State of Massachusetts Industry Practices and Policies on Energy Efficient Program Rebates/Incentives

Transcription

1 State of Massachusetts Industry Practices and Policies on Energy Efficient Program Rebates/Incentives FINAL REPORT January 25, 2011

2 State of Massachusetts Industry Practices and Policies on Energy Efficient Program Rebates/Incentives FINAL REPORT January 25, 2011 Copyright 2011 Tetra Tech, Inc. All Rights Reserved. Prepared for: State of Massachusetts Tetra Tech 6410 Enterprise Lane, Suite 300 Madison, WI Tel Fax

3 ACKNOWLEDGEMENTS The research team worked closely with a project advisory group consisting of the Evaluation, Measurement, and Verification (EM&V) team leader for the consultants to the Massachusetts Energy Efficiency Advisory Council, and the Massachusetts Program Administrators. The authors would like to thank the members of the advisory team for their valuable inputs in planning and executing this project. Gene Fry, Northeast Utilities Lisa Glover, Unitil Birud Jhaveri, NSTAR Electric and Gas Corporation Kenneth M Keating, PhD Phil Moffitt, Cape Light Compact Ralph Prahl Wendy Todd, National Grid The research team also received information and advice from other contributors. The authors would also like to thank these individuals: Pam Rathbun, Tetra Tech Chris Dyson, Tetra Tech Ingo Bensch, Energy Center of Wisconsin The key researchers for this project include: Carol A. Sabo, Tetra Tech Ingrid Kelley, Energy Center of Wisconsin Joe Kramer, Energy Center of Wisconsin Theresa Holmes, Tetra Tech iii

4 TABLE OF CONTENTS 1. Executive Summary Introduction Key Findings Limitations of the Study Background and Approach Methodology Results of the Industry Scan Key Findings Factors in Comparing Program Incentives Comparison of Residential Rebates and Incentive Levels Comparison of commercial Rebates and Incentive Levels Results of Interviews Key Findings Comparison of Program Goals Results by States 4-2 A. Appendix: Residential Program Descriptions A-1 B. Appendix: Small Business Program Descriptions B-1 iv

5 List of Acronyms ACEEE ARRA BED BEERP BPA CEEIP CFL DSIRE ECW EERS EEU EM&V IRP LIPA NEEP NYSEG/RG&E NYSERDA PA PGE PNM PUD SCE SDGE SMUD VEIC American Council for an Energy Efficient Economy American Recovery and Reinvestment Act Burlington Electric Department Business Energy Efficiency Rebate Program Bonneville Power Authority Connecticut Energy Efficiency Incentive Program Compact Fluorescent Light bulb Database of State Incentives for Renewables and Efficiency Energy Center of Wisconsin Energy Efficiency Resource Standard Energy Efficiency Utility Evaluation, Measurement, and Verification Integrated Resource Planning Long Island Power Authority Northeast Energy Efficiency Partnerships New York State Electric & Gas/Rochester Gas & Electric New York State Energy Research and Development Authority Program Administrators for energy efficiency programs Pacific Gas and Electric Company Public Service Company of New Mexico Public Utility District Southern California Edison San Diego Gas & Electric Sacramento Municipal Utility District Vermont Energy Investment Corporation v

6 1. EX ECUTIVE SUMRY 1.1 INTRODUCTION Tetra Tech and the Energy Center of Wisconsin (ECW) ( the research team ) conducted a scoping study of energy efficiency program incentives to help inform the discussion on rebate and incentive levels for statewide programs in Massachusetts and to support fourth quarter 2010 programmatic planning. Research team members gathered rebate and incentive data on mature incentive programs similar to those energy efficiency programs currently planned and offered in the State of Massachusetts. There was a particular emphasis on those programs and end-use components that were expected to yield the greatest energy savings in Massachusetts. Program planners, policy makers, and program administrators from other states were interviewed to identify current trends and key drivers in establishing various incentives and rebate levels. The research team worked with an advisory group consisting of the Evaluation, Measurement, and Verification (EM&V) team leader for the consultants to the Massachusetts Energy Efficiency Advisory Council, and the Massachusetts Program Administrators. The data collection began in August 2010 with a final report due in October KEY FINDINGS The research team conducted a review of rebate and incentive programs in key states and attempted to make comparisons of incentive levels for similar programs. Residential incentives and rebates in Massachusetts were not consistently higher or lower than those in the other states programs. The Massachusetts average CFL incentive levels for upstream market actor residential lighting programs are in the mid-range of those programs identified in the research. Massachusetts incentive levels for residential air conditioning fall in the lower medium range when compared to other states, along with ductless mini-split heat pumps where they are mid-range. Residential gas furnace incentives in Massachusetts are among the higher incentives offered and are currently under review. Massachusetts also ranked the highest for hot water boiler rebates. Massachusetts weatherization incentives fall in the upper half of offerings, but these are complex programs and difficult to compare. Massachusetts commercial rebates examined for lighting were on the low end of lighting rebates offered in other states. Custom rebate comparisons are less straightforward, but Massachusetts rebates appear moderate relative to other similar custom programs for existing commercial buildings. The small business program offered by program administrators in Massachusetts is identical to those that the Massachusetts program administrators operate in surrounding states. Otherwise, the Massachusetts small business incentive at 70 percent of installed cost of existing building projects is higher than two other state programs and higher than the cap on custom incentives for large commercial projects. Recent evaluations indicate that the small business sector is unique and that aggressive approaches may be needed to get these customers to adopt energy efficiency measures. Finally, Massachusetts rebates appear to be at the high end of offerings in other states for hot-air furnaces. Tetra Tech and ECW conducted interviews with individuals representing key state programs. In general, most of the programs experienced some difficulty in meeting goals due to the economic turndown. The most prevalent response to lower uptake in programs was to increase incentives to commercial and industrial customers. Other approaches used by multiple programs, based on the interviews, were to find more creative ways of marketing the programs, focus on specialty lighting and other emerging technologies with significant market potential, and emphasize comprehensive approaches to energy efficiency at customer site. Incentives and rebate levels were primarily lowered when integrated resource planning (IRP) showed the measures were less cost-effective compared to other resources, which often related to baselines 1-1

7 1. Executive Summary increasing measures or efficient appliances or equipment became more standard practice. Standard use of spiral compact fluorescents was one example, along with some ENERGY STAR appliances. Free-ridership came into play in reducing incentives for measures, such as refrigerator recycling, where increasing efficiency levels was not an option. With few exceptions, program budgets for energy efficiency have increased and continue to increase in recent program plans. At the same time, the setting of incentives and rebate levels were tied to energy savings goals established for the program, often with data available from integrated resource planning studies or market potential studies. The level of incentives and rebates also considered and were adjusted for expected or actual market uptake within program target markets and end-use categories. The programs typically did not adjust rebates or incentives to reflect American Recovery and Reinvestment Act (ARRA) funding. The ARRA funding is considered temporary and helpful in getting participant uptake in specific programs to help meet program goals that are more difficult to achieve during economic turndown. 1.3 LIMITATIONS OF THE STUDY Although these comparisons provide some valuable information, it is important to note that there are many factors that should be considered when making direct comparisons of program rebates and incentives that are not included with the incentive level data. Some of these factors include: savings goals for the state, portfolio, and individual program or end-use group within a program program and measure cost-effectiveness effectiveness of program design, marketing, and delivery size of the target end-use market regional market barriers product availability, infrastructure development to deliver measures, energy costs to end-user available budget program and end-use measure uptake (participation levels) relative to goals measure adoption curve point and market transformation free ridership and spillover levels regulatory requirements and policy decisions economic conditions in the region firmographics and psychographics of customer base. In addition, there is little or no research on exactly how increasing or decreasing incentive levels affect the level of participation with all of these other factors in play. 1-2

8 1. Executive Summary For some high priority programs and end-uses, there are only a few data points on program rebates and incentives that can be used for comparison due to the differences in the structure of the rebates and incentives for prescriptive and custom programs. In other cases, the equipment and measures included, for example in custom programs, vary so it is difficult to make a one-to-one comparison. 1-3

9 2. BACKGROUND AND APPROACH Tetra Tech and the Energy Center of Wisconsin (ECW) ( the research team ) were selected to conduct a high-level scoping study of statewide energy efficiency program incentive and rebate levels to help inform the policy debate for statewide programs in Massachusetts and to support fourth quarter 2010 programmatic planning. The study examined rebate and incentive components for a list of energy efficiency programs and enduse measures of most importance to Massachusetts. Research team members gathered rebate and incentive data on mature incentive programs similar to those currently planned and offered in the State of Massachusetts. Program planners, policy makers, and administrators from other states were interviewed to identify current trends and key drivers in establishing various incentives and rebate levels. The research also included a review of any relevant current research or history on the effects of changes in incentives and rebate levels. The final list of programs, measures, and interviews was decided, after discussions with the advisory group, to provide the most useful information within the short timeframe for the data collection, interviews, and analysis. In that context, the study focused on those measures with the highest savings for statewide Massachusetts programs, while gathering readily available data for other end-use measures. The data collection began in August 2010 with a final report due in October The research team worked with an advisory group consisting of the EM&V team leader for the consultants to the Massachusetts Energy Efficiency Advisory Council, and the Massachusetts Program Administrators. 2.1 METHODOLOGY There were two major tasks identified for this study. First, the research team conducted a review of available data on energy efficiency program rebates and incentives. Second, interviews were conducted with key individuals from other states. The team also conducted an internet search to identify any research that has already been conducted on appropriate incentives and rebates for the selected sector programs. These tasks are described in more detail in this section. The primary focus was on statewide programs but also included major programs operated by individual program administrators. The states of most interest for comparison to Massachusetts were those states that ranked in the top 10 of ACEEE s 2010 State Energy Efficiency Scorecard 1 in leading the way in energy efficiency policies and programs. These states include in order of the 2010 ranking: (1) California; (2) Massachusetts; (3) Oregon; (4) New York; (5) Vermont; (6) Washington; (7) Rhode Island; (8) Connecticut (tie); and (8) Minnesota (tie); (9) Maine; and (10) Wisconsin Industry scan: compare rebate/incentive levels for similar programs The project began with an Internet search to review available research documents, program descriptions, and databases to support this analysis. Program incentive/rebate information was first drawn from the Database of State Incentives for Renewables and Efficiency (DSIRE) and from other sources on the Internet. Based on that initial review, the recommendation was made to summarize the 1 The 2010 State Energy Efficiency Scoreboard, October 2010, available from the American Council for an Energy Efficient Economy, is a comprehensive state energy efficiency policy scorecard to document best practices, recognize leadership among 2-1

10 2. Background and Approach DSIRE data as a starting point to develop a matrix of program end-use measure rebates and incentives. The ECW staff led the task to summarize the DSIRE data to characterize current energy efficiency programs by sector and by major end-use measures, when appropriate, for rebate and incentive programs similar to those offered statewide in Massachusetts. ECW submitted a summary table of the data from the DSIRE database for discussion with the advisory group. The results indicated there was a wide range of measure types but the rebates and incentives information was not of sufficient detail to make reasonable comparisons. In addition, the program definitions did not always match those used for Massachusetts. For example, small business programs were not typically separate from the general category of commercial and industrial programs. At that point, the research team and advisory group decided that they needed to identify some specific program measures that were fairly prevalent in finding comparison data while being important to Massachusetts program design. After a discussion with the advisory group, the decision was made to exclude residential low-income programs in the incentive/rebate review. Tetra Tech s experience is that the free ridership levels are close to zero in that these customers will not undertake energy efficiency measures on their own. In addition, the weatherization and appliance measures typically included for low-income programs varied greatly by program and would typically be covered under residential retrofit. Commercial/industrial custom measure programs were determined to be of particular interest for Massachusetts, so the decision was made to include them as a high priority. The challenge was to identify a sufficient number of programs that could be compared in that they had similar end-use measures and incentive structures, such as payback criteria, size, or per unit of energy saved (kw or watts). The easiest comparisons were those custom programs that paid a percentage of installed cost or incremental cost. Other program rebates described as custom pay the customer based on energy savings and peak load reduction, and are split into sub-categories of lighting, HVAC and other. Small business programs, which are a key sector for Massachusetts, were also decided to be a priority in that the rebates and incentives for Massachusetts may be higher than for other commercial programs that target medium and large customers. In many cases, small business programs include direct install components and similar to custom programs, the rebates and incentives are on a percentage basis. After reviewing the readily available data in DSIRE and discussing priorities with the advisory group to this study, the highest priority programs and end-uses were agreed upon as follows: Residential lighting programs (specifically upstream market actor programs) Residential HVAC programs including gas furnaces Residential weatherization programs Commercial/industrial prescriptive lighting programs Commercial/industrial HVAC programs Commercial/industrial custom measures program Small business programs 2-2

11 2. Background and Approach Although these specific program and end-use categories were identified by the advisory group as having the highest priority, other end-use programs were included such as refrigerator recycling and efficient appliances where sufficient comparable data points were readily available. The highlights of the program rebates and incentives comparison is discussed in Chapter Conduct interviews with program administrators/managers/policy-makers The second task in the study was to conduct interviews with individuals most knowledgeable about the process, policies, and current trends in establishing rebates and incentives for energy efficiency programs in their state. Program contact interviews were designed to glean insights into program function, histories, decision-making, and any notable regional peculiarities related to rebate/incentive programs. Program contacts were also asked whether any studies had been conducted on the effectiveness of their particular incentives with special attention given to examinations of incentive level adjustments or other program innovations and participation related outcomes. The same top 10 states used as the high priority states for the market scan of rebates and incentives were targeted for the interviews. Tetra Tech and ECW contacted program planners, administrators, and policymakers in the chosen states to request interviews. An interview guide was developed an approved by the advisory group with the following topics: Program status (including expected upcoming changes) Process for establishing budgets and rebates/incentive levels History of incentive levels Changes in incentive levels and any effects on program performance Effects of free ridership and spillover, if any, on levels of rebates and incentives Other insights The information gathered from the interviews was compiled and summarized in Chapter

12 3. RESULTS OF THE INDUSTRY SCAN The purpose of this section is to get some perspective on how rebate levels in Massachusetts compare to those offered in other states. To this end, we gathered program data from Web sites and identified rebates that were similar enough to those offered in Massachusetts to warrant comparison. The states most used for comparison were selected because of the maturity and longevity of their energy efficiency programs. Information about each program was drawn from the Database of State Incentives for Renewables & Efficiency web site, and from individual program web sites from each state. These data were compiled and listed, and when appropriate, graphed to allow a quick comparison. The sections below outline these comparisons for selected residential and commercial rebates. 3.1 KEY FINDINGS Residential programs Residential incentives and rebates in Massachusetts were not consistently higher or lower than those in the other states studies. Massachusetts average CFL incentive levels for residential lighting programs are in the mid-range of those programs identified in the research. Massachusetts incentive levels for residential air conditioning fall in the lower medium range when compared to other states, along with ductless mini-split heat pumps where they are mid-range. Residential gas furnace incentives in Massachusetts are among the higher incentives offered but are currently being reviewed in the context of a recent program impact evaluation. Massachusetts also ranked the highest for hot water boiler rebates. Massachusetts weatherization incentives fall in the upper half of offerings, but these are complex programs and estimates for this study are general in nature Commercial programs Massachusetts commercial rebates examined for lighting were on the low end of lighting rebates offered in other states. Custom rebates comparisons are less straightforward, but Massachusetts rebates appear moderate relative to the other similar programs. One California program rebates a lower percentage of costs but has a higher maximum amount that will be covered. Massachusetts is somewhat unique in offering a separate program for small business customers that includes incentives covering 70 percent of installed cost. These are identical to many of the surrounding states, but they are often offered by the same program administrators as Massachusetts. Finally, Massachusetts rebates appear to be at the high end of offerings in other states for hot-air furnaces. 3.2 FACTORS IN COMPARING PROGRAM INCENTIVES Although these comparisons provide some valuable information, it is important to note that there are many factors that should be considered when making direct comparisons of program rebates and incentives that are not included with the incentive level data. Some of these factors include: savings goals for the state, portfolio, and individual program or end-use group within a program program and measure cost-effectiveness effectiveness of program design, marketing, and delivery size of the target end-use market regional market barriers product availability, infrastructure development to deliver measures, energy costs to end-user 3-1

13 3. Results of the Industry Scan available budget program and end-use measure uptake (participation levels) relative to goals measure adoption curve point and market transformation free ridership and spillover levels regulatory requirements and policy decisions economic conditions in the region firmographics and psychographics of customer base In addition, there is little or no research on exactly how increasing or decreasing incentive levels affect the level of participation with all of these other factors in play. 3.3 COMPARISON OF RESIDENTIAL REBATES AND INCENTIVE LEVELS This brief study looks at incentives from residential energy efficiency programs in at least nine states, including California, Connecticut, Maine, New York, Oregon, Rhode Island, Vermont, Washington, and Wisconsin, and compares their residential program incentive levels and specifications with programs in the State of Massachusetts. Project advisors requested that the study team consider and compare specific residential energy efficiency measures unless time permitted gathering data on more programs. The final list of programs reviewed and included in this report were: Residential lighting upstream market actor programs (CFLs and specialized fixtures) Residential heating and cooling Residential appliances Refrigerator recycling Home weatherization 3-2

14 3. Results of the Industry Scan State Table 3-1. States Included in Residential Energy Efficiency Incentive Comparison State Program Utility Program State State Program Utility Program Public Benefits State Public Benefits State California 2 X Connecticut 1 2 X State Program Name State Program Name Connecticut Clean Energy Fund Maine 1 Efficiency Maine Massachusetts 6 Mass Save Program New York 1 X Oregon 1 Rhode Island 1 X Vermont 1 X Efficiency Vermont Washington 1 Wisconsin 1 X Focus on Energy Totals 6 12 The six Program Administrators (PAs) that operate energy-efficiency incentive programs in Massachusetts 2 collaborate on programs such as Mass Save, while working together with the Massachusetts Department of Energy Resources to provide services and resources for residents and businesses. For this reason, their incentive levels and specifications are essentially the same, and therefore Massachusetts data is treated as one set of incentive levels. This study offers incentive comparisons of several specific residential efficiency measures and technologies that are offered by most incentive programs because of their high potential for savings. These include residential lighting, furnaces, boilers, central air conditioning, air-source heat pumps, and home weatherization measures. Other programs such as incentives for refrigerator recycling and efficient appliances are also included because these programs are almost universally offered Residential lighting programs Residential energy efficient lighting programs appear to be moving from direct customer rebates to the upstream approach of offering manufacturers and/or retailers incentives to lower retail store prices for standard compact fluorescent lights (CFLs) and specialty CFLs. Although an attempt was made to gather specific incentives by type of bulb, many provided average incentives for upstream market actors, usually segmented by standard CFL and specialty CFL. The incentives often vary by particular bulb and based on the contract with a particular retailer or manufacturer. Programs are reporting future changes in incentive levels for standard CFL bulbs. Public awareness of the standard CFL bulb has increased and the higher-level incentives are becoming unnecessary to 2 These utilities are Bay State Gas Company, The Berkshire Gas Company, Cape Light Compact, National Grid, New England Gas Company, NSTAR, Unitil, and Western Massachusetts Electric Company. 3-3

15 3. Results of the Industry Scan promote energy savings. Programs are reporting they are beginning to cut back on the incentive levels to retailers and manufacturers in 2010 and in future years. However, specialty CFLs are not as well known and are currently considerably more expensive than their incandescent counterparts therefore programs are reporting little intention on cutting back incentive levels for those measures. The six Massachusetts Program Administrators offer incentives upstream, working with retailers to lower prices for efficient lighting products in the store. The Massachusetts Program Administrators also sponsor an on-line catalog where lighting products are offered for reduced prices to their customers. For example, spiral CFLs cost $1-$2 less per lamp through the catalog. Specialized light fixtures are available at a range of discounts up to 50%. The types of lighting programs that were found in the industry scan are identified in Table 3-2. The upstream market actor programs were determined to be of most interest for this study. State Table 3-2. Residential CFL Lighting Programs Compared Retail Buy Down Incentives Manufacturer Buy Down Incentives Web Catalog Discounts Specialty Lamp/Fixture Incentives California X X X Idaho X Illinois X X X X Massachusetts X X X Montana Nevada X X New Jersey X X X New Mexico X New York X X X X Oregon X Rhode Island X X Washington X Wisconsin X X X Wyoming X a. Upstream market actor programs: standard CFL incentives A number of companies stated their incentive levels for standard CFLs decreased in 2010 or will be decreasing in Incentive ranges varied among the companies, from $0.25 per standard CFL bulb up to $2.75. Figure 3-1 shows the maximum allowed incentive level by state and program implementer. California is showing having the highest maximum incentive levels for a standard CFL bulb in comparison to programs in the rest of the country. Massachusetts is at the mid-range of programs. 3-4

16 NJ ID, OR, MT, WA, WY, NV, CA WI NM WA IL CA CA CA NY CA 3. Results of the Industry Scan Figure 3-1. Residential Upstream Market Actors Standard CFL Incentive Level Comparison $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 Sacramento Municipal Utility District Long Island Power Authority Southern California Edison San Diego Gas & Electric Pacific Gas & Electric Mass Saves (6 utilities) ComEd Seattle City Light Public Service Company of New Mexico Focus on Energy Bonneville Power Authority NJ Clean Energy Program Note: This figure shows the maximum incentive allowed for a standard CFL bulb for each program. b. Specialty CFLs and LED Incentives Research team members from Tetra Tech reviewed residential upstream lighting programs offering incentives for CFL light fixtures and light emitting diodes (LED) lighting. An incentive of $10.00 per CFL fixture is shown as being the most common amongst the companies reported, with the lowest being $5.00 per fixture and the highest being $35.00 for a ceiling fan fixture. LED lighting varied greatly depending on the LED measure being rebated. Quality and reliability of LED technology is still not consistent among available products so incentives are limited. Figure 3-2 shows the average incentive level comparison for specialty CFL bulbs. The average incentive range for specialty bulbs, defined as globe, reflector, dimmable, and 3-way bulbs, begins at $1.00 per bulb up to as high as $4.00 per bulb, depending on the type and wattage. Most programs offered the specialty bulbs between $2.00 and $3.00 on average with the lowest being $1.50 and the highest average being $3.50. Again, Massachusetts is in the mid-range of incentives for specialty CFL. 3-5

17 WI NM IL CA NY CA NJ ID, OR, MT, WA, WY, NV, CA CA CA WA 3. Results of the Industry Scan Figure 3-2. Residential Upstream Market Actors Specialty* CFL Incentive Level Comparison $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 Seattle City Light Pacific Gas & Electric Mass Saves (6 utilities) Sacremento Municipal Utility District Bonneville Power Authority NJ Clean Energy Program San Diego Gas & Electric Long Island Power Authority Southern California Edison ComEd Public Service Company of New Mexico Focus on Energy *Specialty CFLs are defined as globe, reflector, dimmable, or 3-way bulbs. Note: The range of incentive level was great amongst some individual companies. An average level was calculated for comparison purposes. Appendices A-1 and A-2 includes more details of residential upstream lighting programs being offered for standard CFLs, specialty CFLs and LEDs across the country Residential heating and air conditioning equipment Almost all programs examined offer incentives for central air conditioning and heat pumps. The following charts show incentive levels for central air conditioning, both split and packaged systems, and for ductless mini-split heat pumps. Massachusetts does not offer incentives for conventional air source heat pumps or ground source heat pumps, so comparison state incentive data for those technologies is not shown. Neither of the two California utilities offers an incentive for central air conditioning, although one does offer financing for efficient units. Oregon and Washington do not offer incentives for central air conditioning, and Vermont offers no heat pump incentives. 3-6

18 WA RI CT CT VT RI RI NY NY ME ME ME CT CT CA CA CA CA 3. Results of the Industry Scan Figure 3-3. Residential Central Air Conditioning Incentives by State and Mandated Minimum Efficiency Ratings $- $200 $400 $600 $800 $1,000 $1,200 EER 12.0 EER12.5 EER 13.0 EER 14.5 SEER 14.5, EER 12.0 SEER 14.0, EER 11.0, HSPF 8.2 SEER 14.5, EER 12.0, HSPF 8.2 SEER 15.0, EER 12.5, HSPF 8.5 SEER 14.5, EER 12.0, HSPF 8.2 SEER 14.5, EER 12.0 SEER 14.0, EER 11.0 SEER 15.0, EER 12.5 SEER 16.0, EER 13.0 SEER 14.5, EER 12.0, HSPF 8.2 SEER 15.0, EER 12.5, HSPF 8.5 SEER 14.5, EER 12.0 Figure 3-4. Residential Ductless Mini-Split Heat Pump Incentives by State and Mandated Minimum Efficiency Ratings $- $200 $400 $600 $800 $1,000 $1,200 no specifications no specifications SEER 14.5, EER 12.0, HSPF 8.2 SEER 14.5, EER 12.0, HSPF 8.2 HSPF Residential furnaces Most states give incentives for forced-air gas furnaces. However, none of the Connecticut utilities in the study offer a furnace incentive, and only one of the two California utilities does (and customers must live in a qualifying climate zone to receive one). Oregon discontinued its gas furnace incentives in May 2010 but still offers some tax incentives instead. Rhode Island discontinued its gas incentives in April Some states offer incentives in tiers of efficiency ratings while others provide a list of qualifying models. Connecticut offers a sales tax exemption on ENERGY STAR furnaces. The incentives in Massachusetts for furnaces are being reviewed as a result of a recent impact evaluation. 3-7

19 WI WA WA VT NY NY NY ME ME CA CA CA CA 3. Results of the Industry Scan Figure 3-5. Residential Gas Furnace Incentives by State and Mandated Minimum Efficiency Ratings $- $100 $200 $300 $400 $500 $600 $700 $800 94%-96% AFUE 94%-96% AFUE W/VSM 96%+ AFUE 96%+ AFUE w/vsm 92% AFUE 92% AFUE w/ecm or equiv 94% AFUE w/ecm or equiv 90% AFUE gas 85% AFUE oil gas furnace 90% AFUE gas 92% AFUE w/ecm or equiv gas furnace w/ecm gas furnace replacing elec resis 90% AFUE gas 90% AFUE gas Residential hot water boilers Massachusetts offers incentives for a number of boiler equipment options, so a table of comparative incentives is included, even though less than half of the states used for comparison offer incentives. Neither California nor Vermont has a boiler incentive program. Connecticut merely exempts sales tax on ENERGY STAR boilers, and Rhode Island, as mentioned previously, discontinued all natural gas incentives in One state, Maine, offers an incentive for oil fired boilers. 3-8

20 NY NY WI WA OR NY NY ME ME 3. Results of the Industry Scan Figure 3-6. Residential Hot Water Boilers by State and Mandated Minimum Efficiency Ratings 85% AFUE $- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 92% AFUE Integ water heater/boiler, 85% AFUE Integ water heater/boiler, 90% AFUE 85% AFUE Oil boiler 85% AFUE 85% AFUE 90% AFUE 88% AFUE 90% AFUE 90% AFUE Additional boiler incentives Because Massachusetts offers incentives for steam boilers and for boiler reset controls, the following tables compare those incentives with those offered by New York, the only other comparative state to do so. Figure 3-7. Residential Boiler Reset Control Incentives by State $- $50 $100 $150 $200 $250 Boiler reset Boiler reset Figure 3-8. Residential Steam Boiler Incentives by State and Mandated Minimum Efficiency Ratings $- $100 $200 $300 $400 $500 $600 82% AFUE 82% AFUE 3-9

21 WA VT VT RI OR ME ME CA 3. Results of the Industry Scan Residential appliance incentives When making comparisons of residential appliance incentives across the states studied, there were few consistent programs. Massachusetts offers incentives for efficient room air cleaners ($20), computer monitors ($20), desktop computers ($10), and pool pumps ($200). With the exception of one utility in California which offers a pool pump incentive ($100), none of the other states studied offered incentives for any of this equipment. On the other hand, many other states offer rebates to buyers of washing machines and/or dishwashers. Massachusetts utilities do not pay incentives for either of these. The only appliance where a comparison can be made is refrigerators. Among the states studied, there is a wide range of incentives for purchasing an efficient refrigerator, from $25 in Maine, Vermont and Washington, to the $700 maximum incentive offered (up to 70% of unit cost) by the Oregon Energy Trust. Another factor that applies to appliance rebates nationally is funding from the American Recovery and Reinvestment Act, or ARRA. Two of the states refrigerator rebate programs are partly or wholly dependent on this temporary funding source, as noted in the graph. Neither PG&E nor SMUD in California offer an incentive for purchasing an efficient refrigerator, so the California state program (funded entirely by ARRA) is included in this graph for the sake of comparison. Two of the states studied offer different incentive levels for refrigerators. Maine designates $25 for refrigerators equal to or less than 7.5 cubic feet, and $75 for larger units. Vermont bases its incentives on efficiency level. For an ENERGY STAR refrigerator the incentive is $100. For an EER Tier 2 ENERGY STAR refrigerator, the incentive is $200. The following graph shows the state incentive levels, with the higher options in Maine and Vermont appearing in red. Figure 3-9. Refrigerator Incentives by State And Program Level $- $100 $200 $300 $400 $500 $600 $700 $800 CA EE Appliance Rebate Program (ARRA) ME (less than 7.5 cu ft) ME (greater than 7.5 cu ft) OR (70% of unit cost, max $700) RI VT (state and ARRA rebates combined) VT Tier 2 (state and ARRA rebates combined) WA Refrigerator recycling Another appliance incentive that was surprisingly consistent among the states studied is what they offer for recycling second refrigerators. Not only were the monetary incentives similar, most programs required that the units be in working order, and limited the number to two units per household. Three states have no refrigerator recycling programs: Connecticut and Maine made no mention of a program 3-10

22 3. Results of the Industry Scan on their web sites, and Wisconsin Focus on Energy reported (in an interview) that their refrigerator recycling program had been discontinued because evaluators found a high incidence of free ridership among participants. Washington also offers a $20 rebate for recycling a freezer, and PG&E in California will pay $25 for recycling a room air conditioner if the room air conditioner picked up with a refrigerator. The following graph shows comparative recycled refrigerator rebate levels. Figure Rebates for Recycling Second Refrigerators by State $0 $10 $20 $30 $40 $50 $60 California Massachusetts New York Oregon Rhode Island Vermont Washington Residential weatherization incentives Most states surveyed offer weatherization incentives for existing residences. To establish a consistent approach for comparison of programs, ECW began by defining weatherization as including duct and air sealing, insulation, and home energy audits. Only two programs offered incentives for efficient windows, so ECW did not include that measure. Connecticut programs either did not offer incentives for weatherization measures or the information provided was inadequate for making an estimate. SMUD in California has an advanced weatherization program (in addition to their basic that includes HVAC and cool roofs along with the other items. This program option was not included in the graph below. There is a wide variety in the incentive methods and packages offered among the states studied. For example, home energy audits play an important role in most of the programs, although some program web sites do not mention them at all. Some states offer a package deal for weatherization incentives based on the results of an energy audit. However, Wisconsin only offers a rebate on the audit itself if the customer installs at least three recommended measures. In Vermont an audit rebate is available only if air leakage reduction goals are met. Some states offer walk-through audits with CFLs for a fee to the customer. Insulation incentives might be designated by the cost per square foot, percentage of the overall project cost, or as a flat fee for each insulation type. Methods for calculating the incentives vary widely, making dollar for dollar comparison difficult. However, despite this variation, most programs give maximum dollar incentives for specific measures or package deals available to each customer. For these programs ECW looked closely at the weatherization offerings and calculated the maximum incentive amount a customer could receive if all program requirements are met, including any multiple-measure bonus. For programs where square or linear footage determined the total incentive, ECW created a model of a 2,000 square-foot, single story 3-11

23 WI WA VT RI OR OR NY ME ME CT CT CT CA CA 3. Results of the Industry Scan house with 20% of wall area being windows and doors for use in the incentive calculations. Customer costs for audits were not included in the calculations. Using these methods, an incentive figure was derived from the specifications of each program. These are not intended to be averages of actual incentives paid because they assume the maximum incentive available, or, the use of a conservative insulation model. A table showing details of the weatherization programs studied, and the total estimated incentive calculated for each state, appears in the Appendix as Table A-3. Figure Maximum Estimated Weatherization Incentives by State $- $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 PG&E SMUD CT Clean Energy Fund United Illuminating Co. CT Light and Power Efficiency Maine -- Tier 1 Efficiency Maine -- Tier 2 Mass Saves (6 utilities) ConEd Oregon Energy trust, electric homes Oregon Energy Trust, gas homes National Grid Vermont Efficiency Avista Focus on Energy 3.4 COMPARISON OF COMMERCIAL REBATES AND INCENTIVE LEVELS The purpose of this section is to provide a snapshot of incentive levels from commercial programs that may be comparable to those offered in Massachusetts. Table 3-3 lists the commercial rebate programs that were studied for rebate offerings comparable to those offered in Massachusetts. Table 3-3. States and Programs Studied State Massachusetts Programs Studied Mass Save Program Administrators Program and Materials Bay State Gas Commercial Energy Efficiency Program Berkshire Gas Commercial Energy Efficiency Rebate Program National Grid (gas & electric) commercial energy efficiency programs 3-12

24 3. Results of the Industry Scan State California Connecticut Maine Minnesota New York Oregon Rhode Island Vermont Washington Wisconsin Programs Studied NSTAR Business Solutions and Commercial Energy Efficiency Rebate Programs Western Massachusetts Electric Commercial EE Rebates PG&E Non-Residential EE Programs Sacramento Municipal Utilities District Commercial Energy Efficiency Rebate Program Southern California Edison Non-Residential Energy Efficiency Rebates CEEIP Commercial and Industrial Rebate Program Connecticut Light & Power Commercial Energy Efficient Rebates Norwich Public Utilities Commercial Energy Efficiency Rebate Program Unitil Commercial EE program Efficiency Maine Business Program Interstate Light and Power (Alliant) BEERP MN Power Power Grant Energy Efficiency Program Xcel Energy Business EE Rebate Programs NYSERDA Lighting Rebate Program National Fuel Small Commercial Conservation Program NYSEG/RG&E Commercial & Industrial Efficiency Program Energy Trust Business Energy Efficiency Rebate for Existing Buildings Columbia River PUD Commercial Energy Efficiency Rebate Programs Avista Utilities Prescriptive Commercial Incentives Program National Grid (Gas) Commercial Energy Efficiency Programs Burlington Electric Department Commercial Energy Efficiency Rebate Program Efficiency Vermont various programs Avista Utilities Commercial Energy Efficiency Incentives Program Avista Utilities (Gas & Electric) - Commercial Food Equipment Rebates Puget Sound Energy Commercial EE Equipment Rebate Programs & Commercial HVAC We Energies - Multi-family, Non-Profit, and Small Business EE Rebate Program Focus on Energy Business Program Incentive - Retrofit ECW began by searching program Web sites for rebate documentation, focusing on measures that appeared to be comparably defined (e.g. some rebates are based on estimates of energy saved versus a dollar amount per unit installed), and those that appeared to have the necessary data for comparison readily available. After sorting and organizing the data, temporary programs, or those with temporarily elevated offerings due to federal stimulus funds were excluded. Upon review of the summary tables, project advisors suggested the study cover commercial rebate categories in lighting, HVAC, and custom energy efficiency projects. 3-13

25 State 3. Results of the Industry Scan Commercial lighting rebates Examination of data on lighting rebates suggested three specific rebates as the most readily comparable to those offered in Massachusetts. The first is described as re-lamping and re-ballasting existing fixtures with high-performance or reduced wattage T-8 or T-5 lamps and high-performance or reduced-wattage T-8 electronic ballasts. Figure 3-12 shows a comparison of the Massachusetts offering (in yellow) with offerings in other states. Figure Rebate For Re-Lamp/Re-Ballast with HP/RW T-8 or T-5 and HP/RW T-8 Electronic Ballasts by State NY $15 ME $12 VT $10 VT $10 CT $15 is minimum, up to $40 based on type being replaced $15 $10 $- $2 $4 $6 $8 $10 $12 $14 $16 Rebate The Massachusetts rebate and two programs in Vermont offered the lowest rebates at $10. The other programs offered higher rates, with one offering $12 per fixture, and two offering $15. One of the $15 per fixture rebates offered could go as high as $40 depending on what it was replacing. CFLs were not common as a C&I incentive. However, there were several programs offering incentives for designated CFL fixtures. Therefore, this rebate was chosen as the second for comparison. Figure 3-13 shows those rebate levels. 3-14

26 State 3. Results of the Industry Scan Figure Compact Fluorescent Fixture Long Tube CFL or BIAX Fixture Eligible, by State WA $35 is min. max is $55 $35 WA $15 ($15 for 40-55W, $25 for 55-65W) CT Biax systems get $50 $25 VT $20 $15 $- $5 $10 $15 $20 $25 $30 $35 $40 Rebate Massachusetts programs offer $15 rebates for installation of each CFL fixture. They again tie for the lowest rebate level of those found. A Vermont program offers a $20 rebate for fixtures of unspecified wattage. Washington has two programs that vary rebate levels based on wattage: one that offers $15 for CFL fixtures, but also offers a $25 rebate for installation of higher wattage CFL fixtures (55-65W); and another that offers a minimum of $35 rebate for installation of a fixture, and a maximum of $55 (basis for rebate amounts not specified). The final commercial lighting rebate type with some cross-program comparability is the incentive for installing LED or LEC (electroluminescent) exit signs. Figure 3-14 below shows the levels found for this type. 3-15

27 State 3. Results of the Industry Scan Figure Rebates for Commercial Sector LED or LEC Exit Fixtures by State WA $50 WA $25 NY $10 MN $5 CA $15 ($15 if replacing CFL, $27 if replacing incandescent) CT $10 ME $10 $10 $- $10 $20 $30 $40 $50 $60 Rebate The rebates offered for LED or LEC exit signs range from $10 per fixture up to $50. The smallest rebate offered is in Minnesota at $5. The Massachusetts program offers the most common (along with the Maine, Connecticut, and New York programs) amount at $10, and California and two programs in Washington offer the highest amounts. The California program offers a minimum of $15 per fixture, or $27 if it is replacing an incandescent sign. The Washington programs offer $25 per fixture in one, and $50 in the other which requires that an incandescent bulb is being replaced Commercial custom incentives The study also examined rebates listed as custom for several programs. For the graph below (Figure 3-15) the research included only those rebates structured as a percentage of installed costs so they could be easily compared to Massachusetts rebates. The California program, offered by SMUD, has a much lower percentage of installed cost but the ceiling for some end-use custom measures is as high as $150,000. In some cases, custom programs paid incentives for a high percentage of the cost of the technical feasibility study while using prescriptive rebates. These programs were not compared. Based on the National Grid web-site, the Massachusetts Program Administrators offer up to 45% of the project cost for existing facilities. The Massachusetts PA s also offer up to 75% of the additional cost for new construction or renovation projects under the Custom Program. Efficiency Maine has a similar incentive of 75% of the incremental cost for new construction and renovation projects, while their 35% of total project cost for retrofit projects is lower than Massachusetts. 3-16

28 3. Results of the Industry Scan Figure Custom Rebate Incentives by State Other California program rebates (not included in the above figure) described as custom are structured to pay the customer based on energy savings and peak load reduction, and were split up into subcategories, each with their own specific rebate formula. These programs were split into subcategories of lighting, HVAC and other. The two lighting-specific custom rebates offered $0.05/kWh rebates for energy savings and one also offered $100/peak kwh demand reduction. One of the HVAC custom rebates offered $0.15/kWh rebate for energy savings and $100/kW demand reduction. The other split the custom HVAC project categories into levels 1 (systems) and 2 (controls), with rebates of $0.15/kWh and $0.9/kWh, respectively Commercial furnace rebates Examination of rebates in the HVAC category suggested that the rebate for furnace for hot air systems AFUE 92+% would have good comparability across the programs. Figure 3-17 below describes these rebate levels. Rebates are all for furnaces with an AFUE of at least 92% unless otherwise noted. 3-17

29 State 3. Results of the Industry Scan Figure Rebates for Furnace for Hot Air Systems AFUE 92+% by State RI up to 150MBH OR OR NY $3/kBtu/hr in, min AFUE is 91%, <225MBH up to 150MBH min AFUE 91%, up to 225MBH MN CT up to 300MBH up to 150MBH CT up to 150MBH up to 150MBH $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 Rebate For this rebate type, Massachusetts programs are at the upper end of the range of incentive levels offered. Regarding furnaces up to 150MBH, a Massachusetts and a Connecticut program both offer up to $400 rebate. A Rhode Island program offers a rebate of $300, and programs in Connecticut and New York offer rebates of just $100. A Minnesota program offers a rebate of $250 for furnaces up to 300MBH. Two Oregon programs instead have a minimum AFUE of 91%, and limit qualifying furnaces to those that are 225MBH or smaller. One offers a $200 rebate and the other offers a rebate of $3/kBtu/hour in Chillers Incentives for installing energy efficient chillers were also examined. States we found with programs that have specific incentives for chillers were Massachusetts, New York, and Wisconsin. Chillers were split into both technology type and by size. Differences in minimum efficiency requirements were apparent between states. These are included in Figure 3-17 below. 3-18