ENERGY EFFICIENCY POLICIES AND EXISTING PROGRAMS
State-level policies shape the type of rate-payer programs that can be offered to industrial facilities. The length of funding cycles, allowable savings, budgets, and energy efficiency targets or goals can influence the length and depth of SEM offerings. In addition, SEM programs can thrive where regulators, program administrators, implementers, account managers, and, most importantly, customers have experience with a wide variety of energy efficiency offerings, including: capital, HVAC, lighting, operational, and process.
For this SEM program, do you intend to claim energy savings associated with operational and process changes?
Historically, most utility programs have claimed and provided incentives for capital measures, with EM&V methodologies for individual energy efficiency projects being common and well understood. However, SEM programs that claim operational and process change energy savings typically rely on top-down, meter or facility level models of energy intensity based on statistical regression analysis. This approach to quantifying savings is much less familiar to administrators, implementers, evaluators, and regulators, which increases the perceived risk for program administrators. When designing an SEM program, align the expected or allowed savings with the resources the program will be able to provide.
Answer: Not likely
SEM programs that do not intend to claim operational savings may be able to reduce implementation costs and complexity by processing capital projects through existing custom and prescriptive program tracks. However, not counting operational and process change savings, which can be a significant source of savings for both the program and the customer, may necessitate a program design with a much lower level of support to remain cost effective.
SEM programs typically lead to significant operational and process change savings, as well as a significant uptake in capital projects, but require a significant amount of resources to do successfully. SEM programs are more likely to be cost effective in the long-term when operational and process savings are claimed.
What does your current industrial efficiency program offer?
SEM programs are most successful when they are part of a comprehensive strategy (i.e. including capital equipment, operational and process measures, and technical assistance). SEM programs rely on customer engagement, training and technical support to drive savings. Prior successful participation in custom programs can provide a good foundation for both the participant and the program.
Answer: Rebates for deemed and prescriptive measures only
Offering a comprehensive SEM program may be unrealistic as a first step, as it will likely require establishing entirely new program structures and processes. More targeted engagements such as offering information and training may be more appropriate to get started.
SEM programs rely on customer engagement, training and technical support to drive savings. It is a relatively advanced, complex program that was designed to overcome deeper organizational barriers to efficiency and unlock much higher levels of the industrial EE savings potential. Without prior successful participation in custom programs, an SEM program may struggle to establish the trust needed for SEM recruitment.
Answer: Rebates + Engineering studies and incentives for custom capital projects.
Offering a comprehensive SEM program could be beneficial and unlock a new source of industrial savings, but may require a steep learning curve for engineering and regulatory staff.
Energy efficiency programs that provide audits, incentives and technical support focused on capital equipment measures may be seeking to establish better long-term relationship with large customers. Those programs can leverage the operational/process savings that could be obtained from SEM programs but need to ensure that both utility and regulator staff understand how to calculate, report, and incent these types of savings.
Answer: Rebates and custom + Engineering studies, technical support and incentives for custom operational or process improvements.
Energy efficiency programs that already offer a mix of incentives, audits and technical support for quantifiable energy savings from capital, operational and process improvements can have more confidence that all types of SEM savings will be accepted and will have an easier time educating regulators, customers, and implementers on the advantages and savings methodology of an SEM program.
Answer: Rebates, custom, process + Technical services, training and support for performance- based efficiency incentives measured at the whole building or meter level
Due to the spread of enabling smart meter technology, energy efficiency programs based on whole building, pay for performance, continuous commissioning or others that claim savings based on meter level analysis of energy use are being piloted for both Commercial and Industrial markets. SEM programs are a type of pay for performance program that influences and relies on the end user to drive improvements that save energy. The EM&V principles and program logic of these programs is otherwise very similar. Those already administering pay for performance type programs should experience few barriers in setting up Industrial SEM programs.
How long is your energy efficiency program planning and funding cycle?
SEM programs tend to be long-term offerings that may require 1) long recruitment cycles, 2) a year or more of participant training and technical support, and 3) multiple years of EM&V. The most mature programs recruit and offer SEM to their customers through a continual offering of multi-year commitments. While longer term or continuous SEM program seems to be emerging as a best practice, one to two year engagements have been successful as well. In the design phase, consider the timing of your organization’s goals and funding cycles and align your SEM program to work well within them.
Answer: One year
While multi-year and continuous engagements are emerging as a best practice for driving a more robust energy management system and maximum, persistent savings, some SEM programs with only one year of participant engagement have succeeded in saving energy cost-effectively. A one year program design can introduce participants to energy management system terms, principles and practices and can save energy, but is not typically expected to result in the full adoption of an energy management system or therefore in a continuous improvement of energy performance after the engagement.
Answer: Two to three years
Two year engagements are currently the most common approach to SEM programs, providing enough time for participant adoption of the comprehensive training, technical support and energy performance modeling that help establish an energy management system at their site. In a successful program, participating sites will also continuously improve their energy performance after the 2-year engagement.
Answer: You currently have a four-year program planning and funding cycle or a rolling portfolio.
Longer funding cycles allow for longer-term SEM program engagements and for initial EM&V of energy savings within a funding cycle. In addition, rolling portfolios allow for the continuous recruitment of customers and uninterrupted implementation of SEM programs.