City of Boulder Meeting Kyoto -- Carbon Emissions Reduction: Commercial Lighting

City of BoulderMeeting Kyoto -- Carbon Emissions Reduction:

Commercial Lighting

August 2009 Slide: 2

Discussion OverviewState of Play

Project Overview - Analysis I Project Development and Goals

Model Review Energy Efficiency Model Development and Overview

Findings and Implications

Key Assumptions

Areas for Model Refinement

Derivation of Potential and Cost of Efficiency Technical, Economic and Achievable Potential

Cost of Efficiency Example Calculation

Levelized Cost of Energy

Questions and Discussions

State of Play


State of Play

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600000

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1000000

1200000

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1800000

2000000

2200000

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

GH

G E

mis

sio

ns

(mtC

O2)

Electricity Natural Gas Landfill Gas Vehicle Fuel Offsets

7% Below 1990

2004 Forecast

417,750 ton

gap

Current Forecast

City of Boulder Emissions Projections by Source

Project Overview


Project Inception Project Identification

Commercial sector poses a significant amount of energy efficiency potential Increasing energy efficiency in commercial buildings is among

the most cost-effective ways of reducing energy use and the associated carbon emissions

Project Development Project ID prompted the proposal and development

of a commercial energy efficiency potential model to: Determine the feasible range of delivered cost per

metric tonne of CO2 reductions

Determine the anticipated metric tonne reduction for a given investment


Analysis I - Delivered Price per mt CO2 Assessment

Analysis I set out to answer the questions:

1. What is Boulder’s cost for delivered CO2 (cost CO2/metric tonne reduced)?

2. What are each of the components that make up the delivered CO2 price?

3. How much CO2 reduction can be expected with a given investment?

4. What influence does industry type, building type, etc. have on CO2 price?


Analysis I - Approach Basis

Various energy efficiency potential studies and data sets exist Itron 2006 California Energy Efficiency Potential Study DEER (Database for Energy Efficiency Resources) NYSERDA’s 2003 study for New York State E-Source / Platts California Commercial End-Use Survey Others…

Integrate City of Boulder data Develop the model to reflect Boulder’s

Climate zone Building stock Energy mix Consumption projections Program Development Others…

Model Review


Model Overview


Analysis I - Findings Boulder’s Budget Required for Achievable Potential ≈

$480,000 (Boulder’s LCOE: $0.0035/kWh)

Boulder’s Achievable Potential Year 3 ≈ 9,000 mt CO2Total Boulder energy consumption in Year 3 = 1,118,452 MWh

Total Technical Energy Efficiency Potential in year 3 88,460 MWh

% of year 3 Commercial energy consumption 7.9%

% of year 3 Total City of Boulder System energy consumption 6.2%

Power 12 MW

Total Economic Energy Efficiency Potential in year 3 81,194 MWh 71,229 mt CO2 Budget category budgetLCOE($/kWh)

% of year 3 Commercial energy consumption 7.3%Boulder cost(PV, EM&V)

$3,782,440 $0.0035

% of year 3 Total City of Boulder System energy consumption 5.7% System $36.38 Xcel tech cost $11,328,406 $0.0102

Power 11 MW Boulder $3.96 Customer cost $19,315,757 $0.0182

Total Achievable Energy Efficiency Potential in year 3 10,422 MWh 9,126 mt CO2 Budget category budgetLCOE($/kWh)

% of year 3 Commercial energy consumption 0.9%Boulder cost(PV, EM&V)

$481,341 $0.0035

% of year 3 Total City of Boulder System energy consumption 0.7% System $36.38 Xcel tech cost $1,445,492 $0.0102

Power 1 MW Boulder $3.96 Customer cost $2,454,182 $0.0182

Total system budget required in Year 3

Technical Potential

$4,375,825

$34,385,815

Total system budget required in Year 3

Economic Potential

Achievable Potential

Cost of Carbon($/ mt CO2 reduced)

Cost of Carbon($/ mt CO2 reduced)


Analysis I - Findings Boulder’s Annual Budget Target = $400,000

=> Associated Annual CO2 Savings 8,300 mt CO2

Total Technical Energy Efficiency Potential in year 3 88,460 MWh



Power 4 MW

Total Economic Energy Efficiency Potential in year 3 81,194 MWh 71,229 mt CO2



Power 11 MW

Total Achievable Energy Efficiency Potential in year 3 9,477 MWh 8,314 mt CO2



Power 1.3 MW

Total System Budget Required

$34,385,815


Total System Budget Required

$3,640,677

Existing Commercial

Technical Potential

Economic Potential

Year City of Boulder Budget

Total System Budget

Achievable Potential Towards Target (mt CO2)

Percent of Total Load

Year 1 $368,509 $3,354,060 7,878 0.6%

Year 2 $400,000 $3,640,677 8,408 0.7%

Year 3 $400,000 $3,640,677 8,314 0.7%

Year 4 $400,000 $3,640,677 8,309 0.7%

Year 5 $400,000 $3,640,677 8,193 0.7%

Year 6 $400,000 $3,640,677 8,204 0.7%

Year 7 $362,500 $3,299,367 7,590 0.6%

Year 8 $183,338 $1,668,686 3,770 0.3%

Year 9 $77,079 $701,546 1,534 0.1%

Year 10 $29,957 $272,661 566 0.0%


Analysis I - Findings Boulder Lighting Energy Efficiency Potential by

Building TypeMWh savings by building type and end-use

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4,500

Small O

ffice

Larg

e Offi

ce

Reta

il

Health

Scho

ol

College

Misc

Restau

rant

Hotel

Groce

ry

MW

h s

avin

gs c

um

ula

tive t

o T

arg

et

Year

Refrigeration

Misc

Lights

HVAC

Cooking


Analysis I - Findings Boulder’s Program Administration Costs

Model Baseline ≈ 11% of measure costs Analysis - 1%

Project Management - 3%

Strategic Positioning - 2%

Sales - 4%

Education an/Outreach - 1%

Compare to utility Demand Side Management/EE Programs

PA Costs modeled in range of the national average (10-18%) but above "best-in-class" utilities, which have more experience running programs than does the City of Boulder PG&E SCE SDG&E CA Total Other Utilities

Gross Program Costs $8,916,986 $15,762,067 $4,390,326 $29,069,379Net Measure Costs $299,159,822 $359,197,092 $115,383,448 $773,740,362Gross Incentives $94,911,995 $99,328,120 $37,375,867 $231,615,982

Program / Measure 3% 4% 4% 4% 10-18%Incentives / Measure 32% 28% 32% 30% 40-70%


Analysis I - Implications Commercial lighting has significant EE potential

Boulder’s building stock is well positioned (i.e. significant savings from a few building types)

Small Office, Large Office, Retail and Health Care ≈ 87% of Achievable Potential

Targeted commercial EE can provide measurable and verified emission reductions

Cost sharing makes the commercial EE options more appealing for all stakeholders

Multi-party appeal

Understanding market segmentation will be critical for program development and sustained emission reductions.


Analysis I - Implications System-wide Levelized Cost of Energy (LCOE) at

$0.032/kWh, is comparable to leading industry analyses.

City of Boulder’s Cost of Carbon at $3.96/mt CO2,

is significantly less than worldwide carbon market cost of carbon (e.g. EU ETS at ≈ $20.8/mt CO2 on

Aug 18, 2009)

Achievable lighting efficiency has the potential to reduce overall commercial lighting energy use by 5%*

Achievable lighting efficiency has the potential to achieve nearly 12%* of Boulder’s commercial emissions reduction goal

* Based on conservative Achievable Potential and “Ramp-up” percentages. Includes all energy savings from year 1, 2 and 3


Key Model Assumptions Data set corrects for any measure double counting

(i.e. measure XX negates the savings potential from measure YY)

Only readily available commercially implemented and proven measures included in model (i.e. no singular or extreme cutting-edge technologies)

System Consumption Projections: ≈ ½ % per year growth

Cost of CO2 offsets: $20/mt CO2

Boulder Discount Rate: 2.04%

Ratepayer Discount Rate: 3.0%

Boulder’s Program Administration Costs: 11%


Areas for Model Refinement As data becomes available:

Program Administration Costs Sales, Analysis, Project Management, etc.

Utility and Federal Incentives Achievable Potential

Boulder’s technology saturation, customer acceptance, etc.

Achievable Potential Ramp-up Investment/Benefit change over time

Lighting Technology cost Anticipate reduced costs as technology

gains mainstream market acceptance

Derivation of Potential and Cost of Efficiency


Technical Potential

Boulder Building Stock

• Energy consumption forecast

• Commercial energy use break down by building type (sources: CBECS, Boulder)

• End use breakdown by building type(sources: PLATTS, CEC CEUS)

Efficiency Measure Data(by building type and climate zone)

• Measure lifetime• Annual savings (kWh/unit)• Measure cost ($/unit)• # of units in building type

To

p d

own

Bo

ttom

up

Technical Potential


Economic Potential

Total Resource Cost (TRC) =

System Avoided Costs

System Costs

TRC< 1

> 1

Not included in Economic Potential

Economic Potential (kWh/year)

Customer:Avoided retail rate

of electricity

Xcel:avoided cost of generation or

wholesale purchase price

City of Boulder: avoided cost of

carbon offset

System Avoided Costs

Customer:Measure costs,

net of rebate

Xcel:rebate, lost revenue

City of Boulder: Program administration

costs

System Costs



EconomicPotential(kWh/year)

Achievable Factor (% achievable, by end

use and bldg type)

Achievable Ramp-Up Factor (% achievable by year)

x x=

CO2 Intensity(m tons CO2/kWh)x =

Achievable Potential (kWh/year)

Achievable Potential (kWh/year)

Achievable CO2

Savings(m tons/year)


Derivation of Cost of EfficiencyExample: Occupancy Sensor in Small Office

Source data for cost and performance of efficiency measures: Itron’s 2006 report “California Energy Efficiency Potential Study”Each measure defined as:

Example for City of Boulder:

Technology Occupancy sensor - plug load

End-use Lighting

Building type Small Office

Climate zoneCalifornia Energy Commission Climate Zone 16 (“high, mountainous, semiarid region above 5,000 feet in elevation”)


Derivation of Cost Example: Occupancy Sensor in Small Office

*Program Administration (PA) costs defined as % of measure capital cost:

Analysis (1%) Project Management (3%) Sales (2%) Strategic Positioning (4%) Education / Outreach (1%)

Efficiency Measure/Bldg. Type

Occupancy Sensor/Small Office

Measure energy savings per year 789 kWh per year per unit

Measure cost $169.20 per unit

Measure lifetime 8 years

City of Boulder Data Used for Cost Analysis:

Discount rate 2.04%

Program administration costs* Total of 11% of measure cost



Levelized Cost of Energy (LCOE) is the lifecycle cost of a measure, amortized over the measure’s lifetime, divided by the measure’s lifetime energy savings.

LCOE = [PMT(1) (measure cost + PA costs, @ Boulder’s discount rate, measure lifetime)]

[(energy savings/year) × (lifetime)]

Occupancy sensor in small office:

LCOE = [PMT(1) ($169.20 + (11% × $169.20),

@ 2.04%, 8 years)]

[(789 kWh/year) × (8 years)]

= $0.033/kWh

(1) PMT is a function that calculates the payment for a loan based on constant payments and a constant interest rate, using the present value of all future payments, the interest rate, and the number of payments (years) for the loan.

measure cost PA Costs

discount rate lifetime

energy savings/year lifetime

$ 25.96788.9 kWh

=



How does this compare to the levelized costs of the rest of the measures modeled?

Energy Efficiency Marginal Cost Curve

$0.000

$0.020

$0.040

$0.060

$0.080

$0.100

$0.120

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000

Cumulative Savings per Unit (kWh)

Leveli

zed

Cost

of

En

erg

y (

LC

OE)

- $/k

Wh

$0.033/kWh

Measures costing more than ≈$0.12/kWh are not economic ($0.12 = customer rate + city's avoided cost of CO2 offset alternative)


System Cost Breakdown

Xcel Costs =

Customer Costs =

Boulder Program Administration Costs = % of Total Measure Cost

Units Installed x Measure Cost per Unit —

Units Incentivized x Incentive per UnitIncentive

Cost =

Incentive Cost

Overall costs are further broken down by stakeholder:

Thank You!

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City of Boulder Meeting Kyoto -- Carbon Emissions Reduction: Commercial Lighting