Transcript Importance of Energy Efficiency to Ohio’s Low

Energy Efficiency as a Resource in
Alabama
Max Neubauer
ACEEE
Presented at the PowerUp
Forum
December 12, 2013
The American Council for an EnergyEfficient Economy (ACEEE)
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ACEEE is a nonprofit 501(c)(3) that acts as a catalyst
to advance energy efficiency policies, programs,
technologies, investments & behaviors.
Nearly 50 staff based in Washington, D.C.
Focus on end-use efficiency in industry, buildings,
utilities & transportation
Other research in economic analysis; behavior;
national, state & local policy.
Funding:
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Foundation Grants (52%)
Contract Work & Gov. Grants (20%)
Conferences and Publications (20%)
Contributions and Other (8%)
ACEEE has been Engaged in the South
for 7 Years
• ACEEE has prepared potential studies for 10 southern
states
• ACEEE
actively
involved
with 4 other
states
• Dramatic
increase in
activities
over past 6
years
Agenda
1. Overview of the Benefits of Energy Efficiency
2. Energy Efficiency as a Resource in the South and
in Alabama
3. How Do States Succeed with Energy Efficiency?
General Issues and Deconstructing Mississippi’s
Success
4. Roles for State Government
5. Defining Success
6. Resources for Alabama
7. Conclusion/Questions
1. Benefits of Energy Efficiency
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Economic development strategy
Energy independence
Customer bill savings
Helps contain future increases in energy prices
Low-cost path for environmental compliance
Helps the most vulnerable families & businesses
make ends meet
• Enhances energy security in face of natural
disasters—energy assurance
Energy Efficiency is the Least-Cost Resource
Energy Efficiency & Assurance/
Resiliency—Least-Risk Strategy
Source: CERES. Practicing Risk-Aware Electricity Regulation. April 2012
Net Incremental Electricity Savings by State
State
Vermont
Massachusetts
Arizona
California
Connecticut
Hawaii
New York
Rhode Island
Ohio
Minnesota
Maine
Iowa
Pennsylvania
Michigan
Oregon
Washington
Utah
Idaho
Nevada
New Jersey
Illinois
Colorado
New Hampshire
Maryland
Montana
Indiana
Wisconsin
2011 Net
Incremental
% of Retail
Savings (MWh)
Sales
117,940
2.12%
789,894
1.43%
1,028,378
1.38%
3,399,300
1.35%
394,266
1.32%
130,108
1.31%
1,791,302
1.25%
96,009
1.25%
1,880,629
1.22%
818,512*
1.21%
120,211
1.05%
475,964
1.04%
1,553,739
1.04%
1,000,437
1.00%
465,211
0.99%
853,253
0.92%
245,308
0.85%
189,082
0.82%
250,559*
0.74%
530,453
0.69%
951,055
0.67%
347,132
0.65%
69,409*
0.64%
397,748
0.58%
80,592
0.58%
605,904
0.58%
408,221
0.57%
State
New Mexico
Missouri
North Carolina
Tennessee
South Carolina
Nebraska
Florida
Kentucky
Oklahoma
Texas
South Dakota
Delaware
Mississippi
Arkansas
Georgia
Virginia
Wyoming
Kansas
Alabama
North Dakota
West Virginia
Alaska
Louisiana
District of Columbia
US Total
Median
2011 Net
Incremental
Savings (MWh)
106,891
369,438
514,195
333,563
255,110
80,000
583,171
224,585
117,826
721,445
20,532
20,478
66,913
63,677
152,771
109,224
14,001
30,918
69,537
9,491
7,888
1,276
15,813
0
22,879,359
245,308
% of Retail
Sales
0.47%
0.44%
0.39%
0.33%
0.32%
0.27%
0.26%
0.25%
0.20%
0.20%
0.18%
0.18%
0.14%
0.13%
0.11%
0.10%
0.08%
0.08%
0.08%
0.07%
0.03%
0.02%
0.02%
0.00%
0.62%
0.58%
ACEEE 2013 Scorecard
2. Energy Efficiency as a
Resource in the South
and in Alabama
• Though energy prices are low, bills are high
• AL has energy efficiency role models
• Efficiency programs & policies taking on regional
character
• ACEEE brought Energy Efficiency as a Resource
Conference to Nashville—record attendance, with
many from region
Energy Efficiency as a Resource in the
South and in Alabama
• Every state is unique
• South has some common attributes:
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Low electricity prices
More rural customers
Unique networks that can enable energy efficiency
Lots of efficiency opportunities, but less experience
& resources to implement
• Regional policy & program models emerging
• States can now look to regional leaders
• Building a base of efficiency expertise that
others states can leverage
Customers Pay Bills, Not Rates
Electricity Expenditures Relative to Household Income
State
Avg.
Electricity
Residential Consumption
Electricity
per
Price
Household
(¢/kWh)
(kWh)
Median
Electricity Expend. Expend. as a
Household Expend.
per
Percent (%)
Income
in 2011 Household
of Median
($2011)
(Million $)
in 2011
Income
Mississippi
¢10.17
17,887
$36,919
$1,966
$1,819
4.9%
Alabama
¢11.09
17,892
$41,415
$3,661
$1,985
4.8%
S. Carolina
¢11.05
17,414
$42,367
$3,405
$1,925
4.5%
Florida
¢11.51
16,372
$44,299
$13,389
$1,884
4.3%
Tennessee
¢9.98
17,455
$41,693
$4,298
$1,742
4.2%
South Represents Region of Energy
Efficiency Opportunity
2013 State Energy Efficiency Scorecard Rankings
Source: American Council for an Energy-Efficient Economy
3. How Do States Succeed with Energy
Efficiency? General Thoughts and
Deconstructing Mississippi’s Success
• Leadership
• Prudent Regulatory Policy to Address the Utility
Business Model
• Energy Efficiency as a Resource: Integrated
Resource Planning
• Rigorous Program Design
• Thorough Evaluation, Measurement, and
Verification
Leadership
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Executive
Legislative
Regulatory
Private Sector
Nongovernment
organizations
Mississippi’s Leadership
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Governor Phil Bryant has touted the need for increased
energy efficiency as an economic development strategy
Staff at the Mississippi Public Service Commission promoted
proposed rules (Rule 29) for years prior to adoption
Staff at the Southeast Energy Efficiency Alliance (SEEA)
convened individual/group stakeholder meetings for several
years to educate and raise awareness
Stakeholder engagement was key to bringing businesses
and other non-profit organizations on board
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SEEA and ACEEE will continue to engage with stakeholders on
specific policy and program issues in the future
Regulatory Policy to Address the Utility
Business Model
• Regulatory environment for utilities favors selling
energy over saving it – “throughput incentive”
• Must develop energy efficiency as a revenuegenerating business opportunity
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Program and fixed cost recovery
Shareholder incentives / rate of return on investments
• Setting energy savings
targets for utilities
Brief Review of Rule 29 in Mississippi
(Docket 2010-AD-2)
• Quick Start and Comprehensive Program Phases
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Quick Start programs implemented within 6 months of
approval for utilities with 25,000< meters
Quick Start programs exempt from cost-effectiveness
requirements
• Established procedures for filing plans and report
requirements during both phases
• Established cost recovery and incentive
structures
• Established cost-effectiveness tests for
evaluating Comprehensive utility EE programs
Energy Efficiency as a Resource:
Integrated Resource Planning
Regulatory Assistance Project, 2013
Energy Efficiency as a Resource: Integrated
Resource Planning
• Acknowledges energy efficiency as a systemwide energy resource
• Understand how energy efficiency fits in with
long-term capacity needs
• All utilities do some sort of long-range planning
based on least-cost procurement of resources,
and some may develop an IRP even in the
absence of a regulatory requirement
• Can aid in developing energy savings targets
Designing Effective Energy Efficiency
Programs
• Understanding the Market
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Market Assessment and Segmentation; Soliciting
stakeholder input
• Leveraging Existing Infrastructure and Resources
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Coordinate with other utilities and third-party program
administrators: uniform messaging for statewide
programs like low-income weatherization and energy
efficiency education
• Maximizing Participation
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Keep participation simple
Evaluation, Measurement & Verification
• Provides accurate, transparent and consistent
assessments of program methods and performance
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Ex-post EM&V helps understand program cost and
benefits, as well as the efficacy of program design
Did the program deliver estimated savings? How certain
are the savings? What can be done to improve
performance in the future?
• No need to reinvent the wheel—existing evaluation
methodologies should be used
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Federal Energy Management Program (FEMP) M&V
Guidelines
International Performance Measurement & Verification
Protocol (IPMVP)
Summary of Findings from ACEEE
Mississippi Study
Statewide Energy Efficiency Policy and Program
Achievable Potential through 2025
Electricity
Natural Gas
Customer
Class
GWh
%*
MMCF
%*
Residential
1,275
6.5%
1,060
5.3%
Commercial
3,316
22.8%
1,885
8.8%
Industrial
2,225
11.7%
2,307
19.1%
Total
6,815
12.8%
5,252
9.8%
• $4.3 billion in net economic output
• $1.1 billion in increased wages
• Almost 33,000 new jobs
4. Program Roles for State Government
• Lead by Example
• Building Energy Codes
• Benchmarking and Disclosure
Lead by Example (LBE)
• State governments can advance energy-efficient
technologies and practices in the marketplace by
promoting energy efficiency in their own everyday
operations
• Allows governments to benchmark (and disclose)
their energy use to identify areas for improvement
• Communications and outreach to stakeholders
outside state government, like taxpayers, can
show the benefits of energy efficiency and “smart
government”
Building Energy Codes
• Buildings are much more difficult and costly to
retrofit for energy savings after they are built; i.e.,
they become “lost opportunities” for energy
savings
• Alabama currently
requires compliance with
the 2009 iterations of the
IECC (residential) and
ASHRAE 90.1
(commercial and
industrial)
Benchmarking and Disclosure
• Market-based policy tool that can increase
awareness of building energy performance and
generate demand for energy efficiency
improvements
• Disclosure policies require these performance
metrics to be made public, providing a more
accurate picture of a building’s total operational
costs and allowing for better investment decisions
• Critical for developing credible LBE program
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Nationwide there is a considerable lack of awareness
about public building energy consumption patterns
5. Defining Success
Quantifiable Metrics for Success
• Levelized Cost of Saved Energy ($/kWh) – the
level of annual payment necessary to recover the
total investment over the life of a measure; or
“bang for the buck”
• Program Participation (%) – a measure of the
market share reached by a program
• Savings as a Percent of Sales (%) – keeping
track over time can help guide the setting of
energy savings targets
• Budgets as a Percent of Revenues (%) – total
energy efficiency budgets relative to statewide
utility revenues
Quantifiable Metrics for Success
• Reduced customer energy bills
• Job creation / economic growth
• Meeting / exceeding future energy savings targets
Qualitative Metrics for Success
• Improved customer satisfaction / perception
• Improved comfort and productivity at home and in
the workplace
• Customers have greater awareness and control
over their energy consumption
6. Resources for Alabama
• Regulatory Assistance Project (www.raponline.org)
• National Action Plan for Energy Efficiency
(http://www.epa.gov/cleanenergy/)
• SEE Action Network
(www.eere.energy.gov/seeaction/)
• Southeast Energy Efficiency Alliance
(www.seealliance.org)
• American Council for an Energy-Efficient Economy
(www.aceee.org)
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State Policy Database: http://aceee.org/sector/statepolicy
7. Conclusions
• Continue to communicate and collaborate through
formal and informal settings
• Awareness growing that energy efficiency is:
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The least-cost energy resource
A strategy to improve the economy & environment
An energy assurance strategy to manage risk
• Energy efficiency no longer something just for the
Northeast & California
• Unique southern model for energy efficiency
emerging—MS and AR are paving the way,
making it easier for other states to follow suit
Thank you!
Max Neubauer
Senior Policy Analyst
202-507-4005
[email protected]
Visit ACEEE on the Web:
www.aceee.org