4/23/2014
Pay-for-Performance Pilot Program Outcome-based Incentives for Energy Efficiency Dave Rodenhizer, PE, CMVP Conservation Resources
Oregon Future Energy Conference, April 22 nd, 2014
www.seattle.gov/light/conserve
Presentation Outline • Introduction • Stakeholder Direction • Pay-for-Performance Pilot Program Development • Program Status
• Going Forward • Food for Thought
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Seattle City Light • 10th largest public electric utility in the United States. • It has some of the lowest cost customer rates of any urban utility, providing reliable, renewable and environmentally responsible power to nearly 1 million Seattle area residents. • City Light has been greenhouse gas neutral since 2005, the first electric utility in the nation to achieve that distinction. • Energy efficiency is the City’s priority energy resource for meeting load growth • The nation’s longest continually operated energy conservation program. • Conservation programs designed to serve all market sectors (residential, commercial, industrial, low-income) • 2014 total budget is $46 million; incentive budget is $27 million
• 2014 energy savings target is 122,640,000 kWh
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Pay-for-Performance Concept • Outcome-based incentives • Savings are “measured” at the meter against a statistically derived baseline IPMVP Option C Certainty of savings can be quantified
• Payments may be structured to occur over varying terms • Greater flexibility for the customer to pursue a wide-range of measures and strategies • Reduced risk for the utility of energy savings not being delivered
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Pay-for-Performance Mechanics
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Pay-for-Performance What’s “New” about it • Payments are structured to occur over time Lower rate, longer term - potential to reward savings persistence
• Greater flexibility for the customer to pursue a wide-range of measures and strategies Captures all efforts and interactions Captures savings “lost” through conservative calculations
• Reduced risk for the utility of energy savings not being delivered Conserving Energy for a Sustainable Future
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Pay-for-Performance Paradigm Shift
• Traditional Conservation
• Pay-for-Performance
More certainty of the measures
Uncertainty of the measures
Less certainty of the savings
More certainty of the savings
Payment up front
Payment over time
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Stakeholder Driven Stakeholder Engagement • The City of Seattle’s Green Ribbon Commission and the Northwest Energy Efficiency Council both provided impetus • Green Ribbon Commission 2012 recommendations: Maximize the City’s conservation programs to promote cost-effective energy efficiency measures that will help meet much of the city’s future electricity needs, reduce the need for new energy sources as Seattle grows, and reduce energy costs to residents and businesses. (Consistent with SCL’s long-standing policy of meeting load growth with energy efficiency)
Provide outcome-based incentives that are based on actual energy savings of an energy upgrade rather than projected energy savings of individual measures
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Pilot Development Pay-for-Performance Pilot Program • Three year pilot program with three downtown Seattle office buildings • Greater flexibility in delivering a wide-range of measures and strategies • Incentive paid annually based on measured energy savings against a single baseline • Pay only for savings at the meter • If successful the program offering could be expanded
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Pilot Development Pay-for-Performance Pilot Program (continued) • Original RFP released in November, 2012 SCL sought proposals with a fixed $0.03/kWh incentive Incentive rate based on our perception that proposals would be O&M or behavior oriented; not capital projects
• RFP was re-released in January, 2013 Received comments that proposed incentive would not be sufficient to Compensate for capital measures over a pilot limited to three years Compensate for additional reporting and M&V efforts required Asked proposers to bid an incentive rate required for their participation and include their proposed mix of energy saving actions
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Implementation Three Buildings
Lake Union Building
One Union Square
1111 Third Avenue
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Implementation Three Buildings, Three Providers, Three M&V Packages, Three Years Building One Union Square Lake Union Building Address 600 University St, Seattle 1700 Westlake Ave N, Seattle Service Provider McKinstry MacDonald Miller M&V Subconsultant New Buildings Institute Cond Sq Ft 794,000 94,000 Baseline EUI (kbtu/ft²/yr) 40 80 Anticipated Savings % 16% 16% Software Tool Metrix Utility Analytics / FirstView Anticipated Measures Condenser water system Upgrade HVAC Control System consolidation and upgrades, LED lighting upgrades to building common areas , Complete building hvac retro-commissioning effort, Design and implement “free cooling purge mode”, Full building LED lighting upgrade to tenant spaces
Baseline Year Begins 3-yr Performance Period Begins Billing Data Available
January 1, 2012 April 1, 2013 15-minute Interval Data
March 1, 2012 October 1, 2013 Monthly Billing
1111 Third Ave 1111 Third Ave, Seattle ATS Automation QuEST 574,000 60 21% UT3 Critical Chilled Water Valve Reset, Cooling Tower Optimization, Additional Control Optimization Measures, Air Handler VFD Installations, Variable Primary Chilled Water Flow, Floor Isolation Dampers, Solar Window Film, Full Building VAV DCC Upgrade, RetroCommissioning Pnuematic System, Tenant Awareness March 1, 2012 April 1, 2013 15-minute Interval Data
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Implementation Current Status • Work began almost immediately upon selection, 1st Qtr, 2013 • Contracts almost all in place 1st Qtr, 2014 3-yr term required legislation through Seattle City Council First performance measurement year has passed for two buildings
• Baseline periods selected, initial activity and energy reports submitted • RFP released for independent review of savings calculations • RFP for pilot evaluation pending • Final evaluation, analysis and recommendations due December, 2016
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Food for Thought RE: A “Measure-Blind” Approach • We won’t know what caused the savings Are we paying for conservation? Is it curtailment? Fuel switching? Would energy codes have required it? What can we count towards BPA? Towards I-937?
We can’t differentiate between Capital, Operational, and Behavioral How do you keep track of market penetration or conservation potential? How do we incorporate the savings into our IRP? Measurement period versus unknown measure life
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Food for Thought RE: Incentive Rates • Longer investment terms change the mechanics Different customers can have widely different discount rates Will longer terms reduce some pressure for higher incentive rates? A long enough term will capture the whole life of the measure.
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Food for Thought RE: M&V • Baselines Not all buildings have well-behaved baseline data It can be difficult to isolate a stable period in time Variables affecting consumption are sometimes not well understood or haven’t been collected
• Baseline Adjustments Adversely affect the numerical precision of a model Estimates and assumptions introduce art into the science Have the potential to be “messy” Expectations and process should be clearly laid out
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Preliminary Results Unofficial
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Contact Information Pay-for-Performance Pilot Program Dave Rodenhizer 206 684 4601
[email protected] The Seattle Climate Action Plan
http://www.seattle.gov/archive/climate/ The Green Ribbon Commission http://www.seattle.gov/environment/grc.htm
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OUR MISSION Building on a legacy of clean hydro power, Seattle City Light partners with customers to secure a green energy future. We are leaders in providing innovative ways to conserve electricity and invest in renewable resources.
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