In many states, energy efficiency programs are meeting annual savings goals and their incentive cash is depleted in a fraction of the year. States where energy efficiency programs are a new offering are especially quick to meet goals. These states include Ohio, Michigan and Illinois. These states rely heavily on lighting, which accounts for somewhere in the range of 90% of the total savings. Even mature states like Wisconsin and California still get well over half their savings from lighting and other prescriptive measures (rebates). Wisconsin surpassed goals and ran out of incentives last program year.
There are many ways to solve the “excess savings problem” from reducing or eliminating incentives on some things or eliminating program offerings. In Wisconsin, they are sort of cutting incentives across the board and getting rid of comprehensive energy retrofit in existing commercial and industrial (C&I) facilities, where everyone knows the greatest potential exists. Comprehensive energy retrofit in WI is dead because they killed feasibility studies.
Wisconsin must know something Minnesota, Iowa, Illinois, Michigan, New York, California, Johnson Controls, Honeywell, Siemens, and dozens of energy service companies (ESCOs) around the country are oblivious to. These states’ programs rely substantially on comprehensive energy retrofit and it’s actually the holy grail of energy efficiency. But not in Wisconsin.
Wisconsin instead relies on the discount model. See Incentive or Discount, January 12, 2010. The powers that are believe this is the most cost effective (only) way to deliver savings and that feasibility studies once paid for by the program just rot on the customer’s shelf. But there are numerous ways to avoid this. You just have to develop an integrated program that holds customers accountable for implementing measures.
When Wisconsin (Focus on Energy, Focus for short) took over the energy efficiency programs from the investor-owned utilities about 10 years ago, one of the goals was market transformation. Market transformation simply means making energy efficient products and services the normal way of doing business such that ratepayer-funded programs are no longer needed, or their need is greatly reduced. Market transformation has long since been cast aside.
Instead, Focus has been transformed into something that seems to be directly at odds with its market transformation charter. Service providers in the market, ones with expertise and no bias (don’t sell stuff) are locked out by an apparatus that cannot work for them. Eliminating feasibility studies was the equivalent of adding a mote full of alligators around the fiefdom with razor wire atop the castle wall to keep the serfs out.
The idea that feasibility studies are a waste of money is just plainly incorrect. Nearly all of our feasibility studies are acted on. Last year we kicked off a retrocommissioning program with three pilot studies – no commitment from the owners whatsoever. We just wanted to demonstrate potential. Two of three have already been implemented. One has almost a year’s savings accumulated with 25-30% electric and gas savings, on their bills. The third project is close to implementation, which will probably be completed by year’s end.
In another study, we projected 30% savings for a high school. Actual results were 40% savings, indicated by energy bills. One college campus: 20% gas and electric savings projected, 20% savings realized. Another campus 15% and 22% electric and gas savings projected, respectively. Actual savings from bills: 25% and 20%. A medical clinic with about 25% savings projected: actual savings in the first 3 months of post-implementation operation total a full half year of projected savings. Every one of these projects needed measure identification, cost and savings estimates, and return on investment analysis. We started with a blank slate.
We have a study underway for a huge food processor and are projecting 3.5 million kWh savings, from only a portion of their air handling systems (68 units). We are looking forward to moving on to the ammonia refrigeration and compressed air systems. This customer has been very progressive with energy projects over the past 7-8 years and is willing to get everything that meets their financial criteria. In fact, when we delivered the proposal they agreed to move forward with the study on the air handlers but said, “but I don’t think you’ll find anything”.
The bottom line is, a comprehensive program that includes front-end screening, study, Implementation design, implementation, functional performance testing of measures, and customer training will be acted on by customers. Of the 10 or so projects, including dozens of campus buildings, where we have used this process, savings have been 20% or more in every case, up to 40%, and actual savings from pre and post implementation bill comparisons have always come in above study projections. Projects include everything from retrocommissioning to major equipment/system retrofits to new controls systems.
Ironically, we completed a “no risk” study with Focus last year including controls, refrigeration and HVAC. The customer went forward with all recommended measures. Again, all we started with was a customer that wanted to cost-effectively save energy, a blank sheet of paper. No “pre-packaged” projects. I.e., no free rider.
From a program perspective, this is very cost effective because savings are huge and concentrated and studies do not get stranded. The problem with some (as in, not all) program administrators whether they be third parties or utilities is they are steadfastly wedded to the status quo with a divorce rate Vatican City would cheer. The typical disjointed process with reams of paperwork and delays at the outset, no assistance between study and implementation, no hook or commitment from customers to do anything with the study, and no functional testing at the conclusion of implementation is doomed to fail.
The solutions to the “waste of money” issue are simple and they work very well, but some administrators and in some cases regulators need to open their minds and ditch their horse and buggy program paradigms.
And by the way, the attribution rate, which is the savings that occur as a result of an integrated program including feasibility studies, is near 100%. See the food processor guy’s quote above. He didn’t think we would find anything. Tell me. Would these 3.5 million kWh savings have occurred in the absence of a thorough investigation? How does a customer who buys an efficient boiler have any idea what the incremental cost and energy savings of his new equipment are? Does that constitute decision making based on energy efficiency? Perhaps some programs could improve their attribution rates on C&I programs if they would actually lead customers to implement energy efficiency measures rather than chasing contractors, like lawyers chasing ambulances, to capture savings that are going to happen in the marketplace anyway.
written by Jeffrey L. Ihnen, P.E., LEED AP