CA Statewide Savings by Design PG&E, SCE, SCG, SDG&E
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- Flora Richardson
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1 Program Synopsis Savings By Design is implemented by the four largest investor-owned utilities in California: Pacific Gas & Electric, Southern California Edison, San Diego Gas & Electric, and Southern California Gas Company. The target market for the program is commercial, industrial, and agricultural new construction and renovation/remodel projects. The program promotes integrated design and seeks to influence projects at the programmatic or schematic design phase. It encourages early design involvement by offering building owners and their design teams a wide range of services including education, design assistance, owner incentives, and design team incentives. All end uses are considered. Participants can opt for either a Whole Building or Systems approach. The program also offers a wide range of publications, software tools, and trainings through Energy Design Resources. Program Type Incentive PrescriptiveRebates CustomIncentivesSPC BillCreditsRateDiscounts Services DirectInstallation FinancingLoansLeasing FreeMeasures InHousePlusSubs IncentiveOther Information and Training GeneralEducation MailAudit TelephoneAudit OnSiteAudit OnLineAudit DesignAssistance FeasibilityStudies EndUserTraining TradeAllyTraining Program Focus Primary Market Events Targeted AllMarketEventsTargeted NewConstructionRenovation ExistingConstructionAll ExistingConstructionRetrofit ExistingConstructionNaturalReplac ExistingConstructionEarlyRetire Primary Program Focus EndUser SupplySide EndUserAndSupplySide Residential End User Target Markets ResidentialALL SingleFamily MultiFamily MobileHome - 1
2 LowIncome ResOther Commercial/Industrial End User Markets Commercial All Offices Retail Restaurant Public (govt.) Facilities Grocery Store Health Care Education Lodging (Hotels/Motels) Warehouses Industrial All Other Market Barriers End User Supply Side Information or Search Costs Performance Uncertainties Asymmetric Information and Opportunism Hassle or Transaction Costs Hidden Costs Misplaced or Split Incentives Product or Service Unavailability Externalities Non-Externality Pricing Inseparability of Product Features Access to Financing - 2
3 Bounded Rationality Organizational Practices or Customs Irreversibility Other End User Other Supply Side Customer Sizes Targeted (C/I only) VerySmall Small Medium Large Supply Side Actors Targeted SupplySideActorNotProgFocus AorEFirms Manufacturers Realtors Developers Builders Contractors TradeAssociations WholesalersDistributors Retailers EnergyServiceCompanies NonProfitNotForProfitGroups Govt Other Types of measure/end use technologies ALL MEASURES HVAC High Efficiency DX/HP High Efficiency Chillers High Efficiency Room/Terminal Economizers Control Systems Variable Speed Drives Occupancy Sensors Lighting Compact Fluorescents Electronic Ballasts Reflector Systems Efficient Fluorescent Lamps (T-8, T-5, etc.) Lighting Controls Occupancy Sensors High Intensity Discharge - 3
4 Duct Sealing and Balancing Equipment Testing/Tune-up Commissioning Retro-commissioning Space Heating Heat Pump Water Heating Load Control (Cycling) High Efficiency Insulation Blankets Low-Flow Showerheads Low-Flow Aerators Solar Assisted Motors High Efficiency Variable Speed Drives Industrial Process Compressed Air Motors Pumps Day lighting Applicances Refrigerators Dish Washers Clothes Washers Clothes Dryers Office Equipment Plug Load Building Envelope Insulation Infiltration Control Glazing and Glazing Control Windows Refrigeration High Efficiency Controls Variable Speed Compressors Multi-Stage Compressors - 4
5 Commissioning Other (specify) Program Context Program began in 1999, as an outgrowth of utility-specific non-residential new construction programs that have operated in CA for a number of years.utilities started from very different local programs. In 1996, when the state adopted a deregulation strategy, California also embraced market transformation as a program design paradigm. In 1998, PG&E switched to a pure market transformation focus (ie, information and education only) with this program, which was massively unsuccessful. In response, PG&E program a reintroduced a resource acquisition element (i.e.; direct incentives). With the advent of the energy crisis in , the state reverted to an emphasis on resource acquisition. The different utility program managers have different philosophies about resource acquisition versus market transformation. The net result is a balanced program design that features elements of both. Goal is to move toward 100% market transformation model. Internal program management differences are due to different utility organizational structures. From the participants perspective, the program is uniform. Rationale for consistent statewide program design: Nonresidential new construction is not a local industry. Market actors act at state and national level. Designers and contractors work across utility boundaries. Statewide consistency in program design gives it clout.time dimension. Program design stability is essential. Project timelines are typically 3-5 years. Significant changes to the program design would be disruptive to their participation.in response to the energy crisis, there was an emergency change in Title 24 building standards in midyear 2001, authorized under Assembly Bill 790. The change required an out-of-sequence program redesign, which affected training requirements, baseline, and incentive levels. This affected new projects initiated in 2001.Program funding experienced a big increase in Since then, funding levels have been fairly consistent (but growing) over time. Utilities face a challenge to maintain well trained program staff, especially given uncertainty in the funding levels and regulatory environment. In 2004, overall program funding has expanded because of the addition of procurement money. However that money may be used only for resource acquisition activities. There is a big difference between the utilities in their ratio of procurement money to PGC fuinds, which creates challenges for uniform program design. For SDG&E, PGC=80% of funds; for PG&E and SCE, PGC=50%; for SCG, PGC=100%. Program Components Program Management There are 4 utility program managers and a program design consultant who is an outside contractor. Utilities work together to coordinate and share design analysis assumptions and baselines; provide cross-referrals for projects outside their service territory; collect, track, and compile comparable project information and results; and report on program accomplishments and status. Contractor facilitated development of incentive levels and software in Since 1999, contractor helps SCE supervise evaluations.within utilities, the program management structures vary. Mostly in-house staff. (perhaps some contract staff). Utilities hire specialty consultants on a per-project basis for DOE-2 analysis, refrigeration projects, and other tasks that require specialized skills. Utilities hired consultants to develop education content through EDR. Utility staff also developed EDR content in-house. SCE leads development of a Systems analysis tool, which all utilities share. Implementing Organization Implementation Structure - 5
6 Utility Nonprofit Govt Private IOOther InHouse TurnkeyContractor InHouseAndSubcontractors Other Reporting and Tracking Tracking systems are utility-specific, because they are tied to contract and financial systems which are utility-specific. Due to customer non-disclosure issues, a statewide tracking system is not possible. The need for separate tracking systems presents some evaluation challenges for merging data to produce a statewide evaluation. Since 1999 utilities have focused on consistent tracking of core content, which has mitigated problems and produced clean, complete data. Tracking systems are used to track contacts and applications, through project stages. They track estimated savings and incentives and link to contract and verification process. Tracking systems support evaluations and quarterly regulatory reports. Verification and Quality Control Projects receive an onsite verification visit once they are substantially complete. Visits comfirm that projects were constructed as agreed in the Incentive Agreement. This was harder on a whole building project. Identify the key measures, at least. Every project gets verified in-field. PG&E has more checks, double-checks, and quality control than the other utilities, which is more onerous. PG&E verification includes full inventory of all incented features in all systems. A technical auditor checks the field engineer data. The program engineer conducts a 2nd review before reserving the funds. Any change in any system requires a full building re-analysis. PG&E pays for what is found on-site (sometimes more and sometimes less than reserved). The office engineer checks the field results. With other utilities, if it is built substantially the same, an agreed-upon amount is paid without re-analysis. Verification is not a performance inspection; there is no commissioning.verification process is pretty good. There are few differences between verification results and impact evaluation results. Over time, realization rates at utilities have converged at near 100%.Verification does some installation quality control (at least for control measures). Not just installed/not installed but also not a full performance verification or commissioning. Participation Process 1. Owners, architects, designers, engineers, contractors, or SBD Representatives may initiate contact to begin project participation. 2. Once contact has been made, Owner submits a completed Participation Letter/Letter of Interest (using the appropriate form(s) provided by the Utility) indicating their interest in the program. When applicable, the Design Team must complete a Design Team Application during the preliminary or schematic design phase to establish their interest in participating, which will be reviewed and approved by the Utility. 3. An SBD Representative will work with the participants to determine which program path applies and how to optimize the energy efficiency of the project. 4. After the selection and design of energy efficiency enhancements is finalized, the SBD Representative issues an Incentive Agreement to the Owner/Design Team delineating the proposed project details, estimated incentive amounts, and terms and conditions. 5. The Owner/Design Team signs, dates, and returns the Agreement to the SBD Representative. By signing the Agreement, the Owner/Design Team acknowledges that they have read and agree to all program eligibility requirements. The Utility s countersignature and date indicate funds have been reserved for the project for a period of 48 months. Program funding is first-come, first-served. 6. Once construction is substantially complete, the - 6
7 Owner contacts the SBD Representative of the project to request an on-site verification. 7. If the project is built as agreed and the project meets all program requirements, the incentive will be paid. If the completed design differs from that outlined in the Incentive Agreement, a recalculation of the incentive amount will be performed and may be adjusted up or down to reflect the revised, estimated building performance. Outreach, Marketing and Advertising Marketing and outreach includes the following components: Direct outreach and personal contact with prospective project sponsors, Common statewide brochures, uniform program documents, SBD and EDR WebsitesTraining and education in partnership with allied industries, energy centers, partnerships with professional organizations, targeted messages through industry publications. The utility partnered with American Institute of Architects on a cosponsored design awards program. Installation and Delivery Program promotes good project design but does not exercise any control of influence over installation and delivery issues.unique incentive structure feature: design team incentives. The program tries to influence ~20 out of 10,000 design decisions. So program compensates designers for the extra time and effort. Some designers see a conflict of interest in accepting 3rd party incentives to influence owner s project. They prefer that the incentive go to the owner as a pass through. The incentive enlists the designer in defending against value engineering by reserving 50% of the payment until the project is completed. If value engineering deletes the energy efficiency features, then the designer does not get paid.incentive levels are based on precedent, expected cost/benefits, minimum amount required to get participation, and expert opinion. It s virtually impossible to measure incremental cost of energy efficiency. The incremental cost of construction is buried in the bid process. Estimates of what the project would have cost without the measures are notoriously unreliable. Program Evaluation NRNC Market Characterization and Program Activities Tracking Report: PY2002:Results indicate that SBD program participation is high in the building segments with significant market activity, namely office, retail, school and storage. Among the measures installed by program participants, unitary HVAC systems and lighting measures are the most popular. However, whole building design accounts for the highest estimated energy savings in new construction projects, and lighting and other HVAC measures (VSDs, motors) produce the highest estimated energy savings in R&R projects.program penetration results for PY2002 indicate that the SBD program captured 9.4% of the nonresidential new construction projects and 2.9% of the R&R projects. By square footage, program penetration into the new construction market is 26.9%, indicating that the program is reaching relatively large buildings. Although this penetration level is significant, opportunities remain for increased program penetration into the market.energy Design Resources EvaluationEDR is primarily reaching engineers (34%), architects (29%), and energy consultants (17%) a large percentage (54%) of whom work in the Southern California new construction market. Notably, EDR is not reaching lighting designers, developers, buildings owners, or facility managers in great numbers, despite the fact that EDR offers tools specifically for these groups.in the aggregate, more respondents (53%) have used the EDR publications than the software tools (34%) or trainings (19%). Actual use of each of the individual tools varies, with the largest percentage of respondents using enews (34%) followed by equest (27%). The other three software tools (EDR Charette-2%, evaluator-5%, and SkyCalc-11%), as well as the Commissioning Handbook (9%) and most of the trainings, are used by the least number of respondents. In-person training sessions (on-site-8% or at an Energy Center-12%), while infrequently used, have higher rates of participation than online training (1 to 2%). Low levels of awareness is one of the major reasons why some of these tools are not being used.more than a quarter of the people reached by EDR are not using the tools provided - 7
8 to them. Engineers and energy consultants appear to be the primary users of many of the EDR tools such as the publications and software. Architects are less likely than other market groups to use many of the tools, despite the fact that they are probably the most important market actor group because they are in closest contact with the end-user.in general, the software tools appear to be used primarily as a rough-cut estimate of energy savings in the schematic phase of the design process. Of all of the tools offered, equest seems to lead to the largest savings. In addition to being used by a large percentage of people, users of equest tend to use it more frequently and on more projects. Users also indicate that this tool is useful for a variety of systems. Among publications, enews is having the largest impact due to its wide readership. Finally, most participants of the various training sessions stated that the training sessions have helped to increase the use of energy efficient design practices.transforming the new construction market using the suite of educational tools provided by EDR will require EDR to more actively reach out to architects, engineers, and other key market actors. Our findings, in the context of the existing research on the market, can be useful in the effort to penetrate these segments, educate market actors, and transform the market.the EDR program should also aggressively promote its website and suite of tools. EDR can do this through the use of trade journals, associations, and links from other key websites that attract new construction market actors. EDR should also consider revising the EDR website to better inform website users about what the tools are best used for, and what value they offer. EDR program may also want to consider providing additional support and trainings to encourage use once awareness is established. Finally, to increase use of the tools, the EDR program should consider conducting additional research to better understand the needs of the market in relation to the existing tools.building Efficiency Assessment:2001 Net-to-Gross ratio is Value was adopted by the PUC as the ex-ante NTG value. Quantitative Data Program Year: 2002 to 2003 Participation rate is available Cost Breakdown is available Net Savings Breakdown is available Net-to-Gross is available Total Resource Cost Data is available Quantative Data Summary: Cost and savings data available. List Of Key Sources Contact Information - 8
9 Name Title Company Phone Grant Duhon SBD Program Manager Pacific Gas & Electric Company (415) Ext. - 9
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