1 Comments for Workshop on EEU Budget for 2009-2011 August 6, 2008.

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Comments for Workshop on EEU Budget for 2009-2011

August 6, 2008

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Outline of Presentation

1. The Board’s Questions to Efficiency Vermont

2. Efficiency Vermont’s Approach to the Board’s Questions

3. Approach to Ramp-up Response

4. Efficiency Vermont’s Ramp-up Response

5. Rate of Ramp-up

6. Potential Expansion Strategies

7. Potential Changes in Costs and Savings

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The Board’s Questions to EVT

• Can EVT ramp up the delivery of energy efficiency services as quickly as CLF and VPIRG have proposed?

• If so, what types of services would be increased or offered for the first time?

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Efficiency Vermont’s Approach to the Board’s Questions

• We will seek to meet the Board’s objectives for the EEU with whatever budget level we are provided.

• Our response is preliminary; we have not yet adequately considered all aspects of the proposed ramp-up, including the time necessary for:

• Planning

• Development

• Capacity expansion (both internal and external)

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Our Approach to Ramp-up Response

We conducted rough estimate of potential costs and savings for 2011 at the major market level, including consideration of:

• Trends in technology and market opportunity

• Recent history and expected % changes in EVT cost / MWh

• Potential to take target area strategies statewide

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Summary of Efficiency Vermont’s Response

While challenging, we believe it would be possible to increase spending on cost-effective energy efficiency by 2011 to a budget level commensurate with that proposed by CLF and VPIRG.

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Ramp-Up

$40

$60

$85

$31

2008 2009 2010 2011

To ramp up responsibly to the 2011 budget level proposed by CLF and VPIRG, we suggest a ramp-up path that would likely rise more slowly at the beginning:

?

?

$30.75 M

?$85 M

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Other Ramp-up Issues

• Consider ramp-up and ramp-down demands and effects on market partners and customers• To minimize market disruption, large ramp-ups should be sustained for several years; and if ramped down, at a gradual pace.

• What planning assumptions would be made beyond 2011? • Would ramped-up levels be maintained?

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Potential Expansion Strategies

Markets Key Ramp-Up StrategiesBusiness Market Opportunities   Lighting Increase incentives & more upstream focus

HVAC and other Business Market opportunity

Increase incentives & more upstream focus

Business Retrofit More comprehensive in all retrofit markets

Largest Customers (> 500 MWh, account- managed)

Expand target area strategies statewide (Account Management)

Large Commercial (40-500 MWh)Expand target area strategies statewide (Direct Install)

Small CommercialExpand Direct Install to Small Commercial; new vendor-driven options

New target / niche marketstelecommunications, hospitality, data centers, others tbd

New vendor-driven target InitiativesPay for performance for compressed air, refrigeration, farms, and other technologies and sub-markets tbd

Business New Construction Stratgeies tbd for higher market share

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Potential Expansion Strategies

Markets Key Growth Strategies

Retail Efficient Products  

CFLsFocus on maintaining success and on specialty products with lower adoption rates

Appliances and other retail productsStrategies for higher market share; refrigerator turn-ins, higher tier incentives

Advanced lighting (LEDs) Phase in and aggressive promotion

Consumer electronicsENERGY STAR® PCs, Smart Strips, upstream promotion

Residential Existing Homes  

Home Performance with ENERGY STAR Expand participation in HPwES

Direct Install lighting / appliances (new) Direct install in targeted communities

New technologies for electric DHW Retrofit or Direct Install

Feedback / Behavioral Tools that provide customer feedback (e.g., Blue Line; Positive Energy; others tbd)

Solar DHW Incentives and promotion (subject to screening)

Residential New Construction Strategies for higher market share, deeper savings

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Supplemental and Back-up Strategies

• Open solicitation for third-party / vendor proposals

• Pay for customer energy reduction (similar to California 20/20) – possible tie-in to smart meters

• Downsize strategies – (e.g., right-sizing equipment, smaller appliances, smaller homes)

• Next generation, deep direct installation for residential and / or small business

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Potential Changes in Costs and Savings

2008 2011

EVT Cost ($M) 28$ 77$

Annual MWh 116,000 159,000

Summer Peak MW 16 24

Winter Peak MW 17 22

TRB ( $M ) 100$ 156$

$0.025

$0.051

$0.107

$-

$0.020

$0.040

$0.060

$0.080

$0.100

$0.120

2008 2011 AVOIDEDCOST

With savings from CFLs dropping, an expected greater reliance on measures and strategies with higher costs, and more aggressive strategies, the levelized cost of efficiency will likely increase. It would still remain well below avoided supply costs.

EVT Levelized Cost / kWh

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Potential Change in Levelized Cost and TRB / kWh by Major Market

2007 2011 2007 2011

Business New Construction 0.029$ 0.045$ 0.117$ 0.162$

Business Market Opportunities 0.050$ 0.064$ 0.097$ 0.154$

Business Retrofit 0.023$ 0.045$ 0.086$ 0.127$

Retail Efficient Products 0.012$ 0.047$ 0.088$ 0.131$

Residential New Construction 0.079$ 0.118$ 0.277$ 0.295$

Residential Retrofit 0.056$ 0.098$ 0.065$ 0.110$

Total 0.025$ 0.051$ 0.095$ 0.140$

EVT Cost / kWh EVT TRB / kWh

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Potential Change in Spending by Major Market

Business New Construction

14%

Business Market Opportunities

7%

Business Retrofit30%

Residential New Construction

16%

Residential Retrofit17%

Retail Products16%

Business New

Construction

13%

Business Market

Opportunities

12%

Business Retrofit

54%

Residential New

Construction

10%

Residential Retrofit

5%

Retail Products

6%

20112007

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Planning for CFL Market Transformation

In 2007, retail CFLs accounted for:

• 46% of first-year MWh

• 42% of Summer Peak MW

• 26% of lifetime MWh

• 25% of TRB

• 14% of costs

Efficient Products Percentage of Total EVT

MWhs, Lifetime MWHs, expenditures, and TRB

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

2000 2001 2002 2003 2004 2005 2006 2007

% of Annual MWH % of Lifetime MWH % of EVT Cost % of TRB

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Planning for CFL Market Transformation• EVT is collaborating in the DPS investigation of

attribution and savings in the context of the rapidly changing CFL market to inform 2009-2011 planning

• EVT’s interim planning for 2009-2011 assumes for Retail Efficient Products:

• 25% reduction in savings per CFL in 2009• 50% reduction in savings per CFL in 2010• 75% reduction in savings per CFL in 2011