The LGEA Program will provide incentives up to $100,000 per fiscal year, per local government agency to subsidize the cost of the energy audit.

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1 Program Planning Committee: Program Review Template Program Name: Local Government Energy Audit (LGEA) PROGRAM DESCRIPTION The Local Government Energy Audit Program provides incentives to subsidize the cost of an energy audit for eligible facilities owned by municipalities or other local government agencies, as well as New Jersey State Colleges and Universities. The LGEA Program is also open to select nonprofits that are exempt from taxation under Section 501 (c) (3) of the Internal Revenue Code. The application process follows the following steps: Applicant completes and submit a Registration Form Applicant completes and submits a draft version of the Request for Proposals to TRC for approval. After receiving approval from TRC, send the final version of the RFP to ALL of the prequalified energy auditing firms. Applicant evaluates the proposals, selects a firm and submits selection to TRC for approval. Following approval, applicant executes contract with the approved firm and schedules audit of the building(s). Applicant submits completed audit to TRC for approval. Once TRC has reviewed and approved the audit report customer can apply for incentive. Applicant then can use the Energy Audit Report to guide you in energy-efficient projects and use New Jersey's Clean Energy Program to offset the costs of those projects. Enjoy energy savings The LGEA Program will provide incentives up to $100,000 per fiscal year, per local government agency to subsidize the cost of the energy audit. Participants in the Local Government Energy Audit Program will be able to take advantage of incentives available under existing New Jersey Clean Energy incentive programs to implement specific measures recommended in the energy audit PROGRAM GOALS AND OBJECTIVES The table below outlines the Fiscal Year 2015 Goals for the Local Government Energy Audit program. There are no savings goals associated with this program. Goals are based on the number of energy audits completed. There is no energy savings associated with this program. All savings would be achieved through the implementation of recommended energy efficiency measures. Program FY 2015 Audits Completed Annual kw Committed Annual MWh Committed Annual DTh Committed LGEA 133 N/A N/A N/A FY 15 LGEA Program Goals 1

2 Current program progress against the goals depicted above can be found in Section 3 of this document. In addition, the LGEA program s goal is to make it economically feasible for local government entities to have an energy audit conducted in their facilities Program Benefits While the primary purpose of the program is to achieve the goals outlined above, the program creates several ancillary benefits for both the state and community. Some of these benefits include the following: Whole Building The nature of an energy audit is to evaluate the entire facility and identify areas needing improvement. The audit will identify areas or measures requiring the most attention as well as the low hanging fruit so the customer knows where to start with measure implementation. 2.2 Target Market The target market is the 566 municipalities, 21 Counties, and Public School Districts in New Jersey. Success will be determined in reaching a large percentage of these groups as well as many in the nonprofit sector. 2.3 Market Barriers Municipalities can and have addressed their energy needs by participating in the Direct Install Program which does include a simpler audit to identify energy efficiency measures. This can cause some confusion regarding the need for and LGEA. Need to better educate potential users of LGEA that this should be a first step before using other programs as it helps to establish a plan and prioritize energy efficiency measures, Many local government agencies do not have staff with experience in energy management. They are often unfamiliar with the technologies available, the potential for energy savings or the OCE program incentive to implement these measures. The energy audit provided by the LGEA program is helping to address these barriers Addressing Market Barriers Coordination with Sustainable Jersey to target marketing and education efforts Improved coordination with ESIP Program Managers at BPU Identify other opportunities to reach local government representatives to inform them of program opportunities. 2.4 Scale of Market Intervention The planned scale of market intervention for this program is full statewide implementation within the local government sector (including schools) as well as eligible nonprofit entities. 2

3 3. 3. HISTORIC PROGRAM RESULTS The Local Government Energy Audit Program provides incentives to customers in a specific segment to subsidize the cost of an energy audit. The program does not have direct energy savings goals since it is unclear if a customer will implement the energy efficiency measured identified in the audit. The tables below show the program results for a portion of the past two fiscal years of the program. The first table includes the number of participants who received incentives and the program expenditures; the second table show the outstanding commitments. Since the LGEA program only provides incentives for energy audits the energy savings fields read N/A. Time Period Fiscal Year 2014 (July June 2014) Fiscal Year 2015 (July June 2015) (Data Through Dec ) Participants MW MWh DTh Incentives Paid Admin Expenses Total Expendatures 310 N/A N/A N/A $ 1,818, $ 766, $ 2,585, N/A N/A N/A $ 503, $ 234, $ 737, Local Government Energy Audit Program Results Time Period As of June 2014 (End of 2014 Fiscal Year) As of December 2014 (YTD for Fiscal Year 2015 at time of analysis) MW MWh DTh Committed Incentives N/A N/A N/A $ 562, N/A N/A N/A $ 526, Local Government Energy Audit Program Results The results shown in the tables above were exported from the New Jersey Clean Energy Program (NJCEP) database in a series of reports and compiled into tables. The database is populated with application data from applications and proposals received from program participants. calculations and algorithms are applied in order to determined energy savings values RESULTS OF BENEFIT ENEFIT/C /COST ANALYSIS 5. /C The Local Government Energy Audit Program does not track energy savings therefore only has costs and no direct measureable benefit. The program is not intended to offer incentives for energy savings measures which would result in energy savings and therefore does not have the data necessary to perform a proper analysis. 5. COMPARISON TO OTHER PROGRAMS P The NJCEP Local Government Energy Audit (LGEA) program is a unique program model as it specifically targets government, institutional, public, and 501(c) (3) non-profit organizations. Other audit programs evaluated did not have this target sector and were instead designed for the small business sector. 3

4 5.1 Incentive levels We found no other audit program targeted at local government entities. Two small business audit programs NYSERDA s Small Commercial Energy Efficiency Program (SCEEP) and PSEG, Long Island s Energy Assessment (EA) program in New York also cover 100% of the audit cost. The EA and SCEEP programs do not have a hard cost cap, while LGEA will not pay more than $100,000 per local government agency, per fiscal year. Historically, incentive levels for the NJCEP and SCEEP programs have remained constant, paying 100% of audit cost, however, the hard incentive cap used to be on a tiered scale based on conditioned space at program inception in 2010, up to $300,000 per year. Incentives are now capped at $100,000 per fiscal year. 5.2 Program requirements While LGEA, SCEEP, and the EA programs differ in terms of incentives, they share eligibility requirements in most respects, with a few distinctions. SCEEP and EA cover small commercial, industrial, and governmental facilities, while LGEA is governmental, institutional, and non-profit only. All programs require the facility to be located within the applicable service territory and have accounts with the relevant utility that are in reasonable standing, under a specific rate code, and both LGEA and SCEEP require that the applicant pay into the SBC fund on the utility bill. Over the course of the program life time, general LGEA requirements have remained constant, as they address a targeted segment of local government facilities. 5.3 Identify best practices Neither of the LGEA, SCEEP, or EA programs follow a standard best practice template, however, they all contain many elements that are accepted by the industry as standard. The Environmental Defense Fund (EDF) Investor Confidence Project is a representative example of best practices that have a strong impact on a successful EE program. They lay out 5 overarching categories in their report: Base lining, Projections, Initial Commissioning, Ongoing Commissioning, and Measurement & Verification. Taken together, these were designed to represent the entire lifecycle of a strong energy efficiency project. Each category contains three parts, Required Elements, Required Procedures, and Required Documentation. While LGEA doesn t contain every single practice laid out in the EDF report, it does use the first two major categories listed by the EDF. NJCEP LGEA is based around performing an audit, identifying and energy efficiency measures and projecting potential savings to the customer SUMMARY OF INPUT FROM CONTRACTORS AND CUSTOMERS TRC organized seven sector focused subcommittee meetings designed to bring together contractors, trade allies, customers and stakeholders to discuss their experiences with the current Commercial and Industrial program offerings and to share suggestions for program modifications and improvement as well as new program ideas. 4

5 In our invitations, we discussed the purpose of these meetings and how the information collected will be used. We also sent each participant a series of questions in advance so they could come to the meeting prepared. Each meeting was facilitated and extensive notes were taken. There were between participants in each meeting. 6.1 General Findings Across multiple sector subcommittee meetings we heard similar concerns/issues raised by customers, contractors and stakeholders. We recognize that some are based upon existing State law or Treasury requirements and shared that with meeting participants, however we present them for consideration as part of the overall record of comments received. 1. Prevailing Wage a. This requirement will often influence whether a customer will move forward with a project. Even with incentives this requirement may make certain energy efficiency projects cost-prohibitive, particularly in Smart Start. 2. Tax Clearance a. This requirement is cumbersome and often causes problems when name on form doesn t not match name of customer. 3. Utility Bills a. Many customers and contractors expressed frustration regarding the time required to obtain twelve months of bills from the utilities. Discussions regarding improving this process included: making bill requirements consistent over all programs, improving upfront education of customers that this would be a requirement of the program so they can initiate the request early and improving relationship with utility contacts through TRC and BPU. 4. Enhanced Marketing and Outreach a. Contractors shared that they often encounter customers who not familiar with program offerings and incentive opportunities. Discussions focused value and quality or existing marketing information and suggestions for new material/tools. There was consensus that the current CEP web site is cumbersome and discussed short term solutions for improvement while plans were underway for the website overhaul. Sector specific entry points were recommended so customers see exactly what would be appropriate for them (i.e., hotel or datacenter). A simpler home page with clearer navigation was also discussed. Increasing the number of success stories/case studies to cover wider variety of programs, sectors was recommended. Webinars and s were the preferred method for receiving program updates and information. 5. Brand Recognition a. Many committee participants commented that there is confusion in marketing materials due to the number or logos (BPU, CEP, Smart Start, DI) and not much brand recognition for the clean energy program. Group members suggested: using a single logo, establishing a more catchy name such as Green Team used in NY. 6. Market Uncertainty a. Due to the lack of long-term planning/long term funding commitments, the lengthy process to implement program changes and variability in program budges over time, customer and contractors expressed concern regarding obtaining commitments for 5

6 larger more long-term projects energy efficiency projects such as new construction or CHP. 7. Confusion over audit options a. Some customers and contractors stated that there is confusion in the marketplace over audit opportunities. In particular, the DI contractors will perform an audit and it is unclear whether this is the same as what would be done under a LGEA or other ASHRE audits and the audits required under ESIP. 8. Additional Guidance Needed for Customers Interested in Multiple Programs a. Discussions focused on how to better assist customers trying to determine best program and or best path forward when considering multiple programs. This guidance isn t available on web site or via program literature, only when/if customer contacts program representative. This was a particular focus in Local Government meeting but was raised in others as well. 9. Sector Specific Program Design Suggestions a. In multiple meetings the concept of sector based programs were discussed. Options for this design ranged from offering same programs but through a sector-based portal which provided better direction regarding best options or, alternatively, a complete redesign of incentive options for specific sectors that don t always have a clear program option, for example: data centers, multi-family and gut rehab projects. 10. Financing a. When asked about the need for financing most participants indicated that this is not a problem and they can find funding if needed. Incentives drive the programs. On bill repayment however was generally agreed to be a very attractive option for customers. 11. Follow Through a. Contractors and stakeholder discussed concerns that many customers make inquiries about the programs and/or move ahead with an audit through LGEA or DI, but never follow through with actual implementation of energy efficiency projects. Participants discussed improving customer follow up and looking into why this occurs. 12. Benchmarking a. Should be promoted more, many customers not aware of program. 13. Trade Ally/Contractors a. Consider offering incentives that encourage contractors to promote the programs and/or incentivize them to meet specific goals for energy savings or projects. Establish requirements for becoming and remaining a pre-approved contractor or trade ally so it encourages performance; consider tiered levels to recognize top performers. 14. Technology Advancement a. Programs should be designed to be more responsive to changes in technology changes i.e., lighting. Suggest using fewer categories or eliminating those rarely used. 6.2 Local Government Energy Audit Specific Findings 1. Groups discussed how to better promote this program to eligible customers so promote a more comprehensive approach to energy efficiency. 2. Sustainable Jersey identified as logical partner for education and outreach on value of LGEA and identifying candidates. 3. Need clarity on how the LGEA will be used as part of the Energy Resilience Bank application process. 6

7 4. LGEA applicants are encouraged to audit all buildings however there are concerns that an older audit may not be accepted when work is done. Group discussed program enhancement that would allow for audit update or refresh for audits over 3 or 4 years old. In most cases buildings are essentially the same with only change being fuel use/costs. 5. Some customer confusion regarding the audit done by a DI contractor and the LGEA. Need more education and information on similarities and differences and how to select best option. 6. Additional confusion in the marketplace regarding LGEA and ESIP. Why is LGEA required when an additional, higher level audit will also be needed for ESIP projects? 7. Some contractors stated that they will not advise an LGEA since they prefer to do their own audit. 8. In school districts or municipalities with an in-house architect or engineer they will often dismiss LGEA since it was conducted by an outside firm. Discussed option for them to be involved in the LGEA process and how to get that information to the local government entities and their engineering or architectural firm partners CODES AND STA TANDARDS IMPACTS ON PROGRAM ASHRAE is the current energy code in New Jersey. This code has been superseded by two newer versions, -2010, and -2013, so there is reason to assume that the state may need to update to a more recent version of ASHRAE The approved and proposed updates to the DOE and ASHRAE 90.1 Efficiency Standards affect several of the appliances incentivized under the SmartStart and Direct Install Programs, and will also have indirect effects on the Pay for Performance Program. In this document we provide an estimate of the impact based on an overall whole building energy performance basis and overview of the HVAC and Lighting program elements that may be impacted by an update to the state building energy code. We compared the current and expected updates for each appliance and evaluated how each update impacts the current program efficiency requirements and savings. For the Pay for Performance Program, the baseline against which a proposed project is compared will be affected by these updates; therefore, in order to be eligible, projects may need to install higher efficiency appliances to reach the program threshold saving requirements. 7.1 Impacts to Local Government Energy Audit Program Changes in code would not directly impact the Local Government Energy Audit Program since it does not offer incentives for specific measures. Code changes would impact the recommendations made in the reports due to the changes in minimum equipment efficiencies CHANGING BASELINES IMPACTS ON PROGRAM In this document we provide an estimate of the impact based on an overall whole building energy performance basis and overview of the HVAC and Lighting program elements that may be impacted by an update to the state building energy code. We compared the current and expected updates for each appliance and evaluated how each update impacts the current program efficiency requirements and savings. Not all programs will be affected by these changes, within the Pay for Performance Program, the baseline against which a proposed project is compared will be affected; therefore, in order to be 7

8 eligible, projects may need to install higher efficiency appliances to reach the program threshold saving requirements. (Please see appendix section 8) SUMMARY OF RECOMMENDED PROGRAM MODIFICATIONS While this program has seen steady growth since its inception we learned that there are still many eligible customers who are not aware of the program and how it can help them make plans and decisions regarding energy equipment and management. As the Program evolves and builds on past experiences to expand the reach and impact of wholebuilding energy audit programs, the following are areas of enhancement that have been suggested by staff, customers, contractors and stakeholders: Develop a methodology to measure/track energy savings associated with implementation of measured identified in their LGEA. Work with Sustainable Jersey following their research on local government entity use of the programs to develop targeted outreach to entities based upon their level of participation (no involvement, LGEA but no measure implementation, measure implementation but no LGEA). Enhance outreach and marketing regarding the program. Consider program modification that will allow for an LGEA update or refresh for older audits. Coordination with municipal customers to encourage that them include their in-house engineer or architect in the LGEA process. This may ensure audit is used. Review ESIP requirements for an LGEA and an additional investment grade audit later in the process. Are both necessary? 8