NEEP Notes: Signs of The Efficiency Ramp Up

Region Continues to Ramp Up for Expansion of Energy Efficiency

For many months, states in the Northeast have been preparing to undertake a great expansion in energy efficiency programming to address critical energy, environmental and economic challenges. The ramp up has been spurred by renewed commitments from business leaders and policy makers to implement sustainable energy policies and practices aimed at ending our dependence on foreign fuel sources and slashing expenses from extremely tight budgets. With the recent enactment of the American Recovery and Reinvestment Act (see past article), maximizing energy efficiency has become a national priority. Billions of dollars in federal funding is now making its way to states to deploy energy efficient services across all sectors. With the Northeast poised to receive over $1 billion in stimulus funding for efficiency projects, the region continues to be a leader in advancing efficiency.

As the first half of 2009 comes to a close, signs of the ramp up in efficiency efforts abound in the Northeast. Many of these are detailed elsewhere in this newsletter- please see Policy Updates, Initiative Updates, High Performance Buildings Updates, and “Mass. Adopts ‘Stretch’ Code” for more information.

Other notable developments include:

Increased attention to federal appliance efficiency standards;

Launch of a capacity market valuing efficiency by the PJM Interconnection; and

Implementation of a solid state lighting qualified products list for Northeast states.

Appliance Efficiency Standards

While other aspects of the ongoing efficiency ramp up may have traditionally received larger amounts of publicity, federal appliance efficiency standards are now gaining their share of attention. President Obama’s recent call on the Department of Energy (DOE) to fulfill their legal responsibility of completing updates for a long list of appliance efficiency standards is a clear indication that attitudes and priorities have changed in Washington D.C. The new President has highlighted their importance in his latest effort to reduce American energy usage, and has put the Department of Energy on a strict timeline to ensure this process is completed in the next 3 years.

In a speech at the DOE on February 5, 2009, President Obama put appliance efficiency standards front and center as a key element of his energy plan. He signed a Presidential Memorandum ordering the Department to complete five new standards subject to legal deadlines by August and to work toward completing standards due after August 8 ahead of schedule, especially those with the largest potential savings.

The benefits of these national standards over the next 30 years will equal the amount of energy produced over a two-year period by all the coal-fired power plants in America. The administration notes that implementation of the standards would represent an estimated savings to Americans of more than $500 billion in electric bills in that same time frame.

President Obama’s commitment to meet and beat the legal deadlines for new standards is an important break with the past. His predecessors fell behind on legislatively-required updates for some 22 standards. Congressional oversight and lawsuits have pushed DOE to set this ambitious agenda to compensate for missed deadlines. In addition, the 2005 and 2007 energy laws required new DOE rulemakings for several additional product categories. Altogether, 25 standards are due to be set in the next three years, an unprecedented pace for DOE.

PJM Interconnection Capacity Market Includes Efficiency Resources

In spring 2009, the PJM Interconnection (PJM) launched a capacity market that includes energy efficiency resources, as a result of an effective stakeholder process. The PJM Interconnection is an independent, not-for-profit corporation created to oversee the bulk electric power system in all or parts of 13 mid-western and mid-Atlantic states, including New Jersey, Maryland, Delaware, the District of Columbia, which are also participants in NEEP’s Regional Evaluation, Measurement and Verification Forum (EM&V Forum). Since its inception, PJM has worked with stakeholders, including market participants, state regulators, and other public officials, to ensure that region’s electric power system is reliable and meets the needs of their electric customers, at just and reasonable rates. The most recent step toward ensuring this reliability comes through the design and implementation of a market solution for attracting new resources and maintaining necessary existing resources. PJM began implementation of the Regional Pricing Model (RPM) capacity construct in the spring of 2007 pursuant to its Federal Energy Regulatory Commission (FERC)-approved proposal filed in August 2005 and modified in Orders issued by FERC in December 2006 and June 2007. On November 19, 2008, in the Markets Reliability Committee, competing proposals for integrating energy efficiency into the RPM were voted on, and ultimately the staff proposal was filed with FERC.

PJM’s stakeholder process played a key role in the efforts to establish the capacity market. Since the most active stakeholders in PJM affairs are market participants, and energy efficiency resources did not yet participate in the market, it was essential for efficiency advocates in 2008 and 2009 to seek out and engage in the structured process of stakeholder deliberations. As such, the advocacy of various energy efficiency stakeholders, including the American Council for an Energy Efficient Economy (ACEEE), Natural Resources Defense Council (NRDC), the FERC Sustainable Project and Synapse Energy Economics was critical, where, drawing heavily on their experience with ISO-New England’s capacity market development, Synapse made presentations and responded to questions from stakeholders on multiple occasions over the course of a year. As part of this process, NEEP worked with the Mid-Atlantic Demand Response Initiative (MADRI) to coordinate input from states on the development of the RPM rules for integrating energy efficiency resources into the market structure. Multiple letters jointly-authored by stakeholders were submitted to PJM and/or FERC. One success related to these efforts was that FERC adopted an up to 4-year revenue payment stream for efficiency resources instead of the 1-year restricted payment period in the original PJM staff proposal. To view details of rules for integrating energy efficiency into the RPM, see FERC's March 26, 2009 Order.

In early 2009, PJM established an Energy Efficiency Task Force (EETF), dedicated to informing the development of PJM’s M&V manual for energy efficiency resources participating in the RPM. The PJM M&V Manual sets forth the M&V requirements to demonstrate the Nominated Energy Efficiency Value of an energy efficiency resource to be qualified as a Capacity Resource in the PJM Capacity Market starting with the 2012/13 Delivery Year. Drawing on its previous experience with the ISO-NE Forward Capacity Market M&V Manual stakeholder process, as well as the expertise of the EM&V Forum participants, NEEP played a very active role (through the Regional EM&V Forum), to inform the development of PJM’s M&V Manual. On behalf of the EM&V Forum mid-Atlantic participants, NEEP provided extensive comments to the EETF, including suggestions related to metering based on research that had been commissioned by program administrators in New England involved in the Forward Capacity Market. These suggestions, as we well as all other recommendations made by the Forum, were adopted by PJM. In April 2009, the PJM M&V Manual was voted on and approved by the PJM Markets Reliability Committee.

In May 2009, PJM held a Base Residual Auction, a process to establish clearing prices for capacity resources, which for the first time included energy efficiency resource for which 2012/2013 is the first delivery year for the resources at the price established in the May 2009 auction. Documents associated with the RPM and the May 2009 BRA are available at PJM's website.

Meanwhile, while the EETF was originally envisioned as a group with a finite term of existence, the life of this task force has been extended; it will reconvene in the fall 2009 when some aspects of the M&V manual and potentially other issues will be revisited. NEEP plans to continue to participate in the EETF on M&V issues important to Forum participants.

Qualified Products List for Solid State Lighting

Efficiency program administrators throughout the region are increasingly asked by customers and suppliers for incentives for solid state lighting (SSL) projects. However without an ENERGY STAR SSL certification program, independent examinations are needed to assure product quality before offering incentives. This can be a tough and time-consuming effort. The Qualified Products List (QPL) for SSL undertaken by the DesignLights Consoritum (DLC) aims to address this challenge.

The QPL is a resource for program administrators, to help them decide which solid state lighting products to include in their energy efficiency promotions. Their primary reference tool for SSLs is ENERGY STAR, however the regional QPL covers categories which ENERGY STAR does not include. The Department of Energy’s ENERGY STAR team is working in cooperation with DLC to develop the QPL list and procedures. The sponsors hope that products from their QPL will eventually be incorporated into the ENERGY STAR list once corresponding categories are added.

QPL participants include a collection of utilities and state and regional organizations who operate or support energy efficiency programs. These are sponsors of NEEP’s C&I Buildings and Technologies Initiative plus three regional energy efficiency organizations and five electric utilities in California. For the sake of the SSL list project the sponsors are considered members of the DesignLights™ Consortium (DLC). Find more information on the DLC web site: www.designlights.org

The programs that are sponsoring the QPL cover half of the population of the country and most of its energy efficiency programs. The DLC is working hand in hand with DOE’s ENERGY STAR for SSL team. The resulting process brings industry closer to, not farther from their eventual ENERGY STAR certification.

Currently, the QPL process is in Phase I- the development and testing of the application process for manufacturers to have their products approved and listed. The DLC team expects the QPL process to launch in early August, when manufacturers will be able to complete an online application process to register their products for review.

The QPL application requirements are nearly identical to those of ENERGY STAR. These include submission of IES LM-79 test reports, LM-80 reports, UL 1598 reports, full IES files and product lifetime claim evidence.

More information about the SSL Qualified Products List is available here.

For full coverage of the region’s efficiency efforts, please read this newsletter, stay tuned to future editions of NEEP Notes, and continue to access the information available on NEEP’s website.