The most successful DSM programs in North America

The Most Successful DSM Programs in North America By focusing on North Americmz utilities’ successfil demand-side management programs, The Results Center intends to assist other utilities and nations in adopting those practices and programs that have worked - and thereby promoting cost-@ective energy ejkiency. Ted Flanigan and June Weintraub

t I

has, until now, been difficult

Ted Flanigan is the director ofThe Results Center, a research organization established in 1992 to promote energy eflciency. He is also president of IRT Environment, located in Aspen, Colorado. June Weintraub is a senior research associate at The Center. All data in the utility DSM program pro?les published by The Results Center have been verified by staflat those utilities. Any errors, however, are the sole responsibility of The Results Center, Each year, The Center publishes 40 detailed ZO-page case studies of successful energy efficiency programs in North America.

May 2993

to compare one demand-side management program with another. For one thing, DSM cost and savings figures have been mported in a variety of ways. In addition, DSM analysts face complexities in assessing the costs and the energy and capacity value of DSM programs which are quite different from those faced by their supply-side brethren. The Results Center was established to evaluate successful DSM programs in a way that bridges this complexity gap, by assessing and reporting on successful D!3Mprograms on a comparable basis. This article presents the results of the 40 programs The Center profiled in 1992 and is intended to

highlight some of their unique attributes. The surprisingly low cost of saved energy saved under the programs may be of interest as well. Each program selected by The Center’s board of Advisors is a study of a success. (While failures arguably present the most fertile lessons learned, few utilities am eager to showcase their least successful programs.) The programs analyzed were designed and implemented for virtually every market segment within each customer sector. From the diverse menu of programs profiled, we believe it should be possible to de velop an optimal portfolio of D!3Mresources for any given utility 53

Demand-side management is a wide open field, ripe for innovation and experimentation. But just as there ~IVmyriad oppotinities for greater energy efficiency, there are also myriad barriers to overcome to achieve durable efficiency gains. I. Comparing Program Impacts A. Recognizing Utilities that Derate Savings The sophisticationof program accounting - particularly in regard to derating savings for free ridership, snapback, measure removal and other factors that may diminish actual savings - is a hidden but critical aspect of demand-side management. Derating savings makes program impacts appear smaller, but the practice is followed to reflect more accurately the impact of a particular program. The Results Center has levelized all costs and savings for ease in comparability wherever possible. However, some utilities have presented “raw” savings data, while others have done a first-rate job of derating savings to reflect their best estimate of reality. For example, the New England Electric System takes credit for only 56% of the savings attributed to its Small Commercial and Industrial Program. While derating drives NEES’s program manager to distraction, NEES and other utilities have been pioneers in this regard and deserve recognition for their realistic portrayal of program impacts. 54

Wisconsin Electric Power Co. presents its savings in terms of “net impacts,” which are the estimated demand and energy savings at the power plant level, before transmission and distribution line losses, adjusted for free riders. Wisconsin Electric’s Appliance Turn-In program net savings were just 28% of the gross savings in 1991. Utilities tend to calculate and account for savings differently; Caution must be taken to determine whether savings are based on en-

gineering estimates promoted by manufacturers and occupancy schedules estimated by customers, or whether process and impact evaluations have been conducted, and whether the savings have been adjusted for free ridership, unusual weather, snapback (the rebound effect), measure persistence and attrition, etc. We salute utilities that recognize that savings are not easy to achieve, because just when you think you’ve got significant levels of savings, you unfortunately may not! Utilities seeking shareholder

incentives for DSM savings tend to be the ones that have effectively “derated” their savings estimates based on intense impact evaluations. B. Energy Savings There are many ways to show the relative impacts of the programs profiled in 1992. Figure 1 on the next page presents total annual energy savings for each of the programs profiled according to the targeted market sector and type. (Table 1 on page 56 lists program names and types by their identification numbers.) The two menu-driven rebate programs for commercial and industrial customers of Wisconsin Electric and Southern California Edison have achieved the greatest total energy savings over the five year periods for which data are available. Wisconsin Electric’s Smart Money for Business (#32) has racked up total annual energy savings of 670 GWh while Southem California Edison’s Energy Management Hardware Rebates Program (#28) has achieved total annual energy savings of 596 GWh. When we compare the most recent year’s annual energy savings, the commercial and industrial rebate programs of PG&E (both the Custom Rebate program (#/4) and the Retrofit Program (#25)),SCE’s Energy Management Hardware Rebate Program (#28), and Con Edison’s Enlightened Energy Rebate Program (#3) achieved the highest first-year, or annual energy savings. On the low end of this top four was Con 7’heElectricity Journal

Edison, with 1991 annual energy savings of 185 Gwh; F’G&E’s Custom Rebate program had the highest 1991 annual energy savings at 213 GWh (##4).The success of these programs in achieving largescale savings underscores the significant savings potential in the large commercial and industrial sectors. As one might expect, the annual energy savings potential in the residential sector is not as dramatic as in the commercial and industrial sectors. But Bonneville Power Administration’s Manufactured Housing Acquisition Program (#30) stands out as a winner. BPA projects that each home will achieve annual energy savings of 6,000 kWh and that this level of savings will be spread across all 12,000 homes manufactured in the Northwest annually, resulting in 72 GWh in savings each year. Southern California Edison’s Low Income Lighting Program (#/2) has achieved 122 GWh over seven years.

C. Capacity Savings Incentiveprograms for commercial and industrial customers also consistently achieve the highest capacity savings. Wisconsin Electric (#32) and SCE (#28), each with five years of data, Con Edison (#S) with three years, and the California Energy Coalition’s Energy Cooperatives program (#I!))with nine years of data make up the top four programs in terms of total capacity savings. An annual capacity savings comparison changes the picture slightly, this time with Con Edison’s Enlightened Energy Rebate program (#8) out front with 72 MS&’saved in 1991. PG&E’s Retrofit Program (#25), SCE’s Energy Management Hardware Rebate Program (#28), and the Environmental Protection Agency’s Green Lights (#35) are not far behind with 1991 capacity savings of 48 MW, 36 MW, and 35 MW respectively (EPA’ssavings are based on data for the 22-

month period January 1,199l to October 31,1992.) For residential programs, again Bonneville Power Administration’s Manufactured Housing Program (#DO)is out front with pro jetted capacity savings of 8.2 MW Not far behind are Wisconsin Electric’s Appliance Turn-In program (#24), with 1991 capacity savings of 5.2 MW.,Seattle City Light’s Low Income Electric Program with 4.5 MW (#DO),and BRA’sSuper Good Cents Homes with 4.0 MW (W). D. Savings per Participant Not surprisingly commercial and industrial incentives programs generated the highest savings per participant but we were surprised by the magnitude of average savings per customer! Bonneville Power Administration’s Energy !§avingsPlan (#18) for industrial customers had savings of 1.8 GWh per participant. New York Power Authority’s High Efficiency Lighting Program (#l7)

600

10 24 APTI

116 5 / 11 7 30 1 3 Comm NewRes.

23 21 19 2 Res. Lighting

/ 22

13 31

6

34 33 1 37 38 18 35 17 8 25 4 Commercial/Industrial Incentive Programs

28

32

Figure 1: ProgramTotalAnnualEnergySavings(GM) May 1993

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had savings of nearly 1.1 GWh per project. Pacific Gas and Electric’s Commercial New Construction program (#33) had average savings of 331 MWh per pmject. We’ve found that for large commercial and industrialcustomers,

the predominantbarriers to the

implementationof energy efficiency are knowledge and motivation; for smaller customers the predominant barrier is clearly access to capital. To overcome this fundamentalbarrier, Boston

Edison’s Small Commercial and Industrialprogram (#31) provides free technicalassistance,analysis, and energy efficiencymeasure installationsfor nonresidentialcustomers with peak demands of less than 150 kW. Between 1990 and

Table 1: Key to Programs Profiled

1.

2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. Abbwiati:

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OrganbatiOll

Program Name

ProgramType

New England Electric System Southern California Edison Burlington Electric Department Pacific Gas & Electric Osage Municipal Utility Northeast Utilities Bonneville Power Administration Consolidated Edison California Energy Coalitiin British Columbia Hydro City of Austin, Texas Bonneville Power Administration Sacramento Municipal Utility District Pacific Gas & Electric United Illuminating Ontario Hydro New York Power Authority Bonneville Power Administration Central Maine Power Seattle City Light Northeast Utilities Western Massachusetts Electric Boston Edison Wisconsin Electric Pacific Gas & Electric Energy, Mines and Resources, Canada Seattle City Light Southern California Edison Western Area Power Administration Bonneville Power Administration Boston Edison Wisconsin Electric Pacific Gas & Electric Northeast Utilities Environmental Protection Agency New England Electric System Bonneville Power Administration British Columbia Hydro Burlington Electric Department Western Area Power Administration

Small C/I Program Low Income Relamping Smartlight Customized Electric Rebates Comprehensive DSM Program Energy Conscious Construction Super Good Cents Enlightened Energy Energy Cooperatives Power Smart Refrigerator Buy-Back Pilot Energy Star Rating Hood River Conservation Project Commercial Lighting Installation Program Showed-read Program Homeworks Espanola High Efficiency Lighting Program Energy $avings Plan Operation Lightswitch Low Income Electric Program Lighting Catalog Program Neighborhood Program Residential Efficient Lighting Program Appliance Turn-In Program CIA Retrofit Program R-2999 Lighting Design Lab Energy Management Hardware Rebates Solar DSM Manufactured Housing Acquisition Program Small Commercial and Industrial Retrofit Smart Money for Business Commercial New Constructii Energy Assistance Program Green Lights Residential Electric Space Heating Energy Smart Design Power Smart High-Efficiency Motors Program Heat Exchange Pump Testing and Irrigation Efficiency Program

C/I Incentive Res Lighting Res Lighting C/I Incentive Comm C/I Incentive New Res C/I Incentive C/I Incentive APTI New Res Comm C/I Incentive Res Retrofits Res Retrofit Comm C/I Incentive C/I Incentive Res Lighting Res Retrofii Res Lighting Res Retrofits Res Lighting APTI C/I Incentive New Res Other Non-Res C/I Incentive Agricuftural New Res C/I Incentive C/I Incentive C/I Incentive C/I Incentive C/I Incentive Res Retrofits C/I Incentive C/I Incentive Res Retrofits Agricultural

Rea Lighting = Fbsic&nU Lighlirg; APTI q Appii Turn-In; t&w Res = New R&&I&I a Res l?etrofits = F&idenM bkdii~ Cunm = Canmtit@sed DSM; C/l lncenthm = caund&&lrial

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1991, the program provided 1,718 eligible customers (2.3% of eligible participants), with weatherization measures, heating ventilation and cooling upgrades, hot water heating improvements, new energy-efficient lighting technologies and refrigeration equipment, saving the average participant 3,144 kWh in 1991 and 6,005 kWh in 1992. New England Electric System’s Small Commercial and Industrial Program (#l), which uses a similar program design but with a lower threshold for participant eligibility (50 kw), captured just under 10% of eligible customers in the first three years of the program, saving an average of 4,011-7,256 kWh per customer. estern Area Power Administration’s Pump Testing and Irrigation Program achieved savings of more than 16,000 kWh per well tested. Westem’s program has been applied to 1,749 wells and effectively couples relatively low cost pump tests with education for farmers on how to use less water while still attaining their desired crop yields. The program has not only resulted in a remarkably low cost of saved energy, but has also resulted in savings of some 56,000 acre feet of water annually! For residential customers, Burlington (Vt.) Electric Department’s Heat Exchange program (#39), a fuel switching program to foster residential conversions from electric space and water heating to natural gas, had the highest per participant savings at more than 10,000 kWh per project. Energy, Mines and Resources of

Canada’s R-2000 program (#26) and Bonneville’s MAP (#30) both registered savings on the order of 6,000 kWh per home. In Ckage’s community-based DSM program (#5), an average of 5,000 kWh was saved each year based on the success of a 13year effort to promote efficiency in this small Iowa town. (Note that no formal evaluations have been done in Osage; The Results Center considers the data quite “raw” and thus cautions the reader accordingly)

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Ontario Hydro has conducted a community-based project in the town of Espanola, and has recorded per customer annual savings of 4,201 kWh. In contrast to Osage, Espanola’s savings data are based on direct measurement of savings and an expenditure of $3.5 million (fully a third of total program costs) on research and evaluation. The results from Espanola are likely more comparable to the impacts of the Hood River Conservation Project (#X2) which registered per participant savings of 2,600 kWh per home for the first two years, dropping

to 1,700 kWh per home in the third year, based on extensive analysis of actual customer usage. E. Targeted Savings

Many utilities run core DSM programs, such as broad-based rebate programs, and targeted efforts simultaneously. Targeted efforts afford a wealth of opportunities for experimentation and can be used to “blitz” certain neighborhoods, for example, or areas defined by utility substations. Targeted programs can also focus on specific customer types, and specific technologies. Western Area Power Administration’s Solar USM Program (#29) is perhaps the consummate example of a targeted program. Severe ice storms on the plains of eastern Colorado have repeatedly destroyed transmission lines, prompting Western to promote the installation of photovoltaic systems where expensive line extension or line replacement costs more than the photovoltaic systems. Western’s program has been especially important in remote applications such as stock water pumping and cathodic protection. An approach used effectively by Western Massachusetts Electric (#22) and by United Illuminating (#15) is to geographically select areas within their service territories in which to concentrate residential weatherization programs. Go ing ‘block to block” not only saves travel time and money, but allows neighborhoods to see and feel the utility presence. (In some more dangerous neighborhoods, 57

teams of installers in a close proximity add a certain safety value for each other as well.) Western Massachusetts Electric’s installation crews use sidewalk signs next to program vans to promote the program after several direct mail pieces have been sent using zip code regions. Canvassers also walk door-to-door to advertise the program in neighborhoods to promote maximum levels of participation. Customers can sign up on the spot with canvassers who than radio dispatch the installation crews to treat customers within days, if not hours! argeted programs can also effectively shift load where peak capacity is a major constraint. The California Energy Coalition’s Energy Cooperatives program (#!9)was designed as a load management tool but has evolved into an efficiency program as well through its interesting third party arrangement. Between 1982 and 1991 the Energy Cooperatives program, operated by a non-profit organization, has provided up to 18,210 kW in average monthly capacity contributions to Southern California Edison. This capacity contribution represents an unusual but effective system whereby customers are pooled together to cooperatively shed load using a dispatch format that takes advantage of their diverse operating characteristics. Both the Wisconsin Electric (##24) and B.C. Hydra Appliance Turn-in programs (#lo) haveexceeded their objectives. Wisconsin Electric has recovered and

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properly disposed of 242,000 appliances (refrigerators, chest freezers, and air conditioners). B.C. Hydro’s pilot program has re claimed and recycled almost 17,000 refrigerators, exceeding its first-year goal by 29%. Pacific Gas and Electric’s Showerhead Program resulted in the distribution of 553,000 efficient showerheads to residential customers in PG&E’s service territory Note that PG&E only took credit for savings for 180,000 showerheads,

Going “block to block” not only saves travel time and money, but allows neighborhoods to see and feel the utility presence.

recognizing that many showerheads were not installed, or were replacing other water-efficient showerheads, or were installed by free riders. PG&E was able to take credit for electric and gas and water savings, however, based on the installation of 180,000 showerheads! Burlington Electric’s Smartlight (leasing) program (#3) was successful in promoting the use of compact fluorescent lamps (CPLs), outstripping its first year goals by a whopping factor. BED had projected that it would take three years to install its planned

5m lamps. In fact this goal was accomplished in the first three months of the program. The program placed almost 25,000 CPLs in the homes of over 5,000 customers in its first 15 months, and so far over 33,000 compact fluorescent lamps have been distributed. Smartlight now is incorporated into BED’s more comprehensive, direct installation NeighborSave Program. entral Maine Power has effectively used “trade allies” such as the Lions Club for special promotions, and has distributed over 472,000’halogen and compact fluorescent lamps through its Operation Lightswitch program (#19). Boston Edison had similar results using a similar program design that featured “instant rebates” to distribute 482,000 efficient lamps and fixtures in five years (#23). Over 300,000 lamps were distributed in 1990 alone! Through Northeast Utilities’ Lighting Catalog program (#21), over 38,000 customers have ordered lighting products for their homes and have been pleased to accept the utility’s low prices for the equipment. Southern California Edison’s Low Income Relamping Program (ti) has had perhaps the most dramatic penetration levels with over 361,000 customers installing almost 1.4 million lamps. Despite the fact that less than 5% of New England Electric System’s residential customers use electricity as their predominant heating source, NBESs Residential Electric Space Heat Program (#/36) was specifically designed to

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target these customers, with the initial target group composed of those who had complained about high electric bills. In slightly more than two years, the program has treated 12% of the 56,CKKl customers who use electricity for heating. E Environmental Benefits Each of the profiles researched and published by The Results Center contains an environmental benefit statement. This statement addresses the unique regional environmental implications of the specific program’s level of savings and thus avoided environmental impacts, and includes a matrix that applies the level of total cumulative energy savings of a particular energy efficiency program to 15 generic power plant types. Thus carbon dioxide, sulfur dioxide, nitrous oxides, and total suspended particulates reductions can be considered for a variety of marginal power plant types in relation to specific programs’ savings. Many utilities are implementing DSM programs to mitigate environmental concerns related to power generation. In California’s Orange County where strict air quality standards are driving efficiency the California Energy Coalition (#9) provides critical load management services that can curb emissions at times of peak demands. Austin, Texas’s Energy Star home rating program (#ll) was developed in direct response to a 1983 city mandate to “construct” a conservation power plant, thus precluding the need May 2993

for construction of any new thermal facilities. Austin’s program has evolved to incorporate a Green Builder program as well to promote the use of sustainable and environmentalIy benign building materials. B.C. Hydro’s Appliance Turn-In program (#24) recycled over 55,OtKlpounds of refrigerants. In a rather interesting environmental twist, fully 8% of the total program costs of New England Electric’s Small C/I Pmgram (#l) have been spent di-

Many utilities are implementing DSM programs to mitigate environmental concerns related to power generation.

redly on the responsible disposal of retired electromagnetic ballast that contain PCBs. G. Educational Benefits Educational programs that stimulate interest in energy-efficiency and which solidify the public’s understanding of its importance and value may well deliver the greatest impact over time. We suspect that these programs may also deliver the lowest cost energy savings over time, though in our profiles we have only been able to present detailed program cost information. Energy resource cen-

ters, such as the Seattle Lighting Design Lab (#27), provide useful demonstration tools and educational facilities for customer seminars and building professionals. Similarly the work and success of Wes BirdsalI in Osage, Iowa (#5), where tremendous efficiency gains and market transformation has occurred at very low cost, is a tribute to education as a low cost DSM strategy programs that we’ve reviewed recognize that raising awareness is a very important program attribute to assure long term savings. Programs such as Western Massachusetts Electric’s Neighborhood Program (##22), Espanola (#16), and United Illuminating’s Homeworks (#15), purposefully complement direct installation measures with literature. Program installers am directed to take the time to explain the attractive life-cycle economic and environmental benefits of efficiency to customers. Both the Neighborhood Program and Homeworks present program materials in English and Spanish The Seattle Department of Health and Housing Services staff provide translation services in languages including Chinese, Laotian, Russian, Vietnamese, Cambodian, and Ethiopian for their low income program programs profiled have specific mechanisms to promote complementary utility programs for customers ready to take the next steps up the supply curve of energy efficiency.

M

any

Many

(#20)!

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H. Durability of Savings One of the most difficult issues

for DSM evaluators is the durability or persistence of savings. Proper housing orientation and attic insulation provide durable savings, as does a high degree of energy education and ongoing awareness programs. On the other hand, degradation of efficiency technologies, tenant and housing turnover, and a litany of other factors erode savings. What is an acceptable measure-lifetime for different technologies? For Bonneville’s Super Good Cents program (#7), an average measure lifetime of 70 years was used to calculate life-cycle benefits and the cost of saved energy Canada’s R-2000 (#26), BPA’s Manufactured Housing Acquisition program (#30), and Austin’s Energy Star (#Ill) used lifetimes of 50,45, and 40 years respectively. Both Espanola (#16) and Hood River (#12) community-based DSM programs used lifetimes of 35 and 44 years in various calculatiOllS.

residential retrofit pmgrams had lifetimes ranging from 6 to 30 years, with Western Massachusetts Electric’s Neighborhood program (#22) at the low end, installing mostly lamps and water heating efficiency improvements, and Seattle City Light’s Low Income Electric Program (#20) at the upper end, installing building envelope improvements. Central Maine Power has implemented an interesting evaluation criteria which is specifically designed to test savings after one, The

two, and three years to validate savings and thus assign appropriate financial incentives. This tends to stimulate program design and assures that the technolo gies and controls put into place remain in place for several years. Toward the other end of the spectrum, lessons learned in small communities, such as Osage, Iowa, have taught us that durable savings can be ‘bought” cheaply by utilities if the community is solidly on board with the efficiency program.

II. The Balance Sheet A. Program Expenditures Figure 2 presents the costs of the programs to date and in 1991. Over the course of four years, Bonneville’s Manufactumd Housing Acquisition Program (#XI) is expected to cost $138 million, making it the most costly program we profiled in 1992. Wisconsin Electric spent over $93 million in rebates alone on the Smart Money for Business incentive program (#32) over a four year period as well - a conservative

number since this does not include costs other than direct incentive costs. Con Edison’s Enlightened Energy C/I Retrofit program (#3) cost $55 million over three years. The New York Power Authority committed $55 million to its High Efficiency Lighting Program (#l7) in just over a single year, making it the largest single year program expenditure. However, the net cost to NYPA as shown in the accompanying chart was $18.8 million. (Note that the costs presented reflect only the utility’s cost to catalyze energy efficiency installations. For some programs, the utility’s cost is meant to represent the entire cost, but for other programs the utility cost represents only a fraction of total program costs; the customer directly bears additional and often large costs.) Some projects, such as Hood River (#12) and Espanola (#16), were designed as research and demonstration projects and thus large proportions of the programs’ budgets were spent on evaluation activities. In Hood River (#12), $22 million was spent in five years beginning in 1983, with fully 25% ($5 million) spent directly on research and evaluation. In Espanola (#l6), over $10 million will be spent over the five year period 1991-95, with $3.9 million earmarked for research and evaluation About a third of this total expenditure was spent on the research and evaluation component of the program. Seattle has been a leader in terms of providing weatheriza-

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tion services to low income customers (#20). Seattle City Light has worked with the Department of Housing and Human Services to weatherize 9,673 single family homes, 836 multiplex units, and 4,600 multifamily units at a total cost of $40.1 million, though $7.3 million of this was paid by Bonneville Power Administration. Southern California Edison has spent some $23.5 million to provide 1.4 million compact florescent lamps for low income customers in its service territory (a). On the other end of the spectrum, Osage’s Community DSM Program had the lowest total expenditure of all the programs profiled in the 1992 series, estimated at $477,000 over an l&year period. Western Area Power Administration’s Pump Testing and Irrigation Efficiency Program cost $731,000 over three years, and the Burlington Electric Department’s Smartlight and Heat Exchange programs spent !§811,000in three

years, and $826,000 in three years, respectively We’ve been impressed to find that some very effective programs have been implemented at low cost. We suspect that in some cases program concepts that have been proven effective on a small scale can be transferred and implemented as larger-scale programs Utilities have found that one of the best means of keeping program costs low is to partner with trade allies such as equipment vendors and community-based organizations. B.C. Hydro, for example, provides vendors of high efficiency motors with an incentive that is approximately 20% of the incentive they offer to end-users directly (#38). United Illuminating’s contractor for its Homeworks program (#l5) added value to the program by taking the initiative to contact the local gas utility and to work out an arrangement whereby the two utilities’ efficiency programs are now cou-

n

pled, providing customers with a more comprehensive program at less cost to each utility. Other programs, such as SCE’s Low Income Lighting Program (#2), effectively rely on community-based organizations to market their program These organizations, such as the Southern California IndianCenterand the Vovi Friendship Association (which serves the Vietnamese community), use the DSM pmgramsinturnasmeanstomake money for community centers and the like. B. Cost per Customer The milliondollar rebate that Consolidated Edison paid to Columbia University was pretty exciting (#8), as is the $2.6 million project retrofit of Brooklyn Union College which was financed by the New York Power Authority’s High Efficiency Lighting Program (#17). For small commercial and industrial customers, New England

Total Cost

5 40 3 39 22 11 13 27 14 10 36 15 21 18 38 9 33 35 19 37 6 31 23 34 16 24 25 17 1

4

12 2

7 28 26 20 8 32 30

Figure 2: Costs for Programs (x 1000) J

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Electric System spent up to $16,000 per school and an average of $5,000 per customer (#l). Little marketing is necessary when large sums are spent and offered, but concerns about durable savings remain paramount. Ontario Hydro has been hugely successful at spending a lot of money on a per home basis in Espanola (#16), but also in getting the community to invest nearly $2 million in two years to improve their homes’ air quality (mitigating radon and moisture-related problems) and energy efficiency. The Results Center finds that overall spending per customer is quite variable, depending on the program and on how the customer or participant is defined. For commercial and industrial programs, the cost per customer has ranged from a low of $169 per participant in Sacramento Municipal Utility Distrid’s Commercial Lighting Installation Program (#13), to a high of !$384,000per completed project in New York

5

14 18 40 35 25

4

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Power Authority’s High Efficiency Lighting Program (#17). Residential lighting programs have relatively low per-customer spending from about $50 per household for Central Maine Power’s Operation Lightswitch to $191 per household for Burlington Electric Department’s Smartlight (#3). Residential retrofit programs have an even wider range, from $5 per showerhead for PG&E’s program (#14) to $2,700 per unit for Seattle City Light’s Low Income Electric Pro-

had cost of saved energy less than 7 g/kWh. (Figure 3 presents the cost of energy saved for the most recent year of the program.) Moreover, only three programs cost more than 6 g/kWh, and only 7 of the 40 programs cost more than 4 e/kWh. At the lower cost end, eight programs cost less than 1 c/kWh, and 15 programs cost less than 2 c/kWh. We were surprised to find that the five least-cost programs represent a wide spectrum of D!SMprograms profiled by The Results Center in 1992 - from community-based programs to residential retrofits to industrial incentive programs to agricultural programs to comrnen&l lighting programs. The lowest cost programs were Osage’s community program at 0.11 c/kWh, Pacific Gas and Electric’s Showerhead Program at 0.32 e/kWh, Bonneville’s Energy $avings Plan at 0.33 c/kWh, Western’s Pump Testing Program at 0.37 c/kWh, and the Environmental Protection

gram (a@ C. Low Cost Savings One useful means of comparing the costs of DSM programs is to use the cost of saved energy, a measure of a program’s cost effectiveness that is not tied to regional marginal costs or prevailing utility rates. Though our program selection was done without regard to the cost of saved energy, with only one exception all of the programs profiled in the 1992 series

17 28 32 33 39 37

7

11 24

2

13 21

8

19 30

6

34

10 22

15 36 16 26

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Figure3: Costof Saved Energy for Most Recent Year of Program (GkWh) J

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Agency’s Greenlights at 0.46 e/kWh. D. Systematic Design and Retrofits Having presented an irnpmssive array of low cost programs, we caution the reader not to be enticed simply by low costs, and suggest that slightly higher cost programs that provide more systematic retrofits may be more cost effective in the long term. Bl?A’s Energy Smart Design (#37) encourages energy simulations prior to design and provides recognition to virtually all professionals involved in the design and construction of energyefficient buildings. Northeast Utilities’ Energy Conscious Construction program (#6) promotes incentives throughout each phase of the design process of new commercial buildings. These program designs, while more expensive than some more simple programs, have been critical in capturing lost opportunities.

Osage, by their very nature have resulted in the broadest coverage and have enjoyed stunning participation rates of 91%, 92% and 100% respectively However, the participation numbers for Hood River and Espanola reflect participation in audits. In Espanola, participation was also measured in terms of customer uptake, the percentage of recommended measures on a kilowatt-hour basis that were finally implemented by the customer at the utilivs recommendation.

B. Supporting the Local Economy

III. The Marketplace A. Participation Levels Program participation is perhaps the most basic indicator of program acceptance and success but must be used with some caution, as there are a number of ways to define participation. Some programs we profiled had extremely high levels of participation - in excess of 90% - while others have lower levels, but higher levels of savings per participant. The community-based programs, Hood River, Espanola, and

May 1993

individual items, with a single item being a lamp or motor. Yet another indicator of participation for commercial and industrial new construction programs is the percentage of actual square footage of new space that is fitted with energy&ficient equipment. PG&E estimates that its new commercial construction program (#33) is now reaching 33% of the market; Northeast Utilities’ Energy Conscious Construction estimated penetration is 2025% of all new, nonresidential construction, or approximately 8.5 million square feet in 1991.

Another measure of program participation is based simply on the gross number of measures installed. Most residential lighting programs count the number of bulbs or lamps installed. Hardware rebate and coupon programs are often discussed in terms of the number of pieces of equipment promoted and installed. PG&E’s Showerhead Program (#14) resulted in the distribution of nearly half a million showerheads. PC&E‘s Retrofit Program (#25) has invoked the installation of more than 30 million

Utilities are investing greater and greater sums in their DSM initiatives. Some utilities recognize the value of using DSM as a means of promoting economic development. Many utilities seek local contractors to implement their programs. Others have mcognized that purchasing energy-efficient lighting from local distributors has at least a three-pronged effect. First, the distributors start to stock energyefficient products, making them available to the general public and thus gradually transforming the market. Second, the distributors buy the equip ment in bulk for the utilities, thus get better prices, stimulating more cost effective retrofits. Finally, supporting local businesses not only has positive employment ramifications, but results in dollars experiencing the multiplier effect in the local economy

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United Illuminating’s Homeworks program (#15) for low income neighborhoods is a classic example of how a utility can support job creation and how this in turn reinforces the program. The program has effectively tapped the manpower of both the Bridgeport Urban Corps and the local Summer Youth Corps program. These youths are desperately in need of meaningful employment, and the utility benefits from not only relatively inexpensive labor, but also by the reputation that the program affords to the utility’s overall DSM effort, especially in loti income and multi-ethnic neighborhoods. C. Allowing for Innovation and F’lexibility Perhaps the most important lesson learned from our first year’s worth of research with exemplary DSM programs is that for utilities to be successful with DSM they must be flexible and adapt as necessary Effective D!SMis a process of experimentation, a continual quest for what works and what doesn’t and why As markets change, and as marketing strategies run their useful courses, pmgram designs and incentive levels and technologies eligible for rebates must be adjusted. Pacific Gas and Electric has demonstrated the effective interface between its custom incentive and prescriptive rebate program, a dynamic between two programs that reflects market transformation. Installation of new technologies and innovative energy-sav-

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techniques are financially sup ported through the Customized Rebate program (#4). After sufficient interest has been demonstrated in a technology, the technology can become eligible for rebates through the prescriptive path: PG&E’s Retrofit Program (#25). Southern California Edison’s Energy Management Hardware Rebate Program (#/28) also has both a menu rebate and a customized component, allowing customers the flexibility to install whatever energy efficiency measures are appropriate for their specific applications. Bonneville’s Energy Smart De sign (#37) is another ideal example of the flexibility of a D!SMprogram and thus its success. The program was introduced initially as a design assistance program with,no financial incentives offered to encourage implementation of measures recommended through the program. As BPA reing

alized that many recommended measures were not being installed, it introduced an Optional Services component to the program through which rebates and incentives were offered. This new element was so popular that it has become the centerpiece of the Energy Smart Design program rather than a secondary element, essentially resuscitating the program and allowing for its success. Bonneville’s Energy !$avings Plan (#l&3)encourages industrial customers to identify savings opportunities. The agency then calculates an acquisition payment based on the value of the savings to BPA. Northeast Utilities’ Energy Action Program (#34) is implemented in a similar manner: large commercial and industrial customers are provided design assistance and financial incentives to implement energy management systems and industrial process improvements.

7’hm havebeenmorethan ajw DSM successstories.

The Electricity Joumal

Similar flexibility is critical in residential sector programs as well. Energy, Mines and Resources of Canada’s R-2000 new home rating program utilizes the HOT-2000 computer program to determine whether a home’s energy usage will meet specified energy-efficiency goals. Homebuilders and designers am allowed the flexibility to meet the energy usage goals in any manner that they feel appropriate, thus encouraging innovation in design. D. Transforming the Market Clearly the goal of effective demand-side management programs is “market transformation.” Utilities recognize that they can shift the market to greater and greater consumer acceptance of energy-efficient goods and services. Many consider this transition a continuum. As more and more efficient products become available, utilities acting as energy service providers can stimulate their market adoption. Many utilities recognize that by raising awareness of new techniques and technologies - and by offering incentives to catalyze consumer buying patterns toward energy efficiency - the utility can “ramp down” incentive levels and perhaps ultimately only serve as advisors, getting out of the complex and contentious arena marred by cross subsidization and ratepayer equity issues. B.C. Hydro’s Power Smart High-Efficiency Motors program (#38) is a good example of market transformation. The program began to promote energy-efficient May 2993

motors and adjustable speed drives with high rebate levels. Now the rebate levels are being reduced, a function of the success of the program. In 1988, when the program began, only 3.5% of the total horsepower value of all motors purchased in British Columbia were high efficiency By 1991, 63.7% of motor purchases, again based on horsepower, were high efficiency. B.C. Hydro was also highly successful at using vendors to promote the program, and was unusually successful in

E. Eclipsing Program Goals Naturally the most successful energy efficiency program is one that has accomplished its stated objectives entirely, and which appears to eclipse its own usefulness; this is the ultimate function of success. Bonneville’s Super Good Cents Home program (#7)is a good example of this as conservation standams for the region will eclipse the need for the program. Many utility rebate programs similarly will have to be abandoned or modified as national appliance efficiency standards take hold. while utilitiesmaybe tempted to rest on their laurels,as energy eff+ncy technologiesand techniquesadvance, creative utilitieswill find new ways to further promote and support an ever more important and effectivetransformationto energyefficiency IV Conclusion

stimulating the use of high efficiency motors by original equip ment manufacturers in the province. Bonneville’s Manufactured Housing Acquisition Pmgram (#t30) is another powerful example of market transformation. The program will significantly increase the efficiency of virtually all new manufactured homes sold in the Pacific Northwest thanks to a unique collaboration between BPA, the Northwest Power Planning Council, the region’s public and private utilities, and the 18 manufactured housing makers who serve the region with their products.

The 19!ZProtie Series is a powerful roster of effectiveDSM programs. Another4oplof&sanXurrently under development It is our hope and belief that The Results Center profiles will serve as a solid basis upon which to promote effective DSM throughoutNorth America and around the world. The DSM track record developed so far, thanks to the hard work and ingenuity of many dedicated individuals, serves as a fine foundation - one that can support bold and insightful experimentation, learning and then, ultimately widespread implementation of energy efficiency. W

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