How to Evolve Your DSM Portfolio in a DER WorldDesign new programs and improve existing ones Program...

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How to Evolve Your DSM Portfolio in a DER World

A Data-Backed, Customer-Centric Approach

Wednesday, September 12, 2018

Chad Garrett

Managing Director, E Source

Alanya Schofield

Senior Director, E Source

Tom Hines

Principal, Tierra Resource

Consultants

Matthew Joyce

Managing Consultant, Tierra

Resource Consultants

© 2018 E Source | www.esource.com 2

Agenda

Introductions

Utility portfolio trends

DSM-DER portfolio evolution approach

Understanding the context

Identifying the goals

Conducting the analysis

Prioritizing portfolio changes

Next steps to ensure success


E Source

Distributed

Energy

Resources

(DERs)

Utility strategy Innovation Design thinking

Confidential & Proprietary


Tierra Resource Consultants

DER program design and

portfolio consulting

Program planning and

delivery

Market and technology

assessment

Evaluation and

performance measurement

Energy strategy and regulatory

assistance


Utility portfolio

trends


Customer interest in DER technologies is growing

Base: All respondents (n = 7,201); respondents without the technology (n varies). Question S2_4: Which of the following

technologies do you or someone in your household currently have? Select all that apply. S2_5: On a scale of 1 to 5, where 1

means not at all likely and 5 means extremely likely, how likely are you or someone in your household to purchase or lease

any of the following technologies in the next three years? Note: Percentages reflect those selecting a 4 or 5.

© E Source (2018 DER Residential

Customer Market Research)

14

12

19

16

15

15

14

16

16

17

27

3

4

4

5

5

6

6

7

7

12

20

0 10 20 30 40 50

Home EV charging station

Community solar

Virtual assistant with a connected home energy management system

Wi-Fi-enabled electric water heater

Home battery storage system

Plug-in all-electric or hybrid vehicle

Green electricity program

Heat-pump electric water heater

On-site solar

Air heating and cooling electric heat pump

Smart thermostat

Percentage of respondents

Technolo

gy

Percentage of customers who have the technology

Percentage of customers who are likely to purchase or lease the technology in the next 3 years


DSM-DER portfolio goals are evolving

Energy savings

Cost-effectiveness

Demand reduction/

load management

Customer benefits

Greenhouse gas (GHG)

reduction

System operational

benefits

Locational benefits

Note: DSM = demand-side management.


Utilities are increasing their focus on DER programs, products, and services

Program or incentive provider

Service provider

46%

43%

89%

57%

2017

(n = 28 utilities)

2018

(n = 36 utilities)

Base: n varies by year. Question S4_2: Which role(s) do you believe will most likely be your

utility’s essential area(s) of focus related to DERs in the next 7 years? Select all that apply.

© E Source (2017 and 2018 Utility

DER Strategy Benchmark)


Base: n = 35. Question S5_11: Which of the following programs or services is your utility currently piloting or offering for residential

customers? S5_12: Including continuing current pilots and offerings, which of the following does your utility anticipate piloting or

offering for residential customers in the next 3 years? Select all that apply. Notes: BTM = behind the meter; EV = electric vehicle.

1

9

10

11

11

13

13

16

16

18

21

21

24

24

26

27

28

2

4

3

12

10

12

10

12

8

15

18

13

16

25

13

23

31

0 10 20 30 40

Other

Grid-interactive water heaters

Utility-owned BTM solar (solar host)

Heat pump - air heating or cooling

Heat pump water heaters

BTM solar incentives or rebates

Solar plus storage

Energy management

BTM battery storage

Smart home devices

Green-pricing program

EV incentives or rebates

Community solar

Demand-response programs

EV charging infrastructure incentives

Smart thermostats

Energy-efficency programs

Number of respondents

Response

Currently offering or piloting Anticipate offering or piloting in next three years

© E Source (2018 Utility DER

Strategy Benchmark)

And adjusting their portfolio of offerings


Utility problem statement

How can my utility proactively and more effectively

address evolving customer desires and utility

needs through our DSM-DER portfolio?


DSM-DER portfolio

evolution approach


Approach overview

Identifying

goals

Understanding

the context

Conducting

the analysis

Implementing

and refining

new portfolio

Prioritizing

portfolio

changes

Customer

market research

and insights

Market analysis

Best practices

and utility

benchmarking

Utility and

regulatory

considerations

Customer-related

goals

Operational goals

Planning and

resource

management

goals

Financial goals

Societal goals

Customer

segmentation and

propensity

analysis

Measure / portfolio

benchmarking and

best practices

Time value

analysis

Measure level load

shape analysis

Target program

use cases

Rank current and

new measures

Measure

selection

Program/portfolio

design

Rates

Regulatory

Program

implementation

Target

marketing

Evaluation and

customer

experience

improvement


Understand the customer context

Customer energy usage

and program participation

Existing customer market

research and segmentation

Direct customer feedback


Understand the market context

Market maturity and

evolution

Innovative energy

products, services, and

business models

Market forecasts

Best practices and

competitive intelligence


Understand the utility context

Existing resources

and capabilities

Regulatory

considerations

Operational

considerations

Financial

considerations


Approach overview

Identifying

goals

Understanding

the context

Conducting

the analysis

Implementing

and refining

new portfolio

Prioritizing

portfolio

changes

Customer

market research

and insights

Market analysis

Best practices

and utility

benchmarking

Utility and

regulatory

considerations

Customer-related

goals

Operational goals

Planning and

resource

management

goals

Financial goals

Societal goals

Customer

segmentation and

propensity

analysis

Measure / portfolio

benchmarking and

best practices

Time value

analysis

Measure level load

shape analysis

Target program

use cases

Rank current and

new measures

Measure

selection

Program/portfolio

design

Rates

Regulatory

Program

implementation

Target

marketing

Evaluation and

customer

experience

improvement


Define goals for your portfolio

Delight key

customer

segments with

targeted DSM-

DER offerings

Reduce

greenhouse gas

emissions

Defer new

generation

and upgrades

on select

feeders

Manage the

integration of

DERs to minimize

peak load and

maximize system

performance


Approach overview

Identifying

goals

Understanding

the context

Conducting

the analysis

Implementing

and refining

new portfolio

Prioritizing

portfolio

changes

Customer

market research

and insights

Market analysis

Best practices

and utility

benchmarking

Utility and

regulatory

considerations

Customer-related

goals

Operational goals

Planning and

resource

management

goals

Financial goals

Societal goals

Customer

segmentation and

propensity

analysis

Measure / portfolio

benchmarking and

best practices

Time value

analysis

Measure level load

shape analysis

Target program

use cases

Rank current and

new measures

Measure

selection

Program/portfolio

design

Rates

Regulatory

Program

implementation

Target

marketing

Evaluation and

customer

experience

improvement


Market researchCustomer

segmentation

Propensity

modelingTechnology

adoption

forecasts

Predict customer behavior


Utilize benchmarking and best practices

Portfolio design

Marketing techniques

Technology evolution

Program results

Innovative customer solutions


Conduct a value assessment

Objective: Assess DERs using data to value load shapes according

to their alignment with objectives

Resource planning

Grid needs

Transmission and distribution (T&D) feeder loads

GHG emissions

Bill savings by rate


Map time value of avoided costs

© E Source; Tierra Resource Consultants


Map GHG emissions intensity per kilowatt-hour (kWh)



Build DER savings load shapes

Does your utility have 8,760

hourly load shape data?

If not, use EPRI’s publicly

available regional data

Map shapes to current portfolio

measures

Modify into program-specific

savings load shapes



Analyze savings load shapes



Identify measures with the most beneficial load shape impacts



Evaluate T&D feeder capacity



Approach overview

Identifying

goals

Understanding

the context

Conducting

the analysis

Implementing

and refining

new portfolio

Prioritizing

portfolio

changes

Customer

market research

and insights

Market analysis

Best practices

and utility

benchmarking

Utility and

regulatory

considerations

Customer-related

goals

Operational goals

Planning and

resource

management

goals

Financial goals

Societal goals

Customer

segmentation and

propensity

analysis

Measure / portfolio

benchmarking and

best practices

Time value

analysis

Measure level load

shape analysis

Target program

use cases

Rank current and

new measures

Measure

selection

Program/portfolio

design

Rates

Regulatory

Program

implementation

Target

marketing

Evaluation and

customer

experience

improvement


Bring it all together

Context

and

portfolio

goals

Bench-

marking

and best

practices

Value

mapping

and load-

shape

analysis

Customer

segmentation

and propensity

analysis


Bring it all together

Context

and

portfolio

goals

Bench-

marking

and best

practices

Value

mapping

and load

shape

analysis

Context

and

portfolio

goals

Bench-

marking

and best

practices

Value

mapping

and load-

shape

analysis

Customer

segmentation

and propensity

analysis


Target program use cases

Bundled solution for tech-

savvy enviro customers

Peak shaving

Integration of intermittent

resources

Mandates for renewables

and behind-the-meter

storage

T&D upgrade deferral

GHG reductions


Rank and select measures

What weighting

should you apply

to each goal?

How should you

rate each measure

on each goal?

What is the

weighted total for

each measure?



Agree upon changes to DSM-DER portfolio

1

2

Portfolio Recommendations

Which measures should you

add or increase?

Which measures should you

cut or decrease?

Which measures should

remain the same?



Design new programs and improve existing ones

Program Design DSM Options Load Shapes

Provides incentives of

50% of incremental cost

for HP water heating,

high-efficiency HVAC

equipment and tune-ups,

duct sealing and

installing smart

thermostats

Dual Fuel - DTR Tier 1, 2, ER HVAC with QI Tier 1, 2,

HVAC QI Tier 1, 2, Advanced Tune-up, Indoor and

Outdoor Coil Clean, Refrigerant Charge Repair, Smart

Thermostats

Residential Cooling DX D: 49% 1/13, U: 7% 2/13

All Electric DTR Tier 1, 2, ER HVAC w/QI ER HVAC w/QI

Tier 1, 2, HVAC QI, HVAC QI Tier 1, 2

Residential Cooling HP D: 14% 4/13, U: 20% 8/13

Energy Star Heat Pump Water HeaterResidential Water Heating

D: 8% 11/13, U: 26% 11/13

• Previous Year Participation – 2,750 customers, providing 4,112 HVAC measures and 504 tune ups

• Key Stakeholders – HVAC contractors, plumbers, retailers

2018 Budget % Budget MWh Savings MW Savings $/MWh $/kW Year 1 Cost Lifetime Cost

$3,889,972 17% 9,262 5.8 $348 $557 $0.31 $0.018

Note: D=Desirable Load Shape, U=Undesirable © E Source; Tierra Resource Consultants


Next steps to

ensure success


Approach overview

Identifying

goals

Understanding

the context

Conducting

the analysis

Implementing

and refining

new portfolio

Prioritizing

portfolio

changes

Customer

market research

and insights

Market analysis

Best practices

and utility

benchmarking

Utility and

regulatory

considerations

Customer-related

goals

Operational goals

Planning and

resource

management

goals

Financial goals

Societal goals

Customer

segmentation and

propensity

analysis

Measure / portfolio

benchmarking and

best practices

Time value

analysis

Measure level load

shape analysis

Target program

use cases

Rank current and

new measures

Measure

selection

Program/portfolio

design

Rates

Regulatory

Program

implementation

Target

marketing

Evaluation and

customer

experience

improvement


Develop a roadmap for portfolio evolution

Regulatory strategy

Program design

Rate design

Target marketing

Customer experience

And a lot more …


Want to learn

more?


Wednesday, September 26:

Plenary: Your Customers Are

Choosing Their Future—Will

They “Swipe Right or Left” on

Your Utility?

Tales from the Top: The

Strategies Behind Successful

DSM

Top Solar Marketing Leaders:

Utilities That Are Winning with

Customer-Centric

Communications

Strategic Electrification and the

Next Generation of Efficiency

Programs

Thursday, September 27:

Designing Customer-Centric

Residential Demand-Response

Programs

Mind the Gap! How to Lead Your

Utility into the Next Generation of

Savings

Shifting Regulatory Models and

Spending Trends: Poster Session

and Lounge

Utility-Only Workshop: Crossing the

EV Marketing Chasm—How Would

Apple or Amazon Do It?

Friday, September 28:

Electrification: The Link Between

Customer-Centric Products and

New Revenue Streams

Evolving DSM Portfolios in the Age

of DERs

What’s in Store for the Utility

Business Model? Let’s Gaze into

the Crystal Ball

Register now!

https://www.esource.com/forum2018


Gain deeper insights into residential customers’

interest in DER technologies

Expand your understanding of other utilities’ efforts to

create innovative DER programs, services, and

portfolios

Develop a data-backed tactical plan for making

changes to your utility’s DER portfolio

Information and registration

DER Strategy

Service

Members

Only

https://www.esource.com/der-fall2018


For more information

Alanya Schofield

Senior Director, Strategy, Consulting

and New Products, E Source

303-345-9156

[email protected]

Tom Hines

Principal, DER Strategy &

Regulatory Policy, Tierra

Resource Consultants

602-505-4826

[email protected]

Matthew Joyce

Managing Consultant, DER

Portfolio Planning and Design,

Tierra Resource Consultants

303-579-3344

[email protected]

Chad Garrett

Managing Director, Consulting, E Source

303-345-9151

[email protected]

You're free to share this document in its entirety inside your company. If you'd like to quote or use our material outside of your business,

please contact us at [email protected] or 1-800-ESOURCE (1-800-376-8723).

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