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HomeMy WebLinkAbout20161013AVU to Staff 3 Attachment A.pdf1.1 Conclusions and Recommendations The following outlines the key conclusions and recommendations as a result of the evaluation activities. Specific details regarding the conclusions and recommendations outlined here, along with additional conclusions and recommendations can be found in the program-specific sections of this report and in Section Error! Reference source not found.. 1.1.1 Nonresidential Programs The overall realization rate for the nonresidential portfolio is 95%. The realization rates ranged from 102% for the Small Business program down to 54% for the “Prescriptive Non-Lighting Other” program. The largest program in the nonresidential portfolio, Site Specific, had a realization rate of 99%. The evaluation team found that the processes Avista is utilizing for estimating and reporting energy savings for the nonresidential programs are predominantly sound and reasonable. The following subsections outline specific key conclusions and recommendations for several of the nonresidential programs. Conclusion: The Site Specific program constitutes more than 60% of the program energy shares. Within the last 2 years, Avista has increased their level of quality assurance and review on projects that participate through the program. The evaluation team’s analysis resulted in a 99% realization rate for the Site Specific program. The high realization rate indicates that Avista’s internal process for project review, savings estimation, and installation verification are working to produce high quality estimates of project impacts. Recommendation: The evaluation team recommends that Avista continue to operate this program with the current level of rigor. For interior lighting projects, Avista should consider applying the interactive factors deemed by the Regional Technical Forum (RTF) to quantify the interactive effects between lighting retrofits and their associated HVAC systems. Status: We are in the process of changing our interactive effect values for both prescriptive lighting and site specific lighting. The RTF updated values in March 2016 and those will be reflected in our documents by November 1, 2016. Conclusion: Avista’s EnergySmart Grocer program is successfully providing retail and restaurant customers with an avenue to upgrade their refrigeration equipment. Participation in the program includes both prescriptive and custom projects. The evaluation team’s review of projects in the program resulted in a realization rate of 90%. For prescriptive projects, the evaluation team determined that RTF deemed savings values were being appropriately applied in most cases. However, low project-level Staff_PR_03 Attachment A Page 1 of 13 realization rates for custom projects, which tend to be larger in size than prescriptive projects, are driving the program realization rate downward. Recommendation: Avista should consider more internal review of energy savings estimates submitted by vendors for custom projects under this program. Alternatively, Avista could consider tracking custom projects under the Site Specific program with other projects of similar size and complexity. Status: In 2016, we began treating EnergySmart Grocer Site Specific measures the same way we treat our own. Conclusion: Avista reported 2014-2015 participation in six other prescriptive programs. Of these, the HVAC Motor Controls program is the largest, constituting 65% of the energy savings for this group. The evaluation team’s review of projects in these programs resulted in a 54% realization rate. Cases of ineligible VFD projects receiving incentives were cause of the low realization rate for these programs. Recommendation: Avista should revise the HVAC Motor Controls program to include more verification of motor eligibility status. More emphasis should be placed on confirming motor application and duty status to ensure compliance with the program’s existing eligibility requirements. More specifically, Avista should place specific emphasis on ensuring VFDs are installed in a manner that saves energy (i.e. not just as “soft starters”) and that incentivized VFDs serve primary-duty motors. Status: To address this issue the VFD incentive application now includes two additional check boxes stating “VFD is for control and not for a soft start” and “There are not 2 VFD’s on the same fluid flow system.” Conclusion: The Small Business reported savings for faucet aerators were found to be conservatively low based upon the evaluation team’s secondary research. The realization rates for faucet aerators were 126% for electric savings and 204% for natural gas savings. Recommendation: It is recommended that the modified deemed savings values utilized by the evaluation team be adopted by the program for future reporting purposes. Status: The modified deemed savings values have been updated and are included in the 2017 business plan. 1.1.2 Residential Programs The overall realization rate for the residential portfolio is 109%. The realization rates varied significantly across the various programs evaluated with the Shell and Fuel Staff_PR_03 Attachment A Page 2 of 13 Efficiency programs having the lowest realization rate (60% and 62% respectively). The evaluation team found that the reported savings for the majority of the programs were understating the actual impacts found from the evaluation activities. The following subsections outline specific conclusions and recommendations for several of the residential programs. Conclusion: The evaluation team found that the reported deemed savings value (per recycled unit) for the program was lower than estimated gross savings valued from prior studies. Avista may have aligned their deemed savings values close to the RTF deemed savings values, but it is important to understand that the RTF is reporting a value that accounts for net market effects (i.e. free ridership). Recommendation: If Avista choses to offer an appliance recycling program in the future, it is recommended that a clear distinction between gross and net savings values is noted if Avista reports the most current RTF values. Status: Avista discontinued its appliance recycling program in the middle of 2015 and is not planning on offering this program due to newer refrigerator and freezer vintages having greatly reduced savings. Conclusion: The evaluation team found, through billing regression analysis, a relatively low realization rate for the Air Source Heat Pump (ASHP) measures (RR of 49%). Recommendation: The evaluation team recommends Avista reexamine the assumptions relating to annual per-home consumption and savings estimates in homes receiving ASHP installations. In addition, to help better understand the baseline for the ASHP replacement, Avista could consider requesting that contractors and customers provide a better description of the replaced unit Status: Previously, Avista had been using a figure from a previous evaluation and has since updated the value to match the RTF UES, which is more in line with the evaluated results. As a result high efficiency ASHPs were not cost-effective for 2016 and were discontinued. Customers may switch from electric straight resistance to either natural gas or an ASHP but the stand alone new or replacement HE ASHP is no longer available. Conclusion: For showerheads distributed through the Simple Steps program, Avista allocates 50% of its reported savings to electric savings and 50% to natural gas savings to account for homes that have different water heating fuel types. Recommendation: The evaluation team recommends Avista update this allocation assumption to be based on representative water heater fuel type saturation. These data are available through the Regional Building Stock Staff_PR_03 Attachment A Page 3 of 13 Assessment study; however, we recommend Avista base the allocation on data specific to its territory. Status: Avista has decided to continue to utilize the RTF figure for any water heating retail showerheads, which is nearly a 50/50 split. Conclusion: The evaluation team conducted a billing regression analysis for the Fuel Efficiency participants and found realization rates of 60-70% for rebate projects that included the conversion of a home’s heating system from electricity to natural gas. When regression coefficients were examined in detail, the evaluation team noted that the estimated reduction in electric heating load was being offset by an increase in estimated base load within participating homes. Recommendation: Because the rebate amounts and per-home savings from Fuel Efficiency are so large and the number of participants is relatively low, the evaluation team recommends Avista ask participating customers for details on any additional home renovations that were completed in parallel with the fuel conversion. Home improvement projects such as an addition, finishing a basement, or adding air conditioning can drastically change the consumption patterns within a home and render the assumed baseline inaccurate. Status: Avista concurs with the findings and has chosen to utilize the newly evaluated fuel efficiency numbers for future program design. Interestingly a previous impact analysis found higher realization rates that resulted in the lock UES used most recently. The impact analysis aligns with anecdotal feedback from customers that the higher incentive is helping reach customers with less usage and shortening their payback to successfully encourage them to convert. Conclusion: The evaluation team found that over half the homes receiving Fuel Efficiency rebates in 2014-2015 did not have a gas billing history with Avista prior to the conversion. These homes realized savings at a higher rate than homes that did have previous gas service. Recommendation: The evaluation team recommends that Avista consider adding a field to the program tracking database that indicates the gas meter installation date or service start date of participating homes. This would more clearly delineate homes that were previously all electric and became dual-fuel around the same time as the Fuel Efficiency project, from homes that had been dual-fuel historically. Avista may also want to consider assuming a more conservative electric savings estimate for homes that had prior gas service because it’s possible that the home was not 100% electrically heated prior to program participation. Staff_PR_03 Attachment A Page 4 of 13 Status: While the database may not be able to track the additional data points, Avista will look for opportunities to track and/or communicate greater detail for evaluation. Avista has chosen to utilize the newly evaluated fuel efficiency number for future program design. Conclusion: Avista’s deemed savings estimates, which were generally the same for all similar product types and not correlated to the bulb wattage, understated the savings found by the evaluation team. This was especially the case for Avista’s CFL giveaway program. Recommendation: The evaluation team recommends that Avista consider more detailed product type deemed values in an effort to be more closely aligned with the actual participating lamps. Simple Steps has shifted its program tracking to specific product types by lumen bins in accordance with the most current BPA UES measure list. Avista should consider using these higher resolution deemed value for internal reporting with the Simple Steps program and for use with internal residential lighting programs. Status: Avista will shift its Simple Steps tracking to align with the most recent RTF UES. Recommendation: An overarching recommendation related to the Residential Lighting, is that Avista monitor the LED lamp market for technology cost changes and customer preferences, and consider increasing LED lamp options from the 2014-2015 portfolio in future DSM planning. Currently, LED prices are dramatically decreasing and customer preferences are shifting from CFL to LEDs as a preferred choice as an energy efficient technology. Consequently, CFLs shelf space share is declining as an abandoned technology, despite its better cost effectiveness compared to LED lamps. Status: Avista will continue to monitor the quickly changing residential lighting market. Conclusion: The evaluation team found a low realization rate (38%) for shell rebate measures (windows and insulation). This finding indicates that reported savings values were too aggressive on average. The evaluation team compared the end-use shares estimated via regression analysis and found that only approximately 5,500 of the 13,000 kWh of average annual consumption in residential homes in Avista’s service territory was assigned to heating and cooling load. Given this end-use share, the reported savings values claimed by Avista equate to a 25% reduction in HVAC loads. Recommendation: The evaluation team recommends Avista examine planning assumptions about per-home consumption, end-use load shares, and percent reductions in heating and cooling loads from shell improvements. It may be that the percent reduction assumptions are sound, but they are being applied to an overstated assumption of the average electric HVAC consumption per home. Conversely, the assumed end-use shares may be accurate, but the end-use Staff_PR_03 Attachment A Page 5 of 13 reduction percentage is inflated. This investigation should be conducted separately for electrically heated homes and dual fuel homes as the heating electric end-use share will be different. Status: Avista had been using older RTF numbers that corresponded to the time of the Conservation Potential Assessment. The current business plan is utilizing the most recent RTF numbers. Conclusion: The evaluation team found that savings held fairly consistent during the 6 month interruption in Home Energy Report delivery. The finding reinforces Avista’s decision to assume a multi-year measure life when calculating the cost-effectiveness of the Opower program. Recommendation: The evaluation team recommends Avista examine the program delivery model in the 2016-2017 cycle. Given the fixed and volumetric nature of program costs, measure life assumptions, and mechanisms by which measured savings are counted toward goal achievement the evaluation team believes there are alternatives to the traditional delivery model that optimize program achievements relative to costs. Status: Avista will continue to utilize the same design for the 2016-2017 Home Energy Reports program, but will be looking at all options of different HER program design for 2018-2019. Conclusion: The evaluation team found a high realization rate for the fuel conversion measures implemented through the Low Income program. One reason for the high realization rate could be due to the fact that Avista caps the reported savings value to 20% of the contractor estimated savings. In addition, the evaluation team found that the verified savings for these fuel conversion measures aligned closely with the verified savings found through the regular-income Fuel Conversion program. Recommendation: The evaluation team recommends re-evaluating the current savings cap for fuel conversion projects. In addition, we recommend that Avista align assumptions for fuel switching savings for the Low Income and Fuel Efficiency programs. Status: Avista is re-evaluating the cap for low income savings claim. Based on past impact analysis savings were capped at 20% of the home. There should be a distinction between a cap for weatherization and conversions where savings could exceed 20%. 1.3 Conclusions and Recommendations Staff_PR_03 Attachment A Page 6 of 13 The evaluation team concluded the following and provides several suggestions for Avista’s programs. This section begins with conclusions and recommendations pertinent across all programs (cross-cutting), followed by nonresidential and small business, and ending with residential specific conclusions and recommendations. 1.3.1 Cross-cutting Conclusion 1: Contractors are key program partners. Contractors are the driving force of Avista’s rebate programs, as they inform both nonresidential and residential consumers about Avista’s rebate opportunities and convince them to purchase qualifying equipment. The nonresidential contractors also initiate a notable portion of work in comparison to customer-initiated jobs and appear to be playing a larger role in application preparation than in years past. Both nonresidential and residential customers report being highly satisfied with contractors and are taking into account contractor’s recommendations on what to install. Recommendations: Increase support for contractors. Consider the following suggestions to continue strengthening relationships with contractors and to improve their effectiveness in generating program savings: 1. Offer an opt-in mailing list to contractors. Contractors subscribed to this mailing list would receive regular information on program offers, changes, trainings, and other program supporting information. This list would be open to any interested contractor. 2. Promote outreach to contractors: Encourage program staff and account executives to engage further with contractors by continuing and perhaps increasing their involvement with contractor-related resources such as the Northwest Lighting Network. This work can further educate contractors and nudge them to cross- promote the rebate programs to their customers. Additionally, training may help contractors’ up-sell high efficiency equipment through the program by improving their understanding of and ability to sell high efficiency solutions. Therefore, Avista should continue to support contractors attending NEEA’s training sessions including their recently launched comprehensive training for lighting contractors and distributors. 3. Share effective messaging or marketing collateral with contractors. Contractors could support program and marketing staff by providing insights into how to best target certain customer types, learn from Avista on how to better target certain customer segments, and possibly promote cross-program referrals and participation. As findings from the evaluation show that most contractors specialize in the nonresidential or residential sectors, even if they serve both, developing sector- specific messaging may be particularly effective. 4. Investigate offering cooperative (co-op) marketing. Co-op marketing can help contractors effectively market the program consistent with Staff_PR_03 Attachment A Page 7 of 13 Avista’s objectives and increase customer perceptions of contractor’s credibility and cross-promote other programs. Status: We have in the past offered quarterly updates to contractors and attempted to further engage them. There was limited engagement in the additional events and we have focused on 1-2 per year with high engagement at outreach early in the year where we reiterate program guidelines, updates and changes. We have established a web page for contractors where they can go for reference materials. We have broadened our communication of program changes sending both HVAC and Electrical (Lighting) as well as residential and non-residential in order to avoid gaps in communicating with contractors. We have discussed co-op marketing opportunities and are evaluating such opportunities with internal stakeholders. Some other outreach efforts include our Questline newsletter which is available to businesses and vendors alike. It provides regular updates on energy related issues and Avista programs. Our commercial and industrial outreach has centered on case studies that provide customers and vendors a starting point for proposing energy efficiency measures. We have also underwritten vendor training and are active in related groups like BOMA and NEEA lighting efforts. Conclusion 2: Avista and its implementation contractors deliver rebate programs efficiently, and promoting the programs further could help maintain or even increase participation. Several indicators suggest program promotions could be optimized. First, participants and nonparticipants expressed high interest in learning more about Avista’s rebate programs, indicating that although they may be aware of Avista’s offers, their knowledge is limited. Second, a majority of residential participants who indicated learning primarily about Avista’s offers through contractors were not aware of other program opportunities outside the program they participated in. Recommendation: Develop more abilities to target marketing. For example, cross- promote programs to recent participants by acknowledging their recent participation and informing them of other program opportunities applicable to their home or business. Status: Continue to cross-promote additional programs in our small business effort where we emphasize additional opportunities and have seen additional throughput. Work with marketing as they evaluate Customer Relationship Management (CRM) software solutions that can enable us to track customer participation in different programs and cross-promote additional offerings. In the meantime continue to utilize our existing direct mail channels such as the customer newsletter and bill inserts. Staff_PR_03 Attachment A Page 8 of 13 Recommendation: For residential customers, continue improving messaging in direct mail promotions to better communicate program information since residential customers prefer to receive this information via mail. Status: In 2014 and 2015 we utilized direct mail to promote our electric to natural gas conversion rebate. In 2016, energy efficiency was included via direct mail in our Connections customer newsletter as part of our, “Efficiencies Matter” and “Way to Save” Campaigns; we also utilize bill inserts to extend our message as appropriate. 1.3.2 Nonresidential, Including Small Business Conclusion 3: Although declining participation rates could threaten Avista’s ability to achieve long-term goals, evaluation results point to opportunities to drive additional savings. Developing new strategies to encourage deeper savings or increased participation will be paramount to reversing the decline in participation and achieving long-term savings goals. Almost one-third of nonparticipants reported they will make a building upgrade in the next two years, indicating a continued potential for program participation. In particular, evidence suggests that much opportunity remains for converting lighting from T12s. Recommendation: Develop a marketing approach specifically targeting replacement of T12 lamps. The switch to a T8 baseline in 2012 had a dramatic effect on participation because the rebates became far less attractive to customers to upgrade from T12s. While it may not be feasible for Avista to alter the baseline for T12 change-outs, Avista should look into developing targeted marketing strategies for convincing nonresidential customers with T12s to replace them with more efficient lighting, focusing not only on savings but improved lighting quality and performance. Avista could begin by targeting businesses that the Small Business Program has identified as still having T12s. Status: Currently, Avista has prescriptive incentives for electric commercial customers for replacing T12's or T8 lamps with Tubular LEDs (TLEDs). To replace T12 lamps with TLEDs, the customer will need to replace the T12 ballast with a LED driver or a ballast that supports the TLED lamp. This incentive is extremely popular and does not require additional marketing, at this time. Lighting contractors have been heavily marketing these incentives and numerous customers are changing out their lamps. Avista also has prescriptive commercial lighting incentives for replacing T12's Fixtures with new or retrofit High Performance T8 (using low wattage T8 lamps-25 or 28 watt) or DLC qualified LED fixtures. It was found to be cost effective only for lighting with run times greater than 80 hours per week. This limits the business marketing audience-electric Staff_PR_03 Attachment A Page 9 of 13 commercial customer that would qualify for this incentive. Target marketing only to the business customer that qualifies would be difficult. It is believed that many customers with existing T12's fixtures are most likely rate Schedule 11's. Avista currently has a small business program that is treating those customers and cross-promoting other opportunities like lighting. Avista is also piloting additional lighting (T12 replacements) for this customer segment as an expansion of the current program. Questline Newsletter is another avenue to let Avista electric commercial customers know about Avista's incentives for T12 conversions and other energy efficient lighting incentives. Recommendation: Work with nonresidential lighting contractors to promote replacement of T12 lamps. Contractors make their living by selling equipment. Avista should work with nonresidential lighting contractors to make sure they are fully aware of the advantages that more efficient lighting (including the reduced wattage tube lighting that NEEA is targeting through its Reduced Wattage Lamp Replacement Initiative) offers their customers. Status: Avista currently markets to lighting vendors through Avista Commercial Lighting update newsletters and vendor outreach workshops about the T12 lamp conversions. The lighting vendors and contractors have been responsive and market the T12/T8 lamp replacement to TLED lamp conversions and many customers are taking advantage of the incentives. Recommendation: Consider claiming Simple Steps savings for bulbs purchased for the nonresidential sector. The evaluation found that about 12% of Simple Steps LED sales and somewhere from 5% to 12% of Simple Steps CFL sales go to nonresidential customers. The mean hours of use for such lighting is much higher in a nonresidential than residential settings, meaning that the total Simple Steps savings is potentially higher than currently estimated, and at a minimum, Avista should consider claiming the additional savings for these purchases. Status: This was considered but upon further review we chose to continue to just use the RTF UES even if it might be slightly conservative given some longer runtime commercial applications. 1.3.3 Residential Staff_PR_03 Attachment A Page 10 of 13 Conclusion 4: Participation in the Avista rebate programs has rebounded since 2013 driven by a fivefold increase in shell program participation. Rebate program participation reached a low point in 2013, after which participation increased year over year by 51% from 2013 to 2014 and by 43% from 2014 to 2015. This is a positive sign; however, maintaining or increasing program participation requires cost effective savings opportunities for residential customers. Avista’s residential programs operate in a fast-changing market. Consumers are adopting LEDs rapidly, retailers are transitioning away from CFLs to LEDs, and the federal government and regulators are mandating higher efficiency standards for bulbs and other energy efficient technologies. The convergence of these forces has implications for the cost effectiveness of Avista’s downstream rebate programs. Program administrators throughout the United States are exploring and testing alternative program designs such as upstream and midstream designs in response to the evolving market. Although Avista is currently participating in the Simple Steps, Smart Savings program (a midstream program), when asked about future opportunities, program staff did not mention any upcoming pilots or programs that apply these types of designs. Recommendation: Continue regularly reviewing the expected savings and cost-effectiveness of the measures in residential portfolio and exploring the benefits and costs of other program designs including upstream and/or midstream designs. Consider these suggestions: 1. Continue monitoring the technological advances and availability of ductless heat pumps and water heating equipment. Surveyed contractors recommended both of these categories as candidates for inclusion in Avista’s programs. NEEA, for example, has been working to promote the savings potential of heat pump water heaters in the Northwest via the Northern Climate Heat Pump Water Heater Specification, and The Northwest Power and Conservation Council has identified both of these measure types as promising technologies in the recently adopted Seventh Power Plan. 2. Explore upstream program opportunities outside of the lighting market. Upstream incentive programs offer the potential to increase the adoption of energy efficient technologies at a lower cost compared to downstream incentive programs. Program administrators in California and elsewhere have successfully tested or used upstream program designs for technologies that Avista currently incents, including HVAC equipment and water heaters. Status: The business planning process includes an annual review of expected savings and cost-effectiveness for residential measures. We ensured that ductless heat pumps and heat pump water heating technologies received additional review as we didn’t currently have incentives. We are planning incentives for both in 2017. Also we have Staff_PR_03 Attachment A Page 11 of 13 added upstream buydown opportunities for water heating savings in both low flow showerheads and clotheswashers. Conclusion 5: Residential customers who rent their home are underserved. Nonparticipants say living in a rental property prohibits them from making improvements. This was the second most commonly cited barrier to making energy efficient upgrades among nonparticipants (after the up-front cost barrier). More than a quarter (27%) of nonparticipant survey respondents were renters, whereas only 3% of the participant survey respondents were renters. Renters account for about one-third of the population in Avista territory.8 Currently, Avista serves renters via the low-income program. The CAP agencies reported having difficulty serving the low-income renter population because it is difficult to convince landlords to participate. Additionally, there appears to be no multifamily program in the Avista portfolio that could serve this market, although Avista does offer an incentive for a natural gas space and water heating measures to multifamily property owners. Recommendation: Investigate energy savings opportunities in the rental market. Consider the following suggestions: 1. Estimate the number and distribution of rental units in the single family, manufactured home, and among multifamily buildings. Analyzing these data geographically and by vintage would likely yield insights regarding the energy saving potential in these markets. 2. Conduct needs assessment research with landlords to understand their needs and concerns and explore ways to bolster their willingness to make energy efficiency upgrades on their properties. This research should consider the needs landlords serving low-income renters as well as renters not eligible for the low income program. 3. Conduct needs assessment research with renters to understand their needs and the barriers to participation they face. For example, although some energy savings activities may not be appropriate for renters (for example, HVAC system replacement), other activities such as installing energy efficient lighting and/or advanced power strips could be appropriate. Status: Renters are a difficult market due to the split incentive issue where landlords are hesitant to make capital improvements where the return is to the renter rather themselves. Our billing system does not have the ability to break down customers by single family, manufactured home and multifamily. There are some manual analysis that could be done to query customers with landlord agreements but it is a manual Staff_PR_03 Attachment A Page 12 of 13 process at this time. We have worked with renters who inquire about energy efficiency programs and have had some success with certain programs, like electric to natural gas conversions where landlords have taken advantage of rebates that currently cover a significant portion of the retrofit and while the energy savings accrue to the renter it’s an obvious and lower than otherwise out of pocket improvement to the property. We also tailor our outreach efforts with our energy fairs and mobile outreach to include low-cost improvements that most renters can do within their rental agreement such as rope-caulk, window kits and v-seal. Low-Income As part of the review of evaluator recommendations we also reviewed comments from community action partners in regards to low income programs. Overall their suggestions were for additional health and human safety, home repair or measures that are not cost-effective EE measures (such as renewables). There were also comments and review of educational opportunities that we continue to try and provide outreach but also recognize the CAP funding and flexibility from LIRAP or special DSM Con/ED funding to design and deliver different educational approaches. Staff_PR_03 Attachment A Page 13 of 13