ACEEE Presentation to PA Climate Change Advisory Committee Jan. 2017
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Transcript of ACEEE Presentation to PA Climate Change Advisory Committee Jan. 2017
Climate Impacts of Energy Efficiency in
PennsylvaniaPresentation to the Pennsylvania Climate Change
Advisory CommitteeJanuary 10, 2017
Annie Gilleo, Meegan Kelly, and Cassandra Kubes
aceee.org @ACEEEdc
The American Council for an Energy-Efficient Economy is a nonprofit 501(c)(3) founded in 1980. We act as a catalyst to advance energy efficiency policies, programs, technologies, investments, & behaviors.
Our research explores economic impacts, financing options, behavior changes, program design, and utility planning, as well as US national, state, & local policy.
Our work is made possible by foundation funding, contracts, government grants, and conference revenue.
Annie GilleoState Policy [email protected]
Meegan Kelly Senior Research Analyst, Industry [email protected]
Cassandra KubesSenior Research Analyst, Health and Environment [email protected]
Agenda • A bit of background• Multiple benefits of energy efficiency (EE)• Current EE landscape in Pennsylvania • Utility policies and programs: Act 129 and beyond
• Low-income programs • Combined heat and power (CHP)• Building energy codes • EE financing • ACEEE resources
A Bit of Background
6
Total energy use with and without energy efficiency
Source: ACEEE 2016. Greatest Energy Story You Haven’t Heard. http://aceee.org/research-report/u1604
7
In the electricity sector, efficiency is now our 3rd largest resource
Source: ACEEE 2016. Greatest Energy Story You Haven’t Heard. http://aceee.org/research-report/u1604
313 power plant equivalents avoided since 1990… could grow to 800 by 2030
8Source: ACEEE 2016. Greatest Energy Story You Haven’t Heard. http://aceee.org/research-report/u1604
Multiple Benefits of Energy Efficiency
Potential CO2 Reductions from Energy Efficiency in Pennsylvania
Utility 1.5% savings per year
ESCO programs
Building energy codesCHP 500 MW
Source: ACEEE 2016. State and Utility Pollution Reduction Calculator Version 2 (SUPR 2). http://aceee.org/research-report/e1601
Multiple Benefits of Energy Efficiency
Protect health Improve safety and comfort
Save money Create jobs and opportunity
Protect the environment
Energy Efficiency Protects the Environment
• Energy efficiency is an important adaptation strategy for climate change.
Energy Efficiency Protects the Environment
• By avoiding the need to burn, mine, drill, and transport fossil fuels, energy efficiency protects air quality while meeting increasing energy demands due to climate change.
• The reduction of air pollutants like mercury and particulates result in quantifiable health benefits.
Health Benefits of Energy Efficiency • By displacing fossil fuels, energy efficiency
reduces pollutants overall and improves our healthMercury exposure from fossil fuels can damage the brain and nervous system, leading to stroke or loss of intellectual capacity Pollutants such as particulate matter and nitrogen oxides can harm the respiratory system and cause lung cancer, COPD, and asthmaFossil fuels can also damage the cardiovascular system which can lead to coronary heart disease, heart attacks, or congestive heart failure
Source: ACEEE and PSR, 2016. Energy Efficiency and Health. http://aceee.org/sites/default/files/ee-health-1008.pdf
Ambient Health Effects (Outdoor)Dangers Mitigated Health Harms Reduced Example
Fossil fuel air pollutants (PM, NOx, SO2, CO2)
Mercury exposure Extreme weather
events
Death Lung cancer COPD Asthma Coronary heart disease Heart attacks Congestive heart failure Impaired cognitive ability
of babies (brain damage, hearing and vision)
This is discussed in our health and EE fact sheet: http://aceee.org/sites/default/files/ee-health-1008.pdf Coronary heart disease is the leading cause of
death in the US Lung cancer kills more people each year than
any other cancer. COPD (chronic obstructive pulmonary disease)
is the 3rd leading cause of death in the US. Asthma is at epidemic levels and is
disproportionately harmful to minority and poor children.
Indoor Health Effects Dangers Mitigated Health Harms Reduced Example
Indoor air quality (particulates, lead, VOC, CO, CO2, NOx, radon)
Environmental toxins
Thermal stress (extreme temperatures)
Fire safety Mold
Mortality Hospital admissions Upper and lower
respiratory illness Asthma Lead Poisoning Cancer Cardio-vascular disease Depression and anxiety
Housing conditions are responsible for 40% of asthma episodes. Structural leaks, damp foundations, pest infestations, and inadequate ventilation are common and can lead to bacteria, mold, viruses, and dust mites. Damp indoor air environments can also cause asthma and other respiratory illnesses among otherwise healthy children. Some of the triggers for asthma attacks that EE addresses are listed below: Allergic reactions to allergens such as pollen,
mold, animal dander, feather, dust, food and cockroaches
Indoor and outdoor air pollutants, including ozone and particle pollution
Exposure to cold air or sudden temperature change
Respiratory infections and colds Excitement/stress
ACEEE Upcoming Research • Analysis of health benefits of energy efficiency is a new area of research for ACEEE
• Upcoming research to include: • Documenting the environmental and health
impacts that existing efficiency policies now achieve and could achieve by reducing emissions from power plants.
Energy Efficiency Creates Jobs
Source: ACEEE 2016. Energy Efficiency to Reduce Pollution and Create Jobs. http://aceee.org/fact-sheet/ee-jobs-pollution
Energy Efficiency Creates Jobs • Manufacturing and installing energy-efficient equipment supports 1.9 million full and part-time jobs nationwide, and projected to increase by 250,000 more jobs next year.
• Pennsylvania ranked in top 10 states for energy efficiency jobs
• 53,175 energy efficiency workers in Pennsylvania
• 31% of Pennsylvania EE firms focus on installationSource: E2 and E4theFuture, 2016. Energy Efficiency Jobs in America.
http://www.e2.org/wp-content/uploads/2016/12/EnergyEfficiencyJobsInAmerica_FINAL.pdf
Current Landscape
21
22
Utilities
Transp
ortation
Building c
odesCHP
State-le
d initiati
ves
Appliance
stan
dards
0
5
10
15
2020
10
7
4
7
24
34.5
1
4
0
3.55 4.5
2.55
0
Points possibleMedian scorePennsylvania
Pennsylvania & the 2016 Scorecard
23
Utility Policies and ProgramsAct 129 and Beyond
Climate Change Action Plan: Act 129• Support Phase IV and V of Act 129
• Second most cost-effective work plan• Potential Reductions of 18.1 MMTCO2e through 2030
• Develop central organization for management of programs
• Include natural gas• Include rural coops, munis, and smaller utilities• Include societal benefits in analysis• Eliminate 15-year measure life limit• Remove the 2% spending cap
26
2006 2007 2008 2009 2010 2011 2012 2013 2014 20150.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
Pennsylvania National Median National High
Elec
tric
ity S
avin
gs(%
Ret
ail S
ales
)
Source: ACEEE State Energy Efficiency Scorecard (2006-2015)
EERS Targets
State
Approx.
annual target
Cost cap
Natural gas State
Approx. annual target
Cost cap
Natural gas
Massachusetts 2.9% • Iowa 1.2% •Rhode Island 2.6% • Michigan 1.0% • •
Arizona 2.5% • New Hampshire 1.0% •
Maine 2.4% • Arkansas 0.9% •
Vermont 2.1% • Wisconsin 0.8% • •
Maryland 2.0% New York 0.7% •
Connecticut 1.5% • Illinois 0.7% • •
Minnesota 1.5% • Pennsylvania 0.8% •
Washington 1.5% New Mexico 0.6% Hawaii 1.4% Ohio 0.6% Colorado 1.3% • Nevada 0.4% Oregon 1.3% • North Carolina 0.4% California 1.2% • Texas 0.1% •
Source: ACEEE State Energy Efficiency Scorecard (2006-2015)
Landscape of program administration
28
“hybrids”
primarily third-party program administrators
DC
primarily utility-run programs
Natural Gas Savings Goals
Reaching smaller utilities• Specific Requirement
• Arizona: An electric distribution cooperative shall…file for Commission review and approval an implementation plan for each DSM program to be implemented… An implementation plan shall set forth an energy efficiency goal for each year of at least 75% of the savings requirement specified [for IOUs]
• Voluntary Programs• Iowa: Senate File 2386, enacted in 2008, directed gas
and electric municipal and rural electric cooperative utilities to assess their maximum potential energy and capacity savings and establish an energy efficiency goal based on that assessment.
Calculating Complete Benefits
Resource Value Framework
EERS Targets Revisited – Cost CapsState
Approx.
annual target
Cost cap
Spending (%
revenues) State
Approx.
annual target
Cost cap
Spending (%
revenues)
Massachusetts 2.9% 6.16% Iowa 1.2% 2.86%Rhode Island 2.6% 6.34% Michigan 1.0% • 1.70%Arizona 2.5% 1.31% New Hampshire 1.0% 1.45%Maine 2.4% 2.74% Arkansas 0.9% 2.01%Vermont 2.1% 6.89% Wisconsin 0.8% • 1.07%Maryland 2.0% 3.69% Pennsylvania 0.8% • 1.43%Connecticut 1.5% 3.32% New York 0.7% 1.66%Minnesota 1.5% 2.40% Illinois 0.7% • 2.24%Washington 1.5% 3.87% New Mexico 0.6% 1.54%Hawaii 1.4% 1.34% Ohio 0.6% 1.18%Colorado 1.3% 1.65% Nevada 0.4% 1.34%Oregon 1.3% 3.45% North Carolina 0.4% 0.91%California 1.2% 3.43% Texas 0.1% • 0.54%
2020 2025 20300
2
4
6
8
10
12
14
16
18
1% target 1.5% target
Annu
al C
O2
redu
ced
(mill
ion
shor
t ton
s)Bigger target, more carbon reductions
Calculated using: ACEEE 2016. State and Utility Pollution Reduction Calculator Version 2 (SUPR 2). http://aceee.org/research-report/e1601
Additional Considerations
Robust Policy Structures Support High SavingsAdministrator State Type
2014 electricity savings
as % sales
Energy savings target
Revenue decoupling or
similar mechanism
Performance incentive Penalty
Arizona Public Service AZ IOU 1.65% ● ● ● Commonwealth Edison IL IOU 1.27% ● ●Eversource MA MA IOU 2.69% ● ● ● Naragansett Electric RI IOU 3.54% ● ● ● National Grid MA MA IOU 2.90% ● ● ● NSPC (Excel) MN IOU 1.32% ● ●** ● Otter Tail Power MN IOU 1.21% ● ●
Pacific Gas & Electric CA IOU 1.16% ● ● ● SoCal Edison CA IOU 0.97% ● ● ●
Tucson Electric Power AZ IOU 2.16% ● ● ● Fort Collins Utilities CO Muni 1.83% ● Seattle City Light WA Muni 1.78% ● ●
Efficiency Vermont VTThird-Party 1.45% ● NA* ●
Energy Trust of Oregon OR
Third-Party 1.47% ● NA*
Source: Baatz, Gilleo, and Barigye 2016. http://aceee.org/research-report/u1601
Decoupling
Share of net benefits (12 states)
Savings based (6 states)
DC
Performance incentives that have been authorized but not implemented*
*
*
Rate of return (1 state)
Multi-factor (5 states & DC)
We grouped incentives into four types:
EE Performance Incentives for Electric Utilities
A Complete Business Model Drives Savings
Source: http://aceee.org/sites/default/files/policies-matter.pdf
Offer Great Programs for All Customers
41
Defining opt-out and self-direct• Opt-out provisions allow large
customers to stop contributing funding for energy efficiency programs, and may prevent utilities from incentivizing, measuring, or otherwise accounting for these savings in resource planning efforts
• Self-direct policies typically allow large customers to control how some or all of their energy efficiency fees are used, but do not allow them to opt out of fees & programs completely
Self-Direct & Opt-Out Continuum
Program Type EE Payment M&V of Savings
Use of Funds Follow Up Examples
Opt-out None None Co. uses retained cash for EE
None NC, KY
Less structured self-direct
None Minimal; self-reported
Co. uses retained cash for EE
None to minimal
MN
More structured, lower oversight self-direct
Fully or partially paid on bill
Minimal; self-reported
Rate credit or project rebate
Minimal MT, OR
More structured, higher oversight self-direct
Fully or partially paid on bill
Robust; similar to CRM-funded programs
Personal escrow, rate credit or project rebate
Minimal to substantial
WA, CO
Publ
ic B
enefi
t Max
imiza
tion
43
Size and cost-effectiveness of C&I utility programs
AEP Ohio Xcel Colorado Wisconsin Focus on Energy
1.2¢ 1.9¢ 1.8¢Levelized Cost of C&I Savings ($/kWh)
Source: ACEEE estimates based on 2014 annual reports
44
Combined investments enable greater savings potential
Source: ACEEE Fact Sheet, The Dollars and Cents of Industrial Efficiency Program Investment, February 2016. http://aceee.org/fact-sheet/ieep-dollars-cents
Low-Income Programs
Climate Change Action Plan: Low-Income Efficiency Programs • Develop partnerships to generate non-federal
resources for weatherization. • Expand coordination between state agencies
on WAP, LIHEAP and LIURP.• Incentivize affordable multifamily, master-
metered facilities to install whole house efficiency measures.
• Expand qualifying low-income households to 200% FPIG or consider other qualifiers.
• Encourage utilities to use demographic data to track the success of their low-income programs and see what communities the programs are currently reaching.
• Continue to leverage existing relationships with organizations already reaching low-income households (e.g. foodbanks, housing organizations, etc.)
• Set aside money for health and safety improvements. • Coordinate with rate assistance and other energy
efficiency programs for intake of program participants.• Increase spending, expand program offerings, and take
a whole building approach for multifamily housing.
Improving Low-Income Programs
ACEEE Upcoming Research • Baseline study to review current landscape
of low-income utility programs. • Resources highlighting best practices using
results from baseline study. • Convening multifamily energy efficiency
and low-income utility work groups.
Combined Heat and Power (CHP)
Benefits of Combined Heat and Power (CHP)• Fuel efficiency• Avoided transmission losses• Reduced emissions (CO2, SO2, NOx)• Cost savings• Economic development• Improved grid reliability• Avoided infrastructure investments• Increased local resiliency
Role of CHP as climate solution• CHP displaces higher emitting generation• A typical unit results in 43% fewer CO2 emissions than conventional power
SO2
NOx
CO2
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Emission Reduction from a typical 5-MW CHP
Pollu
tant
(ton
s/ye
ar)
Source: Estimated using EPA CHP Energy and Emissions Savings Calculator (accessed 2017)
CHP’s higher efficiency results in energy and emissions savings
Source: Combined Heat and Power: A Clean Energy Solution, August 2012, DOE and EPA
Existing CHP in PA• As of 2015, 153 sites totaling 2,950 MW• Strong investment in recent years
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
0
10000
20000
30000
40000
50000
60000
Capacity Installed (kW) from 2000 - 2015
Source: DOE Installation Database (accessed Jan 2017)
Pennsylvania is one of the top states for new technical potential for CHP
Source: DOE 2016, CHP Technical Potential in the United States
North Carolina
Louisiana
Georgia
New York
Florida
Ohio
Pennsylvania
Illinois
California
Texas
0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000
Ten states with largest technical potential for CHP
Total technical potential (MW)
Capturing the CO2 benefits of CHP potential in Pennsylvania
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
CO2 reduction in 2030 (short tons)
240 MW 500 MW 1300 MWSource: ACEEE 2016, State and Utility Pollution Reduction Calculator (SUPR 2)
Climate Change Action Plan: CHP• Standby rates• Interconnection standards• Fair market for excess power sales• CHP in portfolio standards• CHP for critical infrastructure*• Utility ownership of CHP*• Environmental/air permitting
Existing CHP at Critical Infrastructure
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
0
10,000
20,000
30,000
40,000
50,000
60,000
Capacity Installed (kW) from 2000 – 2015
Capacity Installed (kW) MINUS CICritical Infrastructure
Source: DOE Installation Database (accessed Jan 2017)
Policy approaches to encouraging CHP at critical facilities• Requiring consideration of CHP at critical facilities
• Louisiana – HR 167 in 2012• Texas – HB 1831 in 2009; HB 1964 in 2013
• Programs to encourage CHP-supported microgrids
• Connecticut – DEEP Microgrid Program• New York – NY Prize
ACEEE Upcoming Research on CHP as a Grid ResourceValuing the resiliency benefits of CHPUpcoming research from ACEEE in 2017
Utility-Ownership of CHP
More than one model to increase CHP deployment
• Customer installs CHP for onsite benefits
• State policy encourages utilities to incentivize CHP for energy savings and additional benefits
• Customer owns energy products and may sell excess power
• Utility installs CHP for grid/system benefits
• State regulates utility investments in CHP for reliable power at reasonable rates
• Utility owns energy products and sells electricity and thermal
Customer-Owned Utility-Owned
62
Benefits of utility-ownership model• Utility continues to serve customer, no lost
load• Least cost supply-side resource to utility and
ratepayers• Less risky investment overall• Beneficial for the grid• Better service and value for customers• Air quality improvements and carbon
reductions• Encourages economic development
Case Study: Eight Flags Energy CHPBackground• 20 MW CHP• Amelia Island, FL• Owned by FPU/ChesapeakeBenefits• Cheap steam for Rayonier Advanced Materials• Low-cost reliable electricity for local customers• Estimated 160,000 tons/yr of CO2 reduction• Created 100 jobs during construction
For more information, see DOE Case Study: http://southeastchptap.rlmartin.com/Data/Sites/4/documents/profiles/eight-flags-chp_project_profile.pdf
Approaches to encouraging utility-ownership• Look to examples from utilities in other states
• Florida, Alabama, Carolinas• Consider supply-side CHP in resource
planning• Duke Energy IRP
• Facilitate utility-ownership when it provides the most benefit to the system and ratepayers
• Encourage utilities to identify best customers and locations
Building Energy Codes
Climate Change Action Plan: Building Codes • Consistently adopt the latest ICC/IECC
• Cost effective and impactful• Potential Reductions of 85 MMTCO2e through 2030
• Focus on compliance• Code training website• Education and outreach to code officials, policy
makers• Pilot compliance approaches• Formalize and continue PA Energy Code
Collaborative
Code Updates: A Legislative Fix• Act 45: established Uniform Construction Code
• Act 106: established 19 member Review and Advisory Committee
• Act 1: amended code adoption process, requiring 2/3rd majority vote by RAC on each provision of ICC
Legislative Update Requirement• Automatic code update requirement
• Maryland: §12-503 of the Maryland Code requires the Department of Housing and Community Development to adopt the most recent version of the IECC twelve months after it is issued. DHCD may adopt energy conservation requirements that are more stringent than the codes, but may not adopt energy conservation requirements that are less stringent.
Code Compliance
State
Compliance Study(1 pt.)
Gap Analysis(0.5 pts)
Stakeholder Group(0.5 pts)
Utility Involveme
nt(0.5 pts.)
Training(0.5 pts)
Total Score(3 pts.)
Illinois ● ● ● ● ● 3Massachusetts ● ● ● ● ● 3New York ● ● ● ● ● 3Texas ● ● ● ● ● 3Maryland ● ● ● ● 2.5Pennsylvania ● ● ● ● 2.5Arkansas ● ● ● 2New Jersey ● 0.5Ohio ● 0.5
Utility Involvement in Compliance• Arizona: Up to 1/3 credit of savings from codes can be
claimed towards annual savings goals. Utilities must demonstrate and evaluate the savings that they claim.
• California: Regulatory guidelines have been established requiring significant utility involvement in supporting building energy code compliance. The CPUC has authorized the IOUs to support standards development since the early 2000s. Since 2008, the CPUC has authorized the IOUs to claim savings from standards development activities.
• Texas: Regulatory guidelines have been established enabling significant utility involvement in supporting energy code compliance. Compliance data is being used to develop new utility programs that will provide incentives to increase residential energy efficiency in new homes.
Energy Efficiency Financing
Climate Change Action Plan: Financing• Energy-efficient mortgages• On-bill financing• Keystone HELP• PACE• Qualified Energy Conservation Bonds• Green Bank
On-bill programs• Role for the state beyond legislation
• Develop standard underwriting guidelines (consider how to reach more customers)
• Continued work to understand utility aversion to these programs
• Guidelines, regulations, and laws should address utility concerns
• Role for continued stakeholder group engagement• Systems upgrades may facilitate on-bill programs
(and more!)• Accounting matters
• Potentially limited by spending cap
Keystone HELP• Plan recommendation: Add funding to continue program
• Considerations:• How to ensure that demand does not continue to
outstrip supply?• Can the state better leverage private capital?• Interconnection of financing, rebate, and
education programs
PACE• Plan recommendation: Develop enabling legislation
• Current Status: Penn STAR commercial PACE legislation moving through legislature
ACEEE Resources
How ACEEE can help• Technical assistance
• Respond to requests for assistance in working through energy efficiency questions
• Help with best practices in program and policy design • Policy research and analysis
• Resources on energy efficiency policies, programs, and technologies
• Data and analysis to estimate GHG reductions from energy efficiency
• Examples from other states• Best practices from other states • Share PA success stories with other states
ACEEE Resources• Heath and Environment
• The Greatest Story You Haven’t Heard - http://aceee.org/research-report/u1604
• Energy Efficiency and Health - http://aceee.org/fact-sheet/ee-and-health
• SUPR 2 - http://aceee.org/research-report/e1601 • Jobs
• Energy Efficiency to Reduce Pollution and Create Jobs - http://aceee.org/fact-sheet/ee-jobs-pollution
• How Does Energy Efficiency Create Jobs? - http://aceee.org/fact-sheet/ee-job-creation
• State Policy • 2016 State Energy Efficiency Scorecard -
http://aceee.org/state-policy/scorecard • State Technical Assistance Toolkit -
http://aceee.org/sector/state-policy/toolkit • State policy database: http://database.aceee.org/
ACEEE Resources• Low-income programs
• Lifting the High Energy Burden in America’s Largest Cities - http://aceee.org/research-report/u1602
• Building Better Energy Efficiency Programs for Low-Income Households - http://aceee.org/research-report/a1601
• CHP • CHP Technical Assistance Toolkit -
http://aceee.org/sector/state-policy/toolkit/chp • CHP Playbook - http://aceee.org/research-report/ie1404 • Utilities and the CHP Value Proposition -
http://aceee.org/research-report/ie134 • Coal Retirements and the CHP Investment Opportunity -
http://aceee.org/research-report/ie134 • Challenges Facing CHP Today: A State-by-State Assessment -
http://aceee.org/research-report/ie111
Thank You!Annie GilleoState Policy [email protected]
Meegan Kelly Senior Research Analyst, Industry [email protected]
Cassandra KubesSenior Research Analyst, Health and Environment [email protected]