Benchmarking and Program Review. Distributed Energy Services

Transcription

1 Benchmarking and Program Review Distributed Energy Services Prepared for: Austin Energy Austin Energy and the Austin Energy logo are registered trademarks of the City of Austin December 2010

2 Benchmarking and Program Review Distributed Energy Services» Background Work Performed Conclusions / Recommendations Summary Findings Recommendations Appendix 1

3 Distributed Energy Services Background» NCI was asked by the City of Austin to assess Austin Energy s operations and identify performance gaps and potential opportunities for cost savings.» A key backdrop to this review is the City Council s 2007 adoption of the Austin Climate Protection Plan and its related Generation Plan adoption this spring, which included more aggressive clean energy targets for DES encompasses the utility s EE programs, distributed PV program and Green Pricing program, and will be key to meeting these goals. AE s progress to date varies by target. Measure Austin Clean Energy Targets Initial Target Current Target 2009 Level Energy Efficiency (MW) Renewable Energy (% Total) 30% 35% 12.6% Solar Generation Capacity (MW) CO2 Reduction from % 20% 0% Sources: AE Resource and Climate Protection Plan to 2020 (Jan 2010) and 2009 EE Program Report *2008 and 2009 reported EE results 2

4 Distributed Energy Services Background DES accounts for 8%, or $32 million of AE s $412 million non fuel expense budget in DES is budgeted at about the same level in 2011 and down slightly from 9% of AE s total in both 2008 and Source: Austin Energy Financials 3

5 Benchmarking and Program Review Distributed Energy Services» Background Work Performed Conclusions / Recommendations Summary Findings Recommendations Appendix 4

6 Distributed Energy Services Work Performed» NCI staff reviewed financial and program documents, interviewed nine personnel in Distributed Energy Services and conducted follow up interviews with three.» The team then benchmarked the following activities, which account for over 85% of DES costs: Energy Efficiency/DSM Energy Efficiency/Distributed Photovoltaics Market Research/GreenChoice Green Building Key Accounts» Benchmarking sources include : NCI s annual Energy Efficiency Program Benchmarking Survey, NCI PV Rebate survey SEPA PV installed capacity survey DOE/NREL Green Pricing program rankings E Source s Key Accounts benchmarking products 5

7 Benchmarking and Program Review Distributed Energy Services Background» Work Performed Conclusions / Recommendations Summary Findings Recommendations Appendix 6

8 Distributed Energy Services Conclusions / Recommendations Summary» Many DES operations are among best in class; that is, in the case of the DSM and green building programs, they are both effective and efficient; in the case of GreenChoice and distributed PV, they are effective.» AE s Climate Protection Plan operation, budgeted at $1.9 million in total in 2010, operates broadly within the community and non utility functions should be considered for transfer to and cost coverage by City Hall.» Potential additional savings, though likely limited, could be identified through an evaluation of the DSM and Green Building program costs and benefits as well as a benchmarking of the PV program. 7

9 Benchmarking and Program Review Distributed Energy Services Background Work Performed Conclusions / Recommendations Summary» Findings Recommendations Appendix 8

10 Distributed Energy Services Findings Energy Efficiency Energy Efficiency accounts for 74% of DES 2010 budget, while Green Building and Austin Climate Protection Plan each account for another 6%. DES Activity 2010 $Million % Energy Efficiency $ % Green Building $1.8 6% Climate Protection Plan $1.9 6% Market Research/GreenChoice Program $1.4 4% Key Accounts $1.4 4% Emerging Transportation Technologies $0.2 1% DES Corporate $1.6 5% Total 2010 DES Budget $ % 9 Source: Austin Energy Financials

11 Distributed Energy Services Findings Energy Efficiency/DSM A utility s average energy cost is an important driver of its level of DSM spending since benefits are a function of energy cost. Since AE s average energy cost is in the lower half of the surveyed utilities (12 th up from the lowest), all else being equal AE s DSM spending level should be in the lower half as well. DSM reports and NCI analysis 10

12 Distributed Energy Services Findings Energy Efficiency/DSM AE spends less on energy efficiency as a percent of total retail revenues than most surveyed IOUs as well as two of four munis for which spending data was obtained (Seattle City Light and SMUD.) Source: Utility DSM reports and NCI analysis 11

13 Distributed Energy Services Findings Energy Efficiency/DSM FY2008 Overall DSM Program Performance kwh Savings and Cost AE is among the Best in Class utilities in obtaining above average savings (kwh as a % of total) at below average cost ($ per kwh saved). This holds true for both the residential and C&I program portfolios, although some utilities achieve better results with some programs. Austin Energy Other Munis Source: Utility DSM reports and NCI analysis 12

14 Distributed Energy Services Findings Energy Efficiency/DSM FY2008 Overall DSM Program Performance Peak kw Savings and Cost AE is also among the Best in Class utilities in obtaining above average peak kw savings at below average cost ($ per kw saved). This also holds true for both the residential and C&I program portfolios, though, again, some utilities perform better at the individual program level. Austin Energy Other Munis Source: Utility DSM reports and NCI analysis 13

15 Distributed Energy Services Findings Energy Efficiency/PV Rebates are typically the largest cost of a distributed PV program, and AE s cost per kwh is below average in both sectors. The surveyed municipal residential PV rebates range from about $0.04/kWh to $0.11/kWh, with AE s in the middle of the range. Commercial rebates range from $0.055 to $0.16, with AE at the low end of the range. Source: Utility websites July 2010 and NCI analysis 14

16 Distributed Energy Services Findings Energy Efficiency/PV Although its installed capacity is relatively modest, AE is among the leading municipal utilities in distributed PV installations both installed in MW and total installations through end MW. AE ranked sixth among municipal utilities in MW solar PV installed in 2009 and fifth in total distributed PV installed among munis. Source: SEPA 2009 Utility Solar Rankings 15 In contrast, AE was not among the top municipals in MW installed per customer., further suggesting that AE is not at the top end of the spending range.

17 Distributed Energy Services Findings Green Building AE s residential Green Building program delivered greater 1 st year savings at lower cost than other best practice utilities programs benchmarked in FY2008 based on utility reported costs and savings. AE s C&I Green Building program in FY2008 was also among best in class, outperforming all but APS. 16

18 Distributed Energy Services Findings Green Pricing Program AE is a leader in Green Pricing programs, ranking #1 nationwide in both GWh and MW sales in 2009, and 5th in % of load participating. Source: DOE/NREL 2009 Green Pricing Program Rankings 17

19 Distributed Energy Services Findings Green Pricing Program 18

20 Distributed Energy Services Findings Key Accounts 19

21 Distributed Energy Services Findings Climate Protection Plan» AE s Climate Protection Plan department accounts for $1.9 million or 6% of DES 2010 costs, and includes Air Quality and Urban Heat Island operations. The department is tasked with implementing the City Council s Climate Protection Plan city wide, including developing a carbon emission calculator for Austin residents use, inventorying City carbon emissions, and planning community involvement in carbon reduction efforts. In addition to community level activity, the department s efforts to lead department level climate plans for the City impact many other City Departments beyond AE, including water, solid waste collection, fleet management and parks and recreation.» Important management changes are underway that are central to the management of this organization. The current department manager is retiring at the end of 2010, while a Sustainability Officer (reporting to an assistant city manager) has just been hired by the City of Austin. The former General Manager of Austin Energy, who was reportedly very interested in this department s activities, has retired. 20

22 Distributed Energy Services Findings Climate Protection Plan» The community wide and city specific focus of this department suggests that it would be more appropriately reside at City Hall. Many of the group s activities (e.g., carbon emissions inventory and community planning) extend well beyond the utility itself and into the community. In its community and City department initiatives, being a City employee would likely be more effective in helping make the community and departments take the initiatives seriously. There is a potential regulatory risk that some of the costs would not be considered used and useful if appealed to the Public Utility Commission of Texas.» With the change in utility management and the hiring of a Chief Sustainability Officer in City government, now may be an appropriate time to review where the non utility portion of this function is located and how its costs are assigned. 21

23 Benchmarking and Program Review Distributed Energy Services Background Work Performed Conclusions / Recommendations Summary» Findings Recommendations Appendix 22

24 Distributed Energy Services Conclusions and Recommendations» No DES departments have been identified as under performing or overspending both relative to peers and given the City s ambitious clean energy objectives.» Energy Efficiency and Green Building are very strong performers relative to peers based on AE provided (unverified) PY2008 savings and costs. These savings, however, have not been evaluated by a third party as has become the industry standard for IOUs and is required of California municipals. An independent evaluation would provide important benefits: A benefit : cost analysis can affirm program cost effectiveness. A savings impact evaluation provides additional certainty of resource availability, an important consideration with load forecasts increasingly dependent on these numbers. A third party evaluation also provides feedback on program processes to make them even more effective. 23

25 Distributed Energy Services Conclusions and Recommendations» The Austin Climate Protection Plan Department s non utility specific functions should be reviewed for potential transfer to City management given the pending management changes and the breadth of activities managed by this department.» Key Accounts should continue to work to improve AE s perceived value to customers by leveraging the findings from the Best Practices benchmarking in which it participated.» Austin Energy should consider participating in a distributed PV benchmarking study to review implementation best practices and to benchmark its program costs and processes to assure maximum program benefits for the cost of this growing program. 24

26 Benchmarking and Program Review Distributed Energy Services Background Work Performed Conclusions / Recommendations Summary Findings Recommendations» Appendix 25

27 Appendix» DES: Energy Efficiency Program Benchmarking by Sector: kwh and peak kw savings 26

28 Benchmarking and Program Review Distributed Energy Services Findings: Energy Efficiency/DSM Appendix FY2008 C&I DSM Spending Relative to C&I Revenues AE s spending on C&I DSM programs (as a % of C&I revenue) is below the average of the other utilities surveyed as well as all surveyed munis except LADWP. Austin Energy Other Munis Source: Utility DSM reports and NCI analysis 27

29 Benchmarking and Program Review Distributed Energy Services Findings: Energy Efficiency/DSM FY2008 Residential DSM Program Spending Relative to Residential Revenues Appendix AE spent a lower proportion of residential revenues on DSM programs than Palo Alto, SMUD and Seattle City Light in FY2008 but more than the average IOU surveyed. Austin Energy Other Munis Source: Utility DSM reports and NCI analysis 28

30 Benchmarking and Program Review Distributed Energy Services Findings: Energy Efficiency/DSM Appendix FY2008 C&I DSM Program Performance kwh Savings and Cost AE s C&I program portfolio is among the Best in Class in obtaining above average kwh savings (as a % of total utility) at below average cost ($ per kwh saved). Austin Energy Other Munis Source: Utility DSM reports and NCI analysis 29

31 Benchmarking and Program Review Distributed Energy Services Findings: Energy Efficiency/DSM Appendix FY2008 Residential DSM Program Performance kwh Savings and Cost AE s residential program portfolio is also among the Best in Class in obtaining above average kwh savings (as a % of total utility) at below average cost ($ per kwh saved). Austin Energy Other Munis Source: Utility DSM reports and NCI analysis 30

32 Benchmarking and Program Review Distributed Energy Services Findings: Energy Efficiency/DSM FY2008 C&I DSM Program Performance Peak kw Savings and Cost AE s C&I program portfolio is among the Best in Class in obtaining above average peak kw savings at below average cost ($ per peak kw saved). Appendix Austin Energy Other Munis Source: Utility DSM reports and NCI analysis 31

33 Benchmarking and Program Review Distributed Energy Services Findings: Energy Efficiency/DSM Appendix FY2008 Residential DSM Program Performance Peak kw Savings and Cost AE s residential program portfolio is among the Best in Class in obtaining above average peak kw savings at below average cost ($ per peak kw saved). Austin Energy Other Munis Source: Utility DSM reports and NCI analysis 32