PUC of Texas EEIP Meeting Residential A/C Load Control Program ©2012 Comverge – Confidential and...

PUC of TexasEEIP MeetingResidential A/C Load Control Program

©2012 Comverge – Confidential and Proprietary 1

11.27.2012

Comverge Introduction


• Operating in Texas since 2001– Austin Energy – Power Saver Free Thermostat

Program– TXU Energy - iThermostat program– Utility C&I Standard Offer DR Programs– ERCOT C&I ERS Program (Formerly EILS)

• Equipment provider for other Texas energy service providers

• Active market participant at ERCOT

World-leading provider of Intelligent Energy Management

(IEM)/Demand Response (DR) solutions

Headquartered in Atlanta, GA

~520 employees

Revenues: 2011 - $136.4 million 2010 - $119.4 million

Q1 2012: Revenue growth of 75% compared to 2011

Acquired by H.I.G. Capital – 5/2012

HighlightsHighlights

Leading Provider of Intelligent Energy Management/Demand Response Solutions

Revenues From All Customer Classes (2011)Revenues From All Customer Classes (2011)Client Base GeographyClient Base Geography

PPS CHART #3USE RIDER A

(next page)Residential

57%

C&I43%Grid Operators Electric Utilities

Electric Utilities

C&I43%

Wide Range of ServicesWide Range of Services

Program Design, Planning and Execution

Marketing Strategy & Execution

Installation

Measurement and Verification

Energy Audit

Customer Care

© 2012 Comverge, Inc. 3

VPC Structure Description• VPC™ – Virtual Peaking Capacity

– Pay-for-Performance• Payment is based on delivered Peak Load Reduction• Paid through a $/kW-yr charge • M&V Methodology is specified by contract

– Fully Outsourced

– Comverge takes the risk of performance

• Can be offered through REP’s, Utilities or Direct from Comverge or other third party

• Can be tailored to fit the market need


Demand Response is our Business

5© 2012 Comverge, Inc. Confidential and proprietary.

Offer Summary• 400 MW Residential Air Conditioning Cycling Pilot• 2 pilot locales each 200 MW• Pay for Performance – Comverge guarantees MW

– Direct Air Conditioning Load Control – Smart Switches• Communications over Paging & Zigbee using AMI

– Residential & Small Commercial market – Creates 80-90 jobs in Texas– Representative Implementation Costs

• $145/kW-yr Includes $50/yr Incentive per device & $50/customer sign on bonus

– Pilot roll out over 4 years, Device life > 10 years


Switches Allow for Flexible Control - Load Guard

M⃰ Load Guard is a Comverge program implemented for Com Edison for their real time pricing program

7

Load Guard is an optional “set and forget” service that utilizes the already deployed load management switch population to allow participants (via a website) to make their own cycling option decisions for dynamic pricing events

Load guard enables customers to take advantage of dynamic pricing events automatically by pre-selecting a cycling level that runs during a high price event

Provides added value at little incremental cost to utilities

88

Real Time Pricing – Innovative Set & Forget Solution

©2012 Comverge – Confidential and Proprietary

Measurement and Verification (M&V) Plan• Basic Assumption – Use Customer’s or Aggregations of

Customer’s individual AMI Meter data

• Two Options for Measurement and Verification (M&V)– Controlled/Comparison Methodology

• Performance calculated by statistical sample of Customers’ metered load prior to dispatch instruction compared to metered load at the reduction deadline

• This is a very common methodology for residential air conditioning load control

– Baseline Methodology• A baseline is defined as an estimated or predicted load in the absence of a DR deployment. • Baselines are appropriate for loads or aggregations of loads that are predictable in nature • Can be modeled based on their historical usage patterns • This is an appropriate methodology for Weather Sensitive residential air conditioning load.

• Both Methodologies are recognized as applicable for DR programs by the International Performance Measurement and Verification Protocol (IPMVP) Option


Comverge M&V Experience

• Comverge Energy Sciences team:– 10 engineers and mathematicians

– Oversee & shepherd the process

– M&V processes have been evaluated and approved by numerous utilities and by PJM

• Responsible for M&V measurements & evaluation of many residential and small commercial DR programs since 2006

– Seven seasons of meter deployment and data acquisition for thirteen programs

– Energy Sciences team creates a detail M&V plan annually

– Per the plan, meters are deployed, baseline and event measurements are obtained during the summer season and a final report is prepared in the fall

• Comverge has used many different approaches for measurement – Direct metering of air conditioners and hot water heaters, including monitoring run times as

determined by the thermostats and service meter measurements

– For the proposed program, Comverge envisions using AMI service meters to calculate demand reduction

– Estimates can be prepared for each event using a prior day(s) baseline based approach

– The estimates from each premise would be aggregated to provide a system wide determination of the demand response


Summary of Results• Residential programs produce reliable Demand Reduction

• Programs across the country producing perennial results – Emergency Curtailment, Ancillary Svc, Operating Reserves– Attacks the primary Contributor to annual Peak System Load

• Job Creation – as many as 85 Jobs if fully deployed (400 MW) – Potential for more during deployment phase (3-5 years) – Scales down by 30-40% after deployment phases

• Assumed Penetration Rates– 6.7% Proposed Penetration– 432,350 Proposed Enrollments– 18 Months expected to reach the proposed penetration level

• Assumes Two largest TDSP service territories as target markets


Demonstrated Performance

12

14% Penetration119,077 Enrollments26 Months

Utility 1


13

9.4% Penetration56,604 Enrollments16 Months


Utility 1

Utility 2


14

6.7% Proposed Penetration432,350 Proposed Enrollments18 Months

9.4% Penetration56,604 Enrollments16 Months


Utility 1

Utility 2

Applicability• Demand Response is an integral component of several existing EE

Program offerings– Oncor, CenterPoint, AEP – Load Management Standard Offer Program for Commercial &

Industrial Customers

– TNMP – Commercial Load Management Pilot Program

– Other Texas Utilities – Various Load Management Standard Offer Programs

• Residential programs will be a valuable addition• Program Structure fits well in the Texas Market

– Ability to transition program to ERCOT when appropriate

• Comverge design reduces risk for the customer through experience and process

– Example - in VPC, Comverge assumes risk for program dropouts and customer opt outs • Allowances for these risks are designed into the program plan • Allow customers to opt out of 2 control events per season • Program is Voluntary – If customer wants to leave the program – accommodate the request • Since contract is MW based we manage churn through the life of the program


Market• Demand Response is a critical element in Texas Resource Adequacy

Discussion

• Residential Price Responsive Demand is a desired end-state

• ERCOT making strides to facilitate products for loads to participate in Market

– 30 min Emergency Response Service • Pilot in Second Season• Load Aggregation Participation

– Weather Sensitive Loads Product category• Protocol changes currently in development

– Aggregated Load Resources• Draft White Paper

• Residential DR – Deployment through multiple channels– Third Party DR Providers– Retail Electric Providers– Channel Partners (HVAC, Security, Cable)


Conclusions• Demand Response is our business

– The estimates are achievable– The Resource is reliable– M & V is proven industry accepted practice

• Pay for performance structure ensures value

• 400 MW pilot offer – Large enough to provide system value– Small enough to fit the budget over roll-out period

• Next steps:– Meet with PUCT Staff and/of Commissioners to Answer additional

questions– Road show to gauge interest from TDSP’s and Utilities– Advance the program concept to filing phase with Sponsor Utility


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