June 20, 2017 Michael Goldman, Eversource
Overview Background on Non ‐ Energy Impacts (NEIs) Common state approaches for valuing NEIs NEI evaluation findings—what’s the evidence? 2018 ‐ 2020 Plan NEI proposal
Background NEIs are positive and negative effects attributable to energy efficiency programs, distinct from energy savings. Utility NEIs – e.g., reduced arrearages and debt collection, e.g. from low income customers Participant NEIs – e.g., reduced (or increased) O&M; impacts on occupant health and productivity; increased property values Societal NEIs – e.g., economic development and environmental impacts
Background NEIs can represent a significant benefit Over 300 studies to date, with monetized NEIs ranging from 50 percent to over 300 percent of annual energy bill savings. 1 NH’s cost effectiveness screening to date includes all costs, but not all benefits—NEIs other than water savings are excluded Excluding NEIs can result in inaccurate valuation of programs due to substantially underestimating their benefits 1 Non ‐ Energy Benefits / Non ‐ Energy Impacts (NEBs/NEIs) and Their Role & Values in Cost ‐ Effectiveness Tests: State of Maryland, Final Report. Lisa Scumatz, Ph.D. March 31, 2014.
Background Symmetrical treatment of costs and benefits is a core principle for developing and applying cost ‐ effectiveness tests “ Cost ‐ effectiveness practices should be symmetrical, where both costs and benefits are included for each relevant type of impact .” 1 For example, the Maryland Public Service Commission adopted the use of non ‐ energy impacts in a July 2015 ruling, 2 stating: “ cost ‐ effectiveness testing must be symmetrical in how it considers both costs and benefits, and thus an inclusion of all participant costs in a test requires the inclusion of all participant benefits – including NEBs…Because the TRC test includes all participant costs, we concur that quantified NEBs accruing to program participants must be included in the TRC .” 1 The National Efficiency Screening Project, National Standard Practice Manual for Assessing Cost ‐ Effectiveness of Energy Efficiency Resources (May 2017). 2 Maryland Public Service Commission, Order No. 87082 (July 16, 2015)
Common approaches: NEI adders Adders are proxy values (e.g., fixed percent of energy benefits) used to account for NEIs in cost effectiveness screening Adders allow states to account for NEI value, given limited resources for precisely quantifying NEIs Some states have adopted adders as conservative proxies, with subsequent measurement of specific NEI values
Common approaches: NEI adders Thirteen states and Washington D.C. use some type of adderin cost effectiveness screening 1 Eight of these states also allow some readily measured NEIs Adders were subject to adjudicatory processes and review by PUCs/DPUs prior to approval Percent adders: Generally between 10% and 15%, with an additional 10% to 25% for low ‐ income programs in several states 1 Modified from NEEP, Non ‐ Energy Impacts Approaches and Values: an Examination of the Northeast, Mid ‐ Atlantic, and Beyond , June 2017
Common approaches: measured NEIs Nineteen states allow a range of “readily ‐ measured” NEIs in cost effectiveness screening 1 Measured NEI values are typically derived from independent evaluations of specific efficiency measures or programs NEI allowances were subject to adjudicatory processes and review by PUCs/DPUs prior to approval 1 Modified from NEEP, Non ‐ Energy Impacts Approaches and Values: an Examination of the Northeast, Mid ‐ Atlantic, and Beyond , June 2017
Common approaches: measured NEIs Measuring NEI values requires rigorous methodologies direct analysis of utility data (e.g., arrearages, shutoffs/reconnects) models (e.g., economic or environmental NEIs) surveys and interviews (e.g., participant benefits such as health or O&M impacts) Evaluations to develop precise and reliable NEI estimates require time and money
NEI evaluations: what’s the evidence? NEI evaluation methods are robust and have been continually refined to ensure results are reliable and valid 1 Use of engineering studies to supplement self ‐ reported surveys Avoiding double counting of overlapping NEIs Ensuring evaluations include non ‐ energy costs to maintain objectivity Large body of research on engineering models, survey valuation methods, costs and benefits (e.g., health and economic impacts) 1 See Non ‐ Energy Benefits / NEBs – Winning at Cost ‐ Effectiveness Dominos: State Progress and TRMs , 2016 ACEEE Summer Study on Energy Efficiency in Buildings, Skumatz L.; EM&V Roadmap to Quantifying Challenging Non ‐ Energy Impacts, paper and presentation before the 2016 International Energy Program Evaluation Conference, Abdou M. et al; Measuring Participant Perspective Non ‐ Energy Impacts (NEIs) 2012 ACEEE Summer Study on Energy Efficiency in Buildings, Clendenning, G. et al.
NEI evaluations: what’s the evidence? Evaluation quality and reliability is reinforced in several ways. NEI evaluations: undergo regulatory and stakeholder review before results are applied are conducted by trained, independent third ‐ party evaluators are often peer ‐ reviewed and presented at national and international conferences “Saving Lives through Energy Efficiency: Valuing the Health ‐ and Safety ‐ Related Benefits of Weatherization “The (r)Evolution of Non ‐ Energy Benefits in Low ‐ Income Homes,” to be presented at the 2017 in Energy Efficiency” presented at the 2017 Society for Benefit ‐ Cost Analysis International Energy Program Evaluation Conference (Washington, D.C.) (Baltimore, MD) “Measuring participant perspective non ‐ “Examining Non ‐ Energy Benefits (NEBs) at the energy impacts (NEIs),” presented to 2012 Measure Level and by Type of Program Participant,” ACEEE Summer Study on Energy Efficiency presented at the 2011 International Energy Program in Buildings (Pacific Grove, CA). Evaluation Conference (Boston, MA).
NEI evaluations: what’s the evidence? Key NEI evaluations from neighboring states, across multiple sectors: C&I New Construction: MA Commercial and Industrial New Construction Non ‐ Energy Impacts Study, DNV ‐ GL (Mar 2016) C&I Retrofit: MA Commercial and Industrial Non ‐ Energy Impacts Study, Tetra Tech (Jun 2012) Residential and Residential Low ‐ Income: CT Project R4 HES/HES ‐ IE Process Evaluation and R31 Real ‐ time Research , NMR (Apr 2016) MA Low ‐ Income Single ‐ Family Health ‐ and Safety ‐ Related Non ‐ Energy Impacts (NEIs) Study , Three 3 (Aug 2016) Portfolio ‐ wide: RI Analysis of Job Creation from 2015 Expenditures for Energy Efficiency in Rhode Island by National Grid (Apr 2016)
Evaluations: MA C&I New Construction, 2016 Scope : O&M NEIs (labor and non ‐ labor) for 2013 commercial and industrial new construction program participants Methodology : engineering cost ‐ estimating approach, based on: Manufacturer O&M manuals CostLab cost ‐ estimation software (used by institutions/large businesses to set O&M budgets) In ‐ depth interviews with building owners/managers, equipment engineering and design firms DNV GL engineers experienced in high ‐ performance building design Underwent rigorous peer review for acceptance to 2016 ACEEE Summer Study on Energy Efficiency in Buildings
Evaluations: MA C&I New Construction, 2016 Findings : total annual NEIs of roughly $488,000 per year, across 957 measures installed in 2013 Key measures with NEIs included lighting, air compressors, commercial kitchen fryers, and others
Evaluations: MA C&I New Construction, 2016 Baseline (T8 fixtures): lamp changes every 3 years, and replacement fixtures every 5 years Efficient (LED fixtures): replacement every 10 years. In addition, LEDs are brighter than T8s, so require fewer fixtures per square foot, reducing labor and equipment costs for lamp replacements.
Evaluations: MA C&I New Construction, 2016 Compressed air systems are “workhorse” tools for many processes (e.g., manufacturing, auto repair) Baseline (reciprocating compressors): require rebuilding or replacement every 10,000 hours; oil changes & related maintenance every ~4 months Efficient (rotary screw compressors): require rebuilding or replacement every 20 ‐ 25,000 hours; oil changes & related maintenance every 3 ‐ 4 years
Evaluations: MA C&I New Construction, 2016 Commercial fryers—widespread in commercial kitchens Baseline fryers require more fryer oil replacement, filter pads, filter powder, kitchen staff maintenance time and annual contractor maintenance time. Efficient fryers no filters – reduced costs for oil filtering self ‐ cleaning – reduced maintenance costs and fryer oil replacement reduced external contractor maintenance time
Evaluations: MA C&I Retrofit NEIs, 2012 Scope: NEIs attributable to 2010 C&I retrofit programs in MA, including O&M, non ‐ O&M labor, supplies and materials, water usage, waste disposal, fees, sales and other revenues Methodology: semi ‐ structured, in ‐ depth interviews with 258 respondents, a sufficient sample for statistically significant NEI estimates of prescriptive and custom electric and gas measures
Evaluations: MA C&I Retrofit NEIs, 2012
Evaluations: MA C&I Retrofit NEIs, 2012
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