Stepping into Resiliency

Screening and prioritization of a building portfolio The most cost-effective approach to implementing resiliency planning is to first determine energy efficiency (EE) measures that would reduce load, then size the generation and energy storage needed for resiliency. Generation and storage equipment used for resiliency during an outage will also be able to provide demand charge reduction, energy arbitrage, load shedding and load shifting services to the building when the grid is operational. These services have economic value for the customer and can offset the cost of the system installation. Across a portfolio of buildings, the question should be asked as to what infrastructure can most cost- effectively reach self-sufficiency. In short, some buildings will never get there, and some will start paying for themselves immediately. The two charts show the energy efficiency savings potential and the cost savings associated with using a power purchase agreement (PPA) to achieve two days of resiliency for an actual portfolio of buildings. The bars in green represent those buildings that achieved cost savings, but they are not necessarily the buildings with the highest EE savings potential. Energy Efficiency Savings Potential and Cost Savings in an Actual Portfolio of Buildings. 51 The three steps toward energy resiliency are: 1. Identify & implement EE measures to reduce usage 2. Identify generation & storage type, size, and location 3. With the utility, identify upgrades for grid interconnection The last step may result in the utility identifying distribution system upgrades necessary to accomm- odate the resiliency measures that are costly enough that they could make the project infeasible. Electrification and Resiliency go hand in hand The benefits of electrification are that electrical loads can be more easily backed up, while reducing the carbon footprint by removing fossil fuel sources of a facility. The types of loads that can be most easily electrified using conventional and emerging technologies are: • Space heating loads using heat pumps • Domestic hot water heating loads using heat pump water heaters • Cooking loads using electric ranges and convective ovens • Transportation with fleet electrification However, electrification adds load to a building or campus, and energy resiliency based on a baseline of past electrical consumption may not be sufficient. A reasonable estimate of future consumption must be made, with consideration for electrification and decarbonization efforts. Recently, occupancy levels in critical facilities have dropped due to COVID, and they may not go back to pre-2020 levels. Reasonable estimates of future occupancy levels must be made considering hybrid work schedules and telecommuting.

Microgrids and distributed energy resources According to the U.S. Department of Energy: A microgrid is a group of interconnected loads and distributed energy resources (DERs) within clearly defined electrical boundaries that acts as a single controllable entity with respect to the grid. A microgrid can connect and disconnect from the grid to enable it to operate in both connected and islanded mode. Based on this definition, many critical facilities that implement resiliency measures are microgrids. The most common DERs used in resilient microgrids in California are solar panels, battery energy storage, fuel cells, diesel backup generation, and combined heat and power systems that can include internal combustion engines, microturbines, small gas turbines, and molten carbonate or phosphoric acid fuel cells. Solar panels Siting considerations for solar panels include cloud coverage, shading by trees and other structures, roof area and parking lot area. Financial and environmental considerations are that they are a zero greenhouse gas (GHG) producing source of electricity and lowering solar panel costs make them an economically attractive source of energy if the site can accommodate the footprint. Power purchase agreements can reduce upfront costs. Solar panels on roof of commercial building. Battery Energy Storage The size of the electric load and the duration of the needed shift is a primary consideration for resiliency, and also a primary driver for cost. Of the three main types of batteries, flow batteries tend to be the highest cost, followed by lead acid and then lithium-ion. Some jurisdictions require adherence to strict fire codes if lithium- ion batteries are installed inside. In comparison: Tesla battery storage system • The operational characteristics of lithium-ion batteries exceed their competitors in power density • Flow batteries have longer cycle lives than lithium-ion or lead acid batteries • Lead acid batteries have the most robust recycling industry, as these batteries have been used in automobiles for years Environmental benefits depend both on the paired renewable energy source and, if charging from the grid, the alignment of the customer’s time of use (TOU) rates with the grid’s marginal emissions rates. Fuel Cells Non-combined heat and power applications of fuel cell technology Bloom Energy fuel cells in California have been primarily solid oxide fuel cells manufactured by Bloom Energy. Solid oxide fuel cells are modular and easy to site, with a small footprint, hardly any noise output, and inverter based electrical output. This technology is applicable to the commercial and industrial sectors. All the waste heat generated is used intern- ally to reform the natural gas fuel resulting in a high efficiency fuel cell. The technology has very low carbon dioxide emissions, resulting in a California Air Resource Board exemption. 52

Diesel Backup Geneation Noise is a consideration for siting of this technology, as well as storage and replenishment of diesel fuel during an extended outage. The installed cost per kW of diesel generators is quite low. However, emissions from these generators make them difficult to site for anything other than backup operation. Generac diesel generator Combined heat and power Combined Heat and Power (CHP) options include internal combustion engines, microturbines, small gas turbines, and molten carbonate or phosphoric acid fuel cells. Siting considerations include availability of natural gas, size of thermal load, size of electrical load, footprint of the CHP system, local air quality restrictions, and local noise restrictions. Fuel cells are the highest cost generators; however, they also have the smallest environmental footprint. Internal combustion engines are the lowest cost generators Capstone Microturbine combined heat and power system Microgrid Controllers Microgrid controllers are needed to integrate a microgrid with the utility grid, and to optimize the following functions: • Coordinate the operation of the DERs and balance generation with load during an outage • Deploy DERs and dispatchable loads in response to TOU or real time pricing tariffs, when the grid is up • Grid forming and black start capabilities of the generation sources and energy storage to allow operation in islanded mode • Automatic transfer switches that can island the microgrid when the grid goes down and reconnect to the utility grid when it comes back up Utility interconnections may identify distribution system upgrades that could impact the economics of the microgrid. Schematic of a Microgrid with Multiple DERS Connected to an Energy Management System, Image courtesy of Aalborg University 53

Resiliency Audits In an effort to push needed resiliency in the region, 16 PG&E sites have been evaluated by energy engineering and consulting firm AESC and are now included in an active procurement that should result in installations in late 2024. The audits included a site visit that identified EE opportunities and provided recommendations following evaluation of the electrical infrastructure and the site conditions, such as the building roof and parking lot areas. Audits include specifications for the generation and energy storage equipment for ease of procurement. Resiliency is becoming imperative in the face of the extreme effects of climate change. For critical facilities, resiliency planning and implementation allows for operations and services to continue during emergencies and grid outages. Resiliency planning for critical facilities must be done in an organized and intentional way, first by minimizing load and then using location and operational considerations to size the energy storage and generation to meet the needs of the building, operators, and owners. There are a variety of solutions, from EE opportunities and electrification solutions to generation and storage technology, that can meet resiliency needs in California and other regions. The audit process brings forward the environmental, economic, and operational considerations and solutions that will best serve the resiliency needs of the organization. About the Author Dara Salour Dara Salour has 32 years of experience in the energy industry, and currently manages AESC’s distributed generation practice. As part of his Program Management responsibilities, he oversees application reviews and inspections for the SGIP and CSI Thermal Program. Mr. Salour has worked with local and state governments to plan and scope energy resiliency solutions, including energy efficiency, microgrids, interconnection hubs, and back-up generation. Mr. Salour has conducted training sessions for PG&E’s Pacific Energy Center on energy resiliency and energy storage. He is a Professional Engineer and holds an MBA from Arizona State University, a Master of Science in Mechanical Engineering from University of California, Davis and a Bachelor of Science in Mechanical Engineering from California State University, Sacramento. About AESC Founded in 1994, Alternative Energy Systems Consulting, Inc. (AESC) is an energy engineering and consulting firm that delivers solutions in energy efficiency, renewable energy, and software for utilities, governments, and the private sector. AESC combines technical excellence, Integrated Demand Side Management experience, and a broad skillset to provide a complete suite of engineering and management services. AESC’s 60+ person team includes experts in energy efficiency engineering, water and wastewater system optimization, distributed energy resources (DERs), measurement and verification (M&V), tool/software development, codes and standards, and demand response. Find out more about AESC: https://www.aesc-inc.com 54

Increasing Engagement in Energy Assistance Benefit Programs Through Automatic Enrollment And Other Measures by Heather Polonsky ADM Associates Assistance and benefit programs across all sectors regularly fail to attract all eligible participants. Numerous studies have demonstrated that anywhere from 20 to over 50% of eligible participants do not enroll in or utilize programs for which they are eligible1. This gap in uptake stems from a variety of factors, including application burden, lack of awareness, stigma, income volatility, and other logistical issues. This article begins with a case study of a utility exploring ways to increase program engagement, followed by an overview of engagement strategies that have proven successful in assistance programs, as well as suggestions for how to best engage traditionally hard to reach populations. Case Study A small municipal utility expressed concerns that their energy assistance program had low participation. They requested we conduct a brief study to determine if the program was reaching saturation and if so, if relaxing the program admission requirements would increase participation. To determine if the program had reached saturation, we conducted a gap analysis. Using publicly available datasets from the American Community Survey (ACS), along with utility program data, we estimated the number of households eligible for the assistance program under existing eligibility criteria and compared that to existing enrollment. Census data revealed that 9,576 residents were eligible for the energy assistance program. However, only 851 customers were enrolled. These data suggest 9% of eligible customers were enrolled in the energy assistance program. Although our calculations demonstrated substantial room for increased engagement under the current income eligibility criteria, we took our analysis a step further to see what impact loosened eligibility criteria might have on the potential applicant pool. Conversations with utility staff revealed that substantial funding was available for these programs, and that the utility was motivated to reach as many customers as feasible. Moreover, expanding income criteria to include more customers may have the added benefit of reducing stigma among potential beneficiaries, as more lenient eligibility criteria will include a larger pool of participants, normalizing customer perception of the program. 1 Lasky-Fink, J., & Linos, E. (2022). It’s Not Your Fault: Reducing Stigma Increases Take-up of Government Programs. Available at SSRN 4040234. 55

We began by exploring other social services programs offered in the area to understand how similar programs and agencies define eligibility criteria. This review demonstrated that although the utility had looser eligibility requirements than other local, state, and federal programs—including LIHEAP— the utility was using the Department of Housing and Urban Development’s (HUD) “very low-income” criteria (≤50% area median income, AMI), rather than HUD’s “low-income” criteria (≤80% of AMI). Continuing to use ACS data, we found that if the utility were to expand its income criteria from ≤50% AMI to ≤80% AMI, an additional 5,756 households would be eligible for the utility’s assistance program. Currently Enrolled Eligible Households Eligible Households Newly eligible Households Current Criteria Expanded Criteria households (≤50% AMI) 851 (≤80% AMI) 5,756 9,575 15,331 Equipped with evidence that not only had their program not reached saturation under existing eligibility criteria, but there was substantial room for growth, the utility needed ideas for how to better engage their customers. Marketing Solutions When looking to increase program engagement from traditionally underserved communities, utilities can make simple changes to their communications to appeal to a wider audience. These changes include diversifying marketing strategies, building partnerships, and promoting non-energy benefits. Diversifying Marketing Strategies By Building Partnerships and Trust Reducing Stigma Often times, energy efficiency assistance Previous research has also demonstrated programs reach customers through mailings that customer trust in their utility company is and bill inserts. Utilities may also consider other paramount for optimal engagement in utilities’ communications techniques like to door-to- offerings.4 When customers trust their utility marketing and neighborhood canvassing, both of company, they are more likely to see the utility which have proven to be effective strategies for and its services as a net positive in their lives, and reaching underserved customers in other service subsequently engage in the utility’s specialized areas.2 Moreover, the language used in marketing programs and offerings.5,6 In a study of 140 materials is important. Previous research has utilities, evaluators found that customers with demonstrated that small changes in phrasing high brand trust took advantage of approximately can increase interest in a program by 36% and nine utility offerings, while customers with applications by 11%. Researchers found that low brand trust took advantage of only four.7 statements like “you are not alone, and it is not Utilities can create a foundation of trust with your fault” and “we are here to help all eligible their customers by building partnerships with residents get the assistance they deserve” are local community organizations and social more welcoming than just “you are not alone” service agencies. For example, programs by DC or “the program has helped over 1,000 people Sustainable Energy Utility, Efficiency Vermont, so far.” 3 Researchers speculate that revised and Dayton Power, have had success distributing language reduces internalized stigma and fear energy-efficient lightbulbs via food banks, of discrimination. WIC centers, and community events.8 These programs often include educational materials and information regarding additional assistance programs and thus can act as the first step in engaging customers in the utility’s comprehensive energy assistance programs. 56

Promote Non-Energy Benefits In addition to diversifying marketing techniques and building partnerships, utilities can benefit from focusing on the non-energy benefits of their energy assistance programs. Although the ultimate goal of energy efficiency programs is to reduce energy use, energy costs, and environmental impact, there are other benefits of energy efficiency measures that may further resonate with customers. For example, in addition to reducing energy usage by making homes more efficient, weatherization measures have also been shown to minimize home-based health hazards such as poor air quality, slip and fall hazards, and pest infestations. 9,10 Emphasizing additional benefits, like health and safety, of energy efficiency measures may help increase interest and engagement in energy assistance programs. Enrollment Solutions When looking to increase program engagement from traditionally underserved communities, utilities can make simple changes to their communications to appeal to a wider audience. These changes include diversifying marketing strategies, building partnerships, and promoting non-energy benefits. Automatic Enrollment Administrative burden, or the “cost that citizen must bear during interactions with government,” is a major deterrent for engaging in various means tested programs.11 Filling out applications and other paperwork to prove eligibility is often a cumbersome and stigmatizing process for individuals. Moreover, although many means-tested programs rely on similar demographic criteria to establish eligibility for their services, these programs tend to exist in silos, with minimal communication and coordination. One solution to mitigate application burden is through categorical eligibility. Rather than potential new customers including income level and household size on their application, customers can indicate they participate in another means tested program whose eligibility criteria is similar or more stringent than that of the utility’s program. Moreover, utilities can further streamline enrollment and reduce paperwork via automatic enrollment. Building from categorical eligibility, automatic enrollment involves a system in which participants of one means tested program, like Supplemental Nutrition Assistance Program (SNAP), are automatically enrolled in another means tested program. Automatic enrollment has proven successful for the National School Lunch and Breakfast Programs, which uses participation in SNAP or Temporary Assistance for Needy Families (TANF) as an automatic qualifier for school meals participation.12 Using a verification process known as “direct certification,” districts confirm students’ families’ enrollment in SNAP or TANF and automatically enroll them in the meals program. Different versions of “direct certification” exist across states and districts. Examples of direct certification verification include the “letter method” in which families receive a letter from SNAP or TANF informing them they are eligible for school meals, and they in turn present this letter to the school district; as well as the “data matching method” in which program staff share data with other program staff and match families accordingly. The “data matching method” requires no upfront action from families, but rather they are provided the opportunity to opt out once enrolled.13 2 Cluett, R., Amann, J., & Ou, S. (2016, March). Building better energy efficiency programs for 5 Przepiorka (2020) 57 low-income households. Washington, DC: American Council for an Energy-Efficient Economy. 6 Escalent (2021), June 24). Brand Trust spikes as utilities spend more on communication. Escalent. 3 Lasky-Fink (2022) Retrieved July 8, 2022, from https://escalent.co/news/brand-trust-spikes-as-utilities-spend-more- on-communication/ 4 Przepiorka, W., & Horne, C. (2020). How Can Consumer Trust in Energy Utilities be Increased? The Effectiveness of Prosocial, Proenvironmental, and Service-Oriented Investments as Signals of 7 Escalent (2021) Trustworthiness. Organization & Environment, 33(2), 262-284.

Although categorical eligibility and automatic enrollment can increase program participation, administrators need to balance creating an inclusive definition that allows for maximal eligible participants reached, with sound verification procedures on the part of the categorically eligible program. Categorically eligible and automatic enrollment processes are most successful when the administering agencies have data sharing protocols or linked applications. In the case of energy assistance programs, utilities may benefit most from data sharing, linked applications, and referral systems with the local social service agency and housing authority. CONTINUOUS ENROLLMENT Although related to reducing application burden, continuous enrollment is unique in that it addresses the common issue of income volatility. Income volatility refers to the ebbs and flows of a household’s income, with a focus on sharp spikes or dips. Because most assistance programs are income-dependent, changes in a household’s monthly or annual income can greatly impact that household’s eligibility for services. In general, income volatility most impacts self-employed, hourly workers, contractors, and part-time workers. Income volatility is most common among low-income individuals, with one study demonstrating that 74% of individuals in the bottom income quintile studied experienced a 30% month-to-month change in total income.14 These data demonstrate that a household that was eligible for assistance programs one month, may no longer be eligible the next month. The impact of income volatility on assistance eligibility is most salient as it relates to health insurance coverage under the Affordable Care Act (ACA). Although ACA created a continuum of coverage across different income levels and health insurance marketplaces, many individuals experience a gap in coverage when their income or employment status changes. This gap in coverage often stems from becoming ineligible for Medicaid and/or issues with paperwork. New York and Montana have attempted to mitigate the challenges of income volatility by offering continuous eligibility for Medicaid recipients. Continuous eligibility allows recipients to keep their Medicaid coverage for 12 months, regardless of whether or not their income or employment status changes.15 As evident by this healthcare example, providing continuous coverage reduces application and administrative burdens, as well as ensures ongoing assistance for eligible customers. Example of Automatic and Continuous Enrollment Cycle 58

Conclusions Many strategies exist to increase enrollment in energy assistance programs. These strategies range from relaxing eligibility criteria, to diversifying marketing strategies, to changing enrollment procedures. In order for utilities to maximize their enrollment potential, programs should employ a variety of different tactics that not only make enrollment easier, but also reduce the stigma associated with participation and normalize the program as a community benefit. Automatic and continuous enrollment are important tools for streamlining operational procedures for utility staff and customers and should be tested in future programs. 8 Cluett (2016) 12 Food and Nutrition Services, Direct Certification in the National School Lunch Program: State 9 Nadel, S. (2020). Weatherization and Home Improvements: A Promising Path for Improving Implementation Program (2018). Retrieved July 8, 2022, from https://fns-prod.azureedge.us/sites/ Health and Reducing Medical Costs for Older Adults. default/files/resource-files/NSLPDirectCertification2016.pdf 10 Norton, R. A., Brown, B. W., & Malomo-Paris, K. (2017). Weatherization and its impact on 13 Neuberger, Z., & Namian, T. F. (2010). Enrolling all children in a household for free school meals. occupant health outcomes. pdf. 14 Farrell, D., & Greig, F. (2016, January). Paychecks, paydays, and the online platform economy. In 11 Lasky-Fink (2022) Proceedings. Annual Conference on Taxation and Minutes of the Annual Meeting of the National Tax Association (Vol. 109, pp. 1-40). National Tax Association. 15 Farrell (2016) About the Author Heather Polonsky Ms. Polonsky is an evaluator and project manager with a passion for translating complicated data into digestible programmatic findings and recommendations. She is committed to equitable evaluation and culturally responsive program management practices and has worked with diverse stakeholders across large project portfolios. She has 12 years of experience in epidemiological and survey research. In her current role at ADM, Ms. Polonsky focuses on process evaluation for a variety of residential and C&I programs. She has contributed to multiple energy efficiency market research and market transformation projects. Prior to her tenure at ADM, Ms. Polonsky managed evaluation and data monitoring activities for a national AmeriCorps program, led the qualitative arms of multiple community health focused program evaluations, and directed a multi-school- based evaluation of a childhood obesity prevention program. 59

Solving the Grid Puzzle - Effective Shed, Shift, and Stack with Behavioral Energy Efficiency and Demand Response by Hannah Courtney It is well established that as critical beneficial electrification efforts ramp up and compounding stresses on our grid intensify (weather, supply chain, aging infrastructure), the ability to flex the collective set of distributed resources on the grid must grow in parallel. And while there are front-of-the-meter resources that will continue to contribute to flexibility, behind-the-meter (BTM) customer resources, namely Behavioral Energy Efficiency (BEE) and Behavioral Demand Response (BDR), must also play a paramount role as one of the most cost-effective, quick-start, and agile resources at a utility’s disposal. But what’s different about this outlook compared to the siloed traditional approaches to BEE and BDR? For starters, the burgeoning ability for utilities to know and consider a deeper layer to each customer via advanced meter infrastructure (AMI)—specifically their individual usage profile and correlated flexible capacity—enables a more potent and critical resource to the grid. Traditional strategies that generalized Energy Efficiency or Demand Response programs as separate resources with parallel behavior change strategies can no longer work effectively in siloed administration and experience for customers. These programs must combine their powers dynamically to maximize the achievable resource capacity to meet the reality we face today and in the future. Utilities have a strong foundation to start with, with their BEE and BDR programs. Here is where things stand today: Building the Through BEE programs, energy customers have become accustomed to Behavioral Foundation receiving personalized insights about their home energy habits and how to reduce their usage correspondingly. As a result, utilities have a built-in, cost-effective resource to call upon → Pre-coached customers that are ready to be once again nudged, except this time to flex their demand. Using proven Customer Experience engagement strategies that advise them precisely what actions to take, but in a time- bound fashion. Utilities are awakening to extending BEE populations into BDR in California, (CPUC Decision 18-05-041) and beyond in the midwest, southwest, and northeast and are pairing these programs together. Extending As early as 2015, cross-utility studies began to examine the complementary The Demand Response effects (or not) of paired behavioral energy efficiency and BDR. While these studies showed measurable complementary savings, primarily these experiments and studies have focused on driving behavior change through the traditional BEE behavior change mechanism—normative “similar home” comparisons, which leaves a valuable opportunity on the table. 60

The key to maximizing the consumer’s contribution to grid optimization of a paired BEE and BDR is to understand each customer’s unique fingerprint of shiftable, sheddable, and stackable potential within the overall population—i.e. what appliances are in use, when they are in use, the size of that consumption and/or demand, and whether the grid is best served by curtailing usage, shifting time of use or more granular stacking of consumption during off-peak periods, including if or how customers should be best targeted and incentivized to take these actions. Below we examine two core benefits of an integrated BEE/BDR flex equation in greater detail. First, Meet Customers Where They Are Then, Empower Customers with a Unique to Drive Customer Satisfaction Shed, Shift, or Stack Plan that Maximizes their BTM Flexible Potential Applying AI-powered analytics to meter data empowers utilities to target each unique Here’s where some of the key differences customer with programs best suited to achieve between unoptimized combined BEE/BDR personalized behavior change to build the models come in that we can be doing differently. flexibility that the grid needs. Using these insights, Traditional energy reduction behavioral utilities can meet customers where they are by modification has focused on the changes in providing messaging based on that customer’s behavior over months and years driven by needs within hyper-personalized segments (cost- normative comparison. However, as you will see conscious, green, retirees, etc.), according to their here, this falls short of the needs of critical time- appliance usage during peak hours. The benefits bound grid shed events. of AI-powered personalization in HERs and BERs abound. Let’s take an illustrative example, in the Northeast, where peak demand in July of 2022 For example, Rocky Mountain Power has seen an reached 30,505 MW. We’ll examine the scenario increase in their commercial JD Power ranking by looking behind the kW—through the eyes of from 54 to 18 (out of 87) in just one year when a pair of residential customers. We’ve compiled implementing business energy reports. Utilities two illustrative examples of typical customers in can leverage the trust built from BEE customer the Northeast on a July 2022 weekday. satisfaction to extend their relationship into requests for shift. Individualized, itemized, and timebound BDR (with or without incentives) as a complement to its BEE’s cousin is a natural extension opportunity. 61

As shown in the charts below, these customers have different profiles and demand needs. So what’s the appropriate messaging for each that supports their efforts as much of their consumption off-peak as possible ? A truly optimized combination BEE/BDR program can provide these customers with a dynamic messaging approach to maximize their individual potential in the shed, shift, and stack paradigm. Customer 1 Shed (Coincidental Shift): For those customers whose inefficient appliance usage presents opportunities to shed load for coincident demand reduction, (e.g. an old and degrading cooling unit upgraded to a new unit with a higher SEER rating or long-term thermostat set-point changes) utilities can continue to pursue personalized BEE engagement focused on normative comparison to reshape their demand baseline at both a system and locational level to match constraints. This can have measurable benefits: A disaggregation-driven BEE program at a utility, NV Energy, has seen as much as 13 MW hours of coincident load reduction between 2019 and 2020. For example, let’s examine how Customer 1 might contribute to demand shed on a July summer day. In the BEE program, Customer 1 is served with a personalized similar home comparison indicating that their AC consumption is high during June and the BEE communication recommends shifting the household thermostat a few degrees and cleaning their refrigerator’s coils. In the weeks following, the customer makes a small thermostat change and cleans the refrigerator’s coils as directed, thus reducing their on-peak usage marginally during a July event day. While this is a small contribution to peak load individually, the reduction is made impactful when multiplied across thousands of customers reachable by a cost-effective email behavioral program. However, this methodology serves the customer with a look-back at trends over time, typically aggregated at the monthly level, and encourages customers to change behavior in the future, at whatever hour of the day makes sense for them. As a result, this alone cannot meet the needs of our evolving grid landscape—more granular time- sensitive communication is required. Customer 2 Shift: For customers with more flexible end-use profiles (DERs, Central HVAC, Pool Pumps, Electric Water Heaters) that make them an ideal target for load shifting, (e.g. passively or directly managing EV charging outside of peak periods), it is a natural progression to adapt customer messaging from the classic energy reduction nudges to time-bound recommendations encouraging that consumption behavior at a different time more favorable to grid constraints. This adaptation requires that we build upon our understanding of personalization and its ability to drive behavioral changes, versus the tried-and-true long-term change strategy of normative comparison alone. Personalized and time- relevant messaging during an example July event day, as illustrated in Table 1, allows someone like Customer 1 to shift their behavior outside of the peak, which they may have not been able to do with more general similar home-focused messaging. 62

Table 1: Through the Eyes of the Customer: Demand Event Messaging Behavioral Nudge Customer 1 Customer 2 Strategy Messaging: “You used more energy Messaging: Reminds them that than your neighbors on the last peak they used less than their inefficient day” and encourages them to use less neighbors last time, and encourages in the upcoming event. them to do so again. Similar Home Comparison Response: After already making Response: Engages in similar behavioral BDR Messaging some changes this customer unplugs changes as last time, like pre-cooling some always-on appliances. Without their home. feedback on their personal usage, like their un-programmed pool pump, and with limits on doable HVAC changes with an infant at home, Customer 1 is unsure of other additional actions and thus does not shift much load during the event Messaging: Receives messaging about Messaging: Receives messaging the top appliances used during peak about the top appliances used during hours and discovers that their pool peak hours and remembers that pump is not programmed. the water heater is actually electric. Explores more about their usage and learns about their always-on and lighting usage. Hyper-Personalized Response: Shifts their consumption by Response: Engages in several BDR Messaging programming their pool pump ahead of behaviors beyond their cooling to stack the next event to off-peak hours. their shift. Stack: Similarly, in the case of stacking (or stacked shift), a customer’s understanding of their entire consumption profile makes it more feasible for a load stacking approach to help better manage both consumer constraints and grid demand outcomes. When customers lack the flexibility to shift singular large appliance loads (HVAC or EV) but understand what makes up the remainder of their load profile, they can be coached to stack a combination of smaller time-bound behaviors such as cooking, water heating, dishwashing, and laundry usage to still contribute to shiftable kW achieved during periods of demand response. In our example, Customer 2 already understands their cooling usage, has an off-peak programmed pool- pump, and must dig deeper into their usage to stack behaviors together for the additional shift. The best customer in any grid management scenario is a willing customer, and coached stacking allows utilities to not limit the functional end uses that can be leveraged to achieve those outcomes. As customers continue to become more energy aware, utilities will be required to help customers like Customer 2 to shift their hidden load made visible through a deeper understanding of their hour-by-hour consumption in their homes. 63

Conclusion When utilities apply a dynamic behavioral modification approach to combined BEE/BDR programs, they ensure inclusion and optimization across all of their participating customers. As you can see in the before and after scenarios for Customers 1 and 2, using their detailed understanding of their energy usage they have been able to shed, shift and stack their consumption to optimize their impact during an event. Customer 1 Customer 2 This approach has a wide range of benefits—from utilities optimizing $/kW and $/kWh by creating new marketing and outreach efficiencies, to reducing the need for separate implementation budgets and engagements. As an industry, we are now enabled to use highly specific and tailored energy profile information to personalize messaging and behavioral change tactics across multiple components of an integrated customer experience. The time has come for utilities and vendors to use this approach to engage customers in response to a wide range of evolving demand flexibility calls to action, resulting in not only increased customer empowerment and satisfaction but quick and quantifiable benefits to grid flexibility, resilience, and reliability for the utility. 64

About the Author Hannah Courtney Hannah Courtney has a specialization and finesse in developing strategic customer-centric solutions, as well as a deep interest in how to combine innovative problem-solving and analytics with result-driven outcomes in the energy efficiency and DER space. At Bidgely, she oversees all behavioral energy efficiency and demand response projects in all stages of a project’s lifecycle. Previously she spent 9 years at ICF where, as Program Manager, she designed and delivered innovative programs, proposals, and presentations to communicate client-focused and data-driven recommendations. Resources for this article: ADM. Energy Reports Program NV Energy Program Guidehouse. 2020, 2019 National Grid Behavior- Year 2019 and 2020. al Demand Response Evaluation Findings, https:// ma-eeac.org/wp-content/uploads/NG-BDR-2019- Brandon, Alec, et al. “Testing for Crowd out in Social Findings-Report-FINAL-2019-04-28.pdf. Accessed Nudges: Evidence from a Natural Field Experi- 2023. ment in the Market for Electricity.” PNAS, 13 Aug. 2018, https://www.pnas.org/doi/full/10.1073/ Schuler, Max. “2022 Summer Peak Loads - NYISO.” pnas.1802874115. NYISO, NYISO, 2022, https://www.nyiso.com/doc- uments/20142/32974180/2022_Peak_Loads_To_ Brennan, Debbie. “2017 IEPEC CONFERENCE.” Date.pdf/cfa6bf47-72be-738f-a61e-d44d5eacc134. THE RELIABILITY OF BEHAVIORAL DEMAND RESPONSE, 2017, https://guidehouse.com/-/media/ Thayer, David, et al. 2016 ACEEE Summer Study on www/site/insights/energy/2017/iepec_2017--bran- Energy Efficiency in Buildings, 2016, Is Behavioral nan.pdf. Accessed 3 Mar. 2023. Energy Efficiency and Demand Response Really Bet- ter Together?, https://www.aceee.org/files/proceed- Buckley, Brian. 2016 ACEEE Summer Study on Ener- ings/2016/data/papers/2_1222.pdf. Accessed 2023. gy Efficiency in Buildings, Northeast Energy Efficien- cy Partnerships (NEEP), 2016, Putting More Energy Walton, Robert. “Home Energy Reports: Still the into Peak Savings: Integrating Demand Response ‘Biggest, Baddest Way’ to Drive Customer Behavior.” and Energy Efficiency Programs in the Northeast and Utility Dive, 10 July 2019, https://www.utilitydive. Mid-Atlantic, https://www.aceee.org/files/proceed- com/news/home-energy-reports-still-the-biggest- ings/2016/data/papers/6_968.pdf. Accessed 2023. baddest-way-to-drive-customer-beh/558166/. 65

Thermal Energy Storage – 65 GW of DERs Ready for Deployment Jeff Ihnen and Stan Nabozny Federal, state, and local policies are driving a clean energy transition. But clashing forces of physics, engineering, and economics are converging to trigger grid reliability and price volatility the United States has not experienced in 120 years. Utility Dive summarizes the issues well in their 2023 outlook1: • The energy transition continues in the U.S. with increasing momentum but with some \\ significant bumps in the road. • Supply chain and economic challenges persist while grid reliability and security concerns grow. • Ambitious government and corporate decarbonization goals are also helping to drive renewable and energy storage deployments. • Inflation, rising interest rates, and high commodity prices [particularly with rare-earth materials needed to manufacture batteries] are pressuring investments. • Distributed energy resource supply chains are stunting expansion. • Slow FERC action on proposed natural gas pipelines and liquefied natural gas projects is squeezing fuel supply for dispatchable generation. • Regional transmission planning and construction takes 10-plus years to develop. • The rise of distributed energy resources creates a larger [cyber] attack surface. • Extreme weather conditions beyond what has been planned for in the past, especially heat waves, can lead to high electric loads, as well as wildfires and storms that can damage generators and transmission lines. 66

The following headlines from recent Wall Street Journal articles paint the picture: “Electric Shortage Warnings Grow Across U.S.” “America’s Power Grid Is Increasingly Unreliable” “Prep Your Tech for Power Outages and Energy Blackouts” “Get Ready for Blackouts” “Coming to a Town Near You: Power Blackouts” “Wary of Being Left in the Dark, Americans Produce Their Own Power” “S.O.S for the U.S. Electric Grid” In our AESP training course, The Three-Legged Stool of Decarbonization (register today), the three legs represent affordable, reliable, and clean energy. It’s a play on the old engineering axiom: cheap, fast, or good; pick two. Delivering all three is hard. The same applies to the energy transition. The clean attribute is leaving affordable and reliable in the dust. Challenges with reliability and affordability are rooted in several things. According to North American Clean Energy2, wind generation “often varies more than 40% from one minute to the next,” and a “solar photovoltaic (PV) system can transition from full power to 30 percent output in a matter of seconds.” Where solar doesn’t vary that fast, we have duck curves developing from California to Arizona and soon to the Eastern Interconnection, where solar photovoltaic is the leading source of new generating capacity. California sees over 5 GW per hour of net load ramp, as shown in Figure 13 —to be met by something—a lot of hot spinning reserves, imports, or expensive batteries. Figure 1 CAISO Net Load Load curves, net of renewable resources, will not get smoother. The following two charts show total renewable generation and a breakdown by type. 1 Utility Dive’s 2023 Outlook for the US Power Sector Trends to Watch | 2 NA Clean Energy | 3 CAISO 67

Figure 2 U.S. Electric Generating Build by Fuel Type Figure 3 Renewable Capacity Build by Technology Battery storage has grown rapidly, but only to 11 GW at the end of 2022. Using the nation’s annual energy consumption, 11 GW of battery storage is good for about five and a half minutes nationwide. Pumped hydro represents two-thirds of electricity storage, and our total peak demand in the lower 48 is about 700 GW. We need additional storage and load flexibility—FAST! The Global Energy Transition and Thermal Energy Storage What are other countries doing in their energy transitions? We should observe what to mimic and what to avoid. Japan is demonstrating the proactive leadership required to navigate the energy transition with aggressive decarbonization and the buildout of microgrids across the country. They face the same problems we have with the duck curve and solar penetration as they move toward energy independence (Japan produces only 8% of their primary energy through solar). The government has hired Kyocera and other companies to implement this strategy. They are inventing a sophisticated microgrid system with city and building-level controls integrated with energy efficiency, generation, and storage technologies, including thermal energy storage (TES), to help manage their demand profile. In a microgrid design, managing the largest loads on the grid is complex. Managing these loads with the complexities of co-incidental peaks, multiple generation sources, and multiple forms of storage is a challenge. Stan Nabozny, coauthor of this article, was fortunate to work with Kyocera a year ago to design and implement their first TES project in a cold storage facility to span the 4:00 P.M. to 9:00 P.M. peak window; the steep ramp period on their duck curve. They plan to roll out this technology to hundreds of other cold chain warehouses to manage the demand profile of their microgrids. In a few years, we will see Japan emerge as one of the leaders in microgrid technology and decarbonization. 68

South Africa (RSA) is another example of a country using TES. The grid in RSA is unreliable. Currently, customers do not have electricity 41% of the time. Businesses are closing, they have massive problems with grid reliability, and everyone is crying for generators and diesel fuel. Corruption, mis- management, and sabotage are the primary causes of this crisis. This is an example of poor leadership from the government with no proactive plan for the energy transition. It will take RSA years to recover from this national emergency. Thermal energy storage is used in RSA to protect the food; it serves as a thermal battery keeping temperatures stable during power outages. This dichotomy between Japan and South Africa leads to a question about the United States. What are we doing to lead the energy transition while fending off challenges noted in the introduction to this article? If we’re leading the energy transition, we need to explore innovations the way Japan is and integrate various technologies to proactively head off problems before they worsen. Thermal energy storage is one solution to the duck curve and sudden fluctuations in wind-generated electricity that we should all consider to shift load and create energy efficiency in refrigeration-based businesses and chilled water systems serving buildings, campuses, and cities. Where to Begin with Thermal Energy Storage for Grid Resilience Thermal energy storage is a fantastic, distributed energy resource for microgrids and macrogrids. Air conditioning and refrigeration are two of the largest loads on the grid. Cold storage warehouses have the highest consumption per square foot of any occupied building. It makes sense to start with the largest loads on the grid, as they have in Japan. Advantages of TES technology include: • Green Technology: There are no disposal issues, and • Energy Efficiency: Along with the load-shifting the useful life for TES technology is 20 years. A Li- benefits, there is an energy efficiency benefit ion battery, for example, has a useful life of about that can range from a 15% to 30% reduction in five years. consumption in both air conditioning and refrigeration applications. Round trip losses and • TES technologies will not catch fire and release parasitic loads for space conditioning of battery units toxic gases like hydrofluoric acid.4 They are non-toxic can easily waste 40% of delivered power from Li-ion solutions of salt, water, and stabilizers. batteries. • Cost-Effective: Six to eight times more cost-effective • Inflation Reduction Act Tax Credit of 30%: With than a typical Li-ion battery for the same load over the Inflation Reduction Act, installing a TES system 20 years. now comes with a 30% tax credit. This incentive can be taken in one tax year or spread over three years. • Protection of Food: Energy transfer during phase It can also be sold on the open market. With this change ensures stable, safe temperature for food. tax incentive, a TES system is inside of a three-year payback period in most markets across the United • Food Safe: The materials used for TES include States and has a ten-year IRR of over 20%. This will salt, water, and other non-flammable and food-safe support the adoption of TES in commercial additives. businesses. • Grid Resilience: Utility peak load management • Levelized Cost of Energy (LCOE): LCOE measures through demand response, load shifting, and peak lifetime costs and energy production for a present shaving applications. value of the total cost of a system. This measure allows for comparing technologies with an unequal life span. The LCOE for a TES system is $.02/kWh compared to Lithium-Ion batteries, which is ~$.20/kWh. Every utility across the United States has more than ample opportunities to use this technology to 69 support grid resiliency and decarbonization. Energy is the second largest expense in the U.S. Cold Chain at over $40B per year and growing. U.S. refrigeration-based businesses consume over 200B kWh per year. With more than 4,200 Cold Storage Warehouses, 40,000+ supermarkets, and over 620,000 restaurants in the U.S., reducing consumption and shifting load at a large scale is now possible.

What Does Thermal Energy Storage Look Like? Figure 4 Thermal Energy Storage Module Figure 5 Thermal Energy Storage Deployment Figure 4 and Figure 5 show TES up close and deployed in a frozen food warehouse. The load-carrying capacity for TES is demonstrated in Figure 6, representing a small 30,000 sq ft cold storage warehouse operating at 0F. The TES is displacing 200 kW of electric load for six hours. Try that with a battery! This application also reduces energy consumption by 14% by allowing the TES system to charge at night when it’s cooler outside and allowing the refrigeration system to operate at its full-load maximum efficiency. Conversely, electric batteries waste energy with round-trip losses and standby parasitic losses to condition their storage containers. Figure 6 TES Load Shifting Capacity 70

Perspective At the end of 2022, there was 11 GW of grid-connected electric batteries in the U.S. The peak load is about 700 GW. About 10% of that peak load, or 65 GW, is commercial and industrial refrigeration and chilled water systems. This is a huge slice of untapped distributed energy resources for grid resilience and efficiency! Call to Action The energy transition is upon all of us, and how we respond will be judged by future generations. Grid innovation we see in Japan provides food for thought as we respond to decarbonization and grid resiliency challenges. Thermal energy storage opportunities are immense, with over 21 billion cubic feet of industrial refrigeration globally. Pile on frozen storage in groceries, C-stores, and restaurants, plus chilled water air conditioning, and the opportunities are endless. We can conquer much of our energy-transition challenge without massive upgrades to generation, transmission, storage, and distribution upgrades, while leveling the three-legged stool with greater reliability and lower-cost alternatives like TES. 4 ScienceDirect About the Authors Jeff Ihnen Stan Nabozny Jeff Ihnen, CEO of Stan Nabozny, Director Michaels Energy, is a of Thermal Energy thermal energy storage and distributed energy Consulting, Michaels resource visionary. He Energy, manages strategic presented a paper, account design, engineering, “Thermal Energy Storage estimates, utility incentive with Phase Change programs, and the ongoing Materials - Shifts Loads, performance of our Saves Energy, Costs Less,” for the Association of installations. He is a patent Energy Engineers’ 2020 World Energy Conference. holder for Thermal Energy Storage using Phase Change He teaches residential, commercial, industrial, and Materials. His experience is broad in this field in that transportation electrification for the Wisconsin he has set up sourcing and production in multiple Public Utilities Institute and The Three-Legged countries, implemented Thermal Energy Storage in Stool (reliable, affordable, clean) of Decarbonization industrial refrigeration, developed algorithms for energy for AESP. efficiency and ongoing continuous commissioning and is now developing comprehensive utility load-shifting programs for aggregating islanded loads for peak demand load shifting. 71

Resilience Planning and Implementation: What do you need to consider when planning your resilience investment to mitigate the challenges of the future? Hector Artze and Michael Levy The analysis by the National Oceanic and Atmospheric Administration’s National Center for Environmental Information (NOAA NCEI) of weather and climate disasters exceeding one billion dollars (Consumer Price Index Adjusted) from 1980 through 2022 clearly reveals an upward trend over time. The NOAA NCEI attributes this to “…increased exposure (i.e., values at risk of possible loss), vulnerability (i.e., how much damage does the intensity (wind speed, flood depth) at a location cause), and that climate change is increasing the frequency of some types of extremes that lead to billion- dollar disasters (NCA 2018, Chapter 2).” For utilities and their customers, these extreme weather and climate events result in service interruptions, long restoration periods, and increasing costs. Figure 1: Billion-Dollar Disaster Events in the US from 1980-2022, by Climate Hazard. 72

Historically, utilities responded to extreme events by building back their assets after disasters. They repaired or replaced assets like-for-like without updating the design standards to account for growing resilience risk. Starting in 2005, utilities like Florida Power & Light began to invest in hardening its power grid to be more resilient to hurricanes. Similarly, in 2007, San Diego Gas & Electric began hardening its power grid to mitigate wildfires. Since then, this trend has been adopted by other utilities with exposure to extreme weather and climate events. These resilience programs recognize the need to update the material and construction standards of the exposed utility assets to better withstand the impact of the events and recover more quickly, as well as replace assets in entirely new locations (e.g., undergrounding) or implement new technologies like distribution automation that can reduce outages altogether. Typically, these resilience programs are focused on the prevailing hazard affecting the utility, and the planners developing the programs rely on historical trends to forecast future events. This approach fails to take into consideration climate change’s first- and second-order impacts. The first-order impact of climate change refers to the physical impact of both chronic climate trends, such as sea-level rise, and extreme weather events, such as hurricanes and acute cold and heat waves, which pose an increased risk of damage to utility infrastructure resulting in power outages, and increased operations and maintenance costs. Climate change can alter the exposure to new hazards and the intensity of the events affecting the utility assets. The second-order impact of climate change refers to the impact resulting from the changes utility customers implement as they adapt to climate change, which in many cases can exacerbate the first- order impacts. For example, a utility customer can adopt distributed energy resources (DERs) such as distributed solar, energy storage, and electric vehicles, which lead to a more decentralized and complex energy grid. While these resources can help improve the resilience of individual customers and the grid, they can also pose planning and operation challenges. DERs can introduce uncertainties into the system, making it more difficult to forecast and manage supply and demand, adding pressure to maintain power quality and system capacity. Utilities with existing resilience investment programs have reported the value of these programs to their customers in terms of improved everyday reliability and faster restoration of power following severe weather events. However, there is value in further maturing how utilities approach resilience planning and implementation. Three key principles should be incorporated into the resilience planning process: 1. The use of asset-level extreme weather forecasts for all relevant hazards, and the use of DER forecasts to support resilience investment planning. 2. Converting resilience risk into dollars to substantiate spending and facilitate integration into existing investment plans. 3. Ensuring clear traceability between asset-level resilience risk and the prioritized investment plan. 73

Asset-level forecasts for asset-level planning The first key principle involves the incorporation of events. The models can also reveal increased risk asset-level climate and extreme weather forecasts, from hazards that previously were not consequential as well as DER forecasts, when planning engineers to the utility. By understanding the impact of these develop resilience investment plans. new hazards, planning engineers can design resilience programs that modify the design and construction The Intergovernmental Panel on Climate Change, standards to mitigate the risk of emerging hazards in its joint Shared Socioeconomic Pathways- and include appropriate mitigation measures in Representative Concentration Pathway framework, current resilience investments. provides a range of possible climate futures that climate scientists use to produce global climate Further, incorporating DER forecasting in the models (GCMs) that represent the current scientific resilience planning process allows the planning understanding of the effects of carbon emissions on engineers to understand the second-order climate climate parameters, including temperature, wind, and change impact and design appropriate mitigation precipitation. Leading physical climate risk providers measures as part of the resilience programs. To can leverage the GCM to produce downscaled illustrate the importance of including DER forecasting models that forecast the impact of hazards affecting in resilience planning, consider the following example: the infrastructure at a local level. For example, the a utility engineer working on a resilience program leading physical risk forecast providers can determine selects the undergrounding of circuit laterals to how precipitation patterns cause local flooding mitigate the impact of tropical cyclone winds. If that can damage substation equipment at specific that engineer does not incorporate DER forecasting locations; how chronic changes in temperature impact into her analysis, she will miss the higher demand urban heat islands; how high temperatures can impact resulting from the adoption of electric vehicles by the the loading of a distribution transformer, shortening customers on those laterals. The vehicles’ load could its life or resulting in a failure; and how tropical far exceed existing and projected load increases in cyclones’ winds can damage individual transmission those laterals. Consequently, while she will correctly structures. size the underground conductors and transformers based on the information available to her, absent DER Incorporating the forecasting of climate and extreme forecasting, the investment in undergrounding can weather physical risk in the resilience planning be functionally obsolete well before the end of the process allows planning engineers to better design useful life of the assets she planned. comprehensive mitigation measures that go beyond addressing historical hazards, based on historical Quantification of resilience risk in dollars The second key principle involves assigning avoided unplanned repair/replacement costs a dollar value to resilience risk. In doing so, and the costs of downtime. Downtime costs for electric utility engineers can better substantiate transmission and distribution assets are typically the spending on resilience investments when measured based on the value of the load lost integrating them into their existing investment (load that was not delivered to the customer), plans. This helps to ensure that utilities while downtime costs for generation are the appropriately prioritize resilience among their marginal replacement cost of generation for an existing capital investments. Given the value of asset at a specific location. the mitigated risk, “pricing resilience risk” into the benefits of investments that previously would not From a DER perspective, increased demand from have appeared cost-effective when compared electric vehicles coincident with extreme ambient to a like-for-like replacement alternative, would temperature can result in localized overloading not only change the cost-effectiveness of those that wreaks havoc on the distribution network, investments but the investments would rank as noted above. Sizing new conductors to higher in the priority stack. mitigate this risk is more costly. Therefore, the benefits of avoiding these overloaded conditions Avoided outages typically have two main value should similarly be priced into the prioritization components based on the delta between and justification of the investment. pre-investment risk and post-investment risk: 74

Clear traceability between risk forecasts and the investment plan The third key principle involves the establishment the utility’s investment plan. From the utility’s of clear traceability between asset-level resilience perspective, it gives planners confidence that risk and the prioritized investment plan. The they are buying down the most risk possible, planning engineer needs to leverage the asset- given the amount of money they must spend. level climate forecasts converted into dollars of As the utility continues to optimally invest, the risk to create a plan that can be integrated with average health of its assets should improve with overall investment planning programs. Clear time, freeing up more capital to invest elsewhere. traceability ensures that resilience investments From the regulator and customers’ perspectives, are targeted to the most vulnerable areas of this direct linkage similarly provides confidence the energy system, and that resources are used that the utility’s investments explicitly address effectively to improve overall grid resilience and the areas of greatest exposure while considering reliability. all climate risks to reduce outages during extreme weather events. Further, it prevents the There are many benefits to having a direct premature replacement of assets with design linkage between the climate forecasts, forecasted standards that did not account for that future. asset behavior under those conditions, and Conclusion The increasing frequency and intensity of extreme weather and climate events, along with the second- order impacts of climate change, are posing significant challenges for utilities and their customers. While many utilities have implemented resilience programs to improve the reliability and recovery of their assets, there is still significant room for improvement. Incorporating asset-level climate and extreme weather impact forecasts, as well as DER forecasts, into the resilience planning process can help utilities better design comprehensive mitigation measures, more precisely calculate their benefits and costs, and deploy resilience programs that create long-term value. By taking a proactive and adaptive approach to resilience planning, utilities can not only improve their own operations and customer service, but also contribute to the broader goal of mitigating the impacts of climate change on our communities and infrastructure. About the Authors Michael Levy Hector Artze Michael Levy is a Director in Guide- house’s Energy, Sustainability, & In- Hector Artze is a Partner in frastructure Practice. He serves as Guidehouse’s Energy, Sustain- Guidehouse’s Global Infrastructure ability, and Infrastructure Prac- Resilience Lead focusing on advis- tice. His professional career ing energy companies how to opti- spans more than 30 years in mally invest in adaptation strategies the electrical utility and ener- to combat the risks from climate gy fields. Hector is the ES&I’s change. He has expertise in regulatory innovation, grid & global growth lead for energy asset analytics strategies, and renewables & battery stor- transformation and infrastructure resiliency. He helps en- age development. He creates a strong connection with ergy, utility, and public sector clients plan for the transi- clients and has a focus for value creation in both strategy tion to Net-Zero carbon emissions; build infrastructure development and implementation. resiliency to mitigate the impact of natural disasters and climate change; modernize their utility systems; reduce the cost of operations and maintenance through process automation, optimization, and technology; and manage asset investments. 75

What Improv Can Teach Us About Funding the Clean Energy Transition by Rachel Dortin It will cost roughly $1.7 trillion per year to decarbonize the building sector by 2050. “How do we pay for it?” is a top question the U.S. needs to answer. Federal and local investments can accelerate the clean energy transition, but it still falls to the shoulders of individuals and businesses to facilitate and fund their own transition. People and businesses who are financially able can make the transition, but the 20 million households in America2 who are behind on their energy bills worry more about keeping the lights on. Low-income households, which make up 44% of the U.S., 3 have limited options when it comes to energy consumption because they spend an average of 8.6% of their total income on energy. In contrast, households without low incomes spend only around 3% of their income on energy, giving them more flexibility to transition to cleaner energy options. 3 Nearly half of U.S. households make tradeoffs because of energy-related expenses that “jeopardize health, safety, and housing stability.”4 We have an affordability crisis that will require “power and economic benefits [to] shift hands from the few to the many.”5 State agencies, community action programs, community-based organizations, utilities, and society at large all have a role to play in making sure the clean energy transition benefits everyone equitably, regardless of whether they can afford to pay. Energy justice, or “the goal of achieving equity in both the social and economic participation in the energy system while also remediating social, economic, and health burdens on marginalized communities,”5 begins with solutions for frontline communities. We will not achieve energy justice until all people and communities participate in, and benefit equitably from, the clean energy economy. Getting there will require creative answers to “how do we pay for it?” The reality is that individuals, businesses, communities, and society at large will all have to fund the transition. 7766

Yes-and thinking: Good for improv, better for tackling wicked problems. What’s the most important rule for good improv? Don’t say no. Say, “yes, and.” A “no” kills even the best comedian’s momentum, just as negative responses easily stymie the sustainability movement. Yes-and thinking helps people “find something worth accepting and then build off that nugget of goodness.”6 Yes-and thinking also offers a path to improve the current energy economy while we simultaneously advocate for an equitable transition to clean energy. Yes, there are people and businesses who don’t access financing programs. And we share the responsibility to develop alternate pathways for broader participation. Many lenders haven’t given enough consideration to the clean energy sector and charge disproportionally high interest rates because they assume that unsecured energy loan programs are high risk.7 Research by the Lawrence Berkeley National Lab recently found that energy efficiency loan portfolios have an incredibly low default risk under 1%.8 Finance programs can offer lower interest rates that reflect the actual risk incurred from financing energy efficiency and clean energy upgrades to make programs immediately more affordable. Another major misconception is that one program can meet everyone’s needs. The reality is that each market requires tailored solutions. Clearly define your audience and practice a listen-first approach to determine their specific goals and needs. Don’t assume you have all the answers. Once you have fully listened, then you can begin to work with your audience to co-develop people-centered solutions that break down barriers to participation. 77

Slipstream transitioned a utility partner in However, many finance solutions for the the northeast away from traditional loan commercial and industrial market, like Commercial underwriting, which considers debt-to-income Property Assessed Clean Energy (CPACE) ratio and credit score, to an inclusive approach programs and traditional bank loans, only finance that evaluates utility bill payment history. We saw high dollar amounts. a 33% increase in the number of loans approved over a 12-month period when we focused on the In the same way that more inclusive underwriting person, not their credit score. practices allow more people with low credit scores and high debt-to-income ratios to access Utilities, governments, and other energy service energy efficiency and clean energy loans, providers might believe stereotypes that the commercial and industrial loans under $150,000 people and businesses who are burdened by high allow small businesses to access the same energy costs are disinterested in energy efficiency upgrades that are available to larger businesses. and, therefore, “hard to reach.” But the 22% increase in loan applications shows that people Yes, more inclusive loan terms mean more are eager to reap the benefits of the clean energy people participate in funding. And people need economy when it’s easier to do so. to easily know and trust that the solutions they access are right for them. There’s a similar stigma that small business owners care only about their bottom line, not Slipstream began to design our new loan sustainability measures. The opposite is true. origination system, VelocityGO, because we Many small businesses have sustainability values wanted to be able to provide our partners with and would love to access clean energy solutions. more robust data about the carbon and equity impacts of financing. We also had customer needs top of mind. Our system is built to be easy for real people, whether they’re busy HVAC contractors who need real-time access to their customer pipeline, a first-time applicant who feels overwhelmed by the process, or a partner who will develop new finance offerings based on data about who they serve. Financing is complicated and under-discussed. One of the largest benefits of the integrated The IRA, IIJA, and other federal interventions financing system is its ability to cross-reference are building new pathways to finance the clean geolocation with income data to ensure that energy transition. At the same time, inflation and applicants access free and low-cost solutions interest rates are high, people are overwhelmed available to them prior to moving forward with by mis- and disinformation, and there is a crisis of an application. Such a capability can be built trust. out to offer auto-enrollment in income-qualified programs that provide energy bill assistance or free home upgrades prior to a loan. Yes, a simple, reliable process improves participation. And solutions need to address gaps that prevent people from accessing programs. Many customers that are considered “hard to reach” have past experiences with unclear program terms or complicated systems that give them good reason to be trepidatious. You can make it easier to trust the solutions you offer with an easy-to-use system that streamlines the process from the first line of the application until funds are distributed. 78

Many programs have shortcomings that make it Yes, financing is important to accelerate the impossible for people to participate. Programs clean energy transition. And all communities— like “LIHEAP and WAP were created as short- especially those on the frontlines of energy term solutions to assist eligible customers with injustice—deserve to benefit from clean energy an immediate energy crisis…They were not and the wealth and resilience it produces created to fully address long-term solutions regardless of whether they can pay. to energy burden or energy poverty.”9 People require programs that will meet the needs of their buildings. Many require critical repair before energy efficiency and clean energy upgrades can be considered. Solutions need to address these needs to drive program access. Slipstream’s Energy Finance Solutions (EFS) facilitates a program in the Midwest that issues up to $20,000 forgivable or deferred loans for substantial resiliency retrofits. 10% of the loan amount is forgiven for qualifying homeowners (<80 AMI) each year a homeowner remains in their home after the loan term begins, and loans are completely forgiven after ten years. The homeowner does not need to make any A truly equitable transition will mean that payments on the loan unless they decide to those most impacted “receive access to the sell or cash out refinance before ten years have benefits of new technologies in a way that is passed. This program prioritizes home resilience specifically tailored to their needs and holds them and code-compliance first and energy efficiency harmless when forecasted energy savings don’t second. However, the model can scale to fund materialize.”9 In other words, the communities larger clean energy technologies that are often that experience high energy burdens and the inaccessible to people with low and limited physical and mental health impacts of energy incomes. insecurity deserve solutions that push the needle beyond affordability. This program is a shining example of a step in the right direction, but the ideal solution is one with Currently, only about 13% of ratepayer-funded no financial burden whatsoever, even one that energy efficiency program budgets10 go to will be forgiven. households with low incomes, and the programs tend to tackle low-hanging fruit, like offering Yes, financing is important to accelerate the energy efficiency kits, rather than the expensive clean energy transition. And all communities— measures like solar power and air-source heat especially those on the frontlines of energy pumps, which are likely to offer recipients the injustice—deserve to benefit from clean energy largest margin for utility bill savings. and the wealth and resilience it produces We need equitable, low-risk finance solutions regardless of whether they can pay. that can bring air source heat pumps, heat pump water heaters, solar photovoltaics (PVs), and To achieve our building decarbonization goals other clean energy solutions with a high first cost by 2040, we need to make existing funding barrier to scale for all residential and commercial models as equitable as possible. More people buildings. We need to recognize that financing is, and businesses can overcome first-cost barriers at best, a stopgap measure for the nearly half of to improve health, save money, and mitigate U.S. households with low incomes. climate change with clean energy upgrades when programs offer lower rates, practice more We also need no-cost programs, grants, forgivable inclusive underwriting, and prioritize other loans, and other solutions to balance the scales of measures. This moves the needle closer to a distributional equity and give those communities world in which communities fully benefit from, immediate relief without an added financial and participate in, the clean energy transition. burden. 79

Yes, more people and businesses will access clean energy finance. And we can use data about the people and businesses we serve (and the ones we can’t) until everyone benefits from the clean energy economy. We begin with more approachable, accessible, and affordable financing programs that meander down a winding “yes-and” path until everyone benefits from the clean energy economy. As you begin to implement solutions that are designed for people, not their credit scores, communities will be able to break down the barriers that keep them from participation. You can also begin to collect more robust data about who benefits from the solutions you offer. And most importantly, who doesn’t. For example, Slipstream’s new finance software, VelocityGO, will offer our partners and contractors access to robust data about the carbon and equity impact of financing. Partners will know exactly who they do and don’t serve, and we can collaborate to design programs for those who are still left out. Data can help us advocate for solutions that benefit more people, like direct pay rebates instead of tax credits, which are often only helpful for wealthy people who can afford an upfront investment,11 and community solar. Yes, and data only tells half the story. The people and businesses who have been left out of the solution tell the rest. As our industry designs solutions for more people, we need to listen first. Then the work of co-creation can begin. 80

Resources for this article: 1. https://www.mckinsey.com/capabilities/sustain- 6. https://uxdesign.cc/improv-and-design-think- ability/our-insights/the-net-zero-transition-what-it- ing-128776659148 would-cost-what-it-could-bring 7. https://slipstreaminc.org/blog/dont-get-left-be- 2. https://neada.org/wp-content/uploads/2022/04/ hind-amplify-equitable-energy-finance-iija-funds utilitydebtpr4-26.pdf 8. https://betterbuildingssolutioncenter.energy.gov/ 3. https://www.energy.gov/scep/slsc/low-in- webinars/put-your-money-it-investing-energy-effi- come-community-energy-solutions#:~:text=Ener- ciency gy%20burden%20is%20defined%20as,which%20 is%20estimated%20at%203%25 9. https://www.nclc.org/wp-content/up- loads/2023/02/NCLC-PAYS-issue-brief_fi- 4. https://elpnet.org/sites/default/files/2020-04/ nal-2.14.23.pdf energy_justice_-_what_it_means_and_how_to_inte- grate_it_into_state_regulation_of_electricity_markets. 10. https://www.canarymedia.com/articles/ener- pdf gy-equity/low-income-families-dont-get-a-fair-share- of-energy-efficiency-funds 5. https://iejusa.org/wp-content/uploads/2019/12/ The-Energy-Justice-Workbook-2019-web.pdf 11. https://blog.ucsusa.org/john-rogers/lower-in- come-households-shouldnt-pay-more-for-solar-con- gress-can-fix-it/ About the Author Rachel Dortin Rachel Dortin (she/her) unearths stories from the frontlines of the cli- mate fight in her capacity as Digital Content Strategist for Slipstream, a nonprofit organization on a mission to decarbonize the built environ- ment. Rachel has a PhD in Rhetoric and Composition from Wayne State University where she practiced ecofeminist and participatory research to establish activist approaches to advance equity in university-nonprofit partnerships. Rachel’s current professional interests examine the nexus of environmental justice and the clean energy transition and hope to ad- vance community-led solutions. Outside of her professional life you can often find Rachel on adventures with her three rescue pit bulls. 81

Pairing Traditional Energy Assessments with the New Frontier of Load Management by Greg Wassel Franklin Energy Traditional in-person auditing programs have unwilling to spend more than 30 minutes on an been a staple in the utility energy efficiency assessment. portfolio for decades. However, with the adaptation of virtual and even hybrid virtual/in- As we continue to emerge from the pandemic, person experiences over the past several years, the need remains for alternative assessment it’s time to look at the next generation of these choices that provide the best options to ensure home auditing programs. customers can participate in ways that are most convenient for them, while still generating This evolution includes meeting the customer savings opportunities. These options are where they are comfortable—which could specifically important to customers who are mean online, over the phone, or in person—in typically away from home during the day, those order to capture a deep, holistic view of their who are concerned about allowing an unknown opportunities, including efficiency, DER adoption, third party into their home, and those who do EV readiness, and electrification. Enhancing the not want to spend the time waiting for someone customer experience by providing an audit that to come to their home. A combination of online, best meets the needs of the customer, along virtual, phone-guided, and in-person energy with a wide variety of custom efficiency options, audit options help to overcome common barriers, leads not only to increased portfolio flexibility, ultimately driving greater program participation. but also to increased customer participation and satisfaction. The various types of assessments may also help drive greater participation at a wider When the pandemic hit in March of 2020, utility range of engagement levels. Customers programs across the country looked for ways who are looking for initial information and to adapt to continue driving towards savings general recommendations can select an online goals. This led to an increase in online and phone assessment, which is perceived as a lower assisted audit-based programs, along with newly commitment than in-person audits, to reach designed phone-assisted audits. To improve these goals. For mid-level customers, a phone- participation rates in assessment programs and assisted audit allows for a more detailed uptake of assessment recommendations, Franklin approach that walks homeowners through the Energy conducted proprietary research, surveying home and aids with the installation of measures; 500 consumers in June 2020. Results found this is ideal for customers who want to complete that 57% of respondents would be likely or very installations on their own but have questions likely to schedule a virtual energy audit. The most during the process. important perceived benefits of an audit were Finally, for customers who are looking for the receiving a free or discounted bundle of energy- most detailed assessment and are ready for saving products (23%) and getting a personalized deeper retrofits, the in-home approach is a energy-saving action plan (21%). The most method to accomplish these goals. popular virtual audit option was an online self- guided format with chat support (44%), followed by a video assessor-guided format (38%) and a Additionally, providing a variety of audit options phone assessor-guided format (17%). The least places a greater focus on equity. To achieve popular option was an in-person audit (10%). this goal, all assessment types must include 82 Finally, we learned that 60% of consumers were offerings in multiple languages. Furthermore,

conducting outreach events in communities Modern programs will analyze a home’s incoming can help to build confidence and a rapport electrical service and the load served via the between utility programs and customers who electrical panel. This information is fed into may be skeptical. These events can be based calculation tools to determine the ability for directly in the community, via partnerships with customers to add additional electrical loads to local organizations, via local media, and many their home, including electric vehicle charging other ways. Understanding the needs of the and the upgrade of appliances to newer, more customers within the community helps the efficient electric models (e.g. heat pumps, heat program and the program designer to understand pump water heaters, clothes dryers, ovens, and the messages and implementation plans that will cooktops). Should additional work be required be most desirable by the community as a whole. to install these devices, the audit report must And offering the widest amount of services provide the process to upgrade the service at possible will allow a utility to reach the greatest the customers’ homes and any utility incentives number of customers. or programs to assist in the upgrade. Providing services to a greater population is more Upon completion of a qualifying quiz, regardless important now than ever. Assessment programs of the avenue selected, a program can offer themselves are beginning to evolve to meet the customers items such as a bundle of energy- needs of customers and utility programs alike. efficient products, upgrades to the next Traditionally, assessment-based programs have assessment type, access to specific rebates focused solely on energy efficiency needs and or services, coupons to use within the online upgrades, including a review of the home, the marketplace, or any other offer. An optimized building shell, the appliances, and the behaviors conversion pathway and customer journey within. However, recent program changes have tracking removes the need for the customer begun to focus beyond just energy efficiency. to re-validate to schedule an assessment or Specifically, looking into a customer and their apply for rebates, while an automated follow-up home’s readiness for demand response, load message includes their recommendation report shifting, time-of-use (TOU) rates, electric vehicle based on their responses and audit findings. charging, whole home batteries, and overall Finally, to encourage participation, customers can electrification is crucial. be automatically enrolled in nurture messaging around the offers for which they qualified. Offering a wider variety of programs can present a challenge for utilities looking to qualify their This expansion of the utility-sponsored customers, but the solution is simple: offer an assessment program is critical to the ongoing easy-to-complete quiz, either online, via phone, success of these offer types. Varying how or via an in-home assessor—again, multiple customers can participate helps to bring new options eliminate barriers to participation. In customers into programs. Ensuring that the the past, a homeowner may have found out assessments touch on upgrades that are whether they qualified for a single energy important to the customer is just as important in efficiency program. making the assessment valuable to the customer. The rise in electrification goals will lead to greater Now, energy efficiency targets go a step further interest in these opportunities, from electric than completing calculations that model a home vehicles to appliances, and utilities can position and its energy usage. themselves as a trusted advisor to customers through the implementation of expanding assessment offerings. About the Author Greg Wassel, CEM, Senior Manager of Residential Solutions: Greg leads the grid 83 Greg Wassel optimization and residential solutions product line for Franklin Energy, focusing on program design, start-up, best practice development, program reporting, and EM&V support. He identifies new program approaches and forges partnerships with industry- leading companies to enhance our operations and develop new products and services for our clients. Within grid optimization, Greg focuses on demand response initiatives, including behavioral, BYOT, direct installation, and online marketplace initiatives, along with programs that are looking to leverage rate-based design, the integration of storage systems, electric vehicle management, and additional distributed energy resources (DERs). As a part of Franklin Energy’s Innovation Team, Greg works to integrate our software solutions for customers, clients, and partners into our programs to provide detailed support and experiences. He has more than a decade of demand response and energy efficiency program design, management, operations, and evaluation experience, including oversight of M&V for the award-winning Power Manager® residential switch-based demand response program and the Energy Wise residential load control program. Greg is a Certified Energy Manager. He earned a bachelor’s degree and master’s degree in geography from the University of Georgia.

Illuminating Your Life – How the Ameren Illinois Energy Efficiency Program Brightens Underserved Communities by Angie Ostaszewski Ameren Illinois Since 2008, the Ameren Illinois Energy Efficiency key metrics, but to transform how the Energy Program has been committed to helping Ameren Efficiency Program operates in every area. To Illinois customers save money on their energy do this, the MDI team cultivates new economic expenses through energy-efficient products, and energy efficiency opportunities for diverse services, and education. The service territory individuals residing in underserved areas to spans over 43,000 square miles throughout the promote workforce deployment in the energy state of Illinois, and every day, Ameren Illinois field, as well as increase energy efficiency delivers electricity energy to 1.2 million electric education through outreach events and local and 816,000 natural gas customers in central partnerships with diverse suppliers. and southern Illinois. A key partnership of this initiative was formed To serve these communities better, the Market with Solutions for Energy Efficiency Logistics, Development Initiative (MDI) was established LLC (SEEL) to provide workforce development in 2018 as part of the Ameren Illinois Energy services to underserved individuals. The Efficiency Program to closely integrate with both partnership with SEEL and MDI focuses on the business and residential teams on day-to- connecting non-traditional energy industry job day operations, helping to identify more project seekers to jobs or training that provide products opportunities, maximize underserved customer and services that improve the energy efficiency touchpoints, and create a streamlined process for of Ameren Illinois customer homes and buildings. customers’ participation in the Energy Efficiency Program. This initiative specifically targets In just one year, this program initiative and lower-income communities and populations community partnership saw 47 job seekers that have previously not had access to energy attain energy efficiency employment and 56 efficiency education and products. Since 2018, individuals receive energy efficiency job training. MDI has partnered with 117 community-based Additionally, the workforce development organizations, engaged over 240,000 customers, partnership continues to increase awareness provided 88 scholarships at six community of energy efficiency careers in K-12 schools, colleges, funded 64 internships and spent over community colleges, churches and community $72,141,000 with diverse-owned businesses. organizations as they advocate, promote and The mission of MDI is not only to meet these support greater diversity within the energy 84

efficiency workforce, with a focus on women, platform for Black individuals in the Peoria underrepresented minorities, and returning arts community. Forming and nurturing this citizens. Most recently, MDI ran a seasonal partnership between PGOBA and the Ameren employment pilot in November 2022, connecting Illinois Energy Efficiency Program means Ameren 28 job seekers—the majority of whom were Illinois reaches and connects to a population currently incarcerated or recently released of individuals that hasn’t typically had positive from incarceration—with an energy auditing connotations associated with their energy certification. This resulted in 22 of the 28 students provider. By building this relationship from within, obtaining seasonal employment in various energy the Energy Efficiency Program provides energy efficiency positions, such as smart thermostat efficiency education through art and is able to installation or neighborhood canvassing. continue conversations with the community about energy efficiency, including getting them involved Many of these seasonal positions supported the in the workforce development program offered Smart Savers Initiative. The Smart Savers Initiative by MDI. offered by the program allows customers living in qualified ZIP codes to receive a no-cost smart Currently, PGOBA has hand painted three murals thermostat with free professional installation from around the city, each representing sustainability, a Program Ally Contractor. This offering allows the racial justice, and energy efficiency, with the program to connect with these individuals through most recent iteration being a playful scene of targeted communications, while providing the Black children frolicking in a field as they chase customer with no-cost energy efficiency products a whimsical scene of “lightning bulbs,” which are to help manage their energy usage and lower LED lightbulbs designed to look like lightning bugs their costs. illuminating the sky. The Ameren Illinois Energy Efficiency Program celebrated an unveiling of the Two of the program initiative job seekers obtained mural at a community “block party,” with over 465 employment with SEEL to do door-to-door people in attendance, complete with a DJ, local canvassing in income-qualified communities to food trucks, family-fun games, and community distribute information about the partnership partners in attendance. between Google and the Ameren Illinois Energy Efficiency Program. Because of this partnership, Whether the Ameren Illinois Energy Efficiency 168 community member households were able Program is creating partnerships or promoting to take advantage of receiving a Google Nest program offerings in unique, new ways, the Smart Thermostat at no cost in December 2022. program continues to remain innovative in serving This type of “boots on the ground” approach its underserved customers. With energy efficiency helped the program distribute over 35,000 smart education and cost savings for customers at thermostats. the forefront, the program builds relationships and sets high goals each year, all to ensure In fall of 2022, MDI also partnered with a local Ameren Illinois customers increase the comfort group of artists to create beautiful, hand-painted of their home or business, manage energy usage murals around community centers and meeting and reduce costs. To learn more about the areas in underserved communities of Peoria, IL. Ameren Illinois Energy Efficiency Program and The Peoria Guild of Black Artists (PGOBA) is a the Market Development Initiative, visit www. group of Black creatives from within Peoria, whose mission is to bring Black creatives together, AmerenIllinoisSavings.com/MDI. uplift one another, advocate, and provide a About the Author Angie Ostaszewski Since 2016, Angie Ostaszewski has worked for Ameren Illinois in their communications, charitable giving, and energy efficiency groups. In her current role as Energy Efficiency Advisor, she supports residential pro- grams and manages the Market Development Initiative. Outside of work, Angie is also grateful to serve on the Center for Prevention of Abuse and Illinois Central College Foundation boards and is the vice president of Re- naissance Park Community Association. She graduated #1 in her class at Bradley University’s MBA program, and prior to that studied Economics and Sociology at Knox College. 85

Living in the Customer Dimension: Integrating Energy Efficiency and Distributed Energy Resources by Tilak Subrahmanian Over the last 10+ years, investment in Energy When I joined Eversource 14 years ago, just Efficiency across our territory in Connecticut, as we were ramping up investment in Energy Massachusetts, and New Hampshire has led to Efficiency, we were long on energy expertise but strong results. From 2019 through 2021, the had limited go-to-market infrastructure to drive Eversource programs resulted in annual savings scale. So how have we been able to achieve the of over 2.7B kWh from all electric customers, results we have since then? equivalent to offsetting the total energy usage of over 370,000 homes in a year. In addition, well The key is investing in understanding our over $500 million in annual energy cost savings customers: how they use energy; their peak went directly to customers. demand; the homes and buildings they reside and work in; their firmographic and demographic Moreover, these efforts achieved an average context. This focus led to an understanding of annual reduction of 1.9M metric tons of carbon their needs, opportunities, and barriers which dioxide (CO2) emissions — the equivalent of informed the solutions we offer and the partners taking 400,000 cars off the road for a year. we work with to reach our customers. We achieved these results despite multiple Now, we’re using the same approach to im- challenges, including inflation, supply chain plementing Distributed Energy Resources (DER). issues and policy changes driven by the COVID-19 pandemic. “ The key is investing in understanding our customers: how they use energy; their peak demand; the homes and buildings they reside and work in; their firmographic and demographic context. 86

Segmentation — Key to Understanding Customers and Scaling Programs Successful customer segmentation requires different approaches. The Commercial and Industrial Segment (C&I) Over a decade ago, we performed our first quartile analysis of our C&I customers based on their energy usage. The results surprised us and have not only informed our go-to-market approach, but have become deeply embedded in it. Key insights: • 2% of our C&I customers accounted for • Approximately 80% of our small C&I 80% of our usage. Contrary to popular belief customers accounted for only about 8% of at the time, our largest customers were under- usage. We refer to these as microbusinesses: indexed in EE uptake. These were very large hair and nail salons, coffee shops, institutional customers with complex buying neighborhood restaurants, etc. The best processes. We noticed that there was a high way to engage them was through targeted degree of energy awareness on the shopfloor, marketing, complemented by channel but much more limited understanding at the partnerships to follow up on warm leads. executive level. We realized that selling one project at a time was not the right approach. Rather, we needed to engage the C-suite in a high-touch, one-to-one approach to create Memorandums of Understanding (MOUs) for a multi-year agreement on a joint commitment. Our first MOU on a three-year agreement was with Massachusetts Institute of Technology (MIT) in 2010. Today, we are on our fifth. This has become our standard operating procedure — we now have MOUs with most of our largest customers. 87

Our sales approach is segment-specific... From the C-Suite to Main Street: Lessons in Segmentation We have since gone much deeper with segmentation to incorporate different sectors and sub- sectors—such as healthcare and hospitals—as well as building size and use: labs, office space, etc. This approach has given us a rich understanding into how our customers consume energy, including recognizing their times of peak demand and creating more detailed profiles of their greenhouse gas emissions. Labs offer a good example. Over time, we have driven the Energy Use Intensity (EUI) of new lab spaces down by more than 70%. We’re currently supporting Wesleyan University of Middletown, Connecticut on the construction of a new lab building which is projected to have an EUI below 90—a stark contrast to similar labs that just a few years ago had EUIs closer to 300. In existing labs, we have worked with Principal Investigators to drive significant reductions in energy use through a combination of behavioral approaches and simple technical solutions. In the small business sector, we worked with a popular, fast-food/breakfast company with franchises across New England to improve EE and mitigate peak demand. We were surprised to discover that their energy demand profile didn’t match the business profile. We had assumed that the demand profile would peak during the breakfast rush and then drop off after 10:00 or 11:00 AM. That was not the case—each franchise continued to draw a high level of energy throughout the day. The root cause: multiple toasters running continuously, even when the franchises were not selling toasted products. Solving the problem was just a matter of turning the toasters off when they were not in use. This was a scalable solution because that single change could be implemented at every franchise. This example is not an anomaly. As we’ve developed demand personas for different sectors, we consistently notice that those personas usually don’t match peak business hours for that sector. 88

Our Main Streets approach helps microbusinesses in Massachusetts reduce their energy costs and environmental impact. Authorized contractors schedule no-cost energy assessments, answer questions about energy efficient equipment upgrades, and provide some improvements on the spot. Larger projects, such as new HVAC equipment or energy efficient motor controls, are scheduled for future installation and may qualify for incentives and interest-free financing to offset the cost of upgrades. The program tripled our outreach compared to a 2020 benchmark by serving 55 communities during 2022 and focusing on the non-English customer journey. The Main Streets events completed in 2022 resulted in 1,500+ projects (a 30% increase YoY) and a resulting annual savings of over 19M kWh and 270K therms. In Connecticut, our Community Partnership Initiative similarly supports small businesses, as well as residents, through community-based outreach initiatives. In 2022, the Partnership funded nine projects in eight Connecticut communities. The initiative leverages the experience, trusted relationships, and knowledge of local groups, municipalities and nonprofits to further efficiency adoption and educate residents and businesses on available solutions. The Town of Branford and the Branford Clean Energy Committee championed the Small Business Energy Advantage program through the “Branford Business Energy Efficiency” campaign. As a result of their outreach and educational efforts, nearly 60 small businesses in Branford either completed or ended the year with an energy efficiency project underway. Bringing Segmentation to the Home Our approach to residential segmentation examines a couple of dimensions. Understanding the building profile. Understanding the customer profile. Too often in this industry we consider Again, we use simple buckets: income each home or building unique, which is bracket, number of folks in the household, not a scalable approach. We’ve learned to preferred language, etc. Using this data, we segment single-family homes into different create targeted (and more equitable) offers buckets, mostly based on the type of and messaging. home, its age, and its square footage. That helps us understand the physical asset and the opportunity within. Our hypothesis is that this relatively simple, straightforward segmentation should tell us what to expect more than 80% of the time. An overarching factor that impacts our approach to residential segmentation is geography. We have very old housing stock in New England—some data indicates that more than 80% of single-family homes in the region were built before insulation was required by code. EE initiatives necessarily require a lot of weatherization and retrofitting. Given this context, where do Distributed Energy Resources fit into the picture? 89

Where Integration (of DER) Meets Segmentation As we look ahead to decarbonizing the residential sector—electrification of heat and transportation— we have to effectively integrate a few different considerations: • Weatherization to reduce baseline energy consumption. Our challenge, among other things, is to overcome all the pre-weatherization barriers associated with such old housing stock • Electrifying heating in a way that makes economic sense for the end consumer • Supporting EV charging at home, which can roughly triple the peak demand draw of a home • Integrating all this and PV/Storage to mitigate impact on the grid and minimize customer investment in upgrading their electrical service As we refine our approach, we go back to the basics: an understanding of the customer and their expected energy use profile. Customers will choose to take action in whatever sequence they prefer— the challenge for us is to design offers that reinforce one another and communicate opportunities with the right amount of context to help customers make informed decisions. Achieving Equity We see the equity piece as an integral and embedded part of our overall strategy. While developing our go-to-market processes, we’re also building the critical relationships to make all this work for our most vulnerable customers. Central to these efforts is the Community First Partnership Program, which promotes increased partnership with local organizations in under- resourced communities. This program provides each Community Partner Team up to $60,000 of financial support annually for three years to incentivize participation in energy efficiency programs. Thirty communities currently participate, 70% of which represent Environmental Justice Communities. In EJCs, 34% of residents speak a language other than English at home. New Construction New construction provides a unique green-field opportunity to test-drive new technologies at scale— and we have. We’re reaching more and more people in the building community who are actually doing the work on the ground, including architects, engineers, general contractors and developers. Just a few years ago, our annual Zero Energy Building Conference drew fewer than 100 people from the building community. Our 2022 event welcomed more than 500. The impact is very apparent: we routinely see Elementary and Middle Schools built with EUIs <25, where historically those numbers were closer to 100; office buildings going up these days have EUIs ~40, where they used to be well over 100. 90

Closing Thoughts As we look ahead to an increasingly complex and distributed energy landscape ahead, it is important for us to start with the customer: who is the customer; what is their need; what is their buying process; and how do we help them weave the different threads together into an approach that achieves the broader decarbonization objectives? We have to check our inclination to get wonky and focus on technologies. This approach has served us well as we drove adoption of EE at scale – we will be using a very similar playbook to drive broader electrification and decarbonization. We have to start with the customer and work our way back. About the Author Tilak Subrahmanian As Vice President, Energy Efficiency, Electric Mobility and Behind- the-Meter Storage for Eversource, Tilak Subrahmanian oversees one of the largest portfolios of solutions that help customers decarbonize their homes, businesses, and transportation. Tilak leads the integration of a broad range of behind-the-meter customer energy solutions and end-use decarbonization: Building Electrification, Energy Efficiency, Distributed Energy Resources, Renewables, Cogeneration, Storage, Microgrids, and Electric Vehicles. Previously, Tilak was at Arthur D. Little and at Thomson Reuters. He has an extensive background in Corporate Strategy and New Business ventures, working with executives in different industries to drive top-line growth and performance. He has successfully launched and operated new business ventures for several companies. Tilak has also been a judge of the MIT Clean Energy Prize. Tilak earned an MBA from the University of Michigan, a MS in Engineering from the University of Washington, and BTech in Engineering from the Indian Institute of Technology, Madras. 91