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Energy efficiency enhances other DERs' value, but few utilities incentivize combinations of them

image credit: Pearl Homes
Peter Key's picture
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Westhaven Power CEO Brett Joerger describes the northern California company he runs as a utility.

That’s because Westhaven’s goal is to provide its customers with the solar generation and energy storage capacity they need to run their homes without drawing electricity from the grid.

“We give them the power of choice,” he said.

To help it give them even more power for less money, Westhaven also installs energy-efficient heating and cooling systems. Reducing the amount of electricity its customers demand to heat and cool their homes allows them to store more power for use during peak times or public safety power shutoffs due to fire risks. It also helps Westhaven put its customers on the path toward what Joerger calls “grid liberation” for less money.

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“We … want the home as efficient as it can be,” Joerger said.

It’s easy to see why. ICF, a global consulting firm that helps utilities design and implement energy efficiency (EE) programs, among other things, estimates that fitting a home with EE measures before installing solar panels can save from 4,000 to 6,500 kilowatt hours of power per year. At an average residential rate of 13 cents per kWh, that equals from $520 to $845 in annual savings.

Despite that, a report by the American Council for an Energy-Efficient Economy (ACEEE) found that although many utilities have EE programs and programs for other DERs, few offer programs promoting the integration of EE with other DERs, including solar-plus-storage (solar+), even though the programs can provide them with operational and systems benefits and save money for their customers.

Programs promoting EE and solar+ “can combine the benefits of efficiency and solar+, especially energy savings, emissions reductions, grid stability, and resilience,” as well as “increase program participation for utilities, provide one-stop-shop convenience for customers, and give disadvantaged communities more energy options,” said the report, which is called “Integrating Energy Efficiency, Solar and Battery Storage in Utility Programs.”

While utility programs promoting EE and solar+ are rare, programs promoting energy efficiency and other DERs are even rarer. ACEEE originally planned to focus its report on programs that integrated energy efficiency and such DERs as microgrids and electric vehicles as well as solar+ but it found so few of them that it narrowed the report’s scope. The report does mention some energy efficiency and solar+ programs offered by entities other than utilities.

One reason few utilities offer EE and solar+ programs is the relative novelty of most DERs. EE products and services in some form have been around for decades. That’s not the case for rooftop solar, energy storage and grid-to-vehicle technologies. As a result, utilities are still crafting programs for them, let alone programs that integrate them with EE.

Similarly, regulators have been devising rules for EE programs for decades. They are still coming up with rules for other DERs and many of the rules they have come up with are controversial. As a result, even if utilities were attempting to launch programs promoting EE with other DERs, regulators would still be taking a while to approve them.

The programs also face the challenges of all programs dealing with DERs, most notably that they promote energy conservation rather than energy consumption and therefore have to somehow reward utilities for reducing rather than increasing their sales. On top of that, EE programs have established sources of funding and performance metrics, while programs promoting other DERs either don’t yet or have different ones.

Even so, utilities are starting to test programs that integrate EE and other DERs. For its report, ACEEE identified 13 that integrated EE with solar+ and divided them into five types: zero-energy building programs, which it said are the most common; solar rebate programs with energy assessments; DER aggregation pilots; online marketplaces that allow utility customers to evaluate, compare and shop for EE and solar+ services; and programs that finance energy efficiency upgrades and solar investments through tariffs on customer bills.

The report presented case studies on five of the programs: a residential solar rebate program offered by the municipal utility of Fort Collins, Colo.; Path to Net Zero, which is part of Energy Trust of Oregon’s New Buildings program; a partnership between the Sacramento Municipal Utility District and a private developer to build a 34-home zero net energy community; a Consolidated Edison partnership with Opower to connect customers to cost-effective energy efficiency products and services as well as DER offerings; and a partnership between the Ouachita Electric cooperative and a Certified B Corporation that enabled the co-op’s customers to pay for EE upgrades and solar generation through monthly charges on their bills.

ICF is working with utilities it doesn't have permission to identify on two programs that involve multiple DERs. One program involves offering incentives for EE and solar+ on new construction and another involves combining EE and electric vehicle (EV) charging.

Steve Fine, ICF’s vice president for distributed energy resources, said utilities are getting interested in combining energy efficiency and DER programs due to changes brought on by technology, renewable generation and DERs. Prior to large-scale renewables and DERs, grid managers treated load as a variable quantity that they accommodated by dialing up the necessary generation capacity. They could control load somewhat through demand response programs, but generally they responded to it with generation that, once it went online, provided a fixed quantity of power. Renewables and DERs are making the generation more variable, too, so managing the load becomes more important. Technologies such as advanced metering infrastructure give grid managers a better view of it and technologies such as smart thermostats, solar+ and EV chargers enable them to manage it more dynamically.

“Utilities and others are starting to pay much more attention to how they manage that load on an hourly basis; how they shift that load to match the resources that they have,” Fine said. “That’s where combinations of things like [EE and solar+] start to become much more interesting.”

Still, he said, it’s going to take ongoing investment in sensing and control technologies to better realize the potential of managed load. Building electrification and EV charging will make that load visibility and control that much more important.

EE measures don’t have to have smart technologies to be helpful, Fine said. Just reducing load helps because a smaller load is easier to manage. That means even old-school EE technologies enhance the value of new DER technologies. Utilities realize this and so are thinking about programs combining energy efficiency and other DERs even if they’re not ready to roll them out yet.

“I think things are really moving quote, unquote, in the right direction if you will, but it’s not widespread,” he said.

One thing that could make them more widespread is continuing drops in the price of energy storage, which Fine said hasn’t reached the point where rolling it out on a wide scale is cost effective. Technologies also could help — specifically those that allow utilities and others to manage load intelligently and close to instantaneously on a large scale.

Sarasota, Fla.-based Pearl Homes plans to put those technologies to use in its latest development. After completing Mirabella, an “active adult” community in West Bradenton that contains 158 homes with Platinum LEED (Leadership in Energy and Environmental Design) certification from the US Green Building Council, the company’s founder and CEO, Marshall Gobuty, decided to step up his environmental efforts. The Hunters Point Resort & Marina in Cortez, which is pictured in an artist's rendering accompanying this post, will combine EE, solar+ and smart-home technologies to enable its 99 homes to be net zero, which the World Green Building Council defines as “highly energy efficient and fully powered from on-site and/or off-site renewable energy sources,” and be able to collectively function as a virtual power plant.

A common complaint about the types of technologies that Pearl is using in Hunters Point is that they are too pricey for anything but luxury homes. Gobuty plans to prove that wrong in an affordable apartment complex called The Metropolitan. Located in downtown Bradenton, it too will combine EE, solar+ and smart-home technologies to be a net zero structure.

The ACEEE report mentions an affordable housing building in Washington, D.C., called St. Dennis Apartments that was redeveloped with EE technologies and a 250-kilowatt solar system. It also describes the Solar Access Program, which provides heat pump and solar array packages to low-to-moderate-income (LMI) homeowners in Massachusetts; and the Connecticut Solar for All program, also directed at LMI homeowners, which combines advanced efficiency upgrades with solar leases.

Of course, combining EE with other DERs has applications well beyond residences. Johnson Controls and the University of Hawaii are combining EE and solar+ to cut fossil fuel usage on the school’s Oahu campus by 70 to 98 percent and enable the Maui campus to generate all its power.

Even the US government is getting in on the act. In a project it completed in 2019, EE and renewables contractor Ameresco put Marine Corps Recruit Depot Parris Island on its own microgrid with islanding capability, 6.7 megawatts of solar generation capacity and energy storage, among other things. Ameresco also undertook EE measures from replacing light bulbs to upgrading the laundry energy system that save $6.9 million in annual energy costs and are expected to reduce the famous South Carolina training base’s carbon dioxide emissions by 37,165 metric tons per year.

That's a combination few developers or utilities will be able to match: EE, solar+ and Semper Fi.

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