Energy Efficiency Policy
Options and Program
Best Practices
National
Action
Plan for
Energy
Efficiency
MD PSC Planning Conference on
State’s Future Electricity Needs
July 26, 2007
Stacy Angel
Climate Protection Partnerships Division
U.S. Environmental Protection Agency
[email protected]
www.epa.gov/eeactionplan
National Action Plan for Energy
Efficiency
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Released on July 31, 2006 at
the National Association of
Regulatory Utility
Commissioners meeting
Goal: To create a sustainable,
aggressive national commitment
to energy efficiency through gas
and electric utilities, utility
regulators, and partner
organizations
Over 50 member public-private
Leadership Group developed
five recommendations and
commits to take action
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Additional recommendation
endorsements and commitments
to energy efficiency – exceeds
90 organizations
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US DOE and US EPA facilitated
National Action Plan for Energy Efficiency
Recommendations
1.
2.
Recognize energy efficiency as a highpriority energy resource.
Make a strong, long-term commitment to
implement cost-effective energy
efficiency as a resource.
3.
Broadly communicate the benefits of
and opportunities for energy
efficiency.
4.
Provide sufficient, timely and stable
program funding to deliver energy
efficiency where cost-effective.
Modify policies to align utility incentives
with the delivery of cost-effective energy
efficiency and modify ratemaking
practices to promote energy efficiency
investments.
5.
Make the Business Case for Efficiency
to the Customer, Utility and Society
• Customer bill savings estimated at 2-9% across report cases
– Rate design may encourage customers to invest in energy efficiency
– Persistent customer barriers to efficiency include “split-incentive,” lack
of information and customer awareness, competing vendor claims,
need for upfront capital
• Utility financials affected by changes in throughput, creating
disincentive to support energy efficiency
– Disincentive applies to distribution and supply services
– Barrier exists regardless of energy efficiency program administration
• Energy efficiency provides net societal benefits
– Quickest, cheapest and cleanest energy resource to meet today’s
challenges of increased energy costs, rising demand, and reducing
carbon emissions
Source: Bill savings calculated using the Energy Efficiency Benefits Calculator (http://www.epa.gov/cleanenergy/actionplan/resources.htm); cases discussed in
National Action Plan for Energy Efficiency Report: Chapter 4, Business Case for Energy Efficiency (2006)
Policy Options to Encourage Investment
in Cost-Effective Energy Efficiency
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Establishing policies to establish energy efficiency as a priority resource
Establishing the potential for long-term, cost-effective energy efficiency savings
Developing long-term energy saving goals as part of energy planning processes
Integrating energy efficiency into utility/state/regional resource planning activities
Designating organization(s) to administering the energy efficiency programs
Align utility and program administrator financial incentives
1. Ensure Program Cost Recovery for Program Administrator(s)
• Utility revenue requirement / procurement funding, public benefit funds, utility tariff rider for
energy efficiency, spending budgets / savings targets
• Capitalize or expense costs
2. Remove Utility Disincentives to Support Increased Energy Efficiency
• Decoupling revenues from sales, lost revenue adjustment, straight-fixed variable rate design
3. Provide Incentives for Delivering Energy Savings
• Performance incentives, shared savings, bonus rate of return
• Establishing appropriate cost-effectiveness tests that reflect the long-term benefits
• Developing robust evaluation, measurement and verification (EM&V) procedures
• Rates modified and energy usage information shared considering impact on
customer financial incentives to invest in energy efficiency
Source: Excerpts derived from Recommendations and Options to Consider in National Action Plan for Energy Efficiency Report: Executive Summary (2006)
Cost-Effective, Best Practice Efficiency
Programs Can Meet 50-100% Load Growth
• Energy efficiency resources acquired at half the cost of new generation
– Total cost of $0.02 to $0.03 per lifetime kWh
– Funding at 1 to 3% of electric utility revenue
• Recent potential studies have shown energy efficiency can meet:
– 10 to 40%+ of energy sales (kWh)
– 9 to 20%+ of electric capacity (kW)
• Program best practices include:
– Making Energy Efficiency A Resource
• Align organizational goals
– Developing An Energy Efficiency Plan
• Offer programs for all key customer classes
• Use cost-effectiveness tests that are consistent with long-term planning
• Consider building codes and appliance standards when designing programs
– Designing and Delivering Energy Efficiency Programs
• Leveraging existing infrastructure and demonstrated program models
• ENERGY STAR
– Ensuring Energy Efficiency Investments Deliver Results
• Robust, transparent evaluation, measurement and verification
Source: Excerpts from National Action Plan for Energy Efficiency Report: Chapter 6, Energy Efficiency Program Best Practices (2006)
Sample Progression of Energy
Efficiency Program Designs
SECTOR
PROGRAM RAMP UP
EARLY (6 MONTHS-2 YRS)
MIDTERM (2-3 YRS)
LONGER TERM (3 to 7 YRS)
Market-based ENERGY STAR lighting &
appliance program
Continue market-based ENERGY STAR
lighting & appliance program
Continue market based ENERGY STAR
lighting & appliance program. Increase
efficiency levels//refocus technologies as
needed
Expand outreach for hard-to-reach market
segment (low income, multifamily,
affordable housing)
Continue hard-to-reach program components
Refrigerator/freezer recycling program
Continue recycling program. Add
incentives for ENERGY STAR qualified
replacement appliance
Continue appliance recycling program. Add
incentives for ENERGY STAR qualified
replacement appliance
Pilot residential HVAC diagnostics and installation
program
Full-scale residential HVAC diagnostics
and installation program
Continue ENERGY STAR residential HVAC
diagnostics and installation program
Pilot Home Performance with ENERGY STAR
Expand Home Performance with ENERGY
STAR pilot
Full-scale Home Performance with ENERGY
STAR program
Residential – new
construction
ENERGY STAR Homes pilot (in areas w/out
existing infrastructure)
Full-scale ENERGY STAR Homes
program
Add incentives for ENERGY STAR Advanced
Lighting Package and Indoor Air Package
Commercial –
existing buildings
Sector-based education on whole building energy
management and benchmarking using the EPA
energy performance rating
Sector-based education on whole building
energy management and benchmarking
using the EPA energy performance rating
Prescriptive rebates for lighting and HVAC
measures across a range of commercial facilities;
specify ENERGY STAR qualifying products as
relevant
Custom rebates based on assessment of
whole building and/or portfolio of buildings
Refine incentives to reward comprehensive
whole building upgrades
Incentives for improved operations and
maintenance and/or retrocommissioning
Continue incentives for improved operations
and maintenance and/or retrocommissioning
Residential –
existing homes
Commercial – food
service
Prescriptive rebates for ENERGY STAR qualifying
food service equipment
Pilot custom rebates for whole-kitchen
efficiency projects (remodeling or new
construction)
Expand whole kitchen efficiency program
Commercial – new
construction
Education and training on ENERGY STAR Design
Guidance, setting energy performance targets,
and High Performance Buildings
Integrate Design Guidance with incentives
and design assistance
Continue design assistance, and promote
continuous tracking of energy performance
Source: Adapted from the National Action Plan for Energy Efficiency: Chapter 6, Energy Efficiency Program Best Practices (2006)
Currently Available Resources for
States, Utilities and Stakeholders
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National Action Plan for Energy Efficiency Report
www.epa.gov/cleanenergy/actionplan/report.htm
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Energy Efficiency Benefits Calculator
www.epa.gov/cleanenergy/actionplan/resources.htm
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Consumer Energy Efficiency Fact Sheet
www.epa.gov/cleanenergy/actionplan/outreach.htm
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Regional Implementation Meetings - New England, Midwest and Mid-Atlantic
www.epa.gov/cleanenergy/actionplan/regional_mtgs.htm
– Policy tracking tables
– Presentations and meeting summaries
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Sector Collaborative on Energy Efficiency
www.epa.gov/cleanenergy/actionplan/sector_meeting.htm:
– Meeting Presentations
– Background Paper on Utility Data Availability
– Energy Consumption Profiles for Offices, Hotels, Supermarkets, & Retail Stores
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Draft Educational Briefings www.epa.gov/cleanenergy/actionplan/mar2907meet.htm
Future Resources for States,
Utilities and Stakeholders
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Available by end of July at www.epa.gov/cleanenergy/actionplan/resources.htm:
– Communications Kit
– Building Codes and Energy Efficiency Fact Sheet
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Available late summer at www.epa.gov/eeactionplan:
– Aligning Utility Incentives with Energy Efficiency Investment Paper
– Guide on Energy Resource Planning and Procurement Processes
– Guide on Conducting Potential Studies for Cost-Effective Energy Efficiency
– Guide on Energy Efficiency Evaluation, Measurement and Verification Protocols
– Resource database and sample docket/workshop material
– Final Education Briefings
– Policy tracking tables for West and Southeast
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Available Fall at www.epa.gov/eeactionplan:
– Regional Implementation Meeting Presentations and Summaries for West and Southeast
– Action Plan Vision for 2025
– Demand Response and Energy Efficiency Integration