August EEAC Small Business Offerings & Services. August 16, 2017

Transcription

1 August EEAC Small Business Offerings & Services August 16, 2017

2 Topics 1. Small Businesses in Massachusetts 2. Dive into Turnkey Small Business Services 3. Small Business Case Study 2

3 Stage Setting: Small Businesses in Massachusetts

4 Who are Massachusetts Small Businesses? Source: US SBA: : ~200K business establishments in MA ~335K C&I Electric Accounts ~135K C&I Gas Accounts Most are small and require different approaches and effort to reach with efficiency 4 Source: 2015 Customer Profile Study :

5 The focus of small businesses Net Profit Margin by Segments Business & Consumer Services 4.61% Retail General - 2.6% Retail Food Sales 1.89% Food Service 9.2% Hospitality 8.5% Healthcare & Social Assistance Electricity Cost Ranked 19 th down from 12 th in Hospitals 0.52% - Support 2.3% Source: NYU Stern School of Business Margin Research: Natural Gas Cost Ranked 34 th down from 3 rd in Source: National Federation of Independent Businesses pdf Source: National Federation of Independent Businesses:

6 Things to keep in mind while serving C&I Customers in Massachusetts All Customers are Electric Customers However Not all Customers are Gas Customers Even within a town that has gas utility service Multiple PAs can provide services to customers Creates opportunity for challenges communicating clearly to customers Commercial Customers do not fall under the RCS regulations allowing for EE services targeting delivered fuels Source: 2015 Customer Profile Study 6

7 The Offerings and Services available to Small Businesses Small Business Customers (Aggregate Annual Usage of less than 1.5 Mil kwh and/or 40,000 Therms) Program New Construction Retrofit Core Initiative New Buildings & Major Renovations Initial Purchase & End of Useful Life Existing Building Retrofit Small Business Upstream Lighting Pathway Prescriptive/ Custom Applications Applications & Distributor Delivery Prescriptive/ Custom Applications Turnkey Services Distributor Delivery 7 Source: Year Plan

8 Plan Commitments for Small Business Commitments National Research of Small Business Turnkey Delivery models Complete April 1, 2017 Thorough review of Small Business Turnkey Delivery in Massachusetts Ongoing New Approaches & Demonstrations proposed and tried during Tenant space improvements in commercial real estate Ongoing effort More LED retrofit kits and fixtures with integrated controls Ongoing effort Main Street/Community Blitz Ongoing marketing effort on a case by case basis Energy Savvy online portal for Small Businesses Tested 2016 and discontinued HES style approach Tested Source: Year Plan Pgs ,

9 Dive into Turnkey Small Business Delivery 9

10 Small Business & HES Comparisons Abound Similarities A Type of Direct Install Offer Turnkey Delivery for Customer Lead vendor coordinates assessment, makes customer-specific proposal, and coordinates installation Lighting, HVAC Control, & DHW Instant Savings Measures Cross-Program Promotion Heating and Cooling Equip. Some sort of financing generally available Differences Residential Wx/Insulation is the upsell and primary end goal HPCs and IICs compete but also report under Lead Vendor Able to address delivered fuels alone Small Business Comprehensive Lighting (fixtures and occupancy controls) is the upsell on electric and Wx/Insulation is the upsell for gas Customer Directed Option not reported to Lead Vendor Wx/Insulation not regularly costeffective Other Commercial Measures Refrigeration, Drives, Comp. Air, Boiler-Reset Controls, Custom Anything (where applicable) 10

11 Small Business Offering Goal: to retrofit existing buildings to make them operate more efficiently by overcoming barriers to Customer investment. Customers have to want to retrofit they do not have to make a decision like with a failed piece of equipment. Offer: Up to 70% of eligible total project costs delivered by turnkey vendors under contract to the PA. Customer Specific Offer Gas Instant Savings Measures where applicable Some financing available (PA specific approaches) Electric Lighting System Upgrades & Controls (including LEDs) Refrigeration Controls and Cooler Upgrades HVAC System Upgrades & Controls Motor or Drive Controls Compressed Air Systems Upgrades & Controls Gas Air sealing and weatherization Faucet Aerators & Trickle Start Shower Heads New Heating System Controls Steam trap maintenance Pipe insulation High-Efficiency heating and water heating equipment Cross Program promotion 11

12 Customer Engagement Tactics Vendor Marketing PA Marketing Trade Ally Marketing Main Streets Marketing Coordination Awareness Building Mass Save Awareness Campaigns 1% 0% 1% 6% Mass Save.com 42% 6% 8% Percent of Leads Word of Mouth, Repeat Customers, and PA Staff Relay 800# Cold Call National Grid Website Direct Mail C&I Customer Familiarity with Mass Save 15% 21% Auditor Walk-in Marketing Chamber of Commerce Unknown Source: For Example only - National Grid Percentages: averages of Source: 2016 Massachusetts Statewide Marketing: Post Campaign Report

13 MassSave.com Re-Design Designed with the understanding that 90+% of C&I interest is likely to be small businesses looking for solutions 1: C&I Landing Page 2: Facility Assessment language right out front 3: Process walkthrough for customers Source: Mass Save Website 13

14 Turnkey Process & Setting Customer Expectations Customer Interest /Acquisition Inbound Call, Cold Call, Repeat Customer, Website, Referral, Etc. Assessment Comprehensive Assessment using checklist No Cost to Eligible Customer Proposal Development Generally a week turnaround Financial Analysis for Customer Customer Approval Meets Customer Financial Criteria Discuss options for capital financing & Business Impact Assessment Installation Turnkey vendor coordinates the installation/subcontractors, etc. Includes: Arranges permits using license electricians and plumbers Lifts to reach high bays QA Check performed by 3 rd Party Vendor Post Inspection Cleanup & Disposal Document Universal Waste Lamps/Ballasts/Tstats/Etc Coordinate Disposal Vendors Source: Small Business Assessment Checklist 14

15 Small Business Initiative Longitudinal View Year Fuel Data Grand Total Electric Sum of Participants 4,003 5,914 5,755 5,551 4,995 5,006 3,787 35,011 Sum of Summer Capacity (MW) Sum of Winter Capacity (MW) Sum of Energy (Annual MWh) 76,733 87, , , , , , ,748 Sum of Energy (Lifetime MWh) 941,434 1,085,789 1,322,328 1,187,307 1,196,544 1,412,519 1,347,726 8,493,648 Sum of Total Benefits $128,898,115 $151,964,749 $218,123,907 $203,683,676 $192,560,261 $220,300,331 $211,803,327 $1,327,334,368 Gas Sum of Participants 1,747 1,365 1,052 1, ,575 Sum of Annual Avoided Natural Gas, Therms 171, , , , , , , ,809,105.6 Sum of Lifetime Therms 1,081,446 3,374,075 4,152,050 2,126,431 2,001,495 2,257,737 3,531,520 18,524,755 Sum of Total Benefits $2,259,862 $6,458,449 $5,358,056 $5,294,574 $4,547,242 $4,493,019 $7,473,083 $35,884,286 Total Sum of Participants 5,750 7,279 6,807 6,570 5,708 5,730 4,742 42,586 Total Sum of Summer Capacity (MW) Total Sum of Winter Capacity (MW) Total Sum of Energy (Annual MWh) 76,733 87, , , , , , ,748 Total Sum of Energy (Lifetime MWh) 941,434 1,085,789 1,322,328 1,187,307 1,196,544 1,412,519 1,347,726 8,493,648 Total Sum of Annual Avoided Natural Gas, Therms 171, , , , , , , ,809,105.6 Total Sum of Lifetime Therms 1,081,446 3,374,075 4,152,050 2,126,431 2,001,495 2,257,737 3,531,520 18,524,755 Total Sum of Total Benefits $131,157,978 $158,423,198 $223,481,964 $208,978,251 $197,107,503 $224,793,351 $219,276,410 $1,363,218, Summer Capacity (MW) ,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, ,000 0 Energy (Lifetime MWh) ,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0 Therms (Lifetime) Source: Mass Save Data

16 Small Business Turnkey Measure Mix Small Business Electric Measure Mix (2013) Small Business Electric Measure Mix (2016) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 6% 89% % Annual Savings Other HVAC & Controls Drives Refrigeration & Controls Lighting & Controls 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 6% 88% % Lifetime Savings Other HVAC & Controls Drives Refrigeration & Controls Lighting & Controls 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Small Business Gas Measure Mix (2013) 3% 12% 85% % Annual Savings Wx & Insulation Process, Food Service, & Other HVAC & Controls Hot Water 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Small Business Gas Measure Mix (2016) 35% 25% 38% % Lifetime Savings Steam Systems Process, Food Service, & Other Hot Water HVAC & Controls Wx & Insulation Source: 2015 Small Business Process Evaluation Source: Mass Save Data 16

17 Small Business Case Study 17

18 The Customer An Electronics Assembly Manufacturer in South East Massachusetts Location: South Easton, MA PAs: National Grid Electric & Columbia Gas ~100,000 kwh & ~20KW <5,000 therms ~$20,000 annual energy spend Building Size: 30,000 sqft Heating Source: Gas Cooling Source: Electric Hot Water Source: Gas Lighting: (171) 8 Ceiling 4L4 T-8 Fixtures, (18) 23 Ceiling 4L T5HO Fixtures 18

19 Customer Experience Electronics Manufacturer in South East Massachusetts Customer Interest /Acquisition Customer Calls the 800# Assessment Checklist Assessment Completed 4/6/2016 Inventoried existing lighting, HVAC Controls, and Hot Water systems Identified LED Lighting System, Lighting Controls, Faucet Aerators, & Tstats Proposal Development Customer Approval Presented to Customer on 4/18/2016 Met Customer Financial Criteria and Customer signed contract on 4/25/2016 Discuss options for capital financing Customer chose lump sum payment Proposal Installation Turnkey vendor coordinates the installation/subcontractors, etc. Installation started 6/28/2016 and was completed on 7/12/2016 Post Inspection QA Check performed by 3 rd Party Vendor on 4/25/2017 Cleanup & Disposal Document Universal Waste Lamps/Ballasts/Tstats/Etc (23) 4-foot boxes and (9) 5-gallon pails Available for pickup 7/12/

20 Turnkey Pathway Case Study Savings and Customer Decision Measure Lighting Controls Occ. Sensors LED Kit - 20W - HW Quantity Gross KW Savings Gross Savings (kwh or therms) , Cost Incentive Customer Copay Est. Annual Savings ($) LED Kit - 35W ,702 LED Kit - 142W ,836 LED Kit - 2L4 T8/LP Electric Totals Thermostat Multistage Faucet Aerators ,924 $29,836 $17,663 $12,173 $6, Gas Totals 200 $ $ $74.12 $240 20

21 Customer s financial decision to invest in EE Example Only Discount Rate: 10% Finance Rate: 10% Reinvestment Rate: 10% Inflation Rate 3% Financial Analysis of Efficiency Improvements Simulating Streams of Cash Inflows and Outflows SAMPLE ANALYSIS End of End of End of End of End of End of End of End of End of End of Today YR 1 YR 2 YR 3 YR 4 YR 5 YR 6 YR 7 YR 8 YR 9 YR 10 Date: CASH OUTFLOWS (after Date 0 rebates) $ Single investment (30,158) Phased investment Financed investment Subtotal $ (30,158) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Rebate/incentive rec'd at Date 0 1 $ 17,911 SUBTOTAL OUTFLOWS $ (12,247) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - CASH INFLOWS Energy savings $ 6,991 $ 7,201 $ 7,417 $ 7,639 $ 7,868 $ 8,104 $ 8,348 $ 8,598 $ 8,856 $ 9,122 Maintenance savings $ - $ - $ - $ - $ - $ - $ - $ - $ - Rebates/incentives considered "cash inflow" 1 SUBTOTAL INFLOWS $ - $ 6,991 $ 7,201 $ 7,417 $ 7,639 $ 7,868 $ 8,104 $ 8,348 $ 8,598 $ 8,856 $ 9,122 Annual Cash Flow $ (12,247) $ 6,991 $ 7,201 $ 7,417 $ 7,639 $ 7,868 $ 8,104 $ 8,348 $ 8,598 $ 8,856 $ 9,122 PV of Outflows (for SIR calculation) $ (12,247) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - PV of Inflows (for SIR calculation) $ - $ 6,355 $ 5,951 $ 5,572 $ 5,218 $ 4,886 $ 4,575 $ 4,284 $ 4,011 $ 3,756 $ 3,517 Cumulative Cash Flows Annual Present Value ($12,247.12) $6,355 $5,951 $5,572 $5,218 $4,886 $4,575 $4,284 $4,011 $3,756 $3,517 Cumulative Present Value NOTE THAT CERTAIN RETURNS VARY DEPENDING ON THE LENGTH OF THE ANALYSIS TERM 10-YEAR 1-YEAR 2-YEAR 3-YEAR 4-YEAR 5-YEAR 6-YEAR 7-YEAR 8-YEAR 9-YEAR 10-YEAR NPV $ 35,877 ($5,891.67) $59.35 $5, $10, $15, $20, $24, $28, $32, $35, SPP 1.8 ROI 57.1% IRR 59.4% -42.9% 10.4% 34.4% 45.9% 51.9% 55.2% 57.1% 58.2% 58.9% 59.4% MIRR 26.1% -42.9% 10.3% 24.8% 28.9% 29.8% 29.5% 28.7% 27.9% 27.0% 26.1% SIR NOTE 1: SIR calc removes any rebate/incentive received at Date 0 from first cost prior to calculating SIR. 21

22 Thank you 22