DOE Technical Assistance Program The Parker Ranch installation in Hawaii Interactions between Energy Efficiency Programs Funded Under the Recovery Act and Utility CustomerFunded Energy Efficiency Programs April 28, 2011 Charles Goldman, Ian Hoffman, Elizabeth Stuart Lawrence Berkeley National Lab 1 | TAP Webinar eere.energy.gov What is TAP? DOEs Technical Assistance Program (TAP) supports the Energy Efficiency and Conservation Block Grant Program (EECBG) and the
State Energy Program (SEP) by providing state, local, and tribal officials the tools and resources needed to implement successful and sustainable clean energy programs. 2 | TAP Webinar eere.energy.gov How Can TAP Help You? TAP offers: On topics including: One-on-one assistance Extensive online resource library, including: Webinars
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Upcoming Webinars Please join us again on upcoming webinars: Residential Retrofit Program Design Guide Overview Host: TAP Team 4 - VEIC Date: May 3, 2011 Time: 2:00 3:30 EDT For the most up-to-date information and registration links, please visit the Solution Center webcast page at www.wip.energy.gov/solutioncenter/webcasts 6 | TAP Webinar eere.energy.gov Interactions between Energy Efficiency Programs Funded under the Recovery Act and Utility Customer-Funded Energy Efficiency Programs
Lawrence Berkeley National Laboratory Charles A. Goldman, Elizabeth Stuart, Ian Hoffman, Merrian C. Fuller and Megan A. Billingsley March 2011 Outline Study Approach Overview of utility customer-funded and Recovery Act-funded energy efficiency programs Results of analysis in 12 case study states Case study examples Recommendations 8 Research Questions How have the administrators of these two
sources of EE program funds interacted? What impacts did these two types of program administrators have on planning & design of one anothers programs? To what extent has the attribution of energy savings been a critical issue? What implications might these interactions have for the future of energy efficiency? 9 Study Approach Focus on the SEP, EECBG and SEEARP programs - $6.6B total Most to be spent in 3 years (by September 2012) Not included: DOE low-income Weatherization Assistance Program
EECBG funding awarded directly to over 2,200 cities, counties and tribes Competitive EECBG funding (e.g., Better Buildings grants) Focus on program design and funding choices made by state energy offices in 12 case study states California, Colorado, Florida, Hawaii, Maine, Massachusetts, Michigan, Minnesota, New York, North Carolina, Oregon and Wisconsin Interviews with more than 80 energy efficiency actors 10 Overview of Utility Customer-funded and Recovery Act-funded Energy Efficiency Programs 11 Utility Customer Funding Nationally (2010 - 2020)
2010 Utility Customer-Funded Budget Total $5.5B Empty text box for covering 2020 Utility Customer-Funded Budget Estimate $7.5B - $12.4B Emptytext textbox boxfor forown one Empty 12 State Energy Program Budgets - National Trends
13 SEP Funding for EE in Buildings SEP energy efficiency funding ($ million) for buildings by market sector for 50 states, five territories and the District of Columbia 36 states budgeted $775M in programs targeted to public/institutional buildings Multiple sector programs can include just C/I or all sectors 14
Programs with Lasting Impacts Financing programs have the potential to provide longevity, and flexibility and leverages Revolving Loan Programs (RLF) More than $650 million Loan Loss Reserves (LLR) More than $20 million Workforce training & development Codes and standards 15 Revolving Loan Funds Thirty-five states have established 51 RLFs with over
$650 million in ARRA funds: Target Sectors for ARRA-funded RLFs Quick to set up, which met federal requirements for commitment of Recovery Act funds by 2010 44% for and industrial, commercial, and small business 37% for public/institutional markets Only 7% targeted at the residential market 16
Longevity of Revolving Loan Funds LBNL estimates that RLFs could finance $150-200 million per year of energy efficiency projects over the next 20 years. 17 Loan Loss Reserve Funds At least 7 states and local governments also created loan loss reserves (LLRs): More than $20 million to support lending for energy efficiency projects Loan loss reserve funds will not have the longevity of RLFs but provide significant immediate leverage of private funds Utility customer-funded programs may want to consider similar financing programs once they have been tested with ARRA funds 18
Workforce Training and Development 18 states invested over $54 million in workforce development and training for the energy efficiency services sector and renewable energy industry Spending on Workforce Training and Development by State Significant potential for spillover benefits for utility customer-funded programs
19 Program Diversity, Exploration & Interaction in the States Budgets for 12 Case Study States Utility Customer Program Budgets in Case Study States by Sector 1 year Selected ARRA Budgets in Case Study States by Sector 3 years 21 Innovation in Markets & Technologies States targeted efficiency programs towards new markets, technologies, and geographic regions: New Sectors
New Geographic Areas HI (hospitality) CA, CO (rural areas) NY, NC HI (non-IOU (nonprofits) territory) HI, ME (transitcentric planning) New Program Actors New Technologies & Policies CA (regional entities, counties)
MI (local governments) MN (cities, local government authority) NY(cities) WI (small towns) HI (deep seawater air conditioning) ME, MA, MI (multi-fuel retrofits) NY (reprogramming utility software for on-bill financing) NC (new manufactured housing) 22 Interaction and Coordination Among Program Administrators
Spectrum of Coordination In the 12 case study states there was a broad spectrum of coordination between state energy office & utility customer-funded program administrators They engaged in consultation with utility customer-program administrators but decided not to coordinate their programs Complementary Recovery Act-funded programs were designed as enhancements, extensions or enablers of utility customer programs Administrators tried full collaboration in designing and implementing joint programs Communication or consultation on programs Complementary programs Full collaboration FL, MN, NC, NY, WI, CA
CA, CO, FL, HI, MA, ME, MI, MN, NC, NY, OR HI, CA, ME, MA, MN 24 Benefits of Coordination Coordination between ARRA- and utility customer-program administrators offers potential benefits: Allows administrators to leverage existing resources, infrastructure and experience Both types of program administrators can influence program targeting, design and implementation issues to mitigate market disruption and consumer confusion Joint programs can have a broader support base than either taxpayer or utility
customer programs on their own and may increase the longevity of programs Different administrators and funding sources can serve complementary purposes better suited to their skills and objectives 25 Observed Divisions of Labor Utility Customer-Funded Program Administrators SEO ARRA-Funded Program Administrators Rebates
Revolving loan funds & other financing Marketing & outreach: State & Service Territory Marketing & outreach: State & Local Access to customer bills
EM&V Innovation & exploration of new or underserved markets Workforce training/development Workforce training/development
Credit enhancements 26 Decision Factors for Complementarity & Collaboration Utility Customer-Funded Program Administrators State ARRA-Funded Program Administrators Credit for savings? Leverage of other funds, expertise & infrastructure Leverage of funds & savings
Program sustainability Manage market confusion Relief from CE constraints Narrow objectives, e.g. energy savings Interpersonal/interagency relations Interpersonal/interagency relations Autonomy/Compromise Autonomy/Compromise Fed. requirements/uncertainty Favors coordination Depends - Could go either way
Broad objectives, e.g. job creation, econ. Development Delays in Resolving Fed. Requirements vs. Deadlines for Spending Does not favor coordination 27 Examples from the Case Studies What did states do? Hawaii: Mutual Benefits & Objectives Matter More Than Size Hawaii State Energy Office (HSEO)
Staff: ~12 SEO wanted 3rd-party administrator expertise, delivery infrastructure RP admin wanted to manage market impacts Joint programs took work
Fridge recycling: >200 units/day Solar Hot Water Heater Financing Customer Behavioral Feedback 29 California: Coordination Benefits & Costs Potentially competing mandates - statutory (CEC) vs. regulatory (IOUs) - for statewide home energy upgrade programs Risk of two statewide programs Redundancy, recipe for consumer confusion ARRA programs have financing but little or no rebates
Utility programs have rebates but no financing Now Energy Upgrade California: one brand, one-stop web portal, one clearinghouse for financing (in development) Experience to date: Very labor intensive Slow lots of moving parts Diffuse decision making 30 Colorado: Complementarity Through Scaled Incentives Colorado SEO sought to boost residential efficiency market where utility customer incentives were modest SEO created 40% cap & adjusts own incentives
Statewide system tracks all ARRA projects and sources of funding (including tax credits) 31 Northeast: New Multi-Fuel Programs Maine: SEP funds envelope measures in oil-heated buildings Massachusetts: SEP provides boiler/heater rebates for moderate income families. Local EECBG programs support thermal measures in oil-heated buildings ARRA programs laid groundwork for future fuel oil EE programs Developed workforce infrastructure, gained experience with new measures Proposed legislation in both states includes new PBF for fuel oils Maine: HP 801, LD 1066 would establish new assessment on heating fuels Massachusetts: H00879 would establish Oil Heat and Propane Energy Efficiency Fund
32 Minnesota: Creative RLF Use in Industrial EE Collaboration Commercial/Industrial Revolving Loan Fund Trillion BTU program enlisted an experienced finance program administrator: St. Paul Port Authority Leverages funds from largest IOU and local economic development agencies Utility heavily subsidizes audits and engineering studies Projects designed to create immediate cash flow for companies positive Diverse portfolio of projects E.g., foundries, hospitals, office towers
33 Wisconsin: Economic Stimulus Through Cleantech & Industrial Efficiency RLFs State Office of Energy Independence sought bigger projects, more economic than energy efficiency focus MOU with WI Department of Commerce for 3 RLFS with 2% interest rate and minimum cost share of 75% Greater production of cleantech goods Retooling Rust Belt manufacturing for cleantech Increased energy efficiency or onsite renewable generation at factory Example loans PV component manufacturer & PHEV battery maker increasing production Auto-parts maker retooling for wind turbine parts
Cheese maker converting whey lactose into methane for process heat 34 Implications for the Future Challenges & Recommendations Ongoing Challenges Varying program goals ARRA goals of job retention and creation were not aligned in some cases with utility customer-funded program primary goals of energy savings and market transformation Short-term infusions of cash not necessarily supportive of long-term market transformation Time and capacity limits Tight deadlines required unprecedented ramp-up from state and federal program
administrators Uncertainty over Recovery Act statutory requirements limited coordination with utility customer-funded programs Fully integrated utility/ARRA programs would need to meet all ARRA obligations 36 Attribution of Savings & Impacts Attribution is a critical issue for utility customer program administrators with performance incentives or Energy Efficiency Resource Standards Some states have not settled on exactly what to report and how to attribute savings A number of case study states have decided to give full credit for any savings achieved to the UC administrator, others have decided to give proportional, or strictly separate, the credit based on funding source/amount More refined state and utility reporting guidance could produce consistent approaches to estimating energy savings impacts claimed by multiple program administrators Progress toward EERS compliance by utility administrators may be accelerated by federal
taxpayer dollars Full credit of savings to UC administrator CA, FL, MA, MI, MN, NC Proportional credit of savings to UC administrator Strict separation of ARRA & UC savings Unresolved HI, ME, WI
NY CO, OR 37 Recommendations for Existing Programs Track and share the performance of revolving loan fund programs that will last well beyond the ARRA time frame Assist SEOs in retargeting RLFs on more credit-challenged markets (e.g., residential, small business). Preserve the capacity, lessons learned, and practical know-how being developed at the state and
local level 38 Recommendations for Existing Programs Energy code updates and compliance efforts Recovery Act energy grants came with the expectation that states would implement the latest residential and commercial energy codes Evaluators may want to assess whether the level of SEP investment and effort in states to update their codes is consistent with meeting the Recovery Acts requirement to adopt the latest energy codes
39 Recommendations for Future Programs Funding for innovative EE pilots by states, localities Utility customer-funded programs are bound by cost effectiveness, regulations, the aversion of shareholders to certain activities and risks With SEP funding, states piloted programs in unserved or underserved markets and explored new technologies Continued support could establish SEOs as innovators, testing out new programs for adoption into utility customer-funded portfolios Resource-efficient loading order at the project level A loading order that encourages or requires customers to implement cost-effective efficiency measures prior to installing renewable energy systems should be evaluated as a best practice 40
Contact: Charles Goldman Lawrence Berkeley National Laboratory [email protected] 510 486-4637 URL: http://eetd.lbl.gov/ea/emp/emp-pubsall.html
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