Energy Trust of Oregon comments addressing the Senate Bill 978 process July 10, 2018

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1 Energy Trust of Oregon comments addressing the Senate Bill 978 process July 10, 2018 Energy Trust participated in the SB 978 process and is pleased to provide informational comments to the Commission. These comments are based on our experience as a provider of energy efficiency and renewable energy programs for Oregonians. Energy Trust is an independent non-profit organization that operates under a grant agreement with the OPUC to deliver cost-effective energy efficiency resource for customers of Portland General Electric, Pacific Power, NW Natural, Cascade Natural Gas and Avista, and to support small-scale renewable energy generation projects for customers of Portland General Electric and Pacific Power. Since 2002, Energy Trust has helped participating customers save and generate 796 average megawatts (amw) of electricity, and conserve 57 million annual therms of natural gas. This least-cost resource (2.5 cents per kilowatt hour (kwh) in 2017) helped our utility partners avoid or defer spending on additional generation and transmission resources and better manage rates. The energy we have helped customers save and generate has collectively saved them over $3.2 billion on their utility bills, to date. Saving and generating this energy also delivered additional benefits, including increased economic development, water conservation and greenhouse gas emission reductions (22.8 million tons of CO2 avoided since 2002). Future trends in energy efficiency and renewable energy Significant Cost-Effective Energy Efficiency Resource Remain. Oregon s early leadership in promulgating energy efficiency policies under SB 1149 and SB 838 has resulted in significant, low-cost (669aMW) electricity system savings. This is one of the factors which helped Oregon to repeatedly accomplish top five placements in the annual American Council for an Energy Efficiency Economy state scorecard. As a result of stable energy efficiency programs, many Oregon utility customers have already implemented efficiency measures, reducing the number of cost-effective measures which they can implement in the immediate future (i.e. a customer installing a ductless heat pump in 2010 is not likely to install another more efficient one until the unit ceases to operate at the end of its expected operational life). The Resource Assessment model Energy Trust employs to provide efficiency forecasts for Portland General Electric and PacifiCorp Integrated Resource Plans (IRP) currently projects an additional 747 amws of potential cost-effective achievable net electricity savings over the next 20 years ( ). We estimate this is enough electric savings to functionally offset 99% of forecasted load growth for these utilities. These savings are not likely to be achieved at 2.5 cents per kwh as they were in 2017, since a number of factors will influence the cost of acquisition (e.g. fewer large projects, possible carbon pricing, decreasing cost of renewable generation, product market transformation and changing economic conditions). However, these projected savings are cost-effective and therefore will help utilities deliver least-cost energy for utility customers. Fewer large projects: Energy Trust continues to see commercial and industrial projects with fewer savings per project because the organization has already supported many of the larger projects, which

2 have historically been the source of very low-cost savings. Although smaller projects tend to save less energy at higher costs per project, Oregon s many small and medium size businesses represent a significant source of future cost-effective energy savings. Market Transformation: Energy Trust designs programs and incentives to identify new, more efficient technologies and drive down the unit costs to help them achieve the scale necessary to transform the market. An example of this is our recent success moving new LED lighting products into the residential market. In 2017, and in collaboration with the Northwest Energy Efficiency Alliance, Energy Trust worked with LED manufacturers, distributors and retailers to place 6.5 million LED lights into Oregon customers homes and businesses. This is an increase of 1.8 million over With these results, Energy Trust believes the residential LED market in Oregon is largely transformed. As we wind down our support in the residential LED market, Energy Trust will seek to identify new efficiency technologies which, with coordinated program support, have the potential to move into the market at scale. Ductless heat pumps and heat pump water heaters are two examples technologies that show great promise for significant savings. Energy Trust is currently working on new measure development for these technologies and new approaches to deliver them. Serving all customers: As have members of the SB 978 Access workgroup, Energy Trust recognizes that while we strive to directly serve all customers, that there are customers we have yet to fully reach. To help reach, serve and deliver benefits to more participants, Energy Trust has developed diversity, equity and inclusion goals and a three-year operations plan to guide the organization s work to better engage and serve Oregon s diverse businesses, residents and communities. The diversity, equity and inclusion operations plan will help Energy Trust better understand if and where participation gaps exist and achieve energy efficiency and renewable energy program participation outcomes across a broad range of customer characteristics. Increasing our outreach to rural Oregonians, communities of color and people with low- and moderate-incomes is critical to our ability to serve all eligible customers. Energy Trust is also leveraging our experience with rooftop solar electric generation to design programs that are more accessible to low and moderate income Oregonians. Under a multi-year grant from the United State Department of Energy, Energy Trust is working with Oregon Department of Energy, local community members, Lawrence Berkeley National Laboratory and National Renewable Energy Laboratory to identify barriers and create effective strategies to accelerate solar adoption among low and moderate income Oregonians. Data: Energy Trust is focusing on acquiring and employing new datasets to identify customers we have not yet served, ascertain if barriers to engagement (e.g. linguistic, cultural, geographic, etc.) exist and utilize our findings to modify program design, measure development and outreach methodologies to overcome any such barriers. New data tools can also help us locate communities and customers who, if engaged, can help our utility partners address distribution and transmission challenges. Targeted, Locational Load Management: Historically, Energy Trust has achieved its efficiency savings results by designing programs to reach three broad categories of customers: Residential, Commercial and Industrial/Agricultural. Going forward we foresee engaging in more targeted initiatives. For instance, we are currently engaged in a targeted load management pilot, wherein specific communities and customers are identified where efficiency and distributed generation measures can help the utility manage load. Efficiency and distributed generation measures are marketed and delivered to these customers, helping utilities reduce energy use where it is of most value to the system. Doing so allows

3 the utility to defer or avoid spending on costly transmission infrastructure and load management equipment. Energy Trust believes that more such opportunities exist and that the lessons we are learning with our utilities partners from pilots will help us to refine and expand our work to include more such targeted projects. Manufactured Home Replacement: According to Oregon Department of Housing and Community Services (OHCS) there are approximately 80,000 currently occupied manufactured homes which were built prior to These older homes were not subject to any construction standard, and were not designed to be used as permanent, year-round dwelling structures. Older manufactured homes are, beset by numerous challenges, not the least of which is that they are very energy inefficient. This imbedded inefficiency forces occupants to spend a disproportionate amount of their income (sometimes hundreds of dollars per month) on utility bills. This energy burden not only limits residents ability to maintain and improve their homes, but the often substandard condition of the homes can impede Energy Trust s ability to deliver cost-effective efficiency equipment upgrades and require our utility partners to generate or purchase additional energy resource. Energy Trust is currently working with manufactured home builders, OHCS and non-profit manufactured home park owners such as St. Vincent de Paul, CASA and others, to introduce a two-year pilot program to address this energy conservation opportunity. Our substantial efficiency incentives, when combined with funding from other sources, can be leveraged to help residents and park owners replace older homes with new, highly efficient manufactured homes. If this pilot is successful, it will be a template that can be utilized to reach manufactured home residents throughout the state and save utilities significant amounts of electricity resource. Renewable Energy: Energy Trust is also empowered by the OPUC to support the market in small-scale renewable energy generation by reducing any above-market-costs embedded in these systems. The bulk of our work supports three technologies, rooftop residential and commercial solar PV, small-scale hydro and biogas the last is primarily found at municipal Waste Water Recovery Facilities (WWRF). Each of these technologies is experiencing dynamic, and in some cases, conflicting market conditions. Solar PV: Since 2002 Energy Trust has worked with our Trade Ally network to support the purchase and installation of over 10,000 small-scale solar generating facilities at our customers homes and businesses. Solar photovoltaic technologies and associated businesses have experienced dramatic change over the last forty years as solar panel prices have dropped from over $100/watt in 1975 to $.37 /watt in Energy Trust supports the above-market-costs (AMC) of solar electric facilities in our service territory and this price reduction has all but eliminated those costs in grid-scale solar electric projects. The residential and small commercial market has also benefited from decreasing solar panel and inverter prices, however above-market-costs still exist in this sector of the industry due, in part, to highly volatile incentive programs. In 2017, the sunset of Oregon s residential energy tax credit (RETC) incentive helped to encourage a record (1800) number of residential rooftop solar projects. In 2018, the absence of the RETC combined with a new federal tariff on foreign-made solar panels is resulting in a decreased number of applications and installations. Additionally, the 30% federal Investment Tax Credit program is scheduled to shrink to 10% in 2022, introducing another variable into future PV growth projections. Energy Trust funding cannot fully mitigate for the loss of the RETC and, if as expected, the new federal tariff increases the price of foreign made solar panels, it is likely this market will experience instability for some time to come. In addition to our solar industry Trade Ally training and certification,

4 Energy Trust solar incentives have acted as a stabilizing influence within Oregon s solar markets. If price volatility continues as expected, we believe there will be a need for continued stabilization programs. Small Scale Solar Benefits: Distributed rooftop and small commercial solar projects provide multiple benefits to ratepayers and the utility system in general. Whereas grid-scale solar electric facilities are often sited on rural and farm lands, far from customer loads, rooftop solar electricity is generated where it can be used. It is our understanding that several transmission corridors in the NW are nearing capacity to host additional solar resource. Energy Trust is also involved in a Solar + Storage pilot, wherein our early Project Development Assistance can be utilized to help prospective solar system owners design and incorporate battery storage into their homes and businesses. Energy Trust believes the prospects for this solar + storage pilot to be significant. Small-scale hydro: Energy Trust supports communities, farmers, ranchers, irrigation districts and others who wish to take advantage of the energy embedded in moving water. Using recently developed early Project Development Assistance funding, the organization has dedicated three small hydropower projects as part of a larger suite of 46 projects working with Energy Trust s Irrigation Modernization program. Modernizing legacy irrigation projects leverages multiple funding sources to deliver an abundance of related benefits beyond the efficiency and renewable energy benefits which Energy Trust focuses upon (e.g. increased water quality and quantity for farms and fish and wildlife, locally sourced generation which can be enhance community resiliency). As many of these leveraged funding sources are federal, their future availability is not a certainty. Also complicating the funding picture is the declining avoided cost rates granted under PURPA (Public Utility Regulatory Policies Act Regulatory Policies Act {PL }. These unknowns challenge the financial viability of both new and existing irrigation modernization projects. Biogas: Oregon s current existing biogas resource is largely located at urban and suburban municipal waste water recovery facilities. Oregon has 55 such facilities, only 9 of which are producing electricity from biogas although 20 have sufficient resource to do so. Current design and equipment costs and netmetering rate structure limit the number of facilities that can take advantage of their biogas resource. Those that are not generating electricity are flaring the gas, diminishing Oregon s ability to meet its greenhouse gas emission goals an objective which the SB978 workgroups identified as important. Other sources of biogas are to be found in Oregon s many landfills. While a few have installed equipment to capture and convert the gas to electricity, most are flaring the gas, again diminishing Oregon s ability to meet its greenhouse gas emission goals. In the absence of other price drivers, equipment costs and rate structures prevent landfill operators from optimizing this resource. Additionally, natural gas utilities are exploring the extent to which wastewater treatment recovery facilities and landfills can provide gas for transportation fleets or utility transmission. Should market conditions change as a result of carbon pricing or regulatory change, the economics of biogas generation facilities could change dramatically. The Oregon legislature passed SB 334 in 2017, and the Oregon Department of Energy is currently convening a workgroup to assess the size and viability of Oregon s biogas resource.

5 Thank you for opportunity to participate in the SB 978 public process and for considering Energy Trust s comments.