC scenario; and 2.3% and 5.0% for the Constrained 

Achievable scenario. The Achievable UCT scenario assumes 50% incentives and includes measures 

that passed the UCT Test. The Achievable TRC scenario also assumes 50% incentives but includes 

only measures that passed the cost-effectiveness screen based on the TRC Test. Last, the Constrained 

Achievable scenario is a subset of Achievable UCT scenario, assuming a spending cap on nonresidential DSM approximately equal to 2% of future annual industrial revenue. The percent of the 

non-residential spending cap allocated to the industrial sector is based on the percentage of total nonresidential UCT savings that the industrial sector represents. This presumes that the total nonresidential spending cap will allocated at the sector level based on where the savings opportunities are 

found. 

TECHNICAL POTENTIAL

Technical potential represents the quantification of savings that can be realized if energy-efficiency 

measures passing the qualitative screening are applied in all feasible instances, regardless of cost. Table 8-

2 shows that the technical potential is more than 9.1 million MWh annually in the industrial sector during 

the 10 year period from 2014 to 2023 across Michigan, representing 27.0% of 2018 forecast industrial 

sales and 26.4% of 2023 industrial sales. Machine Drive represents the majority of the potential at 36% 

of 10-yr savings, while water heating, space heating and office equipment represent the smallest shares, 

each with less than 2 percent of 10-yr savings. Table 8-3 shows the annual (summer) peak demand 

savings potential in 2018 and 2023. The ten year summer peak demand savings potential is 1,790 MW, 

which is 40.6% of the 5-year peak forecast and 39.7% of the 10-year peak forecast.

Table 8-2: Industrial Sector Technical Potential Savings By End Use

END USE

2018 ENERGY 

SAVINGS (MWH)

% OF 

2018

TOTAL

2023 ENERGY 

SAVINGS 

(MWH)

% OF 2023

TOTAL

Machine Drive 3,344,311 36% 3,344,311 36%

Ventilation 1,720,439 19% 1,720,439 19%

Lighting 1,663,985 18% 1,663,985 18%

HVAC Controls 364,007 4% 364,007 4%

Process 571,628 6% 571,628 6%

Space Cooling - Chillers 540,901 6% 540,901 6%

Appliances, Computers, Office Equipment 79,561 1% 79,561 1%

Envelope 527,313 6% 527,313 6%

Water Heating 64,490 1% 64,490 1%

Other 108,263 1% 108,263 1%

Space Heating 195,819 2% 195,819 2%

Total 9,180,717 100% 9,180,717 100%

% of Annual Sales Forecast 27.0% 26.4%
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

131 | Page

Table 8-3: Industrial Sector Technical Potential Demand Savings

SUMMER PEAK DEMAND

2018 2023

Summary MW MW

Total 1,790 1,790

% of Peak 40.6% 39.7%

ECONOMIC POTENTIAL

Economic potential is a subset of technical potential, which only accounts for measures that are costeffective. This analysis includes two estimates of economic potential. One cost-effectiveness screen is 

based on the UCT and a second economic potential scenario was screened using the TRC Test. In both 

scenarios, the utility incentive was assumed to be equal to 50% of the measure incremental cost. The 

UCT was used for this study because it is mandated in Michigan to be the primary cost-effectiveness test 

used when considering energy efficiency programs. The TRC Test was also included because it also 

considers the cost assumed by the participant. 86% of all measures that were included in the electric 

potential analysis passed the UCT and 73% of all measures passed the TRC Test.

Table 8-4 indicates that the economic potential based on the UCT screen is slightly more than 7.1

million MWh during the 10 year period from 2014 to 2023. This represents 21.0% and 20.5% of 

industrial sales across the respective 5-year and 10-year timeframes. Machine drive, lighting and process

end uses make up a majority of the savings. Table 8-5 shows the economic demand savings potential in 

2018 and 2023. The five and ten year summer peak demand savings potential is 1,360 MW, respectively, 

which is 30.8% and 30.2% of the 5-year and 10-year peak forecasts.

Table 8-4: Industrial Sector Economic Potential (UCT) Savings By End Use

END USE

2018 ENERGY 

SAVINGS 

(MWH)

% OF 2018

TOTAL

2023 ENERGY 

SAVINGS 

(MWH)

% OF 2023

TOTAL

Machine Drive 3,344,311 47% 3,344,311 47%

Lighting 1,585,959 22% 1,585,959 22%

Ventilation 801,060 11% 801,060 11%

Process 571,628 8% 571,628 8%

HVAC Controls 364,007 5% 364,007 5%

Space Cooling 227,400 2% 227,400 2%

Space Heating 108,263 1% 108,263 1%

Other 162,932 1% 162,932 1%

Appliances, Computers, Office 

Equipment 70,706 1% 70,706 1%

Water Heating 64,468 1% 64,468 1%

Envelope 32,801 1% 32,801 1%

Total 7,133,458 100% 7,133,458 100%
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

132 | Page

END USE

2018 ENERGY 

SAVINGS 

(MWH)

% OF 2018

TOTAL

2023 ENERGY 

SAVINGS 

(MWH)

% OF 2023

TOTAL

% of Annual Sales Forecast 21.0% 20.5%

Table 8-5: Industrial Sector Economic Potential (UCT) Demand Savings

SUMMER PEAK DEMAND

2018 2023

Summary MW MW

Total 1,360 1,360

% of Peak 30.8% 30.2%

Table 8-6 shows that the economic potential based on the TRC screen is over 6.5 million MWh during

the 10 year period from 2014 to 2023. This represents 19.3% and 18.9% of industrial sales in 2018 and 

2023 respectively. As with UCT machine drive, lighting and process again make up a majority of the 

economic TRC savings potential. Table 8-7 shows the demand savings potential in 2018 and 2023. The 

five and ten year summer peak demand savings potential is 1,210 MW, which is 27.5% and 26.9% of the 

5-year and 10-year peak forecasts.

Table 8-6: Industrial Sector Economic Potential (TRC) Savings By End Use

END USE

2018 ENERGY 

SAVINGS 

(MWH)

% OF 2018

TOTAL

2023 ENERGY 

SAVINGS 

(MWH)

% OF 2023

TOTAL

Machine Drive 3,344,311 51% 3,344,311 51%

Lighting 1,164,015 18% 1,164,015 18%

Ventilation 672,929 10% 672,929 10%

Process 571,628 9% 571,628 9%

HVAC Controls 364,007 6% 364,007 6%

Space Cooling 165,956 2% 165,956 2%

Envelope 32,838 0% 32,838 0%

Other 107,408 2% 107,408 2%

Appliances, Computers, Office 

Equipment 68,628 1% 68,628 1%

Water Heating 53,484 1% 53,484 1%

Space Heating 22,812 0% 22,812 0%

Total 6,568,017 100% 6,568,017 100%

% of Annual Sales Forecast 19.3% 18.9%

Table 8-7: Industrial Sector Economic Potential Demand Savings

SUMMER PEAK DEMAND

2018 2023

Summary MW MW
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

133 | Page

Total 1,210 1,210

% of Peak 27.5% 26.9%

8.1.3 Achievable Potential Savings in the Industrial Sector

Achievable potential is an estimate of energy savings that can feasibly be achieved given market barriers 

and equipment replacement cycles. This study estimated achievable potential for three scenarios. The 

Achievable UCT Scenario determines the achievable potential of all measures that passed the UCT 

economic screening assuming incentives equal to 50% of the measure cost. Unlike the economic 

potential, the industrial achievable potential takes into account the estimated market adoption of 

energy efficiency measures based on the incentive level and the natural replacement cycle of 

equipment. The second scenario, Achievable TRC, also assumes incentives set at 50% of the measure 

incremental cost, but only includes measures that passed the TRC Test economic screening. The third 

scenario, Constrained UCT, assumes a spending cap equal to 2% of utility revenues, thereby limiting 

utilities from reaching the ultimate potential estimated in the Achievable UCT scenario. 

8.1.3.1 UCT vs. TRC 

Tables 8-8 through 8-11 show the estimated savings for the Achievable UCT and Achievable TRC

scenarios over 5 and 10 year time horizons. As noted above, both scenarios assume an incentive level 

approximately equal to 50% of the incremental measure cost and include an estimate 10-year market 

adoption rates based on incentive levels and equipment replacement cycles. However, because more 

measures pass the UCT relative to the TRC Test, the Achievable UCT scenario is able to include 

additional measures that would result in greater savings potential over the next five and ten years. 

Overall the Achievable UCT scenario results in an achievable potential that is 0.27 million MWh 

greater, over the next decade, than the achievable TRC scenario.

Table 8-8: Industrial Achievable UCT Potential Electric Energy Savings by End Use

2018 % OF 2018 2023 % OF 2023

Machine Drive 672,522 40% 1,345,044 44%

Lighting 433,232 26% 798,405 26%

Ventilation 212,221 13% 354,445 11%

HVAC Controls 151,334 9% 216,191 7%

Process 101,464 6% 202,927 4%

Space Cooling 43,943 3% 66,723 2%

Space Heating 7,166 1% 10,789 0%

Other 14,279 1% 27,129 1%

Appliances, Computers, 

Office Equipment 18,255 0% 35,045 1%

Water Heating 18,555 1% 28,881 1%

Envelope 1,520 0% 2,172 0%

Total 1,674,490 100% 3,087,742 100%

% of Annual Sales Forecast 4.9% 8.9%

Table 8-9: Industrial Achievable UCT Potential Demand Savings

SUMMER PEAK DEMAND

2018 2023
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

134 | Page

SUMMER PEAK DEMAND

Summary MW MW

Total 295.8 571.1

% of Peak 6.7% 12.7%

Table 8-10: Industrial Achievable TRC Potential Electric Energy Savings by End Use

2018 % OF 2018 2023 % OF 2023

Machine Drive 672,522 44% 1,345,044 48%

Lighting 332,748 22% 597,430 21%

Ventilation 183,798 12% 296,042 11%

HVAC Controls 148,907 10% 212,894 8%

Process 101,464 7% 202,927 7%

Space Cooling 42,949 3% 65,132 2%

Office Equip 18,103 1% 34,741 1%

Space Heat 6,352 0% 9,161 0%

Other 13,893 1% 26,576 1%

Water Heating 14,277 1% 22,728 1%

Envelope 2,628 0% 3,754 0%

Total 1,537,639 100% 2,816,429 100%

% of Annual Sales Forecast 4.5% 8.1%

Table 8-11: Industrial Achievable TRC Potential Demand Savings

SUMMER PEAK DEMAND

2018 2023

Summary MW MW

Total 278.5 539.2

% of Peak 6.3% 12.0%

8.1.3.2 Achievable UCT vs. Constrained UCT 

Although the Achievable UCT assumes incentives are set and capped at 50% of the incremental measure 

cost, and that measures are typically replaced at the end of their useful life, the Achievable UCT scenario 

also assumes no DSM spending cap to reach all potential participants. In the Constrained UCT scenario, 

the analysis assumes a spending cap roughly equal to 2% of Michigan annual utility revenues. The 

percent of the non-residential spending cap allocated to the industrial sector is based on the percentage 

of total non-residential UCT savings that the industrial sector represents. This presumes that the total 

non-residential spending cap will be allocated at the sector level based on where the savings 

opportunities are found. To model the impact of a spending cap the market penetration of all cost 

effective measures was reduced by the ratio of capped spending to uncapped spending that would be 

required to achieve the Achievable UCT scenario savings potential. 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

135 | Page

Tables 8-12 and 8-13 show the estimated savings for the Constrained UCT scenario over 5 and 10 year 

time horizons. The 5-year and 10-year Constrained UCT potential savings estimates are approximately 

786 thousand MWh and 1.7 million MWh. This equates to 2.3% and 5.0% of sector sales in 2018 and 

2023. The five and ten year summer demand savings estimates in the Constrained UCT scenario are 

138.1 MW and 334.9 MW, respectively, which is 3.1% and 7.4% of the peak forecast in 2018 and 2023.

Table 8-12: Industrial Constrained Achievable Energy Savings by End Use

2018 % of 2018 2023 % of 2023

End Use Energy (MWh) Savings Energy (MWh) Savings

Machine Drive 326,294 41% 785,827 45%

Lighting 204,780 26% 450,985 26%

Ventilation 95,201 12% 187,716 11%

HVAC Controls 65,900 8% 107,366 6%

Process 47,335 6% 113,998 7%

Space Cooling 19,350 2% 34,036 2%

Computers & Office 

Equipment 8,437 1% 19,449 1%

Building Envelope 662 0% 1,097 0%

Water Heating 8,209 1% 14,884 1%

Other 2,474 1% 15,007 1%

Space Heating 3,151 0% 5,484 0%

Total 785,903 100% 1,735,830 100%

% of Annual Sales 

Forecast 2.3% 5.0%

Table 8-13: Industrial Constrained Achievable Demand Savings

SUMMER PEAK DEMAND

2018 2023

Summary MW MW

Total 138.1 334.9

% of Peak 3.1% 7.4%

Figure 8-2 shows the estimated 10-year cumulative annual efficiency savings potential broken out by end 

use across the entire industrial sector for the Constrained UCT scenario. The Machine Drive end use

shows the largest potential for savings at just over 0.78 million MWh, or 45% of total savings, in the 

Constrained UCT scenario. Lighting is second at just over 0.45 million MWh, or 26% of total savings. 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

136 | Page

Figure 8-2: Industrial Sector 2023 Constrained UCT Potential Savings by End Use

Figure 8-3 shows the breakdown of estimated savings in 2023 by building type for the Constrained UCT 

scenario. The vast majority of savings come from the transportation equipment, primary metals, 

chemicals, plastics and rubber, fabricated metals, paper, and food industries; with the other SIC codes 

accounting for less than 20% of total savings.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

137 | Page

Figure 8-3: Industrial Constrained UCT Savings in 2023 by Industry

8.1.4 Annual Achievable Electric Savings Potential

Tables 8-14, Table 8-15 and Table 8-16 show cumulative energy savings for all achievable scenarios

for each year across the 10-year horizon for the study, broken out by end use.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

138 | Page

Table 8-14: Cumulative Annual Industrial Energy Savings in the Achievable UCT Potential Scenario by End Use

END USE 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Machine Drive 134,504 269,009 403,513 538,017 672,522 807,026 941,530 1,076,035 1,210,539 1,345,044

Lighting 73,540 162,764 258,175 353,546 433,232 512,918 584,761 655,973 727,185 798,405

Ventilation 26,695 70,889 123,833 176,776 212,221 247,665 274,360 301,055 327,750 354,445

HVAC Controls 10,810 43,238 86,476 129,714 151,334 172,953 183,762 194,572 205,381 216,191

Process 20,293 40,585 60,878 81,171 101,464 121,756 1420,49 162,342 182,635 202,927

Space Cooling 4,027 13,345 25,308 37,271 43,943 50,616 54,643 58,669 62,696 66,723

Office Equip 3321 7009 10,880 14,750 18,255 21,759 25,081 28,402 31,724 35,045

Space Heat 636 2,158 4,123 6,087 7,166 8,245 8,881 9,517 10,153 10,789

Other 2534 5426 8496 11566 14279 16992 19526 22060 24594 27129

Water Heat 1,860 5,776 10,721 15,666 18,555 21,443 23,302 25,162 27,021 28,881

Envelope 109 434 869 1,303 1,520 1,738 1,846 1,955 2,064 2,172

Total 278,327 620,633 993,271 1,365,870 1,674,490 1,983,110 2,259,741 2,535,741 2,811,742 3,087,742

% of Annual Sales Forecast 0.9% 1.9% 3.0% 4.1% 4.9% 5.8% 6.6% 7.3% 8.1% 8.9% 

Table 8-15: Cumulative Annual Industrial Energy Savings in the Achievable TRC Potential Scenario by End Use

END USE 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Machine Drive 134,504 269,009 403,513 538,017 672,522 807,026 941,530 1,076,035 1,210,539 1,345,044

Lighting 53,443 122,571 197,885 273,159 332,748 392,337 444,084 495,199 546,315 597,430

Ventilation 20,660 59,208 106,701 154,194 183,798 213,402 234,062 254,722 275,382 296,042

HVAC Controls 10,674 42,579 85,098 127,617 148,907 170,196 180,870 191,545 202,219 212,894

Process 20,293 40,585 60,878 81,171 101,464 121,756 142,049 162,342 182,635 202,927

Space Cooling 3,917 13,026 24,731 36,436 42,949 49,462 53,380 57,297 61,215 65,132

Office Equip 3,291 6,948 10,788 14,629 18,103 21,577 24,868 28,159 31,450 34,741

Space Heat 473 1,832 3,634 5,436 6,352 7,268 7,741 8,214 8,688 9,161

Other 2,507 5,315 8,275 11,235 13,893 16,550 19,057 21,563 24,070 26,576

Water Heat 1,545 4,546 8,275 12,004 14,277 16,549 18,094 19,639 21,183 22,728
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

139 | Page

END USE 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Envelope 188 751 1,502 2,253 2,628 3,003 3,191 3,379 3,567 3,754

Total 251,495 566,371 911,280 1,256,150 1,537,639 1,819,128 2,068,926 2,318,094 2,567,261 2,816,429

% of Annual Sales Forecast 0.8% 1.7% 2.8% 3.8% 4.5% 5.3% 6.0% 6.7% 7.4% 8.1% 

Table 8-16: Cumulative Annual Industrial Energy Savings in Constrained UCT Potential Scenario by End Use

END USE 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Machine Drive 80,205 140,224 194,641 250,427 326,294 403,355 498,013 594,477 691,256 785,827

Ventilation 43,430 82,862 121,091 160,266 204,780 249,995 300,069 350,650 401,396 450,985

Lighting 15,306 34,268 54,864 75,978 95,201 114,727 132,791 151,200 169,669 187,716

HVAC Controls 6,198 20,112 36,932 54,175 65,900 77,810 85,125 92,579 100,058 107,366

Process 11,635 20,342 28,236 36,329 47,335 58,514 72,246 86,239 100,279 113,998

Space Cooling 2,309 6,307 10,961 15,732 19,350 23,026 25,751 28,528 31,314 34,036

Computers & Office Equipment 1,904 3,487 4,992 6,536 8,437 10,367 12,615 14,905 17,203 19,449

Other 1,453 2,694 3,888 5,112 6,584 8,078 9,793 11,541 13,294 15,007

Water Heating 1,066 2,747 4,670 6,643 8,209 9,800 11,058 12,341 13,627 14,884

Space Heat 365 1,018 1,782 2,565 3,151 3,745 4,175 4,614 5,054 5,484

Building Envelope 62 202 371 544 662 782 855 930 1,005 1,079

Total 163,933 314,261 462,429 614,306 785,903 960,200 1,152,491 1,348,004 1,544,154 1,735,830

% of Annual Sales Forecast 0.5% 1.0% 1.4% 1.8% 2.3% 2.8% 3.4% 3.9% 4.5% 5.0%
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

140 | Page

Table 8-17: Cumulative Annual Industrial Demand Savings in the Achievable UCT Potential Scenario by End Use

END USE 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Machine Drive 23.2 46.5 69.7 92.9 116.2 139.4 162.6 185.8 209.1 232.3

Lighting 14.6 33.2 53.4 73.5 89.6 105.7 119.8 133.7 147.7 161.8

Process 3.5 7.0 10.5 14.0 17.5 21.0 24.5 28.0 31.5 35.0

Ventilation 2.4 4.9 7.3 9.8 12.2 14.7 17.2 19.6 22.0 24.5

Space Cooling 1.2 2.7 4.4 6.1 7.4 8.8 10.0 11.1 12.3 13.5

HVAC Controls 0.1 0.4 0.7 1.1 1.2 1.4 1.5 1.6 1.7 1.8

Other 0.8 1.6 2.4 3.2 4.0 4.8 5.6 6.4 7.2 7.9

Office Equipment 9.1 18.3 27.4 36.6 45.7 54.9 64.0 73.2 82.3 91.5

Space Heating 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Water Heating 0.2 0.6 1.0 1.5 1.7 2.0 2.2 2.4 2.6 2.8

Building Envelope 0.0 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.2 0.2

Total 55.2 115.1 176.9 238.7 295.8 352.8 407.5 462.0 516.5 571.1

% of Annual Sales Forecast 1.3% 2.7% 4.1% 5.4% 6.7% 7.9% 9.2% 10.3% 11.5% 12.7%
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

141 | Page

Table 8-18: Cumulative Annual Industrial Demand Savings in the Achievable TRC Potential Scenario by End Use

END USE 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Machine Drive 23.2 46.5 69.7 92.9 116.2 139.4 162.6 185.8 209.1 232.3

Lighting 10.5 25.0 41.5 58.1 70.6 83.1 93.6 104.0 114.5 125.0

Process 3.5 7.0 10.5 14.0 17.5 21.0 24.5 28.0 31.5 35.0

Ventilation

2.4 4.9 7.3 9.8 12.2 14.7 17.2 19.6 22.0 24.5

Space Cooling 0.2 0.3 0.5 0.7 0.9 1.1 1.2 1.4 1.5 1.7

HVAC Controls 0.1 0.4 0.7 1.1 1.2 1.4 1.5 1.6 1.7 1.8

Other 1.2 2.5 3.7 4.9 6.2 7.4 8.6 9.9 11.1 12.3

Office Equipment 9.7 19.4 29.2 38.9 48.6 58.3 68.1 77.8 87.5 97.2

Space Heating 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Water Heating 0.2 0.6 1.0 1.5 1.8 2.1 2.3 2.5 2.7 2.9

Building Envelope 0.6 1.3 1.9 2.6 3.2 3.9 4.5 5.2 5.8 6.4

Total

51.7 107.8 166.2 224.5 278.5 332.4 384.1 435.8 487.5 539.2

% of Annual Demand Forecast 1.2% 2.5% 3.8% 5.1% 6.3% 7.5% 8.6% 9.7% 10.9% 12.0%
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

142 | Page

Table 8-19: Cumulative Annual Industrial Demand Savings in Constrained UCT Potential Scenario by End Use

END USE 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Machine Drive 13.3 22.7 31.5 40.9 55.6 68.6 87.3 103.8 120.2 135.5

Lighting 8.4 16.4 24.1 32.1 41.0 50.0 59.7 69.6 79.3 89.0

Process 2.0 3.5 4.9 6.3 8.2 10.1 12.5 14.9 17.3 19.7

Ventilation 1.4 2.4 3.4 4.4 5.7 7.1 8.8 10.5 12.2 13.8

Space Cooling 0.7 1.3 2.0 2.7 3.4 4.1 4.9 5.8 6.6 7.4

HVAC Controls 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.8 0.9

Other 0.5 0.8 1.1 1.4 1.9 2.3 2.9 3.5 4.2 4.7

Office Equipment 5.2 9.2 12.7 16.4 21.1 27.2 36.0 45.0 54.1 62.5

Space Heating 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Water Heating 0.1 0.3 0.4 0.6 0.8 0.9 1.1 1.2 1.3 1.4

Building Envelope 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.1

Total 31.6 56.8 80.4 105.2 138.1 171.0 214.0 255.1 296.0 334.9

% of Annual Demand Forecast 0.8% 1.3% 1.9% 2.4% 3.1% 3.8% 4.8% 5.7% 6.6% 7.4%
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

143 | Page

8.1.5 Industrial Electric Savings Summary by Measure Group

Table 8-20 below provides an end-use breakdown of the industrial electric savings potential estimates for 

technical and economic potential, and each of the three achievable potential scenarios. The table 

indicates how the savings potential decreases systematically from the technical potential scenario to the 

Constrained UCT potential scenario as additional limiting factors such as cost-effectiveness requirements 

and anticipated market adoption at given funding levels are introduced.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

144 | Page

Table 8-20 Electric Potential by End-Use and Measure

END USE

TECHNICAL 

POTENTIAL 

(MWH)

ECONOMIC 

POTENTIAL

-UCT-

(MWH)

ECONOMIC 

POTENTIAL

-TRC-

(MWH)

ACHIEVABLE 

POTENTIAL

-UCT-

(MWH)

ACHIEVABLE 

POTENTIAL

-TRC-

(MWH)

CONSTRAINED 

ACHIEVABLE

-UCT-

(MWH)

Water Heating

Low Flow Faucet Aerator 16,458 16,458 16,458 3,542 3,542 1,759

Heat Pump Water Heater 15,728 15,728 15,728 6,620 6,620 3,719

Tank Insulation (electric) 14,885 14,885 14,885 9,940 9,940 4,937

Solar Water Heating System 10,539 10,539 0 6,007 0 0

High Efficiency Electric Water Heater 3,177 3,177 3,177 1,543 1,543 867

Efficient Hot Water Pump 3,005 3,005 3,005 943 943 468

Drain water Heat Recovery Water Heater 446 446 0 147 0 82

Hot Water (DHW) Pipe Insulation 174 174 174 113 113 56

Hot Water Circulation Pump Time-Clock 56 56 56 26 26 13

Point of Use Water Heating 22 0 0 0 0 0

Ventilation

Enthalpy Economizer 895,829 0 0 0 0 22,196

Demand-Controlled Ventilation 196,425 196,425 196,425 84,211 84,211 47,307

High Performance Air Filters 145,378 145,378 145,378 16,564 16,564 9,305

Improved Duct Sealing 139,823 0 0 0 0 0

Variable Speed Drive Control, 5 HP 96,838 96,838 96,838 58,331 58,331 28,968

Variable Speed Drive Control, 40 HP 96,838 96,838 96,838 58,331 58,331 28,968

Variable Speed Drive Control, 15 HP 96,838 96,838 96,838 58,331 58,331 28,968

Electronically-Commutated Permanent Magnet Motors (ECPMs) 38,207 38,207 38,207 15,441 15,441 8,674

Destratification Fan 11,858 0 0 0 0 0

Controlled Ventilation Optimization 2,405 2,405 2,405 943 943 530

Space Cooling - Chillers

Chilled Hot Water Reset 59,940 59,940 104,809 36,899 64,521 23,479

Efficient Chilled Water Pump 18,897 18,897 33,042 3,596 6,289 2,288
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

145 | Page

END USE

TECHNICAL 

POTENTIAL 

(MWH)

ECONOMIC 

POTENTIAL

-UCT-

(MWH)

ECONOMIC 

POTENTIAL

-TRC-

(MWH)

ACHIEVABLE 

POTENTIAL

-UCT-

(MWH)

ACHIEVABLE 

POTENTIAL

-TRC-

(MWH)

CONSTRAINED 

ACHIEVABLE

-UCT-

(MWH)

Air-Cooled Screw Chiller 14,824 14,824 14,824 3,202 3,202 1,799

Air-Cooled Recip Chiller 14,604 14,604 14,604 3,155 3,155 1,772

High Efficiency Pumps 3,001 3,001 12,378 571 2,356 509

Water-Cooled Centrifugal Chiller < 150 ton 2,932 2,932 2,932 633 633 356

Water-Cooled Centrifugal Chiller > 300 ton 2,929 2,929 2,929 633 633 355

Water-Cooled Centrifugal Chiller 150 - 300 ton 2,908 2,908 2,908 628 628 353

Water-Cooled Screw Chiller > 300 ton 2,755 2,755 2,755 595 595 334

Water-Cooled Screw Chiller 150 - 300 ton 2,527 2,527 2,527 546 546 307

Water-Cooled Screw Chiller < 150 ton 2,019 2,019 2,019 436 436 245

Space Cooling - Unitary and Split AC

Ground Source Heat Pump - Cooling 170,048 19,588 0 4,972 0 0

Ductless (mini split) - Cooling 169,368 0 0 0 0 0

High Efficiency AC - Unitary & Split Systems 63,112 63,112 0 22,784 0 12,799

Water Loop Heat Pump ( WLHP) - Cooling 11,039 11,039 11,039 3,985 3,985 2,239

Lighting

New Fluorescent Fixtures T5/HP T8 (replacing T12) 128,982 128,982 0 49,603 0 28,701

Induction Fluorescent 104,252 104,252 104,252 53,870 53,870 31,170

High Intensity Fluorescent Fixture (replacing HID) 94,044 94,044 94,044 45,294 45,294 26,208

T5 HP replacing T12 86,105 86,105 0 41,392 0 23,950

LED Exterior Flood and Spotlight 69,735 3,953 0 2,567 0 0

LED Wallpack 66,853 66,853 66,853 28,945 28,945 16,748

42W 8 lamp Hi Bay CFL 63,350 63,350 0 34,099 0 19,730

CFL Exterior Lighting 58,985 58,985 58,985 28,141 28,141 16,283

Light Tube 58,510 58,510 0 26,947 0 15,592

New Fluorescent Fixtures T5/HP T8 reduced wattage (replacing 

T8) 43,239 43,239 43,239 0 0 0
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

146 | Page

END USE

TECHNICAL 

POTENTIAL 

(MWH)

ECONOMIC 

POTENTIAL

-UCT-

(MWH)

ECONOMIC 

POTENTIAL

-TRC-

(MWH)

ACHIEVABLE 

POTENTIAL

-UCT-

(MWH)

ACHIEVABLE 

POTENTIAL

-TRC-

(MWH)

CONSTRAINED 

ACHIEVABLE

-UCT-

(MWH)

HID Fixture Upgrade - Pulse Start Metal Halide 41,385 41,385 41,385 9,515 9,515 5,506

Lamp & Ballast Retrofit (HPT8 Replacing T12) 41,380 41,380 41,380 19,892 19,892 11,299

Fluorescent Fixture with Reflectors 12,814 12,814 12,814 0 0 0

Lamp & Ballast Retrofit (Low Wattage HPT8 Replacing Standard 

T8) 11,223 11,223 11,223 0 0 0

LED Specialty 10,936 10,936 10,936 6,504 6,504 3,763

CFL Screw in Specialty 10,115 10,115 10,115 6,015 6,015 3,480

LED Outdoor Area Fixture (Parking Light or Street Light) 10,028 10,028 10,028 5,010 5,010 2,899

CFL Screw-in 6,576 6,576 6,576 3,911 3,911 2,045

LED Screw In 7,919 7,919 7,919 3,140 3,140 1,817

Lamp & Ballast Retrofit (HPT8 Replacing Standard T8) 7,576 11,223 0 0 0 0

LED Pin Based Lamp 7,299 7,299 7,299 2,894 2,894 1,674

LED Exit Sign 4,231 4,231 4,231 285 285 165

Illuminated Signs to LED 3,953 0 0 0 0 1,486

CFL Fixture 1,259 1,259 1,259 624 624 325

CFL Flood 1,029 1,029 1,029 612 612 354

LED Replacing Halogen Incandescent 954 954 954 567 567 328

LED Downlight 839 839 839 483 483 280

Lighting Controls

Daylight Dimming 241,517 241,517 241,517 156,853 156,853 80,234

Central Lighting Control 138,674 138,674 138,674 75,052 75,052 43,427

Switching Controls for Multilevel Lighting (Non-HID) 89,312 89,312 89,312 48,073 48,073 27,816

Switch Mounted Occupancy Sensor 73,469 73,469 0 46,359 0 26,824

Remote Mounted Occupancy Sensor 73,469 73,469 73,469 46,359 46,359 26,824

Stairwell Bi-Level Control 68,331 68,331 68,331 44,132 44,132 25,536

Controls for H.I.F. 17,350 17,350 17,350 11,268 11,268 6,520
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

147 | Page

END USE

TECHNICAL 

POTENTIAL 

(MWH)

ECONOMIC 

POTENTIAL

-UCT-

(MWH)

ECONOMIC 

POTENTIAL

-TRC-

(MWH)

ACHIEVABLE 

POTENTIAL

-UCT-

(MWH)

ACHIEVABLE 

POTENTIAL

-TRC-

(MWH)

CONSTRAINED 

ACHIEVABLE

-UCT-

(MWH)

Controls for HID (Hi/Lo) 8,291 0 0 0 0 0

Appliances, Computers, Office Equipment

Energy Star office equipment including computers, monitors, 

copiers, multi-function machines. 61,212 61,212 61,212 31,080 31,080 17,460

Energy Efficient "Smart" Power Strip for PC/Monitor/Printer 7,839 0 0 0 0 0

PC Network Energy Management Controls replacing no central 

control 7,416 7,416 7,416 3,661 3,661 1,818

Energy Star Compliant Single Door Refrigerator 2,078 2,078 0 304 0 171

EZ Save Monitor Power Management Software 753 0 0 0 0 0

Energy Star UPS 263 0 0 0 0 0

Building Envelope

Cool Roofing 291,304 0 0 0 0 0

Energy Efficient Windows 97,752 0 0 0 0 0

Ceiling Insulation R-11 to R-42 81,842 0 0 0 0 0

Wall Insulation R-7.5 to R13 29,969 29,969 31,280 1,457 1,521 736

Roof Insulation R-11 to R-24 24,134 0 0 0 0 0

Below Grade Insulation 2,311 2,311 2,423 683 716 343

HVAC Controls

EMS install 239,198 239,198 239,198 147,252 147,252 73,129

Programmable Thermostats 99,062 99,062 99,062 53,089 53,089 73,129

EMS Optimization 25,747 25,747 25,747 15,850 15,850 7,872

Space Heating

Ductless (mini split) - Heating 93,982 0 0 0 0 0

Ground Source Heat Pump - Heating 62,548 0 0 0 0 0

VFD Pump 14,151 14,151 14,151 7,663 7,663 3,805

High Efficiency Heat Pump 11,967 28,754 0 0 0 0

ECM motors on furnaces 6,289 6,289 6,289 1,197 1,197 594
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

148 | Page

END USE

TECHNICAL 

POTENTIAL 

(MWH)

ECONOMIC 

POTENTIAL

-UCT-

(MWH)

ECONOMIC 

POTENTIAL

-TRC-

(MWH)

ACHIEVABLE 

POTENTIAL

-UCT-

(MWH)

ACHIEVABLE 

POTENTIAL

-TRC-

(MWH)

CONSTRAINED 

ACHIEVABLE

-UCT-

(MWH)

Water Loop Heat Pump (WLHP) - Heating 4,510 4,510 0 1,628 0 915

High Efficiency Pumps 2,372 2,372 2,372 301 301 169

Other

NEMA Premium Transformer, three-phase 59,972 59,972 59,972 12,761 12,761 7,169

NEMA Premium Transformer, single-phase 38,231 38,231 38,231 8,135 8,135 4,570

Optimized Snow and Ice Melt Controls 4,682 4,682 4,682 3,022 3,022 1,501

Engine Block Heater Timer 3,306 3,306 3,306 2,135 2,135 1,199

Electrically Commutated Plug Fans in data centers 1,217 1,217 1,217 524 524 294

Vendor Miser for Non-Refrig Equipment 855 855 0 552 0 274

Process Heating

Electric Supply System Improvements 115,369 115,369 115,369 39,233 39,233 22,040

Sensors & Controls 112,867 112,867 112,867 38,378 38,378 21,559

Energy Information System 36,807 36,807 36,807 12,514 12,514 7,030

Process Cooling and Refrigeration

Improved Refrigeration 132,031 132,031 132,031 48,585 48,585 27,294

Electric Supply System Improvements 76,090 76,090 76,090 27,995 27,995 15,727

Sensors & Controls 74,287 74,287 74,287 27,329 27,329 15,353

Energy Information System 24,176 24,176 24,176 8,893 8,893 4,996

Machine Drive

Motor System Optimization (Including ASD) 1,595,219 1,595,219 1,595,219 612,224 612,224 357,685

Pump System Efficiency Improvements 387,428 387,428 387,428 148,984 148,984 87,042

Compressed Air System Management 324,440 324,440 324,440 187,765 187,765 109,700

Electric Supply System Improvements 278,666 278,666 278,666 106,905 106,905 62,458

Sensors & Controls 272,349 272,349 272,349 104,474 104,474 61,038

Advanced Efficient Motors 162,603 162,603 162,603 37,425 37,425 21,865

Energy Information System 86,616 86,616 86,616 33,224 33,224 19,411
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

149 | Page

END USE

TECHNICAL 

POTENTIAL 

(MWH)

ECONOMIC 

POTENTIAL

-UCT-

(MWH)

ECONOMIC 

POTENTIAL

-TRC-

(MWH)

ACHIEVABLE 

POTENTIAL

-UCT-

(MWH)

ACHIEVABLE 

POTENTIAL

-TRC-

(MWH)

CONSTRAINED 

ACHIEVABLE

-UCT-

(MWH)

Industrial Motor Management 69,714 69,714 69,714 40,112 40,112 23,435

Compressed Air - Advanced Compressor Controls 67,391 67,391 67,391 26,002 26,002 15,191

Advanced Lubricants 51,830 51,830 51,830 29,847 29,847 17,438

Fan System Improvements 48,056 48,056 48,056 18,082 18,082 10,564

Total 9,180,717 7,133,458 6,568,017 3,087,742 2,816,429 1,735,830

% of Annual Sales Forecast 26.4% 20.5% 18.9% 8.9% 8.1% 5.0%

Note: Measures in the above Table with "0" achievable potential are ones that did not pass the SCT Test.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

150 | Page

Table 8-21 provides a list of the Top 10 industrial electric savings measures for the Achievable UCT 

scenario. The table provides the measures ranked according to the electric savings potential. The column 

to the far right shows the results of the measure level cost-effectiveness screening test using the UCT to 

screen the measures. The table presents an average of the UCT ratios for all measures which are part of 

the measure categories in the Top 10.

The Top 10 measures combine to yield an estimated 1,682,050 MWh savings. This accounts for 54% of 

the total industrial electric savings in the Achievable UCT scenario.

Table 8-21: Top 10 Industrial Electric Savings Measures in the Achievable UCT Scenario

MEASURE

2023

ENERGY (MWH)

% OF SECTOR 

SAVINGS

UCT RATIO

1. Motor System Optimization (Including ASD) 612,224 20% 18.88

2. Compressed Air System Management 187,765 6% 16,869.70

3. Daylight Dimming 156,853 5% 7.57

4. Pump System Efficiency Improvements 148,984 5% 22.06

5. EMS install 147,252 5% 87.52

6. Electric Supply System Improvements 

(Motors) 106,905 3% 17.61

7. Sensors & Controls (Motors) 104,474 3% 12.63

8. Demand-Controlled Ventilation 84,211 3% 5.00

9. Central Lighting Control 75,052 2% 7.54

10. Variable Speed Drive Control, 40 HP 58,331 2% 2.69

Total 1,682,050 54%

8.2 INDUSTRIAL NATURAL GAS POTENTIAL

The GDS Associates natural gas consumption forecasts for the residential, commercial and industrial

segments of the Michigan economy indicates that annual natural gas consumption will decrease by about 

10% from 656.2 trillion BTU in 2013 to 587.2 trillion BTU in 2023.46 Over that same period industrial 

natural gas use is expected to decline by about 4% from 2012 levels. 

8.2.1 Natural Gas Energy Efficiency Measures Examined

For the industrial sector, there were 44 unique natural gas energy efficiency measures included in the 

potential natural gas savings analysis. Table 8-18 provides a brief description of the types of natural gas 

energy efficiency measures included for each end use in the industrial sector. The list of measures was 

developed based on a review of the Michigan Energy Measures Database (MEMD), and measures 

found in other Technical Reference Manuals (TRMs) and industrial potential studies. For each measure, 

the analysis considered incremental costs, energy savings, and useful measure life.

 46 GDS applied a forecast trends to actual deliveries by customer classes as reported by the U.S. Energy Information 

Administration (EIA). The annual sales forecast trends are based the EIA's Long term Reference Case forecast of natural 

gas consumption for the East North Central Region (Illinois, Indiana, Michigan, Ohio, and Wisconsin) as reported in the 

EIA 2013 Annual Energy Outlook. 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

151 | Page

Table 8-22: Measures and Programs Included in the Industrial Sector Analysis

END USE TYPE END USE DESCRIPTION MEASURES/PROGRAMS INCLUDED

Building Envelope Building Insulation & Air Sealing

• Wall Insulation R-7.5 to R13

• Below Grade Insulation

• Ceiling Insulation R-11 to R-42

• Energy Efficient Windows

• Roof Insulation R-11 to R-24

Conventional Boiler Use Boiler Improvements

• Insulate Steam Lines / Condensate 

Tank

• Repair Malfunctioning Steam Traps

• High Efficiency Hot Water Boiler 

(>300,000 Btu/h)

• Condensing Boiler (>300,000 Btu/h) 

(EF>90%)

• Boiler Pipe Insulation

• High Efficiency Steam Boiler (>300,000 

Btu/h)

• Boiler Reset Controls

• Boiler Blowdown Heat Exchanger 

(Steam)

• High Efficiency Hot Water Boiler 

(<=300,000 Btu/h)

• Boiler Tune-Up

• High Efficiency Steam Boiler 

(<=300,000 Btu/h)

• Condensing Boiler (<=300,000 Btu/h)

• Boiler O2 Trim Controls

• Electronic Parallel Positioning Controls 

(linkage less)

Facility HVAC HVAC improvements

• Stack Heat Exchanger (Condensing 

Economizer)

• Stack Heat Exchanger (Standard 

Economizer)

• High Efficiency Furnace (<=300,000 

Btu/h)

• Infrared Heater (low intensity - two 

stage)

• Direct Fired Make-up Air System

• Gas Unit Heater - Condensing

• Heat Recovery: Air to Air

• Insulate and Seal Ducts (New Aerosl 

Duct Sealing)

HVAC Controls HVAC Controls Improvement

• EMS Optimization

• EMS install

• Programmable Thermostats

Process Heating Process Heating Improvements

• Regenerative Thermal Oxidizer vs. STO

• Boiler Pipe Insulation

• High Efficiency Hot Water Boiler 

(>300,000 Btu/h)
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

152 | Page

END USE TYPE END USE DESCRIPTION MEASURES/PROGRAMS INCLUDED

• Condensing Boiler (>300,000 Btu/h) 

(EF>90%)

• High Efficiency Steam Boiler (>300,000 

Btu/h)

• Boiler Reset Controls

• Boiler Tune-Up

• Regenerative Thermal Oxidizer vs. CTO

• Improved Sensors & Process Controls

• Boiler O2 Trim Controls

• Electronic Parallel Positioning Controls 

(linkage less)

• Waste-Heat Recovery

Ventilation Ventilation & Fans

• Demand-Controlled Ventilation

• Controlled Ventilation Optimization

• Improved Duct Sealing

• Destratification Fan

8.2.2 Technical and Economic Potential Natural Gas Savings

This section presents estimates for natural gas technical, economic, and achievable potential for the 

industrial sector. Each of the tables in the technical, economic and achievable sections present the 

respective potential for efficiency savings expressed as cumulative savings (MMBtu) and percentage of

sales. Data is provided for a 5 and 10-year horizon for Michigan

SUMMARY OF FINDINGS

Figure 8-4 illustrates the estimated savings potential for each of all the scenarios included in this study.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

153 | Page

Figure 8-4: Summary of Industrial Natural Gas Energy Efficiency Potential as a % Sales Forecasts

The potential estimates are expressed as cumulative 5-year and 10-year savings, as percentages of the 

respective 2018 and 2023 industrial sector sales. The technical potential is 16.0% in 2018 and 17.1% in 

2023. The 5-year and 10-year economic potential is 13.0% and 13.9% based on the Utility Cost Test 

(UCT) screen, assuming an incentive level equal to 50% of the measure cost. Based on a measure-level 

screen using the TRC Test, the economic potential is 12.0% in 2018 and 12.8% in 2023. The slight drop 

from technical potential to economic potential indicates that most measures are cost-effective.

The 5-year and 10-year achievable potential savings are: 2.7% and 4.4% for the Achievable UCT 

scenario; 2.5% and 3.9% for the Achievable TRC scenario; and 0.7% and 1.3% for the Constrained 

Achievable scenario. The Achievable UCT scenario assumes 50% incentives and includes measures 

that passed the UCT Test. The Achievable TRC scenario also assumes 50% incentives but includes 

only measures that passed the cost-effectiveness screen based on the TRC Test. Last, the Constrained 

Achievable scenario is a subset of Achievable UCT scenario, assuming a spending cap on nonresidential DSM approximately equal to 2% of future annual industrial and industrial revenue. The 

percent of the non-residential spending cap allocated to the industrial sector is based on the 

percentage of total non-residential UCT savings that the industrial sector represents. This presumes 

that the total non-residential spending cap will allocated at the sector level based on where the 

savings opportunities are found. 

TECHNICAL POTENTIAL

Technical potential represents the quantification of savings that can be realized if energy-efficiency 

measures passing the qualitative screening are applied in all feasible instances, regardless of cost. Table 8-

23 shows that it is technically feasible to save over 26 million MMBtu during the 10 year period from 

2013 to 2023 across Michigan, representing just over 16.0% and 17.1% of 2018 and 2023 sector sales, 

respectively. Process heating represents the majority of the potential at 41% of 10-yr savings, while 

ventilation and Ventilation represent the smallest share with 3 percent of 10-yr savings. 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

154 | Page

Table 8-23: Industrial Sector Technical Potential MMBtu Savings By End Use

END USE

2018 ENERGY 

SAVINGS 

(MMBTU)

% OF 2018

TOTAL

2023 ENERGY 

SAVINGS 

(MMBTU)

% OF 2023

TOTAL

Process Heating 11,449,066 44% 11,449,066 44%

Facility HVAC 7,623,712 29% 7,623,712 29%

Conventional Boiler Use 3,225,394 12% 3,225,394 12%

Envelope 2,728,383 10% 2,728,383 10%

HVAC Controls 1,796,940 7% 1,796,940 7%

Ventilation 893,366 3% 893,366 3%

Lighting -1,533,839 -6% -1,533,839 -6%

Total 26,183,022 100% 26,183,022 100%

Percent of Annual Sales Forecast 16.0% 17.1%

ECONOMIC POTENTIAL

Economic potential is a subset of technical potential, which only accounts for measures that are costeffective. This analysis includes two estimates of economic potential. One cost-effectiveness screen 

is based on the UCT and a second economic potential scenario was screened using the TRC Test. 

In both scenarios, the utility incentive was assumed to be equal to 50% of the measure incremental 

cost. The UCT was used for this study because it is mandated in Michigan to be the primary costeffectiveness test used when considering energy efficiency programs. Because the TRC includes 

participant costs, it goes beyond utility resource acquisition and looks at the measure/program from a 

more broad perspective. 77% of all measures that were included in the electric potential analysis passed 

the UCT and 75% of all measures passed the TRC Test.

Table 8-24 indicates that the economic potential based on the UCT screen is just over 21 million

MMBTu during the 10 year period from 2014 to 2023. This represents 13.0% and 13.9% of industrial 

sales in 2018 and 2023. Process heating again makes up a majority of the savings.

Table 8-24: Industrial Sector Economic Natural Gas UCT Savings By End Use

END USE

2018 ENERGY 

SAVINGS 

(MMBTU)

% OF 2018

TOTAL

2023 ENERGY 

SAVINGS 

(MMBTU)

% OF 2023

TOTAL

Process Heating 10,011,269 47% 10,011,269 47%

Facility HVAC 6,362,046 30% 6,362,046 30%

HVAC Controls 3,069,341 14% 3,069,341 14%

Conventional Boiler Use 1,796,940 8% 1,796,940 8%

Ventilation 893,366 4% 893,366 4%

Envelope 574,166 3% 574,166 3%

Lighting -1,516,602 -7% -1,516,602 -7%

Total 21,190,526 100% 21,190,526 100%

Percent of Annual Sales Forecast 13.0% 13.9%

Table 8-25 shows that the economic potential based on the TRC screen is over 19 million MMBtu

during the 10 year period from 2014 to 2023. This represents 12.0% and 12.8% of industrial sales in 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

155 | Page

2018 and 2023. As with UCT process heating measures continue to makes up a majority of the savings 

potential. 

Table 8-25: Industrial Sector Economic Natural Gas TRC Savings By End Use

END USE

2018 ENERGY 

SAVINGS 

(MMBTU)

% OF 2018

TOTAL

2023 ENERGY 

SAVINGS 

(MMBTU)

% OF 2023

TOTAL

Process Heating 8,400,649 43% 8,400,649 43%

Facility HVAC 6,362,046 32% 6,362,046 32%

HVAC Controls 3,071,321 16% 3,071,321 16%

Conventional Boiler Use 1,796,940 9% 1,796,940 9%

Ventilation 893,366 5% 893,366 5%

Envelope 574,166 3% 574,166 3%

Lighting -1,486,891 -8% -1,486,891 -8%

Total 19,611,597 100% 19,611,597 100%

Percent of Annual Sales Forecast 12.0% 12.8%

8.2.3 Achievable Potential Savings in the Industrial Sector

Achievable potential is an estimate of energy savings that can feasibly be achieved given market barriers 

and equipment replacement cycles. This study estimated achievable potential for three scenarios. The 

Achievable UCT Scenario determines the achievable potential of all measures that passed the UCT 

economic screening assuming incentives equal to 50% of the measure cost. Unlike the economic 

potential, the industrial achievable potential takes into account the estimated market adoption of 

energy efficiency measures based on the incentive level and the natural replacement cycle of 

equipment. The second scenario, Achievable TRC, also assumes incentives set at 50% of the measure 

incremental cost, but only includes measures that passed the TRC Test economic screening. The third 

scenario, Constrained UCT, assumes a spending cap equal to 2% of utility revenues, thereby limiting 

utilities from reaching the ultimate potential estimated in the Achievable UCT scenario. 

8.2.3.1 UCT vs. TRC 

Tables 8-26 and 8-27 show the estimated savings for the Achievable UCT and Achievable TRC scenarios

over 5 and 10 year time horizons. As noted above, both scenarios assume an incentive level 

approximately equal to 50% of the incremental measure cost and include an estimate 10-year market 

adoption rates based on incentive levels and equipment replacement cycles. However, because more 

measures pass the UCT relative to the TRC Test, the Achievable UCT scenario is able to include 

additional measures that would result in greater savings potential over the next five and ten years. 

Overall the Achievable UCT scenario results in an achievable potential that is slightly less than eight

million MMBtu greater, over the next decade, than the achievable TRC scenario.

Table 8-26: Industrial Achievable UCT Natural Gas Potential Savings by End Use

END USE

2018 ENERGY 

SAVINGS 

(MMBTU)

% OF 2018

TOTAL

2023 ENERGY

SAVINGS 

(MMBTU)

% OF 2023

TOTAL

Process Heating 2,187,112 49% 3,295,968 49%

Facility HVAC 1,004,760 23% 1,664,228 25%

HVAC Controls 747,065 17% 1,067,236 16%

Conventional Boiler Use 603,287 14% 933,864 14%

Ventilation 211,567 5% 366,527 5%
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

156 | Page

END USE

2018 ENERGY 

SAVINGS 

(MMBTU)

% OF 2018

TOTAL

2023 ENERGY

SAVINGS 

(MMBTU)

% OF 2023

TOTAL

Envelope 79,173 2% 113,104 2%

Lighting -381,744 -9% -763,489 -11%

Total 4,451,220 100% 6,677,438 100%

Percent of Annual Sales Forecast 2.7% 4.4%

Table 8-27 Industrial Achievable TRC Natural Gas Potential Savings by End Use

END USE

2018 ENERGY 

SAVINGS 

(MMBTU)

% OF 2018

TOTAL

2023 ENERGY 

SAVINGS 

(MMBTU)

% OF 2023

TOTAL

Process Heating 1,721,341 43% 2,630,580 44%

Facility HVAC 1,004,760 25% 1,664,228 28%

Conventional Boiler Use 747,065 19% 1,067,236 18%

Ventilation 603,859 15% 934,681 16%

HVAC Controls 211,567 5% 366,527 6%

Envelope 79,173 2% 113,104 2%

Lighting -381,573 -10% -763,146 -13%

Total 3,986,192 100% 6,013,211 100%

Percent of Annual Sales Forecast 2.5% 3.9%

8.2.3.2 Achievable UCT vs. Constrained UCT 

Although the Achievable UCT assumes incentives are set and capped at 50% of the incremental measure 

cost, and that measures are typically replaced at the end of their useful life, the Achievable UCT scenario 

also assumes no DSM spending cap to reach all potential participants. In the Constrained UCT scenario, 

the analysis assumes a spending cap roughly equal to 2% of Michigan utility revenue. The percent of the 

non-residential spending cap allocated to the industrial sector is based on the percentage of total nonresidential UCT savings that the industrial sector represents. This presumes that the total non-residential 

spending cap will be allocated at the sector level based on where the savings opportunities are found. 

To model the impact of a spending cap the market penetration of all cost effective measures was reduced 

by the ratio of capped spending to uncapped spending that would be required to achieve the Achievable 

UCT scenario savings potential. 

Table 8-28 shows the estimated savings for the Constrained UCT scenario over 5 and 10 year time 

horizons. The 5-year and 10-year Constrained UCT potential savings estimates are approximately 1,070

thousand MMBtu and 2,039 thousand MMBtu. This equates to 0.7% and 1.3% of sector sales in 2018 

and 2023.

Table 8-28: Industrial Constrained UCT Natural Gas Achievable Energy Savings by End Use

END USE

2018 ENERGY 

SAVINGS 

(MMBTU)

% OF 2018

TOTAL

2023 ENERGY 

SAVINGS 

(MMBTU)

% OF 2023

TOTAL

Process Heating 592,610 55% 1,145,569 56%

Facility HVAC 248,601 23% 538,481 26%

Conventional Boiler Use 170,224 16% 306,447 15%

Ventilation 165,198 15% 330,310 16%
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

157 | Page

END USE

2018 ENERGY 

SAVINGS 

(MMBTU)

% OF 2018

TOTAL

2023 ENERGY 

SAVINGS 

(MMBTU)

% OF 2023

TOTAL

HVAC Controls 53,730 5% 122,272 6%

Envelope 18,040 2% 32,477 2%

Lighting -178,091

-17%

-436,739

-21%

Total 1,070,312 100% 2,038,818 100%

Percent of Annual Sales Forecast 0.7% 1.3%

Figure 8-5 shows the estimated 10-year cumulative natural efficiency savings potential broken out by

end use across the entire industrial sector. The Process Heating end use shows the largest potential for

savings by a wide margin at over 1.1 million MMBtu, or 56% of total savings, in the Constrained UCT 

Achievable scenario.

Figure 8-5: Industrial Sector 2023 Constrained UCT Achievable Potential Savings by End Use

Figure 8-6 shows the breakdown of estimated natural gas savings in 2023 by industry type for the 

Constrained UCT Achievable scenario. The vast majority of savings come from the transportation 

equipment, primary metals, chemicals, fabricated metals, non-metallic minerals, and food industries, 

with all other SIC codes accounting for less than 25% of savings. 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

158 | Page

Figure 8-6: Industrial Constrained UCT Achievable Potential Savings in 2023 by Industry

8.2.4 Annual Achievable Natural Gas Savings Potential

Tables 8-29, Table 8-30 and Table 8-31 show cumulative energy savings for all achievable

scenarios for each year across the 10-year horizon for the study, broken out by end use.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

159 | Page

Table 8-29: Cumulative Annual Industrial Natural Gas Savings in the Achievable UCT Potential Scenario, by End Use for Michigan

END USE 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Process Heat 194,815 659,194 1,258,354 1,857,515 2,187,112 2,516,709 2,711,523 2,906,338 3,101,153 3,295,968

Facility HVAC 123,261 332,846 585,591 838,337 1,004,760 1,171,183 1,294,444 1,417,705 1,540,967 1,664,228

HVAC Controls 53,362 213,447 426,895 640,342 747,065 853,789 907,151 960,513 1,013,874 1,067,236

Conventional Boiler Use 59,298 186,773 348,337 509,900 603,287 696,673 755,971 815,268 874,566 933,864

Ventilation 29,577 73,305 124,110 174,915 211,567 248,220 277,797 307,374 336,951 366,527

Envelope 5,655 22,621 45,242 67,862 79,173 90,483 96,138 101,793 107,449 113,104

Lighting (76,348) (152,697) (229,046) (305,395) (381,744) (458,093) (534,442) (610,791) (687,140) (763,489)

Total 389,620 1,335,488 2,559,482 3,783,476 4,451,220 5,118,963 5,508,582 5,898,201 6,287,819 6,677,438

% of Annual Sales Forecast 0.2% 0.8% 1.5% 2.3% 2.7% 3.2% 3.5% 3.8% 4.1% 4.4% 

Table 8-30: Cumulative Annual Industrial Natural Gas Savings in the Achievable TRC Potential Scenario, by End Use for Michigan

END USE 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Process Heat 161,545 526,116 992,199 1,458,283 1,721,341 1,984,399 2,145,944 2,307,490 2,469,035 2,630,580

Facility HVAC 123,261 332,846 585,591 838,337 1,004,760 1,171,183 1,294,444 1,417,705 1,540,967 1,664,228

HVAC Controls 53,362 213,447 426,895 640,342 747,065 853,789 907,151 960,513 1,013,874 1,067,236

Conventional Boiler Use 59,339 186,936 348,664 510,391 603,859 697,327 756,666 816,004 875,343 934,681

Ventilation 29,577 73,305 124,110 174,915 211,567 248,220 277,797 307,374 336,951 366,527

Envelope 5,655 22,621 45,242 67,862 79,173 90,483 96,138 101,793 107,449 113,104

Lighting (76,314) (152,629) (228,943) (305,258) (381,573) (457,887) (534,202) (610,516) (686,831) (763,146)

Total 356,425 1,202,642 2,293,758 3,384,872 3,986,192 4,587,514 4,943,938 5,300,363 5,656,787 6,013,211

% of Annual Sales Forecast 0.2% 0.7% 1.4% 2.0% 2.5% 2.9% 3.1% 3.4% 3.7% 3.9% 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

160 | Page

Table 8-31: Cumulative Annual Industrial Natural Gas Savings in Constrained Achievable Potential Scenario by End Use for Michigan

END USE 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Process Heat 113,268 232,321 353,177 475,207 592,610 710,404 819,060 927,372 1,036,158 1,145,569

Facility HVAC 62,049 108,569 152,708 197,276 248,601 300,097 359,619 418,953 478,546 538,481

HVAC Controls 26,862 62,395 99,671 137,310 170,224 203,247 229,015 254,701 280,500 306,447

Conventional Boiler Use 34,327 66,867 99,314 132,077 165,198 198,428 231,358 264,183 297,152 330,310

Ventilation 14,889 24,595 33,467 42,426 53,730 65,071 79,354 93,591 107,890 122,272

Envelope 2,847 6,613 10,563 14,552 18,040 21,540 24,271 26,993 29,727 32,477

Lighting (43,775) (76,534) (106,235) (136,682) (178,091) (220,151) (271,815) (324,465) (377,287) (436,739)

Total 210,467 424,825 642,666 862,166 1,070,312 1,278,635 1,470,860 1,661,328 1,852,687 2,038,818

% of Annual Sales Forecast 0.1% 0.3% 0.4% 0.5% 0.7% 0.8% 0.9% 1.1% 1.2% 1.3% 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

161 | Page

8.2.5 Industrial Savings Summary

Table 8-32 provides an end-use breakdown of the industrial natural gas savings potential estimates for 

technical and economic potential, and each of the three achievable potential scenarios. The table 

indicates how the savings potential decreases systematically from the technical potential scenario to the 

Constrained Achievable potential scenario as additional limiting factors such as cost-effectiveness 

requirements and anticipated market adoption at given funding levels are introduced.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

162 | Page

Table 8-32: Natural Gas Potential by End-Use and Measure

END USE

TECHNICAL 

POTENTIAL 

(MMBTU)

ECONOMIC 

POTENTIAL

-UCT-

(MMBTU)

ECONOMIC 

POTENTIAL

-TRC-

(MMBTU)

ACHIEVABLE 

POTENTIAL

-UCT-

(MMBTU)

ACHIEVABLE 

POTENTIAL

-TRC-

(MMBTU)

CONSTRAINED 

ACHIEVABLE

-UCT-

(MMBTU)

Conventional Boiler Use

Insulate Steam Lines / Condensate Tank 83,878 83,878 83,878 34,652 34,652 11,443

Repair Malfunctioning Steam Traps 419,389 419,389 419,389 173,260 173,260 57,213

High Efficiency Hot Water Boiler 

(>300,000 Btu/h) (Th. Eff. =85%-90%) 539,964 539,964 539,964 89,229 89,229 37,230

Condensing Boiler (>300,000 Btu/h) (EF>90%) (Th. Eff. >=90%) 32,637 32,637 32,637 7,491 7,491 3,125

Boiler Pipe Insulation 210,169 210,169 210,169 86,826 86,826 28,671

High Efficiency Steam Boiler 

(>300,000 Btu/h) (Th. Eff. >=80%) 251,634 251,634 251,634 41,582 41,582 17,350

Boiler Reset Controls 511,569 511,569 511,569 211,342 211,342 69,788

Boiler Blowdown Heat Exchanger (Steam) 261,211 261,211 261,211 107,913 107,913 35,634

High Efficiency Hot Water Boiler (<=300,000 Btu/h) (AFUE = 85%-

90%) 194,079 194,079 194,079 40,089 40,089 16,727

Boiler Tune-Up 164,071 164,071 166,051 67,782 68,600 22,382

High Efficiency Steam Boiler 

(<=300,000 Btu/h) (AFUE >=82%) 284,426 284,426 284,426 47,001 47,001 19,611

Condensing Boiler (<=300,000 Btu/h) (AFUE>90%) 116,314 116,314 116,314 26,696 26,696 11,138

Boiler O2 Trim Controls 78,224 0 0 0 0 0

Electronic Parallel Positioning Controls (linkage less) 77,830 0 0 0 0 0

Process Heating

Regenerative Thermal Oxidizer vs. STO 815,809 815,809 815,809 337,031 337,031 111,776

Boiler Pipe Insulation 848,957 848,957 848,957 350,725 350,725 116,317

High Efficiency Hot Water Boiler

(>300,000 Btu/h) (Th. Eff. =85%-90%) 2,120,091 2,120,091 2,120,091 350,345 350,345 146,812

Condensing Boiler (>300,000 Btu/h) (EF>90%) (Th. Eff. >=90%) 376,904 376,904 376,904 86,505 86,505 36,250
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

163 | Page

END USE

TECHNICAL 

POTENTIAL 

(MMBTU)

ECONOMIC 

POTENTIAL

-UCT-

(MMBTU)

ECONOMIC 

POTENTIAL

-TRC-

(MMBTU)

ACHIEVABLE 

POTENTIAL

-UCT-

(MMBTU)

ACHIEVABLE 

POTENTIAL

-TRC-

(MMBTU)

CONSTRAINED 

ACHIEVABLE

-UCT-

(MMBTU)

High Efficiency Steam Boiler 

(>300,000 Btu/h) (Th. Eff. >=80%) 989,276 989,276 989,276 163,478 163,478 68,505

Boiler Reset Controls 1,992,335 1,992,335 1,992,335 823,083 823,083 272,974

Boiler Tune-Up 729,934 729,934 729,934 301,554 301,554 100,010

Regenerative Thermal Oxidizer vs. CTO 527,344 527,344 527,344 217,859 217,859 72,252

Improved Sensors & Process Controls 1,610,620 1,610,620 0 665,387 0 220,674

Boiler O2 Trim Controls 310,217 0 0 0 0 0

Electronic Parallel Positioning Controls (linkage less) 308,653 0 0 0 0 0

Waste-Heat Recovery 818,927 0 0 0 0 0

Facility HVAC

Stack Heat Exchanger (Condensing Economizer) 570,220 570,220 570,220 208,558 208,558 59,885

Stack Heat Exchanger (Standard Economizer) 277,633 277,633 277,633 101,544 101,544 29,158

High Efficiency Furnace (<=300,000 Btu/h) (AFUE >=92%) 1,740,448 1,740,448 1,740,448 353,649 353,649 128,309

Infrared Heater (low intensity - two stage) 1,459,915 1,459,915 1,459,915 314,096 314,096 113,958

Direct Fired Make-up Air System 1,512,309 1,512,309 1,512,309 553,127 553,127 158,825

Gas Unit Heater - Condensing 801,522 801,522 801,522 133,253 133,253 48,346

Heat Recovery: Air to Air 470,878 0 0 0 0 0

Insulate and Seal Ducts (New Aerosol Duct Sealing) 790,787 0 0 0 0 0

Building Envelope

Wall Insulation R-7.5 to R13 159,032 159,032 159,032 7,733 7,733 2,220

Below Grade Insulation 7,912 0 0 0 0 0

Ceiling Insulation R-11 to R-42 415,134 415,134 415,134 105,371 105,371 30,256

Energy Efficient Windows 1,896,822 0 0 0 0 0

Roof Insulation R-11 to R-24 249,483 0 0 0 0 0

Ventilation

Improved Duct Sealing 653,831 653,831 653,831 225,009 225,009 81,636
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

164 | Page

END USE

TECHNICAL 

POTENTIAL 

(MMBTU)

ECONOMIC 

POTENTIAL

-UCT-

(MMBTU)

ECONOMIC 

POTENTIAL

-TRC-

(MMBTU)

ACHIEVABLE 

POTENTIAL

-UCT-

(MMBTU)

ACHIEVABLE 

POTENTIAL

-TRC-

(MMBTU)

CONSTRAINED 

ACHIEVABLE

-UCT-

(MMBTU)

Destratification Fan 239,535 239,535 239,535 141,519 141,519 40,636

HVAC Controls

EMS Optimization 127,103 127,103 127,103 78,245 78,245 22,467

EMS install 1,180,814 1,180,814 1,180,814 726,916 726,916 208,727

Programmable Thermostats 489,024 489,024 489,024 262,075 262,075 75,252

Lighting

Induction Fluorescent -1,533,839 -1,516,602 -1,486,891 -763,489 -763,146 -436,739

Total 26,183,022 21,190,526 19,611,597 6,677,438 6,013,211 2,038,818

% of Annual Sales Forecast 17.1% 13.9% 12.8% 4.4% 3.9% 1.3%

Note: Measures in the above Table with "0" achievable potential are ones that did not pass the SCT Test.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

165 | Page

Table 8-33 provides a list of the Top 10 industrial natural gas savings measures for the Achievable UCT 

scenario. The table provides the measures ranked according to the electric savings potential. The column to 

the far right shows the results of the measure level cost-effectiveness screening test using the UCT to screen 

the measures.

The Top 10 measures combine to yield an estimated 4,775,915 MMBtu savings. This accounts for 64% of 

the total industrial electric savings in the Achievable UCT scenario.

Table 8-33: Top 10 Industrial Gas Savings Measures in the Achievable UCT Scenario

MEASURE

2023

ENERGY 

(MMBTU)

% OF SECTOR 

SAVINGS

UCT RATIO

1. Boiler Reset Controls 823,083 11% 2.59

2. EMS Install 726,916 10% 18.81

3. Improved Sensors & Process Controls 665,387 9% 1.20

4. Direct Fired Make-up Air System 553,127 7% 1.99

5. High Efficiency Furnace 

(<=300,000 Btu/h) (AFUE >=92%) 353,649 5% 5.69

6. Boiler Pipe Insulation 350,725 5% 4.00

7. High Efficiency Hot Water Boiler

(>300,000 Btu/h) (Th. Eff. =85%-90%) 350,345 5% 2.11

8. Regenerative Thermal Oxidizer vs. STO 337,031 5% 17.61

9. Infrared Heater (low intensity - two stage) 314,096 4% 5.61

10. Boiler Tune-Up 301,554 4% 2.29

Total 4,775,915 64%

8.3 ACHIEVABLE POTENTIAL BENEFITS & COSTS

The tables below provide the net present value (NPV) benefits and costs associated with the three achievable 

potential scenarios for the industrial sector at the 5-year and 10-year periods. Tables 8-33 and 8-34 compare 

the 5 and 10 year NPV benefits and costs associated with the Achievable UCT and Achievable TRC 

Scenarios. Both the UCT and TRC scenario benefits include avoided energy supply and demand costs, while 

the Achievable TRC scenario benefits also include water savings benefits. The NPV costs in the Achievable 

UCT scenario includes only program administrator costs (incentives paid, staff labor, marketing, etc.) 

whereas the Achievable TRC scenario costs include both participant and program administrator costs.

Table 8-34: 5-Year Benefit-Cost Ratios for Achievable Potential Scenarios – Industrial Sector Only

5-YEAR NPV BENEFITS NPV COSTS B/C RATIO NET BENEFITS

Achievable UCT $1,460,878,857 $458,092,836 3.19 $1,002,786,022

Achievable TRC $1,586,366,858 $490,194,989 3.24 $1,096,171,869

Table 8-35: 10-Year Benefit-Cost Ratios for Achievable Potential Scenarios– Industrial Sector Only

10-YEAR NPV BENEFITS NPV COSTS B/C RATIO NET BENEFITS

Achievable UCT $2,475,174,491 $697,726,700 3.55 $1,777,447,791

Achievable TRC $2,710,700,750 $795,215,890 3.41 $1,915,484,860

Tables 8-35 and 8-36 compare the NPV benefits and costs associated with the Achievable UCT and 

Constrained UCT Scenarios. Both scenarios compared the benefits and costs based the UCT. However the 
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

166 | Page

constrained scenario’s 2% of revenue spending cap on DSM results in reduced program participation and 

overall NPV benefits.

Table 8-36: 5-Year Benefit-Cost Ratios for Achievable Potential Scenarios – Industrial Sector Only

5-YEAR NPV BENEFITS NPV COSTS B/C RATIO NET BENEFITS

Achievable UCT $1,460,878,857 $458,092,836 3.19 $1,002,786,022

Constrained UCT $624,960,526 $186,886,891 3.34 $438,073,636

Table 8-37: 10-Year Benefit-Cost Ratios for Achievable Potential Scenarios– Industrial Sector Only

10-YEAR NPV BENEFITS NPV COSTS B/C RATIO NET BENEFITS

Achievable UCT $2,475,174,491 $697,726,700 3.55 $1,777,447,791

Constrained UCT $1,264,708,643 $332,546,178 3.34 $932,162,465

Year by year budgets for all three scenarios, broken out by incentive and administrative costs are depicted in 

Tables 8-37 through 8-39. Table 8-40 shows the revenue requirements for each scenario as a percentage of 

forecasted sector sales.
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

167 | Page

Table 8-38: Annual Program Budgets Associated with the Achievable UCT Scenario (in millions)

ACHIEVABLE UCT 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Incentives $51.2 $76.5 $88.9 $88.5 $62.2 $62.4 $49.1 $49.2 $49.8 $51.5

Admin. $21.1 $31.3 $36.2 $36.0 $25.5 $25.6 $20.3 $20.3 $20.6 $21.3

Total Costs $72.4 $107.8 $125.1 $124.5 $87.7 $88.0 $69.4 $69.5 $70.4 $72.8 

Table 8-39: Annual Program Budgets Associated with the Achievable TRC Scenario (in millions)

ACHIEVABLE TRC 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Incentives $35.5 $46.8 $52.5 $52.6 $41.8 $42.1 $39.2 $36.7 $37.5 $39.7

Admin. $14.9 $19.4 $21.7 $21.7 $17.4 $17.5 $15.3 $15.3 $15.7 $16.5

Total Costs $50.4 $66.2 $74.2 $74.3 $59.1 $59.6 $55.5 $52.0 $53.1 $56.2 

Table 8-40: Annual Program Budgets Associated with the Constrained UCT Scenario (in millions)

CONSTRAINED UCT 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Incentives $28.8 $29.2 $29.7 $30.2 $30.6 $31.1 $31.5 $32.0 $32.6 $33.1

Admin. $11.9 $12.0 $12.3 $12.5 $12.6 $12.8 $13.0 $13.2 $13.4 $13.6

Total Costs $40.7 $41.2 $42.0 $42.7 $43.2 $43.9 $44.5 $45.2 $46.0 $46.7 

Table 8-41: Revenue Requirements per Scenario as a % of sector sales

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Achievable UCT 3.5% 5.2% 5.9% 5.8% 4.0% 3.9% 3.0% 3.0% 3.0% 3.1%

Achievable TRC 2.5% 3.4% 3.7% 3.7% 2.8% 2.8% 2.5% 2.3% 2.4% 2.4%

Constrained UCT 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
STATEWIDE MICHIGAN ENERGY EFFICIENCY POTENTIAL

PREPARED BY GDS ASSOCIATES, INC.

168 | Page

APPENDIX A: RESIDENTIAL MEASURE DETAIL

APPENDIX B: COMMERCIAL MEASURE DETAIL

APPENDIX C: INDUSTRIAL MEASURE DETAIL

APPENDIX D: GLOBAL ASSUMPTIONS
MICHIGAN ELECTRIC AND NATURAL GAS

ENERGY EFFICIENCY POTENTIAL STUDY

Prepared for:

MICHIGAN PUBLIC SERVICE COMMISSION

Prepared By:

GDS ASSOCIATES, INC.

1850 PARKWAY PLACE

SUITE 800

MARIETTA, GA 30067

770.425.8100

770.426.0303 (FAX)

WWW.GDSASSOCIATES.COM