Going Deeper: Next Generation Energy Efficiency

Have you crossed paths with these terms recently? Becuase we certainly have.

“Utility 2.0”

“Utility of the Future”

“Intelligent Efficiency”

“Reforming the Energy Vision”

It’s hard to open a newsletter, attend a conference or read a blog these days without hearing or reading about the game-changing, landscape-altering, markets-animating, paradigm-shifting developments occurring in the world of energy efficiency.

But what, precisely, does it all mean?

To be honest, I’m not exactly sure. But, then again, I don’t think anyone else is either.

But, at NEEP, we do know that the ground is shifting rapidly, and we’ve recognized the need to look ahead with an eye toward Next Generation Energy Efficiency.

Almost a year ago, NEEP began a process that brought together our Board of Directors, staff and a group of selected stakeholders to help chart a strategic direction for the organization for the next three years. The goal was to inform energy efficiency program development and respond to those critical issues and trends that are reshaping the energy industry in the Northeast and Mid-Atlantic region. The process included interviews with stakeholders from 14 different organizations representing government, industry, non-profits, and funders; a broader survey of stakeholders; a Board and staff retreat; and market research on evolving utility business models, climate change, infrastructure developments, and the digital revolution.

That Strategic Plan included a lot of different elements to it. But at the cornerstone was an acknowledgment of and commitment to helping to deliver Next Generation Energy Efficiency.

So, back to the question: exactly what is it? Rather than develop a consensus definition, our process, instead, examined those elements that are generally acknowledged to characterize Next Generation Energy Efficiency. At its most basic, said our stakeholders, it includes:

• Deep and comprehensive cost-effective energy savings, for all fuels;
• Controls and other intelligent efficiency technologies; big data; and data analytics to maximize savings, and optimize building energy performance via systems-level approaches, advanced building designs and cutting-edge installation, integration, operation and maintenance of energy systems;
• Integration of energy efficiency with demand side and distributed resources, including energy storage solutions; and,
• Engagement and animation of markets to deliver high efficiency products and solutions,

But while identifying a set of common characteristics might have been relatively straightforward, understanding all of the implications is anything but.

For example, if we acknowledge a new paradigm where customers are placed at the center of the delivery of energy services, via controls, advanced analytics or other elements of intelligent energy efficiency, we will need to fundamentally alter the ways in which our energy infrastructure has operated for generations. Thus, our electric grid will need to be built out and operated in a vastly different way, with far more emphasis on distributed energy generation, storage and microgrids.

Such a scenario requires significantly different public policy actions, evolving quickly from current models of utility investment and reward, and focused far more than has been the case on relieving local and regional energy system peaks and constraints. Customer/supplier interaction also evolves from being one way — i.e., the delivery of energy — to a more dynamic scenario where customer load can move both ways, especially with greater deployment of electric vehicles.

Energy policies also have to acknowledge the commitments to carbon reductions that our states have made, while also supporting resiliency for homes, buildings and communities. And, all the while, they will be tested by the political realities of trying to squeeze every kWh or therm of savings at the least possible financial cost.

Wading even further into the weeds, policies will need to begin looking very differently at issues such as program cost-effectiveness, recognizing the full array of energy and non-energy benefits that accrue not only to program participants, but to society, and not just in the short term, but for years to come.

The American Council for an Energy-Efficient Economy (ACEEE) recently brought its third “Intelligent Efficiency Conference” to Boston to examine many of these issues. For two days, a couple of hundred stakeholders chewed over topics such as “smart cities” (with an emphasis on Boston); dynamic pricing; program design; data and analytics; and related public policy. As an attendee, I have to be honest and say that I came away with more questions than answers. For while the topical discussions were fascinating and provocative, I was left with a whole host of “So now what?” questions.

One person who never fails to impress with her vision of what Next Generation Energy Efficiency might entail — and who, in fact, has literally been at the forefront of many of the ground-breaking developments in energy efficiency — was Dian Grueneich, formerly a commissioner with the California Public Utilities Commission and currently a Senior Research Scholar at Stanford University. In her plenary comments at the ACEEE IE conference, she laid out her vision for a policy framework needed to embrace and exploit intelligent energy efficiency. Such a framework would include:

• A focus on metered, rather than modeled, energy savings, and accounting for persistence.
• An evolution from “widget-based” rebates to performance based incentives.
• Abandoning fights over attributed energy savings and cost-effectiveness, duly noting that such issues aren’t required when it comes to distributed generation or renewable power purchase agreements.
• Better valuing energy efficiency that delivers “extra attributes,” such as locational value to defer transmission and distribution upgrades; and grid integration where efficiency saves on load.
• Using intelligent efficiency to provide real-time feedback to a broad spectrum of stakeholders.
• An equal focus on retrofits and operational savings
• Holistic, whole-building driven energy efficiency
• Data - driven, segmented opportunity targeting, with remote assessments available at low cost

No light topics, these will challenge policymakers to evolve from long-established practices to a new way of thinking about the delivery of not just energy efficiency, but energy services generally.

We’re looking forward to delving more deeply over the next several months into many of the issues posed by Next Generation Energy Efficiency. In fact, NEEP’s forthcoming Regional Roundup of Energy Efficiency Policy will focus this year on a look forward to that next generation, using that theme as a sort of lens through which to gauge states’ progress toward utilizing energy efficiency as a first-order resource to meet economic, environmental and energy system needs.

So, look for NEEP’s Regional Roundup, scheduled for publication in mid-February of 2016, and stay tuned, as we all seek to enhance our knowledge and understanding of “Next Generation Energy Efficiency.”