How Energy Efficiency Programs Can Support State Energy and Environment Planning: Energy Efficiency Potential and Pathways

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1 How Energy Efficiency Programs Can Support State Energy and Environment Planning: Energy Efficiency Potential and Pathways Presentation for NASEO April 25, 2016 Johanna Zetterberg, U.S. DOE

2 Outline Why energy efficiency Pathways concept Energy efficiency potential Considering energy efficiency pathways in state plans DOE and SEE Action resources for states 2

3 Why Energy Efficiency Help meet state, local, federal & private sector goals Least cost solution Energy resource at ½ cost of new supply Yields policy bang-for-buck Energy Efficiency Improves air quality Reduces all types of power-plant related emissions Lowers overall energy consumption on transmission & distribution systems Increases electric system reliability Increases economic development Energy cost savings, jobs, competitiveness 3

4 Energy Efficiency Pathways Ratepayer-Funded Programs Industrial Efficiency Combined Heat & Power Energy Savings Performance Contracting Building Energy Codes City-Led Efficiency 4

5 Private Sector S/L Gov t Utility Many Substantial, Well Documented Energy Savings Opportunities Savings come from EE activities across: industrial, commercial, public, residential bldgs ratepayer-funded (e.g., utility) programs private sector initiatives state / local government-run programs Typical Lead Savings Pathways Estimate of National Electricity Savings Potential in 2030* Estimate of National Carbon Savings Potential in 2030** Ratepayer-Funded Efficiency Programs million MWh million short tons Industrial Efficiency million MWh million short tons Combined Heat and Power million MWh million short tons Energy Savings Performance Contracting million MWh million short tons Building Energy Codes million MWh million short tons City-Led Energy Efficiency Efforts million MWh million short tons *DOE calculations of ballpark achievable potential based on sector-specific assumptions for activities occurring ; see appendix. **Carbon emissions estimates based on national average total output emission rate published in 2012 egrid; see appendix. NOTE: Savings Pathways may have overlapping savings, so estimates are NOT additive. S/L Gov t = state or local government 5

6 State Level Potential Estimates Available and Coming Soon Savings Pathways For More Information Combined Heat and Power (technical potential) Residential Efficiency Industrial Efficiency Commercial Efficiency Building Energy Codes Appliance Standards s/new-release-us-doe-analysis-combinedheat-and-power-chp-technical-potential Coming soon Coming soon Coming soon Coming soon Coming soon 6

7 Energy Efficiency Potential Studies & Achieved Electricity Savings DOE identified 79 energy efficiency potential studies published between 2007 and 2015 completed for states, utilities, and NGOs. 1 They provide estimates across 44 states. The majority (60%) found an average savings rate of 1 to 2.5% from prior year electricity sales in economic or achievable potential. The 10 states leading on energy efficiency are already achieving 1.25 to 3.5% in annual electricity savings. 2 Many of these states have been running energy efficiency programs for decades and are continuing to increase savings. 1 U.S. Department of Energy, 2016, Energy efficiency potential studies catalog 2 American Council for an Energy-Efficiency Economy (ACEEE), 2015, State Energy Efficiency Scorecard 7

8 Private Sector State / Local Gov t Utility/Program Administrator EE Savings Pathways Can be Incorporated into Climate Planning Typical Lead Savings Pathways Helps reach carbon reduction goals Reduces smokestack emissions Produces verifiable energy savings Industrial Efficiency Combined Heat and Power Building Energy Codes Energy Savings Performance Contracting City-Led Energy Efficiency Efforts Ratepayer-Funded Efficiency Programs Low Income Energy Efficiency Programs Gov t = government 8

9 Energy Savings as Percent of Consumption Illustrative Example of a State-Level Portfolio of Pathways with Increasing Total Savings Over Time 3.50% 3.00% City Led Programs 2.50% Performance Contracting 2.00% 1.50% Industry Programs 1.00% Ratepayer Programs - Deep Savings 0.50% 0.00% Years Ratepayer Programs - Quick Start Building Energy Codes Note: some strategies overlap 9

10 Considering Pathways How does it work? What are the benefits? Is policy action required? Show me some examples Who is doing it? What support is available? What does it take to implement? Is it cost effective? How are savings documented? What are they achieving? What are the best practices? 10

11 Pathways: 30,000 Foot View About EE Addresses multiple pollutants (including C0 2 ) for state-specific reasons Is an established energy resource Saves money and is cost-effective Approaches to documenting energy savings and emission reductions Practical Considerations Intergovernmental coordination Workforce development Pathways for each pathway: Definition/description Policies foundation for success Brief case studies Methods for estimating and determining energy savings Expected range of energy savings and emissions reductions EE for low income communities 11

12 Pathways: 5,000 Foot View Q: I want to understand what it would look like to include a specific pathway in my state s climate or energy plan Q: I want to learn about DOE s technical assistance for a specific pathway, and more on implementation best practices A: See Pathway overview presentations A: See Accessing DOE s Many Energy Efficiency Resources and Technical Assistance 12

13 EM&V and Modeling Resources Energy Modeling 101 Presentation: covers the basics of power sector capacity expansion modeling, and briefly touches on other types of modeling and analytical tools available to provide data on the electric power system, including energy efficiency. Data and Analysis Tools Capacity Expansion Models Grid Operation (Unit Commitment and Dispatch) Models Network Reliability Models Webinar Tuesday, April 12, 2016, 1:00 pm EDT SEE Action EM&V Resource Portal: a resource compendium for energy efficiency program administrators and project managers. The resources focus on tools and approaches that can be applied nationwide, address EM&V consistency, and are recognized by the industry. EM&V Guidance for Multiple Sectors Sector Specific EM&V Resources Regional Resources on EM&V Consistency Resources on Air Quality Impact Evaluation Webinar Tuesday, May 16, 2016, 3:00 pm EDT 13

14 Fastest Way to Access Technical Assistance ENERGY.GOV/TA 14 1

15 15 Sign up for SEE Action News Alerts

16 Thank You All resources in this presentation can be accessed from energy.gov/eere/slsc/eeopportunities Contact Johanna Zetterberg (202) Danielle Sass Byrnett (202)

17 Background Slides State Roles in Pathway Policies and Implementation 17

18 18 State and Local Role in Ratepayer-Funded EE Policy Actions State legislatures and public utility commissions can: Set EE targets for program administrators to meet (e.g., EE resource standard) Require that a utility plan to meet forecasted demand include EE (e.g., integrated resource plan [IRP]) Designate an EE program administrator if not utility Public utility commissions can independently: Require utilities to offer energy efficiency programs Incentivize utilities to deliver energy efficiency (i.e., program and administrative cost recovery, recovery of lost revenues, and incentive payments) Implementation Actions Energy savings are generated when customers install EE measures or change behavior to save energy, as encouraged by ratepayer-funded EE programs States employ a variety of accountability and oversight structures to ensure savings IOUs: investor-owned utilities are regulated by state public utility commissions (PUC) Independent administrators: can be overseen by PUC, state energy office, or other agency Non-profit and public power: rural electric co-ops and municipal utilities are overseen by co-op boards and municipal governments, respectively, or by PUCs in some states

19 State and Local Role in Industrial Efficiency Strategic Energy Management: ISO and SEP ISO and SEP can be supported by state and local action Policy Actions Public utility commissions can facilitate ISO/SEP expansion by: Promoting inclusion of ISO/SEP in ratepayer-funded efficiency programs Approving the energy savings from ISO/SEP audited results, both as part of mandated efficiency programs and those conducted voluntarily Developing a statewide registry of ISO/SEP facilities and energy savings State and local policymakers can facilitate ISO/SEP expansion by: Leading by example and pursuing ISO/SEP in state and local facilities Advancing ISO/SEP as part of economic development and large energy user engagement/retention strategy Implementation Actions State and local implementation can be supported through: Providing technical assistance, tools, and incentives to encourage users to adopt SEP Providing support for training and certification of Certified Practitioners in Energy Management Systems (CP EnMS), SEP Lead Auditors, and SEP Performance Verifiers 19 18

20 State and Local Role in Combined Heat and Power Policy Actions State public utility commissions can facilitate CHP installations by: Including CHP as a qualified resource in EE or renewable resource standards Including CHP in utility or state ratepayer-funded efficiency programs Standardizing interconnection requirements Establishing reasonable standby rates Pursuing models of utility ownership of CHP Incorporating the non-energy benefits of CHP into cost-effectiveness calculations, including resiliency and grid stability Local policymakers can streamline CHP installations by including CHP in local permitting codes and inspector training. Implementation Actions State and local CHP implementation is supported by offering: Training, outreach, and enforcement of building efficiency policies and codes Outreach and technical assistance regarding the energy efficiency and non-energy benefits of CHP 20 18

21 State and Local Role in Energy Savings Performance Contracting ESPC pathway requires state and local action Legislation enabling ESPC is adopted at the state level; nearly all states have legislation allowing ESPC. Decision or approval to use ESPC is made at the individual state or local agency, department, council, or facility level. Policy Actions The most effective state-level ESPC policy includes establishing a state-level program to provide technical assistance to entities pursuing ESPC projects. State and local debt and financing policy impacts the way ESPC projects are structured. A state legislature, governor, administrative agency, or local government can support ESPC by: o Establishing or leveraging a statewide savings goal o Establishing or leveraging an energy savings goal or EE standard specific to state or local building stock (often set by the governor or local elected official) o Establishing training or certification programs/requirements for building operators o Establishing or accessing an internal financing mechanism that can provide a regular, low-cost funding stream for ESPC projects o Establishing a state chapter of the Energy Services Coalition; chapter meetings bring 21 together public and private ESPC stakeholders.

22 State and Local Role in Building Energy Codes Building energy codes require state and local action There is no U.S. national energy code or standard. Building energy codes are adopted and implemented at the state and local levels. A designated state agency (e.g., energy office), local government agency (local code administrator), or both are responsible for code development, adoption, and enforcement. Policy Actions: Adoption of new building energy codes can occur directly by legislative action or through regulatory agencies authorized by the legislature. The most effective state adoption processes include legislation triggering an automatic review and update process when new codes are available. 22 Implementation Actions: Actual energy savings are achieved through code compliance, not code development or adoption. State and local building officials enforce the code by verifying that what is built actually complies with the energy code. Adopting jurisdictions must educate and support local code officials to enforce the energy code. State and local governments can speed adoption by helping to prepare the building design and construction communities to comply with new energy codes.

23 State and Local Role in City-Led Efficiency City-led efficiency requires state and local action Policy Actions State legislatures or public utility commissions can facilitate city savings through: Enabling policies that facilitate clean energy financing, such as PACE (e.g., Texas, Colorado) Utility requirements to facilitate better access to energy data (e.g., California, Washington) Targeted city programming to encourage and provide technical and financial assistance for community-wide efficiency (e.g., Massachusetts) Implementation Actions City offices (e.g. General Services, Sustainability, Finance, Mayor s Office), municipal utilities, or community-based organizations generate energy savings from: Training, outreach, enforcement of building efficiency policies Outreach and technical assistance for voluntary efficiency programs Installing energy upgrades to municipal buildings, water/ wastewater treatment facilities, streetlights 23

24 Appendix: Calculations of Electricity and Carbon Savings 24

25 Estimates of National Electricity and Carbon Savings Potential in 2030 NOTE: Pathways may include overlapping savings, so estimates are NOT additive. Savings Pathway Ratepayer- Funded Efficiency Programs Industrial Efficiency Combined Heat and Power Energy Savings Performance Contracting Building Energy Codes City-Led Energy Efficiency Efforts 25 Ballpark Achievable Potential Calculations Based on the Following Low to High Scenarios Data Sources Low estimate High estimate Total estimated savings in 2030 from reduced electricity LBNL, 2013, The Future of load growth rates due to ratepayer-funded energy Utility Customer-Funded 645 million MWh 895 million MWh efficiency programs achieving annual incremental Energy Efficiency Programs in 368 million short 510 million short savings of % from 2012 baseline. the U.S. tons CO 2 tons CO 2 Total estimated savings in 2030 from 50-75% of industrial plants achieving double business as usual annual energy intensity improvements relative to AEO 2015 forecasted baseline. Total estimated savings in 2030 from completing 30-45% of economical (less than 10 year payback) CHP projects smaller than 100 MW. Total estimated savings in 2030 based on 0-8% annual growth rates in volume of ESCO projects from 2012 baseline. Total estimated savings in 2030 from 100% adoption and 70-95% compliance rates for ASHRAE / ASHRAE commercial building codes (compared to ASHRAE baseline) and IECC 2012 / IECC 2015 residential building codes (compared to IECC 2009 baseline) Total estimated savings in 2030 from 5-10% savings in city-wide (residential, commercial, and industrial) electricity consumption for the largest 50 U.S. cities. EIA 2015 AEO Tables American Gas Association, 2013, The Opportunity for CHP in the United States LBNL, 2015, Estimating customer electricity and fuel savings from projects installed by the US ESCO industry and LBNL, 2014, A method to estimate the size and remaining market potential of the U.S. ESCO industry DOE determinations and supporting analysis and PNNL Codes Impact Analysis ACEEE, 2015, City Energy Efficiency Scorecard Table C6 Carbon emissions estimates based on national average total output emission rate (1, lb/mwh or.57 short tons/mwh) published in 2012 egrid 115 million MWh 66 million short tons CO 2 75 million MWh 43 million short tons CO 2 45 million MWh 26 million short tons CO 2 50 million MWh 29 million short tons CO 2 25 million MWh 14 million short tons CO million MWh 100 million short tons CO million MWh 66 million short tons CO 2 90 million MWh 51 million short tons CO 2 60 million MWh 34 million short tons CO 2 50 million MWh 29 million short tons CO 2

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