AESP Magazine 2018

2018THE NEWUTILITYIMPERATIVESUCCESSFULLY NAVIGATING CHANGE Strategies to Improve Cost Effectiveness The Forefront of TOU Pricing Program Design Beneficial Electrification to meet Climate Goals Allowing Data to Drive Evaluation Are Non-Wires Solutions the Next Big Thing? Air Source Heat Pumps Do They Work? MORE INSIDE

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AESP MAGAZINE IS PRINTED BY: 6 2018Association of Energy Services Professionals 4 AESP Energy Awards: Innovation 15215 S. 48th St., Suite 170, is Alive in Energy Efficiency Phoenix, AZ 85044 Tel: (480) 704 5900 6 Strategies to Improve Cost AESP.ORG Effectiveness in a Tight Environment EDITORIAL TEAM 9 The Forefront of Time-of-Use Pricing Program Design Adeline Lui, AESP, Editor Chris Baggett, APS Jeff Ihnen, Michaels Energy Sherry McCormack, SWEPCO Tracy Narel, ENERGY STAR® Laura Orfanedes, ICF Elizabeth Titus, NEEP Lynn Westerlind, National Grid Greg Wikler, NavigantGRAPHIC DESIGNER 11 The New Utility Imperative – Successfully Navigating Change Paul Sawyer AESP STAFF 14 14 Can we Electrify Everything to meet Climate Goals? John Hargrove, President & CEO Suzanne Jones, Chief Operating Officer 17 Cold Climate Air Source Heat PumpsShannon King, Vice President, Finance & Administration How well does this “Hot” technology work? Quinn Parker, Vice President, Content & Research Kim Burtraw, Director, Meetings & Events 20 Home Energy Management Systems: Adeline Lui, Director, Marketing & Communications Expanding Energy Efficiency’s Potential Christa Lombardo, Manager, Member RelationsLaurah Sedeq, Manager, Instructional Design & Training Kara Kelly, Events Supervisor Carly Sells, Content & Research Coordinator Alexandra Verhein, Marketing Coordinator Amelia Hall, Administrative Specialist BOARD OF DIRECTORS 23 23 Recalculating! Allowing Data to Drive Evaluation of Energy Efficiency ProgramsBill Norton, Opinion Dynamics, Board Chair 26 Battery Storage is theJohn Augustino, Honeywell CONTINUOUS Future for the Grid PROGRAMDave Backen, Evergreen Consulting Milepost 4: Milepost 5: Create dashboards Report results IMPROVEMENTChris Baggett, APS Milepost 1:Dave Bend, NEST (Google) Begin Route: What Establish Raegan Bond, Alectra are we trying to stakeholder team accomplish?Charmaine Cigliano, Orange & Rockland Utilities Milepost 6: Monitor changesBob Collins, Independent Electricity System Operator Milepost2: Prioritize Milepost 3: Establish KPIsSarah Colvin, ecobee objectivesSue Hanson, Tetra Tech 29 Are Non-Wires Solutions the Next Big Thing?Jeff Ihnen, Michaels Energy 37 32 Smart Thermostat On The Wall,Erika Lontoc, Enbridge Gas Distribution it Could be the Fairest Efficiency Measure of Them allLeAndra Archuleta, Energy Solutions 34 Pay-for-Performance: An Energy Efficiency program for the Utility of the FutureDanielle Marquis, AM Conservation Group 37 Case Studies: Innovations in Energy Management ProgramsSherry McCormack, SWEPCO 40 Capturing Defensible MultifamilyMike Mernick, ICF Savings in an Improved Codes EnvironmentTim Michel, PG&EVicki Nichols, JEASam Sirkin, RecleimMichael Volker, East River Electric PowerSubid Wagley, SMUDLynn Westerlind, National GridGreg Wikler, NavigantAdvisors to the BoardAbigail Daken, ENERGY STAR®Michael Li, U.S. DOEAll rights reserved. Contents may not be reproduced by any means, in wholeor in part, without prior written permission from AESP. The opinions expressedby the authors do not necessarily reflect those of AESP. Additional copies ofthis magazine may be ordered for $10 each, shipping and handling included. Contact: [email protected] following organizations are proud to support AESP and its mission. Thank you! www.aesp.org | 2018 3

INNOVATION IS ALIVEIN ENERGY EFFICIENCYW hile the industry looks expectantly at the horizon for the next game-changing technology that will be its new source of energy savings to the scale of CFLs and LEDs, it does not mean that until a new hero emerges, that the energy efficiency industry and its peopleare not busy innovating and improving. Indeed, as our winners below will testify, new sourcesof savings can be found from varied and sometimes unexpected places – from nurturing newmarkets, improving on existing technologies to championing process improvements.Every year, the AESP Energy Awards recognize the people behind the scenes who dream upnew ideas, champion them, then implement and enlist the cooperation of all parties to turn aseed of an idea into action, and eventually, realized energy savings.WE SALUTE THE WINNERS OF THE 2018 AESP ENERGY AWARDS! AWARD FOR AWARD FOR AWARD FOR OUTSTANDING ACHIEVEMENT OUTSTANDING ACHIEVEMENT N CUSTOMER ENGAGEMENT OUTSTANDING ACHIEVEMENT IN RESIDENTIAL MARKETING DTE Energy, for IN MARKET RESEARCH & EVALUATION Puget Sound Energy, for Energy Deaf Community Outreach Upgrades Thermostat Campaign IESO, for the report DTE Energy is the first utility in the Culture of Conservation In the first half of 2017, Puget Soundnation to drive outreach and marketing Energy built a new type of validated instantto engage deaf customers. Through In 2009, the head of the Conservation rebate tool for smart thermostats thatthe use of Video Remote Interpretation division at IESO read part of their allows customers to receive their rebatetechnology, they are able to have energy mission statement – “…to foster a culture instantly, increasing customer satisfactionexperts in the field directly communicate of conservation” – and asked, how will and lowering their upfront costs. It alsowith their deaf customers. Through we know when we’ve succeeded? That layered on a highly effective marketingthe pilot and commercialization of the prompted extensive market research campaign by partnering with Nest todeaf outreach program, DTE has seen a which turned into an eight-year (and promote Nest Learning Thermostat sales,great deal of success from engagement counting) longitudinal survey to track thereby quadrupling smart thermostatservicing over 375 exclusively deaf changes in the level of energy adoption across a period of eight weekshouseholds to date and expanding the conservation in Ontario, Canada. The in April and May 2017.initiative to three other energy efficiency results have been referenced in revenueprograms. The commercialized model is requirements submissions, in filingsnow viewed as an industry best practice related to an Integrated Powerand is being adopted by other utilities. System Plan, in IESO-produced public documents and publications, and by the Environmental Commissioner of Ontario. The results are also being shared with electric utilities around Ontario so that they can understand the culture in their service territories and implement strategies to influence it in their communities.4 Association of Energy Services Professionals

The AESP Energy Awards were presented this February at AESP’s 28th Annual Conference in New Orleans.In addition to the Energy Awards, AESP also presented individual awards to key figures who have made a significant contribution to the energy efficiency industry. Join us in congratulating them. INDUSTRY LEADER AWARD B.H. PRASAD AWARD ONE TO WATCH AWARD Daniel Violette Laura Orfanedes Marta SchantzManaging Director - Energy Practice, Navigant Principal - Energy Marketing, ICF Director - Waypoint Consulting AWARD FOR AWARD FOR AWARD FOR OUTSTANDING ACHIEVEMENTIN EMERGING TOOLS & TECHNOLOGIES OUTSTANDING ACHIEVEMENT OUTSTANDING ACHIEVEMENT AEP Ohio and DNV GL Energy, IN RESIDENTIAL PROGRAM IN NONRESIDENTIAL PROGRAM for Ultra-low Temperature Freezers DESIGN & IMPLEMENTATION DESIGN & IMPLEMENTATION Ultra-Low Temperature (ULT) freezers are used by hospitals, universities and Energize Connecticut in partnership IESO, for laboratories to store sensitive biological with Eversource, UI, SCG and CNG, Energy Performance Program samples. The Stirling Ultracold freezer was determined to use 70-75% less electricity for Home Energy Solutions℠ IESO’s Energy Performance Program than standard technology (cascaded has offered customers an innovative, compressors) freezers to achieve In April 2015, Eversource Energy holistic approach to energy management. temperatures from -70° to -80°C. AEP Ohio and AVANGRID Inc. subsidiaries United The Energy Performance Program is a and DNV GL compared this technology to Illuminating, Connecticut Natural Gas and large-scale program that rewards business old technology, and after Stirling became Southern Connecticut Gas (collectively customers for whole-building energy ENERGY STAR®-certified, DNV GL created referred to as the “Connecticut utilities”) performance improvements using smart/ a new incentive structure which provided became the first statewide implementer interval meter data. By offering an incentive- a prescriptive incentive of $20 per cubic of the DOE Home Energy Score and has based mechanism, the program not only foot. This incentive was incorporated into since generated the highest number of promotes a holistic conservation culture, it AEP Ohio’s Efficient Products for Business scores of any partner. They are leading also shifts risk away from ratepayers and Energy Efficiency application. the way in building market recognition for onto program participants while ensuring Home Energy Score as a valuable home participants have access to the best savings energy labeling tool. The Connecticut choices for their organization. Overall, this utilities developed an innovative approach customer-centric approach has increased to delivering the Home Energy Score to the rate of executing energy efficient customers, and have more than 25,000 projects and is the first comprehensive Home Energy Scores generated to date. commercial pay-for-performance program They have shared best practices with in North America. other DOE Home Energy Score Partners and are often looked to as a model for its successful implementation. www.aesp.org | 2018 5

STRATEGIES TO IMPROVECOST EFFECTIVENESSIN A TIGHT ENVIRONMENTBY CATIE KRASNER AND CLAIRE FITZGERALDThe Cost Effectiveness Challenge Strategies to Improve ■■ Emphasize project benefits beyond Cost Effectiveness the rebate – e.g., net present value Throughout the United States, program of savings over the project life andadministrators and implementers face the Below are examples of strategies non-energy benefits such as safety,challenge of decreasing cost effectiveness that can be considered at product, reliability, maintenance cost savings,in energy efficiency programs and program, portfolio, and policy levels to sustainability, resiliency, preparedness,portfolios, causing decreased claimable keep cost effectiveness afloat without carbon reduction, etc.savings. Cost effectiveness is being driven diminishing the customer experience:down by many factors, including rising Portfolio strategies:baselines due to more stringent codes Product strategies:and standards and industry standard ■■ Shift portfolio savings to marketpractices; increased adoption of cost- ■■ Bundle traditional measures like pathways with less friction, transactions,effective measures – such as LEDs – due to LED lighting with advanced control and related costs.declining capital costs; and lower avoided strategies to enhance savings percosts due to the low cost of natural gas. transaction and offer additional ◆◆ C onsider shifting savings toAdding to cost effectiveness challenges customer benefits such as demand midstream strategies where fundingis the fact that, in many states, \"anytime control.1 can go further to impact moreenergy efficiency,\" which offers the same customers than through traditionalincentive regardless of demand reduction, is ■■ Increase behavior change programs downstream programs.becoming less valuable relative to peak- which can claim actions resulting intime or geo-targeted energy efficiency. energy savings. ◆◆ C onsider joining national platforms, such as ENERGY STAR® programs One common fallout of decreasing Program strategies: or DesignLights Consortium, tocost effectiveness can be a reduction in synchronize program designs,customer incentives or services. In programs ■■ Reduce non-incentive program costs streamline market engagement andthat may have traditionally led with the relative to savings and incentives. reduce administrative costs at therebate or incentive, customers may feel utility level.that the rebate value is no longer worth the ■■ R educe customer acquisition costs byhassle of participation, which can lead to leveraging data sources (smart meter, ■■ Focus on creating a positive customerdisengagement and lost opportunities in the socioeconomic, historical participation experience to make participation easy andmarket. In this article, we will highlight some data, automated billing analysis, customer painless, even with lower incentive levels.strategies to consider at product, program, engagement software) for targeting andportfolio and policy levels to improve cost screening of potential participants in ◆◆ Work closely with evaluation teameffectiveness while maintaining or improving energy efficiency programs. upfront to streamline evaluationcustomer satisfaction. Following a list of steps, which can limit uncertaintythese examples, we provide a more in-depth ■■ Increase savings per transaction by and speed up the incentiveexamination of three specific strategies. offering more comprehensive services distribution and reporting processes or measures, for example, through (real time EM&V, pre-reviewed Strategic Energy Management.2 savings equations, unified evaluation interviews).6 Association of Energy Services Professionals

Policy approaches: but rather, a combination of strategies program model to allow utilities to focus on at various levels that can be deployed. demand management benefits. To achieve ■■ Enable capture of stranded savings Here we lay out three strategies – one maximum savings potential, programs product, one portfolio, and one policy should require a mix of lighting design ◆◆ Consider how to enable the capture – to highlight different approaches layout, commissioned and designed control of existing baseline to code to maintain the cost effectiveness of settings, and a plan for the continued savings as enabled by California's traditional energy efficiency programs. maintenance and use of the system. AB 802.3 1. Product Strategy: When offered as a holistic package, ◆◆ Piggyback on awareness and Capture Deeper Savings this allows for savings through bulb establishment of state and local and Benefits from Measures replacement and design, introduction of benchmarking initiatives to drive occupancy sensors, opportunities for energy participation and gain savings. As savings from bulb replacement conservation through daylight harvesting, programs become more limited due the use of commissioned advanced lighting ■■ Incorporate greenhouse gas and to significant market adoption, market controls, and continued opportunities additional societal benefits into transformation, and tightening standards, to engage business customers around the non-energy benefits metrics in additional savings can be captured their energy use. Utilizing a bundled currently used cost effectiveness through advanced lighting controls, either approach to lighting allows energy test frameworks. to increase control of existing installed efficiency portfolios to gain back a portion measures or to complement the installation of previous lighting savings potential. ■■ States may also consider alternative of new energy measures. Advanced lighting cost effectiveness test options. For controls allow customers to finely tune their 2. Portfolio Strategy: example, some states have switched energy use and enable them to participate Harmonize Programs with to a Societal Cost Test or Net Benefits in demand management programs. Paired National Initiatives Test as their main cost effectiveness with smart meters, advanced lighting test in order to capture additional controls can give program providers and With tightening savings margins, one- benefits. customers insight into other potential to-one measure replacement programs savings opportunities within facilities must reduce complexity to remain cost ■■ Readjust incentive setting guidelines and allow program providers to engage effective. One program working to make that restrict cost-effective programs customers in behavior change programs midstream measure replacement programs by setting cost-effectiveness that provide evaluated, provable savings.4 less complex is the ENERGY STAR® Retail thresholds lower than the cost of Products Platform (ESRPP). Facilitated generating energy, thus restricting Upcoming Lighting Standards Changes viable cost-effective programs from by the U.S. Environmental Protection running. In 2020, the Energy Independence and Agency (EPA), the ESRPP is a national Security Act (EISA) will bring about standards collaborative, involving multiple utilitiesDiving Deeper: that establish minimum efficiencies for and retail chains, seeking to streamlineThree Specific Strategies general service light bulbs. These new and harmonize utility energy efficiency requirements could potentially eliminate programs for the retailers who participate As exemplified above, cost effectiveness halogen bulbs from the national market in them. ESRPP seeks to capture energycan be addressed through a variety of and will remove CFLs as energy efficiency savings in the growing “miscellaneous/strategies. There is no singular solution, program contenders, making value LEDs the plug load” product categories which new baseline measure for energy savings are often overlooked in portfolios.5 programs. Utilities are already increasing the minimum efficiency standard and shifting their ESRPP aims to push manufacturers baseline lighting to LEDs in portfolio planning. to build more efficient appliances, and Energy efficiency portfolio administrators to lock in those efficiencies through across the U.S. need to plan now for 2020 when changes to federal standards. While this the potential savings per bulb is expected to will eventually mean higher standards, drop from 32 watts to 3.2 watts. This expected along the way it creates opportunities decline in traditional savings opportunities will for market transformation and market necessitate innovative approaches to reach lift programs, allowing utilities to savings targets. capture the resulting energy savings. Utilities have begun adding prescriptive Through ESRPP, participating retailers network lighting control rebates for are provided with incentives that will business customers to their portfolio to ultimately lead to greater prominence of boost lighting savings, which can be easier energy-efficient appliances on retailer to plan for and participate in than custom shelves and, thus, in the residential lighting control rebates. Some programs market. The ESRPP offers a universal have switched to a $/kW controlled participation agreement with common product eligibility that makes it easier for retail partners to participate in the program across their footprint with different utility partners. In exchange for a streamlined approach across utility service territories, participating retailers must provide baseline data and production data as well as allow point-of-purchase signage and participate in evaluation efforts. www.aesp.org | 2018 7

The organized and prescribed approach Upcoming Appliance Standards Changes allowing to-code energy savings.to the ESRPP means a low barrier to Given the diversity of energy efficiencyentry to utility participation, if utilities T he U.S. Department of Energy (DOE) is nationwide, each portfolio must consideragree to the program participation in the process of rolling out additional the specific mix of opportunitiesrequirements. There is some flexibility appliance standards as part of the appropriate for their situation and goals.available to make the program work for energy efficiency standards program. The To reach these goals while fosteringa variety of portfolios, which should be standards effective in 2018 pertain to washing productive collaboration amongstconsidered when weighing challenges machines, battery chargers, rooftop air all energy efficiency stakeholdersand benefits to participation. conditioners, and commercial ice makers with (customers, suppliers, retailers, additional standards due out for portable air government, utility commissions,3. Policy Strategy: conditioners, uninterruptable power supplies, utilities, evaluators, etc.) will be critical.Allow for To-Code Energy Savings to air compressors, and commercial boilers, withCapture Stranded Savings additional standards coming.6 References For decades, California has been a California Assembly Bill 802 1 2015 California Demand Response Potentialleader in energy efficiency policy and Study: Charting California’s Demand Responseprograms. Yet over the years a combination “(the commission shall…) authorize electrical Future. Lawrence Berkeley National Laboratory.of effective codes and standards and corporations or gas corporations to provide November 14, 2016. www.cpuc.ca.gov/WorkArea/a saturated marketplace has made it financial incentives, rebates, technical DownloadAsset.aspx?id=6442451541increasingly challenging for utilities to assistance, and support to their customerscost effectively meet savings targets. to increase the energy efficiency of existing 2 Data-Driven, Strategic Energy Management. buildings based on all estimated energy Department of Energy. https://www.energy. Historically, the California Public savings and energy usage reductions, taking gov/eere/slsc/data-driven-strategic-energy-Utilities Commission developed goals into consideration the overall reduction in managementfor the investor-owned utility rebate normalized metered energy consumption asprograms that focused on above-code a measure of energy savings. Those programs 3 California Assembly Bill No. 802 Energyenergy savings. In 2015, California shall include energy usage reductions resulting Efficiency. California Legislation Information.changed this paradigm with the passage from the adoption of a measure or installation https://leginfo.legislature.ca.gov/faces/of Assembly Bill 802 (AB 802). of equipment required for modifications to billNavClient.xhtml?bill_id=201520160AB802 existing buildings to bring them into conformity AB 802 seeks to increase the with, or exceed, the requirements of Title 24 of 4 Note: Some portfolio administrators are bannedefficiency of existing buildings in the the California Code of Regulations, as well as from stacking measures in this way.most cost-effective manner: by allowing operational, behavioral, and retrocommissioninginvestor-owned utilities (IOUs) to claim activities reasonably expected to produce 5 The Energy Star Retail Products Platform. Energysavings for to-code energy projects Star. 2017. www.energystar.gov/ESRPPwith meter-based savings. AB 802 multiyear savings.”opens the door for IOUs to engage with 6 New Lighting Standards Kick In But some stillcustomers who have not updated their A Cost Effective Future in Limbo. NRDC. January 22, 2018. https://www.buildings and equipment to code and nrdc.org/experts/lauren-urbanek/new-lighting-unlock their stranded savings potential. As tightening lighting standards, efficiency-and-other-standards-kick-somAdditionally, this bill authorizes IOUs to appliance standards, and building codesmeasure energy savings from an existing restrict achievable program savings for 7 Bender, Silvia, Bernan, Jan, Skala, Pete;conditions baseline with a smart meter energy efficiency portfolios, it is important Perspectives on Doubling Energy Efficiency ininfrastructure. This meter-based approach to put in place policies and programs which California. ACEEE. 2016. https://aceee.org/files/presents IOUs with additional methods enable and incentivize cost effective energy proceedings/2016/data/papers/6_429.pdfto generate energy savings, such as savings opportunities. Savings are poisedthrough financing or technical assistance. to erode unless innovative opportunities Catie Krasner is a seniorWhile rebates will certainly continue to are embraced. These opportunities include project managementplay a central role as strong incentives, optimizing customer journeys, highlighting specialist for APTIM’sthis broader allowance for various non-energy benefits, integrating with Energy Management &types of measures supports provides demand response and dynamic pricing Sustainability group.flexibility for utilities to introduce more cost programs, streamlining retail and trade She previously workedeffective strategies into their portfolio. ally participation, real-time EM&V, and at MEEA, and has served in leadership roles at the As programs are designed to integrate USGBC-IL Chapter and at theto-code savings, addressing customer Chicago Chapter of AESP.needs for simple incentive structures,hand-holding, and turn-key support from Claire FitzGerald is aimplementers will be critical. The value of client program managersimplification in program design cannot beoverstated, and non-financial incentives for APTIM, where sheof support and technical services can supports California utilitiesplay an important role in engaging andkeeping customers. Determining how with IDSM strategies andto set the right incentive levels and how programs. Claire is basedto streamline customer participation will in San Francisco and holdscontinue to be important considerations.7 an MBA in Sustainable Management from Presidio Graduate School.8 Association of Energy Services Professionals

THE FOREFRONT OFTIME-OF-USE PRICINGPROGRAM DESIGNDemand Response (DR) has a long and storied track record ofimproving system reliability and providing cost-effective net systembenefits. The onset of Advanced Metering Infrastructure (AMI) andreadily available interval-metered data has brought Time-of-Use (TOU)pricing DR strategies to the forefront of future program development.It is an ongoing area of research and innovation, bringing new ideas tooptimize resource utilization and enhance grid resilience.BY ADAM THOMASLet’s start at the beginning – what Demand Response Treatments Automated DR: Where interruptible loadsis TOU pricing? or demand bidding are enhanced by 60% Time of Use Variable Peak Peak Time Critical Peak automated energy management systems TOU pricing is generally comprised of 50% which curtail loads in accordance with adiffering rates by time of day and time of Pricing Rebate Pricing predetermined strategy.year, with the rates fluctuating in pre-determined hour-blocks (such as “12-6 Peak Reduction 40% How do you select thep.m. Summer On-Peak”). The taxonomy right DR treatment?of TOU pricing includes the following:1 30% Selection of a DR strategy is a distillationReal-Time Pricing (RTP): Prices fluctuate 20% of (1) how much incentive needs to beon an hourly or continuous basis. provided to obtain (2) a load reduction 10% per participation for (3) a given number ofVariable Peak Pricing (VPP): A hybrid of participants. The lowest upfront cost per-standard TOU and RTP, where some times 0% customer can be had through recruitmentof the day are set as pre-determined price into CPP-type programs (also referredblocks while the price in the peak period Source: Faruqui, Ahmad. “Arcturus.” The Brattle Group to as Reduce-Your-Use or “RYU” alerts).may mirror the RTP fluctuations. The trade-off embedded in this is in the What DR/Load Control treatments perceived value proposition to the potentialCritical Peak Pricing (CPP): TOU pricing, are available? participant versus the potential and reliabilitywith callable price increases during critical of the load reduction frompeaks. These are often established with a Direct Load Control (DLC): Use of an the participant.pre-set limit of the number of events that external control on an HVAC system or watermay be called annually. heater to provide callable curtailment. Let’s discuss those options below.Critical Peak Rebates (CPR): TOU pricing, Thermostat Setback DR: Formerly Automated Demand Responsewith a rebate offered for curtailment during completed with two-way thermostats anda called peak event (rather than a temporary now done with smart thermostat models; Automated Demand Response (ADR)price increase). this provides DR resources through the technologies using Open Automated setback of a thermostat setpoint. Demand Response (OpenADR) protocolsHow do these perform across serve to improve the reliability of customerdifferent demand response C&I Demand Bidding/Buyback: participation in DR events. OpenADRtreatments? Customers offer bids to curtail load when systems offer some advantage over wholesale prices are high. proprietary systems in that they allow The figure to the right summarizes for competitive bidding between DRthe demand response treatments Interruptible Load: Interval-metered providers and allow for lower-cost rolloutfrom 34 demand response projects large commercial and industrial customers of communication technology platforms.in a database of pricing studies.2 nominate an available load reduction that will be provided when called. www.aesp.org | 2018 9

In an ADR program, the day-ahead What about the interaction What are the next steps?notification is coupled with a signal Between TOU and Load Control?to the control system, planning the The taxonomy of available TOU strategiescurtailment without the need of manual A recent case study afforded an is in a vacuum, well-developed; futureadjustments by the participant household opportunity to compare TOU, DLC, and demand response programs will needor business. Lawrence Berkeley Labs an overlapping TOU+DLC offering for to optimize the interaction between TOUfound a median cost of $200/kW in a demand response events. The DLC offering offerings and technologically-drivenstudy of 56 ADR systems.3 In California, was enabled via installation of smart approaches to demand response (beutilities require a long-term commitment thermostats. The average per-household they the traditional cycling switch orin ADR (upwards of three years) to ensure reductions resulting from this were: more advanced ADR systems). Morean adequate return on the upfront cost research may be needed to truly addressof the ADR system. This is combined ■■ DLC: 1.82 kW the marginal impacts of load control orwith incentives that are as much as 67% ■■ TOU: .04 kW demand response systems when stackedhigher than non-automated programs.4,5 ■■ TOU + DLC: 1.89 kW or integrated with a pricing offering. We will ■■ DLC: 216 kWh need to discern how well an ADR system The push towards ADR is less about ■■ TOU: 179 kWh allows for adjustment to a critical peak pricegrowing nominal DR capacity and geared event, versus the added cost of systemmore so towards a long-term goal of ■■ TOU + DLC: 218 kWh implementation. System operators willmaking this resource fully-dispatchable need to determine their price premium forand reliable, allowing for micro-level grid Though the per-customer kW reduction the enhanced reliability of a callable loadstabilization as part of ancillary services from TOU may appear low, it’s notable reduction with ADR for micro-level griddemand response program operation. that this was from a two-tiered rate stabilization while balancing this question ($.0782/kWh from 2-7 p.m. June-October, with the maximizing of the availableLighting Demand Response compared to $.0171/kWh off-peak hours resource size through TOU/CPP initiatives. in these months) with no added incentive As of January 1, 2017 California Title 24 during peak periods; the peak event Referencesrequired installation of demand response reduction came from a Reduce Your Usecontrols for lighting in commercial facilities Alert, without a rebate or critical peak 1 https://www.smartgrid.gov/recovery_act/1greater than 10,000 square feet and pricing. Further, while the DLC and thewith a lighting power density of at least DLC+TOU have higher kWh savings, those 2 Faruqui, A. and S. Sergici. 2013. “Arcturus: International.5W per square foot.6 Further, the LEED are attributable largely to the thermostat Evidence on Dynamic Pricing” Prepared by Brattle Group.v4 green building rating system awards while significant per-customer kWh was Available at: https://papers.ssrn.com/sol3/papers.credits for equipping lighting with demand found solely from the TOU rate. There are cfm?abstract_id=2288116., referencing Hopkins, Aresponse capabilities. However, this is at synergies between the two offerings, and and Whited, M. 2017. “Best Practice in Utility Demandpresent time ahead of what is market- TOU can be a good first introduction to Response Programs with Application to Hydro-Quebec’sready. As of August 2017, there were 128 deeper participation in DR or DLC programs. 2017-2026 Supply Plan” Prepared by Synapse EnergyOpenADR-compliant products, of which Economics, Inc.six offered lighting controls capabilitiesand one included an OpenADR-certified 3 Piette, M., Schretrit, O., Kiliccotte, Cheung, I., Li, B.Virtual End-node as a default feature. “Costs to Automate Demand Response – Taxonomy and Results From Field Studies & Programs” Prepared byAutomated Demand Response Lawrence Berkeley National Laboratory for the California Energy Commission Public Interest Energy Research Program. 2015. 4 “San Diego Gas & Electric Demand Response Program Process Evaluation” Prepared by Evergreen Economics. 2016. 5 Campbell, M. and Patterson, O. “California Statewide Automated Demand Response Program Process Evaluation” Prepared by Opinion Dynamics for the California Public Utilities Commission. 2014. 6 http://www.energy.ca.gov/2015publications/CEC-400- 2015-037/CEC-400-2015-037-CMF.pdf Adam Thomas is the director of energy efficiency program evaluation at ADM Associates. ADM provides energy efficiency program evaluation and research for utilities and other clients across North America. Source: OpenADR Primer10 Association of Energy Services Professionals

THE NEWUTILITYIMPERATIVESUCCESSFULLYNAVIGATINGCHANGEBY PAUL A. DECOTIS, DAVID SOUTH AND JAMIE MIZE It is no secret that the utility industry is E arly adaptors can structure A Challenge: Defining aexperiencing change — internally from the rules of the playing field Regulatory Paradigmtechnological innovation and organizational along with regulators andrealignment, and externally from distributed market influences; whereas, adapting This begs the question of the extentresource adoption and heightened with the masses is less opportunistic to which utilities are able and willing tocustomer expectations—and the rate of and at times too late. identify and capitalize on new revenuechange continues to increase. While large opportunities — or extract additionalinvestor-owned utilities are experiencing to assure customers that rates and costs revenue from existing assets — as salesstagnant and, in many cases, decreasing are fair and reasonable for all remaining continue to fall. The deployment of newrevenues from the reduction in sales due customers, regardless of the level of service. grid-edge distributed energy resourcesto deployment of grid-edge distributed and continued improvements in energyresources and greater end-use energy The nimbleness and flexibility with which efficiency will further erode utilityefficiency, they continue to invest in new utilities navigate this change will determine revenues unless new service offeringsrevenue and business opportunities. whether they are able to adapt and help lead or pricing structures are proposed to this change successfully − to the benefit of cover the gap in revenue collections This change requires that regulators customers, shareholders, and regulators brought about by a reduction in sales.focus more on providing direction and or succumb to disruption in a “death-driving initiatives to define the playing spiral” of sorts, leading to higher costs The pace of technological change -field for how utilities address declining and increased customer dissatisfaction. and the penetration of new productsrevenues while maintaining just and and services, enabling customers toreasonable rates. Many eyes are watching If utilities do not lead the change they better control their energy use and coststo see how utilities navigate amid this will be forced to adapt to the change and diversify energy service providers -change. In many respects “the ball is in being driven by others. Early adaptors can require that utilities look for new revenuethe utility’s court” because, while much structure the rules of the playing field along opportunities and business models tohas been generalized about the changing with regulators and market influences; remain viable. Diversifying offerings andnature of the electric utility industry and whereas, adapting with the masses is defining new rate structures, either basedits business model, there is no consensus less opportunistic and at times too late. on some combination of “cost-of-service”on the role utilities should play in the By failing to lead the market to adaptation regulation or transactional, market-basedfuture – other than remaining the provider and embracing change, higher costs “willingness-to-pay” pricing is key toof last resort with the “obligation to serve.” and increased customer dissatisfaction ensuring fixed costs are recovered will lead to more regulation not less. and opportunities exist for utilities to The challenge is to define a regulatory improve service and meet equity returnsparadigm for utilities that ensures they to maintain favorable bond ratings.fulfill their obligation to serve, remainfinancially viable with flat or declining Some utilities, including Consolidatedsales, while more customers leave the Edison Company, Commonwealth Edison,system in whole or in part. To address the National Grid, and PG&E are launchingchallenge, regulators and utilities need marketplace platforms that avail customers www.aesp.org | 2018 11

to behind-the-meter technologies and treatment. Utility consolidations require and generation platform throughout key“internet-of-things” that can be purchased, regulatory approval with assurances that competitive power markets in the U.S .and when necessary, installed by third- customers remaining with the regulatedparty vendors. Such platforms maintain the utility share in the savings from consolidation. If the regulated distribution utility isutility-customer connection and the use of seeking growth to benefit utility customersinstalled grid assets to deliver services. Creation of unregulated subsidiaries and shareholders, new products and requires separation of businesses and services need to be offered that provide While utility rates are still predominately operations so that customers remaining incentives for customers to remain with“cost-of-service” some utilities and with the regulated utility are not negatively the utility with revenue generated throughregulators are experimenting with higher affected by the actions of the unregulated some combination of cost-of-service anddemand charges and lower commodity subsidiary − controls and requirements market-based, transactional or incentiverates, and many states have implemented are put in place to protect the regulated regulation to meet revenue requirements.“decoupling” when sales do not meet business and customers. Examples include, Another tactic is the purchase of gas andforecast in the rate year to ensure costs are Edison International with its subsidiaries, water businesses to accomplish economiesfully recovered. For example, Hawaii Gov. SCE and Edison Energy; National Grid with in customer engagement and valueDavid Ige (D) on April 24, 2018 signed a bill National Grid Ventures; Exelon, Dominion, delivery. For an example of this, see recentdirecting the Public Utilities Commission toimplement performance-based regulation R evenue opportunities found CenterPoint/Vectren announcement.by 2020 that breaks the link between through new regulated productutility revenues and capital investments. and service offerings can take Regulatory InnovationsFurther, SB 2939 directs the creation of the form of improving operationala \"new business model\" for utilities, by efficiencies through which a utility Regulated distribution utilities arebasing revenue collection on metrics shares in the cost take-out, selling challenged to continue delivering valuelike customer satisfaction, renewable anonymized customer usage data, to customers and stakeholders whileenergy integration, and data sharing. leasing fiber telecommunications their core business is being threatened infrastructure to others for private or by customers self-generating their None of these are new concepts − setting public use, or technology attachments power, improving energy efficiency,demand and commodity charges to reduce to utility poles for third-parties. or receiving electricity directlydependency on revenue collection from from third-party providers, therebycommodity and decoupling to recover and other utilities that have a generation reducing sales and revenue.“lost-revenue” schemes have been in business selling into wholesale electricityplace for decades. Marketplace platforms, markets. New revenues from unregulated Revenue opportunities found throughhowever, are new. While these strategies subsidiaries flow to holding company new regulated product and servicedo mitigate the impact of lost sales on investors, not customers of the regulated offerings can take the form of improvingrevenue collection due to energy efficiency, utilities. Such new business ventures do operational efficiencies through which ademand response, and distributed energy nothing to guard against lost utility sales, utility shares in the cost take-out, sellingresources on the grid, they result in higher and sometimes compete directly with their anonymized customer usage data, leasingcosts being borne by the remaining full- regulated business; they only benefit the fiber telecommunications infrastructure torequirements customers. The greater the holding company shareholders from any others for private or public use, or technologyerosion of utility sales and dependence on loss in earnings in the regulated business. attachments to utility poles for third-parties,higher demand charges and decoupling to name a few. It should be noted that anyto recoup lost revenue, the more rapid and Another Challenge: reduction in revenues, without correspondingsevere the death spiral. To the extent that Deciding Who Benefits from New reductions in costs, lowers shareholdersales of new products and services through Revenue Opportunities returns and threatens bond ratings.marketplace platforms can offset revenuelosses, the death spiral will be mitigated. Proactive distribution utilities may In the traditional utility business embark on strategies for growth that benefit model, regulation seeks to achieveNew Revenue Opportunities customers or shareholders. But, it does not stable utility revenues and return to have to be one or the other. If the desire shareholders, efficient use of energy, and The utility industry has been is to seek growth through shareholder fair and equitable rates to customers.experimenting with new revenue value creation, hands-down, creating andopportunities through creation of unregulated successfully running unregulated businesses A hybrid of cost-of-service ratesubsidiaries and to a limited extent, new will likely ensure greater returns for holding regulation applied to traditional in-kindproducts and service offerings, for some company shareholders. For this example, infrastructure replacement, or transmissiontime. To date, there is no consensus on how see the recent merger announcement of and distribution system investments, andregulators would like the industry to adapt Vistra Energy and Dynegy, where Dynegy's transactional or market-based pricingto changing economic and social pressures generation capacity and existing retail for new products and services, presentsand technological innovation − so utilities are footprint with Vistra Energy's integrated a provocative model for protectingfree to help shape the narrative themselves. ERCOT model is expected to create the utility revenue from further erosion. lowest-cost integrated power company With the repeal of the Public Utility Holding in the industry and position the combined Flexible traditional, and transactionalCompany Act (PUHCA) in 2012, and interest company as the leading integrated retail market-based ratemaking along within embarking on new competitive ventures, earnings adjustment mechanisms (sharingutilities have created new enterprises and savings with customers and shareholders),offerings, some competing directly with other and decoupling revenue collection fromregulated utilities. PUHCA repeal provided sales provide distribution utilities with aopportunities for utilities to consolidate, myriad of choices to remain financially viableresulting in the ability to capture efficiencies, in an increasing competitive marketplace.gain strategic advantage, and operate in While discussions are being had aroundjurisdictions with more favorable regulatory hybrid rate-setting, regulators and utilities need criteria and guidelines on when and how such rates should be set.12 Association of Energy Services Professionals

1 Through its Grid Modernization proposal Utility Examples 3 Through New York’s Reforming the and implementation plans, and recently Energy Vision (REV), utilities have been mandated by the PUC, Hawaiian Electric 2 Commonwealth Edison in Illinois has a invited by the NY PSC to propose new Companies (HECO) is incentivized to four-pillar approach to DER integration revenue sources via platform servicegenerate revenue based on performance-based as a means to achieving its goal to serve revenues or market-based earnings to collectmetrics such as customer engagement and as a platform utility. The four key areas fees for playing the role of gatekeeper or hostsatisfaction, and timely interconnection of DER include the physical asset base, system operation of the distributed system marketplace. The PSCand renewables (including third-party services/ and planning, transactive commodity exchange, has created regulatory incentives as the utilitytechnologies). HECO’s objective focuses on a and a services and solutions marketplace, which business model shifts towards a services-transition towards the creation of power system has been built in partnership with Simple Energy. platform business model, and revenue streamsmarketplaces for new services, technology This products marketplace provides customers become bi-directional between the utilities,products, and affordable, feasible opportunities for access to information and selected energy-efficient third-party providers, and the ratepayers.distributed technology adoption to meet the state’s products, rebates, and discounts to facilitate betterrenewable energy goal of 100% by 2045. energy usage and control. ComEd has capitalized on the traditional business model shift from energy distribution to energy coordination by incentivizing itself to achieve revenue from fees on transactions and charges for services provided. Vermont’s Green Mountain Power is profiting from a distribution platform for assets comprising the backbone ofan example of a services-driven utility, market while concurrently preserving the grid or distribution system platform,providing customers with a customizable traditional utility responsibilities of providing while not discouraging competition from“off-the-grid” service package including reliable, affordable and safe energy. Such third-parties, and assisting in achievingsolar, storage, home automation and investments are not without risk, in part state incentivized public policy goals.more. While these services are provided justifying a more flexible rate recoveryin some form either through third-parties structure, commensurate with risk. Paul A. DeCotis is senioror with support by the local utility, such director and head of theservice innovations offered by a regulated Requiring utilities to manage both East Coast Energy &utility itself are rare. This provides the utility electricity supply and demand (end-use Utilities Practice for Westwith the opportunity to meet a diverse load) requires more sophisticated planning Monroe Partners. Paul wasset of interests of customers rather than and operations platforms that must a founding member of thesimply providing demand and energy operate in ‘real-time’. Movement toward Eastern Interconnectionservices through traditional means. this role for utilities requires rethinking the States Planning Council and business model across the value chain of served as energy secretary Other states and distribution utilities are how utilities are organized, operate, and and chair of the statepursuing a more aggressive, and difficult deliver value to customers. It also requires energy planning board for two New York governors.to implement, approach to create new rethinking how investments and costsrevenue opportunities by means of a are recovered. The traditional “cost-to- David South is a seniorPlatform Service Provider. These include, serve” paradigm would need to change, principal in the Energy &Hawaii (Hawaiian Electric Company), perhaps with a hybrid of sorts in which Utilities Practice at WestIllinois (Commonwealth Edison), and utilities recover replacement equipment Monroe Partners, as wellNew York (where a second round of investments necessary to support the as a lead for its firm-widedistribution system platform (DSP) filings backbone of the system for all usersare due to regulators in summer 2018). through rate-base cost-of-service recovery, Sustainability Practice.Having utilities function as a DSP provider while new investments in technology David has more than 35for many interconnected resources and and operations platforms, are recovered years of power generation,devices requires significant investment on a transactional or blockchain basis. distributed energy, energyin communications technology, sensors efficiency, strategic, policyand controls, asset and enterprise Conclusion and regulatory assessment experience.managements, and potentially newcustomer information systems. This role Utilities have the opportunity – in Jamie Mize is a seniorrequires utilities to focus more on network partnership with regulators and customers consultant with Weststabilization and service coordination, – to define the 21st century utility regulatory Monroe Partners in theand potentially co-optimizing electricity paradigm and drive marketplace and Energy & Utilities Practice.supply with demand. New investments technology innovations. Furthermore, Jamie has experience inin operations and information technology utilities have an opportunity to position designing, mobilizing,are also required to support the platform themselves by adapting early in the and operating programapproach to services offerings. This shift process to influence how market conditions management organizationsin utility functionality and new technology embrace behind-the-meter technologies to for complex initiativesinvestment will prove educational regarding better manage the power grid. The optimal and large implementationthe feasibility of creating, managing, and outcome is to have utilities meet their projects for IOUs with multiple stakeholders. revenue requirements (e.g., cost recovery), www.aesp.org | 2018 13

CAN WE “ELECTRIFY EVERYTHING”TO MEET CLIMATE GOALS? BYASAHOPKINS The United States burns about 49 light trucks) that burn gasoline represent For space and water heating (together 14quadrillion BTUs of fossil fuels directly, more than one third of direct fossil fuel use. percent of direct fossil fuel use), heat pumpsthrough the nation’s buildings, vehicles, Fortunately, the light duty electric vehicle come in a diverse array of sizes, capabilities,and industrial processes, generating market continues to grow rapidly. General and configurations: air-to-air, air-to-water,about 48 percent of total U.S. greenhouse ground-source, variable refrigerant flow,gas emissions. For the U.S. to honor its Transport(Larg1e3r%DVieehsieclles) ings Industri Build cold climate capable, variable- and single-responsibility to mitigate climate change, Other 8%(CarsG&asLoilgi3nh4et%Trucks) speed, CO2 and other refrigerants, ductedand for individual states to meet their Heat 11%Refining 7% PWrOaottcheeersr3s%2%5% and ductless, split and package. Ductlessemission reduction targets, we must cut Boilers 7% heat pumps as add-on systems for boiler-emissions from direct fossil fuel use Other 10% heated buildings offer improved servicesdramatically. In New York and NewEngland, for example, the combination al (air conditioning without the hassle ofof aggressive energy efficiency window units) while displacing theand zero-carbon electricity would Source: U.S. Energy Information Administration majority of boiler fuel use. Heat pumpsreduce emissions to only 40 percent can also supply low-temperaturebelow 2001 levels1 far from states’ Motors offers two plug-in vehicles today; heat for industrial processes such ascommitments to reduce emissions it plans to offer more than 20 within the food processing. Electric cookingby more than three quarters by next five years. Ford will manufacture 40 and dryers are well established, and2050. Low-carbon options for direct all-electric or plug-in models by 2022. innovative technologies like inductionfuel end uses are therefore essential. cooking and heat pump dryersBut sustainable low-carbon fuels can further increase efficiency overare in limited supply, so they should traditional resistance-based options.be restricted to end uses that cannotbe electrified. An effective nationwide The availability of heat pumps andstrategy will pair electrification with a electric appliances means that newcleaner generation mix and include low- buildings (especially those with high-carbon fuels like biofuels where needed. quality shells) can be made all electric and low-cost to operate in almost any The Easy Part climate. Building codes and state, city, or utility programs that lead toward “net For many end uses, a scalable and zero ready” will drive this market. Hittingcost-effective de-carbonization strategy emissions reduction goals will require nearcan rely on electricity and efficiency almost complete electrification of building usesexclusively. Light duty vehicles (cars and by 2050. Constructing a new building that14 Association of Energy Services Professionals

has a fossil fuel heating system simply sets capacities, especially for colder climates, The System Impactup the building owner for unnecessary so they might not provide adequateand potentially untenable future costs. comfort without complementary building While not every end use is ripe for shell improvements such as air sealing. electrification today, and some may The Hard Parts never be, the environmental and electric Another class of barriers relates system impact of electrifying space Electrifying other end uses will take more to knowledge. Many customers are heating, water heating, cars, and lightinnovation. While Tesla has announced a unfamiliar with electric options, so trucks alone would be substantial. Nearlylong-range electric semi-truck, heavier demand remains low. Professionals in half of direct fossil fuel used in theand longer-distance freight will be sales, installation, and servicing may country is used for these purposes.harder to electrify due to battery size, lack experience with electric options.weight, and charging time limitations. In 2017, Synapse Energy EconomicsA comprehensive solution will involve ■■ Air conditioning contractors are modeled an electrification scenario forsome mode change: increasing use of rail, relatively well suited to install heat Northeast Energy Efficiency Partnerships’for example, and transferring freight to pumps, but many are also happy to sell Northeast Regional Assessment ofmedium-duty electric delivery vehicles on a fossil fuel furnace. Strategic Electrification that achieves athe outskirts of cities. Hybrid airplanes are 69 percent greenhouse gas emissionin development, but no electric option for ■■ Plumbers may not have the expertise to reduction in the seven northeastern stateslong-distance ocean shipping exists yet. service a heat pump water heater. by 2050, to be attained from expanded efficiency, zero-carbon electricity, and Locations where a byproduct is burned ■■ Auto dealers have not been strong end-use electrification. Getting all the(such as paper mills) and combined heat advocates of electric vehicles. Many way to the states’ targets of 80 percentand power configurations will be nearly EV purchasers effectively have to sell would require electrification of minorimpossible to electrify without full system themselves the car and find a dealer to end-uses, and the use of biogas, biodiesel,reconfiguration. District heating presents place an order. or other low- or zero-carbon fuels.a similar challenge. However, someinnovative district heating systems — such Electric vehicles also require charging In this scenario, for the cold climateas Vancouver’s False Creek — share a stations. These include stations for public of the northeast, this suite of innovativeheat reservoir and use heat pumps to use (including fast charging for through- technologies and efficiency has dramaticpull the heat into participating buildings. travelers), workplace charging for those impact on the seasonal demand forHigh temperature industrial process without dedicated home parking spaces, electricity. Summer consumption barelyheat and steam can be produced with and shared chargers in multi-family garages. rises by 2050, as efficiency counters theelectric resistance, induction heating, Business models for charging are not increase from EVs and water heating. Winteror arc furnaces, but efficiency gains yet well-established. EVs still represent consumption, however, rises quickly and(mostly from improved precision in timing a small fraction of vehicles and most steadily. January consumption passesand targeting heat to the appropriate customers charge at home, so charging August by 2035. Monthly total consumptionmaterial) are not transformative. stations may not generate enough money may shift to winter faster than peaks: to cover the hardware cost. Yet many winter heating loads will likely be flatter The Barriers customers won’t buy an EV until they see across the day, while summer afternoon the charging infrastructure in place. air conditioning peaks are sharper. Even where effective technologies arelargely available, electrification at scale and 45 Monthly Electric Consumption (TWh)the associated market transformation face 40 2050numerous barriers. First among these is 35 2045cost. The decreasing total cost of owning anall-electric vehicle, for example, now rivals 2040that of internal combustion cars, but high 30 2035upfront costs still discourage customers. 25 2030 20 2015 In new construction applications,electrification can save builders and buyers 15money. Adding heat pump functionalityto an air conditioner, choosing electric 10appliances, and building the electric serviceto meet the electric demand from the start 5can be cheaper than installing plumbing forgas and adding a separate heating system. Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec In retrofit applications, however, cost Source: NEEP, Northeast Regional Assessment of Strategic Electrificationbecomes an obstacle. Customers may needto upgrade the electric service and replaceeither an air conditioner or heating systembefore its end of life. Gas piping is alreadyinstalled, negating those savings. Residentialheat pumps aren’t available in high www.aesp.org | 2018 15

In warmer climates, electrification approved to build support infrastructure markets grow, there is time to deploy thewill have a smaller seasonal component, for EV charging sites; and “Tier III” of tools necessary to manage electrified loadsalthough it won’t disappear entirely. As Vermont’s renewable energy standard (like time-of-use or other dynamic rates)national markets develop for high efficiency requires utilities to reduce their customers’ and plan for any grid upgrades needed.electrification technologies, they may fossil fuel use. As utilities and regulatorsdisplace electric resistance uses, which develop new performance incentives, Grid changes include the increasedare more common in warmer climates and they should consider how to accelerate dynamism of load expected from waterareas with lower electric rates. This could electrification markets without giving heating, electric vehicle loads, and directmean that total electric consumption rises utilities new, unwarranted market power energy storage. New flexible loads couldless — or even falls — in some places. in markets outside their core functions. reduce the costs of grid integration for variable renewable energy sources and The Pace of Change One source of delay and complication mitigate peaks driven by other causes. for utilities and regulators is interaction with Electrification that increases sales The dominant end uses to electrify — natural gas. Nearly complete electrification without increasing peaks will increasespace heating, water heating, and vehicles of the building sector, as envisioned in system utilization. This should create— each have typical hardware lifetimes of this article, represents a mortal threat net downward pressure on electric10 or more years, with 20 or more typical to gas utilities’ traditional way of doing rates, mitigating the rate effects of gridfor heating systems. This means that the business. If an electric utility also owns a upgrades, energy efficiency, and distributed32 years between now and 2050 allow gas utility, pushing electrification could generation. Long-term planning for utilityfor between one and four opportunities to impede near-term shareholder interests. infrastructure and utility business modelsswitch to electricity at end of life (see table). Meanwhile, electric and gas utilities owned has time to adapt to the coming changesEach replacement is critical, especially for by separate firms have entered a high- in load—but planning must begin now.long-lasting heating systems. Replacing stakes competition in which regulators andvehicles and appliances faster than typical policymakers have been loath to pick a Referenceend of life (e.g. early retirement or a “cash winner. To resolve these challenges, electricfor clunkers” approach) is more expensive utilities, gas utilities, or both must break out 1 Northeast Energy Efficiency Partnerships.and difficult to achieve at scale, but each of their traditional business model boxes. Northeastern Regional Assessment of Strategicmissed opportunity to adopt the electrified Electrification. 2017.option will make that approach more likely. The Need to Be Strategic Asa Hopkins is a principal The market to sell new electric A strategic and long-term approach associate at Synapsetechnologies needs to develop faster to decarbonization using electrification Energy Economics. He leadsthan the system-wide response to bulk begins by accelerating markets for essential analyses regarding utilityelectrification. The same long lifetime electric technologies: those which reduce regulation, public policy,that makes each replacement critical also emissions while increasing efficiency. and planning, with a focusmeans that even if everyone switched to Simultaneously, electric supply must get on demand-side resourceselectric at their first opportunity, it would ever cleaner while complementary energy and markets.still be past 2040 before every system efficiency saves money and makes room onwas electric. There is time to plan. the grid for new electric uses. While these Lifetime Cycles Efficiency before 2050Car 12 years Low-Load Homes & BuildingsHeating 15-25 2 to 3System years 1 to 2 Efficient AppliancesWater heater 8-12 years 2 to 4 Low-Carbon Solar Hybrid Cars Electrification Supply Wind LEDs Run-of-River Hydro CHP Resistance Heat Wood The Role of Utilities Nuclear Ponded Hydro Bldg, Controls PHEVs Biofuels Smart Appliances HP Space Heat Utility regulations and the utility business Freight and Transitmodel have not yet adapted to meet the HP Water Heatneed for electrification. Utilities that run Light Duty EVsrobust energy efficiency programs haveexperience informing customer appliance Biogas Batteries Resistance WHschoices and navigating the supply chain Pumped Hydrofor efficient products. They also have the Interruptible Loadsexpertise and capital to build infrastructure.The seeds have been planted in a few Flexibilityplaces: Central Hudson in New York hasproposed earning incentive returns for Source: NEEP, Northeast Regional Assessment of Strategic Electrification Strategicdeploying heat pumps; Eversource has been Electrification16 Association of Energy Services Professionals

COLD CLIMATE AIR SOURCE HEAT PUMPSHOW WELL DOESTHIS “HOT”TECHNOLOGY WORK? BY DAVE LISGood news is here Two large scale evaluations studying perform close to as advertised it does not in-field performance in the Northeast were tell us how well any individual product Important technological improvements conducted by Cadmus since 2016. Taken performs relative to its nameplate rating.have greatly improved the amount of together, they looked at approximatelydelivered heat and efficiencies for many 225 heat pumps in Massachusetts, Rhode Ductless Heat pumps are being operatedof today’s ASHP systems, making them a Island and Vermont; The Massachusetts/ significantly less than they could be.viable alternative to the traditional heating Rhode Island Ductless MiniS‐ plit Heatsystems, including electric resistance heat Pump Impact Evaluation included “cold The large majority of systems meteredand oil/propane boilers and furnaces found climate” and “non-cold climate” heat through these studies were ductless heatin the Northeast, for example. While these pumps while the Evaluation of Cold Climate pumps being operated in conjunction withimprovements have been made to both Heat Pumps in Vermont focused on “cold existing central heating systems. In mostductless and centrally ducted ASHPs, early climate” units. While these studies help cases, the management of two systemsmarket growth in the Northeast has been to provide a number of insights related is left up to the homeowner. This dynamiclargely driven by ductless configurations. to performance, usage, and importance led to a wide range of operating times. As of installation, there remains a number of illustrated in the graph on the bottom ofBut how well do they work in places like chilly questions that will require further research. page 18, Cadmus compared the EffectiveNew England or other cold climate regions? Full Load Hours (EFLH) of ASHPs from the Some of the key take-aways field to projections of assumed EFLHs for Because they are still an emerging from these include: heating and cooling. EFLH is the ratio oftechnology, until recently there was little total energy consumed in a season to theinformation about their performance Ductless Heat Pumps are collectively rated (peak) full ‐load power2. In both cases,in the field which made this a difficult operating close to “as advertised” in cold the actual was approximately half of thequestion to answer with confidence. climate applications. expected. This equates to the systemsEnergy efficiency programs and installers not being operated by the homeownerhad to rely on equipment ratings and The ASHPs studied in Vermont as much as the program administratorsanecdotal information drawn from a collectively performed at approximately 90% in Vermont, Massachusetts and Rhodefew installations. Fortunately, there is a of the average nameplate rated efficiency Island were expecting. Fewer run hours,growing body of evidence that suggests (11.9 heating seasonal performance factor, means less savings for programs.that a recent generation of ASHPs are or HSPF). The ASHPs in Massachusettsin fact a technology that can deliver and Rhode Island performed at 83% of the Stakeholders see opportunity in theefficiency and perform well, even in cold average nameplate ratings for that group1. development of more automated controlsclimate winter heating conditions. While this means that on average they that help homeowners manage operation across two systems more seamlessly. www.aesp.org | 2018 17

A ir-Source Heat pumps are a one-stop shopping climates. Because ASHPs transfer energy from outdoor air, product for efficient home heating and it makes sense then, that the warmer the outdoor air cooling. When properly installed, an air temperature, the more heat can be “moved” insidesource heat pump (ASHP) promises to deliver to the conditioned space. Lower heating loads inone-and-a-half to three times more heat moderate climates also require smaller capacityenergy to a home than the electrical energy heating systems, small enough that “old” ASHPsit consumes. This is possible because a heat were capable of maintaining comfort. Despitepump moves heat rather than converting it all of that, ASHPs have long suffered fromfrom a fuel, like combustion heating systems low heating capacities and efficiencies whendo. the temperature dipped below freezing. This characteristic has made using ASHPs in colderHowever, ASHPs have long been considered an regions such as New England, Canada and parts ofHVAC technology better suited for warm and moderate the Mid-Atlantic challenging.The quality of installation probably CoolSmart program. The study also found satisfaction with heating performance wasmakes a difference to equipment various customer behaviors that reduced significantly higher when DHPs designedperformance. performance of installed systems—e.g. for cold climate heating were installed. obstructing or failing to clear snow from While it may be difficult to draw a direct outdoor units, misunderstanding proper As with customer satisfaction, there iscorrelation between performance and use of remote controls, inefficient system general agreement from multiple studiesquality of installation, Cadmus suggested operation, and failing to clean filters. that customers are satisfied or very satisfiedanecdotally that installation quality was with the comfort from DHPs. In fact, somesuperior between the units metered However, pulling from a meta-study of customers identified increased comfort as a keyin Vermont versus those metered in ductless heat pump studies from as long benefit; most participants reported increasedMassachusetts and Rhode Island. As ago as 2014, customers with ASHPs seem comfort, especially due to heat being providedmentioned earlier, performance was generally happy. In the Pacific Northwest, to areas that were not well heated before.generally higher in Vermont compared 92% reported high levels of satisfaction. Into Massachusetts and Rhode Island. A Maine, the question “would you recommend More to Researchcaveat here is that the Massachusetts the program?” received a 9.7 responseand Rhode Island study looked at a mix of on a scale of 1 to 10. In Connecticut and Research results suggest ASHPs are readycold climate and non-cold climate HPS, Massachusetts, 38 out of 40 participants for prime time, but as the technology evolves,whereas Vermont only studied cold climate rated their satisfaction at a 4 or 5 on a 5 point the newer systems warrant additional study.units. Nonetheless, it is helpful to note scale. In general, customers were widely Future studies might consider evaluating:that other research on residential HVAC satisfied with the cooling. In the surveyshas also noted that quality of installation of customers using ductless heat pumps ■■ Centrally ducted ASHPs, sized to meetaffects equipment performance and (DHPs) for heating to rated temperature full heating loadthe realization of efficiency savings. ranges, customers were also generally satisfied, although some reported still ■■ Multi-head cold climate systems (or Homeowners need to gain experience. needing to utilize supplemental heating multiple single-head systems fromThe Massachusetts/Rhode Island study systems. As users gain experience with latest generation of cold climateconfirmed that many customers’ primary the systems, there is a reported increased systems) sized for near-whole homeinterest is in the cooling function. This reliance on DHPs for heating during cold heating load;is not surprising since ductless heat conditions. A Massachusetts survey of 430pumps were being promoted through the DHP program participants revealed that ■■ Systems installed with newer controls to integrate the ductless ASHP system Aggregated ccHP Heating Performance 6.0 with the backup heating system (where applicable);120 5.0 Cold Climate Specification kWh 4.0 Increases Transparency in100 Product Performance MBtu As far back as 2014 stakeholders in the Northeast identified improved performance80 COP metrics as a need for greater market COP - Average Nameplate adoption of ASHPs. Certified laboratories conduct standardized tests (defined by the60 Air Conditioning, Heating and Refrigeration Institute in AHRI 210/240 test criteria) to40 determine heat pump performance and efficiency at outdoor temperatures from increasing uncertainty in COP +17°F to +47°F. Although some manufacturers estimate due to small number publish heat pump performance data at of observations much colder temperatures (e.g., as low as ‐20°F), the performance is not based20 on an industry standard test procedure.kWh 3.0 COP and MBtu2.0 increasing uncertainty in COP estimate due to small number of observations 1.00 0.0 -20 -18 -16 -14 -12 -10 -8 -6 -4 -2 0 -2 -4 -6 -8 -10 -12 -14 -16 -18 -20 -22 -24 -26 -28 -30 -32 -34 -36 -38 -40 -42 -44 -46 -48 -50 -52 -54 -56 -58 -60 -62 -64 -66 -68 Temperature Bin (°F)18 Association of Energy Services Professionals

Findings - Heating and Cooling EFLHAnnual EFLH 4,000 EFLH Cooling 3,500 EFLH Heating 3,000 Average Cooling EFLH (240 hours) 2,500 Average Heating EFLH (1,383 hours) 2,000 TRM Heating EFLH (2,876 hours) 1,500 TRM Cooling EFLH (375 hours) 1,000 500 VT126 VT119_1 VT116 VT114_2 VT168_2 VT129_6 VT129_5 VT169 VT168_1 VT153_2 VT129_4 VT109 VT129_7 VT117 VTCOM106 VT127_1 VT106 VT119_2 VT112 VTccMHP202 VT122 VT120_1 VT129_1 VT118_1 VT180 VT124 VT107_2 VT156 VT110_2 VT114_1 VT107_1 VT174 VT101 VT172 VT129_2 VT105 VT125 VT129_3 VT140 VT100 VTccMHP203 VT114_3 VT128 VT183 VT110_1 VT111 VT153_1 VT211 VT103 VT209 VT104 VTccMHP214 VT141 VT108 VT158_1 VT133 VT113 Heating: 12.1% precision at 90% confidence | Cooling: 23.5% Precision at 90% confidence To increase confidence in these products Lastly, ASHPs provide one of the 6. Enable the promotion of climate-for consumers and program administrators, “cleanest” space heating on the market, appropriate ASHPs through improvedNEEP worked with stakeholders in the an increasingly important issue for states performance metricsNortheast to develop the cold-climate around the region looking to find pathwaysASHP specification. The specification to reduced harmful emissions. It’s clear that 7. Develop more accurate tools towas necessary because the heating ASHPs offer several compelling solutions predict energy, cost and GHG savingsperformance metric (HSPF) for air-source – comfort, cost, energy, and emissions. associated with ASHP installationheat pumps does not provide all of the through collection and analysis of realnecessary information to adequately High performing cold-climate ASHPs world performance datacharacterize heating performance at low now provide a number of potential benefitstemperatures. In addition, supplemental in comparison to a number of existing Manufacturers, distributors, installers,information provided by manufacturers residential heating systems. A 2016 NEEP technology experts, program administrators,to demonstrate cold temperature study projects that if the New England and state policy makers, and communityperformance is not standardized or New York region successfully achieved a organizers are just some of the stakeholdersconsistent. Thanks to the specification, 40% penetration rate by 2030 we could that make up the collective ASHP “village”there is a list of 904 products from 32 expect $4 billion in annual cost savings that identified – and can help implement- themanufacturers that now provide greater as well as 50 billion metric tons of CO2 strategies which are more fully discussed inlevels of transparency into their operation equivalent. That amounts to the emissions the Northeast/Mid-Atlantic Air-Source Heatacross a range of operating conditions. of six and half coal fired power plants! Pumps Market Strategies Report 2016 Update. In summary, heat pumps hold tremendousMany Applications and Many With such an impressive value promise for achieving energy, cost andBenefits from this Technology proposition, why aren’t these carbon savings. More in-field performance everywhere? studies will continue to help confirm With higher levels of performance and an performance and ensure important marketincreasing variety of system configuration, From consumer perceptions to data actors have confidence in this technology.ASHPs are primed to see growth in needs, to unanswered high level policyboth retrofit applications as well as new questions, several key market barriers Referencesconstruction. ASHPs now come in both persist. Fortunately, these can be overcome“ducted” and “ductless” versions, meaning using a variety of market transformation 1 HSPF is a ratio of BTU heat output over the heatingthey can be retrofitted into nearly any strategies that are familiar to energy season to watt-hours of electricity used. It has unitsexisting or new application. Cold climate efficiency stakeholders. These include: of BTU/watt-hr. Depending on the system, an HSPF ≥ 8ASHPs can provide seasonal efficiencies can be considered high efficiency and worthy of a USof over 300%, meaning the system 1. Increase consumer education Energy Tax Credit.delivers three times the energy of the input and awarenessenergy. Put in one unit, get out three! 2 To calculate EFLH, Cadmus divided the total annual 2. Increase installer/builder awareness heating and cooling energy by system power at the ASHP is a technology that offers a number of, and confidence in, ASHP through AHRI rated conditions (5°F for heating and 95°F forof exciting benefits including energy cost expanded training and education cooling).savings, greenhouse gas (GHG) emissionreductions and grid flexibility. In fact, ASHPs 3. Reduce upfront costs of installed Dave Lis is the directorare increasingly being referred to as a systems through robust and aligned of technology & marketrenewable technology, due to their ability to promotional programs and the support solutions at Northeastextract energy from the ambient air. Not only of alternative business models Energy Efficiencydo heat pumps provide efficient heating, but Partnerships; wherethey provide highly efficient cooling which 4. Mobilize state and local policymakers to he leads their regionalincrease their versatility and usefulness. expand support for ASHPs market transformation initiatives for Home Energy 5. Promote advanced control technologies Management Systems, to allow automated coordination among Air-Source Heat Pumps, multiple heating systems Strategic Energy Management and Appliance Standards. www.aesp.org | 2018 19

HOME ENERGY MANAGEMENT SYSTEMS:EXPANDING ENERGY EFFICIENCY’S POTENTIAL BY IAN METZGER, WITH CONTRIBUTIONS FROM BRADLEY PIPER AND RYAN MOORE“Hey Alexa, how much “OK Google, how “Siri, what is the “Attention all voice assistants:money can I save on my much energy can I payback for HEMS?” Turn off lights and plugs,utility bills with HEMS?” save with HEMS?” and set back HVAC when I leave the house.”“A recent pilot study “According to a study recently “Recent research found the “A HEMSin New York measured published by NYSERDA and simple payback for HEMS can is required.”*utility bill cost savings of Lockheed Martin Energy, HEMS be as low as five years.”*up to $268 per year.”* can save up to 16% of whole- * Not actual responses from voice assistants. home energy consumption.”* The communication protocol was importantIntroduction Insights from the Field for gathering reliable information from several different brands and manufacturers The Home Energy Management A recent New York State Energy Research of smart devices. The network of smartSystems (HEMS) industry is rapidly and Development Authority (NYSERDA) devices communicating with the hubgrowing. Hundreds of manufacturers pilot – designed and implemented by created a wireless mesh network withinare selling smart products that provide Lockheed Martin Energy – provides deep the home.an array of options within the Internet insights into the expanding energy efficiencyof Things. Navigant Research predicts potential and additional benefits of HEMS. In The hub collected and combined thethat by 2025, the HEMS worldwide this pilot, HEMS were installed in 50 homes data and served as a router, regulatingmarket will be valued at $7.8 billion. across Westchester and Albany Counties. data traffic between the network of smart Approximately 1,500 sensors were deployed devices and the Internet. Data was routed Voice assistants are one way to interact to collect more than 106 million data through the hub to a secure database,with HEMS and are an optional component points related to energy consumption and where it could be accessed and controlledof such a system. HEMS refers to any occupant behavior during the pilot through a graphical user interface or anhardware or software system that can test period. application programming interface bymonitor and provide home energy usage third-party data visualization software.feedback and enable advanced control Interoperability and Data Securityof systems and devices — integrating Participant Demographicsinternet connectivity, software, and visual Interoperability and data security wereanalytics. HEMS hardware typically consists important considerations in this pilot Program implementers were able toof smart sensors and controllers, while because of the variety of available smart attract a wide demographic of participantssoftware features may include monitoring, devices and the vast amount of data within a targeted geographic locationnotifications, demand response, home collected. Most smart devices included using low-cost social media-drivenautomation, energy management, security, in the HEMS pilot used a wireless radio advertisements. The pilot participants wereand data analysis and visualization. Users frequency communication protocol, Z-Wave spread over multiple electric utilities andtypically interact with HEMS through a or Zigbee, to communicate with a hub represented a variety of HVAC systems. Adashboard on a computer, handheld connected to the home’s Internet network.device apps, or a voice assistant.20 Association of Energy Services Professionals

wide range of home sizes and occupants Table 1. HEMS Annual Savings Potential by End Usewere represented, with 33% female and 67%male participants. Smart Device Electricity Heating Fuel Cost Notes Smart Savings Savings (therms/ Savings* Figure 1. Participant Statistics Thermostat ($/year) No existing (kWh/year) year) setback controls 688 52 $174 15-minute $58 occupied delay Smart Outlets 341 $36 Controls only, no retrofit savings Smart Lamps 212 $268 or Switches Total HEMS 1,241 52 Savings * Assumes average utility rates in New York: $0.17/kWh and $1.10/thermAdvanced Measurement HEMS can monitor more variables Deep Energy Savings Potentialand Verification at smaller intervals to determine how, when, and where energy is consumed Figure 2 shows the results for an average The unique data collection capabilities and potentially saved. Measuring home baseline compared to an energy-of HEMS allow for advanced evaluation behavioral variables such as occupancy, efficient home with maximum savingstechniques. The pilot’s measurement presence, system status, operating potential using HEMS. HVAC, plug-load, andand verification (M&V) method monitored state, and other interactions eliminated lighting savings are shown for an averagebaseline behavioral characteristics with a large portion of the uncertainty that is weekday load profile. HVAC savings arereal-time energy consumption metering and ubiquitous with other M&V methods. most prominent during the afternoon andsimultaneously simulated the operation and evening, when temperature setbacks areenergy-saving potential of HEMS devices. The NYSERDA pilot was designed implemented. Potential lighting savings to account for HVAC, plug load, and were most prominent in the evening, when This method eliminated behavioral, lighting control features that HEMS can a higher percentage of lights were in usehousehold, environmental, and system automate. The specific HEMS control and participants kept rooms lit for extendeduncertainties so that real-time energy- strategies tested in each home were: periods of time. Plug-load savings weresaving capabilities could be accurately observed for all hours of the day, unlikeverified — a previously impossible ■■ HVAC control via smart thermostat lighting and HVAC that achieved savingsaccomplishment using traditional pre/ primarily during specific time frames.post monthly utility data methods. ■■ Lighting control and scheduling via smart outlets, smart switches, and HEMS maximum savings potential smart LED lamps and fixtures was estimated to be 37 percent based on the connected loads of three ■■ Home entertainment system plug-load targeted measures. HEMS maximum control via smart outlets savings potential was estimated to be 16 percent when compared to total home ■■ Home office plug-load control via smart electricity consumption. Table 1 shows outlets the energy savings by measure, with HVAC being the highest potential savings, ■■ System effectiveness when paired with followed by plug loads and lighting. occupancy sensors ■■ System effectiveness when paired with geo-fencing FigureB2a. HsEeMLSoSaadviSngims Puoltaetniotianl:fAorvAevreargaegeWHoemeekdonaAyvHerEaMgeSWSeaekvdinaygs 1,400 1,200Power (W) 1,000 800 600 400 100 0 12:00:00 AM 1:00:00 AM 2:00:00 AM 3:00:00 AM 4:00:00 AM 5:00:00 AM 6:00:00 AM 7:00:00 AM 8:00:00 AM 9:00:00 AM 10:00:00 AM 11:00:00 AM 12:00:00 PM 1:00:00 PM 2:00:00 PM 3:00:00 PM 4:00:00 PM 5:00:00 PM 6:00:00 PM 7:00:00 PM 8:00:00 PM 9:00:00 PM 10:00:00 PM 11:00:00 PM Energy Efficient Home HVAC Savings Plug-Load Savings Lighting Savings Baseline Home www.aesp.org | 2018 21

Figure 3 shows the maximum potential a utility energy efficiency program for 25 Referenceswhole-home percent savings results. Higher percent of the installed cost could reducesavings are shown to be coincident with the customer payback period to five ■■ New York State Energy Research and Developmentlower occupancy rates during the daytime to nine years. Authority, “Home Energy Management System Savingsand typical nighttime sleep schedules. Validation Pilot.” November 2017Weekdays are shown to have lower daytime Additional findings related to energyoccupancy, resulting in higher savings savings, demand savings, demand ■■ Navigant, “Market Data: Home Energy Management.”potential when compared to weekends. response, reduced evaluation burden, data December 2016 security, system performance, customerFinal Thoughts engagement, and more can be found in ■■ Northeast Energy Efficiency Partnership, “Home Energy the NYSERDA Home Energy Management Management Systems.” November 2017 Simple payback periods ranged from System Savings Validation Pilot report.seven to 12 years, depending on baseline Ian Metzger is a seniorconditions. Adding an incentive through program development engineer at Lockheed Martin Figure 3. HEMBSasWe hLooaled-SHimomulaetiSona:vAivnegrasgPeoWtehnoltei-aHloCmoemPperacreendt StaoviOngcscupancy Energy, where he designs energy efficiency programs 100% and leads the analysis of emerging technology 90% research. He works directly with utilities to develop 80% innovative solutions for evolving energy efficiency programs.Savings of Occupancy (%) 70% Bradley Piper is a project manager at 60% Lockheed Martin Energy. 50% Ryan Moore is a project manager at New York State Energy Research and Development Authority. 40% 30% 20% 10% 0% 12:00:00 A1M:00:00 AM2:00:00 A3M:00:00 A4M:00:00 A5M:00:00 A6M:00:00 A7M:00:00 A8M:00:00 A9M:00:00 A1M0:00:00 A11M:00:00 A1M2:00:00 P1M:00:00 PM2:00:00 P3M:00:00 P4M:00:00 P5M:00:00 P6M:00:00 P7M:00:00 P8M:00:00 P9M:00:00 P1M0:00:00 P11M:00:00 PM Weekday - % Savings Weekend - % Savings Weekday - Occupancy Weekend - Occupancy 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 |

RECALCULATING! CONTINUOUS PROGRAMALLOWING DATA TO DRIVE EVALUATION IMPROVEMENTOF ENERGY EFFICIENCY PROGRAMSBY MICHAEL NOREIKA Milepost 4: Milepost 5: Create dashboards Report resultsBegin Route: What Milepost 1:are we trying to Establishaccomplish? stakeholder team Milepost 6: Monitor changesMilepost 2: Milepost 3:Prioritize Establish KPIsobjectives Do you remember the days before evaluate our energy efficiency programs. About a year ago, PSE began toGPS navigation? I was a bit late to the To do that, we first asked ourselves, “What question the status quo of our energysmartphone era, and it was not very does GPS navigation really do?” Or rather, efficiency evaluations. Two poles of thoughtlong ago that I had to painstakingly write what value does it provide drivers? Sure, emerged: 1) We are required to evaluate.out directions on scrap paper or sticky you can input an address and off you Therefore, we need only evaluate to thenotes before hitting the road. The system go, but I contend that the real value of level necessary for compliance; and, 2)worked well as long as I didn’t miss any navigation software lies in its ability to We are required to evaluate. Therefore, wesignage or miss any turns. When I didn’t take in and synthesize a lot of data and owe it to our funders, the customers, tostay true to the directions or perhaps respond immediately to new inputs and maximize the value of those evaluations.wrote those directions incorrectly in changing conditions. Therefore, we asked, We realized that, indeed, our evaluationsthe first place, I was quite literally lost. “How can we apply those same design can provide more timely and moreMercifully those days are over, and now I principles to our evaluation efforts?” meaningful results, while also meetingcan confidently hit the road with only my EM&V regulatory compliance requirements.keys, my phone, and my end destination. Searching for a New Route To start, PSE set an objective in our 2018- Can you imagine your GPS telling you Ideally, an evaluation effort at PSE would 19 program cycle to evaluate programs notabout a missed turn 20 miles ago? Well, be integrated and in sync with the program as they operated last year or the year before,in many ways our evaluations at Puget planning and implementation cycle. but rather as they are currently operating.Sound Energy (PSE) do just that. Because Program implementation for each program We developed a framework consistent withconclusions and adaptive management planning cycle at PSE begins in every even the developmental evaluation principlesrecommendations rarely are available in year (e.g., 2018, 2020, 2022, etc.), and established by Michael Quinn Patton intime for concurrent program planning, program planning for the next two-year his 2011 book “Developmental Evaluation:they carry little value beyond regulatory cycle ends sometime in the third quarter Applying Complexity Concepts to Enhancecompliance. More often than not, the most of every odd year (e.g., 2019, 2021, 2023). Innovation and Use.” Whereas traditionalrecent evaluation results available for We realized the most valuable evaluation evaluation answers the summative (“whatprogram planning are at least two years results are the results available for the next happened?”) and the formative (“howold (i.e. one full program cycle removed). two-year planning cycle. However, by the did those things happen?”) evaluations, time most evaluation results are available, developmental evaluation attempts to PSE has challenged our evaluation group we have already missed the window to answer “what should we do next?”to, essentially, emulate the best principles influence the next two-year cycle.of GPS navigation in the context of how we www.aesp.org | 2018 23

In this developmental approach, we rely tracking more complex metrics, such as Similarly, tracking KPIs will help uson near-real-time program performance variance in realization rates and relative understand whether programmaticin order to focus evaluation efforts. Key precision of energy savings estimates adaptations are indeed making a differencequestions we typically ask include: Are as shown in Figure 1. The figure shows (e.g., are realization rates improving?)we effectively reaching our customers? Is realization rates for two representative We assess what is happening, assessthe program tracking toward its goals and custom energy efficiency projects on how it is happening, and use the KPIs toobjectives? Are we realizing the energy the left, and a composite program-level develop experiments to determine why it issavings we expect? This approach is in realization rate on the right. The figure on happening and what, if anything, PSE shouldsignificant contrast with how PSE has the left provides early insight into what the do differently in the next program cycle.historically conducted its evaluations. program is achieving in terms of savings.Typically, we would take each program, Likewise, if (okay, let’s be honest, when)deconstruct it, assess its impacts, and Value of Converging and Diverging conditions change during the evaluation,compare what we thought would happen Relative Precision Boundaries the developmental approach enablesto what actually happened. This is akin to the flexibility to adapt to those changingasking your GPS to recalculate a route after The advanced data analytics is one of conditions. Much like the app Waze, ratheryou have already arrived at your destination. the tools in our toolbox that allows us to use than merely course-correcting, the data current and relevant data to gain insights can show a different, better route for the In order to get to an answer “what into our programs and to influence current evaluations and program implementation.should we do next?” we still need to know program delivery. We can do this because For example, when we begin evaluations,what happened and why those things we have these early insights long before we know the objectives from a regulatoryhappened. However, the distinction the final analysis is presented in report compliance perspective. Primarily, thesebetween PSE’s status quo approach form. The project implemented earlier in are the “what” (i.e., energy savings) and theto evaluation and our new approach is the year has converging relative precision “how” (i.e., delivery process). However, wethe idea of using the most recent data boundaries, meaning that we are confident do not know the appropriate times to askavailable to influence the answer. in the evaluation estimates early (after “why” the what and the how happened. about five months). This doesn’t necessarily We rely on the data to signal those times.Recalculating...with the mean we are realizing the savings wehelp of KPIs expected, but those data tell us a lot about Re-envisioning the the accuracy of our savings projections and Traditional EM&V Report PSE, with the support of our evaluation the efficacy of program implementation. Weconsultant, Opinion Dynamics, is in can confidently make decisions about our Data and information aren’t helpful ifthe process of developing a near-real- programs and no longer have to wait for no one sees them. Evaluation reports cantime key performance indicator (KPI) the evaluation to be completely finished. be excessively long, laden with esoterictracking system. The tracking system vernacular, and downright anachronistic.enables us to keep a finger on the The graph on the right in Figure 1 tells a Again, much like a GPS, “turn left in 200pulse of each program and provides a different story. This project, implemented feet” conveys the actionable information incontinuous data stream used to influence later in the cycle, has diverging relative a straightforward manner. Imagine a GPSprogram planning for the next cycle. precision, which indicates several notification that instead said something possibilities: insufficient data, occurrence of like, “in 200 feet, after you pass the The evaluation KPIs vary by program, and a non-routine event since implementation, restaurant on the left, I have determinedeach program’s logic model and program or something wrong in the reported savings through a complex algorithm usingtheory prescribes the KPIs of concern. estimate. The data will not tell us precisely geospatial data, known traffic patterns,Foundational KPIs include realization rates the issue, but the data will tell us that and estimated driver reaction time, thatof energy savings, customer satisfaction something needs further investigation. you will want to turn left in 200 feet.”with program experience, and actualresource acquisition costs. We are alsoFigure 1. Graphical representation of real-time tracking of project-level and composite program-level realization rates Real-Time Realization Rate (Cumulative) - Individual Projects Real-Time Realization Rate (Cumulative) -Program1.25 1.25 1.25 1.251.20 1.20 1.20 Bound Upper1.15 1.151.10 P_544559 1.10 1.201.05 1.15 1.05 Bound Lower 1.151.00 1.00 1.100.95 CR-DM_539429 1.10 0.950.90 1.05 0.90Realization Rate (Reported/Actual)0.85 0.85 1.05 Realization Rate (Reported/Actual)0.800.800.75 1.00 0.75 1.00 0.95 0.95 Jun 2017 Jun 2017 0.90 0.90 0.85 0.85 0.80 Jul 2017 Aug 2017 Sept 2017 Oct 2017 Nov 2017 Dec 2017 0.80 Jul 2017 Aug 2017 Sept 2017 Oct 2017 Nov 2017 Dec 2017 0.75 0.75 Jan 2018 Jan 201824 Association of Energy Services Professionals

For PSE and other utilities, I have Figure 2. Infographic reporting of evaluation resultscontributed to evaluation reports thatwere in excess of a hundred pages. We developmental framework such that the 3. Prioritize the objectives based on theconducted some research internally results will be used to determine the future value each activity adds to programand found that, although many people state of our programs rather than only planning.reference evaluation reports, only one to looking backward. The ability to do so willtwo people, on average, actually read any afford us higher certainty in our energy 4. Establish a set of KPIs that will be usedgiven evaluation report in its entirety. savings estimates and granular insights into to measure program performance via market segments and energy efficiency real-time evaluation. To address this problem, we challenged measures, which ultimately will lead to moreour evaluation consultants last year to cost-effective delivery of our programs. 5. Create dashboards that all keycondense the reports into a succinct, stakeholders can access toinfographic-like summary, as shown in Are your evaluation efforts looking monitor KPIs.Figure 2. The response from program more like a rear-view mirror than aimplementation staff was overwhelmingly dashboard GPS navigation system? 6. Establish a regular process for reportingpositive, and we now look to develop Here are six tips for recalculating your results and action items.infographics as a regular output of the EM&V route for the betterment of yourevaluation tracking dashboard. Via the programs and your customers. 7. Execute and monitor program changes.condensed reporting style, programimplementation staff knew precisely the 1. Ask and answer: Michael Noreika is aimpacts of their programs, the efficacy of senior analyst in thetheir efforts, and ways to operationalize a. What are we trying to accomplish in Resource Planning andcontinuous improvement. For example, one this evaluation? Load Research groupof our programs needed to know about at Puget Sound Energy.non-energy impacts for cost-effectiveness b. How can we get the most value out of Prior to his current role,calculations of certain measures, and the this evaluation? he managed evaluationsone-pager provided all of the important of energy efficiencyinformation rather than that same 2. Gather a cross-functional stakeholder programs at Pugetinformation buried in a lengthy report. team together to establish objectives Sound Energy and as a for how evaluation reports will be used consultant for many other utilities.You Have Arrived in real-time program planning.at Your Destination Although the transition from status quo tothe developmental framework is ongoing,PSE’s programs have already benefittedfrom the approach. Program staff has aclearer understanding of the objectivesof the evaluations and have been able tostrategically manage programs knowingthat timely and useful evaluation resultswill be available in support of the planningprocess. Our current pilot programs aregood examples of this framework inaction. With real-time evaluation, we willbe able to gather valuable performancedata concerning the pilots well beforewe ultimately need to decide whetherto continue or stop the pilot in the nexttwo-year cycle. As with pilot programs, theframework also benefits existing programsthat include projects with custom-calculated, above average, or impreciseenergy savings estimates. By analyzingsuch projects under the framework,PSE can determine which projects areunder- or over-achieving, assess whetherthe results are systemic to the programor particular to the project, and determinewhether a post-M&V investigation of thoseprojects could mitigate any associated riskto the program meeting its objectives. What does all of this mean for PSE andour customers? We believe that we canuse data to adapt our programs and testthose adaptations in a timelier manner.We can pursue evaluation results in a www.aesp.org | 2018 25

BATTERY STORAGE main issue with these options is their lack of flexibility. They are purpose-driven andIS THE FUTURE OF THE GRID can only meet one or a select few needs.BY TOM TATE On the other hand, there are batteries. Batteries store renewable energy in its The growth in renewable energy sources Here is where intermittency raises its ugly native form if you will, electricity. Storedcontinues as technological advances, head. All renewable energy sources rely electricity can be used for any purposefinancial incentives, and user acceptance on nature for their “fuel” – sunlight, wind, just like what your local utility suppliesand demand influence the market. In certain moving water. Unfortunately, nature does from its conventional fuel sources. And itareas of the Upper Midwest, wind is now the not provide any of these in an absolutely can be stored for a considerable length ofleast expensive energy source available to steady manner that equals the electricity time. This is remarkable as electricity is autilities. Yet for all its promise, renewables from conventional power plants. People in commodity with no shelf life; it is either useddo have an Achilles heel ­-­ intermittency. the Plains States will tell you the wind always when produced or is lost. Batteries give blows. It may seem that way but the speed electricity the shelf life it never had before. The electric grid in North America is one is incredibly variable. And of course, solarof the most stable in the world, a remarkable does not generate after the sun sets. Nor This leads to another aspect of gridfeat considering it is without question the do river generators work when water flow management and energy supply, whenlargest, most complex machine ever built. diminishes due to drought or other issues. demand increases, the grid operators callAnd the individual utilities that make up the for generation to come online. Batteriesgrid have done such a good job providing The solution to intermittency is storing offer an alternative to dispatching fossil-uninterrupted power that most people take the energy when it is available, for use when fueled generation sources by having storedthe availability of electricity for granted. it is not. Storage has taken many forms energy available to meet unexpected including heat, ice, and compressed air. The demands. Imagine the way the grid management process would level out with batteries charged during low demand periods being instantly available for use in high demand situations. Even gas fired turbines require some time to spin up and start generating. Batteries do not. Battery technology continues its rapid evolution. Where lead acid was king a few years ago, lithium ion (Li-ion) is now the preferred technology for more and more applications. And the evolution is not stopping with Li-ion. According to Science Daily1 , a team of researchers lead by Texas A&M have, “discovered an exceptional metal-oxide magnesium battery cathode material, moving researchers one step closer to delivering batteries that promise higher density of energy storage on top of transformative advances in safety, cost and performance in comparison to their ubiquitous lithium-ion (Li-ion) counterparts.” Safety is an issue with batteries as the recent ban on certain consumer products from airline travel indicates. Li-ion batteries use a flammable chemical and lead acid batteries produce gas during operation necessitating proper ventilation when used in an enclosed space. New tech appears poised to eliminate this issue. Battery storage can be located in the grid either in front of the meter on the utility’s side, or behind the meter on the customer’s side. Utility scale batteries in front of the meter are ideal for grid stabilization and balancing demand. These installations can be in the megawatt and larger sizes and can provide power to seamlessly compensate for normal utility actions including relay and recloser operations, switching actions, and other events that typically create blinks and outages of very short duration. If demand spikes, these energy resources can provide26 Association of Energy Services Professionals

power in the place of spinning up fossil- Consider the potential for utilities a challenge and opportunity for utilities. The challenge is keeping them fromfueled peaking units. Figure 12 provides a and consumers with readily available charging during peak demand periods. Creative rate designs are already beingforecast of when utility scale batteries will battery storage at the very edge of the used to incent recharging off peak.overtake gas-fired peaking units in terms of grid. Individual customers can take The opportunity comes from treating the vehicles as DERs and using the samecost. The future appears to lie in batteries the intermittency out of their personal aggregation techniques as with consumer- size battery installations. Pilot programs infor meeting peak renewable installations Hawaii4 are testing these concepts as part of their effort to have 100% of their powerdemand and providing and utilities have supplied by renewable sources by 2045.improved power quality. ROLES FOR BATTERIES the opportunity to Batteries truly represent the next step aggregate these in the evolution of how electricity is These installations ➤➤ Absorb demand assets and manage supplied and it is increasing the percentagecan also be charged fluctuations to clip peaks them as distributed of renewable energy sources in utilityusing renewable and fill valleys. energy resources fuel mixes. Dropping prices, continuingenergy during off peak (DERs). Managing DERs technological advances, mass marketperiods. For example, in ➤➤ Correct distribution level involves aggregating distribution, and utility involvement areCalifornia where there Power Quality issues like these widely dispersed all coming together to help the evolutionis a high penetration of phase imbalance, voltage energy assets and continue. There is still disagreement onsolar, solar production sags, etc. selling their electrical when all this will take place but not muchpeaks at the same capacity and ancillary disagreement that it will happen. The futuretime demand typically ➤➤ Provide ride through in the services on the looks very bright indeed for batteries tofalls. Rather than waste event of grid power loss; energy market. fulfill the promise of renewable energy.that production, it can momentary or extended.be used to charge They can also be References ➤➤ Store low cost off peakthese large battery utilized in the same 1 https://www.sciencedaily.com/ releases/2018/02/180205195603.htminstallations. In a electricity for use on peak. manner as utility scale 2 GTM Research presentation of Crowd-Sourced Insightssimilar manner, wind ➤➤ Allow aggregation of batteries to stabilize from Greentech Media’s 2017 Energy Storage Summit,peaks overnight when assets like EVs to serve as the grid and meet January 2018demand is truly its large power and ancillary short term powerlowest. This provides service sources. needs. Utilities can 3 http://www.businessinsider.com/tesla-selling-the perfect opportunity develop demand powerwall-solar-panels-home-depot-may-help- business-2018-2to take advantage of response programs 4 https://www.metering.com/news/renewable-energy-the excess by charging around these batteries adoption-heco-doe/batteries system-wide. in the same way they Tom Tate is the president of Well Crafted Customer side of the meter battery currently control when certain loads (water Communications, a practiceinstallations have been traditionally heaters, air conditioners, pool pumps) focused on researchingtied to rooftop solar and consumer come online and use energy. For example, and writing articles andscale renewable installations, providing these batteries could be charged with off reports for the electric utilitybackup power and storing system peak power for use during peak demand market space, specializingoutput for use when the renewable without a renewable source as part of the in energy efficiency, energyasset is not producing. With the recent installation. Utilities could distribute these conservation, load reduction,announcement3 that Tesla is partnering small “generation” assets all across their smart grid/Grid 3.0,with Home Depot to market its Powerwall service territory and reap considerable distributed energy resource management and renewables.and Solar Roof (solar shingles) products, operating and financial benefits. He gained his experience during more than 25 years working for both IOU and cooperative distribution andthe behind-the-meter battery opportunity No article on the future of battery-based transmission utilities.has just taken a giant step forward. energy storage would be complete without including electric vehicles (EVs). When connected to the grid, EVs represent both FigBuarsee1:CBaasseeLCeavseeliLzeevdelCizoesdt Coof sEtnoefrEgnyergy PeaPkeinakginGgaGsaCsoCmobmubsutsiotinoTnuTrubribnienevsv.s4. 4hhr rLLi-ii-oionnBBaatttteerryy SSttoorraaggee(($$//MMWWhh) )$140$120$100$80$60$40$20$0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2018 Gas CT 4hr Battery Storage www.aesp.org | 2018 27

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ARE NON-WIRES SOLUTIONS THE NEXT BIG THING AND IF SO WHAT DOES THAT MEAN FOR OUR BUSINESSES? BY GREG WIKLER, ROBIN MASLOWSKI, TIM STANTON AND JAY PAIDIPATI As distributed energy resource (DER) or transformers, by reducing load at a However, more creative solutions aredeployments grow around the country, substation or circuit level.”1 This article being explored to address infrastructureutilities and policymakers are beginning to outlines how NWS is working in today’s needs at a lower cost with higherrecognize the importance of being strategic changing electric grids and identifies a customer and environmental benefits asand mindful of the timing and extent of number of NWS case studies that will help grid management and DER technologiesDER deployments. Non-wires solutions affirm why we think NWS might be the next continue to rapidly advance. Utilities now(NWS) represent a process that helps to big thing for energy service providers. look to increase customer engagementfacilitate the deployment of DERs. Navigant and provide more value-added services,Research defines NWS as: “An electricity Traditionally, when a transmission or as policy concerns related to costgrid investment or project that uses non- distribution system operator had a need and the environment have grown.traditional transmission & distribution (T&D) to upgrade or replace infrastructuresolutions, such as distributed generation, due to aging equipment or load growth, As an example of this, Figure 1 illustratesenergy storage, energy efficiency, demand they would procure new equipment how the value of demand reduction fromresponse, and grid software and controls, on which it could earn a regulated rate certain customers may be higher if thereto defer or replace the need for specific of return. No thought was given to is an upstream constraint on the T&Dequipment upgrades, such as T&D lines alternatives in addressing the issue; it was system that can be relieved by reducing simply seen as replacing equipment. the net load downstream with DERs. The distribution substation in the middle ofFigure 1. Locational Value of Demand Reduction to Relieve T&D Constraints the diagram is projected to be overloaded in the near future (marked by the red CENTRAL GENERATION “X”). Downstream of this constraint, there is a load pocket (marked by customers DERS ARE USED TO with green DER icons) where the value OVERCOME THE of reducing demand2 is higher than other areas on the system where there CONSTRAINTS is no T&D constraint. Similarly, on the right side of the diagram, a transmission TRANSMISSION SYSTEM constraint is depicted with an expanded load pocket due to a higher number of TRANSMISSION customers downstream of the constraint. CONSTRAINT In load pockets that have a high DISTRIBUTION SYSTEM value of demand reduction, utilities may consider offering targeted and focusedDISTRIBUTION customer incentives and conduct CONSTRAINT targeted marketing campaigns to drive faster adoption of demand-reducing CUSTOMERS technologies and utility-funded DER programs. Utilities can justify these higher incentives because of the location-specific benefits that these measures provide. www.aesp.org | 2018 29

When is DER Appropriate to Alternative Solution ■■ Is the NWS portfolio less costly thanDefer T&D Upgrades? Characteristics the traditional solution? In some instances, the NWS portfolio may As more and more utilities consider On the other side of the equation, screen as cost effective, but still beNWS as an alternative to traditional T&D the utility must assess the potential more costly than the traditional solution.investments, there are an increasing number availability for DER within the localizedof case studies in which DER is shown to area of need to determine whether these ■■ What are the overall effects onbe more cost effective and timely than a resources can fully offset the traditional the company’s bottom line (e.g., intraditional T&D investment—and vice versa. solution during all hours of need. This terms of shareholder value) from anThe suitability of a NWS solution to meet demands a more detailed understanding NWS versus a traditional solution?an identified system need is a function of of localized customer characteristics and Under certain regulatory conditions,assessing the costs and time to implement equipment saturations than is typically investment in capital T&D upgradesthe traditional solution in comparison with captured within DER programs. may look more attractive thanthe NWS. It is a vital analysis to balance investment in DER from the perspectivethe consideration of DER to meet system The most important aspect of assessing of regulated rates of return.needs against the mandate to provide the viability of alternative solutions issafe, reliable and affordable service to collecting granular (e.g., feeder-level) ■■ Does the NWS portfolio providecustomers. This assessment begins by data that focuses on: sufficient reliability, as compared to thedetermining the suitability of the T&D need traditional solution?for deferral, then evaluating the localized ■■ Customer demographics (e.g., sector/customer characteristics and equipment segment, income, etc.). In a simplified analysis, the “nameplatesaturations to support DER adoption. capacity” of each DER measure must ■■ Current saturation of DERs (e.g., be converted into “firm capacity” beforeTraditional Solution percentage of efficient lighting, portion calculating the T&D benefit associatedCharacteristics of customers with plug-in electric with the demand reduction. For example, vehicles, etc.).3 a solar PV system rated at 10 kW of To determine whether a specific T&D nameplate capacity may only provide 1investment can effectively be deferred by DER ■■ Technical potential for DER uptake (e.g., kW of firm capacity to the T&D constraintand would be suitable for an NWS, example rooftop square footage available for due to variations in weather and cloudcriteria for consideration could include: solar PV). cover, coincidence with the timing of the constraint, the length of the constraint, andProject Type Suitability: Determines if ■■ Hourly load shapes for available other reasons. For more rigorous analyses,project needs are appropriate for DER. resources and how those align with the one should compare the shape of the local area T&D need. constraint to the “firm” impact shape of each ■■ Project is needed for load relief measure on an hourly or sub-hourly basis to and/or reliability. In conjunction with robust cost curves determine if the “need” is met at all times. for each DER, this granular data lays theTimeline Suitability: Used to assess foundation for the current market state Case Studieswhether there is sufficient time to conduct and can even provide indications of futurean NWS solicitation and implement before uptake by translating customer demographic One recent example of a successful NWSrequired in-service date. data into indicators on the propensity for project is Consolidated Edison Company of adopting various DER technologies. New York’s (Con Edison) Brooklyn Queens ■■ Large projects (e.g., projects on a major Demand Management (BQDM) Program.4 circuit or substation and above) must be With this foundation, similar methods Con Edison has very high T&D infrastructure 36-60 months. to those used in potential and forecasting costs and developed a DER program to help studies (e.g., diffusion modeling, discrete defer upgrades in several parts of its territory ■■ Small projects (e.g., projects that are choice analysis, etc.) can project forward through a variety of DER solutions, including feeder level and below) must be the relative adoption of DER technologies demand response, distributed solar and 18-24 months. at a granular, localized level. battery storage. Con Edison pursued this initiative on its own, but other utilities areCost Suitability: Considers the likelihood of Comparison of Traditional beginning to receive regulatory directives toan NWS to be cost effective. and Alternative Solutions pursue NWS. A recent example includes the California Public Utilities Commission (CPUC) ■■ Large projects have no cost floor. Once the available capacity and denial of a request by Pacific Gas and associated costs are understood for the Electric (PG&E) to build natural gas plants for ■■ Small projects must be greater than or potential portfolio of NWS options, the local reliability. Instead, the CPUC directed equal to a certain minimum threshold. NWS options should be compared to the PG&E to procure DER, including distributed traditional solution. Some questions to solar, storage, and DR, to meet local needs. If the proposed project area meets these consider through this process include:suitability criteria, the utility should then On the other hand, it is not alwaysdetermine the annual capacity deficiency ■■ Is the timing of the demand reduction feasible or cost effective to offset T&Dthat would need to be met through DERs, as provided by the NWS coincident with investments with DER. There have beenwell as the avoided costs from the deferred the peak loading of the T&D constraint? recent examples in California and Newor avoided T&D investments to determine York where NWS assessment processesthe benefits assigned to the NWS. ■■ Does the NWS portfolio screen as have been carried out and through the cost effective? Utilities and regulators analysis and regulatory approval processes, typically apply a Total Resource Cost or NWS portfolios were either deemed Societal Cost Test for cost effectiveness unnecessary or were less economical screening of NWS. than the original T&D investments. .30 Association of Energy Services Professionals

What Does This Mean There is no one right answer for all Greg Wikler is a managingfor our Businesses? situations; each case will depend on the director for Navigant where utility’s internal structure and capabilities he directs studies of DER At this early stage in development, along with the regulatory construct in which market forecasts andthere is no standard business model it operates. But we see ample evidence the development of NWSand procurement process for utilities to throughout North America that NWS portfolios for utilities.implement NWS. Currently, there are four interest and experience is expanding. Wemodels being considered and tried by expect NWS to play an important role in Robin Maslowski is anutilities. The first is request for proposal the future of distributed energy resources. associate director for(RFP), a typical utility procurement model. Navigant where she leadsAuction mechanisms similar to those used to References studies of DER marketprocure resources in wholesale markets are drivers and NWS programbeing explored by utilities. Another option 1 Navigant Research, “Non-wires Alternatives: Non- designs.being explored is procurement with current traditional transmission and distribution solutions”.demand-side implementation contractors to Q2 2017. Tim Stanton is a managingkeep things simple, quick and transparent consultant for Navigantfor the customers. The last possibility is 2 This demand reduction must be coincident in time where he develops analysisinternal utility resource deployment if with the peak loading of the constraint in order to tools to assess NWSthe utility has the required capabilities. provide these T&D benefits. feasibility and viability. Evaluating NWS will require a different 3 The saturation of energy efficiency measures can Jay Paidipati is a directorapproach than traditional DSM projects. not only help inform the potential for further energy for Navigant where heMetering will extend beyond customer efficiency uptake, but can also inform the savings directs studies of DERbuildings and include distribution and baseline for measures within an NWS (i.e., as an technologies and resourcespotentially transmission level data to “existing conditions baseline”). In many jurisdictions, suitable for NWS portfolios.confirm demand reductions are occurring a utility is only able to claim savings under aas intended. In addition, data collection traditional energy efficiency program for a baselinecannot be done at any time. It will have to unit that is consistent with energy code. However,coincide with the same peak events that within an NWS, it is more appropriate to look at theNWS are trying to reduce. Finally, evaluation savings for replacement of the actual existing unit—will require experience with a broad set which in some cases may have an efficiency that isof technologies, not just EE and DR. below code. 4 https://www.Con Edison.com/en/business-partners/ business-opportunities/brooklyn-queens-demand- management-demand-response-programKNOWLEDGE CONNECTIONSAESP offers Industry Leading TRAINING Introductory CoursesCOURSES for the Advancement of Energy ■■Understanding the Electric Utility Business Today and TomorrowEfficiency Professionals. ■■Introduction to the Principles of Demand-side ManagementConvenience and Savings – For a flat fee, we bring the Evaluation, Measurement & Verificationcourse to your organization. You provide the venue, ■■Introduction to the Principles of Evaluation, Measurement & Verificationwe provide the trainers and training materials. This ■■Level II EM&V: Economics & Evaluationeliminates the cost and logistics of sending your staffaway for training. Whether you have to train 15 staff or Demand-side Management (DSM)50, the cost is the same. ■■DSM Program Manager Workshop ■■How to Build, Implement and Evaluate a Customer Engagement ProgramFlexibility – Our trainers can customize the course to fit ■■Behavior Change & Energy Efficiency Programsyour specific industry or regional needs. You can alsocombine courses to create a unique training curriculum. Marketing ■■Strategic Marketing of your Energy Efficiency ProgramsTeam Building – Everyone learns together, so yourteam has the same points of reference and Professional Skillslearning experience. ■■Leadership Training for Exceptional Team Performance ■■Critical ThinkingContact Suzanne Jones at (480) 704 5900 or ■■Sell Efficiency [email protected] for more information www.aesp.org | 2018 31

SMART THERMOSTAT ON THE WALL, IT COULD BE THE FAIREST EFFICIENCY MEASURE OF THEM ALL BY ABIGAIL DAKEN AND CLAIRE MIZIOLEKIntroduction: established ENERGY STAR® certification happens in any particular home is hard to for them, and as of May 2018, there are predict, though the savings of groups ofYou can read more about smart thermostats more than 18 million households covered homes are predictable. Second, a smartin an article by the same authors in the July by efficiency programs that offer rebates on thermostat consists of the thermostat2018 issue of Strategies, AESP’s e-magazine ENERGY STAR®-certified smart thermostats. device (hardware) in combination withfor members. Members can log-into the AESP However, smart thermostats differ from a service offered through the CloudResource Library to download the issue. traditional widgets in some ways, and also connection, which provides wide scope offer significant scope beyond widget- for innovation and a window into howMore than a Widget, More than based efficiency, which can be realized customers use the thermostat. Thirdly,Energy Efficiency by devices even after initial installation. smart thermostats are constantly updated with new software and firmware, so their As examined in detail in the July 2018 To review, there are three specific service offerings are open to change. Toissue of Strategies, smart thermostats properties that make smart thermostats learn more about these differences, andcan be relied on as widgets by energy different from other energy savings devices. about the ENERGY STAR® certification,efficiency programs. In fact, EPA has First, as a control technology for which please see the Strategies article. user behavior impacts savings, what In this article, we will discuss how smartAvailable Rebates for ENERGY STAR® Smart Thermostats thermostats are much more than just widgets. They have the potential to do WA MT ND ME a lot more than reliably save energy. In WY SD fact, since smart thermostats are a portal OR NE MN VT for service offerings, their full potential is ID WI still largely unexplored and untapped. KS NY NH IA MA Right now, they offer the opportunity IL MI CT RI to shift load to off-peak times, within the limits of keeping people comfortable. NV UT MO IN OH PA While there is still some work to be doneCA WV NJ on how to capture this value, the capability DE exists in every smart thermostat product. KY As a dramatic demonstration, Nest used its CO VA MD population of smart thermostats to dial back load during the August 2017 solar eclipse to AZ NM OK AR TN NC account for reduced solar generation. This, TX MS in and of itself, makes smart thermostats aHI SC double win, once for bulk energy savings AK LA and once for peak power demand. AL GA But the potential doesn’t end there. FL Smart thermostats are detectives. They record detailed data (at five-minute intervals Rebates Available or less) on temperatures inside the home No Rebates Available and can detect whether heating and cooling are on. They can see if the homeSmart Thermostats Offered by: cools quickly once the heater turns off, indicating a leaky envelope. Furthermore,AEP Ohio ComEd Focus on Energy PPL Electric UtilitiesAmeren Illinois Consumers Power Inc. Hawaii Energy Puget Sound EnergyAvista Dayton Power and Light Indianapolis Power & Light SMECOBaltimore Gas & Electric DC SEU Mississippi Power SMUDCenterpoint AR Delmarva Power Missouri River Energy Services Snohomish PUDCenterpoint OK Efficiency Smart New Mexico Gas Company UGI UtilitiesClark Public Utilities Efficiency Vermont Pacific Gas & Electric Vectren IndianaColorado Springs Utilities Efficiency Works Pepco Vectren OhioColumbia Gas of Ohio Energy Trust of Oregon Potomac Edison (FirstEnergy)32 Association of Energy Services Professionals

once work has been done to improve a W hile smart thermostats Where do we go from here?home’s envelope, the thermostat can help provide a tremendousconfirm the impact of that action. It can amount of data and We’ve already mentioned a varietyalso see if equipment is quickly meeting information, one thing they cannot of interesting and valuable directions tothe temperature demand, then cycling tell us definitively is what the explore based on the approaches nowfrequently, meaning that it’s oversized for energy use pattern was like before being used for smart thermostats. However,the home. These are just a few examples the thermostat was installed, also we’ve concentrated on the potential forof the potential of smart thermostats to known as the baseline case. One bulk energy savings – reducing total kWhserve as diagnostic tools. None have been approach to overcome this barrier used. Thinking to the future of a cleantranslated into practical business models is to use information about the grid, when and where electricity is usedyet, but they are perfectly feasible. We are way products are used in general will rival how much is used in determiningjust starting to scratch the surface of smart to establish a reasonable guess for the cost and environmental impact ofthermostat’s potential; as these devices a group of homes. For instance, electricity production and distribution. Forbecome familiar fixtures in homes, all of EPA used the assumption that instance, as long as one can heat water inthese possibilities are likely to be leveraged, homes would be kept at a constant a water heater when the wind is blowingand more will arise. The Vermont Energy comfort temperature all the time, locally, the amount of hot water one usesInvestment Corporation1 and the Fraunhofer with no setbacks at all, without will have little impact on how much it costsInstitute2 are already working on making the use of a smart thermostat. to generate and distribute electricity tothis a reality through research and the This example illustrates that an heat it. You can take your own guess as todevelopment of open source data analysis unrealistic baseline can be effective when this future will arrive, and the pacecode and analytics. Smart thermostat in differentiating products, but the will surely vary by location, but there ismanufacturer ecobee is providing claims made based on savings broad agreement that we will get there.anonymized thermostat data to researchers estimates from such a baseline needthrough their Donate Your Data program3 to to take into account how meaningful So, in this future, how will we think abouthelp facilitate new uses for thermostat data. that baseline is. As more products all widgets? There’s a lot of work ahead of are evaluated using field data from us to understand how the whole system willSmart Thermostats, Widgets, and the products themselves, other work, but capabilities such as those offered methods to establish baselines will by smart thermostats – to communicate,the Future of Energy Efficiency control, shift load, and gather data – will no doubt be explored. surely be important to system coordination. Smart thermostats represent the future For now, smart thermostats offer a greatof energy efficiency in their energy savings water heating. If your smart thermostat solution for the widget-based paradigm ofpotential in addition to being a fairly knows that you are not home, it will adjust today and the energy needs of the future.traditional widget in some ways. For energy your HVAC accordingly; but if the thermostatefficiency and other energy services, access could also turn off your smart lightbulbs, Referencesto field data — which reveals how products smart speaker, dial back the smart waterare actually being used in homes — opens heater, and turn off your smart TV, imagine 1 http://www.veic.org/resource-library/smart-thermostat-up possibilities for improved understanding the additional energy savings potential! analytics-toolkitof energy savings attributable to efficiencyprograms. There are other controls that Smart thermostats are not the only way 2 https://energy.gov/sites/prod/files/2017/04/have the potential to lead to energy to sense occupancy in a home, but the f34/10_11150d_Roth_031517-1330.pdfsavings and an approach like that used by products on the market have focused onEPA’s ENERGY STAR® program for smart answering the question of occupancy as a 3 https://www.ecobee.com/donateyourdata/buzz/thermostats could potentially be used for key strategy to save energy. Home securitythese products. For instance, refrigerator systems are another great way to reliably 4 https://arpa-e.energy.gov/sites/default/files/documents/capabilities that could result in fewer door understand home occupancy, and there are files/SENSOR_Project_Descriptions_Final.pdfopenings, or dryers that encourage use of opportunities for other smart home productslonger, lower heat settings. Water heaters to work together to understand what energy Abigail Daken is ancould be optimized for the benefit of the may be saved. A recent Department of environmental engineer ingrid as well as taking into account common Energy (DOE) project under the ARPA-E the ENERGY STAR® Programpatterns of water use. Home energy program called Saving Energy Nationwide at the U.S. EPA where shemanagement systems are, of course, an in Structures with Occupancy Recognition led the development of theobvious example. The stickiest problem (SENSOR) recently awarded funding to ENERGY STAR® specificationwith all of these is establishing a baseline six companies and research organizations for connected thermostats,for what energy use would have been to develop low-cost human presence in addition to managing thewithout the presence of the smart device. sensors for residential use.4 Perhaps these ENERGY STAR® portfolio of cutting-edge occupancy-sensing and HVAC products. As we move forward with smart products HVAC control technologies will eventuallyin the home, the ability to have one supplement or even replace the role of a Claire Miziolek is the seniorcentralized “brain” sending signals to smart smart thermostat in tomorrow’s home. manager of technology anddevices throughout the household becomesmore and more important – both for market solutions at thehomeowner convenience and for improved Northeast Energy Efficiencycomfort and efficiency. Occupancy Partnerships (NEEP). Clairesensing becomes the first line of defense inmanaging the on/off signals for a range of manages NEEP’s work insmart products – from outlets, electronics, state and federal appliancesmall appliances, HVAC, lighting, and even standards, home energy management systems, and emerging commercial sector business models. www.aesp.org | 2018 33

P4P PAY-FOR-PERFORMANCE: AN ENERGY EFFICIENCY PROGRAM FOR THE UTILITY OF THE FUTURE BY VAL JENSEN You’ve seen them around the office – and the lives improved. And then, in the that gap cost-effectively (we use technologybeen with them in meetings. The ones who most respectful manner, they should be in its broadest sense to represent behavioralbear no resemblance to the faded pictures asked to start thinking about their next modifications, devices and processes).on their security badges. The ones who’ve phase – seriously thinking. They need to go,learned what to say to the boss when he’s if the institution of energy efficiency – the Third, we design a way to get thatin that mood; who never speak up when collection of beliefs, concepts, policies technology adopted or installed. Sometimes,they’re obviously wrong. They have almost and even people that we care about – is we can work upstream with manufacturers40 years in, but wouldn’t know what to do if going to be able to reinvent itself for a world or distributors to change the technologythey retired. They do enough to stay under that is so much different than the one the offered to the market. Other times wethe radar – they’re even solid performers; institution was originally built to serve. work with manufacturers to change thebut you really wouldn’t want them on efficiency standard that products offeredyour new product development team. The Energy Efficiency to the market must meet. Many times,They love to talk and they do have some Program Persona we need to convince actual customersgreat stories that they frequently repeat. to adopt the technology. This requires us The current practice of energy efficiency to find ways to get customers’ attention, “They” are the energy efficiency/DSM programming follows relatively standard and convince them of the value of adoptingprograms that we’ve grown to know, built well-honed processes. First, we determine the technology, and get them to installcareers around, met new people through, where people, devices and buildings are not a device or change a behavior. The finaland thought we might help save the world currently as efficient as they could be. In its step in the EE process is to estimate howwith, and “they” need to go. They should most complete form, this process involves much energy was saved by the program.be thanked for all they’ve done; for the study of efficiency potential. Next, wepower plants avoided, the billions of dollars identify a technology that we believe can fill This approach was developed aroundsaved, the tons of carbon not emitted, the late 1970s-early 1980s in early adopter34 Association of Energy Services Professionals

states and by pioneering EE consulting 2. The current approach to program pressure will puncture the protectivefirms. Certainly, we’ve become more design and implementation is inflexible. bubble that surrounds utility-administeredsophisticated in how we estimate potential Typically, energy efficiency programs programs. Alternatively, we can disruptand we’ve become more creative in are proposed as parts of plans filed ourselves and reinvent the energy efficiencyprogram design. The movement upstream with regulatory commissions. Once program for the utility of the future.with lighting programs represented a accepted by the commission, theresignificant shift in design that created is an expectation that they will be The Next Generationpowerful scale effects, as did the adoption executed as proposed over a multi-of behavioral programs over the last decade. year period, in-line with how pretty Sure, it’s easy to spot the flaws inWe also have begun to better understand much everything works in the regulated someone or something we’ve known ahow to align program form factors with how utility industry. This doesn’t mean long time. But having been together allcustomers live and work. We try to focus the programs can’t be changed if that time, we also see what has worked;more now on whole-building approaches. conditions necessitate, but the amount the relationship is comfortable if not of change allowed without regulatory perfect. Change generally means, well, Yet, even as we have begun to evolve, the approval is limited. a lot of disruption and uncertainty; if adominant form of administered program is better choice was so obvious, wouldn’t weshaped around an incentive for adoption of 3. Old school design. The EE industry already have made it? Maybe we have.a technology. And, because this program has made huge progress in the useforms part of a portfolio that often is tasked of human-centered design principals Most of us would agree that our goalwith meeting regulatory or legislative in the last several years, and yet the is a continuing, sustainable decrease insavings targets, its form is heavily influenced driving design principal remains to the amount of electricity required per unitby the process to be used to evaluate it. pay customers to adopt technology of desired energy service at the lowestProgram designs that might make it difficult that they otherwise wouldn’t. Ironically, cost possible. And probably many ofto verify net savings are eschewed in favor conventional EM&V requires that this us see our job as being to continue toof those that produce relatively predictable be a driving design principal.2 It is as reduce the amount of carbon emittedsavings. A program administrator’s greatest though we introduce friction into a per unit of energy service. Both goalsfear is ex post evaluation leading to process so that we can overcome it. are straightforward and arguably can beretroactive reductions in savings and to solved for in many ways.4 The principaldisallowance, penalties and/or shame. 4. The delivery of efficiency could be constraint when the solution involves more efficient. This is counterintuitive utility-administered programs is the needPersona Disorder given that recent analyses show to prove that the decrease in electricity use generally that program administrator is attributable to the effect of the program. One of the greatest challenges to costs per saved kWh are declining3, This constraint has been important toleadership is in recognizing that the and energy efficiency remains the ensure prudent spending, but it influencespeople who got you here are not the cheapest way to serve a kilowatt- program design in fundamental ways.ones who are going to get you there. hour’s worth of energy service need. Marketing, incentive and implementation We collectively are better at program strategies and processes are designedSo it is with our EE programs. Here’s why: execution and more refined in the intentionally not just to yield electricity setting of incentive levels than we were savings but to yield electricity savings that 1. The utility industry’s existential crisis. 30 years ago. The problem is that we can be verified (often by some combination The structure of the industry as a still spend a lot of money on program of physically counting and statistical producer (in central station power administration, implementation and analysis) and attributed to the program. plants) and distributor of electricity, marketing; perhaps 20 percent on This is why so many programs for so long is shifting towards the industry as average but ranging up to almost 50 have relied on incenting adoption of hard a network connecting an ever- percent depending on the program. In technology. The technology installations growing array of distributed energy a $6 billion industry, that amounts to can be counted, their performance can service providers and consumers $1.2 billion. be measured and the customer can (an increasing number of which are be made to disclose if the reason they producers themselves).1 We are None of these should be taken as installed the technology was because of tending to overestimate how fast indictments of the performance of the incentive. Good for evaluation; maybe the change will occur, but likely are energy efficiency programs or program not-so-good for our primary goal. underestimating the extent and impact implementers, but each of these represents of the change, as we usually do an exploitable opportunity for disruption. Dating back to almost the dawn of the when it comes to technology-driven Program administrators are obligated by energy efficiency program age is a genre change. The dominant form of energy law, regulation and mission to maximize of program that paid not based on the efficiency program still reflects the electricity savings, and by extension, promised adoption of some technology, industry it grew up in; centralized and customer bill savings, and community and but on the amount of energy saved. targeted at central station generation. environmental benefits from each customer Variously known as a standard offer or It is not aligned with what will be an dollar spent on administered programs. DSM bidding, this type of program was increasingly distributed, decentralized If we wait long enough, the disruptive intended to simplify the administration of and democratic electric power system. efficiency programs; let customers and/ www.aesp.org | 2018 35

P4Por their agents figure out what to do and been managed by program design.6 are possible. When this business began 35how to do it; the administrator simply The market is also designing solutions or 40 years ago, it was full of innovators,needed to be able to verify savings, most from the perspective of end use comfortable with uncertainty and readyoften using evaluation methods based customers and these customers are to knock down incumbent walls. This wason metering data or building simulation. beginning to demand that administered a business that was built to disrupt. And programs adapt to their needs. Pressure it has succeeded. And in so doing, it has These pay-for-performance (P4P) will mount on regulators to allow become the incumbent, tethered to itsprograms have never accounted for more these new solutions to compete with creation story and the way of doing thingsthan a small fraction of most EE portfolios’ traditional program approaches. that was so instrumental to its originalsavings, but that was largely because of success. All I’m saying is that maybe it’sthe challenges with savings measurement. ■■ Energy efficiency increasingly is one of time to knock down some more walls.Those challenges themselves resulted many distributed energy options thatfrom the combination of older metering customers can use to maximize their Referencestechnology, a lack of interval data for welfare. Utility programs are designedmany customers, and immature data with utility objectives in mind and as 1 The crisis itself has been prompted by theanalytics.5 These challenges have not all such will not necessarily align with recognition in many service territories that growth inbeen resolved, but they can be, because: customer motivations. In any case, it electricity use is mostly a thing of the past. is difficult for complex administered ■■ The cost of near real-time interval data programs to adapt quickly to changes in 2 Net energy savings depend on evaluators being able is dropping and will continue to fall. This the market; customers will gravitate to to attribute a customer reaction to a program action. is largely due to increasing numbers of programs that maximize their flexibility. The easiest action to observe, aside from a standard, smart meters being installed. But the is a payment given in return for a reaction such as digital technology now being used for ■■ Challenged with addressing purchasing a more efficient piece of equipment. metering can and will be extended to increasingly urgent environmental and individual circuits and devices. social needs, program administrators 3 See for example, Ian Hoffman, Greg Leventis, and need to maximize the impact of Charles Goldman, Trends in the Program Administrator ■■ Even absent pervasive sub-metering, every dollar spent/minimize the Cost of Saving Electricity for Utility Customer-Funded the data science associated with load administrator’s cost per acquired kWh. Energy Efficiency Programs, Lawrence Berkeley disaggregation is improving at a rapid Laboratory, LBNL-1007009, January 2017. rate, enabling fairly high resolution of The fullest extension of these truths individual building end uses; resolution leads to a world in which customers or 4 The not so straightforward piece is that good enough to measure changes in their agents simply are paid each billing decarbonization will require increased electrification. consumption for major loads. cycle for the value of the saved kWh, and those savings can be held, applied to other 5 For an excellent history and analysis of P4P programs ■■ The industry’s experience with the services or paid forward to the cause of see Putting Your Money Where Your Meter Is: A Study use of treatment and control groups choice. Perhaps the program administrator of Pay-for-Performance Energy Efficiency Programs in in program evaluation is providing becomes a cloud server and implementers the United States, prepared for the Natural Resources increased comfort with the use of become algorithms, both of which are linked Defense Council and Vermont Energy Investment these techniques for measuring net to enterprise data analytics systems. Energy Corporation, NRDC, January 2017. impacts. efficiency program administration will be tightly integrated with utility billing systems. 6 For example, Sealed a New York-based energyThese challenges will efficiency service company, worked with an insurancebe solved because: Postscript company to developed a product to insure Sealed’s energy analytics which are used to guarantee energy ■■ Customers, particularly larger I’ve intentionally generalized, unfairly saving performance. commercial and industrial characterized, leaped to conclusions and customers, are increasingly ignored volumes of contrary evidence in Val Jensen is senior vice frustrated with rigid program getting to that last paragraph. The energy president for customer designs and rules that limit efficiency program as we know it has more operations at ComEd participation. This is manifest in good years left in it; undoubtedly it will where he is responsible some jurisdictions with pressure to outlast a number of us. But our business is for managing delivery of carve-out, or allow opt-outs by, the changing; the core utility business model the company’s customer- largest customers. is being challenged like never before and facing products and those of us in the efficiency business have services. Previously, he ■■ The market is devising a variety to recognize that as the utility industry served as a senior vice of creative solutions to manage changes, so must our part in it. Things president with ICF International, and worked for the performance risk which historically has beyond what we’ve grown accustomed to U.S. Department of Energy and the State of Illinois Energy Office.36 Association of Energy Services Professionals

CASE STUDIES OF INNOVATIONSIN ENERGY MANAGEMENT PROGRAMSBY MEERA SHARMAThe Plan-Do-Check-Act model is a continuousimprovement strategy where each componentinforms the next; and it is especially applicable inthe launching of building energy managementprograms. Presented here are several case studiesfrom across North America – of organizations bothprivate and public – that have demonstratedinnovation or presented solutions in the buildingenergy management space.1. PLAN Case Study: University of California avoid this problem by San Diego Microgrid2 efficiently archiving the The planning stage involves data for later analysis.collecting high-level energy data The University of California in San Diegoand characteristic data about campus produces 92% of its own energy and UCSD’s integratedthe organization’s buildings and is intent on going further with a combination data collection environmentequipment, as well as thinking about of new clean energy sources, additional allows for comprehensive data gathering,the preferred management structures on-site generation and storage, and innovative and the development of complete energyand responsibilities, and defining and demand-reduction strategies. The cornerstone consumption and production baselines.communicating program goals1. of this effort is the OSIsoft System PI3 which gathers data from multiple energy assets on Case Study: The Kellogg Company4 This discussion is limited to case campus, including both supply and demandstudies of streamlined data collection sources, and serves as a universal translator The Kellogg Company is known for its foodand management practices, to integrate diverse data sources, regardless products in 180 countries across the world. Ingiven that the scope of planning of their protocol, standard, or language. its Battle Creek plant, the company was able tois quite large and beyond what is reduce energy consumption by collecting itspossible to address in this article. The UCSD campus uses BACnet (Building operational data and connecting it to its building Automation Control network) from Johnson management and process control systems. Planning for an Energy Controls in many of its buildings to remotelyManagement Program begins configure, monitor, and control the day-to- The energy management project waswith collecting information on day operations. The interface translates focused on reducing energy consumptionthe building’s characteristics and the energy use data produced from these in 44 HVAC units located in the plant whilebaseline energy use. Data for energy building systems into the main PI system maintaining appropriate pressure levelsmanagement can be collected by for integration with other data sets from the for hygienic food production purposes.a variety of methods: in-person supply side, preventing “analysis in silos” andenergy audits, utility bills, data from allowing for deeper insights to be extracted. Air discharged from the HVAC units wasbuilding automation systems, etc. being heated to 80-100 degrees before beingThese disparate data collection Its system also allows for efficient archival cooled down to 50 degrees for discharge so asactivities, however, often lead to and easy retrieval of data for analysis. Many to prevent the chilled water coils from freezing.a planning stage wrought with data collection systems are unable to handle Furthermore, the make-up air tags (datainconsistencies. The following two large volumes of data from sources that spit streams that provide information about the flowcase studies show how a robust out signals at one-second or one-minute and volume of make-up air for the HVAC units)energy data collection system can intervals. Unfortunately, this leads to averaging were not linked to the building managementminimize these disparities and aid of data over longer intervals and deletion of system or the process control system. Thisthe energy management process. original source data. This practice can often led to excessive energy being used by the lead to missed opportunities. The PI System’s HVAC units, for heating and then cooling, proprietary fast camera approach is able to and also often created near non-existent building pressure causing food safety risks. www.aesp.org | 2018 37

Kellogg retrofitted controls around the Operational data analysis further showedHVAC units, installed building pressure that if fresh air was brought in for the sixmonitors, designed freeze protection HVAC units simultaneously, instead ofsystems for the coils, and installed air one unit at a time, the return air from theflow sensors to measure fresh air intake building could be mixed with make-up air,in each unit. The data collected from nullifying the need for hot water heatingHVAC controls units, pressure monitors the chilled water coils (to prevent themand intake air flow meters were analyzed from freezing). Without needing hotto optimize plant operations, saving the water heating, the company was able toKellogg Company over $350,000 per year, save over $40,000 in one week alone.just on six HVAC units that were studied.2. DO This section spotlights several new and creative financial and behavioral means of implementing energy management initiatives.Case Study: HARBEC – How a Creative An experimental use case study, 3. CHECKProject Approval Process leads to involving the deployment of the requiredIncreased Uptake of Energy Projects5 infrastructure in five houses with different The following case studies demonstrate typology and 11 participants, showed that how the Measurement and Verification HARBEC Inc.’s desire to be a carbon the combined use of localization system stage of Energy Management Programs canneutral company led to a partnership with the WSN and social computing allows be streamlined and made more accurate.with the U.S. Department of Energy’s for identification of potential energy saving(DOE) Advanced Manufacturing opportunities, and immediate generation Case Study: Bayesian Evaluation ofOffice to successfully implement an and communication of customized Energy Conservation Measures8energy management system that recommendations to users. The studymeets the ISO 50001 and Superior showed that proposed system attains an Conventional Measurement andEnergy Performance requirements. average energy savings of 17% per user. Verification practices often report a point estimate, or a +/- 25% range, for energy HARBEC developed a financial system Case Study: A Mid-size Company can savings, giving a false sense of accuracy.of evaluating environmental and energy Participate in Clean Energy Procurement7 Moreover, often pre-retrofit baselineprojects differently than other proposed performance is not readily available whenprojects, which are required to pay for Innovative energy procurement submitting energy projects for approval tothemselves within a specified period. strategies form a fundamental corporate. “Bayesian Evaluation of EnergyUnder this system, the expected energy element of energy management Conservation Measures” by D. Lindelof,cost savings are compared to the cost of implementation. In May 2017, Akamai, a et al. discusses the potential use of thethe project over its lifetime. The project mid-sized Cloud computing company, Bayesian method for overcoming theseis approved if it generates net positive announced a 20-year investment in challenges and calculating net energycash flow, when comparing the cost an 80 megawatt wind energy farm. savings along with reporting a realisticof the financed project to the energy uncertainty range. The experimental casebill. This approach provides flexibility Traditionally, midsize companies have study reported relative savings of 33.1%and helps ensure that opportunities encountered difficulties in negotiating with 19.0 percentage points standard error.are not overlooked due to criterion contracts for renewable energy. This issuch as rigid, short payback periods. largely due to the fact that they do not need all of the energy generated by largeCase Study: A Framework to Improve scale renewable energy projects andEnergy Efficient Behavior at Home also, because their power needs might bethrough Activity and Context Monitoring6 spread across regions leading to a further dilution of their purchasing influence. In “A Framework to Improve EnergyEfficient Behavior at Home through Activity Akamai entered into a virtual powerand Context Monitoring” by O. Garcia, et purchase agreement to circumvental., the authors present a recommendation this problem, allowing it to commit to asystem that identifies and analyzes users’ certain percentage of the output from theenergy consumption behavior patterns renewable energy project, an “off-take”,in their homes to promote energy saving at a predetermined price. The companyhabits. The Context-Aware Framework collaborated with three other companiesfor Collaborative Learning Applications to divide up the off-take. This aggregation(CAFCLA) is used to develop the proved useful for the companies as theyrecommendation system which integrates will now be able to meet their sustainabilitya Real-Time Localization System and targets. The deal also provided guaranteedWireless Sensor Networks (WSN), making it buyers for the project developer, easingpossible to develop applications that work the process to secure financing.under the umbrella of Social Computingso as to influence user behavior.38 Association of Energy Services Professionals

analytics on previously collected end-user HARBEC in collaboration with experts metered data. Data validation for the BQDM from Georgia Institute of Technology program showed absolute precision of developed a total energy consumption about 5% at every hour during a day. model by converting energy from all sources into primary energy as per the SEP M&V Case Study: HARBEC – Accurate M&V Protocol. A net energy consumption value based on a “Total Energy” Model10 could be determined as a result and a forecasting method was developed to model HARBEC uses three sources to fulfill the facility’s total energy consumption. its energy demand: natural gas (for the This M&V practice confirmed energy combined heat and power plant), purchased savings of 16.5% over a three-year period. electricity, and wind. The company hoped to track its energy performance over time; however, the presence of CHP and on-site renewable energy added complexity to the modeling of energy consumption based on common variables like production levels and/or weather. 4. ACT The final component of an energy management program is the presentation of results to the executive leadership, in order to review progress, approve the energy management program, or suggest changes where required. The management review provides an opportunity to demonstrate the value proposition of each energy management initiative and gain support for securing commitment and resources for future energy initiatives. In conclusion, recent advances in computing power, Advanced Metering Infrastructure (AMI) Technology, and innovative financial instruments have helped energy efficiency reach the milestone of becoming the third largest energy resource for the electrical grid.11Case Study: Using Data Analytics References 8 Lindelöf, David, et al. “Bayesian Evaluation ofto Bridge the Gap between M&V Energy Conservation Measures: a Case Study with a1.0 and 2.09 1 “Step 2: Planning.” WBCSD Buildings, eeb-toolkit. Model-Predictive Controller for Space Heating on a com/index.php/step-by-step-guide/stage-2-planning. Commercial Building.” Energy Procedia, Elsevier, 11 Evaluation of energy management Sept. 2017, www.sciencedirect.com/science/article/pii/strategies require higher accuracy at the grid 2 “University of California San Diego Microgrid.” S1876610217329557.level than that established by the industry’s University of California San Diego Microgrid, 12 Apr.evaluation standard of 10% relative precision 2012, smartcitiescouncil.com/resources/university- 9 Wainstein, Isaac, et al. “Using Data Analytics toat the 90% confidence level. In order to california-san-diego-microgrid. Bridge the Gap between M&V 1.0 and 2.0.” www.accurately plan for demand capacity relief, ers-inc.com/wp-content/uploads/2017/04/Using-Data-program planners need to confidently 3 “Overview.” OSIsoft, www.osisoft.com/about-osisoft/. Analytics.pdf.predict which measures will achieve thereduction, and by how much. Furthermore, 4 Kleinderlein, Morgan. “They're Grrreat! Kellogg 10 “HARBEC Develops a ‘Total Energy’ Model tomeasures are valued by their ability to Reduces Energy By $3.3 Million Via the PI System.” Reveal Performance Improvement .” Superior Energyprovide capacity relief when needed as OSIsoft, 11 Apr. 2017, www.osisoft.com/Blogs/They- Performance, www.energy.gov/sites/prod/files/2017/09/opposed to their lifetime kWh reduction re-Grrreat!-Kellogg-Reduces-Energy-by-$3-3-Million- f37/HARBEC_MV_case_study.pdf.potential. These requirements need a With-PI-System/.rigorous EM&V process, and New York’s 11 Eschwass. “Our New Analysis Finds Energy EfficiencyCon Edison set out to test a hybrid approach 5 “HARBEC—a Specialty Plastics Manufacturer— Is the 3rd Largest Resource in the US Electric Powerof evaluation in its Brooklyn Queens Improves Energy Performance 16.5% with SEP.” Sector.” ACEEE, 3 Oct. 2016, aceee.org/blog/2016/08/Demand Management (BQDM) Program. Superior Energy Performance, www.energy.gov/sites/ our-new-analysis-finds-energy. prod/files/2015/05/f22/SEP_EMWG_HARBEC_case_ “Using Data Analytics to Bridge the Gap study.pdf. Mrinalini (Meera) Sharmabetween M&V 1.0 and 2.0” by I. Wainstein, is a project engineer atet al. presents results from the Energy- 6 García, Óscar, et al. “A Framework to Improve Energy kW Engineering wherefocused Deep Granular Evaluation (EDGE) Efficient Behaviour at Home through Activity and she develops data-drivenM&V approach that borrows successful Context Monitoring.” Sensors (Basel, Switzerland), methods to supportaspects of both traditional and M&V MDPI, Aug. 2017, www.ncbi.nlm.nih.gov/pmc/articles/ the Measurement and2.0. More specifically, it uses predictive PMC5579831/#sec4-sensors-17-01749. Verification group. Her work involves statistical analysis 7 Murphy, Sara. “How Midsize Cloud Player Akamai Buys of energy efficiency Clean Power.” GreenBiz, GreenBiz Group Inc., 21 June measures and building 2017, www.greenbiz.com/article/how-midsize-cloud- performance. player-akamai-buys-clean-power. www.aesp.org | 2018 39

FINDING THE CAPTURING AND INCREASINGSWEET SPOT DEFENSIBLE MULTIFAMILY SAVINGS IN AN IMPROVED CODES ENVIRONMENTIntroduction buildings typically fall under the residential and commercial equipment, and lacked code; buildings four stories and above a market-based third party verification How do you capture savings and promote come under the commercial code. infrastructure. Although prescriptiveefficiency for projects that have both incentives were available, participationresidential and commercial uses, as well To address this need, the PAs’ first was low. For these reasons, commercialas multiple fuels, meter types, end users, low-rise multifamily offering was developed savings from multifamily buildings wereand utility service providers? What happens out of an existing single family program. not identified, maximized, or captured,when changes in the building code begin to The multifamily units could be modeled just and residential savings from mid- andpush the envelope, but regulations require like single family homes, since single family high-rise buildings were ignored.increased energy savings? These are the homes and low-rise multifamily projectschallenges that the Massachusetts Program used both the same building code and third To overcome these challenges,Administrators (PA) are facing at a time when party verifiers. But this solution could not implementers, evaluators, and regulatorsmultifamily new construction is outstripping address common spaces beyond the unit or all had to be (or become) familiar withsingle family housing starts. To solve these any potential commercial savings associated both commercial and residential issues,problems, the PAs from Columbia Gas of with them. These areas – corridors, amenity codes, regulations, rates, etc. SomeMassachusetts, Eversource, and National spaces, storage, rental offices, etc. – typically risk was also required. There is a lackGrid, worked with their vendor ICF to design make up 20-30% of the building! of energy efficiency program researchand implement a whole-building, energy- in this building type, and unknownmodel based Multifamily New Construction This solution also did not address savings combined with high start-upProgram. This program is successfully projects four stories and above. They were costs are not an enticing combination!capturing cost-effective and defensible excluded because they fell under thecommercial and residential savings. The commercial code, used a mix of residentialprogram is (literally) tightening the buildingenvelope and helping the Commonwealth Figure 1. Program Enrollment Through 2017to reduce greenhouse gas emissions. Units12000 140Multifamily New Construction: Projects10000120History of Programs and 8000 100Challenges of Codes 6000 2013 2014 2015 2016 2017 80 4000 60 Nationally, multifamily new construction 40projects are underserved by incentive 2000 20programs because of their complex 0 0space types, metering, and fuels. Different 2012 2018building codes with different energyefficiency requirements add to thecomplexity. One- to three- story multifamily Units Projects40 Association of Energy Services Professionals

BY LEAH BERGER, NATHANIEL DICK AND MARK STAFFORD,ON BEHALF OF THE MASSACHUSETTS PROGRAM ADMINISTRATORS Lastly, the biggest hurdle in a multifamily four different PAs to record savings and Program Design 2.0:building is metering. When energy provide incentives for a single project.efficiency programs are segmented into This segmentation enabled the program More Defensible Savings withcommercial and residential divisions, to capture even smaller savings whichif a building has both commercial and otherwise would have been cost-prohibitive. Whole Building Modelingresidential meters, who foots the programcost? Who gets the savings? There are two Results The Program is currently in its sixth yeardifferent ratepayers here, right? Right. and uses the same structure as when it Success! During the first three years, was rolled out – with one exception. ItMassachusetts Multifamily 104 buildings with 9,072 units completed now uses whole building performanceNew Construction Program the program (Figure 1), resulting in a modeling, a change made in 2016. Why? market penetration of over 50%. Savings Whole building modeling is now costInitial Program Design totaled 219,985 MMBtu, of which 35% was effective and generates more defensible commercial. A detailed break out by fuel savings. Modeling also parallels other In 2013, Massachusetts’ Multifamily and meter type can be found in Figure 2. incentive programs in the PA’s portfolios,New Construction Program was rolled out including low rise residential which usesfollowing a three year pilot. The goal was $4.7 million dollars of incentives were RESNET-approved software and the customto create a comprehensive program for paid to multifamily developers. The commercial new construction programmultifamily projects four stories and above. program team learned that in addition to which uses DOE2’s eQUEST®. Lastly, theThe Program utilized deemed savings and financial incentives, developers wanted shift reflects changes in Massachusettsoffered prescriptive incentives for all EEMs technical assistance, were hungry for code to stay ahead of the curve in terms of(Energy Efficiency Measure) found in a support, and were willing to innovate when efficiency, through pay-for-modeled-multifamily residential building, including education and support were provided. performance incentives and energy codeenvelope, mechanical, hot water, lighting, Indeed, some multifamily developers in amendments that require performanceand more, regardless of fuel and meter. Massachusetts began adopting energy path compliance. All EEMs continue to beWithout specific multifamily data, the efficiency as a marketing strategy. associated with both a fuel and meter type,program extrapolated data from studies so that savings, incentives, and programof low-rise residential and commercial The Details implementation cost can be segmented.buildings to determine baselines andefficiencies to be incentivized. Each The program strived to engage To make modeling cost effective, themeasure was associated with both a developers early in the design process, program utilizes a custom front end infuel and meter type. By analyzing and when building envelope and systems are conjunction with the open source platformsegmenting the savings of each EEM, not yet fixed. Projects were required to OpenStudio® with EnergyPlus™, DOE’sresidentially-metered savings were enroll before construction starts, and many computing engine, to generate energydistinguished from commercial savings, enroll during the schematic or design savings. Being open source, all references,and both were reported separately, allowing development phases. Account Managers inputs, and calculations are reviewableincentives to be paid separately. Savings served as a single point of contact for the by evaluators and others. The customand incentives were further segmented developer during all phases (enrollment, front end, with built-in multifamily-specificby fuel type. It was not uncommon for modeling, verification, and payment). assumptions, is used by modelers to enter Prescriptive savings and incentives were data for each project. It serves to simplify captured using a spreadsheet-based tool, modeling, reduce cost, and ensure quality which had multiple benefits, but lacked control. Customizing open source tools the precision of whole building modeling. eliminates the need for complex modeling Figure 2. Annual Program Savings by Meter & Fuel Type kWh7,000,000 800,000 Therms6,000,000700,000 5,000,000 600,000 4,000,000 500,000 3,000,000 400,000 2,000,000 300,000 1,000,000 200,000 100,000 2013 2014 2015 2016 2017 Residential Electric (kWh) Commercial Electric (kWh) Residential Gas (Therm) Commercial Gas (Therm) www.aesp.org | 2018 41

such as eQUEST® that could take 20 hours single family homes), lighting, equipment the same time, there is a surge in multifamilyor more to complete for each building and plug loads, etc. and need a lot less new construction, which is outstripping(depending on building complexity). For heat and more cooling. In this way they single family housing starts in this marketvalidation, simulation results are regularly are more similar to commercial buildings and others. The savings is there and can becompared to results from other software. than single family homes. This could not be captured in a defensible and cost-effective taken into account in the previous design manner. This helps the PAs. The multifamily What makes performance modeling more using deemed savings. The result is not developers receive the value of workingaccurate and defensible is that it captures only more accurate savings, but also a with a single point of contact who isthe modeled performance of EEMs plus significant improvement in the program’s knowledgeable about technology, buildingany interactivity between measures. For technical assistance recommendations performance, and rapidly changing codes.example, the choice and quantity of lighting to improve energy efficiency and longhas a fairly large impact on heating and term building performance. At the same Case Study Characteristicscooling demand. The heating system in a time, the program has “lost” gas savings.residential unit with hot incandescent light To continue to meet gas savings goals, ■■ 4 Storiesbulbs doesn’t need to run as long to heat more projects will need to be enrolled or ■■ 35 Unitsspace up on a cold winter day. Conversely, new EEMs will need to be deployed. ■■ Residential Area: 38,889 sfmore cooling will be needed on a hot day. ■■ Common Area: 14,907 sf (28% total area)Now, if those bulbs are replaced with LEDs, Challenges like the lost gas savings ■■ ENERGY STAR® certifiedthe heating system needs to fire more to described above, and also new codereplace the heat that those old bulbs used adoptions and market shifts, continue Referenceto make, but less cooling will be needed. to force the evolution of the programThe energy savings from switching to design. New EEM modules can be 1 Program Administrators (PA) refer to the entitiesLEDs from incandescent bulbs is more added as desired, and multiple baselines that administer the energy efficiency programs inthan the difference in bulb wattage; it also can be accommodated. This year, the Massachusetts. The gas and electric utilities, togetherincludes savings from the reduced HVAC program will add a Wi-Fi thermostat EEM. with municipal aggregator Cape Light Compact, inload. The deemed savings methodology Although most savings will come from Massachusetts administer their own energy-efficiencydoes not capture this, obscuring EEMs with electric cooling, some of it will include programs. The Multifamily New Construction Programthe more potential savings and resulting gas heating savings. The program is is a joint venture of the PAs.in less inaccurate savings for others. also studying a potential whole building infiltration EEM, which has the potential Nathaniel Dick is an energy With modeling data from almost 300 for significant gas and electric savings. efficiency consultantprojects, the program continues to make with Eversource Energy,new discoveries and face new challenges. The Future of Multifamily focusing on multi-family,One discovery is that HVAC savings and has been in the energychanged dramatically when the program Energy savings from multifamily buildings efficiency industry formoved to whole building modeling. Prior to are more than the sum of their parts. 10 years.the change, gas heating savings dominated Programs like this are replicable and canthe program (see Figure 2), but now electric spread to other markets. Yet, nationwide Mark Stafford is thesavings is dominant. Although it may be there remains less than a handful of lead new constructioncounterintuitive in a cold weather climate, comprehensive energy efficiency program representative in Newmultifamily projects have high internal heat addressing multifamily new construction. At England for National Gridgain from higher occupancy density (than and has been involved in the architecture industry, Case Study Building Model Analysis with over 20 years of experience managing publicEnergy Efficiency Measure Efficiency Meter Annual Annual and private projects across kWh Therms a spectrum of facility types.Low Flow Plumbing Fixtures 0.97 AFUE condensing boiler Commercial 163High-Efficiency Central DHW System 0.55 W/SF, 12% reduction Commercial - 891 Leah Berger is a residentialDecreased LPD in Common Areas Commercial 4,590 448 program manager; she hasLighting Controls in Common Areas R-50 Commercial 3,048 - been working in energyERV/HRV to Residential Units U-0.29, 0.27 SHGC Commercial 1,849 - efficiency since 2010 andImproved Roof Insulation VRF - Air-Cooled with Heat Commercial 7,145 - managing residentialImproved Window U-Factor Recovery, 11.95 EER, 3.47 COP Commercial 19,096 - energy efficiency programsHigh-Efficiency Common Area HVAC VRF - Air-Cooled with Heat Commercial 6,430 - with Columbia Gas since Recovery, 11.95 EER, 3.47 COP - 2012.High-Efficiency In-Unit HVAC Commercial 46,449 -Commercial Sub-Total 0.37 W/SF, 51% reduction Residential 88,770Decreased LPD in Residential Units 39,259 1,339Residential Sub-Total 39,259 -Total Savings (Interactive) 128,029 - 1,33942 Association of Energy Services Professionals

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