Moderator: Panelists:

Transcription

1 Pay For Performance Moderator: Panelists: Mike Little, Seattle City Light Dave Rodenhizer, Seattle City Light Amy Ellsworth, Cadmus Sam Walker, Energy Trust of Oregon George Pohndorf, Snohomish County PUD

2 Pay for Performance a different approach to incentives Stan Price, Northwest Energy Efficiency Council 605 First Ave., Ste. 401 Seattle, WA info@neec.net

3 Aren t all incentives performance based? Payments conditioned on measure and verified savings Savings deemed by sanctioning body such as RTF Engineering estimate of savings for custom projects Duration of savings determined by specified measure life

4 Current Approach: Savings over time Modeled Realization 1 Realization 2 PfP M&V Years Who owns this risk?

5 What is Pay for Performance (P4P)? P4P is an energy efficiency project incentive structured on annual payments for measured and verified energy savings. (Today s one time up-front rebate/incentive, replaced by annual payments based on yearly measured & verified savings over a negotiated term)

6 P4P Approach Transition from measure by measure to building system focus Sustained optimized performance of current building systems Large capital investments that modernize building infrastructure Changed business case that relies on annual revenue streams instead of one time cost buy down Game changing approach that is less dependent on cream skimming of the lowest cost, highest yield measures Addresses the uncertainty of long term persistence of savings

7 Are you talking about MEETS? Graphic by MEETS Accelerator Coalition

8 Attribute comparison Traditional Approach Risk Energy Savings Quantifica tion Persistence of Savings Cost Market Factors Pay for Performance

9 Pay for Performance Programs Presented by: David Rodenhizer, Manager, Seattle City Light Amy Ellsworth, Principal, Cadmus

10 10 Seattle City Light s P4P Program Three Buildings Three Years Three Providers Lake Union 111 Third Ave Building One Union Square

11 11 Concept of P4P Flexible Reduces Risk Outcome based Variable Terms Measured at Meter

12 12 What s new about it? Regular payments Savings measured at the meter All savings qualify Captures all effort & interactions Long Term Multi-year engagement with facility staff Simple Eliminates up front analysis and review

13 13 Program Design Concerns Savings Certainty Measure Uncertainty Measure Certainty Savings Certainty

14 Program Design Concerns Baseline Incentive Rate Contract Term 14

15 15 Pilot Phase: Key Take Aways Takes commercial energy savings to the next level Contract term/incentive rate sweet spot Balancing a streamlined, flexible approach with consistency and rigor Operational and logistical realities

16 16 Pilot Results: Example 750,000 ft² All-Electric Office Tower Baseline: 9M kwh/yr, ~40 kbtu/ft²/yr 1 st Year Cooling tower, pumping, controls VAV zonal recomissioning Common Area LED lighting 2 nd Year VAV zonal recomissioning Variable-flow chilled water pumping 3 rd Year Tenant Space LED lighting

17 20% savings 6% 90% confidence 17

18 Contacts David Rodenhizer, PE Manager, Customer Energy Solutions Office (206) Amy Ellsworth Principal, Energy Services Office (303) LinkedIn.com/company/the-Cadmus-group

19 Pay For Performance (PfP) You get what you pay for. Presented by: Sam Walker, Sr. Project Manager Energy Trust of Oregon

20 20 About Energy Trust of Oregon Independent nonprofit Serving 1.5 million customers of Portland General Electric, Pacific Power, NW Natural and Cascade Natural Gas Providing access to affordable energy Generating homegrown, renewable power Building a stronger Oregon and SW Washington

21 21

22 22 PfP History Custom and prescriptive offerings Ex-ante O&M and behavioral offerings limited to SEM OPUC Report on Energy Efficiency PPAs Pilot RFP issued March 2014 Incentives paid over three years Allowed combination of measures Whole building M&V; no method specified Incentive rates negotiated

23 23 Not Pay for Performance -LeBron James paid $71 million in 2016

24 24 One pilot participant Energy Star certified Customer agreement Measures Incentives, cap PfP Pilot Energy 350 Customer relationship Experience Modeling: CDD & HDD Reporting results Broadway Building, Portland, OR

25 25 PfP Pilot - Results Savings exceeded estimates 778,000 kwh, 18% reduction Incentives: $29,000 ($0.037/kWh)

26 PfP Pilot - Results 26

27 27 PfP Expansion Plans Limited offering in 2016 Program Management Contractor (PMC) approach Prequalified service providers Measures limited to O&M and behavioral Excel based regression analysis required Incentives established by Energy Trust Alignment with other offerings

28 28 PfP Expansion Plans PMC Responsibilities Service provider outreach Customer outreach Application review Measure review Model review to ETO requirements Post installation verification Service Provider Responsibilities Customer recruitment Identification of measures Modeling Implementation of measures Quarterly reporting; annual savings report

29 Not Pay for Performance 29

30 30 Other Considerations Evaluation plans and results Savings claiming Modeling tools Broadening scope Alignment with other offerings

31 Contact For more information, contact: Sam Walker Sr. Project Manager Energy Trust of Oregon Penelope Skye Day 2

32 32 Photo Credits lebron-james/

33 Pay for Performance STEPPING FORWARD WITH A NEW MODEL George Pohndorf Senior Manager, Energy Services EFFICIENCY EXCHANGE April 26, 2016

34 What s this all about? Focusing on delivered energy savings Savings calculations are based on actual use, not estimates Aligning interests of the utility and the customer Greater achievement = Greater payment SNOHOMISH COUNTY PUD ENERGY SERVICES 34

35 But why change? We have been tremendously successful! Our estimates are thoroughly developed! We have complied! We are leaders! By the way, isn t there some uncertainty in building modeling? SNOHOMISH COUNTY PUD ENERGY SERVICES 35

36 Pay For Performance Program Savings are based upon actual achievement of results Rather than relying on estimates, we can utilize advanced metering data Provides for continuous monitoring of energy and capacity savings Provides a mutual incentive to maximize savings Increasingly, savings depend on management and control systems Positive experience with RCM, community energy challenges, ESI Enables funding of equipment and services Allows us to reach customers facing funding constraints More cost effective than traditional utility programs Energy and capacity savings expansion, visibility and persistence SNOHOMISH COUNTY PUD ENERGY SERVICES 36

37 ESPA DESIGN DIAGRAM District Senior Lender $/kwh Saved Saved kwh ESPA Energy Savings Purchasing Agreement (ESPA) Sub Loan Finance Company Payment for Services Contractor Equity $/kwh Saved Energy Services Agreement (ESA) Turnkey Project & Services for Guaranteed kwh Savings Customers/Facilities

38 What s in it for the customer? Equipment financing and services Attracts capital constrained customers Outsources energy management Broader scope of measures and services provided Savings guaranteed by contractor Can uniquely address property management interests Tenant space improvements paid through tenant bill Enables whole building approaches Enhances property value Utility bill does not change Equipment and services paid out of savings and utility payment Addresses a myriad of internal decision making hurdles SNOHOMISH COUNTY PUD ENERGY SERVICES 38

39 What s in it for the utility? Energy savings transparency Actual savings monitored and only pay for what is received Power supply visibility and value (looks like a PPA) Real time feedback on energy management strategies More for less Consistently maintaining equipment maximizes useful lives Optimized equipment produces more energy and capacity savings Capacity is increasingly valuable per the Council s 7 th Plan Avoided marketing, engineering and verification expenses New customers Despite aggressive efforts, PNW successes are lumpy Customer relevance (really) matters SNOHOMISH COUNTY PUD ENERGY SERVICES 39

40 Culture eats strategy for lunch SNOHOMISH COUNTY PUD ENERGY SERVICES 40

41 Questions? George Pohndorf Senior Manger, Energy Services Snohomish County PUD SNOHOMISH COUNTY PUD ENERGY SERVICES 41