Page 80 - North American Clean Energy January February 2018 Issue

energy efficiency
Clean Energy Future
and Valuation of
Energy E iciency
California and New York lead the way
by Carmen Henrikson and Bob Callender
For all the excitement these days over the boom in renewables like wind and solar, and the growth of distributed “clean energy” systems, one truth that never changes is that the cleanest energy is the energy you never have to use.
As major shifts cascade across the energy industry, a key question stakeholders are asking is, “How does the energy industry generally, and utilities and rate regulators speci cally, best value and procure energy e ciency when and where it is needed on the grid?”
As with so many aspects of state energy policy today, California and New York led the nation in tackling this question head-on in 2017. Both states are directing billions of dollars in new investments into clean energy, while also placing a high priority on development of new approaches to buying energy e ciency.
Rethinking energy e iciency procurement
For years, and in some areas decades, energy e ciency has typically been paid for through rebates and subsidies. For example, $10 coupons for buying energy-e cient light bulbs, or $200 rebates for upgrading to a high-e ciency water heater.
In California and New York, however, that era appears to be coming to a close. Both states are aggressively shifting towards procurement models that encourage the private sector to take on the delivery of e ciency through innovative technologies, performance-based programs, and nancing initiatives.
In many states that have administered long-standing energy e ciency rebate programs, much of the low-hanging fruit has been picked; rebate programs are seeing diminishing returns. e traditional rebate model is proving decreasingly cost-e ective in achieving deeper savings across diverse customer classes.
At the same time, technology development in the form of devices such as programmable communicating thermostats and advanced control systems, is advancing faster than government-designed rebate programs ever can. Customers are demonstrating a powerful appetite for engagement, choice, and satisfaction, as new technologies like smart thermostats and electric vehicles impact the cost and convenience of energy. For the utility grid, e ciency and other behind-the-energy- meter resources have the potential to o er greater value through active demand management, to relieve localized and system constraints.
New York’s Energy Vision
Increased energy e ciency and related programs, like demand response to curb electric demand during periods when wholesale electric prices are spiking, are pillars of both New York’s and California’s push to meet aggressive green energy mandates. Both states have adopted a standard of getting 50 percent of their energy from renewable/clean sources by 2030. In the longer term, New York aims to reduce the 1990 levels of statewide greenhouse gas (GHG) emissions by 40 percent by 2030, and 80 percent by 2050.
e state also announced an initiative to invest up to $1.5 billion in major renewable
energy projects. It would be the largest clean energy procurement by any state to date. e New York State Energy Research and Development Authority (NYSERDA) and New York Power Authority (NYPA) plan to invest up to $1.5 billion in wind, solar, large- and small-scale hydro, fuel cells, and other technologies - including 2.5 million megawatt- hours of renewably generated electricity.
New York State Public Service Commission Chairman John B. Rhodes said: “ e Clean Energy Fund allows the State to make faster and greater progress towards Governor Cuomo’s State Energy Plan and Clean Energy Standard goals, while reducing ratepayer collections. It also creates the demand for clean energy and the certainty we need to accelerate the growth of a dynamic clean tech economy that stimulates private investment and job creation.”2
New York’s 2050 goal for 50-percent year-round renewable energy represents nearly a doubling from current levels. But, as National Grid New York President Kenneth Daly has observed, “ e only way to achieve stretch goals is to set them.”
At the same time, New York is pursuing bold changes in energy e ciency. Consolidated Edison, for example, is moving the cost of energy e ciency (now paid for by a system bene t charge) into its rate base. is approach re ects the philosophy that e ciency shouldn't be an add-on or afterthought to buying energy, but rather get fully evaluated as utilities are determining how much energy they need to buy for their customers, and from what sources.
ConEd has also established a new position, Vice President of Distributed Resource Integration–Matt Ketschke, who lls that position, said: “ ey established my job speci cally to think about, as we evolve the
business model, and as we get more and
more grid edge resources out there, what's going to have to change.”3
Walter Rojowsky, an energy and utilities consulting expert with PA Consulting, said: “ e transition to the next generation utility system will be made through the actions
of the utility, vendors, investors, and customers, and the New York Public Service Commission has created a collaborative process that includes all of these parties.”
California’s Carbon Revolution
California addresses the e ciency evolution in a more distributed manner; more than 10 active proceedings in multiple state agencies in uence how e ciency will be planned for, procured, measured, and evaluated over the next 10 years. In 2016, California passed SB32, calling for a 40 percent reduction in greenhouse gas emissions (from 1990 levels) by 2030. One year earlier, California’s SB 350 established a goal of doubling energy e ciency and increasing the renewable energy portfolio to 50 percent by 2030.
Achieving even one of these goals will require a major shift from the status quo, as Governor Jerry Brown has previously acknowledged. “ is is going to be a long march to transition the entire modern world to a decarbonized future,’’ he said.4 “Taking carbon out of the modern economy requires heroic e orts and tireless struggle. SB 350, in both e ciency and renewable energy, ratchet up the California commitment. We have the technological means and now we have the legal mandate to reduce carbon pollution.”5
Andrew McAllister, a commissioner with the California Energy Commission,
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“ e utility of the future is going to be more of a service provider, providing reliability, providing technical help, providing e ciency, and coordinating distributed generation with wholesale power,” says Steve Isser, President of Energy Law and Economics President, a boutique consulting rm.1