Transforming Utility Energy Efficiency Strategies Through

Regulatory Opportunities

April 3, 2017

Vicki Kuo

ACEEE

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Our Industry is Changing

Source: shuttstock via inhabitat.com

From a Traditional Model

To a Cleaner and Sustainable Model

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New York State: 50% Renewable by 2030

Source: Flickr

Energy Efficiency Assumed in NYS Renewable Goal

vs Current EE Efforts

Source: CES whitepaper; Con Edison analysis

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25

30

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'17 '18 '19 '20 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30

TWh Energy Efficiency

Required EE

Current EE Levels

Significant Energy Efficiency Required

Delivering Policy Objectives

-

100,000

200,000

300,000

400,000

500,000

600,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

We will double energy efficiency savings over three years

Energy Efficiency Savings (MWh)

Innovation Through Performance Incentives

• 5 Earnings Adjustment Mechanisms (EAMs):

EAMs

MWh MW DER

Utilization Customer

Load Factor Energy Intensity

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Enhancing Customer Experience

Source: Business Insider

Meeting Operational Needs with Energy Efficiency

10 Time

Load

Infrastructure

Capacity

Upgraded Infrastructure Capacity

Load Forecast

• Traditional distribution engineering approach: build capacity

based on forecast

Infrastructure

Capacity

• Non-wires alternative (NWA) approach: lower forecast

through customer energy efficiency to defer upgrade

Meeting Operational Needs with Energy Efficiency

11 Time

Load

Upgraded Infrastructure Capacity

Load Forecast

Load Forecast

with EE

Deferral

Infrastructure

Capacity

• NWA BONUS: Deferral yields flexibility in face of potentially

changing forecasts

Meeting Operational Needs with Energy Efficiency

12 Time

Load

Upgraded Infrastructure Capacity

Load Forecast

Load Forecast

with EE

Deferral

Updated Load

Forecast with EE

Additional Deferral

Thank You!

Appendix

Incentive Mechanics

Incentive Metric Achievement

Incentive

Payout

Minimum

Threshold Target

Maximum

Threshold

Minimum

Target

Maximum

No payment

under threshold

Incentive payment

increases with higher

performance

Incentive payment max – additional

performance not rewarded

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• DER Utilization promotes the penetration of DERs

• Measured in MWh (based on standard capacity factors)

Understanding the Incentives

DER Utilization

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Technology Measurement

Solar PV Production

CHP Production

Fuel Cell Production

Battery Storage Discharge and Consumption

Demand Response Reduction

Thermal Storage Consumption

Heat Pump Consumption

Electric Vehicles Consumption

Understanding the Incentives

Customer Load Factor

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𝐶𝑢𝑠𝑡𝑜𝑚𝑒𝑟 𝐿𝑜𝑎𝑑 𝐹𝑎𝑐𝑡𝑜𝑟 = 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐶𝑢𝑠𝑡𝑜𝑚𝑒𝑟 𝐿𝑜𝑎𝑑 (𝑀𝑊)

𝑃𝑒𝑎𝑘 𝐶𝑢𝑠𝑡𝑜𝑚𝑒𝑟 𝐿𝑜𝑎𝑑 (𝑀𝑊)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Ener

gy U

sage

(kW

)

Hour of Day

Peak Customer Load

Average Customer Load

Understanding the Incentives

Energy Intensity

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Energy Intensity

Residential

Commercial

= 𝑅𝑒𝑠𝑖𝑑𝑒𝑛𝑡𝑖𝑎𝑙 𝑘𝑊ℎ 𝑆𝑎𝑙𝑒𝑠

𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑅𝑒𝑠𝑖𝑑𝑒𝑛𝑡𝑖𝑎𝑙 𝐴𝑐𝑐𝑜𝑢𝑛𝑡𝑠

= 𝐶𝑜𝑚𝑚𝑒𝑟𝑐𝑖𝑎𝑙 𝑘𝑊ℎ 𝑆𝑎𝑙𝑒𝑠

𝑇𝑜𝑡𝑎𝑙 𝑃𝑟𝑖𝑣𝑎𝑡𝑒 𝐸𝑚𝑝𝑙𝑜𝑦𝑚𝑒𝑛𝑡