Pay-for-Performance Pilot Conceptual Framework

Transcription

1 Pay-for-Performance Pilot Conceptual Framework Home Performance Conference February 14, 2018

2 What is Pay-for-Performance (P4P)? 2 Simple Idea: Pay for ACTUAL energy savings

3 What is Pay-for-Performance (P4P)? 3 How? Conceptual pilot approach: Work with P4P Aggregators key NYSERDA partners on small commercial and residential customer projects Advanced M&V methods applied to calculate savings from meter data and take advantage of advanced metering infrastructure Track savings and provide financial incentives over time 5 years for demonstrated energy savings, rather than payment at project completion Focus on portfolio performance to manage risk and to overcome performance volatility at the individual project level The ultimate objective of the P4P Program is to establish a scalable model for residential energy efficiency by incentivizing market actors (Aggregators) to deliver energy savings through a variety of effective retrofits that are attractive to eligible residential customers.

4 What is Advanced Measurement & Verification (M&V)? 4 Also known as M&V 2.0 Two keys features: 1. Automated analytics that can provide ongoing, near-real time savings estimates 2. Increased data granularity in terms of frequency, volume, or enduse detail Another key term: Advanced metering infrastructure (AMI) systems May offer opportunities to lower M&V costs through automated calculation of savings

5 What is NYSERDA trying to learn? 5 Does the program structure result in greater energy savings? Deeper retrofits? Does customer participation increase? Does customer satisfaction increase? Do customer bill savings increase? What is the persistence of the energy savings from installed projects over time? Does project performance data and standardized measurement allow aggregators to predict savings for their portfolios and more accurately assess business model risk? Can AMI data be leveraged with this model to deliver energy savings that address grid needs?

6 Questions for the Audience 6 Before today Had you heard of the Pay-for-Performance? Had you heard of advanced M&V? Has anyone had experience with P4P or advanced M&V prior to today? What were your experiences?

7 Who will be involved? 7 Utilities Contractors Distributor s/vendors Aggregators Customers Financers and Insurers

8 Customers 8 Conceptual Requirements: Single-family residential Located in one of the defined pilot territories Willing to release utility data to NYSERDA and aggregators One year of electric and gas account history At least two years of oil delivery records if using fuel oil Cannot have multiple meters at one house Solar panels need to have been installed at least one year prior NOTE: Participating customers will not be able to receive utility residential energy efficiency rebates

9 Aggregators 9 Who are they? Key partners with NYSERDA in this program Will be qualified via an RFQ process, and subsequently selected through an RFP process Can be program administrators or implementers, contractors, distributors, vendors, etc. Have a demonstrated track record of implementing residential projects that have energy efficiency benefits Strong financial standing What will they do? Develop offerings/packages for customers that meet their energy needs Work closely with contractors and vendors/distributors to implement customer projects Mutually beneficial partnerships Direct incentives received from NYSERDA to customers and contractors as per agreements and Aggregator defined business models

10 Contractors 10 Primary installers of projects and energy efficiency measures Provide market feedback on customer reactions to offers Collect and electronically submit project and customer data using standardized forms Relationship with Aggregators Aggregators and Contractors will determine their own working agreements Contractors will be paid by aggregators Contractors will be bound by the terms of Aggregator contracts

11 Other Stakeholders 11 Distributors and Vendors Providers of equipment and materials installed Financers and Insurers Provide upfront capital for project implementation and underwrite portfolio performance Utility Partners Work with NYSERDA to develop and launch P4P pilots

12 Program Administration 12 RFQ Those interested invited to seek qualification as Aggregators RFP Qualified Aggregators submit proposals o Estimated savings, market intervention plan, and bid price Projects Selected Aggregators work with contractors to install projects 2-year window to install Data Customers release utility data to Aggregator and NYSERDA Aggregators provide project data Advanced M&V NYSERDA compares pre-and postintervention models Models are weather normalized, and total savings are calculated Payment Aggregators paid based on total calculated savings for 5 years Can re-intervene during payment period to improve performance and install other measures

13 Questions for the Audience 13 Do you have questions do regarding roles? Do you have questions regarding customer eligibility? What questions do you have regarding process/program administration?

14 Why Pay-for-Performance? Goal P4P approach GHG reductions Paying for realized energy savings improves achievement per dollar spent towards state GHG reduction goals Scalable energy efficiency model with measurable savings Simplified administration that does not impede the sales cycle Utilize electronic data collection and advanced M&V to simplify program administration, creating a consistent and streamlined approach Standardize the measurement of energy efficiency to facilitate procurement similar to other distributed energy resources (DERs) 14 Increase customer participation, satisfaction and bill savings Mobilize private investment Aggregator designed offers/packages that are responsive to market conditions Aggregators and contractors can re-intervene with participating customers to achieve or inspire greater savings Encourages long term relationships with customers, repeat business Customer bill savings = future cash flows Working with the Green Bank and other financing entities Additional data to demonstrate that energy efficiency savings are predictable and stable at the portfolio level

15 P4P v. Existing Programs Key Elements Existing Programs P4P Opportunities Compensation Allowable measures Paid a percentage of project cost or fixed rate for specific measures Only permitted energy efficiency measures eligible for funding Contracted value for delivered energy savings Measure agnostic and fuel neutral approach, packages designed for impact & uptake Timing of payments One-time payment Paid over five years based on realized savings Measurement of energy savings Not required for payment Savings are calculated using weathernormalized meter data Entity receiving the incentive Homeowner and contractor separately Contracted aggregator Portfolio performance Not considered when making incentive payments Aggregator performance will be assessed at the portfolio level Program administrator Separate NYSERDA and utility programs Jointly administered NYSERDA and utility programs 15

16 P4P Relationship to Existing Programs 16 Existing programs will continue to operate during the pilot period, but Participating customers in P4P will not be able to receive utility residential energy efficiency rebates Contractors working with participating customers will not be able to receive Home Performance with ENERGY STAR incentives Aggregators designed offerings/packages could include: Free/reduced-cost audits Loans through NYSERDA s programs

17 Aggregator Designed Options 17 EE Offerings Aggregators will be free to select the measures included in customer offerings: Standard retrofits Smart devices and controls Behavioral initiatives

18 Aggregator Designed Options 18 Business Models Based on estimated payments and cashflows, Aggregators can determine customer and contractor financial arrangements Flat rates Upfront discounts Performance contracts Low-interest financing

19 19 Questions for the Audience What elements of the P4P model do you prefer over existing programs? What elements of existing programs do you prefer over the P4P model? What packages of EE measures could work under this P4P model? Where do you see potential for your company in P4P?

20 20 Pilot Approach NYSERDA intends to issue multiple pilots over the next several years Pilots are intended to test different approaches and use cases and learn what method(s) are most effective Pilots will likely be geographically targeted with utility partners

21 21 P4P elsewhere The concept of P4P is not new some energy efficiency programs have paid for energy savings for many years What is new is the concept of leveraging advanced M&V to implement P4P with mass market customers In California, PG&E is running a residential P4P Program 2-year implementation period and annual incentive payments made to Aggregators Aggregators are responsible for managing a customer portfolio consisting of numerous, single-family residential homes PG&E will pay Aggregators a set price per MMBtu (kwh conversion provided), based on weather-normalized pre-/post-energy usage analysis Aggregators work directly with contractors and residential PG&E gas and electric customers to achieve energy savings through retrofits in addition to operational and/or behavioral interventions

22 Why should you be interested? 22 NYSERDA is scoping a $20 million pilot for residential P4P Pay-for-Performance allows you to design and sell projects that address the needs of your customers Measuring savings can increase accountability and increase customer confidence in results Additional cash flow stream for market actors who are confident their business model will result in customer uptake and deliver energy savings

23 What are the risks? Depends on the business model, offer to the customer, and modeled savings assumptions used to obtain financing 23 Not every project will save energy at the meter Need to understand what types of projects will likely result in negative savings HPwES data set with realized energy savings will be provided

24 Timing 24 Q NYSERDA and utility partners seek approval from DPS Q RFQ is released Q RFP for qualified bidders is released Q1/ Contracts executed Implement projects

25 How to Prepare 25 Contact NYSERDA staff to be added to the P4P distribution list Megan Fisher Laura Geel In the meantime 1. Consider what role you d like to play 2. Think about business models and partnerships that could be successful 3. Stay in touch with NYSERDA

26 26 THANK YOU! Questions & Answers