AESP Magazine 2019

What’s Next for the Energy Efficiency Industry? elerecnetenrwivacibrlcoeonenmvseearnlvutaatitoengas smart DSMmeters energyresidential green supply TOU ef ciency evaluate Pay-for-Performance Assessing Resource Demands Actionable Intelligence Cost Effectiveness Innovations in 5 Things to Learn now about Residential & Building Programs Gas Efficiency Programs

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AESP MAGAZINE IS PRODUCED BY: You Asked for This… Association of Energy Services Professionals 15215 S. 48th St., Suite 170 We hope you enjoy this issue Phoenix, AZ 85044 of AESP Magazine. You’ve Tel: (480) 704.5900 told us what you wanted to AESP.ORG learn about and we found the industry experts from AESP’s EDITORIAL TEAM membership to write about them – the latest utility programs, new Adeline Lui, AESP, Editor technologies, developments in Chris Baggett, APS evaluation, marketing, business Jeff Ihnen, Michaels Energy models and more. Enjoy! Sherry McCormack, SWEPCO Tracy Narel, ENERGY STAR® CONTENTS Laura Orfanedes, ICF Laura Schauer, Illume Advising 04 08 11 14LOOK INSIDE Elizabeth Titus, NEEP What if you could look inside your program and Greg Wikler, Navigant What's Next for the Assessing Resource Energy Efficiency Cost Effectiveness understand RIGHT NOW what is or isn’t working? GRAPHIC DESIGN Industry BY ERIN MALONE, TIM WOOLF, Strategic Electrification Shaping a Building's Sawyer Design Services BY LUISA FREEMAN AND DANIELLE GOLDBERG Technologies Load Using Multiple AESP STAFF BY WILLIAM TOKASH your programResources John Hargrove, President & CEO AND BRETT FELDMAN Suzanne Jones, Chief Operating Officer BY ARVIND SUBRAMANYA Shannon King, Vice President, Finance & Administration Quinn Parker, Vice President, Content & Research 18 21 24 28 Kim Burtraw, Director, Meetings & Events ER+E Adeline Lui, Director, Marketing & Communications Cindy Urbaytis, Manager, Member Relations What's Next for Let's Talk About Pay-for-Performance Emerging Trends Jennifer Lee, Program Specialist Residential Efficiency Non-Energy Impacts Demands Actionable in IDSM Alexandra Verhein, Marketing Coordinator Intelligence Amelia Hall, Administrative Specialist BY DREW SCATIZZI BY NOEL STEVENS BY GREG WIKLER BY CARMEN BEST AND TERI LUTZ AND SHARON MULLEN BOARD OF DIRECTORS 32 35 37 40 Dave Backen, Milepost Consulting Peter Banwell, ENERGY STAR® EPA EMBEDDED Chris Baggett, APS Raegan Bond, Dunsky Energy Consulting Learn from the Leaders How Innovative Gas Efficiency RESEA2R0C19HA&ESEPVEAnLeUrgAyTION Art Christianson, The Home Depot Utilities are Using Charmaine Cigliano, Orange & Rockland BY SUSAN GILBERT Smart Technology Programs ActiAownaabrdlesIWntienllnigeernsce to Bob Collins, RPM Research Sarah Colvin, ecobee BY JEFF HAMEL BY ANDY MITCHELL explore, inform, improve & engage William Ellis, Pepco Sue Hanson, Tetra Tech AND LORELEI OBERMEYER Jeff Ihnen, Michaels Energy Michael Li, U.S. DOE The following organizations are proud to support AESP and its mission. Thank you! learn more James Linder, TVA Erika Lontoc, Enbridge Gas Distribution Danielle Marquis, AM Conservation Sherry McCormack, SWEPCO Tim Michel, PG&E Vicki Nichols, JEA Bill Norton, Opinion Dynamics, BOARD CHAIR Laura Orfanedes, ICF Laura Schauer, Illume Advising Michael Volker, East River Electric Power Subid Wagley, SMUD Lynn Westerlind, National Grid Greg Wikler, Navigant All rights reserved. Contents may not be reproduced by any means, in whole or in part, without prior written permission from AESP. The opinions expressed by the authors do not necessarily reflect those of AESP. Additional copies of this magazine may be ordered for $10 each, shipping and handling included. Contact: [email protected]. info.michaelsenergy.com/ere www.aesp.org | 2019 3

PROGRAM PORTFOLIOS IN TRANSITION A REGIONAL SCAN Energy efficiency remains the nation’s third- OF WHAT’S NEXT FOR THE largest electricity resource, employing 2.25 million ENERGY EFFICIENCY INDUSTRY Americans and typically providing the lowest-cost way to meet customers’ energy needs. By Luisa Freeman Source: ACEEE 2018 State Scorecard Introduction From reversing course to adopting game-changing ways of doing business, virtually all energy program providers will have to deal with Change is the new normal when it comes to utility energy efficiency these challenges sooner or later. The question is, How fast, how much portfolios. After a few decades of relatively incremental progressions and how soon? in program designs and content, energy service providers across the country are having to dramatically rethink their portfolios along The answer depends on several contextual factors, the main ones being: several key dimensions: ■■ Regulatory policies 1. Program objectives – From saving energy and reducing peak ■■ System requirements demand, to decarbonization and beneficial load building ■■ Market conditions 2. Program measures – Less about lighting and more about State legislators have been active in 2018. According to the National incorporating the latest emerging electro-technologies Conference of State Legislators:1 “Renewable energy and energy efficiency measures continue to dominate energy policy in state 3. Program features – Back to the future where incentives are being legislatures with almost 1,000 bills considered across the country in reconsidered in favor of informational services (i.e. from audits to 2018. State interest in renewable energy in particular, continues to rebates and back to audits) grow, as it becomes more cost-effective and increasingly competitive with traditional generation sources.” 4. Program outreach – Bill inserts and one-off marketing methods are being replaced with ways to meet customers where they live and work: i.e. on social media. 4 Association of Energy Services Professionals

Regional Commonalities KEY TRENDS TO LOOK FOR While regulations are set at the state level, there are some Electrification and picking the right consistencies in energy program policies within key geographic energy source for the task areas of the country, where the two coasts are often the first to test and adopt new concepts around energy usage. Energy markets Considering carbon impacts both from and system requirements are regional in nature, as are climate shifting direct use of fossil fuels, as well as challenges. Finally, market economies and cultural attitudes certainly vary from place to place, but also have some regional generation fuel sources consistencies. This article highlights major portfolio trends taking place across the U.S. based on a high-level regional scan. Reducing emphasis on rebates in acknowledgement of the transformation of Southeast: Electrification and Rethinking of Rebates products to higher efficiencies Many utilities are experiencing flat to declining loads and are Increasing transparency around building energy challenged to broaden their use and customizing that information in customer programs to maintain and more accessible ways grow usage levels to ensure grid stability, maintain the economics Lowering the costs of energy efficiency program of baseload plants, fill valleys delivery through online marketplaces, web-based with beneficial electrification and encourage the adoption of appropriate new electro-technologies services and Wi-Fi enabled tools where it makes sense for customers. The rapid growth of mid-sized southern cities is opening opportunities for urban electrification Incorporating distributed generation, EVs opportunities. Like other parts of the U.S., utilities in the southeast, and controllable loads to provide demand such as TVA, are committed to replacing fossil fuel assets with cleaner energy sources over time, and decarbonization is a priority.2 response benefits At the same time, regulatory bodies in some southern states like consulting firms, but trade allies, vendors, non-profits, universities, Kentucky are acknowledging the market transformation of equipment etc. – to apply for funding with their ideas for pilot programs and like lighting and questioning the fairness of continuing to fund energy demonstrations of new technologies. This approach recognizes efficiency rebates with ratepayer funds. Given this combination of that there is no monopoly on good ideas, and that it will take a host changing market conditions, regulatory directives and the need to of organizations to identify and achieve the savings opportunities stabilize the grid and keep rates low, energy service providers in necessary for meeting the goals. To ensure statewide consistency, states like Tennessee and Georgia are looking to pivot their program these two utilities are cooperating by offering some programs using portfolios to deemphasize rebates for energy efficiency measures, a common platform and outreach strategy – but branded separately. incentivize selected electric measures that replace fossil fuels or This kind of cooperation recognizes the importance of making it add efficient new loads, and offer more services and education to easy for people to consider their energy usage investments by not both customers and trade allies. Georgia Power for one has had making them go to several sites to get the information they need. a very active online marketplace for a few years now to help meet their In stark contrast however, is Iowa, where the state legislature is customers where they live – i.e., on focused on costs and eliminating burdens to ratepayers for energy the Internet. That trend is likely to efficiency programs. A new law no longer requires small municipal continue as Millennials become the utilities and coops to offer energy efficiency programs, disallows next largest cohort to Baby Boomers to investor-owned utilities to collect more than 2 percent of annual start thinking about their energy use. revenue to fund efficiency programs and allows customers to opt Midwest: Cooperation and Innovation out of paying for such programs where the Ratepayer Impact The upper Midwest is home to Minimization test fails.4 continuing regulatory and policy support for energy efficiency programs with increasing savings targets in some states and incentives that explicitly encourage investment in longer- term measures by tying eligibility or awards to savings over time (Michigan and Illinois)3. The challenge is that the market for efficiency is already mature, making it hard to reach these higher goals. Utilities are having to face this challenge by being innovative and taking advantage of new tools and techniques for identifying and securing participation. One way in which two major Michigan utilities – Consumers Energy and DTE Energy - are facing the challenge is by widening the tent when seeking ideas for incorporating innovation into their portfolios. These companies invite all parties – not just www.aesp.org | 2019 5

Mid-Atlantic: Shifting Southwest: Dealing with Ducks in the Desert Program Ownership while Increasing Goals For utilities in the American Southwest, the combination of As noted by ACEEE in its 2018 significant increases in distributed State Scorecard report, “In states solar energy plus low to flat customer including Virginia, New York, and loads on the system are threatening New Jersey, policymakers unveiled plans for increased investment in baseload resources. When customer clean energy and energy efficiency, driven in particular by concerns demand hits a daily peak, utilities regarding climate change.”5 Energy efficiency and distributed energy typically can either draw upon peaking resources remain an important component of state level energy units or call on demand response resources. However, when demand policies in many jurisdictions in the Northeast region, where the for utility-provided electricity drops too low – such as when solar impacts from Hurricane Sandy and other major weather events PV resources are serving customers’ needs in the daytime – utilities continue to influence policies directed at energy service providers. don’t necessarily have the capability to throttle down their baseload units – you can’t turn a nuclear unit on and off when needed. System The way in which programs are delivered to customers, however, planners are thus challenged in regions where the Duck Curve is shifting from statewide implementation by third parties back to the dominates their customer usage pattern. How can portfolios be utilities.6 This has given some utilities in those states redesigned to help, while maintaining the ever present need to ensure a “good news/bad news” challenge – the good efficient uses of energy? By promoting strategic electrification – that news being that utilities are directly able to deliver encourages customers to shift or add usage between 9am and 3pm, services to their end-use customers and can take for example – and by considering reverse demand response initiatives. advantage of usage data to help identify opportunities and measure impacts. The challenge is that many Reverse demand response is exactly what it sounds like — it asks to utilities lost the capacity to run large programs turn equipment on to use energy when it is available, rather than turn and are now faced with quickly ramping up their equipment off to lower the load. These strategies are likely to dominate programs to ensure they can achieve the relatively the next era of utility portfolios in regions, like the Southwest, where high goals that have been established. Indeed, there flattening system load factor through strategic electrification can help has been a flurry of activity among utilities in this customers incorporate efficient new electric equipment while enabling region as they transition programs from third parties the utilities to keep rates low. back to utility management while making sure that customer and trade ally relationships are maintained. Pacific Northwest: Shifting from Lighting to Services This is one region where energy efficiency initiatives will continue in importance for years to come. Though not unique to this region of the U.S., service providers here Northeast: Carb Dieting and Building Labeling are cutting back on incentives for lighting, with the understanding States in the northern reaches, such that the market has transformed as Massachusetts, Maine and Vermont, to higher efficiency equipment. are shifting focus from energy savings What to offer next varies depending toward carbon reduction goals, with on the sector. For business and an acknowledgement of the growing industrial spaces, there is more emphasis on energy management concerns over climate change and systems, controllable loads and demand response options, what can be done to mitigate, if not where integrating demand response and peak demand reverse, the effects. This is another reduction value into the regional DSM portfolios is a priority. area in which electrification can be highly beneficial, particularly in a region where oil heat is still prevalent and where products like heat On the residential side, there remains a focus on energy efficiency pump technology have advanced to be applicable in colder climates. but with a growing appreciation that equitable programs that serve all rate-paying communities will help keep rates low for the region. To help households and businesses better understand the full And like other regions, the impacts of increased adoption of electric energy usage profile of properties, work is under way to develop vehicles and renewables are of concern as to how to integrate these building labeling so that there is increased transparency around this market developments into program offerings and resource plans. important consideration when purchasing To help with these questions, large residential and commercial or renting space. The HELIX Program (Home end-use load shape studies are currently under way to update Energy Labeling eXchange) is one example.7 This assumptions and estimates of the impacts of these strategies, region is looking to energy efficiency programs something that all regions of the country could benefit from doing. to help support states’ carbon reduction goals. Knowing where you stand regarding energy Across the country, new opportunities for efficiency and usage – and the optimal types of energy you distributed resources continued to arise through improved data should be using – will continue to be a big focus access, policy innovations, and technological advancements like in this region as efforts continue to push toward smart control systems, geographic targeting, electric vehicle improving the efficiency of the building stock. grid integration, and energy storage. Source: ACEEE 2018 State Scorecard 6 Association of Energy Services Professionals

Western States: Here Comes the Sun Conclusion Solar energy is dominating Across the U.S. the prospect for energy efficiency program portfolio the conversations in California, remains strong, with anywhere from slight to major shifts toward: Nevada and other western states where legislators are ■■ Electrification and picking the right energy source for the task continuing to aggressively push the transformation of electricity ■■ Considering carbon impacts both from shifting direct use of fossil generation to distributed renewable fuels, as well as generation fuel sources energy sources. On the customer front, policies are focused on new construction, where all new ■■ Reducing emphasis on rebates in acknowledgement of the homes in California will have to incorporate PV solar panels transformation of products to higher efficiencies starting in 2020. Furthermore, Zero Net Energy (ZNE) is slated to become the objective of new commercial spaces. ■■ Increasing transparency around building energy use and customizing that information in more accessible ways \"The 2019 Building Energy Efficiency Standards…focus on four key areas: smart residential photovoltaic systems, updated thermal ■■ Lowering the costs of energy efficiency program delivery through envelope standards (preventing heat transfer from the interior to online marketplaces, web-based services and Wi-Fi enabled tools exterior and vice versa), residential and nonresidential ventilation requirements, and nonresidential lighting requirements.\"8 ■■ Incorporating distributed generation, EVs and controllable loads to provide demand response benefits In some ways, California has been so successful with its energy efficiency goals that some of the same issues are confronting Efficiency remains the central concept – in both energy usage and utilities there as in the Southeast and other regions. According how programs are operated. Of course, pressures and challenges to the California Public Utilities Commission (CPUC), “Due to the will continue to impact how portfolios evolve across the U.S. and state’s efficiency programs, per capita energy use has remained in specific regions. Taking advantage of information sources like flat.”9 The CPUC issued a directive in 2018 that requires utilities to AESP and the Regional Energy Efficiency Organizations (REEOs) have at least 60 percent of their energy efficiency portfolio budgets will help make sure that everyone involved – from policy makers, designed and implemented by third party implementers by the regulators and energy services providers program staff – can end of 2022. And, while utility energy efficiency portfolios continue have the best knowledge and tools available to help transition to address the existing building stock, the savings opportunities their program portfolios for the benefit of all stakeholders. for new construction are being simultaneously captured through legislation such as the aggressive 2019 building codes. Reference To date, behavior programs have made up a big part of the savings 1 http://www.ncsl.org/research/energy/2018-energy-trends-across-state-legislatures.aspx. in residential utility portfolios, yet evaluation requirements have been relatively strict, and efforts are underway to attempt to better 2TVA’s draft Integrated Resource Plan 2019. capture the full benefit of such initiatives. Other features of 3 Rachel Gold, ACEEE blog “The gift that keeps giving: energy efficiency produces value year utility portfolios in this region after year” https://aceee.org/blog/2019/02/gift-keeps-giving-energy-efficiency. include on-line marketplaces for national retail product portfolios 4 http://www.mwalliance.org/initiatives/policy/iowa for information on Iowa EE legislation and encouraging adoption and its impact on EE program portfolios in that state. of smart thermostats for their load management benefits. 5 ACEEE 2018 State Scorecard. Island Economies: Hawaii & Puerto Rico 6 Third party implementers have included the New York State Energy Research and Development Authority [NYSERDA] and the Board of Public Utilities in New Jersey (NJBPU). Along with the Florida panhandle area and deep South locations, the areas where utility systems are perhaps most challenged by 7 https://neep.org/initiatives/energy-efficient-buildings/green-real-estate-resources/helix. climate events are on the islands. Like other island economies, these parts of the US are highly dependent on fossil fuel-based 8 https://www.energy.ca.gov/releases/2018_releases/2018-05-09_building_standards_ generation, where oil is imported to be used in electric generation adopted_nr.html. plants. As a result of these two factors alone, energy efficiency has been a major focus on energy policies in Hawaii, and that won’t likely 9 http://www.cpuc.ca.gov/egyefficiency/. change. But like its eastern relatives in the Caribbean and Puerto Rico, these island economies are having to get more aggressive about About the author reducing greenhouse gases and – more importantly – building up the energy systems and the overall resiliency of the building stock. The Luisa Freeman is a Senior Principal Consultant, Program devastation caused by Hurricane Maria in Puerto Rico – and in some Development and Implementation at DNV GL Energy. With utility jurisdictions in the deep South – is presenting an opportunity over 30 years of experience in the industry, she is currently for drastically improving the building stock and adding distributed responsible for assisting utilities, government agencies and generation equipment. Program portfolios are likely to shift attention energy service providers to transform their customer services. toward encouraging the adoption of equipment to make buildings She is an economist and market research professional, has more resilient, both in retrofit situations as well as new builds. held positions on the Boards of Directors of the Smart Energy Consumer Collaborative and AESP Southeast and National Capital chapters. www.aesp.org | 2019 7

ASSESSING RESOURCE COST EFFECTIVENESS By Erin Malone, Tim Woolf, and Danielle Goldberg Introduction In the past, when it came to cost-effectiveness testing for energy efficiency resources, the California Standard Practice Manual (CASPM) got all the attention. States claim to have adopted the CASPM’s tests, as evidenced by the widespread use of the test names across states: the utility cost (UCT), total resource cost (TRC), societal cost (SCT), participant cost (PCT), and ratepayer impact measure (RIM) tests. States may have adopted the tests in name, but in practice their tests can differ wildly in terms of included costs and benefits. Of the 30 states in the recently created Database of State Efficiency Screening Practices (DSESP)1 no two states apply the same test with the same methodology. The National Standard Practice Manual — released in 2017 — updates, expands, and improves upon the CASPM. It provides fundamental principles and a comprehensive framework for assessing resource cost-effectiveness, allowing states to develop screening practices that are tailored to their own regulatory goals. States have applied cost-effectiveness tests to energy efficiency resources for many years. As other distributed energy resources (DERs) – including demand response, distributed generation, distributed storage, electric vehicles, and strategic electrification technologies – continue gaining popularity, states are grappling with the most appropriate method for valuing them. Can the same traditional CASPM cost-effectiveness tests applied to efficiency apply to DERs as well? To answer this question, we first address the traditional tests and their limitations. Limitations of the traditional cost-effectiveness tests Perhaps the greatest limitation in the CASPM is its promotion of the widely- held view that traditional screening tests are the only tests that can be used to assess cost-effectiveness. The CASPM implies that the only perspectives that matter are those of the utility (UCT), the utility plus the participant (TRC), society (SCT), program participants (PCT), and rate impacts (RIM). What is missing from this mix is the perspective of regulators i.e., legislators, commissioners, advisory boards, energy offices, consumer advocates. The CASPM does not address the regulatory perspective because it does not address state energy policy goals. The CASPM explicitly states that the “policy rules that specify the contexts in which it is appropriate to use the externalities, their components, and tests mentioned in this manual are an integral part of any cost-effectiveness evaluation. These policy rules are not a part of this manual” (CASPM, pages 6-7, emphasis added). State energy policy goals raise some of the more vexing questions about cost-effectiveness screening. Should benefits to low-income customers be accounted for? Should other fuel impacts, participant non-energy benefits, or environmental benefits be accounted for somehow? These are key questions that every state wrestles with when developing screening practices. The CASPM provides few answers; except to offer the stark choice among UCT, TRC, PCT, RIM, and SCT. 8 Association of Energy Services Professionals

In practice, many states have devised 1. Efficiency as a Resource. Energy efficiency Test (RVT). By using the Framework (Figure 1.) alternative versions of the traditional tests, is one of many resources that can meet states can include costs and benefits that are with several states referring to their test customers’ needs, and therefore should best-suited to their needs while embracing as a “modified TRC test.” In most cases, be compared with other energy resources the universal principles of the NSPM. modifications were made to reflect (both supply-side and demand-side) in a different policy priorities. The problem consistent and comprehensive manner. The NSPM does not confine a state to with these approaches is that states do one of the traditional tests. Indeed, a state’s not articulate their policy goals and then 2. Applicable Policy Goals. A state’s primary energy policies seldom align precisely with explicitly create cost-effectiveness tests cost-effectiveness test should account any one of the CASPM perspectives. The that reflect those goals. The created tests for its energy and other applicable policy practice of working through the Framework do not necessarily adhere to the theoretical goals. These goals may be articulated might lead to a conclusion that one of the definition of the test they are named after in legislation, commission orders, traditional tests is appropriate for a state, or even to key principles for ensuring regulations, advisory board decisions, but the exercise itself is an important way sound cost-effectiveness analyses. guidelines, etc. They are often dynamic to consider and articulate what the primary and evolving. cost-effectiveness test should include. The classic example of this is the consideration of participant non-energy 3. Hard-to-Quantify Impacts. Cost- Like the CASPM tests, the RVT reflects impacts in the TRC test. Until recently, simply effectiveness practices should account a perspective: the regulatory perspective. comparing these impacts was challenging: for all relevant, substantive impacts, The regulatory perspective is the view of It is often unclear which participant benefits as identified based on policy goals, public utility commissions, legislators, and a state includes in its TRC test without even those that are difficult to quantify public power authorities. It is intended to digging into the cost and benefit details and monetize. Using best-available reflect the important responsibilities of in utility filings. Fortunately, the DSESP information, proxies, alternative institutions, agents, or other decision-makers database described above provides better thresholds, or qualitative considerations authorized to determine utility resource transparency in a consistent format on to approximate hard‐ to‐ monetize impacts cost-effectiveness and funding priorities. cost and benefit details for each state. is preferable to assuming those costs and benefits do not exist or have no value. Figure 1. Seven Steps of the Once the various TRC test components are Resource Value Framework readily comparable, the differences become 4. Symmetry. Efficiency assessment clear. The table below shows the non-utility practices should be symmetrical, for Step ➊ Identify and articulate the jurisdiction’s system impacts included in the TRC test example by including all costs and all Step ➋ applicable policy goals. by selected states. These states include benefits for each relevant type of impact. Step ➌ participant costs (the first row), but few states Include all the utility system costs and include all – or even a significant portion of – 5. Forward Looking. Analysis of the impacts Step ➍ benefits. participant benefits such as improved comfort of efficiency investments should be Step ➎ or economic well-being. Colorado and New forward-looking, capturing the difference Step ➏ Decide which non-utility impacts to include Hampshire are exceptions in that they include between costs and benefits that would in the test, based on applicable policy environmental and public health benefits in occur over the life of efficiency measures Step ➐ goals. their TRC tests, even though these benefits and those that would occur absent the are traditionally considered SCT benefits. efficiency investments. Ensure the test is symmetrical in considering both costs and benefits. Perhaps most states do not include 6. Transparency. Efficiency assessment participant benefits because they are practices should be completely Ensure the analysis is forward-looking and difficult to quantify; but that is not a transparent and should fully document incremental. reason to ignore them. Applying the TRC all relevant inputs, assumptions, test in this way is internally inconsistent, methodologies, and results. Develop methodologies to account for leading to results that are inherently all relevant impacts, including hard-to- skewed against energy efficiency. Applying these principles, the NSPM quantify impacts. introduces the Resource Value Framework The National Standard (Framework), a seven-step structure Ensure transparency in presenting the Practice Manual designed to construct a state’s primary inputs and results of the cost-effectiveness cost-effectiveness test, the Resource Value test. Problematic cost-effectiveness screening issues led a group of energy efficiency Table 1. Non-Utility System Impacts for States that use the TRC test experts to launch the National Efficiency Screening Project (NESP). The National States that use the TRC Test AR CA CO DE HI IL ME MD MA NH NC WI Standard Practice Manual’s (NSPM) purpose is to guide states through the Measure Costs: Participant Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes process of identifying new state-specific cost-effectiveness practices that reflect Asset Value Yes No Yes No No No No No Yes Yes No No stated policy goals. The NSPM encourages better cost-effectiveness testing practices Non-Utility Impacts Productivity No No Yes Yes No Yes No Yes Yes Yes No No by allowing for flexibility and individuality, consistent with each state’s policy goals. Economic Well-Being No No Yes No No No No Yes Yes Yes No No The foundation of the NSPM is a Comfort No No Yes No No No No Yes Yes Yes No No set of guiding principles that states should apply when developing and Health and Safety No No Yes Yes No Not Yet No No Yes Yes No No applying a primary cost-effectiveness test. The NSPM’s principles are: Satisfaction No No Yes No No No No No No Yes No No Low-Income Yes Yes Yes No No Yes No Yes Yes Yes No No Other Fuel Yes No Yes Yes No Yes Yes Yes Yes Yes No No Water Resource Yes No Yes Yes No Yes Yes Yes Yes Yes No No Environmental No No Yes Yes No Yes No Yes No Yes No Yes Public Health No No Yes No No No No No No Yes No No Economic Development and Jobs No No Yes No No No No No No Yes No No Energy Security No No Yes No No No No No No No No No www.aesp.org | 2019 9

Each state’s RVT will likely be unique. The policies supporting each DER could Conclusion Impact categories for each test will vary differ, and regulators will need to balance across states and/or over time because those goals and modify tests appropriately. The NSPM offers a valuable set of impacts are based on each state’s States should also consider synergies across concepts and principles for valuing policy concerns, which can and do vary. DERs, such as using storage to address all types of utility resources, including In contrast, the traditional UCT, TRC, and operational costs of renewable resources. demand-side and supply-side SCT tests are conceptually static; they do resources. Regulators and stakeholders not change geographically or over time if Below, we address cost-effectiveness should adopt the NSPM’s universal applied in their purest conceptual form. considerations for some DERs as compared principles and follow the Framework’s to efficiency resource screening. seven-step process for developing Properly valuing efficiency resources and implementing state-specific through cost-effectiveness tests that ■■ Demand response may have additional cost-effectiveness tests. This will fully reflect state policies could lead to benefits, such as risk reduction and provide a fair comparison for resource increased adoption of efficiency resources increased resilience, or greater capacity investments, grid optimization, and to benefit customers and the utility system. benefits. Such benefits can be difficult benefits to customers and utilities. Additionally, improved cost-effectiveness to value, and establishing baseline practices put efficiency on a level playing use without demand response can be Reference field with other energy resources. challenging. 1 https://nationalefficiencyscreening.org/state- Distributed Energy Resources ■■ Distributed generation – primarily solar database-dsesp/ but also combined heat and power, As DERs become more prevalent, fuel cells, and distributed wind – can About the authors regulators and stakeholders need ways inject power into the distribution grid, to value these investments. It is appealing resulting in additional system benefits Erin Malone specializes in to apply the cost-effectiveness tests for and interconnection costs. Avoided costs assessing energy efficiency efficiency resources to DERs. But does that for solar will depend on forecasts for solar policy, program design, make sense? Can the tests be transferred adoption, which vary by state based on and implementation. Since so easily to different resources? policies supporting solar. Cost-shifting – joining Synapse in early for example when costs are shifted from 2012, much of her work The answer is yes, but with some solar customers using less energy to has focused on energy important caveats. customers without solar – is perhaps the efficiency cost-effectiveness, most important and challenging issue for rate and bill impacts, States evaluating the cost-effectiveness distributed generation cost-effectiveness. participation analysis, of DERs are again falling back on the and best practices for energy efficiency. traditional tests offered in the CASPM, despite ■■ Distributed storage resources can their theoretical and practical limitations. provide multiple services, depending on Tim Woolf has more than Current DER cost-effectiveness practices location, in-front-of or behind-the-meter, 30 years of experience generally suffer from the same challenges technology, rate design, and operating analyzing technical and as practices for efficiency resources. These characteristics. Each such consideration economic aspects of energy include not accounting for all relevant costs can impact both the costs and benefits and environmental issues. and benefits, not explicitly accounting for included and the magnitude of the Before returning to Synapse regulatory policy goals, and not properly included impacts. in 2011, he served four years analyzing rate or cost-shifting impacts. as a commissioner at the ■■ Electric vehicles (EVs) face the Massachusetts Department It is imperative that states develop cost- same considerations as distributed of Public Utilities (DPU). effectiveness practices that can be applied storage. They also require near-term consistently and comprehensively across infrastructure investments that will Danielle Goldberg provides all DERs. The NSPM offers a framework increase adoption and provide long-term consulting and research and universal principles for doing that. The benefits. Projecting EV adoption rates will services on a wide range of NSPM was designed for energy efficiency impact cost-effectiveness results. issues related to the energy resources, but its principles can and sector. Prior to joining should be applied to all types of DERs. Regarding supply-side resources, the Synapse, she worked at The Framework, which focuses on the NSPM principles can be used in the context Helping Overcome Obstacles regulatory perspective, can identify the test of integrated resource planning (IRP) or Peru as an English teacher stakeholders should use when deciding when conducting economic analyses and school coordinator. which resources, whether supply-side or of specific generation, transmission, or DERs, warrant funding from utility customers. distribution infrastructure investments. The Framework can be used to develop Before states start applying the Framework, the primary test for assessing supply-side there are important ways in which DERs investments, or to identify the criteria for require different treatment from efficiency selecting the preferred resource plan resources. As examples, some efficiency costs in the context of an IRP. This approach and benefits might not apply to other DERs would not only ensure sound practices for and vice versa, or some impacts will have analyzing supply-side resources, it would different magnitudes. Most DERs will have ensure DERs are analyzed comparably and locational and temporal considerations, which consistently with supply-side resources. are likely to increase benefits if ideally situated. 10 Association of Energy Services Professionals

STRATEGIC ELECTRIFICATION TECHNOLOGIES POISED TO DELIVER LESS CARBON INTENSIVE LOAD GROWTH AND GRID OPTIMIZATION By William Tokash and Brett Feldman The global electric power industry is facing a transformational shift from centralized generation Factor 1. Costs for Proven toward a more decentralized grid with two-way energy flows. This emerging mix of distributed Strategic Electrification energy resources (DER) technology and smart grid solutions is disrupting traditional utility models Technology Are Dropping while creating new opportunities for residential and C&I customers. The first factor contributing to the This transformation toward innovative new technologies is being driven in part by new customer emergence of strategic electrification demand for cleaner, more flexible and cheaper energy solutions. The combination of these innovative is the availability of new electrified technologies with societal needs for cost-effective decarbonization strategies have created technology alternatives. The opportunities for energy users, electric utilities, energy suppliers, product manufacturers, vendors, residential, commercial and industrial and policymakers to consider strategic electrification. (C&I), and transportation strategic electrification technologies outlined Strategic electrification encompasses the deployment of technologies that use less carbon- in this article are now proven. Further, intensive grid-delivered electricity or distributed renewable energy instead of fossil fuels such as these technologies are becoming natural gas, oil, or propane. Strategic electrification, also known as beneficial electrification, is the increasingly cost competitive as deployment of electrified technologies that can address the customer, environmental, and grid an alternative to grid-delivered stakeholder factors discussed below. These factors have direct implications for utilities, local grid electricity or similar, traditional, operators, energy suppliers, technology vendors, and policymakers looking to implement new fossil fuel-based transportation, strategies and business models for the deployment of strategic electrification solutions and are distributed generation, and building discussed in greater detail as follows. heating and cooling technologies. www.aesp.org | 2019 11

Factor 2. Strategic Electrification Technologies Factor 3. Strategic Electrification Is Can Reduce Environmental Impacts Capable of Grid Optimization The second factor contributing to the emergence of strategic The third factor contributing to the emergence of strategic electrification is the ability of new strategic electrification electrification is the ability of new strategic electrification technologies technologies to reduce environmental impacts when compared to to optimize the local grid. Driven by the transformational shift underway, their fossil fuel-based counterparts. The reduced environmental regulated utilities, local grid operators, energy suppliers, and DER impact scenarios are specific to the local carbon grid mix, local solutions providers are focusing on the delivery of new hardware, climate trends, the technology, local electricity rates, and local software, services, incentives, and business models that optimize the power market factors. The strategic electrification technologies local grid for cost savings, improved resiliency, and grid service revenue. discussed below are more efficient than their traditional fossil fuel counterparts. Further, given the rise of natural gas-fired wholesale Below we delve deeper into these issues by defining strategic grid power and renewable energy, local grid-supplied power is electrification technologies, discussing the implications on the emerging becoming increasingly cleaner, which lowers the net carbon and business model, and highlighting new regulatory concepts enabled environmental air contaminant impact of grid-delivered electricity. through strategic electrification. Defining Strategic Electrification Technologies Strategic electrification can be defined residential, commercial fleet, and municipal electricity costs, and fuel costs are important across five technology use cases: fleets. New charging infrastructure will need determinants on whether the technology is to be deployed to meet charging needs while cost-effective from the customer perspective. 1. Distributed solar PV with battery storage minimizing peak load impact to the local grid. Electric resistance water heaters are less In some grid regions, this should be deployed efficient than HPWHs and use more electricity, 2. Electric vehicles with battery storage to lower charging costs and which can affect the savings and carbon profile minimize the peak load impact on the local grid. aspects of their role in strategic electrification. 3. Air source heat pumps The growth of PEV, MHDEVs, and e-buses, Industrial electrified processes 4. Heat pump water heaters referred to as xEVs, is poised to displace fossil fuel and will occur across residential, Certain electrification technologies have 5. Industrial electrified processes. commercial fleet, and municipal fleet applications in industrial and manufacturing charging infrastructure that will increasingly settings. These technologies include electric Each are described below. But it is be deployed with battery energy storage infrared heaters for curing and drying various important to note that not all electrification is to lower charging costs and minimize coatings, induction heating for surface considered strategic. For example, EV charging the peak load impact to the local grid. treating, and electric natural gas pipeline infrastructure can elevate peak demand compression systems. They are proven and needs or create load pockets that may do Air source heat pumps (ASHPs), heat can offer product quality, productivity, safety, more harm than good to the local grid. pump water heaters (HPWHs), and and total cost of operation (TCO) benefits electric resistance water heaters to the customer that are often available to Distributed solar PV with natural gas alternatives, often even when battery energy storage ASHPs, residential HPWHs, Electric the need and costs for uninterruptible power resistance water heaters, and C&I ASHPs with supply (UPS) service are considered. Solar PV coupled with battery energy storage water heating capabilities are increasingly can reduce carbon-intensive peak energy in being deployed in new construction and ways that solar PV alone cannot deliver. For retrofit scenarios instead of natural gas, example, solar PV deployed on residential or oil, and propane-fired heating systems for C&I customer property can lower the carbon space heating, hot water/radiant flooring intensity of local grid-delivered electricity, heating, and cooling. Local climate patterns, given that a portion of the solar electricity used onsite is 100 percent renewable. But Figure 1: Select Electrification Technology Revenue, World Markets: 2018-2027 since stand alone residential and C&I solar PV systems are subject to periods of intermittent $140,000 Light Duty PEVs generation, these systems cannot guarantee $120,000 E-Buses the reduction of carbon-intensive peak $100,000 MD/HD E-Trucks power or provide reliable local grid benefits. C&I Solar Energy Storage $80,000 Residential Solar Energy Strorage Electric Vehicles $60,000 C&I Air/Ground Source Heat Pumps $40,000 Sales of electric vehicles – comprised of (Source: Navigant Research) light duty passenger electric vehicles (PEVs), e-Buses, medium (MD) and heavy-duty (HD) e-trucks – are growing, and as shown in Figure 1 are projected to continue to grow considerably in the next 10 years, to displace fossil fuel vehicles and will occur across $20,000 $- 2019 2020 2021 2022 2023 2024 2025 2026 2027 2018 12 Association of Energy Services Professionals

New Regulatory Policy Concepts Enabled By Strategic Electrification Sector-based strategic The positive benefits that strategic electrification can have on peak energy carbon intensity electrification programs: as part of grid optimization programs can support decarbonization regulatory program developments. How this strategic electrification benefit will be quantified and implemented Strategic electrification fuel- will vary by climate zone, country and regional policy, and local power market factors. Three switching programs can also support regulatory program concepts where strategic electrification can impact peak energy carbon the development of NWA or VPP intensity are discussed below: programs. For example, in the U.S., Con Edison recently received Clean Peak Standard: Technology-dependent regulatory approval for a novel natural gas DR program to reduce The Clean Peak Standard concept TOU tariffs: demand for natural gas during peak is a regulatory construct mirrored use periods in the winter given after a regulatory mandate such Strategic electrification technologies the anticipated risk for natural gas as a Renewable Portfolio Standard can support utility tariff development delivery constraints. This program (RPS). Whereas an RPS creates a with effective TOU tariffs to reliably specifically highlights technologies mandate that a certain percentage of balance customer electricity use that “convert natural gas applications renewable energy must be supplied or self-generation during peak of firm gas customers to efficient to the grid, a Clean Peak Standard demand events with less carbon- electric applications or other low requires a certain percentage of intensive assets. These regulatory carbon fuel sources.” Such solutions delivered electricity during a period of models are designed to incentivize include the electrification of natural peak energy use to come from clean the capture and onsite reuse of gas space heating and hot water resources. These clean resources low carbon electricity during late heating using cold climate ASHPs, would include low carbon DER like afternoon peak periods and can be dual-fuel gas, and electric space strategic electrification. The goal is tied directly to the deployment of heating or water heating applications. to foster the growth of low carbon strategic electrification technology. The latter refer to applications that DER while reducing electricity costs The tariffs incentivize customers to allow for the switching from natural and making it easier for local electric deploy strategic electrification in a gas to electricity or other low carbon utilities to reliably meet peak demand manner that can reduce the need for fuel during peak demand periods and with less carbon-intensive assets. local carbon-intensive peak energy the conversion of oil customers to resources such as natural gas peaking high efficiency electric space heating plants. TOU rates with demand charge instead of natural gas. They also enable and energy use rates that support conversion to other low carbon space- strategic electrification can also be and water-heating applications. tied to direct incentives to further incentivize technology vendors, policymakers, and energy suppliers, electric utilities, and grid operators with deployments at customer properties. Key Takeaways References According to EPRI’s 2018 report “U.S National Electrification 1 http://mydocs.epri.com/docs/PublicMeetingMaterials/ee/000000003002013582.pdf Assessment”1 the growth of electric transportation is expected to increase load growth for grid operators. Other customer-focused About the authors strategic electrification technologies such as solar PV, battery storage, air source heat pumps for space heating, cooling, and water heating, William Tokash is a Senior Research Analyst on and certain industrial processes will play a lesser role in load growth. Navigant Research’s DER Solutions Team, where he leads the Energy-as-a-Service (EaaS) research But there are few clear-cut situations where the deployment of coverage. Tokash had broad-based expertise in strategic electrification can serve as a grid policy panacea. The benefits technology assessment, project development, from the implementation of strategic electrification globally will vary business development, investment analysis, and by climate zone, country and regional policy, and local power market project finance in DER, including utility grid-edge factors. Each implementation strategy will also need to focus closely on and behind-the-meter technologies. the impact that electrification technologies can have on a customer’s electricity service feed, energy costs, and industrial processes. Brett Feldman is a research director with Navigant, leading the DSM research service. With 20 years of Electric utilities, local grid operators, energy suppliers, technology experience in the energy sector, he focuses on demand- vendors, and policymakers need to work closely together to side management programs and their implications for optimize the benefits, and mitigate the risks and costs of strategic the global power industry. electrification as part of their deployment strategies and business models. A cooperative approach between customers and other grid stakeholders will maximize the benefits and minimize unintended or unquantifiable consequences of strategic electrification. www.aesp.org | 2019 13

By Arvind Subramanya More Choices for Managing Building Loads ELECTRIC LOADS Energy Management In the past, building owners, managers or operators had few choices for HVAC controlling energy use, limited to “addressable loads” such as heating, ventilation PLUGS System and air conditioning (HVAC), lighting, and electric vehicle (EV) charging. In LIGHTS (EMS) the last 10 years, the industry has witnessed a substantial increase in choices for how energy is produced, provided and used in buildings. These choices, EV SOURCES generally called Distributed Energy Resources (DERs), are either energy producers or manageable loads that are connected to the distribution grid. PV UTILITY By managing these resources, a building operator can significantly change a building’s load profile, thereby optimizing the use of installed OFFICE BUILDING DERs and reducing energy use and cost — even making it possible to participate in demand response opportunities with the utility. Electric Loads Data Management Controls This article lays the groundwork for how to optimize a facility to operate as Figure 1: Building Energy Sources and Loads a Load Management Resource (LMR), based on our experience over many projects undertaken. The fundamental basis of load management is “real-time” bi-directional communication of addressable loads and DER production (such as solar photovoltaic and storage), integrated with utility smart meter data to enable such loads to be modified up or down based on defined control algorithms. These control algorithms would employ several load optimization strategies to shape, shift and shed facility demand (kW) and also reduce energy consumption (kWh). Building Loads and Energy Sources In this example, we consider a modern office facility consisting of several energy-using systems such as air conditioning, lighting, EV chargers and plug loads. The facility energy sources include the utility grid and solar photovoltaic (PV) system, without battery storage. The building is assumed to operate between 5 a.m. and 7 p.m. Figure 1 shows all sources and loads. Lighting at the facility is provided by typical T8 linear fluorescent fixtures. Air conditioning is provided by rooftop package units with advanced energy management system (EMS) controls. In addition, the building’s EV chargers and significant plug-loads are operated during building occupancy. 14 Association of Energy Services Professionals

Overall, electricity consumption at the facility can be divided into four Figure 2: Energy Balance Monthly Profile major end-uses: HVAC, lighting, electric vehicles (EV) chargers, and “balance of energy loads.” Balance of energy loads include plug-loads covering EnEerngerEgnUeEsrnUeges(rekg(UskehU)(skhe)(kh) h) , desktop computers, digital monitors, televisions, kitchen appliances, , vending machines, etc. ,, Energy balance is a process of categorizing building end-uses based on their , contribution towards total building energy consumption. In Figure 2, monthly ,, energy consumption of each end-use has been plotted to establish energy , profile for a full-year period. It is interesting to note that when all the end-uses ,, such as HVAC, lighting, EV, and balance of energy loads are plotted together, , the top of the plot indicates total building energy consumption per month. ,, , Load Management Resource Strategies ,, , Because of the many addressable loads and significant solar PV ,, generation potential available at the building, there are a range of load , management strategies that the building operator can use for energy efficient management of electric loads internally as well as integration with the grid. , , 1. Pre-Cooling: One load management strategy to use is pre-cooling of n- - r- AAAAnnppppccrrrree---- - - ----rrggeerrssAAAAuuuugggg - - - NNoovv - DDeecc - the building at different times of the day to enable thermal storage — for J n- FFeebb - M r- M- JJJJuuuunnnneeee - Ju - SSeepp - Oc - HHVVAANNCCoovv - DDeecc - example, reducing the zone temperature setpoints between 3 and 6 a.m. J FFeebb M EMMner--g Ju LLSSiiggeehhpp Oc before the building is occupied, to cool the space before the building’s n - - r --B of EMnerg --EV CJuh - i--ng OOcc - - - internal heat rises during the working day hours. This can temper morning J n - - M r B of EV CJuh - ing - - - HVAC demand before solar PV production begins to ramp up. Similarly, J M reducing setpoints between 11 a.m. and 3 p.m. when solar PV production is greatest, shifts load from the 4 to 6 p.m. period. This is how pre-cooling B nce of Energ EV Ch rgers Ligh ing HVAC control reduces peak energy demands during the building ramp-up period, reducing and shifting the demand to later times of the day when B nce of Energ EV Ch rgers Ligh ing HVAC Solar PV production is maximized. This is represented by load profile plotted in Figure 3, which compares Net Energy Metered (NEM), solar PV Figure 3: Pre-Cooling Profile production, and building operations load (AC) profiles. Move he AC Oper ion o - AM hereb re ucing he pe k occur nce AM 2. HVAC Compressor Control: Another technique controls the HVAC Move he AC Oper ion o - AM hereb re ucing he pe k occur nce AM compressor to reduce (or shut off) load based on the combination of outside air temperature, building demand (kW) value and solar PV Move he AC Oper ion o - AM hereb re ucing he pe k occur nce AM production. A control sequence can turn down HVAC compressors, Move he AC Oper ion o - AM hereb re ucing he pe k occur nce AM based on the outside air temperature, during on-peak and mid-peak TOU periods that coincide with minimal solar PV production. This could reduce DeDmemnDe(nkDm (ek)nm )(nk ( )k ) peak load on the distribution grid as well as minimize utility demand and energy charges. This is represented by load profile plotted in Figure 4. - 3. Outside Air Ventilation Shift: This technique shifts the cooling - operation to coincide with the maximum solar PV production, using increased outside ventilation air (i.e. exceeding ASHRAE 62.1) during load - Hours shift periods when ambient conditions dictate. Then the system would - Ne energ me ere (k ) HouSros r PV (k ) gradually unload the compressors once the on-peak or mid-peak TOU AC (k ) period is reached. This can reduce peak demand and associated higher energy costs. This is represented by load profile plotted in Figure 5. Ne energ me ere (k ) HouSros r PV (k ) AC (k ) HouSros 4. EMS Synergies with EV Charging and Solar PV Production: Ne energ me ere (k ) r PV (k ) AC (k ) The HVAC EMS and EV charging station controllers can integrate Ne energ me ere (k ) So r PV (k ) AC (k ) algorithms that react to changes in solar PV production to modulate HVAC and EV charging loads for near-real-time load shedding. Figure 4: HVAC Compressor Control 5. Electric Vehicle (EV) Charging Control: Another approach reduces Con ro AC compressor oper ion o coinci e i h so r PV pro uc ion. EV charger voltage during periods of high utility TOU charges and Con ro AC compressor oper ion o coinci e i h so r PV pro uc ion. during periods of minimal solar PV production (early morning, late afternoon, or cloudy days). This measure integrates controls on EV Con ro AC compressor oper ion o coinci e i h so r PV pro uc ion. charging stations to shutter or reduce voltage during mid-peak and Con ro AC compressor oper ion o coinci e i h so r PV pro uc ion. on-peak summer TOU periods and the hours of mid-peak TOU winter periods. Also, during summer months, EV chargers are controlled to DeDmemnDe(nkDm (ek)nm )(nk ( )k ) reduce voltage during periods of low solar PV production. EV charging can be encouraged during low-cost Winter Off-Peak hours. This helps to - avoid EV chargers contributing to the facility’s maximum demand while also reducing the utility demand energy charges. - - Hours - Ne energ me ere (k ) HouSros r PV (k ) AC (k ) Ne energ me ere (k ) HouSros r PV (k ) AC (k ) HouSros Ne energ me ere (k ) r PV (k ) AC (k ) Ne energ me ere (k ) So r PV (k ) AC (k ) Figure 5: Ventilation Demand Shift ChartIncre se OSA ven i ion uring PV pro uc ion perio hen OSA emper ure is bove ecoInncorme izseerOchSAnvgeenoiverionn urerinugcPeVvepnroi ucioinon upreinrigo on-hpeen kOSnA ebmuipeirngupree iks bemoven . economizeVr ecnh ngeioonvebr sne reheurmce vesnroi r gioen huireinsg oni-npge ki hnin AbSuHi RAinEg pe. .k em n . Incre seVOenSA venioin biosne urhienrgmPV psrroorucgeionhpieeriso inhgen Oi hSiAn AeSmHpReArE ure. .is bove ecoInncorme izseerOchSAnvgeenoiverion urerinugcPeVvepnroi ucioinon upreinrigo on-hpen kOSnA ebmuipeirngupree iks bemoven . economizeVr ecnh ngeionvebr sne reheurmce vesnroi r gioen huireinsg oni-npge ki hnin AbSuHi RAinEg pe. .k em n . Ven ion b se herm s ror ge hi e s ing i hin ASHRAE . . DeDmemnDe(nDkme(kn)m ()nk ( )k ) - - - Hours - Ne energ me ere (k ) HouSros r PV (k ) AC (k ) Ne energ me ere (k ) HouSros r PV (k ) AC (k ) HouSros Ne energ me ere (k ) r PV (k ) AC (k ) Ne energ me ere (k ) So r PV (k ) AC (k ) seEreUng(seker (gUkshe)U(shk)e (kh) h) S ore excess energ in he b er n issip e i o r s on-pe k n mi -pe k perio s 15 S ore excess energ in he b er n issip e i o r s on-pe k n mi -pe k perio s S ore excess energ in he b er n issip e i o r s on-pe k n mi -pe k perio s S ore excess energ in he b er n issip e i o r s on-pe k n mi -pe k perio s www.aesp.org | 2019

Energ , Dem n , , 6. Battery Energy Storage: Installation of battery energy storage Elements of LMR Implementation as a means to store excess energy from solar PV and discharge J n- Feb - r- Apr - - June - - Aug - Sep - Oc - Nov - Dec - ene- rgy back to the facility during Summer On-Peak and Winter M M Ju The fundamentBal basisnce of Energ of ElVoCah drgerms aLnighaingg emHVAeC nt is Mid-Peak TOU periods. This cHaonursreduce the utility peak demand and associateNcehenaerrggemese.re (k ) So r PV (k ) AC (k ) real-time bi-directional communication among “Addressable Loads” (such as heating, ventilation 7. Thermal Energy Storage: Thermal energy storage systems and air conditioning, and EV Charging) and DER could be another load-shifting asset. Building energy production (such as solar PV), integrated withMove he AC Oper ion o - AM hereb re ucing he pe k occur nce AM consumption is generally divided into time-of-use periods such as on-peCaonkro, mid-peak,AC compressor oper ioan no cdoinoci fef-iph seo arkPV.pOro nuc-iopn. eak times are utility smart meter data to enable such loads to be mid-day hours when building loads are the highest, mid-peak modified (up or down) based on defined control times are morning and early evenings, and off-peak times are algorithms. In order to implement a truly functionalDem n (k ) Dem n (k )during the night. Energy (kWh), demand (kW), and associated rates ($/kWh and $/kW) are highest during on-peak periods LMR, several building/utility infrastructure and lowest during off-peak periods. Cooling during an on-peak elements need to be added or upgraded. period can contribute to significant electric load on the grid. In order to reduce this on-peak cooling electric demand, a thermal 1. LM- R Software Installation: For the building to energy storage technology that makes use of ice to cool the operate as a load managemHoeursnt resource, it needs a bu-ilding during on-peak periods is a valuable addition. An software platNfeoernmerg mthe earet (ck o) mmSuo nr PiVc(kat)es anAdC (kco) ntrols ice making system producesHiocuers during off-peak periods and all the DERs. This platform monitors all the electric Ne energ me ere (k ) So r PV (k ) AC (k ) loads, utility purchases and solar PV generation, and during periods when solar PV production exceeds facility loads, controls building and equipment operation to reduce and then uses this ice to cool the facility during on-peak TOU Con ro AC compressor oper ion o coinci e i h so r PV pro uc ion. rate periods. Such a measure serves to reduce peak-demand as peak demand and energy use. well as associated electric cost due to reduced load on the grid. Incre se OSA ven i ion uring PV pro uc ion perio hen OSA emper ure is bove economizer ch ngeover n re uce ven i ion uring on-pe k n bui ing pe k em n . Ven ion b se herm s ror ge hi e s ing i hin ASHRAE . . Modifying the Building Energy Profile 2. Interval Data Acquisition: The building must have aDem n (k ) Dem n (k )A building operator can combine these strategies to enable smart meter that can be connected to provide interval energy efficient control of DERs at the facility, shifting and shedding data to an energy analytics platform. loads based on solar PV production, utility peak demand times, time-of-day, and outside air conditions. Two 24-hour profiles 3. Connection to the Energy Management System described in this section represent the implementation of load management strategies during a typical winter and summer month. (EMS): The building EMS must be connected to the Figu-re 7 shows a typical winter 24-hour profile. During early so-ftware platform to allow control of HVAC systems morning hours solar PV ramps upH.oDursuring late afternoon hours as solar PV is ramNpeinengergdmoeweren,(klo) ad mSoarnPaV (gk e) mentArCe(kso) urces to operate as true load maHnoaursgement resource. (LMR) protocols can reduce energy usage. LMR protocols could also increase facility power usage during mid-day periods of Ne energ me ere (k ) So r PV (k ) AC (k ) surplus solar PV production. In addition to minimizing energy purchases dSuorreinexcgesseenaergrlyin hme borerninngissaip nedi olatr es orn-apeftkenrnmoi -openk pperieo rs iods, 4. EV Charging: Electric vehicle charging stations must load reductions could potentially minimize demand charges. be connected to the software platform so it can control charging duration and timings to coincide either with solar production or energy storage dissipation.Incre se OSA ven i ion uring PV pro uc ion perio hen OSA emper ure is bove economizer ch ngeover n re uce ven i ion uring on-pe k n bui ing pe k em n . Ven ion b se herm s ror ge hi e s ing i hin ASHRAE . . 5. Solar Photovoltaic System Monitoring: The final part of implementation is to connect solar tracking to the Hour Energ Use (k h)For example, during the hours of 6–9 a.m. and 3–5 p.m. which are the regions labeled “Reduce Manageable Loads”, the Dem n (k )software platform to ensure load balancing is based building energy use is high and solar production is relatively lower. Load management measures such as building pre- on the solar production data. cooling, compressor controls, EMS synergy and EV charging - - - - Ne energ me ere (k ) Hours AC (k ) Ne energ me ere (k ) Hours F ci i Consump ion (k ) So r PV (k ) PV ener ion(k ) Figure 6: Energy Storage Profile Figure 7: Winter Energy Profile S ore excess energ in he b er n issip e i o r s on-pe k n mi -pe k perio s Incre se M n ge b e Re uce M n ge b e Lo s Lo s Re uce M n ge b e Lo s Hour Energ Use (k h) - Hour Energ Use (k h) - - - - - Ne energ me ere (k ) Hours F ci i Consump ion (k ) Ne energ me ere (k ) Hours F ci i Consump ion (k ) PV ener ion(k ) PV ener ion(k ) 16 Association of Energy Services Professionals Re uce Incre se Re uce M n ge b e Lo s

Ne energ me ere (k ) Hours F ci i Consump ion (k ) PV ener ion(k ) control can move the AC and EV loads into the PV production area which is Figure 8: Summer Energy Profile shown by green arrows as “Increase Manageable Loads.” Moving electric loads in the building to the period “Increase Manageable Loads” aligns Re uce them with peak solar production times, thereby reducing reliance on M n ge b e the grid. In addition, battery storage and thermal storage measures can further ensure that during “Reduce Manageable Loads” time periods, the Lo s building draws energy from storage equipment and not from the grid. Hour Energ Use (k h) Figure 8 shows a typical summer 24-hour profile for the building. During summer months (June - September), LMR strategies can minimize utility Ne energ me ere (k ) Hours F ci i Consump ion (k ) cost by reducing load during periods when Gross Facility Load is greater PV ener ion (k ) than NEM load or Solar PV production. There are typically few hours during summer months when Solar PV production is greater than Gross Facility About the author Load. However, there is potential for the facility to benefit from decreasing loads to maximize energy use from a solar PV-and-storage combination. The Arvind Subramanya is the Engineering Manager control strategies during summer are similar to the controls in winter, with an at ASWB Engineering with 15 years of experience; exception that more energy is purchased from the grid because the loads are he manages energy engineering studies, building relatively higher during summer season. The overall concept of controlling simulations, project management, and also business and moving the loads into the PV production region remains the same. development. ASWB Engineering delivers energy management services and has assessed thousands Conclusion – Take Control of Energy Use and Purchase of buildings, and commissioned HVAC and lighting systems across a variety of building types. Building load management is an excellent strategy to operate a building efficiently while being connected to the grid with significant resiliency. Energy supplies are tightening, and costs are increasing with time, making load management an increasingly necessary component of building operation. A load management system may span several entities such as building controls, software systems, thermal storage systems, battery storage systems, or a combination of them all. With a load management system in place, building operators can implement a mix of load management strategies to reduce peak loads, shift peak loads to times when renewables are at their maximum generation capacity, make use of off-peak periods for utility purchase, and at the same time maintain building and grid connectivity and operability. 2019SUCOMNFMEREERNCE AESP SUMMER CONFERENCE PERSPECTIVES ON PROGRAMS AUGUST 27-29, 2019 • TORONTO EEVOLUTITORONTO,OAUGUSTN27-29IN NORTH AMERICACome discover the We’ll be talking about... opportunities amidst all the changes happening in Demand- • Gas and Electric Utilities Collaborations side Management today. Engage • Differences between American and Canadian in thought-provoking sessions and leave with insights to chart Energy Consumers the course for your programs’ • Municipalities’ Approach to Energy future. Whether you are an EE professional Efficiency in the U.S. or Canada, the • Bringing New Technology to market challenges and opportunities are • Quantifying the Opportunities from the same. Policy, electrification and DERs are changing the status Electrification quo, while new technologies, • Promoting “Steam Trap” programs gas-electric collaborations, Big • Thermal Energy Storage as a Demand Data and the customer experience are offering up exciting new Response Asset opportunities in finding savings. • Fuel efficient Replacement Tires — a New So come meet, learn and EEvolve with fellow EE professionals in Opportunity Toronto this August 27-29. • Modifying Food Code Refrigeration CONFERENCE RATES: Guidelines to Save Energy AESP Member: US$695 • Non Wires Solutions to manage Peak Loads Non-member: US$795 • Customer Engagement Group Member: 4 points • Using Data to Drive Market Transformation Three AESP members from the same company • Time of Use programs can register at the same time for only US$1800. Rates increase after August 5 REGISTER AT A E S P. O R G www.aesp.org | 2019 17

WHAT’S NEXT FOR RESIDENTIAL EFFICIENCY? LESSONS FROM CENTERPOINT ENERGY'S HIGH EFFICIENCY HOMES PROGRAM By Drew Scatizzi, with contributions from Ian Metzger and Tim McConkie What will energy efficiency in the residential of tighter envelopes and more efficient As a result, an optimized above-code market sector look like five years from now? technology. Any incremental benefits by home has a disproportionate percentage There is no crystal ball to predict the future adding insulation is quickly outweighed by of its electricity end-use derived from and know exactly what technologies and the cost, and in the case of wall insulation, miscellaneous and/or plug loads.1 For building science innovations will be the there is only so much insulation that will fit homes submitted to the program today, target of utility energy efficiency programs, in a wall cavity or attic space. This is very plug loads account for 23 percent of but to try and answer the original question apparent when you look at the average end-use consumption in all electric we must first contextualize the present. home submitted to CenterPoint Energy’s homes, and 33 percent in dual fuel homes program in 2018; the program’s average (not counting one home we analyzed CenterPoint Energy’s High Efficiency home has 12.7 percent kWh savings above that used on-site propane storage; that Homes program incentivizes more above- code with a 15+ SEER air conditioner house was omitted from this analysis). code new homes that any other utility in system, R35+ attic insulation, and a natural the country – just shy of 13,000 homes in gas 40-gallon water heater with an energy As the homes become more and more 2018, in the 5,000-square mile footprint of factor of .68+. Homes being built today efficient, the percentage of electricity the utility’s Houston electric service territory. are more efficient than ever and are only consumption from plug loads relative to All the homes incentivized in the program getting more so with new code adoptions. the whole home electricity consumption are evaluated for energy savings above the is rapidly increasing. This analysis gives a 2015 International Energy Conservation Plug Load % related to Efficiency clue on what modern technologies that an Code with Federal Minimum Equipment energy efficiency program management Efficiencies, which yields a large data % y = 0.8385x + 0.2163 team should be targeting now, to be pool on above-code homes that helps us % R² = 0.8675 successful five years in the future – non- forecast the future of the industry, and, also envelope related technologies. provides an excellent benchmark of where Plug Load % % the above-code housing market is today. CenterPoint Energy’s program is % watching three specific technologies For a utility and its administrators that have the greatest potential to looking for continued energy savings in % yield future energy savings: residential new construction, they will no doubt notice that – similar to commercial % ■■ Variable refrigerant flow heating and cooling LED lighting retrofits — the lowest hanging fruit of efficiency upgrades in new home % ■■ Energy efficient water heating construction has been addressed. Heating and cooling loads have been reduced % ■■ Occupancy-based controls leveraged by significantly through a combination home energy management systems. % %% % %% % % % % Energy Savings Above Code 18 Association of Energy Services Professionals

As a utility, CenterPoint Energy’s challenge fired appliances. The advantages of heat beyond the meter while creating an ongoing lies in identifying energy efficient technology pump water heaters over electric resistance pipeline of “demand response ready” homes. that delivers added value to consumers… models are well documented. A recent If our team at CenterPoint Energy had to as no homebuilder is going to install energy U.S. DOE study demonstrated 63 percent rank the technologies we’re most excited savings features that can’t be sold. kWh savings per 40-gallon water heater.3 about, this would be at the top of the list. The electricity savings is what an energy Variable Refrigerant Flow efficiency program is interested in, but the Future Outlook heat pumps byproduct of outputting cool air Variable refrigerant flow (VRF) and is especially attractive to some builders who So, what does a new homes EE program ductless mini splits are hardly a recent use the equipment to market “cool garages” look like in 2024? Truthfully, probably innovation but still have only 3 percent in a hot Texas climate, which can be an very similar to what it does now – a residential market share in the U.S. and even attractive selling point to new home buyers. combination of prescriptive and performance less in Houston. The average home in the Whether it’s for clothes drying or water requirements tied to tiered financial program now has a three-ton central air heating, the program’s goal for participating incentives. CenterPoint Energy intends conditioner with 15+ average SEER value, homebuilders is that there are no electric to move the market forward by offering and we anticipate central HVAC equipment resistance appliances being installed. standalone incentives for new technology will remain ubiquitous five years from now. “stacked” on top of the whole house rebate. \"The rapid adoption of voice However, the adaptiveness and advantages activated devices such as This can be done as a bonus, no different of the VRF equipment lends itself well for Amazon’s Alexa or Google than how many new construction programs common floor plans in Texas, which are, offer an additional ENERGY STAR-Certified large square footage and well insulated Home plainly demonstrate that Home incentive. For example, a heat pump homes that benefit from zoned heating and consumers are interested in having water heater can be paid as a prescriptive cooling. Several builders have expressed incentive per unit installed in addition interest in central HVAC with mini splits in the this technology in their home.\" to a whole house incentive, or for total bedrooms or other intermittently occupied kWh savings, whichever is greater. spaces and that application can provide an Home Energy Management Systems opportunity to potentially capture savings. The hard part for utilities and their As newly constructed homes become administrators will be guaranteeing incentives Advances in VRF technology has increased more and more efficient, code will continue over a period greater than one year. We try their performance up to 12 heating seasonal to improve system efficiencies and envelope and take a top down approach; if you can performance factor (HSPF) and 30 seasonal requirements – targeting every increasing offer incentives to a floor plan or product energy efficiency ratio (SEER), significantly plug and miscellaneous loads will require line on a builder-by-builder basis, and then higher than the 15 SEER being installed now.2 occupant-based controls to reduce operating guarantee the eligibility of those incentives HVAC equipment remains crucial to future hours for all systems. The rapid adoption of for two-plus years, then you have provided a energy savings; in the High Efficiency Homes voice activated devices such as Amazon’s powerful catalyst for all relevant stakeholders program, homes with air conditioners with Alexa or Google Home plainly demonstrate to plan and adopt these technologies. an average of 16 SEER have 4 percent more that consumers are interested in having whole house energy savings than similar this technology in their home.4 Many Reference sized homes with equipment of just 15.5 SEER. companies have demonstrated success marketing “smart” technology for everything 1 https://www.nrel.gov/docs/fy05osti/36920.pdf An added benefit of these systems is from refrigerators to sprinkler systems. redundant heating and cooling systems that In a very competitive new home market, 2 https://basc.pnnl.gov/resource-guides/mini-split-ductless- increases reliability and comfort in a hot, humid builders who offer a “smart” product line heat-pumps#quicktabs-guides=1 climate zone which we believe is a powerful or upgrade option will be well positioned market differentiator for participating builders. against their peers for greater sales. 3 https://labhomes.pnnl.gov/documents/HPWH_ SpaceConditioning_Report_PNNL_23526_FINAL.pdf Water Heating Just like new home builders, utilities should be ahead of the smart technology 4 https://www.wsj.com/articles/samsung-predicts-tech-will- Beyond HVAC, water heating and trend. CenterPoint Energy will be launching next-transform-the-home-1508279632 clothes drying have significant potential a new construction Smart Home Energy for targeted electricity savings dependent Management System pilot in 2020 to 5 https://www.nyserda.ny.gov/-/media/Files/Publications/ on the application. As an electric and gas better evaluate this burgeoning market. Energy-Analysis/Home-Energy-Management-System- utility, CenterPoint Energy wants to make Savings-Validation-Pilot.pdf sure its customers choose the right fuel for Home energy management systems their energy needs, and as a result, natural make significant breakthroughs almost daily, About the author gas-fired appliances continue to be the most and the recent report out of New York State economical choice for program participants Energy Research and Development Authority5 Drew Scatizzi is an Energy when considering the operating costs over showed occupancy-based controls of a home Efficiency Program Manager the life of the equipment. In homes with energy management system (comprised with CenterPoint Energy electric water heating, the water heater of smart thermostats, plugs, and lighting) in Houston, TX. Prior to accounts for over 18 percent of whole yielded 16 percent whole house electricity working for CenterPoint, house electricity consumption. As a result, savings in retrofit applications. From an he worked for the State most builders choose tankless natural gas energy efficiency standpoint, hard wiring of Florida implementing water heaters as the best premium option this technology at the time of construction USDA’s Rural Energy for for their customers. Recognizing that is a way to safeguard against free ridership America program increasing some participating builders prefer electric and unrealized energy savings. Utilities may efficiency and reliability for appliances, CenterPoint Energy anticipates also find added value in having another grid-edge rural residents. incentivizing air source heat pump (ASHP) channel to interact with their customers technology in place of electric resistance to Contributors: the minority of builders who opt for non-gas Ian Metzger is a Program Development Engineer and Tim McConkie is a Program Manager; both are with Lockheed Martin Energy. www.aesp.org | 2019 19

AD-AESP-MEMBERSHIP.pdf 1 6/23/19 9:34 AM Take 5 FREE AESP C to Know Today M Y JOIN A TOPIC COMMITTEE CM CHAPTERS CONNECT YOU Business Issues, Gas Programs, Implementation, Technology, MY TO MEMBERS IN… Marketing, Demand Response, CY California, Evergreen, MidAtlantic, Midwest, Northeast, and Evaluation CMY Northwest, Ontario, Rocky K Mountain, Southeast, Southwest, and Wisconsin E2E MENTORING PROGRAM LISTEN TO A FREE WEBINAR CAREER CENTER Benefit from an industry insider’s There are over 25 webinars a Post EE industry jobs, find jobs or experience by becoming a year and they’re always free for post your resume here. Also find mentee. Or help someone who’s Members. Have a product or lots of helpful career resources. just starting out by becoming a service? Present a Member mentor. InFocus webinar. www.aesp.org Leading with Science® in data analytics Tetra Tech’s experts turn data into insights and actionable information. Using advanced analytics and interactive dashboards, we help clients harness the power of data to make informed decisions throughout the project life cycle. tetratech.com |

LET’S TALK \"At least 11 studies suggest ABOUT that bright light is effective in NON-ENERGY reducing depression among IMPACTS patients with bipolar disorder or seasonal affective disorder\" By Noel Stevens \"In operating rooms, Once upon a time… surgeons are more productive because Eight years ago, when anyone asked me about they are able to control the impacts of energy efficiency programs, I the temperature and would have been pondering how we were going humidity levels better\" to make programs cost-effective, as we sweated over the dilemma of shrinking baselines as well as Non-energy Impacts of EE in Hospitals celebrating the promise of market transformation. HVAC 50% of survey In late 2011, I was just finishing an evaluation study respondents reported of a Home Energy Audit program with a surprisingly HVAC system controls provide stable temperature, pressure and decreased labor low realization rate. In a separate effort, I had just humidity to meet CDC and local guidelines on air quality to limit costs associated finished a high-bay lighting market effects study that growth of pathogens and provide optimal health conditions. with maintenance identified untracked spillover to help programs achieve of other equipment their goals. These studies made clear the relationship Productivity resulting from better between realized savings and baseline efficiency levels. space conditioning. Meanwhile, I was investigating the impact that LEDs Studies suggest that medical staff is more productive when air would have on baselines once they hit the market in full quality meets CDC guidelines. Surgical staff is able to perform bore within a year. I was acutely aware of the realization surgeries more often as operating rooms are kept at the of “What happens to savings as Delta-watts become near appropriate temperature and humidity. zero, if the baseline becomes LEDs?”... and that this was a microcosm of the challenge faced by utility programs Operations and maintenance costs that face increasing goals with shrinking baselines. This is my career, and it didn’t look too promising... The ability to properly monitor HVAC systems remotely decreases maintenance costs. Suddenly, I received a call asking me to manage a project that was to become my professional life for LIGHTING Analysis of 345 the next eight-plus years. Moreover, it reflects the lighting measures industry’s evolving and growing interest in how it values Health and safety demonstrates energy energy efficiency toward capturing the overall benefits efficient lighting of programs that include market effects, tracked and Recent findings are particularly relevant to people with ADD/ reduces the payback untracked spillover, and Non-energy impacts (NEI). ADHD, by allowing for increased focus and decreased anxiety. period of lighting Studies also show that LEDs are beneficial to people with projects to under The project was to estimate what were called “Non- Autism Spectrum Disorder by eliminating the flicker associated 2 years. energy impacts” of the Massachusetts Commercial with flourescent lamps that rely on the heating of gas. The and Industrial (C&I) Program Administrators’ continuous luminescense of LEDs is much more calming, When elderly patients (PAs) retrofit programs. I dove in to find out “what resulting in greater attention. with dementia were are Non-energy impacts (or benefits)?\" exposed to 2,500 Productivity lux for 2 hours in NEIs include positive or negative effects attributable Controlling lighting color can help to increase the release of the morning for two to EE programs separate from energy savings. melatonin, the brain's natural chemical to induce restfulness in 10-day periods, their “Participant benefits (or NEIs) are monetary and the afternoon and evening. agitation was reduced. non-monetary benefits (positive or negative) that directly benefit a program partner, stakeholder, trade Operations and Maintenance costs ally, participant, or the participant’s household.”1 Energy efficient lamps require substantially fewer replacements. Measure Average of Average Value of Average Payback Years: Category annual savings incentive annual energy annual Savings, incentive amount Custom (kWh) savings NEI plus NEI Lighting $40,862.85 VSD 510,786 $61,294.27 $4,313.65 3.13 Total $1,272.52 25,755 $3,090.60 $549.23 1.67 $2,335.00 22,879 $1,756.14 $2,745.45 $203.32 4.56 30,900 $3,708.05 $573.29 2.01 Source: DNV GL www.aesp.org | 2019 21

When theory meets application studies employed hedonic price models or Past C&I NEI research showed that people discrete choice analysis to estimate the value may be able to identify that things were On a personal level, this was exciting, as it of product attributes, in which the NEIs are an better and may even be able to specifically might give me an opportunity to apply my training attribute. Engineering-based studies used life- say what was better, but studies had not cycle cost analysis to estimate cost changes yet been able to pull apart these values into in economic benefits assessment and social welfare estimation to address the real challenge from “improved technologies.” separate impacts or benefits. Consequently, utilities are facing in meeting their goals. the existing C&I NEI studies provided a lot Reviewing past NEI studies, I realized that Overcoming challenges… of evidence that NEIs existed, but very few statistically significant NEI estimates. NEIs reflect changes to economic-efficiency For the Massachusetts C&I retrofit NEI study, Realizing we needed to express NEIs in as they capture the increased value of we would employ a mixed approach that combined elements of survey-based research terms that respondents actually thought about goods consumed by residential customers their businesses, we used in-depth interviews (i.e. housing) or increased profitability of with engineering. This sounds easier than it is. instead of surveys to ask respondents about commercial and industrial customers (i.e. One of the big challenges often discussed in the incidence of different NEIs that represented through lower costs or increased revenue). existing NEI literature is to define impacts in mutually exclusive cost and revenue changes. Rather than just ask, “Did O&M costs go up or In the evaluation of most public policies, terms that survey respondents, modelers, and NEIs would be regarded as part Life-cycle Cost Analysis Methodology Overview down and how much?” we used of the social welfare change detailed probes to understand measured by the economic why the costs may have gone concepts of Consumer Surplus or up or down. We then asked Producer Surplus developed by respondents to quantify the Rosen.2 In laymen’s terms, NEIs physical changes that resulted are all the extra-stuff you get when Select Sample Define Baseline Estimate Cost Extrapolate to in the increase/decrease. you invest in EE solutions without Difference for Population We let the respondent tell us the paying for it. If NEIs exist, and can High Efficiency and Baseline Technology story and used probes to get the necessary data. For example, they be attributed to the EE programs, ■■ Combine Tracking, ■■ Review TRM ■■ Review Project Documentation ■■ Aggregate Estimates they should factor into the overall Dodge, and Tax Data ■■ Review Cost Lab ■■ Review Manufacturer O&M by Strata total resource cost (TRC) of ■■ Identify True NC ■■ Data Collection Manuals ■■ Apply Weights may have said: “Well, I don’t have individual measures as well as Measures ■■ In-Depth Interviews to do maintenance on the boiler the portfolio of energy-efficiency ■■ Synthesize Sources ■■ Expand to Entire True every 6 months anymore…” Then ■■ Categorize Measures ■■ Estimate Lifetime Costs New Construction Program ■■ Select Random Sample programs. The trick would be how ■■ Convert to Net Present Value we could ask whether they did it to provide enough evidence that in-house or hired a contractor. If it they exist and monetize them. regulators can understand and accept as real was done in-house, we could get estimates of hours and wages. If it was done with external From what I could see, NEI studies leverage things people experience. NEIs were inherently help, we requested estimates of the cost to techniques largely developed for economic abstract concepts that people did not explicitly hire someone. This provided a rich database benefits assessment of environmental policy consider when going about their day. For of NEI information from 500 respondents and documented by Freeman to isolate and example, when people installed new lighting, over 800 C&I measures. We considered all quantify these changes to social welfare.3 it was not likely they were computing the value this information to construct standard formulas NEI estimation typically used either stated they place on improved light quality, worker for each of the impacts mentioned, used the valuation (surveys), regression analysis, productivity, or even decreased operations data provided to populate the formulas, and engineering analysis, or some combination and maintenance costs. They may have filled missing data with averages or published of these approaches to estimate NEIs. Stated considered these impacts implicitly, but they information where necessary. The analysis Evaluation survey-based studies essentially were probably a big ball of mush in their minds allowed for statistically significant NEI estimates estimated willingness to pay for NEIs using and grouped as: “Stuff I like and don’t like.” for five Prescriptive Electric and three techniques that mirror contingent valuation or Prescriptive Gas end-uses, and six Custom conjoint analysis studies. Regression-based Electric and four Custom Gas end-uses. Figure 1: Average NEI results by measure category from Figure 2: Average NEI results by measure category using in-depth interviews (Electric measures) from using in-depth interviews (Gas measures). Electric measures n Average NEI NEI/kWh 90% CI Low 90% CI High Stat Sig Gas measures n Average NEI NEI/Therms 90% CI Low 90% CI High Stat Sig Prescriptive 163 1,726.37 0.03 0.02 0.04 Yes Prescriptive 2 1,551.39 3.62 2.64 4.59 Yes 50 804.76 0.01 0.00 0.01 Yes Building Envelope 49 2,462.67 4.48 1.37 7.59 Yes Lighting 27 7,902.26 0.10 0.06 0.14 Yes HVAC 47 363.23 0.73 0.15 1.32 Yes Motors and Drives 62 48.62 0.01 0.00 0.01 Yes Water Heater 98 1,382.01 2.65 1.11 4.19 Yes HVAC 302 1,526.63 0.03 0.02 0.04 Yes Total Other Custom 46 1,582.86 0.82 0.28 1.36 Yes Total 6 -12,948.65 -0.01 -0.02 0.00 Yes Building Envelope 41 3,785.47 0.31 0.16 0.46 Yes Custom 20 5,573.22 0.02 0.00 0.05 Yes HVAC 25 1,460.56 0.35 -0.34 1.04 No CHP/Cogen 89 6,321.78 0.07 0.04 0.09 Yes Other 112 2,711.37 0.34 0.19 0.50 Yes HVAC 90 1,620.77 0.05 0.02 0.07 Yes Total Lighting 71 8,166.01 0.05 0.01 0.08 Yes Refrigeration 276 4,710.82 0.04 0.03 0.05 Yes Key Average NEI = NEI/kWh (or therm) saved times median kWh or therm saved Other NEI/kWh = Total dollar value of NEI for a measure category / total kWh saved Total NEI/therm = Total dollar value of NEI for a measure category / total therm saved 90% Low = Lower bound to the 90% Confidence Interval (CI) of the estimated NEI / kWh saved or NEI / therm saved 90% High = Upper bound to the 90% Confidence Interval of the estimated NEI / kWh saved or NEI / therm saved 22 Association of Energy Services Professionals

Telling the story… for marketing and outreach materials. In 2014, The combination of LEDs and advanced we leveraged data from the C&I Retrofit study lighting controls can not only optimize One of the key findings of this study was to demonstrate the value of NEI information luminescence, but also control light color that roughly 80 percent of NEIs that people for program sales and marketing.8 In 2018, two to represent circadian rhythms, which is reported were O&M cost changes. While separate mid-western utilities – Consumers believed to have measurable impacts on other impacts were identified, O&M was Energy in Michigan and AEP Ohio – undertook worker, patient, and student health and the change that people were most able to separate NEI studies strictly to estimate NEIs performance. Advanced lighting systems quantify. This finding was likely influenced by for use in program outreach and marketing also allow for predictive maintenance, asset the target respondents who were individuals to C&I customers.9, 10 For AEP Ohio, this tracking/theft detection, and can detect involved in the decision to install the project was particularly important as Ohio’s movement within a facility. These systems measures. These respondents were mostly C&I customers can opt-out of paying into the can also function as an intranet with the engineers who had detailed knowledge of energy efficiency fund. added security feature that the digital signal the plant operations and less knowledge cannot be detected outside the facility. of sales, revenue, and changes impacting The evidence documented by these personnel. Consequently, when asked by studies was used to produce industry- What started out as a relatively small project the Massachusetts PAs to do a follow-up specific marketing materials highlighting to estimate NEIs has blossomed into an eight study for new-construction measures, we key pain points and quantified cost and year experience spanning evaluation and focused on O&M cost changes. We decided revenue changes that were possible. implementation. By documenting the basis for to use engineering analysis to conduct this NEIs, grounded in economic theory, ensuring study, given the obvious difficulty asking The Hospital industry reported a range of techniques focused on measurable and survey respondents to report on hypothetical revenue increases and cost decreases from EE quantifiable change to participant revenues changes to O&M of equipment that was not measures. The O&M cost analysis alone shows and costs, we have expanded the number there before (i.e. it’s new construction).4 The that O&M cost savings on lighting measures of states allowing NEIs to be included in engineering analysis provided estimates of can reduce the payback period for lighting cost-benefit analysis. We have also helped the life-cycle cost difference between the measures, from nearly three years to under promote participation in EE programs through EE technology and baseline technology.5 one-and-a-half years. Other benefits include developing industry-specific messaging reduced compliance costs with air-quality highlighting key pain points. Finally, advanced As research continues to demonstrate regulations and increased revenue from control systems represent the next frontier in the ability to identify and quantify NEIs, improved HVAC systems, increased worker research that we are just starting to investigate. an increasing number of states now productivity, and health and safety impacts. My quest into NEI research has turned what recognize NEIs or are in the process of seemed to be a dismal future in the EE approving protocols for including NEIs in A new twist… industry into a limitless quest for improving cost-effectiveness tests of energy efficiency the value proposition of EE equipment programs. Further, an increasing number The transition from conducting NEI research by enhancing customers’ bottom line. of state Technical Resource Manuals now for Cost-effectiveness purposes, to developing include O&M benefits as impacts. This marketing collateral, leads to a new twist in momentum fostered guidance from the NEI research: What if we look at measures Northeast Energy Efficiency Partnerships’ that can promote core business objectives, (NEEP) forum to include NEIs in Total such as drive revenue, control inventory Resource Cost tests and development of costs, optimize space, reduce downtime, or the National Standard Practice Manual.6, 7 increase productivity? While advanced lighting, HVAC and other control systems provide An unexpected benefit of the NEIs estimated substantial energy savings, that savings through these studies was they documented may be secondary to these other benefits. and monetized real pain points of end-users. This information provided valuable collateral Reference 5 DNV KEMA and Tetra Tech. February 12, 2016. “C&I New About the author Construction NEI Stage 2 Final Report.” Submitted to the 1 Non-Energy Impacts Approaches and Values: Massachusetts Electric and Gas Program Administrators. Noel Stevens is a Senior An Examination of the Northeast, Mid-Atlantic, 6 https://neep.org/sites/default/files/resources/ Consultant with DNV GL and Beyond. NEEP. June 2017. http://www. Forum_C-E_Screening_Guidelines_Final_No_2014_0.pdf where he serves as a subject neep.org/sites/default/files/resources/NEI%20 7 https://nationalefficiencyscreening.org/ matter expert in the areas Final%20Report%20for%20NH%206.2.17.pdf national-standard-practice-manual/ of non-energy impact 2 Rosen, Sherwin. \"Hedonic Prices and Implicit Markets: 8 Abdou, Marie, Noel Stevens and Anthony Davis. “Non- assessment, advanced Product Differentiation in Pure Competition,\" Journal of Energy Impacts Provide Powerful Marketing Tools for customer analytics, and Political Economy 82, no. 1 (Jan. - Feb., 1974): 34-55. Energy Efficiency Programs.” International Energy Program market characterization 3 Freeman III, Merick A. “The Measurement of Evaluation Conference, Long Beach, CA. August 2015. research. DNV GL Environment and Resource Values: Theory and Methods.” 9 “AEP Ohio Non-Energy Impact Report – Final report.” delivers world-renowned Resources for the Future. Washington D.C. 1993. Prepared by DNV GL. Prepared for AEP Ohio. July 25, 2018. testing and advisory 4 Stevens, Noel, Marie Abdou, Nathan Caron, 10 “Non-Energy Impacts For End-Use Customers: services to the energy value chain including Jeremiah Robinson, and Pam Rathbun. “Life-Cycle Industry Specific Selling Points Of Energy Efficient renewables and energy management. Cost Analysis Provides Powerful Tool for Estimating Technologies.” Prepared by DNV GL. Prepared Non-Energy Impacts of Energy Efficiency Measures for Consumers Energy. April 16, 2018 in New Construction Programmes.” International Energy Policy and Program Evaluation Conference. Amsterdam, Netherlands. June, 2016. www.aesp.org | 2019 23

Pay-for- performance Demands ActionabInletelligence By Carmen Best and Teri Lutz Introduction Value Proposition — Getting Ready for Performance-Based Efficiency Pay-for-performance promises to revolutionize energy efficiency. Pay-for-performance programs differ from more traditional energy Before we dive into ways embedded evaluation, measurement, management programming. Rather than paying incentives up-front and verification (EM&V) can be deployed to add value, it's important based on prescribed measure-level savings estimation, pay-for- to answer the broader question: why is embedded feedback performance incentives are paid after verification based on savings from evaluation, measurement, and verification important? measured at the meter. These pay-for-performance programs demand a new transparent structure for accountability to provide Stakeholders have different levels of interest and needs when it confidence in the energy savings delivered. Accountability and comes to feedback. The need for savings impacts and the drivers confidence attracts private capital to finance efficiency in the same behind them are dependent on the context in which programs way grid infrastructure is financed, ensuring energy efficiency are operated. For programs in which the primary accountability is remains a viable grid resource for an increasingly dynamic grid. delivering on deemed savings goals, the most important pieces of feedback are the number of technologies installed and customer Some might argue that confidence in the energy savings is adoption rates. Unless your organization is responsible for using all that is needed. However, we argue that it cannot stop there. those results to drive grid optimization decisions, there are only A timely understanding of “why and how” customers save a few people (usually at the end of the process) who will be energy is essential for effective program operations, energy interested in taking account of what really happened at the meter. forecasting, and grid management. The “why and how” can provide insight into key program inputs and outputs, such as the However, this all changes when pay-for-performance effectiveness of customer engagement efforts and whether or drives program deployment. Over the past several years, not energy-saving actions are likely to be repeated. This timely performance-based approaches to efficiency have been rapidly understanding of the why and how is actionable intelligence spreading to efficiency portfolios around the country as a way to ­—­ “useful information that can be quickly acted upon.”1 reduce costs, drive accountability, increase investment and — eventually — make efficiency deployable as a grid resource. A recent survey cited in Forbes noted that 69 percent of customers associated good customer service with the speed In this model, accountability drives a need for information, with which their problem was resolved. Speedy actionable or actionable intelligence, throughout the market chain. It intelligence continues to be a gulf we have not yet bridged in the drives the decision to both optimize payments and to capture energy efficiency industry despite implementers and evaluators savings in the most efficient manner. It generates both the attempting more meaningful feedback loops. One solution is to motivation to get the numbers right and creates a real incentive embed feedback loops into program deployment on an ongoing to dig deeper for a better understanding of what is driving basis rather than after the fact. More speedy feedback may the savings. This actionable intelligence is essential. seem like a simple improvement in practice, and it can be. 24 Association of Energy Services Professionals

Get the Numbers Right: Competitive Procurement Embedded Measurement and Verification Implement Pay-for-Performance Measurement and verification (M&V) has always been important to efficiency programs. But methods and tools are only useful insofar Track meter-based impacts as they provide a means to an end – the significant expansion of energy efficiency to meet the needs of a dynamic, integrated grid. Review past performance Unlike a solar panel or a battery, conventional approaches to The OpenEEMeter recently moved to the Linux Foundation’s measuring energy efficiency don't have the means to consistently LF-Energy project for open source governance. This means it is and transparently track progress at the meter. Without meter-based accessible to any player in the market: contractors in the field, quantification, energy efficiency is to some degree marginalized aggregators and implementers, utility or other administrators, as a resource. Even though efficiency displaces the last, most or regulators. It will grow and improve with the effort of this expensive energy that would be supplied to the grid, without community. No proprietary license is necessary to use the meter-based performance accountability, efficiency investments software, which avoids vendor lock-in and ensures that results simply may not drive toward the intended outcomes. will be consistent and the tool will continuously improve. Fortunately, the advent of new approaches to delivering M&V Recurve implements an enterprise version of the OpenEEMeter through automation, where appropriate, and the application of and utilizes the CalTRACK methods at scale. The New York, California, standard, open methods hold the promise of unlocking efficiency and Oregon residential and commercial meter-based pay-for- as a competitive and meaningful resource in an integrated grid. performance programs represent some of the largest deployments in Putting accountability and transparency front and center in our the country. Secure data pipelines facilitate the transfer of data across efficiency and energy reduction efforts transforms uncertainty into parties, delivering meter-based results to contractors, administrators manageable risk, reduces transactional friction, and opens the door and regulators – building a bridge of communication essential to to more investment so we can reach the carbon reduction goals on the success of pay-for-performance as a procurement model. which our relatively comfortable existence on this planet depends. Understanding What Drives the Numbers: Many utilities and implementers have already started down this Embedded Research and Evaluation path, and the savings profiles and peak impacts of current programs may look quite different when viewed through the meter-based Patty Durand, President & CEO of the Smart Energy Consumer lens. Pacific Gas & Electric (PG&E), for example, recently highlighted Collaborative, tells us that “...consumers welcome the ‘utility the hidden value of the Advanced Home Upgrade2 programs to of the future.’ They desire a shift to renewable energy and are deliver savings when most needed. The time-dependent value of ready for new programs that can help them take control of the savings versus the strict cost test output revealed in this analysis their home energy use and help them save money as well.”3 enabled PG&E to make informed trade-offs between programs. To fully deliver on these expectations, more certainty in the Going forward, more of their programs will be tracked on a metered savings delivered by energy conservation programs along with basis to support portfolio optimization for grid integration. why savings are – or are not – occurring is needed to provide better forecasting and effective grid management, including the As parties become more familiar with meter-based outcomes, integration of renewable energy resources. It is in the explaining administrators can shift more of their procurements to performance- of “why or why not” where conventional evaluations can fail, either based payments. This stepwise approach (illustrated in the figure) in providing the information too late or not providing it at all. has immediate benefits to improve accountability and prepares the market for the next logical step: procurement of efficiency as a resource across the organization and regulatory landscape. Each step in this transition requires consistent, transparent M&V. Steps Toward Transforming Energy Efficiency into a Distributed Energy Resource Fundamental to this transition are the open source projects and tools that OpenEE, now Recurve, has been championing for several years. CalTRACK (methods) and the OpenEEMeter (code base) were designed to make energy efficiency savings transactable. In the near term, this means improving program performance with real-time feedback and enabling pay-for-performance program designs. In the long term, it will enable a much bigger role for efficiency as a distributed energy resource, providing value to the grid through consistent, transparent quantification. www.aesp.org | 2019 25

Open architecture tools such as the Engage Embedded Pay for OpenEEMeter along with consistent Customers Research and Performance interpretations of Normalized Metered Evaluation Energy Consumption (NMEC) through hat are customers h fin nci CalTRACK can provide us with confidence in likely to do in the incen ives rive he the savings delivered. Embedded research and evaluation can provide us with the near future? esire beh vior? actionable intelligence needed to move more quickly toward flexible service offerings Inform Design Energy made possible by a smarter grid — and & Delivery Forecasts/Grid increasingly demanded by customers. Management h is he b se ine? Earlier insight and a deeper understanding How are customers Ho oes progr m of how programs and portfolios are performing esign ch nge ffec can lead to better energy modeling and using energy? better customer experiences. It is this energ forec s s? understanding that leads to actionable intelligence. Actionable intelligence can be Embedded Research and evaluation framework to drive actionable used to understand what is happening in real intelligence is a must-have component in time to identify if — and what — changes might and Evaluation Supports these discussions and should be among our be needed to improve program performance expectations for good program design. and the customer experience. It is one thing Multiple Objectives to adjust program delivery mechanisms Are you ready to take advantage based on what happened. It is another to Pacific Gas & Electric’s home energy of all that actionable intelligence understand customer behavior to align optimization4 pay-for-performance program can offer? program adjustments to the desired customer is an example of the opportunity for experience and the desired outcomes. embedding M&V and evaluation research to Reference drive actionable intelligence. PG&E is using Actionable intelligence can also be used CalTRACK and the OpenEEMeter to provide 1 Stephen Pearson, Watson, R., Digital Triage Forensics, to calibrate energy models for the next round transparent, real-time embedded M&V for 2010. https://www.sciencedirect.com/topics/computer- of forecasting. It is one thing to forecast both performance incentive payments to science/actionable-intelligence usage based on knowing what happened. It the implementer and time valued savings is another to build ‘the why it happened’ into to optimize day-to-day efficiency capacity. 2 https://www.openee.io/post/metered-resource-curve- the forecast. As distribution grids become This system is coupled with other products time-and-locational-ee-arrives-in-california smarter, actionable intelligence at the and services as part of the program distribution level is critical. To keep connected deployment that collects data to inform 3 Patty Durand, Three Things Consumers Want From customers, providers must offer and deliver program modifications, or discrete targeting Electricity Providers, April 10, 2018. https://www. what customers want. Make it simple, make such as when to schedule HVAC tune-ups. utilitydive.com/news/three-things-consumers-want-from- it reliable, make it flexible, make it value electricity-providers-1/520821/ priced. It isn't about the cheapest option; it Conclusion is all about the value the options deliver. 4 https://www.homeenergyoptimization.com/ Effectively and efficiently managing a grid So, how do we get there? Coupling that integrates a growing diversity of behind- About the authors thoughtful research and evaluation with the-meter energy usage and management near-real-time metered data analytics provides devices requires early and ongoing insight Carmen Best is the Director of us with an opportunity to link the what and into locational aggregate hourly energy Policy & Emerging Markets at why. The figure presents a simple illustration consumption patterns. Increased customer Recurve (formerly OpenEE). of embedding research and evaluation for expectations for personalized engagement, She is committed to seeking actionable intelligence to support multiple flexibility in service offerings, and a demand consistent, transparent program needs. What energy was used or for a reduction in environmental impact quantification of the impacts saved, and why did that usage or savings coupled with an avalanche of emergent from distributed resource occur? Based on customer actions, what are non-utility product and service offerings only interventions so they can play they likely to do again? Based on customer heightens the importance of both knowing a central role in optimizing experiences, what might they want — and and understanding how energy is used. It our collective energy future. do — in the future? How will emerging is one thing to know what happened. It is technologies, new service delivery models, another to understand why it happened. Both Teri Lutz is the Director of and customers’ energy needs and wants are essential to effective forecasting. Both Research and Evaluation drive energy conservation programming? are essential to smarter grid development at Michaels Energy where and effective grid management. Both are she helps utilities, portfolio essential to effective customer engagement. administrators, governments, and policymakers figure As we strive to gain the most from smart out what is working – and grid investments, policies, frameworks, what isn’t – for meeting protocols, platforms, and tools are emerging. their energy savings goals Pay-for-performance approaches coupled and other objectives. with an embedded measurement, research, She has two decades working for a utility and now seven years as an evaluation professional. 26 Association of Energy Services Professionals





Energy Efficiency mechanism designed to recover T&D costs that is based on the highest demand peak in a given month. Figure 4 shows that demand charges vary Energy Efficiency (EE) programs, started over three decades ago, are across the United States but are sufficient to drive storage in most states. designed to reduce overall energy consumption. Programs address most customer segments, including income-eligible, residential, small business, EV programs can charge vehicle batteries overnight when there large commercial and industrial, and serve facilities from new construction is a surplus supply of generation and tap the battery as a resource through retro-commissioning. EE programs deliver efficient lighting, during early evening peaks. In South Carolina, Duke Energy is testing HVAC, envelope, heat pump, motors, appliances and behavioral change vehicle-to-grid (V2G) capabilities with the “bidirectional power flow measures by offering financial incentives, technical assistance, customer abilities of electric school buses and the potential to use their batteries education, and communication to drive higher levels of efficiency. during times of high electric demand or during disaster recovery” through the installation of a DC Fast Charging (DCFC) infrastructure. EE programs deliver cost-effective, reliable resources. The U.S. Energy Information Administration estimated that in 2016, combined EE programs Microgrids and Non-Wires Alternative in the U.S. saved almost 28 TWh, or 0.7 percent of electricity sales. When EE savings are considered as a resource, they are reliable through the life Microgrids and Non-Wires Alternative (NWA) programs address of the measure. In the example above of 2016 savings, this extends to 354 distribution systems. Microgrids can connect and disconnect from the TWh over the lifetime of the measures. EE alone, however, is insufficient to grid, operating as part of the grid or as an island. They are powered by defer traditional T&D investments to maintain grid reliability and resiliency. distributed generation and exist within defined geographical and electrical boundaries. Southern Company is installing the Tech Square Microgrid Demand Response Project in downtown Atlanta to \"give us a better understanding of the resiliency, sustainability and cost of microgrids to help develop emerging Demand Response (DR) programs are designed to reduce peak energy solutions to better serve our customers now and in the future,\" demand upon request, generally to support the grid during times of said Paul Bowers, chairman, president and CEO for Georgia Power. stress. Automated and customer-initiated programs feature control of HVAC, lighting, even pool pumps. Often the response is to defer demand Figure 4: Maximum demand charge by turning equipment off, but technological advances offer greater control, rates by utility service territory. e.g., advanced lighting controls that permit dimming or turning off of specified lights or banks of lights. Maximum Demand Charge ($) According to FERC, DR participation in U.S. wholesale markets represented nearly 28 GW of capacity, or nearly 6 percent of peak >30 demand. A 2018 Smart Electric Power Alliance (SEPA) survey of 155 20-30 utilities showed that Maryland leads the country in DR capacity, followed 10-20 by California, North Carolina, and Florida. DR programs usually feature an 1-10 opt-out clause that permits participants to decline a set number of annual 0 requests to curtail demand; participants are often aggregated to deliver a No Data reliable resource. Source: National Renewable Energy Laboratory: Identifying Potential Markets for The advent of participant-sited generation, storage and other resources Behind-the-Meter Battery Energy Storage: A Survey of U.S. Demand Charges allows DR participants to replace the utility-generated energy they curtailed during a DR event. NWA applications can be in front of, or behind, the meter and employ distributed generation, storage, EE, DR and grid software and controls Distributed Generation such as voltage optimization. A particular benefit to NWAs is that they may be implemented in phases, avoiding large up-front costs as Distributed Generation (DG) programs generate power near where it well as stranded costs should demand projections not be realized. will be used from a variety of technologies including solar, wind, hydro, combined heat and power, and solid waste incineration. Benefits of DG An “Act to Advance Clean Energy” was signed into Massachusetts include security, resiliency and a reduction in emissions. law by Governor Baker, taking effect in November 2018. Among several provisions is one to address Grid Modernization & Resiliency that requires A weakness among some DG resources is that generation does not utilities to file annual resiliency reports with the state regulatory authorities always align with demand. A solution to this challenge is offered by and authorizes them to hold competitive solicitations for NWAs from shifting loads and storing the excess capacity. third party developers. According to an article in appearing AEE, “these project proposals will be evaluated for their ability to reduce greenhouse Green Mountain Power in Vermont successful piloted residential gas emissions, replace aging infrastructure, and provide benefits to solar-plus-storage and is now expanding the offer. Under this program, stressed, congested, or severe weather-prone areas of the electric grid.”1 customers charge their battery with roof-top solar and set a pre- determined amount of the energy stored for their own use, allowing the utility to tap into the remainder. Energy Storage and Electric Vehicle Energy Storage and Electric Vehicle (EV) Charging programs operate on both sides of the meter, with new utility-scale storage such as Florida Power and Light’s planned 409-megawatt Manatee Energy Storage Center that will be charged by an existing solar plant. Behind-the-meter (BTM) storage falls within the realm of IDSM. As more DG is installed behind the meter, there is greater demand to hold on to the excess energy created. The cost associated with installing storage is falling as production and competition increase. There is an economic advantage to customers faced with demand charges, a rate-setting www.aesp.org | 2019 29

Driving IDSM 2.0 Policymakers from Pennsylvania to Colorado have enacted legislation that requires consideration of the contribution of carbon dioxide to climate Each of these DSM resources has stood on its own since inception. change. Rhode Island enacted the “Power Sector Transformation” initiative Despite the overall reduction in energy they have delivered, electricity related to systems integration, reliability, distribution grid planning and demand continues to rise while the grid continues to be challenged by research to modernize the grid. Through an Integrated Regional Planning various conditions including extreme weather. Utilities are obligated Process, the Province of Ontario is considering grid infrastructure, to have supply on hand to meet demand. Traditionally that has been including DSM as a resource in their planning. achieved through increased infrastructure. Some utilities are leading their own transformation through pilots How can the portfolio of various, variable DSM resources deliver a and are inviting key decisionmakers to support their actions. For reduction in demand that is sufficiently reliable and resilient to replace example, Austin Energy, a municipal utility in Texas, has developed The traditional generation? It can be done through aggregation, or stacking, Resource, Generation and Climate Protection Plan to guide them through of DSM resources. modernization in response to their community needs. Austin Energy’s The Con Edison Brooklyn Queens Demand customers “determined long ago that delivering electricity from sources that don’t Management (BQDM) Project integrates pollute and reducing electricity use through various distributed energy resources — EE, What is IDSM? DR, storage, CHP, solar and conservation energy efficiency is the course” their utility should follow. voltage optimization (VO) — to achieve up to While IDSM 2.0 varies from state Massachusetts offers one model to address 52MW of demand reduction, deferring the the silo-ed impact of program funding, construction of a new substation, switching to state, it is consistently defined administration, cycles and valuation: it placed station and sub-transmission feeders. Running as managing demand through the IDSM under the EE umbrella, and applies from 2014-2018, the project has been integration of two or more of the the TRC cost effectiveness test across the extended to procure additional load reduction. spectrum of resources. While the TRC test The portfolio of integrated BQDM resources following programs: energy efficiency, may be appropriate for EE programs, there is depicted in Figure 5 below. None of them demand response, distributed are challenges when applying it to DR or was sufficient to the cause, but, when stacked generation, storage, EVs, microgrids integrated programs. they deliver the required resource. and non-wires alternatives. Pacific Gas & Electric had attempted to use Numerous barriers continue to frustrate a valuation model that calculated the avoided the adoption of IDSM. Programs organically cost benefit of implementing IDSM projects, developed around their resources over time, but that proved to be very difficult and limited resulting in silos that segregate program funding, administration, and their ability to remain relevant. Richard Aslin said that PG&E is focused on cycles as well as differing cost effectiveness methods. Investor-owned “reducing the customer acquisition cost by offering all the deployments utility DSM programs generally require regulatory approval. Often the for EE & DR in one visit in a very integrated package. Customer acquisition cycles for different types of DSM is a very large cost for all the programs.” programs are not aligned, resulting in separate and disparate EE, DR According to Michael Goldman of Eversource in Massachusetts, their and DG proceedings. focus is on the customer: “Put yourself in the customer’s shoes: you don’t Division can be increased when cost effectiveness methodologies and want this disjointed offering, you want it to be as seamless as possible, proceedings differ, causing a focus on disparate methods and ignoring even if, in reality, they’re a multiple group from the utility perspective. the cost effectiveness of the integrated whole. Some states administer EE When you go in and do a comprehensive retrofit, you want to install programs at the state level (e.g. Vermont, Maine, and Oregon) while others the enabling technologies so that if and when the customer wants to engage statewide programs through third party EE administrators participate in something more on an active demand basis, [the measures (e.g., Hawaii and Wisconsin). In the meantime, DR programs are are already in place.” independently administered by the utility or ISO in most of those states. These barriers are being overcome to allow the integration of DSM. What is driving this transformation? Figure 5: ConEdison, 2018 Anticipated BQDM portfolio during a design peak summer day. Battery Releases Energy To Grid Source: National Renewable Energy Load Relief (MW) Voltage Optimization Laboratory: Exploring New Models Distributed Energy Storage System (Battery) for Utility Distributed Energy Solar Resource Planning and Integration: Fuel Cell SMUD and Con Edison, Jan 2018 DR Distributed Generation (Gas Fired) Energy Efficiency Total 2018 Nontraditional Load Relief Need Battery Charges Midnight - 1 A.M. 2 A.M. - 3 A.M. 4 A.M. - 5 A.M. 6 A.M. - 7 A.M. 8 A.M. - 9 A.M. 10 A.M. - 11 A.M. Noon - 1 P.M. 2 P.M. - 3 P.M. 4 P.M. - 5 P.M. 6 P.M. - 7 P.M. 8 P.M. - 9 P.M. 10 P.M. - 11 P.M. 30 Association of Energy Services Professionals

The GridSolar project in Boothbay, Maine is illustrative of both flexibility and cost avoidance Reference available through IDSM to resolve resource needs. Following a successful challenge to a transmission upgrade to meet projected demand, GridSolar implemented a pilot in two carved-out 1 Besser, Janet and Dickerson, Jamie: https://blog. geographical regions of the state, installing battery and thermal storage units, rooftop solar PV, aee.net/massachusetts-moves-clean-energy-forward- EE commercial lighting, and a back-up diesel powered generator. The pilot delivered reliability with-rps-increase-solar-fix-in-part-storage-target- comparable to a transmission line. energy-efficiency-expansion-offshore-wind-boost At a recent PLMA/AESP-sponsored webinar on IDSM, panelists from LBNL, Eversource, Con About the authors Edison and PG&E listed their main research requirements to move IDSM into the future. Greg Wikler is a They included: managing director for Navigant Consulting ■■ Controls interoperability and communications where he directs studies of DER market forecasts ■■ Feasibility and value of using grid interactive resources to respond and the development to 5-minute real time pricing of non-wires solutions portfolios for utilities. ■■ Evaluation of multiple measures with an interactive effect Sharon Mullen evaluates ■■ Coordination between distribution resources and wholesale needs utility energy efficiency programs for Navigant A question was posed to all the panelists at the webinar, “What might the future look like?” Consulting. Previously, Based on feedback from the panelists, a vision emerged where it is possible for a home to have she owned a product two-way communication nodes for all electrical loads that are all controlled by a virtual top node or development and a centralized platform. This platform would enable the customer to carry out real-time optimization e-commerce company. of their energy cost, comfort and needs through the platform. During occasional periods of the day when local or central grids become constrained, the utility could be granted dispatchable rights to manage these conditions and control the customer’s load consuming and producing capabilities. This perspective aligns with the IDSM 2.0 vision laid out in this article. www.aesp.org | 2019 31

CUSTOMER ENGAGEMENT LEARN Personalize FROM THE LEADERS Initialize Monetize By Susan Gilbert If you want to learn how to do something Look Outside the Box well, study those who are most successful at it. Whether it is skiing or running a company, Nevertheless, it is a healthy exercise to consider what you might have to do if you success often comes from applying the faced the kind of competition other industries do. Would you survive, or possibly even techniques of others who have proven and thrive? Questions like this have some obvious answers, prime among them being to perfected techniques that work. If you’re in build strong relationships with customers — something most utilities have not had to do. the regulated utility business, it’s tempting The clear business advantage for utilities with engaged customers is lower operating to just compare yourself to other utilities that costs (fewer calls to the call center), higher customer satisfaction, and consequentially, are “in the top quartile.” But the regulated higher returns on investment – all which should satisfy the business case question. utility business is not necessarily known for being first at inventing new solutions. But, the bottom line impact of truly innovative change is often uncertain, and it Learning from the leaders can mean studying is all too easy to hide behind regulatory rules and uncertainty even though most industries outside of your own to bring fresh regulators are eager for utilities to try new approaches, at least on a pilot basis. perspectives and breakthrough practices. See the Customer’s Needs First Even though some utilities may readily say they are fast followers, most will admit In an interview some time back, Amazon President Jeff Bezos stated that: “The thing they are intrinsically afraid of change and that connects everything Amazon does, and the number one conviction and principal is, risk. So they shy away from thinking outside Customer Obsession…always focused on the customer’s needs and working backwards from the box. And, to be fair, they can survive the customer’s needs.” I think we can all agree that Amazon’s success is unprecedented. with that approach because they generally don’t encounter the brutal, competitive For utilities, one could argue that customers are their most valuable asset. And, in this new crush other free market industries face. world, growing, nurturing, and protecting those customers and relationships today and into the future could be the most important thing you do. Customers may not be able to switch to another utility, but the technology to meet their energy needs — without the utility — already exists. And that technology is becoming cheaper and more accessible every day. What steps are you taking to protect your customers? Are you thinking backwards from the customer’s needs? This article takes a look at some of the most effective customer engagement techniques used by top ranked companies in other industries, how they are being applied by energy retailers today, and with what results. 32 Association of Energy Services Professionals

Kroger: Personalize One day while sorting through the mail it became clear. I usually throw away the junk mail but opened a personalized envelope from Take for instance the retail grocery business, one of the most brutally competitive low-margin businesses around – Kroger boldly exclaiming COUPONS FRESH PICKED FOR typically a 1 to 3 percent profit range, depending on SUSAN GILBERT. I had now discovered one use they the items. The key to their success is volume, had for my information. Inside were 20 coupons for with lots of customers filling large carts. the items I purchased most weeks at the store, many of them not for a discount but marked To survive, grocery companies must fight to FREE. Wow, I’m not much of coupon clipper, but get the right customers in their doors, win their picking up that week’s shopping list at no cost loyalty, and keep them filling their shopping converted what I found to be creepy to caring. carts. A competition I watch here in Atlanta is the battle between Publix and Kroger. We Impressed with the creativity of the offer, I shop at both, but I must give credit to Kroger was fortunate to meet with the President of for their creative use of personalization. I found Kroger Southeast, Bruce Lucia, and asked it kind of creepy when Kroger, many years about it. He said that knowing his customers ago, started asking for my phone number every and using personalization was critical to keeping time I shopped. In exchange, you received a nice their competitive edge. He asked what our industry discount on your receipt, so most people played does. When I told him segmentation, he said, along and provided their number. But I wondered why “That’s so ‘90s. We wouldn’t survive with something they wanted to keep up with me and my purchases. so general, and why do that when you know something specific about each individual customer?” Good question. American Express: Categorize & Initialize ■■ Notifications are dollar amounts you set in their billing portal to What other businesses have captivated attention and impressed request an e-mail or call if a purchase above a set dollar amount their customers? Financial Services consistently runs at the top comes through. of the J.D. Power industry rankings list, and American Express often leads the category. Their number one position in 2017 ■■ Payment reminders are e-mails marked the ninth time American Express earned the highest you can enable to come a week ranking since the study was launched in 2007. The company prior to your due date to be sure dominated the top spot from 2007 through 2013 and shared you don’t miss a payment (which the highest ranking in 2014. So let’s look at what they do. would also mean you don’t receive your member reward American Express proactively provides its members – not points for that billing period). customers – an annual statement categorizing their spending for the previous year. It’s designed to help you with your taxes, ■■ Payment received notices are but it comes unrequested in an attractive folder, which includes sent so you are never left wondering if charts, graphs and detailed summaries of all your charges. your payment was received. Three other highly effective member engagement techniques   American Express uses that are initialized proactively (meaning you Finally, most of their e-mails feature a don’t have to request them) to arrive at the moment the message FEEDBACK button asking, “Was this helpful?” is most relevant. These are Notifications, Payment Reminders, and and asking you to provide your thoughts about Payment Received, all also offering to gather your feedback. the notice or other aspects of their service. Waze: Personal AND Proactive is Key You Have the Data The Waze app is another innovative business model of You might be thinking Kroger, American personalized, useful, relevant messaging. It’s credited Express and Waze have a leg up on utilities with changing traffic patterns across the country as because they have the data needed to it directs drivers down obscure, little-used roads to produce these enlightening and useful get around traffic back-ups. If you haven’t used it, I coupons, reports, and routes. But think again. recommend you download that app and give it a try. I have found it changes the way I think about each trip I All utilities have billing consumption data, make. Instead of looking at a map or at your car’s GPS, meter-read dates, and can get weather you check Waze to get a recommendation for the best data coincident with the meter-read dates. routes to your destination. It considers traffic jams, road Many have AMI data on top of all that so construction, wrecks, and other factors that impact drive time. real-time notifications are clearly doable. Plus, billing and/or AMI data combined with Initially I didn’t think much about the app until one day, as I mathematical modeling can tell a great deal prepared to head to the office, it did something unexpected: about the customer that can be configured it proactively alerted me to go a different way. How did it into useful, relevant messages and reports. do that? Well, it knows I leave about the same time each And any messaging can incorporate morning, and it knows the route I take, so it must have the Feedback concept to help keep the been aware of something along the way that was slowing traffic. customer actively and happily engaged. That simple outbound, relevant message totally changed my relationship with the app and gave me a much greater regard for Waze. www.aesp.org | 2019 33

 Utilities are slowly getting on board with this ■■ A mid-western IOU sent personalized “Wow, we can now give customers kind of timely, relevant communication. Even videos to their customers and asked how those without AMI data. Consider this: a 7-day it affected their perception of the utility. a look out the windshield instead weather forecast combined with customers’ Fifty-eight percent reported improved simple billing history, permits utilities to perception. The same company of through the rearview mirror!” determine how much higher a customer’s documented a 15 percent drop in high bill will be over the billing period and send bill calls when personalized videos explaining why. Or when a critical peak notifications before the bill cycle is complete explaining why that month’s bill was market condition is anticipated, a message and before it’s too late to make an impact. One higher were sent. is sent requesting customers to conserve. utility manager upon hearing the concept and seeing it in action exclaimed, “Wow, we can ■■ An IOU in the northeast found five So, What Should a Utility Do? now give customers a look out the windshield times more program participation from instead of through the rearview mirror!” customers who had profiled their home There are a few things that are foundational with one of their online applications and and far from optional. The successful utility of Utilities have other data that permits such were then offered programs appropriate the future will have engaged customers who customizations. One sorted all their customers to their home. think of contacting their energy provider first through an analysis engine to detect the ones when questions about energy use in their lives having unusually high use of HVAC. They We have been messaging customers comes up. Since customers rely on “voice targeted those customers with a message for dozens of utilities for over five years. assistants” so much today and on Google for letting them know the percentage of their We regularly see enormous spikes in searching, check out what Siri, Cortana and bill going to heating and cooling and offering online activity when customers are sent Google would recommend when you ask them a program to improve its efficiency. proactive messaging. The open rates questions the way your customers would ask tend to increase with each subsequent them when they’re looking for assistance. Another sends personalized messages distribution, which we attribute to customers explaining why their utility bill was becoming increasingly aware that these And in the race to build those higher this month than the previous truly are personalized, not generic. relationships, no magic wand is required. month. Another sends text messages There are plenty of proven methods a to income-qualified customers with tips When we started, we feared what we utility can replicate establishing a valuable, they, and many renters, can act on that referred to as “Carpal Tunnel Opt-out repeating cycle of involvement. are relevant for that day’s weather, such Syndrome.” It has surprised us that in the as: “It’s going to be another record setting millions of messages we send on behalf of We believe the acronym POP summarizes hot day, be sure to close curtains to keep the utility, or that the utility sends directly, the formula: Personalized Outbound, Proactive the sun out and use fans to stay cool.” opt-outs are almost nonexistent. As we communications are the key. Fortunately, pondered why, we have concluded the examples of what you can offer in information Monetize it! reason is the messaging is not regular or content are easily observable and obtainable. routine on a certain day or time. It’s only Most utilities today have the foundational Messages that sent when something has happened to pieces of the engagement puzzle in place. get the best traction trigger the message, making it relevant. So, start there, but you will probably have are ones that go For instance, when your bill has increased to admit that there is a lot more you can be one step beyond by more than $50, you receive a message doing to Personalize, Initialize, and Monetize relevance and that information. Just learn from the leaders. personalization and include About the author some level of monetization. Susan Gilbert is co-founder, For instance, CEO, and principal owner “Lowering of Apogee Interactive, a your thermostat a few woman-owned Software as degrees would save you $25 between now a Service (SaaS) company and the end of the billing cycle.” Or, “Your specializing in customer next bill is estimated to be between $80 engagement. In her position, and $120, here are some ways to lower it.” she oversees delivery of the firm’s cutting-edge Revealing Results… services to hundreds of North American utilities. A long-time active AESP member, There are enough utilities that have been Susan has served on the Board of Directors and sending personalized, relevant messages is a regular speaker at industry conferences. to customers long enough to give us the industry data to support its effectiveness: ■■ A large IOU in the southeast sent 40,000 Personalized Summary Reports and did an exhaustive study of the results. It showed recipients of the annual reports had a 16 percent higher customer satisfaction level than the control group that did not receive them. That equated to about 100 points on the J.D. Power rankings. 34 Association of Energy Services Professionals

HOW INNOVATIVE UTILITIES ARE USING SMART TECHNOLOGY TO DRIVE CONSUMER ENGAGEMENT By Jeff Hamel Connected devices, digital assistant integrations and online 750,000 Nest Thermostats participated, reducing energy demand by marketplaces are reshaping the energy sector’s relationship 700 MW, equivalent to about the same amount of power produced with its customers. And this transformation is happening far by seven gas-powered peaker plants. The eclipse was a unique faster than anticipated. opportunity to show that utility customers across the country are open to participating in DR events and are eager to use technology that Energy providers are recognizing which services and devices their makes opting-in easy. customers are now looking for, and in turn are proving that the “Utility of the Future” is possible today. They are leveraging smart thermostats Smart devices have also proven to be an important channel for to make it easier for customers to participate in demand response (DR) marketing and encouraging enrollment in innovative new utility and other innovative programs, as well as smart speakers to provide programs such as gas DR. For example, customers who enroll customers access to voice-activated energy information. Online in SoCalGas’ Smart Therm Program4 opt-in to allow their smart marketplaces – where customers can purchase these types of thermostats to be adjusted automatically by up to four degrees products from their utility providers – present another evolving opportunity that industry stakeholders are readily recognizing. Figure 1: Path of 2017 solar eclipse across North America. Smart technology is making the 0% 100% “Utility of the Future” a reality Source: NEEP, Northeast Regional Assessment of Strategic Electrification Smart thermostat adoption is on the rise, as 13 percent1 of U.S. broadband households owned one of these devices in 2017 and 29 percent2 of broadband households intend to purchase one in 2019. These statistics demonstrate significant consumer demand for connected smart home products, and present great opportunity for utility customer engagement. For example, during the August 2017 total solar eclipse, Nest conducted a Solar Eclipse Rush Hour3 experiment as the sun was blocked from Oregon to South Carolina throughout the day (Figure 1). The eclipse reduced solar energy output, replicating the effect of peak demand experienced during heat waves and cold snaps. More than www.aesp.org | 2019 35

when a Smart Therm Event is called. voice assistant industry is anticipated to industry executives surveyed by SECC and Participants are eligible to receive a $50 generate revenues worth $7.8 billion by the Smart Electric Power Alliance (SEPA) said incentive, plus an additional $25 for staying 2023, demonstrating a lucrative business that ease of use on a utility website is the most enrolled through April 1, 2019. In the first venture for the “Utility of the Future”. important portal feature. Marketplaces provide few weeks of the program, enrollment a familiar interface and easy access to rebates more than doubled — increasing from Online marketplaces and to help customers save on energy-related 9,100 participating households to 24,300. greater interoperability will home products. Utilities including ComEd, Some of these households include more see the trend expand Duke, Georgia Power and PSEG are leading than one device, making the total number the transformation of the utility landscape of thermostats enrolled 28,500 at the In recent years, online utility marketplaces by engaging with customers through end of January 2019. Similar to what was have been another important tool for energy marketplace platforms and leveraging new revealed through the Solar Eclipse Rush providers to improve customer acquisition grid resources like smart thermostats and Hour experiment, enrollment in the SoCalGas and establish new revenue streams. A recent technologies related to electric vehicles. program indicates there is a significant Smart Energy Consumer Collaborative (SECC) customer appetite for participating in gas DR. survey found that 78 percent of consumers Looking ahead, market predictions are more likely to participate in a program or indicate that consumers will embrace Voice activation is the purchase a product if their utility endorses it, a device they can easily communicate new frontier for next-level demonstrating customer trust in utilities for with and that automates the whole home. customer engagement information and resources around energy. According to Parks Associates9, 75 percent And, over half (56 percent) of the energy of consumers who are planning to buy smart Smart speaker sales grew 78 percent home devices value interoperability with in 2018, bringing the total number in Important Factors to Purchase Decision other products. If hundreds of household circulation to around 120 million in the energy-saving actions can be made from a United States, according to a survey by U.S.. Broadband Households Intending single interface, and those capabilities are NPR and Edison Research.5 And the same to Purchase Smart Home Devices distributed across thousands of homes, the survey estimates that about one in five benefits would be profound and lasting — households has one of these devices. This Is a well known 80% compounding the positive impacts we’ve data proves that voice assistants are not established brand already seen with the connectivity that smart an emerging communication channel, but thermostats offer to utilities and customers. already an important device for a significant Is a brand that works portion of a utility’s customer base. with other products Continuing the momentum in my home There are plenty of examples of how Analyst research and surveys indicate integrated, voice-controlled devices are Is a brand known that utility services can no longer be silo-ed, already being adopted by utilities with for innovation and interoperability of home devices is key energy savings in mind. Reliant/NRG6 and for maximizing energy management and Xcel Energy7 are delivering voice activation Is the same brand consumer engagement. In the near future, services in Texas and Minnesota, pairing as another smart utilities will be able to provide a richer, more electricity plans with the latest smart product that I own personalized energy management experience technologies from Google and Nest, and to consumers — from alerts about storms Indiana Michigan Power8 (I&M) recently Is the same brand as and outages to reminders to pay a bill and partnered with Tendril and Google to my smart phone easy ways to further save energy — in order provide customers access to voice-activated to offer a more holistic view of home energy energy information. According to a 2018 0% 40% use. This is the level of transparency and report by Market Research Future, the engagement consumers are craving. Important (Rating 5) Very Important Rating (Rating 6-7) © Parks Associates Reference 6 https://www.businesswire.com/news/home/ About the author 20181004005671/en/Reliant-Brings-Texans-Latest-Smart- 1 https://www.mediapost.com/publications/ Home-Technology Jeff Hamel is the director article/313164/13-of-broadband-households-adopt-smart- of industry partnerships at thermostat.html 7 https://www.businesswire.com/news/home/ Google. He is responsible for 20181029005485/en/Xcel-Energy-Google-Launch-Effort- developing and executing 2 https://www.prnewswire.com/news-releases/parks- Develop-New strategic partnerships with associates-23-of-us-broadband-households-intend-to-buy- electric and gas utilities, solar a-smart-thermostat-in-2019-300788931.html 8 https://www.apnews.com/ providers and enterprise cf038a1eb832455d869f912a28ca9fee service providers that leverage 3 https://nest.com/blog/2017/08/10/solar-eclipse-meet- Google hardware and the-nest-thermostat/ 9 https://www.parksassociates.com/blog/article/ services to deliver customer- pr-06052018 focused programs. Nest and Google are continuing to 4 https://www.socalgas.com/save-money-and-energy/ form partnerships with energy providers, using the rebates-and-incentives/smart-therm latest technology innovations to break down historical barriers and support utility-customer engagement. 5 https://www.nationalpublicmedia.com/wp-content/ uploads/2019/01/Smart-Audio-Report-Winter-2018.pdf 36 Association of Energy Services Professionals

Things to Learn Now About GAS EFFICIENCY PROGRAMS By Andy Mitchell & Lorelei Obermeyer When new people start work on a gas utility efficiency program, There are certain fundamental differences between the two fuel-based they inevitably spend the first few weeks repeating the same thing: “I’m EE programs, but gas and electric utilities both face many of the same sorry I said kWh… I meant therms.” Most energy efficiency programs are challenges and are driven by similar trends: an increase in the amount of overwhelmingly focused on electricity, and so is the language surrounding available user data, emerging management strategies that emphasize them. This becomes a problem when that overwhelming tendency individual customers, and movement toward on-site generation and begins to limit the potential for a gas efficiency program to achieve its full storage. Looking to the future and the changes coming to energy use, gas potential. Energy is wasted as a result, but so is money, effort, and intellect. utilities seek a means to move their customer relationship from a monthly bill toward one where the utility is perceived as a trusted energy advisor. It is true most utility energy efficiency (EE) programs are run by and for electric utilities. According to E Source, only 13 percent of 2018’s However, there are key differences in gas-only efficiency programs that U.S. utility programs were specific to gas.1 Fortunately, gas programs are worthy of consideration. Some are distinctions that are fundamental generally coexist just fine with their electric counterparts; much of what to success, while others are the type of subtle difference that may seem works for electricity also works for gas. Often the programs run jointly inconsequential at first, but may later prove critical. The following list of five or in parallel and are equally embraced by customers of each utility. such differences may help inform a gas utility efficiency program strategy. www.aesp.org | 2019 37

1. There are Only Three Things to Do with Gas 3. The Technologies that Save Gas are Often Not Connected to the Gas Line Unlike the endless world of electric digital devices, corded and battery-powered technologies, the uses for gas have not changed Most of the devices that qualify for a rebate from the local electric utility much in the last 50 years. As one EE executive from a large Midwestern are, well… electric. gas utility is fond of pointing out, “There are only three things people do with gas in their homes: heat water, heat air, and heat food.” In other Not so in the gas world. Since gas is used only to heat words, this is heat energy and that’s all. space, water or a product, anything that makes the heating process happen faster or last longer will save gas. The But that does not mean the way gas is measured and saved measure taken to do that may be completely separate needs to remain in the Stone Age. Advanced metering can from a home or business’s gas line or HVAC system. provide time-of-use statistics that lead to efficiency and savings. The way customers are driven to participate can utilize the same In homes, air sealing and insulation are often the first step to innovative products and processes as electricity EE programs. reduce gas consumption for space heating. It doesn’t matter how These approaches include things like streamlined rebate processes, efficient an HVAC system is if the hot (or cold) air slips out of the web-based auditing, behavior-based approaches, economic house. Enter the “bigger blanket” theory of energy efficiency: more impact mapping, and other advanced market analytics. insulation means less energy use. The science is compelling, and the product is notably simple. It is so far from a smart device, and so The technologies that reduce gas consumption have advanced fundamental that insulation is also often held up as the infrastructure and will continue to do so. Technology that moves smart thermostats, justification for ratepayer-funded energy efficiency programs. As advanced furnace controls, and other appliances will continue to march one Michigan utility commissioner put it at a recent Midwest Energy into the digital age. But their fundamental uses will not change: heat Efficiency Association (MEEA) Conference, “It may be cheaper and water, air, or food. Accordingly, the opportunity to keep pace with the faster to pay for part of your neighbor’s insulation than to pay your future lies in the program implementation. share for a new power plant.” The same logic applies to the cost of replacing a gas-main on the street in front of your home or business. 2. Non-Energy Benefits are the Biggest Benefits Other incentivized products in the smart home technology sphere Take a look at print or digital media from a gas utility’s customer are more sophisticated. A smart thermostat can patch into a home’s facing messaging and you will find something like this: we are the Wi-Fi and never touch the gas line, yet still save energy. Appliances company that keeps you and your family comfortable and cozy. Just like dishwashers or washing machines might be nowhere near about all of them then insert a picture of warm, or connected to a gas line, but they consume a lot of hot water. sleeping child or family making dinner at their gas stove. These messages have decoded According to the U.S. Environmental Protection what many in energy efficiency have known Agency, 90 percent of the energy used by a for a long time – people are triggered by washing machine goes toward heating the water, the emotional aspects of efficiency before and only 10 percent goes to the washer motor.2 the financial. A homeowner may be more motivated to address drafty rooms by an For commercial customers, it is a similar unhappy spouse than by saving $4 a month. dynamic. There are innumerable design strategies in manufacturing that planners can A similar dynamic applies to Commercial & do to bilocate heating devices, recover heat Industrial (C&I) customers, as well. Many facility from process A and reuse on process B, and managers are less concerned about gas costs, others. However, there are equally compelling and more concerned about the quality of measures far away from the gas lines. their product, the reliability of their processes, and the safety of their workforce. This doesn’t For example, in a commercial building, steam change the fact that businesses will evaluate systems are used everywhere from space a capital expense project based on financial heating to manufacturing processes. A critical metrics like payback or return-on-investment. component of these systems is the steam trap. Unfortunately, that approach may limit the analysis to the bottom line of Steam traps are a simple and effective way to the gas bill, which doesn’t always tell the whole story. reduce the amount of gas needed to power a steam system. As steam is used, some of it Presenting businesses with the other benefits of process cools down and turns back into water. The role of the steam trap is improvement may help drive participation and satisfaction. Presenting to let the water leave the system while the steam remains trapped the opportunity for a business to participate in a gas program may (thus the clever name). If a steam trap fails in an open position, require a blunt message that lays out benefits beyond energy savings. it releases both the condensate (water) and the precious steam. The good news is that attributes like customer comfort or supply chain It takes more gas to heat water and replace the lost steam. resilience can be measured. Find those numbers, use them. Advancing the utility relationship from a monthly bill to a trusted energy advisor Another commercial development far removed from the gas line may require looking beyond energy. is the trend toward Strategic Energy Management (SEM) in C&I. The concept of SEM is one that is embraced by the more progressive and customer-centric utilities across both gas and electric. The idea is simple: rather than incentivizing certain equipment for people, SEM optimizes certain people for equipment. By partnering with C&I and other public and institutional customers to identify low and no-cost behavioral and process improvements, SEM programs have saved millions of BTUs across the country, in both electric and gas utilities. 38 Association of Energy Services Professionals

4. Partnering with an Electric Program 5. Electrification is Coming! Can be Essential (and Maybe Risky) To Some Places, At Some Point A single utility company often provides both gas and electric The charge toward electrification is advancing on multiple fronts. services to their customers (dual fuel); but not always. When separate The energy futurists among us promise technologies where large utilities provide gas and electric service, there is potential for both to scale, hub-and-spoke infrastructure becomes obsolete. Distributed deliver a more effective product by partnering on efforts to streamline generation becomes the new normal with homes and business the customer experience. generating and storing their own energy. The implication is that new smart appliances will work in concert with these systems, Most residential customers group their utilities together mentally and they are an attractive alternative to hooking into gas lines. and financially. The financial impact becomes critical when a project is screened for cost-effectiveness and only passes when both fuels are Before betting it all on the electrification tsunami, try this: considered together (ACEEE wrote a great report on the topic in 2014)3. Take your regional gas costs and case-uses, and apply them HVAC systems are where this really hits home. Getting a more efficient to national averages. It quickly becomes clear that the cost of system can reduce gas peaks in the winter, and electric peaks in the gas, and the cost of the infrastructure to deliver it, are vastly summer. But just addressing one of those peaks may not be enough different depending on where one is in the country and world. to justify a big purchase. Quick math on the back of an envelope shows electrification In an ideal world, the utilities are aligned in advance to embrace is inevitable for some areas and impractical in others. In that decision-maker and guide her toward an efficient product that some cases, electrification may be an irresponsible choice brings the most value to their shared customers. In so doing, they in terms of financial and environmental impact. also maximize participation in their respective program and capture savings that would have otherwise been lost. For example, Chicago and northern Illinois enjoy some of the lowest gas costs in the country and rely on that gas to heat homes For both residential and commercial customers, the trade- and businesses through long winters. In January of 2019 when much ally (contractor) base will often be the customer’s gateway and of the country was hit with a polar vortex, Illinois enjoyed safe reliable introduction to the utility’s programs. When these contractors gas, delivered as heat with a fraction of the greenhouse gas associated address HVAC or insulation, they can guide customers to an with electricity. The peak demand for electricity would have been so efficient decision. For more complicated projects and evaluations substantial4 that building out the infrastructure wouldn’t work for many in the C&I world there are design engineers, ESCOs and others reasons: financial, physical space, and safety. Having a cost-effective who will present a project with complete energy saving and utility supply of natural gas stored and ready, makes that math unnecessary. incentives combined across utilities. Making that process easier on the contractor will boost participation. A joint program can cut the Everyone values safety above all else. After that, everyone values incentive paperwork in half for contractors, and that matters. and requires reliability. Having gas as well as electric infrastructure provides diversity and resiliency that a single fuel source does not. It’s tempting to declare joint programs as categorically better As society trends toward on-site generation and storage, having a than parallel efforts, but there can be more to the story. For all the reliable gas source to serve as the bridge-fuel will benefit society. benefits that partnering on EE offers, there are risks that can make the partnerships struggle. Some red flags to consider are that the Many of the strategies that influence the electric efficiency utilities may have different budgets, different state requirements, programs also apply to gas programs, but recognizing the key or different company cultures. Misalignment on any one of these differences and opportunities between the two approaches can throw a joint-program off-balance and impact the effectiveness will allow for both to maximize effectiveness. The simple end and customer experience. Further complicating matters, a true product of gas is heat. Finding better ways to heat air, water, or joint program may mean adding multiple levels of management products faster or less often is a good guide on how to seize the with multiple stakeholders that need to reach consensus on simple simplicity of gas EE program potential. Embracing the future, decisions. These types of administrative risks can be mitigated by connecting with the present, and partnering where possible are working with experienced partners that bring disciplined accounting all high-level solutions to effective gas efficiency programs. and role clarity to the partnership. Still, the benefits of a joint program need to be weighed against these potential additional costs. References About the Authors 1 https://www.esource.com/10044-007/total-planned-dsm-spending-will-decline- Andy Mitchell and Lorelei through-2020 Obermeyer manage gas 2 https://blog.epa.gov/2014/04/30/earth-month-tip-wash-your-clothes-in-cold-water/ utility efficiency programs for 3 https://aceee.org/research-report/u1406 CLEAResult in Northern Illinois. 4 http://www.meeaconference.org/sites/meeaconference.org/files/PL-Murphy.pdf CLEAResult is the largest provider of energy efficiency and demand response solutions in North America. www.aesp.org | 2019 39

Hospitals, Marketplaces, Foodservice, Homes … new places to discover energy savings (and AESP Energy Award Winners) PRESENTING THE 2019 ENERGY AWARD WINNERS. Outstanding Achievement in Outstanding Achievement in Non-Residential Marketing Gas Energy Efficiency Program Design and Implementation Consumers Energy, for Small Business Marketplace National Grid, for New York Point-of-Sale Foodservice Program Consumers Energy’s Small Business Marketplace successfully leveraged innovative technology in the form of an e-commerce National Grid launched a pilot program partnering with commercial platform, digital marketing and online chat to provide increased foodservice equipment dealers to offer energy efficiency incentives savings and improved service to the hard-to-reach small business at the Point-of-Sale (POS) to their customers in New York. The team's customer segment and may be the first marketplace for small efforts have proven that a midstream or POS incentive program can businesses in the country. The program achieved its original be effective in the New York market, drive the supply chain toward order goal 50 percent of the way through Program Year 1, and high-efficiency equipment, and increase satisfaction for customers its electric and gas savings goals 75 percent of the way through and equipment suppliers. Their quick work in an 18-month Pilot led Program Year 1, enabling the program to serve as a savings lever the team to achieve 188 percent of their gas savings goals and set for the entire portfolio. An independent evaluation measured the foundation for successful POS foodservice initiatives in other the overall Forrester CXi score at 90.5, on a -100 to +100 scale, parts of New York and across the country. indicating the quality of the customer experience is strong. Outstanding Achievement in Outstanding Achievement in Residential Program Design Emerging Tools & Technologies & Implementation NYSERDA and Lockheed Martin Energy Pacific Gas & Electric Company Team for Home Energy Management and Enervee for PG&E Marketplace System (HEMS) Field Pilot Plug loads - which do not lend themselves to cost-effective Lockheed Martin Energy designed and implemented a pilot rebates - contribute roughly 30 percent of residential energy sponsored by NYSERDA where home energy management load and are the fastest growing source of residential demand. systems (HEMS) were deployed at 50 homes across Westchester The PG&E Marketplace offers an innovative, market-based retail and Albany counties in New York State. Over 1,500 sensors were product approach that delivers highly cost effective savings at deployed, and collected over 106 million data points during the scale. By cooperating with retailers and making efficiency visible pilot test period. An innovative evaluation technique was used to and actionable to consumers, market forces come into play, measure baseline energy consumption and occupant behavior, closing the gap between technical and market potential, without while controls' savings were simultaneously simulated for HVAC the need for mass market incentives. The PG&E Marketplace has temperature setbacks, lighting occupancy-based controls, and attracted 770,000 visitors and influenced hundreds of thousands plug-load occupancy-based controls. A maximum energy savings of retail purchases, leading to energy bill savings of up to $300 per potential of up to 16 percent was found for a typical home. Marketplace visitor. Pacific Gas & Electric is poised to begin claiming market-based savings achieved without rebates beginning in 2019. 40 Association of Energy Services Professionals

B.H. Prasad Award Outstanding Achievement in Bill Clemens, DTE Energy Residential Marketing Bill Clemens (L) with AESP Focus on Energy President John Hargrove Focus on Energy is Wisconsin utilities' statewide energy One to Watch Award efficiency and renewable energy program, and offers a variety of energy-saving programs and incentives of which businesses and Justin Margolies, Slipstream residents throughout the state can take advantage of. Since 2001, Focus on Energy has: Justin Margolies (R) with John Hargrove • Helped bring over $1 billion back to the state of Wisconsin. Outstanding Achievement in • In 2017 given $5.93 back to Wisconsin's economy for each Non-residential Program dollar invested into the program, generating millions of dollars in Design & Implementation economic benefits. PSE&G for Hospital Efficiency Program • Created more than 1,000 full-time jobs in both 2015 and 2016 and will continue to create an average of 263 full-time jobs per PSE&G's program enables hospitals to make an investment in year through 2040. energy efficiency which significantly reduces operating costs while improving the comfort of hospital facilities. PSE&G provides upfront Outstanding Achievement in funding for the total cost of the energy efficiency improvements which eliminates the upfront financial burden for hospitals, while Customer Engagement also providing an incentive toward the total cost of the project, and on-bill repayment for the hospital's share of the program costs which Columbia Gas for Warm Up Campaign is often offset by the savings realized. The program is currently funding the installation of energy efficiency measures at 36 hospitals Columbia Gas of Massachusetts provides free home energy and healthcare facilities in the utility's New Jersey service territory. assessments to assist their customers in finding ways to save energy, and they play an active role in local communities, looking to give back and get involved. For the second year in a row, Columbia Gas partnered with non-profit Operation Warm and Professional Firefighters of Massachusetts to provide winter coats to children in need within their service territories. This marketing program offered a new coat for every no-cost home energy assessment requested from September to October, and resulted in the distribution of 600 coats to local children. The partnership has benefited community members for two years by providing those who are struggling financially in the community with a basic necessity of warmth throughout the winter. Outstanding Achievement in Outstanding Achievement in Demand Response and Pricing Market Research & Evaluation SoCalGas for Winter Demand Slipstream, for Persistence of Savings Response Program from Retro-commissioning Measures SoCalGas successfully implemented a winter gas demand response Slipstream conducted an evaluation study of measure persistence in program utilizing smart thermostats. Over 9,200 customers with past Retro-commissioning (RCx) projects with the following primary smart thermostats were recruited into the program and had their objectives to: temperature set points lowered by up to four degrees during periods of peak demand and system stress. SoCalGas called 13 1. Quantify the persistence of RCx measures based on the Expected events during the 2017-2018 winter period and results concluded Useful Life of all installed measures. that participating customers reduced their gas consumption between 16-25 percent during the morning event from 5-9am and 2. Identify operational factors and energy management characteristics between 10.7-15.6 percent during the evening event from 5-9pm. that influence the high persistence of savings. This study is one of the most comprehensive, field assessment studies conducted in the U.S. It has resulted in realistic measure life assessments, both at the building level and at individual measure level. As we recognize and applaud the 2019 AESP Energy Award winners, take a look at your own projects and consider submitting for next year’s AESP Energy Awards. The call for entries for 2020 will be announced this fall. www.aesp.org | 2019 41



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