DEC CDM Innovation for Success Themes and Outcomes

Transcription

1 DEC 2015 CDM Innovation for Success Themes and Outcomes

2 To meet the objectives set out in Ontario s Conservation First Framework 8.7 TWh in savings by 2020 and 30 TWh by 2032 the sector is required to think about how to unlock new value by integrating innovation into Conservation Demand Management (CDM) practices. Recent planning around conservation presents an opportunity to discuss the integration of innovation into CDM programming and products to ensure that these programs are delivering value to ratepayers and realizing energy savings. Within the Conservation First Framework Local Distribution Companies (LDCs) are required to submit Conservation Demand Management (CDM) plans to meet local needs and deliver cost-effective conservation programs. The current program application process is led and designed by LDCs with the Independent Electricity System Operator (IESO) working in a supportive role. All of Ontario s LDCs have put together plans for programming over the next six years, with an estimated 37 unique programs to be initiated over the next five years. To discuss gaps and opportunities around innovation in CDM, the Advanced Energy Centre (the Centre), the Independent Electricity System Operator (IESO) and the Corporate Partners Committee (CPC) of the Smart Grid Forum hosted CDM Innovation for Success at the MaRS Discovery District on November 27, The event generated discussion on CDM design and delivery with a diverse array of energy players- including LDCs, innovators, building managers, government and regulators- who continue to realize savings and build the next generation of CDM in Ontario. Featuring speakers from the IESO, LDC implementers and innovators, the conference provided insights into the Conservation First Framework and pilot application process, facilitating a greater understanding of how innovators and utilities might bring new technologies and innovative delivery strategies into the Ontario CDM market. Attendees heard about key insights on how the Conservation-First Framework is shaping LDCs, customers and channel partners and how CDM market players can promote new technologies and innovative market solutions. A key component of the event was interactive discussion around how the current CDM process might incentivize and integrate innovation faster. Attendees provided non-attributable insights into gaps and opportunities within the current Framework. CORE OBJECTIVES The CDM Innovation for Success workshops explored how to accommodate product innovation and new program ideas within the existing Conservation-First Framework. Participants engaged in conversations in small breakout groups divided by customer group: residential, commercial and small business, and industrial. Participants answered two framing questions throughout: A. How can we adopt innovation faster? B. How can the IESO and utilities best keep up with what innovations are available? The discussions around gaps and opportunities for adopting innovation in CDM are captured below and categorized by each customer segment in turn. KEY THEMES AND TAKEAWAYS An overarching theme of discussion among participants was challenges around understanding the program application process within Conservation-First. While workshop attendees recognize that simplifying the process in its entirety is unfeasible, concrete suggestions were made around improved communication and making information readily available to LDCs and innovators regarding how to navigate the process, include new measures in proposals, and the criteria for success. To improve communication between LDCs and innovators to discuss what is available in terms of innovation, participants brainstormed the creation of a central place to share successful proposals that include innovative program and product ideas. The thesis is that greater sharing between LDCs can enable LDCs to better understand how to integrate innovation into proposals will encouraging greater collaboration to develop new successful solutions. CREATING Utilities, innovators, building managers and industry association representatives, consistently cited the underlying challenge of incentive structures for the adoption of innovation in CDM. Overwhelmingly, we heard that there is a lack of incentive for LDCs and others to diverge from the status quo. Current measurement and valuation criteria are short-term and do not acknowledge the long-term value that innovation unlocks. With regards to industrial customers in particular, LDCs noted that they are currently getting the same value for changing light bulbs as they do for increased investment in innovative technologies. Considering real and perceived up-front costs and risks associated with innovative technologies, there is little incentive to integrate innovation into existing practices. Participants recommended that programs be measurement based, have longterm targets, and new financing structures. Offering increased incentives for packaged, innovative solutions will drive adoption. MISALIGNMENT OF KEY PLAYERS A key barrier to adopting innovation in CDM is misalignment between LDCs, and LDCs and innovators. Utility representatives noted a lack of understanding around what is possible in terms of innovative programs and products. There is a clear need to share innovative ideas and best practices across LDCs and innovators respectively. Potential actions around this are, embedding corporate energy managers across LDCs and a central repository for LDCs to access innovative products and program ideas. 2

3 INDUSTRIAL The Innovation Fund has burdensome requirements Streamlining and simplifying piloting and approvals process Small start-ups take on financial burden- start-ups have burden of proof and have a high burn rate as a result Lack of training and skills development for contractors Lack of measurement-related incentives to diverge from the status quo and invest in innovation, LDCs are currently getting the same value for changing light bulbs and adopting innovative products LDC targets are short-term; do not align with value derived from investment in innovative programs and products LDCs are losing industrial customers within the Conservation-First Framework Challenges around managing differential incentives so that not every customer is treated the same Lack of incentives between a strict pilot and a full rollout Industries are looking for a risk-free approach to reducing their energy consumption- innovation perceived as high-risk in a production facility Up-front costs- contracts, procurement- are greater than costs of the program itself Leverage ratepayer and/or additional funds (a Smart Grid Fund or similar vehicle) to minimize the funding risk for pilots Training for contractors around CDM Programming to enable selling to competitors and realize electricity savings Programs must be measurement based in order to increase value and incentives to adopt innovation in CDM LDCs targets should be long-term Allow LDCs to buy down the payback period, effectively taking CDM funding to buy down an incentive in a project and, in doing so, pay industrials for taking a risk. Add a layer of the process between pilots and implementation to foster financing and scaling. Addressing the confidence-level problem through increased maintenance Further conversation required around how to structure this conversation more effectively. The process leading up to a pilot should be simplified in order to facilitate LDCs participation in this process 3

4 SMALL BUSINESS Lack of communication/clarity around the CDM process: information on timelines, accountability and ownership, and existing ideas and projects Clear communication from the IESO regarding information around the application process Clarification of incentives (ie. case studies database) Clarity around criteria for successful applications Unclear how to include new measures in proposals. Incentives for LDCs to implement new ideas Lack of incentives for LDCs to innovate Difficult to achieve efficiency and economies of scale to cover resource costs Pilots and regular commercial projects are valued using the same criteria Financial rewards for LDCs to take on risks MISALIGNMENT OF KEY PLAYERS LDCs lack access to new opportunities available from innovators Innovators have difficulty understanding LDC s needs Create a site/central repository for LDCs to review past ideas including both ideas that were accepted or turned down to understand why IESO triage potential opportunities and suggest which programs LDCs and innovators can take advantage of IESO to establish an advisory board of external and internal partners to provide guidance and access ideas Create innovation incentive in Energy Conservation Agreement Valuation criteria for pilots and regular commercial projects should be distinct Readily available funding for demonstration pilots IESO fund for institutional applied research Use a LDC Dragons Den approach for LDCs to access and evaluate new opportunities presented by innovators and entrepreneurs Create demonstration site of technologies available in CDM Sharing and understanding successes and failures across LDCs and innovators Central repository for innovative ideas Capabilities to run micro-programs Embedded corporate energy managers across LDCs Annual Innovation Fair to share ideas widely prior to the application process Small-business-facing calculator or simulator (not engineer-facing) 4

5 COMMERCIAL BUSINESS Clarity on accountability and ownership within process Complex paperwork Not enough manpower to fill requests for real-time data to verify savings Commercial sector groups do not have access to timely data as a third party Financing and speed of incentive payment MISALIGNMENT OF KEY PLAYERS Cultural barriers around customer buy-in Customer scepticism, lack of energy literacy, and aversion to change Use a head office model, where work is not borne by any one LDC Keep it simple approach to paperwork and program applications Applicant representative should automatically have access to data Improving and streamlining data access Access to real-time data for third parties Automatically allow data access to applicant representative Mandatory benchmarking On-bill financing structure (utility bills or tax bills) to support projects Offering increased incentives for packaged solutions Consumption specific billing Improve data and access: Continuous feedback and measures to verify savings and share to the market Customize energy recommendations Benchmarking in buildings Repository to aggregate all energy saving programs and give customer access 5

6 RESIDENTIAL Lack of clarity around the role of the LDC Lack of clarity around how to engage with the IESO in the process Incentives to reach policy objectives are unclear Pain points around realizing non-energy benefits LDCs have limited budget to allocate to innovative CDM programming, being asked to innovate while operating their standard business Uncertainty around the end result of pilots Limited capability to capture energy savings within service territories Clarify the role of the LDC- answer the following questions: Is the LDC active behind the meter, or is its role just education? How do new business opportunities align with defined role from regulator? Launch IESO information session to clarify the process to answer questions like, if I have an innovative product, how do I bring it forward to the IESO? Vendor information sessions every quarter to provide insights into the process- similar to CDM Innovation for Success Document business case and financial incentives to enable outcomes and behavioral transactions Document non-energy benefits that impact business and residential homeowner s bottom line. Include funding up-front business case in total program allowance Once pilot is approved, get money back Create a fixed amount for pilots so the LDC can spend this fixed sum to start the business case, this amount will be approved and returned to the LDC. Deploy market-based programs: fit-bit, NEST labs, etc. to feed energy savings straight to consumer and attribute directly to LDCs. 6

7 marsdd.com The Advanced Energy Centre, Independent Electricity System Operator, and the Corporate Partners Committee of the Ontario Smart Grid Forum would like to acknowledge the the generous time and effort of all attendees during the event. For more information, please contact: KATHLEEN GNOCATO Associate Advanced Energy Centre