Efficiency Incentives: Incentive Funding Continues To Grow...
Ratepayer-funded budgets for energy-efficiency are at an all-time high and continue to rise. A report released earlier this year by the Consortium for Energy Efficiency (CEE), in collaboration with the Institute for Electric Efficiency (IEE) and the American Gas Association (AGA), showed that U.S. electric and gas efficiency budgets have doubled since 2006. Gas-related budgets in the U.S. saw a particularly impressive increase, nearly quadrupling from 2006 to 2009. Canadian efficiency budgets have posted noteworthy increases as well. U.S. and Canadian ratepayer-funded electric and gas programs combined reached nearly $6.1 billion in 2009, up from $4.5 billion in 2008.
All of that growth produces a whole lot of changes. Several utility jurisdictions are seeing their first significant programs being funded. Other jurisdictions have sharply increased program breadth and depth. And while isolated programs are offering end-of-year bonuses to encourage program participation, many more are running out of money prematurely due to overwhelming demand.
One jurisdiction to see new program offerings is Dominion Energy in Virginia. Approved lighting upgrades include high-bay fluorescents and pulse-start metal halides, more efficient ballasts, LED exit signs and occupancy sensors, conversions of T12s to T8s and T5s, and, compact fluorescent lamps. Dominion Energy’s HVAC incentives include unitary and split A/C units and air-source heat pumps as well as both water cooled and air cooled chillers.
Some of the programs now emerging are focused on low-/no-cost measures, which is good news for businesses who find themselves capital-constrained in light of the economy. For example, Pennsylvania Power and Light recently launched its new HVAC tune-up program with field diagnostics. The program defines a specific tune-up protocol designed to optimize energy savings for HVAC units. Provided that appropriate metrics are met within the tune-up, a rebate of up to $250 per unit is available. This tune-up protocol typically realizes between 5% and 8% in energy savings in addition to the rebate payments, making this program a particularly attractive one to consider within PPL’s service territory.
The American Recovery and Reinvestment Act (ARRA) is putting additional wind in the sails of programs focused on efficiency. Figure A shows just one dimension of this funding - assistance to state energy programs. In North Dakota, for example, ARRA funding administered through the North Dakota Department of Commerce is helping to fund efficiency programs for several cooperatives throughout the state. This funding is in addition to new program offerings in North Dakota from Xcel Energy and Montana-Dakota Energy, as well as program expansions in Otter Tail Power’s service territory.
In some utility jurisdictions, ratepayers get to enjoy ARRA stimulus-funded incentives on top of the generous programs that were already in place to support energy efficiency and renewable energy. As just one example, the city of Aurora, CO, recently began dispensing $1 million of ARRA-related incentives, most of which are available now through April 2011, to complement incentives provided by Xcel Energy and the Governor’s Energy Office (GEO).
A particularly interesting dimension of program expansion can be seen in the on-bill financing (OBF) arena. For many years now, a handful of utilities around the country have offered zero-percent financing that uses the utility bill itself as the mechanism for repayment.
That said, it is still big news when a utility as large as Southern California Edison (SCE) announces such a program, as it did in early August. SCE’s program allows eligible customers to make payments that appear in a line item on their SCE bill. The loan terms are based on the effective useful life of the installed equipment chosen through the eligible program(s), the qualifying project costs, the estimated annual energy savings, and other factors. SCE calculates the loan amount by taking the difference between the total qualifying project costs and any incentive received from SCE. The loan limits in this OBF program vary by customer type.
Businesses can borrow between $5,000 and $100,000 for a term of up to five years, while governmental and institutional customers can borrow between $5,000 and $250,000 for up to 10 years. On-bill financing programs can make the difference between doing a capital-intensive project or not, particularly in cases where softness in the economy has taken its toll on a company’s balance sheet or a government’s tax collections.
More information on SCE’s new On-Bill Financing program can be found at www.sce.com/business/onbill.
KEEPING UPStaying abreast of the latest developments in this area is not only important for end users - efficiency-related vendors and service providers have a lot to gain as well. Whether an incentive program is “upstream” (for the manufacturer), “mid-stream” (for the distributor or retailer), or “downstream” (for the end user), there are plenty of ways for a vendor to leverage incentive dollars to increase sales.
Doing an online search is a good start - although, to manage expectations, it probably will not be as effective as working with a reliable and well informed rebate administrator who deals with the full spectrum of funding sources on a daily basis.
Let’s assume a drives manufacturer seeks to improve its sales. Using the Database of State Incentives for Renewables & Efficiency (DSIRE) at www.dsireusa.org, the vendor could search for incentives in the category of “Motor-ASDs/VSDs.” Within seconds, more than a hundred listings would appear as potential funding sources for motors and/or drives. Each of those opportunities would appear as a hyperlink leading the vendor to more information about the program and in most cases, another hyperlink to the web page maintained by the funding source itself.
With more and more incentive programs coming and going, staying abreast of all of the new options for saving energy or growing sales becomes more challenging. The money is there, though, and knowing where to start looking is the first step. ES