Horse and Buggy EE Programs

8 06 2010

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

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EE Lemmings

25 05 2010

Automobiles have really changed over the past 30 years, and in some ways for the worse.  Back in the 1970s before hardly anyone purchased imports, imports were small and domestic vehicles were hulking behemoths.  Then it was the second, or was it the third or fourth – doesn’t matter – energy crisis hit in the late 1970s and domestic cars shrunk in a big way.  The Ford Mustang went from a muscle car to feeble runt.  A 1982 Mustang was the first car I owned.  It was also by far the crappiest car I ever owned.

This was the first giant step for domestic auto makers toward import fuel efficiency and of course it was disastrous.  Millions of buyers experienced the same thing I did and did the same thing I did; started buying imports and never went back.

Getting on with the topic at hand – just look at how automakers of all stripes and origins have morphed into the same styles.  Let’s look at how the Ford Taurus (formerly the LTD), Honda Accord, Volvo, and BMW 535 have changed from 1978 through today.

1978

2010

Back in the day, you could look at a silhouette of a car – or better yet, I could draw it on paper and you could tell what brand it was, and I draw as well as I play violin (I don’t think I’ve ever had my hands on one).  In 2010, all you have to do is change the front grille and unless you study cars like an anal-retentive buyer with every issue of Consumer Reports and Buyers Guides for the past five years, you would never be able to tell what brand they are.  They only have a tiny vestige of auto heritage left in about one square foot of the front of the vehicle.

Here’s an entrepreneurial thought: the “import” makers should sell optional “domestic” front ends and leave their stores open around the clock.  This way the few remaining people who wouldn’t be caught dead in an import could sneak in the back door with a big hooded rapper sweatshirt on at 3:00 AM Monday morning and drive out with a car they really want and nobody would ever know it’s an import.  Their parents would let them in the house.

This paragraph is a bit of a guess because I’m not THAT old to know for sure.  Over the same period of 30 years, energy efficiency programs have “evolved”, more like devolved, in the same way.  Back then there were few efficient technologies (products) and energy efficiency required brain power.  A portfolio of programs probably got the most savings from custom measures like upgrading systems and controls, replacing controls, adding heat recovery, changing incandescent lighting to fluorescent and boring building envelope improvements.  Compact fluorescent and T8 lighting, if they existed back then, probably cost as much as the modern laptop   Check out that baby!

In 2010, program portfolios are like modern cars.  Just take the utility logo off one and slap on the next logo and voila, ready to launch.  They typically consist of prescriptive incentives for residential lighting, heating and cooling, appliances, appliance recycling, and maybe ENERGY STAR® new construction; and commercial and industrial prescriptive incentives for like categories plus maybe commercial new construction and retrocommissioning.  Prescriptive measures, those that receive incentive for achieving some equipment efficiency threshold, probably account for 80-90% of savings – more for newer programs, maybe less for mature programs.

Program implementation has become a marketing campaign for technologies; efficient versions of everything available in the marketplace.  There is nothing wrong with this, but codes and standards can drive these.  Take the home furnace.  Is there any need for an 80% efficient non-condensing furnace anymore?  Any contractors who install 80% efficient furnaces should be fined, speaking facetiously.  It’s just stupid.  Compact fluorescent lighting is pretty much in the same category.  This gravy train of easy savings is about to end as incandescent lighting is phased out.  Moreover, I would say the market has already transformed to CFLs and possibly not even for energy efficiency.  Many consumers choose them because they don’t burn out.  Less maintenance and pain in the kiester to keep up with failing light bulbs.  In commercial and agricultural facilities, these maintenance savings swamp energy savings.  People are expensive.  Good light bulbs are not.

Some states are sharply increasing goals and what are program administrators doing in response?  More of the same.  Some are just increasing incentives, even doubling them in some cases.  This is like trying to significantly cut federal spending and taking entitlements and defense off the table.  There isn’t much left to work with.  Cost premium of efficient stuff is only one barrier to energy efficiency.  At some point, you could literally give away efficient stuff and still not meet goals.

Program administrators and utilities need to put everything on the table and go back to the early days of custom efficiency, and comprehensive energy retrofit, retrocommissioning and demand response for commercial and industrial facilities.  Industrial programs are woeful all over the country, including in California.  Measures like “pump off controllers” for oil wells and numerous oil refining measures are complete free riders – measures that would happen regardless of any efficiency programs.

Administrators also need to think outside the box with “incentives” as well.  There are many ways to do this but I’ll have to save that for another day because I’m out of time.  But for now, let’s just say to take it to the next level, administrators are going to need custom measures, which requires engineering expertise.  It looks good for us!

written by Jeffrey L. Ihnen, P.E., LEED AP





Green Will Follow, Then Lead

26 01 2010

Some of the American Recovery and Reinvestment Act (ARRA or “stimulus”) targets energy efficiency and green jobs training.  Wisconsin just announced $2 million in green jobs training.  Oregon: $6 million.  First off, I’m skeptical of these curricula.  Who will be teaching?  What is the curriculum?  At a cost of about $6,000 per graduate, it’s close to one year of in-state tuition and fees at a public university.  Wow.

Who is going to attend these courses?  I would say a significant portion would be laid off construction workers and skilled trades workers.  Once they are trained to weatherize homes, which does require training, no question about it, they will be ready.  But maybe in a year “real” jobs will return, and do you think a construction worker who can make $50k per year will keep weatherizing homes?  I doubt whether home weatherization can compete with that.  But I digress.

The purported goal of these programs is jobs – green jobs.  These jobs will lead us out of the economic funk we’re in.  I disagree.  The green jobs will really begin to flourish once and if the economy ever recovers.

We need a strong economy to spur construction.  We have a design division and within our energy division, we have a sustainability group that provides new construction design assistance and LEED® consulting services.  These would be considered high paying, long term jobs but as the economy is in the tank, these core services have ground to a slow crawl.  These were “green” jobs before green was a color.  Fortunately, our services are sufficiently diversified that we can keep relatively busy backfilling our other service areas.  Other firms aren’t so lucky.  Unemployment among architect, engineering and construction workers is running nearly double the national average.

Furthermore, with the economy in the tank, energy demand is down.  If you don’t believe it, just ask utility employees who are forced to take unpaid furloughs.  With shriveled demand, who needs energy programs?  Sure, in the short term this will have no effect.  If there is a long term, these programs may lose favor with the public, which is and will be squeezing every penny.  I’m sure we have a long grace period per the currently popular “green jobs” movement.

A strong economy will revive construction and manufacturing and this in turn will put pressure on energy supply, prices, and infrastructure; the drivers for demand side management programs and energy efficiency (not to mention the A&E and construction industries).  It will also put money in public and private institutions’ pockets to spend on energy retrofit and energy efficient new construction.  THEN green jobs will really emerge, organically – how about that!

A strong economy will also move institutions from deer in the headlights / survival mentality to a more competitive mindset.  Once this occurs, green will be a key ingredient to the competitive edge and it will lead the way in differentiating product A from product B, retailer 1 versus retailer 2, or A&E firm α from A&E firm β.

written by Jeffrey L. Ihnen, P.E., LEED AP