SPRING SYMPOSIUM - All Slides April 26 2018 - cedmc.org · Glenn Sansbury, Senior Client Manager, ... private financing capital Pge.com. ... Structure Utility Platform

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Welcome!

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Welcome!

Margie Gardner, Executive DirectorCalifornia Efficiency + Demand Management Council

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Our Board of Directors

Carmen Henrikson (Chair), TRC Valerie Richardson (Vice Chair), DNV GLTerry Fry (Treasurer), CadmusNick Brod (Secretary), CLEAResultMahlon Aldridge, Ecology ActionSharyn Barata, Opinion DynamicsLauren Casentini, Resource InnovationsCody Coeckelenbergh, Lincus

Ann McCormick, Newcomb AndersonMcCormick

Matt O’Keefe, Oracle/OpowerGene Rodrigues, ICFRichard Sperberg, Onsite Energy Paul Whitelaw, WilldanGreg Wikler, Navigant

Event program committee members appear in red.

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Michelle VigenKira KimickMelanie Gillette

Council’s All Star Staff – say hello today!

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Thank You to Our Sponsors!

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Efficiency Always: new and enduring roles for EE in evolving energy markets

Maggie Molina, Senior Director of Policy, ACEEE

Efficiency Always: New and Enduring Roles

for Energy EfficiencyMaggie Molina

Senior Director for Policy

ACEEE

April 26, 2018

aceee.org @ACEEEdc

The American Council for an Energy-Efficient Economy is a nonprofit 501(c)(3) founded in 1980. We act as a catalyst to advance energy efficiency policies, programs, technologies, investments, & behaviors.

Our research explores economic impacts, financing options, behavior changes, program design, and utility planning, as well as US national, state, & local policy.

Our work is made possible by foundation funding, contracts, government grants, and conference revenue.

Efficiency is still our least-cost energy resource

Energy Efficiency & DRP: Survey Results

Efficiency considered as an active resource?

Efficiency and distribution planning departmental coordination?

Yes

No

Geotargeting: ConEd’s Brooklyn Queens Demand Management Project

Source: SEPA

EE in distributed resource planning: recommendations

Valuation methods should continue to be enhanced and improved to capture the full value of energy efficiency.

Planning processes should be coordinated to improve outcomes.

The National Standard Practice Manual should be a tool for regulators and utilities to measure cost effectiveness of efficiency investments.

Geotargeted efficiency should be used as a complement to broad-scale or system wide efficiency, not as a replacement.

ACEEE resources on utility EE program strategies

• York, D. et al. 2015 New Horizons for Energy Efficiency: Major Opportunities to Reach Higher Electricity Savings by 2030.

• Nowak, S. 2016. Big Opportunities for Small Business: Successful Practices of Utility Small Commercial Energy Efficiency Programs.

• Cluett, R. and J. Amann. 2016. Scaling Up Participation and Savings in Residential Retrofits.

• Perry, C. 2017. Smart Buildings: A Deeper Dive into Market Segments.

• Baatz, B., G. Relf and S. Nowak. 2018. The Role of Energy Efficiency in a Distributed Energy Future.

• Denson, JR and S. Hayes. 2018. The Next Nexus: Exemplary Programs That Save Energy and Improve Health.

• Khan, S. and S. Vaidyanathan. 2018. Strategies for Integrating Electric Vehicles into the Grid

ACEEE resources on utility EE program strategies –forthcoming in 2018

• Energy Impacts of Smart Home Technologies

• Reducing Energy Use and Carbon Emissions by Replacing Oil and Propane Furnaces and Boilers with Heat Pumps

• Strategic energy management & smart manufacturing.

• Rural energy efficiency program best practices

• Exemplary energy efficiency programs and recognition

• Capturing energy efficiency’s role in maintaining electric system reliability

• Utility-Electric Vehicle (EV) convening and working group

The top convener in energy efficiency.

aceee.org/conferences

Upcoming ACEEE Conferences

ACEEE SUMMER STUDY ON ENERGY EFFICIENCY IN BUILDINGS

AUGUST 12-17, 2018 PACIFIC GROVE, CA

ACEEE RURAL CONFERENCE OCTOBER 22, 2018 ATLANTA, GA

CONFERENCE ON HEALTH, ENVIRONMENT AND ENERGY DECEMBER 3-5, 2018 NEW ORLEANS, LA

Thank You!Maggie Molina, Senior Director for Policy, 202-507-4004 or [email protected]

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Big Things Ahead for Residential DR

Moderator: Melanie Gillette, Senior Policy Director, The CouncilBrad Davids, Head of Demand Response Partnerships, Nest LabsTyler Rogers, Director of Utility Sales, EnergyHubChris Carradine, Executive Vice President, Business Development, ecobeeDavid Schlosberg, Vice President, Energy Market Operations, eMotorWerks

2018 | Confidential and Proprietary

Winter demand response takes off with

SoCalGas

Incentive of up to $125 leads to more than 10K

enrollments for winter 2017 -- program evaluation

currently underway.

Rapid growth in thermostat-based load

management programs

Participation across Nest thermostat DR

programs increased by over 100% in 2017 -- this

pace of growth is expected to continue in 2018.

“On device” opt-in EE program delivers peak

demand reduction

Subtle on-peak setpoint shifts (0.6℉) deliver ~200 W per

thermostat; simple deployment results in deep

penetration across device population.

What’s new in residential DR?

THE HELPFUL HOME

Imagine a home that learns, listens,

anticipates and responds to your

every command.

No buttons. No clutter. No effort.

❖Provider of EV charging hardware, software and services

❖30,000+ EV charging stations sold worldwide

❖Acquired by Enel Group in 2017, part of Enel X

❖Engaged in residential DR since 2016

❖Managed charging = “V1G” = demand response

❖Flexible, controllable and fast enough for most any energy service

eMotorWerks: Smart Grid EV Charging

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Grid Edge

Reliability Independence

Utilit

y

Custo

me

r

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Thank You to Our Sponsors!

Break Until 11:25

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Efficiency Program Administrators Lightning Round

Moderator: Gene Rodrigues, Vice President, ICFErin Brooks, Regulatory Policy and Reporting Manager, SoCalGasMichael Bushey, Director, Customer Programs, Southern California EdisonMeghan Dewey, Sr. Mgr., Energy Efficiency Portfolio Management, PG&EMeaghan Doran, Manager, Customer Programs Operations, MCEDavid Jacot, Director, Efficiency Solutions, LADWP

Meaghan DoranManager, Customer Programs [email protected]

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Thank You to Our Sponsors!

Lunch Until 2:05

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The Many Flavors of Pay-For-Performance

Moderator: Carmen Henrikson, Associate Vice President, TRCCarmen Best, Director of Policy & Emerging Markets, OpenEEJennifer Chamberlin, Executive Director of Market Development, CPowerAl Gaspari, PG&EGlenn Sansbury, Senior Client Manager, Hartford Steam BoilerJulia Szinai, Graduate Student Research Assistant, Berkeley Lab

The Many Flavors of Pay-For-Performance

Julia SzinaiGraduate Student ResearcherLawrence Berkeley National Laboratory

Jennifer ChamberlinExecutive Director of Market DevelopmentCPower

Al Gaspari, Jr.Manager, Residential & Transaction ServicesPacific Gas & Electric

Carmen BestDirector of Policy & Emerging MarketsOpen EE

Glenn SansburySenior Client ManagerHartford Steam Boiler

Putting Your Money Where Your Meter IsA Study of Pay-for-Performance Energy

Efficiency Programs in the U.S.

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Julia SzinaiCEDMC Spring Symposium, April 26, 2018

Agenda• Defining P4P

• Motivation and background

• Lessons learned and recommendations from case studies

Download the Issue Brief and Report here:https://www.nrdc.org/resources/putting-your-money-where-your-meter

Defining Pay-for-Performance (P4P): Pay- and measure-as-you-go

• Most EE programs provide upfront rebates based on expected savings

• Instead, P4P programs track and reward energy savings as they occur

• Many payment and savings estimation approaches exist, but incentives are

usually paid based on buildings’ meter data

- Encourage continued savings

- Potentially more accurate savings estimate

- Lower risk of over-paying

- May not be appropriate for all sectors or buildings

- Can be more complex

- Does not help with upfront costs

Advantages Disadvantages

Why now? Aggressive EE and grid goals require more innovative approaches

• CA (SB350, AB802): Double state’s energy savings by 2030, emphasis on “measured” savings

• NY (REV): Focus on distributed energy resources (DER) such as EE, and on market-based approaches

Greentechmedia.com

Why now? Smart meter data and analytics may streamline estimation of savings

Widespread AMI, smart devices, and new software enable:• Automated M&V

• “EE meters” that normalize for weather, and other parameters such as occupancy, production process, etc.

State and Local Energy Efficiency Action Network. 2012.

Energy Consumption Before, During and After an EE Project is Implemented

Analysis of key elements and lessons learned from:• 21 case studies from late

1980s to present, across the U.S.

• 24 expert interviews

Taxonomy of P4P Features

Basic Design Features – Recommendations

Encourage deeper savings and avoid “cream-skimming”: • Minimum savings requirements• Tiered incentives• Requirements for multiple measures (early programs focused

mainly on lighting)

How Performance is Measured – Recommendations

To improve accuracy and certainty of savings estimates:• Screen out unpredictable buildings• Estimate for a portfolio of buildings• Backup savings estimation methodology

To streamline M&V and reduce costs:• Standardize and agree in advance on methods and

data

How Payment is Determined - Recommendations

To mitigate performance risk for customers, implementers, utilities, ratepayers:

• Milestones for installation + performance incentives

• Quality standards and insurance for EE projects

• Diversified portfolio of buildings

• Regular feedback on savings

Potential P4P Applications

• Wider range of EE projects, especially complex, interactive, multi-measure, whole-building efficiency projects

• EE as a verified energy or capacity resource

• Facilitate private market of competitive implementers, attract private financing capital

Pge.com

Key challenges to P4P implementation

• P4P not one-size fits all, most focus on commercial sector

• P4P may exist alongside other EE programs for same sector, must avoid double-counting

• Net-to-gross savings challenges still must be addressed

Thank You!

Download the Issue Brief and Report here:https://www.nrdc.org/resources/putting-your-money-where-your-meter

Report Primary Author:

Julia Szinai

PhD Student

Energy and Resources Group

UC Berkeley

[email protected]

Report Contributing Authors:

Merrian Borgeson

Senior Scientist, Energy Program

Natural Resources Defense Council

[email protected]

Emily Levin

Manager – Program Strategies

VT Energy Investment Corp.

802-540-7694

[email protected]

P4P and Demand Response

CEDMC Spring Symposium

Jennifer ChamberlinExecutive Director, Market Development

TYPES OF ENERGY PROGRAMS

Permanent Responsive

Energy Efficiency Co-generation Load Shifting

Capacity Ancillary Economic Utility Efficiency

Excessive Demand Loss of supply Price Initiated Local programs Monetizing ECMs

Demand ResponseHow DR Works

Demand Response: Reduces consumption at critical times or in response to energy high prices.

Curtailment

About Us

• Serve 1 IN 20

Americans

• 70,000 SQUARE-MILE

service area

• Provide energy

services

to 15 MILLION

NORTHERN

CALIFORNIANS

• 5.1 MILLION electric

customer accounts

• 4.3 MILLION natural

gas customer

accounts

• 22,000 EMPLOYEES

• Regulated

INVESTOR-OWNED

UTILITY

• 370,000 SMB

CUSTOMERS

California Efficiency + Demand

Management Council

Spring Symposium 2018

April 2018

Normalized

Metered

Energy

Consumption

Is a Means To

Streamline and

Scale EE to Double

Energy Efficiency in

California

“The energy efficiency savings and demand reduction ….

achieving the targets established pursuant to paragraph

(doubling of EE by 2030) shall be measured taking into

consideration the overall reduction in normalized

metered electricity and natural gas consumption

where these measurement techniques are feasible and

cost effective.” – SB 350

Pay-for-Performance, NWAs, Electrification:

Business

Models

Grid

Resource

DEMAND CAPACITY

Savings Comfort Health

AGGREGATORS

Services and

Products

Consumer

Finance

Project

Finance

Sales and

Marketing

Contractor

Management

Meter-Based

Pay for

Performance

Progress

across the

country

Contractor

Load Serving Entity

Private Capital Performance risk

Insurance

Efficiency

Businesses

Meter-Based

Pay for

Performance

Transaction

Structure

Utility

Platform

Project Finance Insurance

Aggregator

Channel

Buildings

Open Source

Real-time

Metered

Efficiency

Metered Efficiency Performance Insurance

● Performance insurance enhanced with monitoring, verification and

analysis of aggregated performance

● Supports meter based pay-for-performance efficiency markets

derisking upfront investment to encourage greater participation by

aggregators

● Portfolio-level coverage of efficiency projects, rather than individual

assets to enable cash flow

Glenn Sansbury

April 26, 2018

THE MANY FLAVORS OF

PAY FOR PERFORMANCE

Hartford Steam Boiler Inspection and Insurance Co.

Company Background

Steam is king in the

industrial revolution –

but explosions are

common.

Fire Insurance carriers

stop covering boilers.

HSB formed in 1866 to

address the exposure.

Today: we insure all

kinds of machinery &

equipment.

An engineering based

insurance Co.

5/1/2018 54© 2011 The Hartford Steam Boiler Inspection and Insurance Company. All rights reserved.

Performance Guarantee Insurance

If it consumes, transmits, or generates energy we insure it.

Since we know energy well we feel capable of designing insurance products that

guarantee energy production or reduction (energy savings).

Solar Shortfall coverage

Guaranteed cogeneration production.

Energy Efficiency Insurance – guaranteeing energy savings

Started offering four years ago

Target market: mid-sized ESCOs looking to compete against larger companies

Offering credibility to their performance guarantee / protecting their balance

sheet

5/1/2018 55© 2011 The Hartford Steam Boiler Inspection and Insurance Company. All rights reserved.

From individual projects to portfolios

From Adhoc projects to retrofits of a target class / standard approach

Rather than our engineers reviewing discrete engineering calculations for an

individual project we’re underwriting a repeatable process.

One underwriting – many projects – more efficient/ less expense

The next progression was insuring results in the aggregate.

Good for us (eliminates small claims / reduces our risk)

Good for them (protects their balance sheet)

Pay for Performance (the next stage) – An Aggregator controlling many installers,

the portfolios are much larger, further smoothing results/ reducing risk

Underwriting a model of predicted energy savings

5/1/2018 56© 2011 The Hartford Steam Boiler Inspection and Insurance Company. All rights reserved.

Performance Guarantee Insurance

Supports Project Finance

Project finance – lending based the project’s projected future revenues, not on

the credit worthiness of the borrower.

The risk – the actual revenues won’t cover the debt service

Performance Guarantee Insurance eliminates that risk

More attractive to more lenders/investors

Reduced risk = credit enhancement

Pay for Performance - the Aggregator’s projected revenues from the utility

5/1/2018 57© 2011 The Hartford Steam Boiler Inspection and Insurance Company. All rights reserved.

We’re doing this now!

Backing by HSB is a

good sign – good PR.

Financial assurance

can make all the

difference.

Big data, analytics, are

making the model’s

more reliable (back

casting, model

calibration).

P4P is efficient for us

too.

Actively Engaged on Several P4P deals

5/1/2018 58© 2011 The Hartford Steam Boiler Inspection and Insurance Company. All rights reserved.

Thanks for your attention.

Glenn Sansbury

Senior Client Manager

The Hartford Steam Boiler Inspection & Insurance Co.

Tel. 360-225-1384

eMail: [email protected]

© 2018 The Hartford Steam Boiler Inspection and Insurance Company. All rights reserved. CONFIDENTIAL 59

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How to Procure EE like a Grid Resource

Moderator: Michelle Vigen, Senior Policy Manager, The CouncilMarc Monbouquette, Senior Regulatory Analyst, CPUCRichard T. Sperberg, President, Onsite EnergyElizabeth Stuart, Electricity Markets and Policy Group, Energy Analysis and Environmental Impacts Department, LBNLDanny Waggoner, Senior Manager, Regulatory Transformation, Advanced Energy EconomyPaul Whitelaw, Senior VP of Business Development, Willdan Group, Inc.

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Lessons Learned: Observations from 35+ years in the trenches

Margie Gardner, Executive Director, The Council

1983: A mixed reaction from NW utilities to “conservation” –

Pay customers to buy less of our product – huh?

slide 62

2018: Extensive SUCCESS in CA

• Efficiency has avoided at least 30 large power plants since the 1970s

• EE met about 1/5 of CA electricity need in 2013

• EE programs saved $12 billion after costs 2003-

2013; Codes and Standards saved $75 billionsince 1970s

• Took equivalent of 6 million cars worth of CO2 emissions off the road

From NRDC, 2015

Climate Change is worse than I feared

‘You’d better mess with the legislature, cause they’re definitely gonna

mess with you’ Loose quote from Senator DeLeon

Low hanging fruit grows back, but sometimes on a grafted branch

slide 67

The “Gump Model”

“The future is like a box of chocolates: You never know what you’re gonna get.”

EE will be Visible

And visible to CAISO, CPUC, CECEE is 23% of new resources in the Integrated Resource Plan and wasn’t shown in the draft graph…. But it’s in the final!

Integrated – with other DERs on the customer side

Integrated in Utility and CPUC views: IRP, DRP, IDER and with Grid Support

Simplified

The CA Fear of Free Riders

Lowest Cost and Highest Value for Time and Location (Grid Support) Delivery

You can make a difference!• Double energy savings

• Reduce GHGs

• Lower cost for all

The “take action” Model:

“Destiny is not a matter of chance, but of choice. Not something to wish for, but to attain.”

William Jennings Bryan

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Thank You to Our Sponsors!

Networking Reception Until 6:30