Our current regulatory approaches to energy efficiency only allow for marginal progress on an issue that needs addressed in the biggest way. In the parlance of Silicon Valley, we need SCALE and we need regulatory methods to achieve it now. Energy efficiency needs to be better, faster and cheaper if we’re going have an impact on climate change – the number one environmental issue of our time.
California (CA) has long been perceived as a leader in energy efficiency, and policies to address climate change. However, in recent years I feel like we’ve lost leadership status, at least as it relates to our regulated efficiency programs, which have reeled and staggered in response to overwhelmingly poor evaluation results. That’s not just my opinion, according to ACEEE’s scorecard, we’ve fallen behind Massachusetts (again). California is struggling to develop and embrace new programmatic methods that reduce the resource cost and implementation time of energy efficiency.
I won’t pretend to have an answer that solves that issue, but it seems obvious to me, that our current programmatic approaches aren’t working – and one aspect of those approaches slowing us down is the measure-by-measure attribution of energy savings.
How does measure-by-measure attribution slow us down?
We spend literally hundreds of millions of dollars every year counting kWh’s and therm savings and attributing those savings to California’s energy efficiency programs. That attribution is based on the outdated assumption that you can assign impacts such as energy savings, cost savings, retrofit costs, effective lifetimes, and even load shapes to specific “measures” (aka energy efficiency measures or energy conservation measures). When we’re working within the structure of regulated programs in California, the reporting requirements to “get credit” for these savings leads to ridiculous, unintended actions to attempt to quantify what we did. Not to mention it’s spawned a myriad of rules about how attribution is done that further complicates achieving savings (read adds expense).
A closer look
I could give a hundred examples of how measure-by-measure attribution slows our work but let’s discuss just one example project. Say that we’re installing new lights and a new chiller in an existing building. While we’re onsite we notice the existing control system is poorly scheduled and turns the 25-year old chiller on earlier than needed. In the parlance of CA’s regulatory climate, we now have three measures:
- Lighting retrofit
- Chiller retrofit and
- Retro-commissioning (RCx) measure (maybe – more on that later).
To correctly appropriate the savings, I need three calculations just for the lighting energy savings:
1. base case,
2. to-code minimum, and
The savings now get attributed using two baselines and two effective lifetimes. The chiller savings for the retrofit also has two baselines and I might not get any “credit” at all for the retrofit since it’s past the chiller’s expected life and the owner “would have had to replace it anyway with a code-compliant model.” Or I might get partial credit on a weighted basis for the to-code savings if I can show a remaining lifetime for the chiller.
As for the schedule change – never mind that the owner had no plan to change the schedule – if their prior control system had the ability to control schedule the chiller properly, there may be no “claimable” savings for that measure, even though fixing it will obviously provide savings to the owner. OR as an RCx measure I might be able to take credit for some of the savings with an effective useful life of 3 years per guidance.
So now I have three measures and somewhere between four and six baselines. But wait, we’re not done yet. Do you think that lighting retrofit is going to have an impact on the chiller loads?
If you said yes, you get a gold star. More efficient lighting means less heat in the space, so the chiller will see less load. Don’t forget to include that interactive effect in all your calculations “downstream” of the lighting measure.
Now submit all your calculations to the IOU for review. Those calculations will go to the utilities 3rd Party reviewer (full disclosure – kW has done a ton of these reviews) where they will check your calculations, baselines, assumptions and attribution and justification for why the owner isn’t a free-rider. This all gets bundled up into a package now known in our regulator environment as “Preponderance of Evidence” or POE (yep we’ve even got an acronym for that).
Since you have a large project; all your POE will likely be reviewed by the CPUC. If there’s something amiss (different assumptions for baseline, lifetime, schedule, specs, or just not explained well enough) it will get kicked back to you for revision. This process often, literally takes months and all the while, your customer is dutifully waiting to complete their retrofit because if they don’t, the incentive (and as an implementer your “credit” for the savings) may be in jeopardy.
Most of this complication results from trying to parcel out which kWh’s result from what action…as if we can even do that. Pardon me if I see attribution, at best, as a bit delusional. Savings, after all, is what didn’t happen. So our careful bookkeeping is pretty suspect anyway. Oh and then when the program’s over, we’ll need to bring in the EM&V team and do the calculations all over again just to be sure.
Meanwhile, the old chiller continues to run, the lights continue to shine, and the planet gets hotter.
And you may ask yourself, well, how did I get here?
All this process was developed with the best intentions to protect ratepayer dollars. If we’re going to buy energy savings with public money, it’s reasonable to expect that we check to make sure we’re getting people’s money’s worth. Each of the steps above came from the EE community trying to hone our approach and take account of real factors that impact savings. But we’re overwhelming ourselves in details and it’s not just slowing us down, it’s diminishing the resource.
Excessive efforts towards attribution not only slows us down,
it diminishes the available resource by adding cost.
Energy efficiency must compete with other resources like distributed generation, demand-response, storage, and supply-side generation based on cost. We’re now seeing this competition play out in a very direct way with local capacity bids (such as the recent Oakland Clean Energy Initiative) that explicitly evaluates energy efficiency offers on the basis of resource cost. This trend promises to continue as efforts like New York’s Reforming the Energy Vision (REV) build steam (pun intended).
One competitive luxury that energy efficiency has in these bids is that, to a degree, we have influence over the price of the resource. If I want cheap EE, I can design my program to target measures that will get quick adoption, that have short payback periods and reliable savings. We call this “cream-skimming” and it results in “stranded” EE measures. Once I’ve skimmed the cream (i.e. done the cheap stuff), I no longer have those measures to roll into a more attractive package with deeper savings. Measure-by-measure attribution, and the complications associated with it, encourage us to do just that – keep it cheap, simple, defensible – and attributable with precision (if not accuracy).
Can’t we just measure pre- and post- installation then subtract?
Our customers see things much more simply. They want to look at their bills after the project and see them go down enough to pay for what they did. End of story. When you begin to explain all the unintended consequences of attribution to them, you quickly lose their attention. “Wait you want me to not replace the chiller yet because it will take a few months to find out whether I get an incentive? You’re kidding, right?”
Simply subtracting post-install consumption from pre- may be too simple, but you can correct for the right factors, which is exactly what California Law now tells us to do.
AB 802 directs us to seek all energy savings in existing buildings
California’s Assembly Bill 802 (AB 802) sought to simplify our approach to energy efficiency by “taking into consideration the overall reduction in normalized metered energy consumption as a measure of energy savings.” The law gave birth to another new acronym, NMEC, and a new programmatic approach (more here from our prior post).
NMEC promises to simplify our approach by looking at savings at the whole-building level so that, hopefully, we can focus on achieving savings, rather than attributing savings and demonstrating a Preponderance of Evidence for savings (as if we were energy efficiency criminals – sheesh). But if the regulatory environment doesn’t let go of the measure-by-measure, multiple-baseline, multiple-lifetime, interactive savings calculations, new programmatic efficiencies under NMEC will be elusive. Instead of streamlining efforts (as intended by AB 802) we’ll now have to do all those old calculations to show attribution AND show the NMEC results too.
I hope regulators will see how important this issue is and consider revising outdated and prohibitive processes. Measure-by-measure has worn out its welcome. New approaches are imperative to make energy efficiency more cost-effective and achieve a bigger impact on climate change. We have important problems to solve so let’s focus on the bottom line savings and figure out how to credit those that achieve those savings more effectively. Imagine what we could do with all the hours and dollars we’re spending on attributing savings, instead of counting them, one kilowatt-hour, one therm, one pound of steam, at a time.
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