Takeaways from Building Systems Efficiency Case Studies

Themes in the Evolution of Utility Programs

Incentive programs are becoming more comprehensive. Programs are incorporating energy efficiency measures through a process-oriented framework, rather than as a one-time installation.

Pay-for-performance programs set the stage for more creative, systems-level energy efficiency measures. The evolution toward system-level efficiency incentives coincides with the development of performance-based program models, such as Seattle City Light’s Deep Retrofit Pay for Performance Program. Systems efficiency improvements are more likely to be demonstrated within a program that gives participants greater rewards for achieving deeper energy savings, rather than a program that prescribes equipment. Although participants in the programs featured in the case studies are not required to improve the performance of multiple systems, multi-pronged strategies to energy management are encouraged within each program’s educational resources.

More comprehensive programs are often geared toward larger customers. As utilities explore more comprehensive programs, greater administrative resources are often required for customer support. In addition, a utility may need to offer larger incentives to customers – compared to equipment rebate programs – so that customers have resources to hire more experienced contractors with systems-level expertise. The incentive structure and its impact on participation must be considered within the utility’s cost-benefit analysis of the program. As a result, utilities generally target larger and more energy-intensive customers, which helps justify the added expense of program administration. These more comprehensive, systems-level programs are also of special interest to industrial customers, which often have fewer options to participate in traditional equipment rebate programs. However, packaged program resources, such as those supplied by LBNL’s Getting Beyond Widgets project, have the potential to reduce administrative costs and broaden the typical range of participant targets beyond large customers.

As programs evolve, utilities are increasingly offering incentives for peak demand reductions and demand response alongside incentives for total energy savings. Emerging control technologies and smart grid connectivity are enabling demand response capability/load flexibility; this means customers can react dynamically to utility signals to mitigate their energy consumption during peak periods while the customers’ buildings themselves serve as distributed energy assets for the grid. CHP and energy storage programs that are geared toward reducing peak demand also provide customers with the added value of greater reliability and enhanced energy management tools.

One of the challenges to incentivizing peak demand reductions is the need for greater use of key technology enablers. For instance, advanced metering infrastructure (AMI) is a key enabler of grid interactivity, and although AMI deployments are increasing rapidly, they made up just over half of the total installed stock of meters in 2018. Also, ACEEE investigated the status of emerging deployments of utility programs that support grid-interactive efficient buildings (GEB) and found that “No standardized method currently exists for valuing grid benefits, and even if it did, many utilities lack the infrastructure and IT expertise to benefit from the most valuable services.” Further research and development will be needed, such as the ongoing work in the U.S. Department of Energy’s GEB Initiative, to develop the tools required to incentivize and measure the value of two-way building-to-grid interactions.

Key Ingredients for Successful Programs

Peer-to-peer networking can keep existing participants committed and encourage prospective customers to participate. Program success stories shared by peers can be far more meaningful to participants than similar information shared by a utility. The programs highlighted in the case studies that have facilitated peer-to-peer engagement have enabled customers to share lessons learned, resulting in greater confidence in the programs.

Customers require significant technical support and advice throughout program participation, which ESCOs can help provide. The average customer lacks the resources required to explore how to maximize benefits from systems-level energy efficiency measures. Engaging customers in programs that require greater complexity beyond equipment upgrades can thus require significant hands-on support. Utilities that do not have the in-house resources for such customer support can leverage ESCO expertise to:

• Help customers understand the energy and cost savings achievable at their facility through the program;
• Help customers navigate the program with the best fit for them;
• Present customers with creative energy efficiency strategies to maximize the incentives available through the program; and
• Provide optional financing mechanisms, including financing that guarantees savings.

As demonstrated in Entergy Arkansas’s Large Commercial & Industrial Program, ESCOs can play a key role in marketing a program, increasing participation, and maximizing savings. Keeping ESCOs engaged in systems-based energy efficiency programs—including clear communication to ESCOs regarding the program benefits and requirements—can reap positive outcomes for many stakeholders: more projects for ESCOs, greater savings for customers, and less grid stress for utilities.

Addressing Barriers in Program Implementation

Program success requires stakeholder coordination and communication of the program benefits and strategies.

Market barriers, ranging from educational needs to lack of labor/expertise and capital resources, can cause customers, vendors, installation contractors, ESCOs, and program implementers to be reluctant to take a perceived risk on a new technology or new program. These challenges, if left unaddressed, can outweigh the prospect of added energy savings. The keys to program success fell into two categories: 1) the “why” —making the benefits clear; and 2) the “how” —simplifying the steps for participation.

Based on themes identified across case study interviews, possible topics to incorporate into program guidance include:

1. The “why:” Implementers cannot take for granted that the benefits of systems-level strategies are widely known. It is important to make a clear case for investing more upfront to achieve greater long-term savings, especially when a program requires customers to go above code requirements. Key program benefits to highlight within program guidance include:

• The greater savings achievable from system-level measures, in comparison to savings from a component-level measure for the same building system.
• The co-benefits of greater energy savings, e.g., comfort, convenience, safety, resilience, reliability and reduced carbon footprint.
• Economic and operational benefits of systems efficiency, which help address the perceived risk associated with new technologies among vendors, installation contractors, and ESCOs. When these stakeholders are confident in the program benefits, they will promote them within their customer networks.

Examples of program guidance materials for the “why” include:

• A brochure on energy and cost savings potential.
• Cost-effectiveness software tools tailored to a utility’s rate structure and incentive offerings.
• Workshops for customers, installation contractors, and/or ESCOs to learn from utility program managers about benefits and have the opportunity to ask questions.
• Presentation templates to demonstrate the costs and benefits of participation for customers to present to their company’s management team.

2. The “how:” Clarifying the steps for participation to all stakeholders:

• Where possible, align processes and metrics used in systems-level and component-level energy efficiency programs to ease the administration burden at the utility and increase user-friendliness for participants.
• Educate installers and ESCOs on the relevant equipment specifications, control configurations, and installation procedures by building type.
• Integrate standardized practices for installation, operations, and maintenance into the program. Installation contractors and ESCOs may be hesitant to work with new technology if it requires unfamiliar processes for installation or maintenance or is not interoperable with pre-existing equipment.
• For entities interested in promoting new ideas for incentive programs, e.g., utility associations, national laboratories, or energy efficiency advocates: Provide guidance for utilities to administer the program in digestible stages.

Examples of program guidance materials for the “how” include:

• Equipment lists within Technical Reference Manuals (TRMs) or “cheat sheets” that detail the types of equipment required, the configurations possible and associated efficiencies, the installation process.
• A reference list of contractors and ESCOs experienced with systems-level projects.
• Hands-on demonstrations of a new technology’s installation process and configuration of controls—performed by utility staff, program implementers, or a third-party expert such as a national laboratory—for vendors, installation contractors, and ESCOs.
• Roundtables or workshops for utilities to facilitate conversations among stakeholders to help reconcile what manufacturers are recommending, what contractors are specifying, and what the utility is promoting.