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Railbelt Intertie Reconnaissance Study Vol. 3 Analysis of Electrical End Use Efficiency 1989
Alaska Energy Authority LIBRARY COPY RAILBELT INTERTIE RECONNAISSANCE STUDY Volume 3 Analysis of Electrical End Use Efficiency Programs for the Alaskan Railbelt April 1989 Institute of Social and Economic Research University of Alaska Anchorage | Alaska Power Authority RAILBELT INTERTIE RECONNAISSANCE STUDY VOLUME 3 ANALYSIS OF ELECTRICAL END USE EFFICIENCY PROGRAMS FOR THE ALASKAN RAILBELT Prepared for Alaska Power Authority P.O. Box 190869 Anchorage, Alaska 99519-0869 Prepared by Institute of Social and Economic Research University of Alaska Anchorage 3211 Providence Drive Anchorage, Alaska 99508 Alan B. Mitchell, Principal Investigator O. Scott Goldsmith, Project Manager April 1989 RAT OFlo v3 Cot be RAILBELT INTERTIE RECONNAISSANCE STUDY VOLUME NUMBER 1 10 11 LIST OF VOLUMES VOLUME TITLE Economic and Demographic Projections for the Alaska Railbelt: 1988-2010 Forecast of Electricity Demand in the Alaska Railbelt Region: 1988-2010 Analysis of Electrical End Use Efficiency Programs for the Alaskan Railbelt Fuel Price Outlooks: Crude Oil, Natural Gas, and Fuel Oil Anchorage-Kenai Transmission Intertie Project Anchorage-Fairbanks Transmission Intertie Expansion and Upgrade Project Railbelt Stability Study Northeast Transmission Intertie Project Estimated Costs and Environmental Impacts of Coal-Fired Power Plants in the Alaska Railbelt Region Estimated Costs and Environmental Impacts of a Natural Gas Pipeline System Linking Fairbanks with the Cook Inlet Area Benefit/Cost Analysis Analysis of Electrical End Use Efficiency Programs for the Alaskan Railbelt April 1989 Contributors The Institute of Social and Economic Research served as the prime contractor for this project. Scott Goldsmith managed the project and Alan Mitchell was the Principal Investigator. Steve Colt provided valuable guidance, coordinated subcontractors, and provided the necessary input from the concurrent Railbelt Electricity Demand Forecasting effort. Toby Lesniak met with Railbelt utility personnel to identify their past experiences with demand-side programs and hear their concerns about future programs. Marybeth Holleman collected important data on the extent and probable expansion of the natural gas distribution system. She also canvassed local appliance and electrical equipment suppliers to obtain sales data. Eric Larson performed statistical analysis to help identify actual energy consumption of Railbelt appliances. James E. McMahon and Edward L. Vine, staff scientists at Lawrence Berkeley Laboratory, wrote the review of U.S. experience with efficiency programs. Adams, Morgenthaler, & Company performed computer simulations of Railbelt commercial buildings to determine interactions between energy end uses. They also contributed information related to their practical experience with efficiency technologies. Table of Contents EXC Uti ve: SummmneTa BUY corso prs rayon oro toni otiolts 1011 (o)\o lo) ella edlotw =) =) +) otle yes Eso) sl) te SSIs ES-1 OSCE Terr or estctie of ctrentc tose) le (olor) a) Moe Mooi of sic oHCoM=UMS mod oh eriaNCo Ne COCeaToNST OH ES-1 Methodology eyensjs a crrerteliol ey el a cilertclicler = etloueltelen eh) a) field eile to 9) ei ES-2 Programs A nalyZed iy -v-wnononcesttone le eloN ki Neke Idol TANF ICN al oor ES-2 Summary7Of RESUS terete cs oor e) screisre eo) omer e 9) 4) leet ore 9) oS EIS ot sha ES-4 iPeibtauliie\ Vege gegogacao ocd aD00cCcDOUD0GCCOGODGNCbC UGG O0KdG 1-1 11 @bjectives of theAnalysis’: cic reiee <1) lett) a ie © Od Ie 1-1 1.2 Motivation for Efficiency Programs ............. 0. eee eee eee 1-2 1.3. Equity Impacts of Efficiency Programs ..................000005 1-3 4= Program selection’ Griteria- ste scenes eerie ee ey toutes rt ee 1-6 1-5 Summaryof Results) 5 35 sisi © 4 susie She syciotoie e e e ae) letio ie 9) 4 Vols 1-12 1.6 Efficiency Measures not Addressed by Programs ................ 1-16 7M Structurerot Restor Report gare cere oes rere ee a) yeti eo 1-19 2. Quantitative Analysis of Efficiency Programs ..................2..0005 2-1 2el= Description’ of Modelers: se eee cece. ee rade em: ae ec 2-1 21.1 Technology Characteristics; 5. <2). 019 2-1 PANG aRyurubOiiiwegoonoOUdOCCOC OC DODO OCD OOOCOGCO SOC 2-2 2.1.3 Participation Assumptions ................00 eee ee eee 2-3 2.1.4) ‘Calculations. 9.645906 66 1 dE ERR AAs cine © 2-3 ZU. ISUMIMATY, FRESUIS, fe cis saute pen ey sy opis tention) shee asueieye ye -ion sien -aene 2-4 2.1.6 Effects of Different Program Lifetimes ................. 2-5 2.2 -ProgramPAdministration Costs: 06 « « 4 jets 66 6 6 9 tei 5 © 64 3 812 re 2-6 2.3 Programs Participation, Rates 5: 3iejrajc5: 25 op oye) Oye) anh oh 50.- us) cjisyon oneness epee 2-8 2 sensitivities and Uncertainties 1... 5 aes ss scenes ee es vlcisie © = 2-9 25 General Assumptions, 6%. 23 ssc ft 6 cceys 5 9 sit see eo Ss ee eee 2-11 2.6 Water Heater Conversion Program ............. 0.0 eee eee eee 2-13 2.6: Program! Summary Siete eyes ees ete eee ee seis ee eee 2-13 26.2 Energy Savings, .otianacssews ott scene nenncaeonne 2-13 216.3 Technology. Costs is sits iou6j065 0) sicsieitesonciontonorrsusuisyenehell ouch = oul-nonoa ohh 2-14 2:64 =Program'Goststaas taiee es ase tree isiee aces ete ele ae 2-15 2:65) Participation Rates i516 <9 056 55 False Psi oe «ole 2-15 2.6.6 Additional Comments and Model Output ............... 2-18 2.7 Efficient Electric Water Heater Rebate Program ................ 2-36 Dafely PFORLAM SUMMARY aie fo woo teliole @)-o cv elie lelle evapo) A) sislialle | fo) ct'e) es 2-36 Dl 2) ETELRY SAVINGS yc scectory oh oy eicsiosien hoi hs eNoyfouleysy oish syepexsfor-ae thsgen 2-37 Za) Sel eChHNOlOgYs COStS Pa euenerenreneNenerer en sy etietererencuehchetisnets foneratensters 2-38 204: Program’ Costs: ss cjeiet oe aeiele 21s Aree ere ai oh esieRele aa ol oe ele 2-38 Zh) Rarticipation Rates ee cors siegens hss 3) Hieasraseuerou sy rasp sie Leena 2-39 21-6 ModeliOutput era. mice iets onsh od ireteteionsescisiene ters sustenerenens 2-39 2.8 Gas Dryer Rebate Program: 62.6006 6 665 aces ote ea HT 8 woe 2-47 2:0. BLOSramM SUMMARY: oo goiter oooh ustestous os) seit tone tones) ssp 2-47 ZBL ENELSY SAVINGS mays are yel letenen el ol olen Neorenel ed stl ohiototors etrel oP el stig 2-47 2.8:5) Lechnology 'Gosts (1) scraieie es eras eo) eile se a eI 2-48 2S AD ProgramiCostsy ci. os ccicierencsheicias ee henna eae 2-48 28:5) Patticipation RAteSiener che ciclo oto ella dine Maa ass 2-49 21816 sModel’@utput™ fares oe ee oe Oe ee 2-50 2.9 Efficient Refrigerator Rebate Program ..................0000. 2-58 2.9115 Propramt SUMIMALY, goropenencu-psi=her aes -keNokshonsh heii Neen NON NONE 2-58 2:92 SENErpy Savings creole eae) stcle susie eel odes eee meh este teats 2-58 2193 > Technology, Costs reresetete esi ets) «ol te tel'= el of sh stills Choe om ells 2-59 DOTA Programs Costs sete cesses comer reese or rere rel ete 2-59 2295 mR articipationp Rates tewmew-ns-WeW-We¥=P FAW Niet T ol ek- te Ce eee ea see 2-59 21916 5 Model. Outputs yp-yenon ncn ne fienoot-BeNoRR RON N-N-Re) oRMeM MoM oN MoNORS 2-60 2.10 Efficient Freezer Rebate Program ............. 0... e ee eeee 2-68 2-1 OM Program SUMMALY 2%. 2s e)ele 2 sie oe ol) le ee 9 al a atte 2-68 Del OFZ EMETRY SAVINGS voter cece) eteliele el ese ielter el of opetle Gololter: ) e) en et ate fa) iorGs 2-68 2al0Smrechnology: Costs treet cier-ieieneterene ie etenel entire 2-69 PRIIK Waal Oct oooogoaD0OCGFOCODDOGOOD0C OD CO UOOOL 2-69 21055 Participation atest or roreu-jeueasn-isuenonocasicienou ne bh NR Tena 2-69 2.10/65 Modell Outputs cir tiie ii eas Tae ee 2-70 2.11 Fluorescent Lamp Rebate Program .................- e000 0ee 2-78 21:1 Program:Summaty see eee ee eee eee nae ee 2-78 Dell Dep ENSTRyK SAVINGS me wesorow ayes Ne Nolan NoWot gh sl sales RaWet a) ate Ne ieee! 2-79 2113S Rechnologys Costs soyes-ueysueuemek--Nekon cue ened Nemes HOM ROR ACR ORONO 2-80 214 Program'Costsi pas a eeiies o ie eels eee ieee a 2-81 211-5) Participatlon Rates rary. tocraieks te 2) afielle s) P eee a 2-81 2:6 =Model@utput =e see ee ee eee ee Tee eee 2-82 2.12, Electronic Ballast: Rebate: Program .7<:.20-<)<1cicie ecole) oe ie eee sot 2-90 DeAZe le SUIMMALY oe -usycueucnsueksusdcksncncke-NeNcNeh We NekeR-heke ket meus nei 2-90 2E12!2 SENET PY SAVINGS) 5 cocaine see ©) ee 1) 1 Ce ia a 2-90 ZA2SmMechnologyaCosts Marwan ee etre enn neta 2-91 De 12.4 PLORTAMM | COSES ior ox on om ntontoy on on ayo Nef ol oto ope oll ol stic ire No rowistromrsIreureveers 2-92 2.1255 Rarticipation! Rates oye secon sieu-y poh sie keie ges eh eats Heenan 2-92 212.6) Model Output) 3 iwc ae wae eon nase ose ae as 2-93 2.13 Incandescent to Fluorescent Conversions ..................00- 2-101 2:13:1= Program Summaty™se tee oe eee cee a ee 2-101 D132 mE NET RY A SAVINGS wow- ye MoMoN-YoMoWs) Ke Wo To aye NNO WoW oN-M Nae Pato 2-101 2:13:53) Technology, Costs oo yeu-r-n-uoneih-8-4-1- Kekona Nou Mens) RCN R CRON H 2-103 2:13:4) Program! Costs veces «1 selec eee 1 ee Secs oie 2-103 2:13:59 Participatlonl © aire esi oi ouster IIa Sioa Tiere Aaa esac 2-103 2.14 Sliding-Scale New Construction Rebates..................00-. 2-112 214 = Tee Program: SUMmMALy Meow y ye lector ate coal sto) ols eis toles) TeateT ay etielionrotioee 2-112 DA42 SEMEL Sy SAVINGS outa osceroy ay encodoxereyaitoirov ou chiol ste ouauens) sweeten ei siolenons 2-113 2.14:3 Technology Costs <6 6 sac 64 as6.5 244,401,560 ore wrens 2-116 2.1474 Program Costs: cere tors ol citeite|iace) oie foto nal elie ns| lolol als) Se) ctleielle elie) 2-116 2.145" Participation secs. 9am esse 19 Hise © eee sie jele eo» 2-116 2:14:6@ModeliOutput ena rectonct. cloeteteiaiic tes aerniice ees 2-116 Appendix A. Timing of Efficiency Program Implementation ................ A-1 Al Electronic Ballast Example 5 sees ise c os ns6 0545556 0 one A-1 AZ ‘General\Conclusions (66.6 9 sire 616 ois © 9 8 ssi WIA 0) 6 ci vile eles 9 ol A-4 A.3 Energy Efficiency During a Period of Excess Capacity ............ A-6 Appendix B. Review of Electric Energy Efficiency Incentive Programs for Residential and Commercial Buildings .......................005. Appendix C. Comments and Responses to Draft Version of Report ........... List of Figures Figure ES-1 - Electricity Savings over Time from the Nine Railbelt Efficiency Programs, 5.56.6 89 sie 55s esis 9 Fw SAT Bs OH Sud we wns gr otto v0 19 ES-4 Figure ES-2 - Conservation Supply Curve. ............... 2c cece eens ES-5 Figure 1-1 - Approximate generation costs for natural gas and oil generation plants, as a function of the load factor supplied. ...................-00006. 1-9 Figure: 1-2;- Conservation’ Supply ‘Curve Gone esecscece coe scee maa ess ene 1-15 Figure 1-3 - Electricity Savings over Time from Measures Promoted by the Railbelt Efficiency Programs. os accc <5 9ce sie vmod sy Bae ES eT RD e eee 1-16 Figure 1-4 - End Use Breakdown of 2010 Electrical Load. (Mid-Case Demand Forecast); cnc mvadt au auee monte hoe OHARA OE TOG aa eR eS 1-17 Figure 2-1 - Administrative Costs of Utility-Sponsored Energy Efficiency Rebate PLOSTAMS - 50.16.1035 assis oo sees a Ee aS EEE ene ew aE ee eee 2-7 Figure 2-2 - Participation Rates of Utility-Sponsored Rebate Programs ........ 2-8 Figure 2-3 - Fraction of Residences that are Natural Gas Customers .......... 2-49 Figure 2-4 - Example Lighting Rebate Curve for Office Space. .............. 2-112 Figure 2-5 - Power Densities and Annual Energy Use of Various Office Lighting Designs a eee eee cei Core ernie 2-115 Figure A-1 - Time Distribution of Electricity Savings and Generation Costs from Different Efficiency Program Implementation Approaches ............. A-7 List of Tables Table 1-1 - Approximate Budgetary Costs of Alaskan Energy Programs ........ 1-10 Table 1-2 - Quantitative Summary of Efficiency Programs. ................. 1-14 Table 2-1 - Uncertainty of Efficiency Analysis Outputs .................000. 2-9 Table 2-2 - Refrigerator Electricity Use vs. Cost ........... 0. cece eee eeee 2-59 Table 2-3 - Freezer Electricity Use vs. Cost ........ 22. e cece eee e teens 2-68 Table 2-4 - Rebate levels for various energy-efficient lamps................. 2-78 Table 2-5 - Energy Savings of Energy-Efficient Fluorescent Lamps ........... 2-80 Table 2-6 - Efficient Fluorescent Lamp Conversion Costs ...............055 2-80 Table 2-7 - Calculation of Rebate per 1,000 Square Feet of Lighting Converted .. 2-81 Table 2-8 - Incandescent to Compact Fluorescent Conversions............... 2-103 Table 2-9 - Rebates for Incandescent to Flourescent Conversions ............ 2-103 Table A-1 - Time Distribution of Costs and Energy Use for Three Efficiency Program: Scenarios 6s. 6 9 si56 = mse oe Hae ee erase ceennees A-8 Table A-2 - Energy Savings and CCE Comparison for Three Energy Efficiency Program Scenarios qs. 5 < «0.00 ns oo cere 6 35 site As sien toe ee or oo) or flo ts A-9 List of Boxes Box 1-1 - Impact Analysis of a Hypothetical Efficiency Program ............. 1-5 Box 1-2 - Cost of Conserved Energy Concept ............. 2.0. e ee eee eee 1-8 Box 1-3 - The National Appliance Efficiency Act of 1987 .................. 1-12 Executive Summary Objective This report presents an analysis of the costs and estimated electricity savings for the Alaskan Railbelt of nine demand-side electrical efficiency programs. These programs utilize financial incentives to encourage consumers to replace worn-out appliances with more energy-efficient models that are currently available from major suppliers. The programs are called "demand-side" programs because they affect equipment and decisions that are on the customer's side of the electrical meter. An example is a program that pays a consumer a $7 rebate for the purchase of a small fluorescent lamp that is used to replace an inefficient incandescent lamp (normal light bulb). The compact fluorescent lamp provides the same amount of illumination as the incandescent lamp but does so with less energy. Thus, the efficiency of the lighting system is improved, and the program participant’s utility bill is reduced. These programs influence consumer choice at the time of appliance purchase and as such do not represent conservation programs that target the technologically possible level of conservation. Rather, they are designed to effect a level of conservation which is economically efficient. Demand-side efficiency programs have been implemented by a number of utilities and government entities throughout the U.S. A recently published compendium describes programs implemented by 59 different electric utilities.’ The suggested justification for the programs is that the current level of investment in energy efficiency is less than optimal because of market failures. These market failures include limited access to capital, limited information about efficiency measures and potential savings, high perceived risk, and institutional barriers. For each program the appropriation necessary for funding the program and the total resource cost are presented. From this, several summary measures of cost are presented including a conservation supply curve. This curve shows the cost of achieving a particular level of electricity savings. The curve can be compared to the cost of producing electricity to determine whether a particular program is economically efficient. However, this cost- benefit comparison was not performed in this study. The benefits from the efficiency programs’ electricity savings are calculated in the electrical system modeling portion of the Railbelt Intertie Upgrade analysis. Thus, no conclusions concerning the cost-effectiveness of the various efficiency programs can be drawn from this report alone. In this study we present a detailed analysis of nine programs that have the potential to be cost-effective and save a significant amount of electricity. Other programs not included in this analysis may also have potential for cost-effective energy savings. a Compendium of Utility-Sponsored Energy Efficiency Rebate Programs", Consumer Energy Council of America Research Foundation and American Council for an Energy-Efficient Economy, EPRI EM-5579, December 1987. ES - 1 Methodology Surveys that identified the energy-use characteristics of Railbelt residential and commercial buildings were conducted in conjunction with the Railbelt Electric Demand Forecast. These surveys indicated a number of possible opportunities for reducing electricity consumption through the use of energy-efficient technologies. The costs of these efficiency opportunities and their expected electricity savings were estimated. Those that were judged to have little chance of being cost-effective relative to Railbelt generation costs were eliminated from the analysis. Also, those efficiency opportunities that were expected to save small amounts of electricity were excluded. For each of the efficiency opportunities identified as having a potential for cost-effective energy savings, a program structure was chosen that would effectively promote the use of the efficiency measure. Given past U.S. experience with similar efficiency programs and adjusting for the size of the proposed incentives, the expected participation rates were estimated for each program. Efficiency programs are only useful if they encourage consumers to invest in efficiency measures that they would not normally undertake on their own. If successful, the efficiency program causes a net increase in the amount of electricity saved by consumers. To estimate this net increase in savings attributable to the efficiency program, it is necessary to subtract out the amount of efficiency investment that would occur in the absence of the program, ie. the market-driven efficiency investment. This was done for each program by examining current utilization of efficiency measures and considering the change in utilization projected by the end-use forecasting models used in the Railbelt Electrical Demand Forecast. Once the net installation of efficiency measures was determined for each program, technology costs, maintenance costs, program costs, secondary energy impacts, and electricity saving impacts were estimated from 1991 through 2040, the last year when impacts from the programs are expected. Programs Analyzed A total of nine programs are analyzed in this report, five programs for residential buildings and four programs primarily targeting commercial buildings. All programs except one are dealer/contractor rebate programs. These programs involve payment of a cash rebate to the sellers of energy-efficient equipment for each eligible efficiency technology sold/installed. Dealer rebates are inexpensive to administer both for the applicant and the sponsor, since a substantial incentive payment is involved with each rebate transaction. Also, there are far fewer sellers of efficient equipment than users. Capturing a large fraction of the sales of energy-using equipment with an efficiency program can be more easily accomplished by working with sellers. The efficiency programs are as follows: Residential ¢ Contractor rebate program to encourage the conversion of electric water heaters to natural gas. ES -2 e Rebate program for energy-efficient electric water heaters and related conservation devices. e Rebate program for gas clothes dryers and the installation of gas piping within a residence for the dryer. e Rebate program for energy-efficient refrigerators. e Rebate program for energy-efficient freezers. Commercial e Rebate program for energy-efficient fluorescent lamps. e Rebate program for compact fluorescent lamps that are used to replace incandescent light bulbs. e Rebate program for electronic fluorescent lamp ballasts.’ ¢ Rebate program for the owners and designers of newly-constructed or remodeled energy-efficient commercial buildings. The size of the rebate paid is based on the size of the building and the energy efficiency of the building’s lighting and ventilation system. All of these programs are designed to encourage the installation of energy efficient equipment at the time of normal replacement of standard equipment. No intensive retrofit programs are proposed. This approach is recommended because of the low cost of electrical generation in the Railbelt and because of the current excess of generation capacity. Retrofit programs are more expensive than incremental programs, and the energy savings occur earlier in time than those produced by incremental programs. With excess generation capacity, immediate savings are not as important as longer term savings, which extend into the period when additional generation capacity will be needed. Because the stock of energy-using appliances and equipment takes 10 to 20 years to turn over, programs that encourage efficiency upgrades at the time of normal replacement must be in place for 10 to 20 years to have the potential of affecting the entire stock of energy- using equipment. The primary analysis in this report assumes that the programs are in place long enough to affect the entire appliance stock. Additional information is provided to estimate the impacts of the programs for shorter program lives. The cost per kilowatt- hour (kWh) of electricity saved changes little with shortened program lives, so the cost ranking of the programs and their cost-effectiveness are not substantially different. The total amount of electricity saved is roughly proportional to the length of the program. A 5 year program saves approximately one-fourth the energy that a 20 year program does. The nine programs utilize aggressive financial incentives. The rebates pay a large portion 2A fluorescent lamp ballast is the device that starts and provides proper operating conditions for fluorescent lamps. ES - 3 of the additional cost of the efficient technology. As well as increasing the amount of participation in the programs, substantial financial incentives will improve the breadth of program participation. Hard-to-reach groups such as low-income households will be more likely to participate. Summary of Results Railbelt Electrical Efficiency Measures Measures Addressed by Proposed Programs GWh/Year % of 2010 Total Load 800 600 400 200 Year Savings Type MMM Market Driven ZZ Net Program 100% Participation Figure ES-1 - Electricity Savings over Time from the Nine Railbelt Efficiency Programs Figure ES-1 shows the expected electricity savings if all nine programs were implemented for the full 20 year period. The left vertical axis measures the savings in gigawatt-hours per year (1 GWh = 1,000,000 kilowatt-hours). The lowest wedge in the graph shows the market-driven savings from the efficiency measures targeted by these programs. Normal market incentives will cause this level of savings to occur in the absence of the programs. The middle wedge indicates the savings induced by the efficiency programs over and above the market-driven savings. These savings peak at about 270 GWh/year in the year 2010. As a comparison, the output from the Bradley Lake Hydroelectric project is about 370 GWh/year, constant for 50+ years. Finally, the top wedge shows the additional savings that would occur if the efficiency programs achieved 100% participation. The savings grow over time because of the time required for the efficiency measures to penetrate the existing stock of energy-using equipment. In addition, the stock of equipment grows, thereby increasing the opportunities for saving electricity. ES - 4 The right vertical axis shows the size of the savings as a fraction of the load in 2010 (base case forecast). The implementation of all programs is estimated to result in a 7% reduction of the load in 2010. If the programs were to achieve 100% participation an additional 9% of the 2010 load could be saved. The graph does not display the "technical potential" of electrical energy efficiency in the Railbelt, which is much greater than 16%. Many possible efficiency measures are not included, such as those measures that will be required under the National Appliance Energy Conservation Act of 1987. One requirement of the act is the use energy-efficient magnetic ballasts as replacement ballasts and as ballasts in new fluorescent light fixtures.’ This requirement alone will save about 90 GWh in the year 2010. The effects of these required efficiency measures are included in the electrical demand forecast for the Railbelt. Conservation Supply Curve Railbelt Electrical Efficiency Programs 40 Cost of Conserved Energy, mills/kWh 8 9 1 - Incandescent Conversions 2 - Water Heater Conversions 3 - Effic. Fluorescent Lamps 4 - Efficient Water Heaters 5 - Sliding Scale Rebates 6 - Efficient Refrigerators 7 - Gas Dryer Rebates 8 - Electronic Ballasts 9 - Efficient Freezers L 1 1 1 1 ecclnesaseipnidiene liemmenmncatasll 40 60 80 100 120 140 160 180 Level Energy Savings, GWh/ Year Figure ES-2 - Conservation Supply Curve. The savings are level values for the 1991 through 2010 period. The savings are net savings over and above market-driven efficiency investment. Figure ES-2 is the Conservation Supply Curve for the nine Railbelt programs. It shows the resource cost of achieving an additional kilowatt-hour of savings. Each segment on the >The electronic ballasts encouraged by one of the recommended efficiency programs are one level more efficient than the efficient magnetic ballasts required by the standard. ES - 5 graph represents an efficiency program, starting with the least costly on the left. The first segment on the left represents the Incandescent to Fluorescent Lamp Conversion Program, since the savings resulting from this program are the least expensive per kilowatt- hour. This program saves 19 gigawatt-hours per year at a resource cost of 18 mills per kilowatt-hour (1 mill = $0.001, so 18 mills/kWh = 1.8 cents/kWh).‘ 18 mills/kWh is the CCE of the program, the cost of conserved energy. All costs are expressed in constant 1987 dollars. The Water Heater Conversion program is the second least costly program resulting in an additional savings of about 21 GWh/year at a cost of 20 mills/kWh. The most expensive program shown, the Efficient Freezer Rebate Program, saves electricity at a cost of 35 mills/kWh. The average cost for all programs is 27 mills/kWh. As a rough comparison, the cost of supplying a load with a natural gas turbine is approximately 29 mills/kWh.° The total resources required to achieve the savings from the nine programs are expected to cost $78 million in present value terms. These resources include the initial materials and labor associated with the installation of the efficiency measures, the maintenance costs of the efficiency measures, the additional heating fuel consumed because of use of the efficiency measures,° and the administration cost of the program. The program sponsor faces a different set of costs. The sponsor must pay for the administration of the programs and any incentive payments associated with the programs. For the nine programs analyzed, the total budgetary cost of operating the programs for 20 years is $67 million in present value terms. This figure means that a one-time appropriation of $67 million could fund the programs if the appropriation could be invested and earn interest during the 20 year program period. If the appropriation cannot be invested, a much larger appropriation is required to fund the programs over 20 years. This "Nominal Budgetary Requirement" amounts to about $190 million for the programs operating over 20 years. If the programs are in existence for a shorter period, both the costs (present value) and savings would be reduced proportionately. This would not change the cost-effectiveness analysis of the programs. For example, if they are only operated for 5 years, the budgetary requirements are expected to be $19 million in present value terms. The nominal budgetary requirement is $28 million for the five year period. ‘The 19 GWh/year savings figure is a measure of the average savings between 1991 and 2010 so cannot be directly compared to the savings in 2010 quoted for figure ES-1. SOnce again, this comparison will be done in detail in the system modeling phase of the Railbelt Intertie Upgrade study. “Electrical efficiency measures reduce the amount of heat generated by appliances and lights within buildings. Therefore, they increase the use of heating fuel. ES - 6 1. Introduction 1.1 Objectives of the Analysis The purpose of this report is to analyze the costs and electricity saving impacts of a variety of demand-side electrical efficiency programs for the Railbelt region of Alaska. An example of such a program is a commercial lighting rebate program, which would pay building owners $1 for each energy-efficient but more expensive fluorescent lamp they buy. Such a program is referred to as a "demand-side" program because it attempts to affect energy-using technology that is located on the customer side of the electric meter. It is an "efficiency" program because the response it attempts to evoke is one that improves the efficiency with which energy is used. In the lighting rebate program example, the efficient lights installed provide the same amount and quality of illumination as a less efficient lamp but use less energy. Thus, the ratio of useful service (illumination) to energy consumed is improved. This report identifies efficiency programs that have potential for cost-effectively reducing electricity use. No programs that primarily reduce the use of natural gas or fuel oil in buildings were analyzed. Some programs analyzed incidentally affect the use of gas, oil, or wood. An example is a program that encourages the use of more efficient refrigerators in residences. More efficient refrigerators generate less heat and therefore will cause increased fuel consumption by the residential space heating system. This increased fuel consumption is accounted for in our analysis of the efficient refrigerator program. The economic analysis presented in this report is not a full cost/benefit analysis of efficiency programs. The administrative costs of the efficiency programs and the resource costs of the efficiency technologies induced by the programs are identified, but the benefits of the efficiency technologies are not quantified in terms of dollars. Instead, the benefits of the efficiency programs are expressed in terms of reductions in energy use (kilowatt-hours) and peak demand (kilowatts). In the upcoming system modeling phase of the Railbelt Intertie Upgrade analysis, the economic benefits of these load reductions will be estimated. The process will involve a detailed modeling of the electrical system to determine the reductions in generator fuel consumption and system capacity requirements caused by the efficiency programs. The dollar value of these resource savings will be compared against the resource cost of the efficiency programs to determine whether net benefits from the efficiency programs are probable. This analysis is concerned with the amount of electrical load reduction that could be induced by efficiency programs above and beyond that which would normally occur in the marketplace. This netting out of market-driven efficiency activity is an important part of the analysis. If an efficiency program only serves to reward people who would have invested in efficiency improvements otherwise, social resources (in the form of program administration costs) and state budgetary resources (in the form of administrative costs and incentive payments) will be expended with no net effect on the efficiency of energy use that occurs in the state. Consistency with the mid-case of the associated Railbelt End-Use Electric Demand Forecast was maintained when determining the efficiency investment that 1-1 would normally occur in the marketplace. This analysis is not comprehensive. The efficiency programs analyzed, with the exception of one, target particular technologies. Many technologies for saving electricity were not covered in the package of nine programs analyzed. An attempt was made to cover the most promising technologies. However, the expected savings from the analyzed programs should not be construed as an upper limit on the electric savings that could be induced through efficiency programs. Models were developed for analyzing the impacts of efficiency programs, and these models could be used to identify the impacts of other programs not addressed in this report. 1.2 Motivation for Efficiency Programs One premise supporting the need for efficiency programs is that the investment in energy efficiency in the marketplace is below some optimal level. There exists empirical evidence to support this premise. Untapped opportunities to invest in energy efficiency improvements that pay better than a 10% real rate of return (netting out inflation) are available. Yet, the public sector invests in programs with a comparable amount of risk having a 3-7% real return. Thus, society misses opportunities to profit in a pure economic sense. Efficiency investments may also deliver non-economic benefits such as net environmental improvements from less power generation. The reasons why the market fails to capture the full economic benefits possible through use of efficient technologies are several. A partial list includes: ¢ Lack of Capital/Iliquidity of Investment: Some consumers and businesses do not have access to sufficient capital to purchase more efficient but more expensive equipment, or energy efficiency competes with more pressing needs for capital. Investments in efficient equipment are also long term and cannot be converted to cash easily. e Lack of Information/High Information Cost: The information required to make sensible choices concerning energy efficiency i is substantial. Many false claims appear in advertising, and the difficulties in measuring energy savings allow these claims to persist. Without information programs from unbiased sources, the savings achievable through use of efficient technologies may not justify the time required to acquire good information. e High Perceived Risk: Consumers and businesses perceive high risk in their return on efficiency investments. Some of the risk is due to lack of information, but some is due to other factors. For efficiency measures that last longer than the time an owner owns a building, the owner must capture the residual value of the energy savings in the resale price of the building or lose it. There exists substantial risk that the owner will not be so compensated by the market. e Institutional Barriers: An example is a landlord/tenant situation where two entities can affect energy use but only one pays for it. Within businesses and organizations a similar situation occurs. Maintenance staff have substantial influence over energy 1-2 consumption in their maintenance activities and their purchases of replacement equipment. Yet, there are often poor links between the maintenance staff and those departments of the company that control the investment capital necessary for efficiency improvements. One can accept these as being legitimate market failures yet still believe that energy efficiency programs are unjustified. The administrative program costs incurred may add enough to the cost of the induced efficiency investment to render it uneconomic. This concern is accounted for in the subsequent analysis of efficiency programs. All program administrative costs are estimated and added to the cost of the efficient technology induced by the programs. A further concern is the equity impacts of efficiency programs. Most of these programs involve incentive payments to consumers who undertake efficiency measures. In addition, the reduction in loads will drive electric rates upward, at least in the short term, because of the existence of fixed costs of electrical generation. These two effects will have income distribution impacts across the consumers in the Railbelt. The acceptability of such impacts is a political question. The next section qualitatively discusses these impacts in more detail. It should be noted that these two issues are entirely questions of equity. The size and distribution of incentive payments and the effect of efficiency programs on electric rates do not affect a resource cost/benefit test of efficiency programs (except through effects on the amount of participation in the program). A resource cost/benefit test (such as the one to be completed in the subsequent system modeling effort) is only concerned with comparing: a) the materials and labor required to buy and install the efficient technology and administer the program, with b) the materials (e.g. fuel, generating plants) and labor saved by the reduced load created by the efficient technologies. 1.3 Equity Impacts of Efficiency Programs Resource cost/benefit analyses account for the resource costs and savings from a particular program or activity. However, these analyses in their purest form are unconcerned with who pays for the resource costs and who benefits from the resource savings. The intent of this section is to discuss some of these distributional consequences as they pertain to efficiency programs. Consider a Railbelt electricity consumer during a period when efficiency programs are in effect. If the consumer is one who participates in the program by installing some efficient technology, the consumer is economically impacted in five primary ways: 1) Energy Cost Reduction: The use of the technology results in net reduction in energy cost. As an example, a water heater conversion may save 5,000 kWh/year of electricity and increase natural gas use by 27 MCF/year. At residential electric rates of $0.065/kWh and gas rates of $3.30/MCF, the net energy cost savings is $325 - $89 = $236/year. The $236/year is a benefit realized by the consumer. 1-3 2) Technology Cost: Efficient technology is typically more expensive than inefficient technology. In the water heater example, the conversion may have cost $650 more than a standard electric water heater replacement. The $650 is a cost imposed on the consumer. 3) Incentive Payments: The efficiency program may involve a payment by the government or utility to offset the higher cost of the efficient technology (e.g. a rebate or an interest rate reduction on a loan). If a $500 rebate is paid for a gas water heater conversion, the $500 received is also a benefit derived from the program. 4) Program Costs: The program administrative costs and incentive payments are paid for by someone. If the electric utility pays some portion, these costs will be borne by all electric consumers (including the program participant) through higher electric rates. If the government pays for some portion of the program costs, these payments will result in higher taxes or will result in loss of other government services. To the extent that our example program participant is a taxpayer or would have received the displaced government services, the participant incurs a cost.’ It is possible, of course, that the alternative use of the government money may have had a negative impact on the participant. 5) Load-Related Electric Price Effects: The reduction in load caused by the efficiency programs may affect the price paid for electricity. If the generation cost savings (reduced fuel and power plant capital requirements) from the load reduction are less than the revenue lost by the utility from the reduced electricity sales, then the utility will need to set electric rates higher than they would have been otherwise to remain financially whole. (The opposite could be true also.) Because of fixed costs in the operation of electric utilities that are recovered through sales-related charges (energy and demand charges)*, it is currently the case in the Railbelt that most types of load reductions will increase electric rates. Thus, the upward rate impacts caused by the existence of efficiency programs will be seen as a cost by all Railbelt consumers. A participant in the efficiency program incurs the above five economic impacts. A non- participant (one who is not induced to install efficient technology by the program), however, is directly impacted only by the last two items in this simplistic model. Since these two items typically represent costs in the case of the Railbelt electricity consumer, the efficiency program has the effect of making non-participants worse off, upon a first look. A numeric example of these impacts for a hypothetical efficiency program is given in Box 1-1. "The most likely source of funding for the efficiency programs analyzed in this report is the Railbelt Energy Fund. Thus, program costs will not drive up electric rates but will instead displace the benefits from an alternative government expenditure. ®t fixed costs of operation were recovered through fixed charges to customers, load changes would not affect electric rates. Energy and demand charges would be lowered to reflect the marginal cost of providing energy and providing generation capacity, and all other fixed revenue needs would be collected through fixed charges, such as customer or facilities charges. Although such a pricing system would decouple the level of load from electric rates, its effect would be to cause fewer consumers to invest in energy efficient technology, since energy and demand charges would be lower. Given the empirical evidence that investment in efficient technology is less than socially optimal, this form of marginal cost pricing would contribute to the problem. 1-4 Suppose the Railbelt consists of 5 electricity consumers and a state government with $100 to spend. The objective of this analysis is to determine the effects of spending this $100 on an efficiency program versus distributing it equally as transfer payments amongst the S consumers. TRANSFER PAYMENT SCENARIO In this scenario, each consumer uses 10,000 kWh per year of electricity and receives a one-time $20 transfer payment from the government. The electricity is produced by a utility with fixed costs of $1,750 per year and variable costs of $0.035/kWh. Thus the utility’s rate (assuming no fixed customer charges and no demand charges) is: Utility Rate = ($1,750 + $0.035/kWh * 50,000 kWh) / 50,000 kWh = $0.070/kWh Each consumer pays $700 per year for electricity in this scenario, 10,000 kWh * $0.07. The present value of this stream of electricity costs over the next 10 years is $5,678, assuming a 4% discount rate. Thus the economic impact on each consumer is (parentheses indicate negative values): Electric 10 year Use Electric Dividend NET kWh/yr_ Bill, PV Check IMPACT Consumer 1 10,000 ($5,678) $20 ($5,658) Consumer 2 10,000 ($5,678) $20 ($5,658) Consumer 3 10,000 ($5,678) $20 ($5,658) Consumer 4 10,000 ($5,678) $20 ($5,658) Consumer 5 10,000 ($5,678) $20 ($5,658) ($28,288) EFFICIENCY PROGRAM SCENARIO In this scenario, the government decides to spend its $100 on an efficiency program. Consumer 1 is the only participant in the efficiency program and receives a $100 incentive payment to install a $200 piece of equipment that reduces her electric bill by 1,000 kWh per year for the next 10 years. Since the utility has fixed costs and the total electricity consumed is now less, the utility rate increases: Utility Rate = ($1,750 + 49,000 kWh * $0.035/kWh) / 49,000 kWh = $0.070714/kWh Consumers 2 through 5 now pay $707.14 per year, 10,000 kWh * $0.070714, $7.14 more than before. Their 10 year present value electric cost is $5,736. No one receives a $20 transfer, since the money was spent on the efficiency program. Consumer 1 only uses 9,000 kWh/yr now, so pays $636.43 for a 10 year present value of $5,162. The impacts now, including technology costs and incentive payments for Consumer 1 are: Electric 10 year Use Electric Incentive Technology NET kWh/yr Bill, PV Payment Cost IMPACT Consumer 1 9,000 ($5,162) $100 ($200) ($5,262) Consumer 2 10,000 ($5,736) ($5,736) Consumer 3 — 10,000 ($5,736) ($5,736) Consumer 4 10,000 ($5,736) ($5,736) Consumer 5 10,000 ($5,736) ($5,736) ($28,204) Subtracting the two scenarios gives the net effect of the efficiency program for each of the consumers: Consumer 1 $396 Consumer 2 ($78) Consumer 3 ($78) Consumer 4 ($78) Consumer 5 ($78) $84 Consumer 1, the participant in the efficiency program, is substantially better off because of the energy savings (type 1 benefits) and receipt of the incentive payment (type 3 benefits). All five consumers suffer the loss of the $20 transfer payment (type 4 cost), and all consumers suffer the rate increase (type 5 cost) caused by the utility’s load reduction. Viewed as a group, the consumers are $84 better off as a result of the efficiency program, and Consumer 1 could compensate the others for their loss and still come out ahead. Reassuringly, this result can be obtained more directly by calculating the present value of the energy savings over 10 years valued at the marginal cost of generating power ($0.035/kWh in this example) and then subtracting the cost of the efficiency measure (as is done in a resource benefit/cost test): 135 There are, however, a number of more subtle effects that should be considered when evaluating the equity impacts of efficiency programs. First, it may be possible to structure the programs so that most electricity consumers have the opportunity to participate. Opportunities for use of energy-efficiency technologies are present in virtually every building, and the energy cost savings are universally valued. Thus, spreading the benefits or opportunities to benefit over a large fraction of consumers may be an attainable goal. For efficiency measures that are permanently attached to buildings, benefits frequently are passed forward to subsequent owners of the building. If Building Owner 1 converts the electric water heater in her home to natural gas, she receives benefits through reduced energy costs while she owns the building. If she sells the building to Owner 2 five years after converting the water heater, she captures some of the remaining value of the converted water heater in the form of a higher building sale price. In reality, she rarely would capture all of the remaining energy cost savings in the additional resale price, so Owner 2 receives some of the net benefit from the conversion made by Owner 1. Owner 2 may not have directly participated in the efficiency program but still derives some benefit from the program. The net benefit of reduced use of real resources in energy production reflecting in the net savings in energy costs of program participants will be spent and generate further local income, which to some extent will accrue non-participants. Efficiency programs that assist commercial businesses will also provide indirect benefits to non-participants. If the competition between businesses is effective, a portion of the energy cost savings will be passed through to consumers in the form of lower prices. Investments in energy efficient technologies (aside from their energy-saving benefits) have economic impacts beyond the direct program beneficiaries. Installation labor, dealer/distributor mark-ups, a portion of any seller rebates, and the administrative labor to run the programs are all sources of local income that can accrue to non-participants. These issues of equity do not affect the evaluation of program cost effectiveness. They are identified because of their general importance in the determination of public policy where decisions may involve additional considerations. The discussion does not imply that the equity impacts from efficiency programs are better or worse than equity impacts of other types of energy programs, such as energy supply projects. 1.4 Program Selection Criteria This section describes the process that was used to identify the most promising efficiency programs for the Railbelt. Efficiency programs were identified separately for the residential and commercial sectors, since substantial differences in technology and decision-making occur across these sectors. Commercial sector programs were assumed to be available for industrial customers also, although the main uses of electricity in the industrial sector are process specific and are not served well by technology-targeted efficiency programs. Efficiency programs can be evaluated along many different dimensions, including quantitative ones such as: 1-6 e Resource Cost: The resource cost of an energy efficiency program is the material and labor cost associated with installation and use of the efficient technology induced by the program (beyond that technology which would be installed normally). In addition, it includes the cost of the material and labor expended by the program sponsor (staff salaries, advertising, etc.). It does not count incentive payments by the program sponsor. Incentive payments are economic transfers that shift who pays for resources. In this case, the program sponsor pays for some of the resource cost of the efficient technology. A useful way to express resource costs are in terms of the "Cost of Conserved Energy" (CCE). The CCE concept is described in Box 1-2 and essentially involves dividing the resource cost by the net electricity saved to determine a per unit cost. ¢ Budgetary Cost: The budgetary cost of an efficiency program measures the budget requirements of the sponsoring agency. As does the resource cost, it includes the administrative costs of the program. However, it also includes all incentive payments made by the sponsor in the case of programs where financial incentives are offered. The budgetary cost can also be expressed on a per kilowatt-hour saved basis. It is possible for the budgetary cost to exceed the resource cost if there are many free riders participating in the program. A "free rider" in this context is defined as someone who participates in an efficiency program who would have utilized the efficient technology even without the incentive offered by the program. Thus, free riders add to budgetary cost by collecting incentive payments but do not add to the pool of net kilowatt-hours saved since they would have saved the electricity without the program. ¢ Total Energy Saved: The electricity saved by an efficiency program varies over time because the installation and retirement of efficiency measures induced by the-program varies over time. In this report, energy savings are typically expressed in levelized terms over the period 1991-2010. The levelization is accomplished by computing the present value of kilowatt-hours saved over this period and then spreading the sum back out over the analysis period via an amortization factor. This levelization procedure is purely for presentation convenience. The detailed system modeling that will occur later will use the actual stream of saved kilowatt-hours over time as an input. The relative importance given to these different criteria in judging the worth of a program is a value decision. Such a value decision was not made in this report. The efficiency programs were evaluated with respect to these criteria, but the evaluations were not combined into a single measure of merit for each program. Decisions based on judgement were made, however, as to which particular programs would be considered in the analysis. Some programs and technologies were eliminated from the analysis because their resource cost was judged to be substantially more than expected generation costs. As explained above, this economic comparison with supply-side alternatives is the not the primary objective of our analysis. That comparison will be done in detail during the system modeling phase of the work. However, a preliminary economic comparison of demand-and supply-side options was made to screen out demand-side options that have little potential to be cost-effective. In order to do this preliminary screening, electrical generation costs were estimated and are 1-7 Cost of Conserved Energy A useful way to present the cost of an efficiency measure is in terms of its "Cost of Conserved Energy’ or CCE. The measure is most easily thought of as the levelized annual cost of the efficiency measure divided by the annual energy savings of the efficiency measure. For example, if the level cost of an efficiency measure over its life is $100 per year, and it saves 4,000 kWh per year, then its CCE is 2.5 cents/kWh or 25 mills/kWh, $100/year divided by 4,000 kWh/year. As a test of the cost-effectiveness of the efficiency measure, this CCE can be compared against the local levelized cost of generating power. If the CCE is less than the generating cost, the use of the efficiency measure will reduce the total resources devoted to providing a given service. The most complicated aspect of calculating the CCE for an efficiency measure is properly levelizing all costs of the measure. Capital cost of the measure should be amortized over the life of the measure. In this report, a 4% real discount rate is used in the amortization. To the levelized capital cost should be added maintenance costs (or maintenance savings should be subtracted). Finally, if the efficiency measure causes increased non-electric fuel consumption, the annual cost of this fuel should be added to the level cost. As an example, consider the conversion of an electric water heater to natural gas. Assume the capital cost is $650, the annual maintenance cost is $6/year, and the consumption of natural gas by the water heater costs $90 per year. If the $650 capital cost is amortized over a 15 year life at a 4% real discount rate, the level cost is $58/year. Adding the $6/yr maintenance cost and the $90/yr fuel cost to this level capital cost gives a $154/yr total level cost. If the water heater conversion saves 5,000 kWh/year of electricity, the Cost of Conserved Energy is ($154/yr)/(5,000 kWh/yr) = 3.1 cents/kWh or 31 mills/kWh. To compare the CCE of an efficiency measure directly to busbar generation costs (cost at the power plant), a further adjustment must be made. The CCE of the efficiency measure should be lowered by the incremental (not average) transmission and distribution loss since a 1 kWh load reduction at the customer results in more than a 1 kWh load reduction at the power plant. Box 1-2 - Cost of Conserved Energy Concept shown in Figure 1-1. The costs are estimated for both natural gas-based generation and oil- based generation. The natural gas-based generation cost was used as the screen for demand-side technologies applicable to the southern Railbelt (Kenai Peninsula, Anchorage, Matanuska-Susitna Valley). The oil-based generation cost was used to screen technologies applicable to the Fairbanks area. With the existing Anchorage-Fairbanks intertie, the marginal generation source is natural gas for the Fairbanks load for most of the year. However, some high demand growth scenarios indicate that the fraction of the year when oil is the marginal generation source could increase, assuming no intertie upgrade. So as not to eliminate programs and technologies that have some chance of being cost-effective, we used the oil generation cost curve to screen demand-side measures for Fairbanks. The cost of generation is a strong function of the time-distribution of the load being supplied. A load with a large peak relative to the average requires more capital investment in generating plants and is more costly to supply. Therefore, Figure 1-1 shows generation cost versus load factor. For this analysis, load factor is defined as the ratio of the average load (kW) to the load during the utility system peak period. The figure extends to load factors greater than 100% because it is used to determine the generation costs associated with end-use components of a utility's load. Such a component could have an average demand that exceeds its demand at the utility peak; ie. it is a valley filling type load. 1-8 SEE ner Generation Costs w/ Transmission Losses Resource mills/kWh (real) 100° 90F 80F 70 - 60F se 50+ ~* aid s—s— “+ + _ 40r i 20+ +—_+ 4 + 10F | 0: ! : ' ! 0% 20% 40% 60% 80% 100% 120% 140% 160% 180% 200% Load Factor Fuel Type —*- Natural Gas == Oil ASSUMPTIONS: Reserve Margin = 30% Real Discount Rate = 4.0% Capacity Needed in 1999 Transmission Loss = 5% GAS OIL Initial Fuel Cost ($/MMBtu) $1.32 $3.40 Fuel Escalation 1.0% 1.6% Life (yrs) 20 20 Heat Rate (Btu/kWh) 12,000 11,000 Leer ered e escort reballa ret ett ata t est taatalilalaball Figure 1-1 - Approximate generation costs for natural gas and oil generation plants, as a function of the load factor supplied. Costs assume the presence of excess capacity until 1999 and are adjusted for 5% transmission losses. The calculations supporting Figure 1-1 consider the generation costs over a 20 year period from 1991 through 2010. Because of the current existence of excess capacity in the Railbelt, the figure assumes that a reduction in demand at the utility system peak only results in capacity savings from 1999 through 2010. Thus, the generation costs shown in the figure are lower than those that would apply during a period with normal reserve margins. The savings from many of the analyzed efficiency programs extend beyond 2010 and thus beyond the analysis period for this generation cost figure. Generation costs in the post-2010 period will be higher than those shown because of capacity needs in that period and because fuel costs are expected to rise in real terms. Some technologies, such as conversion of space and water heating systems to propane, were 1-9 eliminated because of excessive resource cost. Excessive budgetary cost could also serve as a screen to eliminate efficiency programs from the analysis. As a benchmark to compare against, the budgetary costs of other Alaskan energy programs were approximately calculated and are presented in Table 1. The figures listed are the levelized amount (in real terms) of state government ee ae Energy Program Budgetary Costs Bradley Lake Hydroelectric Four Dam Pool Power Cost Equalization 23 mills/kWh 50 mills/kWh 30 - 418 mills/kWh LPL ELLE LED EDEL ETE ALLELE A LY DASA EERSTE, Table 1-1 - Approximate Budgetary Costs of Alaskan Energy Programs spending per kilowatt-hour generated for these supply side programs. These figures are an approximate indicator of the state government’s historical willingness to pay for energy programs, expressed on a per kilowatt- hour basis.’ The costs are not the total costs of the various projects; they are only the portion contributed by the government. The efficiency programs presented in this report have an average budgetary cost of 23 mills/kWh (1 mill = $0.001 or 0.1 cents). Total budgetary cost is also a constraint on potential efficiency programs. For this analysis it was not used to eliminate any programs from consideration. The total budgetary cost of all efficiency programs presented in this report is substantially less than the size of the Railbelt Energy Fund (~$200 Million), an amount that could be construed as an upper limit on budgetary resources. Beyond these two cost criteria we applied some more qualitative criteria in the selection of efficiency programs. The programs chosen encourage technologies that minimize the life- cycle costs of providing a particular energy service. Many technologies improve efficiency but do not reach this economically optimal level of efficiency. An example is the replacement of incandescent lamps with "energy-efficient" incandescent lamps instead of more efficient compact fluorescent lamps. The efficient incandescent lamp only saves a fraction of the economically efficient level of savings, i.e. the level achieved by the compact fluorescent lamp. An additional benefit of promoting very efficient technologies is the relatively few number of free riders that participate in the program. None of the programs analyzed have the primary intent of shifting load as opposed to reducing load. The Railbelt currently has excess generating capacity, so reductions in peak | demand without any energy reduction would save no real economic resources in the short to medium term. Even in the longer term, the fuel component of generation cost for a natural gas-based system will be more substantial than the capacity cost component. Finally, the loads that lend themselves most readily to shifting are air conditioning, electric water heating, and electric space heating. Air conditioning in Alaska does not contribute to the utility system peak, since the system peaks in the winter. Technology for shifting The budgetary costs per kWh of demand-side efficiency programs are not directly comparable to these supply-side budgetary costs. The demand side figures are calculated per met kWh saved, whereas the concept of a net kWh generated was not applied when calculating the supply-side numbers. The net generation concept could be applied to supply-side programs also. In the case of Bradley Lake, the effect of the state subsidy may have been to build the project now instead of building it at a later date under free-market conditions. The net effect of the state subsidy would therefore the difference in the discounted sum of generated kilowatt-hours between the two scenarios. Using such a methodology, the budgetary costs of the supply-side programs would all be higher. 1-10 electric space and water heating loads off peak is available but is more advantageously deployed late in the 1990’s when generating capacity may be needed and many electric-to- gas space and water heating conversion will have already taken place. The efficiency programs analyzed offer aggressive incentives. By doing so, the breadth of participation is increased, the fraction of free riders is decreased, more substantial energy savings are achieved, and the per unit impact of fixed administrative costs is reduced. The penalty of large financial incentives is the size of the total budgetary cost and the inequities perceived by those who do not participate in the programs despite the large incentives. Because of the relatively low electrical generation costs in the Railbelt and the current excess capacity situation, early retirement of energy-using equipment was not specifically encouraged by any of the programs. The financial incentive levels were chosen and participation was modeled to be consistent with that approach. The least expensive way to improve efficiency is to replace inefficient equipment when it normally fails with more efficient equipment. Most programs addressed in this report involve paying rebates to the sellers of efficient equipment. These rebates would lower the prices of efficient equipment and induce dealers to offer their customers a more efficient mix of appliances and equipment. This gradual introduction of efficient equipment is more consistent with low generation costs and short- to medium-term excess capacity. The early replacement of inefficient equipment is not excluded by the programs but is generally more costly per unit of saved energy. Consumers can replace their energy-using equipment before it normally wears out and receive rebates for the efficient equipment purchased. However, the rebate levels are relatively small in comparison to the full purchase price of the equipment. For example, someone deciding to scrap their working refrigerator for a more efficient model would pay about $900 for the refrigerator and receive a $50 rebate, 6% of the full purchase cost. The rebate provides little incentive to make this early retirement decision. For someone replacing their refrigerator that has just worn out, they are obligated to pay $860 just to buy a model meeting the federal efficiency standard. For $40 extra, they can buy an efficient model that garners a $50 rebate. Thus, the rebate is a large percentage of the incremental purchase price of the efficient model and provides substantial incentive for the purchase of efficient units. The efficiency opportunity with the most potential for cost-effectively saving electricity on a retrofit (early retirement) basis is probably commercial lighting retrofits. Once again, the incentive levels are set so as to not aggressively promote this option, but rebates are available for such retrofits through the four commercial lighting programs and discussed in the following section. A more thorough treatment of the timing of efficiency measure implementation is presented in Appendix A. Because of the incremental approach used by the programs, substantial changes in efficiency require time to occur. Most energy-using equipment has a 15 to 20 year life. Programs that affect decisions when equipment is normally replaced must be active for 15 to 20 years in order to have the potential of affecting the efficiency of the entire stock of equipment. All of the programs were therefore modeled as lasting 20 years. Such a long program life may be unrealistic. Additional analysis was done for each program to allow the estimation of program impacts for any program life shorter than 20 years. The analysis shows that the 1-11 cost per unit of savings changes little under varying program life assumptions. Thus, the per-unit resource cost ranking of the programs is not affected by the program life assumption. Also, the total amount of saved energy is roughly proportional to the life of the program. A 5 year program saves approximately one-fourth the energy that a 20 year program saves. All summary measures of impact in this report are based on the full 20 year program life. The majority of the project effort was spent estimating the quantitative impacts of using financial incentives for the promotion of certain efficiency measures. The detailed structure of the actual programs used to promote the measures was a lesser emphasis. Start-up costs were assigned to each of the programs, and programmatic details would be established with this money. Although we have suggested providing rebates to sellers of efficient equipment as a promising method for encouraging the use of efficient technology, other program structures might be promising also. Our lack of emphasis on program design does not imply that it is not important; substantial variations in program performance can be attributed to the quality of design. In our analysis, we assume the efficiency programs are relatively well-designed and have money available to provide substantial financial incentives. With this assumption, the analysis demonstrates the expected impacts of such programs. 1.5 Summary of Results Nine different efficiency programs were analyzed. They are summarized briefly below. More detailed descriptions appear in Chapter 2. The residential programs are listed first, then commercial. No ranking of the programs is implied by the ordering. Water Heater Conversions - This program pays $500 rebates for the conversion of a residential electric water heater to natural gas. Efficient Electric Water Heaters - $40 rebates are paid for the purchase of an electric water heater with an efficiency in excess of 95%. With each purchase of an electric water heater, a free energy-saving showerhead and set of thermal traps (devices to reduce the heat loss of the pipes connected to the water heater) are included. Gas Dryer Rebates - This program pays a $170 rebate for the installation of gas piping to a clothes dryer within a residence. $50 rebates are also paid for the purchase National Appliance Energy Conservation Act The National Appliance Energy Conservation Act of 1987 imposed energy-efficiency standards on a number of different residential appliances. A subsequent amendment set standards for fluorescent lamp ballasts. The effective dates for the requirements vary by appliance, but most requirements will be in force by 1991. The standards most relevant to the Railbelt are the refrigerator standard (~100 kWh/year savings relative to the 1985 shipment-weighted average- -larger savings relative to the stock average), freezer standard (~ 110 kWh/year savings relative to 1985 shipment average), electric water heater standard (~240 kWh/year savings relative to 1985 shipment average), and the fluorescent ballast standard (30 kWh/year savings relative to 1985 shipment average). Savings will exceed the above figures because the standards are minimum efficiency requirements; only the least efficient units shipped will consume at the level set by the standard. Box 1-3 - The National Appliance Efficiency Act of 1987 1-12 of a gas clothes dryer. Efficient Refrigerator Rebates - Purchases of refrigerators at least ~28% more efficient than required by the National Appliance Energy Conservation Act would be given $50 rebates. Efficient Freezer Rebates - $50 rebates would be paid for freezers at least ~35% more efficient than required by the National Appliance Energy Conservation Act. Fluorescent Lamp Rebates - Rebates from $0.30 to $1.80 would be paid for the purchase of energy-efficient fluorescent lamps. Electronic Ballast Rebates - A $13 rebate is paid for each electronic fluorescent ballast purchased. A ballast is the device used to start and provide the proper operating conditions for fluorescent lamps. Incandescent to Fluorescent Conversions - $7 to $12 rebates would be paid for the purchase of compact fluorescent lamps, adapters, and fixtures suitable for replacing incandescent lamps. Sliding-Scale New Construction Rebates - A rebate of $1 per square foot would be paid for every 1 Watt per square foot reduction in lighting or ventilation power consumption below a threshold level. The rebate would be paid for new construction and remodel projects and would be divided (85%-15%) between the building owner and the architect/engineer project designer. Table 1-2 summarizes the quantitative results of the efficiency program analysis. Residential programs are listed first and given a "Sector" designation of "R" in the table. The "Level Savings" figure is a level measure of the energy savings induced by the programs from 1991 through 2010. The savings in the year 2010 are substantially more than the level figure, since savings are growing over the 1991 to 2010 period. Resource and budgetary costs are expressed both as a cost of conserved energy (CCE) and as a total present value. The savings indicated in Table 1-2 are savings over and above market-driven (and existing program generated) savings. In fact, substantial energy will be saved without efficiency programs via market-driven measures such as electric space and water heat conversions and the federal government’s National Appliance Energy Conservation Act (see Box 1-3). The efficiency programs analyzed are projected to induce a levelized electricity savings of 160 GWh/year. The budgetary cost required to achieve the savings is ~$67 million (present value), and the net real cost of economic resources consumed amounts to ~$78 million (present value). The electricity savings from the commercial sector programs deliver almost 70% of the total savings; however, the residential Electric Water Heater Conversion Program saves a substantial amount of electricity at a relatively low cost. A "Conservation Supply Curve" is a graphical construct used to display the costs and savings of efficiency measures or programs. It is similar to a traditional economic supply curve showing marginal cost versus quantity produced. Such a curve for the nine analyzed 1 - 13 RESOURCE COST BUDGETARY COST Level Present Present Load Savings CCE Value CCE Value Pr m. tor Factor (Wh mills/kWh_$ million _mills/kWh million Water Heater Conversions R 64% 21 20 7.7 15 5.8 Efficient Water Heaters R 85% 7 23 2.5 19 2.0 Gas Dryer Rebates R 59% 13 32 93 28 8.0 Efficient Refrigerators R 88% 6 31: 43 25 3.5 Efficient Freezers R 102% 4 35 3.2 27 2.5 Effic. Fluorescent Lamps C 49% 38 21 11.4 20 11.2 Electronic Ballasts c 49% 36 35 24.1 29 20.1 Incandescent Conversions C 41% 19 18 Sa 16 4.7 Sliding-Scale Rebates c 48% iT: 27 10.2 24 9.0 161 78 67 Table 1-2 - Quantitative Summary of Efficiency Programs. efficiency programs is presented in Figure 1-2, based on the resource cost of the efficiency programs. The efficiency programs are ordered from the least to the greatest cost and are placed from left to right on the graph. The horizontal axis displays the cumulative annual energy savings (GWh/yr), and the vertical axis shows the resource cost (mills/kWh) of attaining the savings from each one of the programs. The Incandescent to Fluorescent Conversion program is shown at the far left on the graph since it achieves savings at the lowest resource cost. The 19 GWh/yr savings are saved at a resource cost of 18 mills/kWh. An additional 21 GWh/yr of savings are generated by the Water Heater Conversion program, costing 20 mills/kWh, bringing the cumulative amount of savings to 40 GWh/yr, as shown on the horizontal axis. By drawing a horizontal line on the graph at some limiting resource cost, the intersection of the line with the supply curve will indicate the total amount of savings attainable for less than the specified resource cost. For example, 100 GWh/yr are attainable at a resource cost less than 30 mills/kWh.” Figure 1-3 shows the time distribution of savings resulting from the efficiency programs analyzed. The lowest line on the graph shows the electricity savings that are expected to be achieved by the normal market adoption of the analyzed efficiency measures. The middle wedge in the graph shows the net electricity savings effect that can be attributed to the efficiency programs. The incentives offered by the programs cause this additional amount of electricity savings to occur. Finally, the top wedge shows the additional amount One problem with this technique is that the load factor of the load saved is not accounted for. An efficiency program with a cost of 30 mills/kWh may substantially reduce peak demand (eliminate a low load factor load) while another with the same resource cost may eliminate a high load factor load. The latter efficiency program is more valuable but is not rewarded by this analysis technique. The utility system modeling to occur in the next phase of the project will accurately treat this concern. 1-14 Conservation Supply Curve Railbelt Electrical Efficiency Programs Cost of Conserved Energy, mills/kWh 4 1 - Incandescent Conversions 20 2 3 2 - Water Heater Conversions r 4 3 - Effic. Fluorescent Lamps 4 - Efficient Water Heaters 5 - Sliding Scale Rebates 6 - Efficient Refrigerators 10F 7 - Gas Dryer Rebates 8 - Electronic Ballasts 9 - Efficient Freezers 0 ; ' ‘ ae \ \ ; 0 20 40 60 80 100 120 140 160 180 Level Energy Savings, GWh/ Year Figure 1-2 - Conservation Supply Curve. This curve only shows program-induced efficiency savings. Savings are expressed as level savings for the 1991 to 2010 period. of savings that would result if the efficiency programs were to achieve 100% participation (i.e. the savings that would result if all consumers who have the opportunity to participate in the programs actually did participate in the programs). The graph shows that the savings from the efficiency programs grow over time. This result is due to the fact that the programs encourage the purchase of efficient appliances and equipment at the time of normal equipment replacement. Since the lifetime of most energy-using equipment is 10 to 20 years, it takes 10-20 years for efficient equipment to fully penetrate the equipment stock. In addition, growth in the size of the equipment stock causes growth in the electricity savings that are achieved by purchasing more efficient equipment. Had any substantial retrofit programs been included, a more rapid increase in energy savings would have resulted. The vertical axis on the right of the graph displays the electricity savings as a fraction of the total load in 2010 (base case forecast). The electricity savings from technologies targeted by the efficiency programs will amount to about 4% of the 2010 load without the existence of the programs (i.e. in the market-driven scenario). This load reduction is already incorporated in the mid-case demand forecast. Another 7% of the 2010 load could be eliminated through implementation of the indicated efficiency programs. If the programs were to achieve 100% participation, an additional 9% of the 2010 load would be saved. 1-15 Railbelt Electrical Efficiency Measures Measures Addressed by Proposed Programs GWh/Year % of 2010 Total Load 800 600 400 200 0 ' ' ' ' ' ' " " ' 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 Year Savings Type Ml Market Driven Net Program 100% Participation Figure 1-3 - Electricity Savings over Time from Measures Promoted by the Railbelt Efficiency Programs. Because this analysis only addresses a subset of the possible electricity-saving technologies, no conclusions concerning the "technical potential" of efficiency technologies can be made. Likewise, no conclusions concerning the total amount of efficiency improvements that occur without the programs can be made. In particular, none of the efficiency improvements required by the National Appliance Energy Conservation Act of 1987 are shown in the graph, since no programs addressed focus on efficiency technologies whose use is already required. The Act requires the use of energy-efficient magnetic fluorescent ballasts instead of standard magnetic ballasts. This requirement alone accounts for a ~90 GWh/year load reduction in 2010." Conversions of electrically-heated buildings to natural gas and fuel oil are another efficiency measure not captured in the Market-driven segment of the graph, since none of the programs address this measure. 1.6 Efficiency Measures not Addressed by Programs “What is shown in the graph are the savings due to the market-driven adoption of electronic ballasts, which are one level more efficient than even the energy-efficient magnetic ballasts. 1- 16 2010 Electrical Use Mid-Case Forecast FRIG 185 WATR 214 Re soe A ea ao, FREZ 100 , COOK 94 Qa LITE 856 VENT 260 DRY 140 EAT 44 LITE 277 “ee | MISC 482 MISC 385 Residential Commercial 1,710 GWh/Year 1,980 GWh/Year Including Distribution Losses Figure 1-4 - End Use Breakdown of 2010 Electrical Load. (Mid-Case Demand Forecast). Because of the very large number of potential efficiency measures, not all electricity-saving efficiency measures could be addressed by this analysis. While an attempt was made to focus on the efficiency measures with the lowest resource cost and largest potential savings, some of the neglected measures, such as a commercial refrigeration efficiency upgrades and multi-family electric heat conversions, may be equally promising. Thus, the actual conservation supply curve is probably flatter than depicted (i.e. more savings are achievable in the 20 - 40 mills/kWh range), as well as containing segments in excess of 40 mills/kWh. Although the analysis was not comprehensive, the nine programs were addressed in some detail and indicate the general nature of the impacts from efficiency programs. Modeling tools were developed that allow the further analysis of other types of efficiency programs. Some of the promising efficiency measures that were not addressed by this analysis are discussed below. To assist in assessing the magnitude of the efficiency measures, Figure 1-4 shows the projected (mid-case) end use breakdown of electrical demand in 2010. e Residential Electric Space Heat Conversions - The forecast shows over 200 GWh/year being used for electric space heating in the year 2010. Electric space heating is a very inefficient method for heating when fuel can be burned directly in a fuel-fired heating system at over 80% efficiency. With typical electrical generation efficiencies of less than 30% in the Railbelt and an additional 10% loss in the transmission and distribution 1-17 system, an electric resistance heating system is just over 25% efficient. In addition, the peak demand imposed by such a heating system can easily be 9 kilowatts for a 1500 square foot dwelling. The capital cost of the generation capacity to supply this load (and its associated T&D losses) with a 30% reserve margin is about $5,000 (with $400/kilowatt gas turbines). For single-family electrically-heated homes with natural gas available, market-induced conversions occur relatively rapidly. However, our residential end use survey indicated sluggishness to convert in the multi-family sector. A program to accelerate natural gas conversions in the multi-family sector could prove effective. Because of the small heat load of individual living units and the fixed costs involved with conversions, separate conversion of each living unit in a multi-family structure is often not economical. However, conversion of the entire building with a central gas-fired heating system can be accomplished more economically. The mid-case residential demand forecast also projects that some new residences will be built with electric space heat. Addressing this source of inefficiency is more difficult. Programs giving incentive payments for the use of another heating fuel suffer a tremendous free-rider problem--i.e. almost all of the recipients of the incentive payment would have used another fuel without being encouraged by a program. A more effective approach might be a marketing campaign to encourage people not to build with electric heat, or a hook-up fee program that actually charges customers a substantial hook-up fee if they choose to use electric space heat in a new residence. Residential Lighting - 280 GWh/year is projected to be used in residential lighting systems in 2010. Over 200 GWh/year will be used in inefficient incandescent lighting. The compact fluorescent lamps discussed in the commercial sector Incandescent to Fluorescent Conversion program are also applicable in the residential sector. Some models are hindered by large physical size, some hum, and delayed starting. However, advancements in the technology are being made rapidly. Electronic-ballasted models have solved the noise and starting problems, and more compact designs are becoming available. We have suggested that the dealer rebates recommended in the commercial sector program also be available to residential lighting dealers. However, we conservatively attributed no residential electric savings to the program. Waterbeds - Few people realize that their waterbed consumes ~$800 of electricity (retail) over a 10 year period. Our end use survey indicated that there are probably 35,000 waterbeds in the Railbelt consuming over 40 GWh/year in total. Better consumer information might lead people to exchange their waterbeds for a more economical form of sleep. Commercial Refrigeration - Commercial refrigeration systems utilizing variable-speed compressors, controls that more accurately cycle anti-sweat heaters for glass doors, and controls that operate the system more efficiently in the presence of cool outside temperatures have the potential to reduce commercial refrigeration energy use by 30%. These technologies are being adopted in the large chain grocery stores. Penetration is slower in the smaller stores and in restaurants. Incentive programs could encourage the use of these technologies and reduce demand in this 230 GWh/year end use. 1- 18 ¢ Commercial Ventilation - The Sliding-Scale Rebate program addresses reducing energy in the commercial ventilation end use. However, two additional comments should be made. The estimate of savings from the program was intentionally conservative, because, unlike the other programs, no detailed calculations for individual energy-saving technologies were presented to support it. In addition to the efficiency potential in new buildings that the Sliding-Scale Rebate program promotes, there is cost-effective energy- saving potential in existing buildings. More accurate matching of fan air flows to the cooling loads present in a building can save substantial energy. A 5% reduction in flow rate will result in a 14% reduction in fan energy use because of the cubic relationship between air flow and power consumption. A ventilation system tune-up program could tap some of this potential. ¢ Industrial Efficiency - No programs were addressed to specifically address the expected 300 GWh/year industrial load in 2010. Most motor-driven industrial processes can benefit from the use of electronic variable-speed motor controllers. These controllers efficiently and accurately reduce the speed of a motor in response to a reduction in the process energy demand. For industrial processes requiring heat and electricity, cogeneration can sometimes be the cost-minimizing means of supplying the energy needs of the process. Cogeneration was outside the scope of this analysis. 1.7 Structure of Rest of Report The rest of the report is organized as follows. The quantitative analysis of potential efficiency programs is presented in Chapter 2. Discussions of the spreadsheet analysis model used, assumptions concerning program costs and participation rates, and uncertainties in the analysis are also included in this chapter. Appendix A discusses issues related to the timing of efficiency measure implementation. Various ways of structuring an electronic ballast incentive program are analyzed as an example. A short discussion of investment in energy efficiency during a period of excess generation capacity is also included. As a part of this study, we commissioned a broad review of all major efficiency programs undertaken in the United States within the last 5 years. A copy of that review and its extensive bibliography are included in Appendix B. It is especially insightful on programs that improve the efficiency of new construction and contains useful detail on issues of program design. Written comments on the Draft version of this report and responses to those comments are included in Appendix C. 2. Quantitative Analysis of Efficiency Programs 2.1 Description of Model The quantitative impacts of efficiency programs were analyzed with a spreadsheet model. The objective of the model was to determine the net resource costs, budgetary costs, and energy savings over time resulting from the implementation of an efficiency program. The purpose of this section is to describe the structure of the model. While important, the reading of this section is not essential to understanding the outcomes of the analysis. Skip to section 2.2 if desired. 2.1.1 Technology Characteristics Using the analysis of the Water Heater Conversion program on page 2-21 as an example, the mechanics of the model will be explained. The top part of the first page presents a number of the program-specific inputs used in the model. One unit of technology is defined first, e.g. square foot, household, heater, etc. All per unit inputs and output are expressed relative to this unit. Next, energy characteristics of the efficiency technology being promoted are specified. "kWh Savings/Unit" indicate the annual kilowatt-hour savings resulting from use of one unit of the technology.” The savings are measured at the input to the electrical distribution system (not transmission system) to account for incremental savings in distribution losses. The "kW Savings/Unit" indicate the reduction in utility system peak, once again measured at the input to the distribution system, resulting from use of the efficiency technology. The peak is assumed to occur during the early evening on a cold winter weekday. Finally, "Htg Btus Consumed" measures the increased heating fuel consumption caused by use of the efficiency measure. The variable is expressed in Btus/kWh saved.” The "Initial Cost" is the incremental capital cost of the efficiency measure, including both materials and design/installation labor. Incremental costs are those costs in excess of capital costs that would be incurred with the standard technology. "Annual Maintenance" is the additional maintenance cost (or the maintenance savings) incurred through use of the efficient technology. Maintenance costs are assumed to stay constant in real terms over time. "Lifetime" refers to the life of the efficiency measure, i.e. how long the savings from the measure last. In most cases, an average life for the efficiency technology is used. In the The savings are measured relative to a defined "standard" technology. The standard technology is the technology most likely to be used in the absence of the program. It is clearly defined for each program analyzed. For all electric to gas/oil conversions there clearly is additional fuel consumption for space heating resulting from the efficiency measures. For other types of efficiency measures that apply to equipment inside heated buildings, there is also an increase in heating fuel consumption. The variable "Htg Btus Consumed" can be calculated by the formula: 3,413 x F / E, where F is the fraction of the kWh saved that need to be replaced with heat from another source, and E is the relative efficiency of the fuel-based heating source. This f and e assumptions are presented in the detailed program write-up section to follow. 2-1 case of the Water Heater Conversion program, however, the measure is assumed to last for the remaining life of the building even though a water heater in the Railbelt typically lasts 10 years. This is done because it is assumed that all subsequent replacements of that water heater will be natural gas water heaters. Once the initial investment in gas piping, flue installation, and possible heater relocation is made, there is little chance that a consumer will switch back to an electric water heater. Gas and electric models are not significantly different in initial cost, but the operating cost of the gas models is substantially less. "When Installed" characterizes the pool of buildings that are eligible for the efficiency measure at any given time. Possible answers are "Retrofit", "New Construction", and "Normal Replacement". "Retrofit" efficiency measures are either measures that are added on to an existing building or measures that replace existing equipment in a building before that existing equipment normally wears out. Thus, all buildings with sufficient remaining life and other pertinent physical characteristics are eligible for the efficiency measure. "New Construction" measures are only applicable to buildings being constructed. "Normal Replacement" measures are measures that replace existing equipment in a building at the time the equipment normally wears out. At a given point in time, the measure is applicable to only those buildings where the targeted equipment is being replaced. For the Water Heater Conversion Program, participation in the program is assumed to occur upon Normal Replacement of an existing electric water heater. The Regional Impacts section shows how the total energy savings are distributed across regions. These fractions are estimated by examining the distribution of opportunities for use of the measure across regions. 2.1.2 Program Costs Program budgetary costs are characterized next. If the program utilizes incentive payments, the "Rebate Amount" is the amount of payment to the consumer per unit of technology installed. Program administrative costs are modeled as fixed and participation-related costs. "Startup" costs are one-time fixed costs necessary to initiate the program. "Annual Fixed" costs are recurring costs unrelated to the amount of participation in the program. "Per Unit" costs are costs directly related to the amount of participation in the program and are expressed per unit of efficient technology installed. For the programs analyzed in this report, we express ongoing administrative costs totally as "Per Unit" costs, as explained in the following section in this chapter devoted ‘specifically to discussing program administrative costs. However, the "Annual Fixed" cost feature was left in the model for possible future use. "Program Life" indicates how many years the program is in existence. All of the programs in this report are assumed to last the full 20 year analysis period. In the summary of analysis results, costs and energy savings are added together in a time- discounted fashion. The "Discount Rate" variable indicates how much each successive year is discounted to calculate present value. The "Analysis Start" is the first year that the efficiency impacts are analyzed. The analysis continues until all induced impacts of the efficiency program are captured. For example, if the last efficiency measure induced by the program is installed in 2000 and the efficiency 2-2 measure has a 30 year life, the analysis is continued through at least 2030. 2.1.3 Participation Assumptions Before examining the section of results, turn to the next page which displays inputs concerning the rate of adoption of the efficiency measure. "Total Initial Stock" is the total number of electric water heaters that could theoretically be converted to natural gas. "Maximum Building Age for Retrofit" indicates that of the stock of convertible electric water heaters in a given year, those in buildings older than "Maximum Building Age for Retrofit" will not be converted because the building will retire before sufficient savings can accumulate. The Participation Rates are given for three different scenarios. A participation rate indicates the fraction of the convertible electric water heaters being replaced in the given year that will actually be converted. The Market scenario indicates the rate of conversion in the absence of any new incentive programs (existing federal and state programs are included in the Market scenario). The Program scenario indicates the conversion rate under the influence of the efficiency program. Finally, the Potential scenario indicates the rate of conversion if the program achieved maximum participation, i.e. all those that have the opportunity to participate in the program do so. This scenario displays the technical potential of the efficiency program. The Vintage Pattern indicates the age structure of the buildings that are potential candidates for the efficiency measure. For example, in 1991, 5.48% of the buildings with electric water heaters are 10 years old.” 2.1.4 Calculations The following three pages in the Water Heater analysis show the main calculations performed by the spreadsheet. The three different scenarios--Market, Gross Program, and Technical Potential--are analyzed in a parallel fashion. The number of efficiency measures installed over time is shown in the "Particip. Units (1000s)" row, and the stock of working efficiency measures is shown in the "Cumulative Units (1000s)" row. These two rows are based on the previous participation assumptions and the vintage structure of the housing stock. In a given year, participating units add to the cumulative unit total and any residences containing converted water heaters that retire subtract from the cumulative unit total. Based on the stock of efficiency measures in each year (i.e. the Cumulative Units) and the savings per unit, the energy and peak demand savings can be calculated on a yearly basis. "GWh Savings" gives the energy savings in gigawatt-hours, and "MW Savings" gives the demand savings at the time of the utility system peak in megawatts. “These participation-related inputs vary somewhat in structure for the other efficiency programs. The differences will be explained in the individual program analyses to follow. For many programs, instead of developing a stand-alone stock/flow model of appliance turnover, the annual replacements of an appliance are taken directly from the residential end-use load forecast. Because the water heater conversion program involved complicating assumptions (i.e. once converted to gas, always gas; only a subset of existing electric water heaters were eligible for conversion; new construction not eligible) a separate spreadsheet stock/flow model was used. 2-3 Since the primary objective of the analysis is to determine the savings induced by the efficiency program in excess of that achieved by the unassisted market, the values in the Net Program Effects section are calculated by subtracting the Market scenario from the Program scenario. The resulting stream of "GWh Savings" and "MW Savings" are the net savings induced by the efficiency program. Resource impacts are calculated for the net effects of the program. "Initial Cost" is determined from the "Particip. Units" times the initial cost per unit of efficiency measure, since capital costs are incurred for new additions to the stock of efficiency measures. "Maintenance Cost" and "Heating Fuel Use" are calculated for the entire stock of efficiency measures (i.e. Cumulative Units) since these ongoing costs are incurred for all working efficiency measures. The "Htg Fuel Price" stream is an input and corresponds to the per unit resource cost of heating fuel (see section 2.5, General Assumptions). Multiplying this stream by the "Heating Fuel Use" gives the "Htg Fuel Cost" estimate for the efficiency program, i.e. the extra heating fuel cost incurred from use of the electricity-saving efficiency measures induced by the program. A few different fuel price scenarios will be investigated during the system modeling effort. The estimate of heating fuel cost in this spreadsheet analysis is for expository purposes only. Program costs representing the budgetary requirements of the sponsoring agency are detailed next. "Incentive Payments are calculated by multiplying the Gross Program "Particip. Units" by the amount of incentive payment per unit. The Gross Program figures are used because the incentive payment must be paid to all consumers who install the efficiency measures (including free-riders), not just those who are induced to install the efficiency measure by the program. "Total Admin Costs" sums the "Startup", "Fixed Annual", and "Per Unit" program administrative costs. The "Total Budgetary Cost" combines the Incentive Payments (transfer payments) with the Total Admin Costs (true economic resource costs). Finally, "Nominal Budgetary Cost" converts the Total Budgetary Cost stream (constant 1987 dollars) to a stream of actual dollars, assuming 4.5% inflation from 1991 onward. This nominal stream is important in actual budgetary planning. For the convenience of the subsequent system modeling effort, the last section summarizes the net resource costs of the efficiency program. The net resource cost is the cost of the economic resources required to produce net electricity savings. The Initial and Maintenance costs from the Net Program Effects section are combined with the Total Admin Costs (but not Incentive Payments) from the Program Costs section. The remaining resource cost, additional Heating Fuel Use, is shown and expressed in terms of giga-Btus, since a range of fuel price scenarios will be applied in the system modeling work. 2.1.5 Summary Results Returning to the first page of the Water Heater Conversion Program analysis, the summary results of the analysis can be examined on the bottom half of the page. The electricity savings measures are first summarized. For each of the different scenarios--Market Driven, Gross Program, Technical Potential, and Net Program (Gross Program minus Market Driven)--the gigawatt-hour savings are summed in a time-discounted fashion. The first 2-4 column of sums (50 yr) gives includes the entire analysis period, whereas the second column only totals over the first 20 years. For the 20 year sums, levelized annual electricity savings are also calculated by "spreading" the totals back out over the 20 year period.” The level savings for the "Net Program" effect is the most important, as it indicates the net electricity savings effect of the program. As a useful benchmark, the Bradley Lake Hydroelectric project is expected to produce about 350 GWh/year. Thus, the net savings of the Water Heater Conversion program would be about 6% of the output of Bradley Lake on an annual basis. The Load Factor output gives the effective load factor of the load reduction, i.e. the average load reduction divided by the load reduction at the time of utility system peak demand. The Net Resource Cost section gives the present values of the various components of resource cost. The costs over the full 50 year period are included. For "Initial", "Maintenance", and "Heating Fuel" costs, only the costs associated with the net efficiency technology investment are included. The full "Program Admin" costs are included as resource costs. The net resource cost per unit of electricity savings (i.e. the resource cost- of-conserved-energy, CCE) is the present value of costs over 50 years divided by discounted sum of electricity savings over 50 years. Budgetary Costs are also summarized in present value terms and cost per unit of net electricity savings (budgetary CCE). Note that the resource cost and budgetary cost should not be added together, because they are costs viewed from two different perspectives. The resource cost is the cost from the perspective of society as a whole, and the budgetary cost is the cost from the perspective of the program sponsor. The "Nominal Sum" is the arithmetic sum of the program budgetary costs expressed in actual (nominal) dollars (no discounting or present value calculations are involved). It is the sum of the "Nominal Budgetary Cost" stream on the spreadsheet. This is the size of the one-time appropriation necessary to fund the program if the sponsoring agency is not allowed to invest and earn interest on the appropriation. The Nominal Sum is $12.7 million for the Water Heater Conversion program. If the sponsoring agency is allowed to invest and earn interest (4% real) on the appropriation, the one-time appropriation necessary to fund the program is the present value of the budgetary cost, $5.8 million for the Water Heater Conversion Program. 2.1.6 Effects of Different Program Lifetimes The primary analysis assumes a 20 year program life. However, additional analysis was done to determine the impacts of the efficiency programs under varying program lifetimes. As stated in Chapter 1, assuming a shorter program life does not significantly change the cost-effectiveness or resource cost ranking of the programs. For all programs except the Water Heater Conversion Program a model was developed that allows the estimation of SFormally, this is accomplished by amortizing the discounted sum of GWh over 20 years at the 4% real discount rate, just as a present value is amortized into a level stream of annual benefits. 2-5 costs and savings for any program length between 1 and 20 years.” The model output for the Efficient Electric Water Heater Program on page 45 typifies the analysis. The life of the program is found in the first column of the chart, and the subsequent values in that row are the electricity savings for the program with that life. The savings for the years 2011 through 2030 are given on the following page. The savings given are net savings, savings in excess of the market-driven savings. To determine the costs associated with a particular program life, the following procedure is used. Additional heating fuel use and maintenance costs are resource costs that continue over the life of the efficiency measure, and these costs are in direct proportion to the amount of energy saved by the program. To calculate the costs, the energy savings in any given year are multiplied by the factors supplied at the top of page 2-45. For the Efficient Electric Water Heater Program, 1,250 Btus of heating fuel are consumed for every kilowatt- hour saved. The table also shows that 0 mills (1 mill = $0.001) of maintenance are incurred for each kilowatt-hour saved. All other costs can be determined from the original 20 year analysis. The capital costs of the efficiency measures are read directly from the "Initial Cost" row in the 20 year analysis. If the program is assumed to last 7 years, the first 7 values from the Initial Cost row are the efficiency measure capital costs for the 7 year program. Likewise, all budgetary costs can be read off the 20 year analysis by ignoring any figures beyond the assumed length of the program. 2.2 Program Administration Costs Program administrative costs were estimated for each of the efficiency programs. The administrative costs of other rebate programs were examined to assist in developing estimates. Figure 2-1 shows the administrative cost component for a number of utility- © sponsored energy efficiency rebate programs.” The size of the rebate program is shown on the horizontal axis (logarithmic scale). The programs chosen for the graph were programs that were in their full operation phase; no pilot programs were included. Thus, start-up costs are not reflected in the figures. The administrative cost of most programs falls between 10% and 30%. The figure also shows that there is little correlation of administrative cost with the size of the program. If there were substantial administrative costs that are independent of the size of the program (i.e. fixed annual administrative costs), one would observe higher administrative fractions for the smaller programs. This is not shown in the figure indicating that most administrative costs are participation related. Because of complicating assumptions, the only alternative program lives investigated were 5S and 10 years for the Water Heater Conversion Program. The model used for this program is exactly the model described above, but the participation assumptions were changed to reflect a S or 10 year program life. The output of the analysis directly follows the 20 year analysis output in the report. my Compendium of Utility-Sponsored Energy Efficiency Rebate Programs", Consumer Energy Council of America Research Foundation and American Council for an Energy-Efficient Economy, EPRI EM-5579, December 1987, pp. A-1 - A-163. 2-6 Utility Rebate Programs Administrative Costs Administrative Costs 60% + | | * al * 40%+ + * * 30% * 7 * * * 20%+ . ~~ * ue | . se | 10% * x. * | 0% | Ei Adi EE xs, * pd Ee ae pe L 1 rr etaul $0.01 $0.1 $1 $10 $100 Total Annual Budget ($ million) Figure 2-1 - Administrative Costs of Utility-Sponsored Energy Efficiency Rebate Programs. Source: "A Compendium of Utility-Sponsored Energy Efficiency Rebate Programs", EPRI- 5579. The proposed Railbelt programs tend to pay higher incentives than the programs presented in the figure. This suggests a lower administrative cost component, because there are fewer transactions per $1,000 of budget. A study performed by Lawrence Berkeley Laboratories for the state of Michigan assumed a 10% administrative cost component for a set of aggressive rebate programs. Also, the programs in the figure were primarily customer rebate programs. It is suggested that the proposed Railbelt programs be dealer rebate programs, and thus will involve far fewer transactions than customer rebate programs. Other factors such as having to serve four separate regions would suggest a higher administrative cost component. For our program analysis we chose to account for all ongoing program administrative costs as participation-related costs, and we estimated these costs to be 15% of the total annual program budget (incentive payments + admin costs). Program start-up costs were estimated on a program-specific basis. There are substantial synergisms between the start-up (and ongoing administrative) tasks of a number of the proposed programs. Some of these cost savings were accounted for in the start-up costs estimates. As one program start-up cost benchmark, the start-up cost of the Chugach Electric CARES loan program was estimated to be $40,000. The start-up tasks involved establishing guidelines for a number of eligible conservation technologies, establishing auditing and inspection procedures, and coordinating with a local financial institution. 2.3 Program Participation Rates Rebate Program Participation Frequency Distribution Number of Programs O-10% 10-20% 20-30% 30-40% 40-50% 60-60% 60-70% 70-80% 80-90% 90-100% % of Sales Qualifying for Rebate Figure 2-2 - Participation Rates of Utility-Sponsored Rebate Programs. Source: "A Compendium of Utility-Sponsored Energy Efficiency Rebate Programs", EPRI EM-5579. The above-cited rebate program compendium also indicated the participation rates of a number of the programs. The participation rates were expressed as a fraction of the appliance or technology sales that were efficient enough to qualify for a rebate. The distribution of this participation figure for the 23 rebate programs that provided the information is shown in Figure 2-2. Our participation estimates for the proposed Railbelt programs typically range from 40 - 70%. Our estimates are somewhat higher than those shown in the figure because the incentives proposed are somewhat higher than the average for the programs in the figure. There is substantial uncertainty in this estimate, and the effects of this uncertainty are investigated in the following section. 8 etter from Mr. Peter Poray of Chugach Electric to Alan Mitchell of ISER, August 24, 1988. 2-8 Even though a number of the programs provide incentive payments that nearly cover the full extra cost of the efficient technology being promoted, we do not assume 100% participation in the programs. With some appliances and equipment, energy efficiency may be bundled with other features that may or may not be attractive to a consumer. Even though the cost of the efficiency may be paid for by the rebate, some consumers will choose not to buy the efficient appliance because of these other features. Another reason why less than 100% participation is achieved in some of the aggressive dealer rebate programs suggested is that dealers will not pass the entire rebate through to their customers. Some will be kept to cover the administrative costs of participating in the program. The fraction of the remaining rebate that will be passed through will depend on competitive pressures and the dealer’s willingness to induce more sales of the efficient (and more profitable) technology by lowering price. 2.4 Sensitivities and Uncertainties The results of the efficiency program analysis are uncertain. This section investigates the uncertainty by developing some very simple models of the output variables of the efficiency program analysis. The models are simplified versions of the more detailed spreadsheet model. Because of the simple structure of these models, the uncertainty in the output variables can easily be mathematically investigated. Such an approach is taken in Table 2-1. Important output variables are listed in the first column, and the remaining columns give a simple combination of input variables that produce that output variable. Underneath each variable is a confidence factor that defines the 90% confidence interval for that variable, which means we can be 90% sure that the value is in that range. All variables are assumed to be log-normally distributed, implying that the logarithm of the variable is normally distributed. A confidence factor of 1.3 means that there is a 90% chance that the value of the variable falls between the (most likely value)/1.3 and the (most likely value) x 1.3. For example, a resource cost of $750 with a confidence factor of 1.3 means that there is a 90% chance that the cost is between $577 and $975 ($750 / 1.3 and $750 x 1.3). For each one of the input variables, we used judgement to estimate confidence factors. For each of the output variables, the confidence factors can be calculated. For log-normally distributed variables that combine via multiplication or division to determine an output variable, the confidence factor of the output variable is: In(Fo) = (m’°(F,) + In’°(F,) + .. + In°(Fy) )’? — where, F, = Output variable confidence factor. F, ... Fy = Input variable confidence factors. In words, the logarithm of the output confidence factor is the square root of the sum of the squares of the logarithms of the input confidence factors. The simple models used in the table are described below: 2-9 Output Variable Input 1 Input 2 Input 3 Net Savings = Savings/Unit x Net Participation 1.88 1.20 1.83 Net Resource Cost = Res. Cost/Unit x Net Participation 1.88 1.20 1.83 Resource Cost/kWh = _ Res. Cost/Unit / Savings/Unit 1.29 1.20 1.20 Budgetary Cost = Bud. Cost/Unit x Gross Participation 1.81 1.10 1.80 Budgetary Cost/kWh = Bud. Cost/Unit / (1- Free-Rider Frac.) / Savings/Unit 1.28 1.10 1.15 1.20 ar LE NT NT TT ET TT TT TT EE III LET LT TIO Table 2-1 - Uncertainty of Efficiency Analysis Outputs Net Savings: Net Savings from the program is modeled as the energy savings per unit of efficient technology times the number of units induced to participate by the program over and above the market driven participation. Net Resource Cost: Net Resource Cost is modeled as the resource cost per unit of technology times the net units induced by the program. Resource Cost/kWh: The Resource Cost per net kilowatt-hour saved is the resource cost per unit divided by the kWh savings per unit. Budgetary Cost: Total Budgetary Cost is the budgetary cost per unit of technology times the gross number of units that participate in the program. Gross participation is used because free riders add to budgetary cost. Budgetary Cost/kWh: Budgetary Cost per net kilowatt-hour saved is slightly more complicated. Because of free-riders, the budgetary cost per unit needs to be scaled up by 1/ (1-Free Rider Fraction) to calculate the budgetary cost per net unit installed. This adjusted budgetary cost is divided by the kilowatt-hour savings per unit. The table shows that confidence intervals for the output variables are substantially different. Those variables with large confidence intervals (much uncertainty) are ones that are a function of the number of participants in the program, the most uncertain input variable. Thus, total net savings, net resource cost, and budgetary cost have relatively large confidence intervals. The per unit output variables, i.e. resource cost per kilowatt-hour and budgetary cost per kilowatt-hour, are known with more certainty since they are not a strong function of participation rates. (This is only true because one-time program start-up costs and fixed ongoing administrative costs are not large.) The Resource Cost per kilowatt- hour saved is the most robust output variable of the group. It is also the key variable in the social benefit/cost test of the efficiency programs. Thus, the cost-effectiveness of 2-10 efficiency programs is known with more certainty than the total impacts of the efficiency programs. 2.5 General Assumptions All costs are expressed in constant 1987 dollars, except Nominal Budgetary Costs, which are expressed in actual (nominal) dollars assuming 4.5% inflation from 1991 onward. Real Discount Rate = 4.0% Incremental distribution losses = 5%. For a 1 kWh reduction in load, 1/0.95 = 1.053 kWh are saved at the input to the distribution system. Because losses in a distribution system are non-linear, incremental distribution losses generally exceed average losses. Maintenance costs for a technology are assumed to stay constant in real terms over time. For the purpose of estimating total resource costs, heating fuel prices are factored into the spreadsheet model.” When natural gas is the heating fuel (in the electric-to-gas conversion programs), the APA Low natural gas price forecast (voted most probable by the APA board) is used (APA memo, Richard Emerman, August 9, 1988). In this analysis, natural gas heating fuel is valued at the wellhead price, since most natural gas transmission and distribution costs in the Railbelt are fixed (unrelated to throughput). In the forthcoming system modeling effort, the various fuel price scenarios will be applied in the modeling of the efficiency program impact. For efficiency programs that do not involve electric-to-gas conversions, a weighted-average heating fuel cost is used. The weighting is based on the relative use of various fuel types in the Railbelt. The cost of each fuel is a marginal resource cost, and therefore does not count any unavoidable fixed costs in the supply of the fuel (relevant for natural gas and electricity). The calculation is summarized by the following chart: % OF WTD $/MMBTU RESID cost GAS $1.32 55% $0.73 ELEC $7.18 11% $0.79 OIL $6.04 20% $1.21 wooD $7.78 8% $0.62 $3.35 /MMBtu For the Efficient Electric Water Heater Program, the assumed weighting of the fuels is different, because homes with electric water heaters are less likely to have natural gas as a heating fuel: 19 Blokes . rm ‘i ie ‘ 3 Once again, this is necessary to estimate the resource cost of the additional heating fuel use caused by electricity-saving efficiency measures. 27-1. % OF WTD $/MMBTU RESID cost GAS $1.32 40% $0.53 ELEC $7.18 18% $1.29 OIL $6.04 30% $1.81 wooD $7.78 12% $0.93 Estimates of the load factors of residential electricity end uses (except space heating) are derived from hour by hour use profiles presented in "The Residential Hourly and Peak Demand Model: Description and Validation", Henry Ruderman and Mark D. Levine, LBL-18698 Draft 2.1, December 1985. The hourly loads across hours 16, 17, and 18 for a winter weekday were averaged to determine utility system peak load. Space heating load factors are calculated based on Railbelt weather data. Commercial load factors are calculated based on the equipment power consumption and the probability of the equipment being on during Railbelt utility system peak. 2.6 Water Heater Conversion Program 2.6.1 Program Summary The Water Heater Conversion Program provides $500 rebates to those residential households that convert their existing electric water heater to a natural gas water heater with efficiency greater than 60% (fuel oil and propane conversions are not eligible). The program would be available to all residential buildings including condominiums, mobile homes, and multi-family rentals. The program is not available for residences built after the start date of the program. The rebate could be paid to the plumbing and heating contractors that perform the conversions. The batch processing of rebate applications would lower administrative costs. To ensure that conversions are actually being performed, spot checks of installations could be made. Plumbing and heating contractors who are found to be forging invoices would lose their ability to participate in the program. An alternative method for ensuring that conversions are being completed is to require dealers to deliver the old electric water heater to a regional collection center along with an invoice for a gas conversion. The electric water heater could be permanently marked so that it could not be salvaged and resubmitted for a second rebate. 2.6.2 Energy Savings The stock average electric water heater consumption was calculated to be 5,000 kWh/year for the residential load. forecast, based on: the actual occupancy (people/house) of Railbelt households with electric hot water heaters, the efficiency of Railbelt electric water heaters (derived from the vintage distribution), an assumption that each person uses 18 gallons of hot water per day (the measured value from a Lawrence Berkeley Lab, LBL, database containing information on 11,000 hot water heaters), and typical water inlet, tank, and ambient temperatures for the Railbelt. The water heater conversions are assumed to occur predominantly upon normal replacement of the existing water heater. With the passing of the federal appliance efficiency standards, new electric water heaters will have a minimum efficiency of about 89%, and probably an average efficiency of about 91%. The existing stock of electric water heaters in the southern Railbelt has an 82% efficiency. Thus, the electric use of a new electric water heater will be about 5,000 kWh/yr x 0.82/0.91 = 4,500 kWh/year, and this is the usage that would be eliminated by a natural gas conversion. Adjusting this savings for distribution losses (see General Assumptions section in this chapter): Savings at input to distribution system = 4,500 kWh/year * 1.053 = 4,740 kWh/year. From the LBL hourly load analysis (Ruderman, 1985), an electric water heater load factor relative to the Railbelt system peak is about 64%. Thus, the average electric demand of an electric water heater during Railbelt system peak is (4,740 kWh/yr) / (8766 hrs/year) / 0.64 = 0.84 kW. For the model used here, the fuel consumption of the natural gas water heater must be 2 - 13 expressed per kilowatt-hour saved. The program requires gas water heaters with an efficiency of at least 60%. Assuming the average will be 61%, but with the sediment build- up on the bottom of the tank (which does not affect the efficiency of an electric water heater), the average efficiency over the life of the water heater will be 58%. Therefore, a natural gas water heater will require 0.91/0.58 = 1.57 times as much energy at the water heater when compared to an electric model. For each kilowatt-hour of electric use eliminated, 1.57 x 3,413 Btus = 5,350 Btus of natural gas are required in its place. However, relative to kilowatt-hours at the input to the electrical distribution system, the natural gas consumption is 5,350 Btu/kWh x 0.95 = 5,080 Btus/kWh. 2.6.3 Technology Costs Initial Costs for the conversion are assumed to be as follows: Gas Water Heater $320 Installation w/ Flue, Gas Piping, Permit $750 Displaced Electric Replacement -$420 $650 All hardware and installation cost estimates are based on discussions with local plumbing and heating contractors. The costs are based on a premium grade water heater. The "Displaced Electric Replacement" is a deduction that accounts for the fact that the electric water heater would normally require replacement, and some fraction of this cost is avoided by the conversion. Assuming a premium grade electric water heater costs $320 and is installed for $205 (Sears prices), the normal replacement would cost $525. If the gas conversion occurs when the electric water heater normally needs replacement, the full $525 should be deducted from the capital cost of the conversion. If the conversion occurs immediately after the electric water has been replaced, the correct deduction is $0. It is © assumed that many of the conversions will occur at the time of normal replacement of the electric water heater, but some conversions will occur prior to replacement. 80% of electric water heater replacement cost is used as a capital cost deduction, $420. In this analysis, the cost of natural gas heating fuel is treated in two components. First, there is the cost of the fuel, which equals the consumption times the wellhead price of natural gas. This cost is captured by the 5,080 Btu/kWh Saved figure discussed in the energy savings section. Since the wellhead price of gas does not include the cost of gas transmission and distribution, any additional investments in gas transmission and distribution caused by the water heater conversion program needed to be counted as initial capital costs. We have made a conservative participation assumption that no additional households will be induced to become gas customers by the program. Only existing customers that have not yet converted their water heater are potential participants. Thus, there is no additional investment in gas distribution mains and service connections for these customers.” This analysis assumes that once an electric water heater is converted to gas, all subsequent replacements of the water heater will be with gas models. Since gas water heaters cost approximately $50 more than electric water heaters, this differential replacement cost needs to be accounted for. Analytically, it was easiest to amortize this cost and treat it as an incremental maintenance cost, since the water heater conversion has a variable lifetime equal to remaining life of the house. $50 amortized at 4% real over a 10 year expected water heater life results in a $6/year maintenance cost.” Discussions with local plumbing and heating contractors suggest that electric water heaters actually have higher maintenance costs than gas water heaters because of electric heating element failures (accentuated by hard water found in the Railbelt). This differential maintenance cost favoring gas water heaters was conservatively not accounted for in the analysis. At a Sears installed price of $75, one element failure during the 10 year life of an electric water heater is equivalent to a $7.60 per year maintenance cost. 2.6.4 Program Costs Program Start-up Costs were assumed to be $50,000, and ongoing administration costs were assumed to equal 15% of the program annual budget, i.e. $88 per rebate. 2.6.5 Participation Rates First, an estimate of the eligible stock of electric water heaters is made by region. Fairbanks is not included because no natural gas is available. For this program, we conservatively assume that only households that are already using gas for some other use will participate in the program. This is equivalent to saying that the program will not induce any new natural gas hookups. Total households in 1987 are multiplied by the fraction containing electric water heaters, as determined by our residential survey. For the total household figure, all occupied units plus one-half the vacant units are counted. All totals are in thousands. while this is a conservative participation assumption, it might be perceived to bias the resource costs of the water heater conversions downward. However, if there are households that are induced to hookup to the gas system because of the program, they are likely to convert more than just their water heater. The net present value benefits derived from these other conversions are gencrally more than the gas distribution and service connection capital investment. Thus, the economics of these cases where a hookup is induced are at least as favorable as the cases where gas is in the house already. ‘To avoid double counting, $50 was subtracted from the capital cost of the conversion also, since it is accounted for in the maintenance cost. 2-15 ANCH MAT-SU KENAI TOTALS Total HH (000) 83.00 13.90 15.30 112520 % Electric HW 20% 57% 54% 29% Total Wtr Htrs (000) 16.60 7.92 8.26 32679) Next, our survey indicates what fraction of households with electric water heaters are already using natural gas for another end use. The pool of electric water heaters is therefore split into those that have gas in the residence and those without. ANCH MAT-SU KENAT Gas in Residence 60% 4% 14% Gas in Resid. (000) 9.96 0.32 1.12 Gas not in Resid. (000) 6.64 TeOL Tiel Of those electric water heater residences that do not have gas in the house, a judgement was made as to how many would never even have gas available on the their street. This judgement was based on data we collected on the areas currently not served by gas and the likely additions to the gas distribution system. The "Never to be Served" water heaters are: Never to be Served (000) -0.80 -2.70 -3.60 These are deducted from the "Gas not in Residence" pool. This leaves a 1987 pool of electric water heaters, some of which are in residences that are currently using gas, and some of which are in residences that are not currently using gas but have or will have gas available on their street before 2010, the end of the program. 1987 ANCH MAT-SU KENAI Gas in Residence (000) 9.96 . 1.12 REKKKK Gas near Residence (000) 5.84 4.91 3.55 The next estimate to make is the number of the electric water heater households that will become gas customers before 2010 (presumably to replace their electric, wood, or oil space heating system). The new Enstar residential customer data for 1987 are used to calculate a rate of increase in hot water heater access to gas. It is assumed that 85% of the hookups were to existing residences (based on conversations with Dave Webb of Enstar Natural Gas Company) and 70% of those residences had electric water heaters. Thus, 210 electric water heaters in Anchorage in 1987 gained access to natural gas within the residence. ANCH MAT-SU KENAI Actual 1987 Enstar 0.35 0.58 0.16 New Customers (000) 85% were Existing Bldg 0.30 0.50 Ona3) 70% Have Elec HW Os22. 0.35 0.09 This gain of access to natural gas can be expressed as a percentage of the stock of electric water heaters that have gas on the street. For example, in Anchorage 210 water heaters out of 5,840 gained access, or 3.6% (210 / 5,840). Total Elec HW Stock w/ 5.84 4.91 3555) Gas Available on Street Annual Rate of Gas 3.6% 7.1% 2.6% Access Assuming this percentage rate of access remains constant over the 1988 to 2010 period, the following numbers of electric water heaters in the current stock of housing units will gain access to natural gas within the residence: Number Added between 332 4.00 12.62) 1988 and 2010 (000) Combined with 1987 stock of electric water heaters with access to gas in the residence (the asterisked line above) gives: Will have Gas in Resid. 13.28 4.32) 2.74 Before 2010 (000) The program analysis starts in 1991, so some of these water heaters will be converted during 1988, 1989, and 1990. We estimate the following conversions, based on our end- use forecast. Converted Between 1988 0.40 0.54 0.28 and 1990 (000) The pool of potential converts in 1990 now is: Final 1990 Pool, 12.88 3.78 2.46 Except Technical Infeasibility (000) Finally, assume that 10% of these water heater are technically not feasible to convert: ANCH MAT-SU KENAI TOTAL FINAL 1990 POOL (000) Lio 3.40 Dee T7e2 % of Total Pool 67% 20% 13% The total pool of potentially convertible electric water heaters during the program operation period is 17,200. In the model of how many actual conversions take place, it is assumed that no conversions will occur in residences more than 40 years old at the time of conversion. The age distribution of residences with electric hot water heaters was 2-17 estimated from our residential survey. For the Market-Driven rate of conversion we use the rate implied by the mid-range residential load forecast: about 23% of the replacements of convertible water heaters in each year actually do convert. For the gross program rate of conversion we assume that 60% of the replacements convert. The program is assumed to last 20 years. We assume that of the stock of potentially convertible water heaters, a conversion is equally likely in each region. Thus, the distribution of electricity savings is: Anchorage 67% Mat-Su 20% Kenai 13% Fairbanks 0% For example, in the year 2005 the net savings from the Water Heater Conversion program is estimated to be 29 GWh. 19 GWh will be saved in Anchorage, 6 GWh will be saved in Mat-Su, 4 GWh will be saved in Kenai, and no electricity will be saved in Fairbanks. The percentage distribution of savings across regions primarily reflects population differences but also accounts for differences in end use technologies (e.g. more convertible electric water heaters per household in Mat-Su). 2.6.6 Additional Comments and Model Output Matanuska Electric Association (MEA) is implementing a pilot program to temporarily shut-off electric water heaters by remote control to reduce their contribution to peak demand. Such a program competes with a water heater conversion program where natural gas is available; a household cannot do both. MEA has a strong incentive to implement a water heater shut-off program because the demand charge (based on peak monthly demand) they pay for their purchased power from Chugach Electric is $15/kW/month ($180/kW/yr). Gilbert Commonwealth estimates that the program will reduce peak demand by about 0.4 kW per participating water heater. Thus, demand savings will be $72 per year for each participating water heater. The cost of installing the heater control unit is approximately $250 per water heater, resulting in a 3.5 year payback to MEA consumers (neglecting any program administration costs, central controller costs, and equipment O&M costs). This program, however, has less benefits when analyzed from a broader resource cost perspective. In the near term, any reduction in the MEA’s peak demand does not avoid the installation of generation capacity, since generation capacity is currently in excess of needs in the Railbelt. A small amount of generation fuel may be saved by the program both because transmission and distribution losses are reduced when energy is shifted out of the peak demand period, and more efficient generators may be able to supply the shifted energy. We estimate this fuel savings to be less than $2/year for each participating water heater. Also relevant are the longer term impacts of the program. The program is in a pilot stage now, and full-scale implementation may not occur until a period when excess generation 2-18 capacity has been absorbed (estimated to be 1995 - 1997 by Decision Focus). If so, peak demand reductions will avoid the need for generation capacity. In the Railbelt electrical system modeling done by Decision Focus, generation capacity is assumed to cost $39/kW/year. The 0.4 kW peak savings per water heater avoids the need for 0.55 kW of generation capacity (30% reserve margin and 5% transmission losses). Thus, the peak demand savings are worth $21/year. Adding $2/year of fuel cost savings gives a total resource cost savings of $23/year for each water heater. This resource cost savings of $23/year is substantially less than the $72/year savings seen by MEA because the $180/kW/year demand charge paid by MEA is significantly greater than the $51/kW/year resource cost of serving an incremental kW of peak demand, accounting for reserve margins and transmission losses. Over 20 years, the $23/year resource cost savings generates $310 of present value benefits (4% discount rate). Thus, the resource benefits are about $60 more than the installation cost of $250, assuming the program is implemented during a period when there is no excess capacity. Accounting for any central controller costs, program administration costs, and O&M costs would probably reduce this net benefit figure to near $0. If the pilot program validates the installation costs and peak demand savings used in the above calculation, we cannot recommend water heater control programs as a means of significantly reducing the resource costs of residential water heating in the Railbelt. 2-19 WATER HEATER CONVERSION Levelized Electricty Savings 21 GWh/Year (20 Year, Net) Load Factor 64% Net Resource Cost $7.7 Million, PV 20 mills/kWh Budgetary Cost $5.8 Million, PV 15 mills/kWh Net Resource Cost ($ Million, Present Value) $0.9 $7.7 Million 20 mills/kKWh Electricity Savings 1991 1993 1995 1997 1999 2001 2003 2006 2007 2009 Budgetary Cost ($ Million, Present Value) $5.8 Million 15 mills/kKWh Admin 16% $0.9 WATER HEATER CONVERSION PROGRAM Unit = Water Heater Rebate Amount = $500 Busbar Savings: kWh Savings/Unit = 4,740 kWh/yr PROGRAM COSTS ($1000s) kW Savings/Unit = 0.84 kW Startup = 50 Htg Btus Consumed = 5,080 Btu/kWh Annual Fixed = Per Unit = 0.088 Initial Cost = $650 /unit Program Life = 20 Annual Maintenance = $6 /yr Lifetime = Remaining Bldg Life Discount Rate = 4.0% When Installed = Normal Replcmnt Analysis Start = 1991 REGIONAL IMPACTS Anchorage 67% Mat-Su 20% Kenai 13% Fairbanks 0% KKEKRKKKKKEKKEKEKKEKKEKEKKKKKKK KEKE KKK KEKE KKK KKK KKK KEKE RESULTS ————— DISCOUNTED SUMS ----- 50 yr 20 yr ELECTRICITY SAVINGS (GWh) Market Driven 365 202 Gross Program 761 482 Technical Potential 1,044 722 Net Program 396 280 21 GWh/yr LOAD FACTOR = 64% NET RESOURCE COST ($1000s) : Initial 37137 41% Maintenance 501 6% Fuel 3,198 41% Program Admin 903 12% 7,739 20 mills/kWh BUDGETARY COST ($1000s): Admin 903 16% Incentive 4,858 84% Nominal === Sum 5,761 15 mills/kWh 12672 2-21 Starting Year = 1991 Total Initial Stock = 17.21 heaters (1000s) Maximum Building Age for Retrofit = 40 years Replacements Occur Every 10 years 1991 Sa ao ww eo oe PARTICIPATION RATES ------ Vintage Market Program Potential Age Pattern 1991 23.0% 60.0% 100.0% O 0.65% 1992 23.0% 60.0% 100.0% 1 0.65% 1993 23.0% 60.0% 100.0% 2 0.65% 1994 23.0% 60.0% 100.0% 3 0.65% 1995 23.0% 60.0% 100.0% 4 0.86% 1996 23.0% 60.0% 100.0% 5 0.86% 1997 23.0% 60.0% 100.0% 6 0.86% 1998 23.0% 60.0% 100.0% 7 5.16% 1999 23.0% 60.0% 100.0% 8 5.16% 2000 23.0% 60.0% 100.0% 9 5.48% 2001 23.0% 60.0% 100.0% 10 5.48% 2002 23.0% 60.0% 100.0% 11 4.19% 2003 23.0% 60.0% 100.0% 12 4.19% 2004 23.0% 60.0% 100.0% 13. 5.16% 2005 23.0% 60.0% 100.0% 14 5.16% 2006 23.0% 60.0% 100.0% 15 5.16% 2007 23.0% 60.0% 100.0% 16 3.48% 2008 23.0% 60.0% 100.0% 17 3.48% 2009 23.0% 60.0% 100.0% 18 3.48% 2010 23.0% 60.0% 100.0% 19 3.48% 2011, 23.0% 23.0% 100.0% 20 3.48% 2012 23.0% 23.0% 100.0% 21 2.06% 2073 23.0% 23.0% 100.0% 22 2.06% 2014 23.0% 23.0% 100.0% 23 2.06% 2015 23.0% 23.0% 100.0% 24 2.06% 2016 23.0% 23.0% 100.0% 25 2.06% 2017 23.0% 23.0% 100.0% 26 1.29% 2018 23.0% 23.0% 100.0% 27 1.29% 2019 23.0% 23.0% 100.0% 28 1.29% 2020 23.0% 23.0% 100.0% 29 1.29% 202. 23.0% 23.0% 100.0% 30 1.29% 2022 23.0% 23.0% 100.0% 31 0.90% 2023 23.0% 23.0% 100.0% 32 0.90% 2024 23.0% 23.0% 100.0% 33. 0.90% 2025 23.0% 23.0% 100.0% 34 0.90% 2026 23.0% 23.0% 100.0% 35 0.90% 2027 23.0% 23.0% 100.0% 36 0.90% 2028 23.0% 23.0% 100.0% 37 0.90% 2029 23.0% 23.0% 100.0% 38 0.90% 2030 23.0% 23.0% 100.0% 39 0.90% 2031 23.0% 23.0% 100.0% 40 0.90% 2032 23.0% 23.0% 100.0% 41 0.72% 2033 23.0% 23.0% 100.0% 42 0.72% 2034 23.0% 23.0% 100.0% 43. 0.72% 2035 23.0% 23.0% 100.0% 44 0.72% 2036 23.0% 23.0% 100.0% 45 0.72% 2037 23.0% 23.0% 100.0% 46 0.72% 2038 23.0% 23.0% 100.0% 47 0.72% 2039 23.0% 23.0% 100.0% 48 0.72% 2040 23.0% 23.0% _ 99 100.0% 49 0.72% WATER HEATER CONVERSION PROGRAM MARKET-DRIVEN EFFECTS Particip. Units (1000s) Cumulative Units (1000s) GWh Savings MW Savings GROSS PROGRAM EFFECTS Particip. Units (1000s) Cumulative Units (1000s) GWh Savings MW Savings TECHNICAL POTENTIAL Particip. Units (1000s) Cumulative Units (1000s) GWh Savings MW Savings NET PROGRAM EFFECTS Particip. Units (1000s) Cumulative Units (1000s) GWh Savings MW Savings Initial Cost ($1000s) Maintenance Cost ($1000s) Heating Fuel Use (GBtu) Htg Fuel Price ($/MMBtu) Htg Fuel Cost ($1000s) PROGRAM COSTS ($1000s) Incentive Payments Total Admin Costs Startup Fixed Annual Per Unit Total Budgetary Cost Nominal Budgetary Cost NET RESOURCE COSTS Initial+Maint+Admin ($1000s) Htg Fuel Use (GBtu) 1991 3.4 0.6 462 4 17 1.32 23 576 151 50 101 728 859 618 17 1992 oa N awe ros =o Rear: on ONACD w Fo 4.35) 46 560 98 98 658 811 556 34 1993 560 98 98 658 848 560 50 1994 0.42 2.51 11.9 2.1 271 15 60 1.42 86 338 59 59 397 535 345 60 1995 1.45 108 464 82 546 768 472 74 1996 546 803 476 1997 533 819 468 101 1998 2001 2005 474 761 422 113 0.50 5.21 4.4 323 31 125 1.59 199 403 71 474 795 425 125 662 1,161 586 142 0.11 5.95 28.2 5.0 72 36 143 1.66 238 212 37 37 249 457 145 143 205 36 36 241 462 142 145 241 483 142 146 0.00 15.32 72.6 12.9 0.06 6.06 28.7 5.1 40 36 146 1.50 219 116 20 137 286 % 146 0.00 15.17 71.9 12:7 Nao Wwue s ° QNU4e SS 147 1.52 223 167 29 29 196 429 123 147 0.33 11215 52.9 9.4 0.00 15.01 196 448 123 147 0.33 11.38 54.0 9.6 163 29 29 191 456 121 148 0.29 11.58 54.9 9.7 168 418 111 148 0.29 11.77 55.8 9:9 0.07 6.18 29.3 5.2 49 37 149 1.58 235 143 25 168 437 111 149 0.40 12.03 57.0 10.1 233 636 140 149 WATER HEATER CONVERSION PROGRAM MARKET-DRIVEN EFFECTS Particip. Units (1000s) 0. Cumulative Units (1000s) 5.95 6. GWh Savings MW Savings GROSS PROGRAM EFFECTS Particip. Units (1000s) Cumulative Units (1000s) 11.90 GWh Savings MW Savings TECHNICAL POTENTIAL Particip. Units (1000s) Cumulative Units (1000s) 14.10 GWh Savings MW Savings NET PROGRAM EFFECTS Particip. Units (1000s) 2011 2012 2013 0.21 28.2 5.0 0.06 0.05 0.05 11.77 11.64 55.8 55.2 9.9 9.8 56.4 10.0 0.00 0.00 13.88 13.66 65.8 64.7 11.7 11.5 0.00 66.8 11.8 -0.15 -0.15 -0.15 Cumulative Units (1000s) 5.95 5.71 5.46 GWh Savings MW Savings Initial Cost ($1000s) Maintenance Cost ($1000s) Heating Fuel Use (GBtu) Htg Fuel Price ($/MMBtu) Htg Fuel Cost ($1000s) PROGRAM COSTS ($1000s) Incentive Payments Total Admin Costs Startup Fixed Annual Per Unit Total Budgetary Cost Nominal Budgetary Cost NET RESOURCE COSTS Initial+Maint+Admin ($1000s) Htg Fuel Use (GBtu) 28.2 27.0 25.9 5.0 4.8 4.6 (100) (96) (96) 36 34 33 143 137-132 1.61 1.62 1.64 230 223) «215 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 (64) (62) (64) 143 137132 2014 0.10 0.14 0.14 0.14 0.11 0.11 0.14 0.10 0.09 0.09 0.02 0.02 6.19 6.18 6.18 6.17 6.14 6.11 6.01 5.78 5.55 5.32 5.01 4.54 29.3 29.3 29.3 29.3 29.1 29.0 28.5 27.4 26.3 25.2 23.7 21.5 5.2 5:2 5.2 S<2 5:2 5:1 5.0 6.9 6.7 (4.5 4.2) 3:8 0.03 0.04 0.04 0.04 0.03 0.03 0.04 0.03 0.03 0.03 0.00 0.00 11.48 11.22 10.96 10.70 10.43 10.16 9.70 9.20 8.70 8.20 7.67 6.90 54.4 53.2 51.9 50.7 49.4 48.2 46.0 43.6 41.2 38.9 36.4 32.7 9.6 9.4 9.2 9.0 8.8 8.5 8.1 7.7 7.3 6.9 6.4 5.8 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 13.43 13.08 12.72 12.37 12.01 11.66 11.06 10.46 9.86 9.26 8.66 7.77 63.7 62.0 60.3 58.6 56.9 55.3 52.4 49.6 46.7 43.9 41.1 36.8 11.3, 11.0 10.7 10.4 10.1 9.8 9.3 8.8 8.3 7.8 7.3 6.5 -0.07 -0.10 -0.10 -0.10 -0.08 -0.08 -0.11 -0.07 -0.07 -0.07 -0.01 -0.01 5.29 5.03 4.78 4.52 4.29 4.05 3.69 3.41 3.15 2.88 2.67 2.36 25.1 23.9 22.6 21.4 20.3 19.2 17.5 16.2 14.9 13.6 12.6 11.2 4.4 4.2 4.0 3.8 3.6 3.4 3.1 2.9 2.6 2.4 2.2 2.0 (48) (67) (67) (65) (54) (54) (68) (47) (44) (44) (7) (7) 32 30 29 27 26 24 22 20 19 17 16 14 127, «1210-115 109) 103 98 89 82 76 69 64 on 1.65 1.67 1.69 1.70 1.72 1.74 1.76 1.77 1.79 1.81 1.83 1.85 211 203) «194 «6186 «6178 «6170 «156 = 146 136125) S117 105 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 (17) (37) (38) (38) (28) (30) (46) (27) (25) (27) 9 7 127) «121,115,109 = 103 98 89 82 76 69 64 57 -0.01 2.05 9.7 1.7 (7) 12 49 1.86 92 oo oo 49 (6) 10 42 1.88 79 oo oo 42 -0.01 1.50 7.1 1.3 (6) 9 36 1.90 69 oo co co 36 -0.01 1.25 5.9 1.0 (6) 7 30 1.92 58 oo oo 30 -0.01 0.93 4.4 0.8 (6) 6 22 1.94 43 co coo 22 So-C WATER HEATER CONVERSION PROGRAM MARKET-DRIVEN EFFECTS Particip. Units (1000s) 0.00 Cumulative Units (1000s) 1.73 GWh Savings 8.2 MW Savings 1.5 GROSS PROGRAM EFFECTS Particip. Units (1000s) 0 Cumulative Units (1000s) 2. GWh Savings 11 MW Savings 2s TECHNICAL POTENTIAL Particip. Units (1000s) 0 Cumulative Units (1000s) 2. GWh Savings 1 MW Savings NET PROGRAM EFFECTS Particip. Units (1000s) 0.00 Cumulative Units (1000s) 0.68 GWh Savings s:2 MW Savings 0.6 Initial Cost ($1000s) 0 Maintenance Cost ($1000s) 4 Heating Fuel Use (GBtu) 16 Htg Fuel Price ($/MMBtu) 1.96 Htg Fuel Cost ($1000s) 32 PROGRAM COSTS ($1000s) Incentive Payments 0 Total Admin Costs 0 Startup Fixed Annual 0 Per Unit 0 Total Budgetary Cost 0 Nominal Budgetary Cost 0 NET RESOURCE COSTS Initial+Maint+Admin 4 ($1000s) Htg Fuel Use (GBtu) 16 oo 7) 1 oo oo oo =o nN o 4 eo eo oe woNuU=CNDDOS oo "=o oor: n o . NER ROM NUS oo oo oo S sao ARWeomUuasS oo oo oo 2037 oo ° So 223: n ° . FenN-0o-f oo co 2038 oo ° So Snes nN aA Wwo-coow oo 7) nN ° co co 0 0 -00 -00 0.0 0.0 0 0 0 4 0 nN ° oo oo WATER HEATER CONVERSION PROGRAM - 5 YEAR LIFE Unit = Busbar Savings: kWh Savings/Unit 4,740 kWh/yr Water Heater Rebat e Amount = $500 PROGRAM COSTS ($1000s) kW Savings/Unit = 0.84 kW Startup = 50 Htg Btus Consumed = 5,080 Btu/kWh Annual Fixed = Per Unit = 0.088 Initial Cost = $650 /unit Program Life = 5 Annual Maintenance = $6 /yr Lifetime = Remaining Bldg Life Discount Rate = 4.0% When Installed = Normal Replcmnt Analysis Start = 1991 REGIONAL IMPACTS Anchorage 67% Mat-Su 20% Kenai 13% Fairbanks 0% KREKEKKKKEKKKEKKEKKEKKKKKKKEKKKKKKKKKKKKKKKKKKKKKKKKKKKKKK KKK KKK KK KK KEK RESULTS 50 yr ELECTRICITY SAVINGS (GWh) Market Driven 365 Gross Program 556 Technical Potential 1,044 Net Program i981 LOAD FACTOR = 64% NET RESOURCE COST ($1000s): Initial 1,404 Maintenance 242 Fuel A ed Program Admin 442 3,599 BUDGETARY COST ($1000s): Admin 442 Incentive 2,239 2,681 2 - 26 39% 7% 42% 12% 19 mills/kWh 16% 84% 14 mills/kWh 11 GWh/yr Nominal 3821 Starting Year = 1991 Total Initial Stock = 17.21 heaters (1000s) Maximum Building Age for Retrofit = 40 years Replacements Occur Every 10 years 1991 ------ PARTICIPATION RATES ------ Vintage Market Program Potential Age Pattern 199% 23.20% 60.0% 100.0% 0 0.65% 1992 23.0% 60.0% 100.0% 1 0.65% 1993 23.0% 60.0% 100.0% 2 0.65% 1994 23.0% 60.0% 100.0% 3 0.65% 1995 23.0% 60.0% 100.0% 4 0.86% 1996 23.0% 23.0% 100.0% 5 0.86% 1997 23.0% 23.0% 100.0% 6 0.86% 1998 23.0% 23.0% 100.0% 7 5.16% 1999 23.0% 23.0% 100.0% 8 5.16% 2000 23.0% 23.0% 100.0% 9 5.48% 2001 23.0% 23.0% 100.0% 10 5.48% 2002 23.0% 23.0% 100.0% 11 4.19% 2003 23.0% 23.0% 100.0% 12 4.19% 2004 23.0% 23.0% 100.0% 13 5.16% 2005 23.0% 23.0% 100.0% 14 5.16% 2006 23.0% 23.0% 100.0% 15 5.16% 2007 23.0% 23.0% 100.0% 16 3.48% 2008 23.0% 23.0% 100.0% 17 3.48% 2009 23.0% 23.0% 100.0% 18 3.48% 2010 23.0% 23.0% 100.0% 19 3.48% 2011 23.0% 23.0% 100.0% 20 3.48% 2012 23.0% 23.0% 100.0% 21 2.06% 2013 23.0% 23.0% 100.0% 22 2.06% 2014 23.0% 23.0% 100.0% 23 2.06% 2015 23.0% 23.0% 100.0% 24 2.06% 2016 23.0% 23.0% 100.0% 25 2.06% 2017 23.0% 23.0% 100.0% 26 1.29% 2018 23.0% 23.0% 100.0% 27 1.29% 2019 23.0% 23.0% 100.0% 28 1.29% 2020 23.0% 23.0% 100.0% 29 1.29% 2021 23.0% 23.0% 100.0% 30 1.29% 2022 23.0% 23.0% 100.0% 31 0.90% 2023 23.0% 23.0% 100.0% 32 0.90% 2024 23.0% 23.0% 100.0% 33. 0.90% 2025 23.0% 23.0% 100.0% 34 0.90% 2026 23.0% 23.0% 100.0% 35 0.90% 2027 23.0% 23.0% 100.0% 36 0.90% 2028 23.0% 23.0% 100.0% 37 0.90% 2029 23.0% 23.0% 100.0% 38 0.90% 2030 23.0% 23.0% 100.0% 39 0.90% 2031 23.0% 23.0% 100.0% 40 0.90% 2032 23.0% 23.0% 100.0% 41 0.72% 2033 23.0% 23.0% 100.0% 42 0.72% 2034 23.0% 23.0% 100.0% 43. 0.72% 2035 23.0% 23.0% 100.0% 44 0.72% 2036 23.0% 23.0% 100.0% 45 0.72% 2037 23.0% 23.0% 100.0% 46 0.72% 2038 23.0% 23.0% 100.0% 47 0.72% 2039 23.0% 23.0% 100.0% 48 0.72% 2040 23.0% ~ 23.0% 2 1pp.0% 49 0.72% 8c -Z WATER HEATER CONVERSION PROGRAM - 5 YEAR LIFE MARKET-DRIVEN EFFECTS Particip. Units (1000s) Cumulative Units (1000s) GWh Savings MW Savings GROSS PROGRAM EFFECTS Particip. Units (1000s) Cumulative Units (1000s) GWh Savings MW Savings TECHNICAL POTENTIAL Particip. Units (1000s) . Cumulative Units (1000s) GWh Savings MW Savings NET PROGRAM EFFECTS Particip. Units (1000s) Cumulative Units (1000s) GWh Savings MW Savings Initial Cost ($1000s) Maintenance Cost ($1000s) Heating Fuel Use (GBtu) Htg Fuel Price ($/MMBtu) Htg Fuel Cost ($1000s) PROGRAM COSTS ($1000s) Incentive Payments Total Admin Costs Startup Fixed Annual Per Unit Total Budgetary Cost Nominal Budgetary Cost NET RESOURCE COSTS Initial+Maint+Admin ($1000s) Htg Fuel Use (GBtu) 576 151 50 101 728 859 618 17 =a uss 3S 449 1.35 46 560 98 98 658 811 556 34 658 848 560 50 0.42 2.51 11.9 2.1 271 15 60 1.42 86 338 59 59 397 535 345 60 464 82 82 546 768 472 74 eo 6 coo 18 7% ¥.51 11.38 53.9 9.6 0. 3. 14 2. ona8s 18 74 1.52 113 ° oo oo 18 7% 1.34 1.34 12.72 14.07 60.3 10.7 0.00 3.08 14.6 2.6 0 18 7% 1.56 116 =) oo 18 7% 66.7 11.8 0.00 3.08 14.6 2.6 0 18 74 1.59 118 co oe co 18 74 0.00 3.08 14.6 2.6 0 18 7% 1.62 120 oo oo 18 74 2001 2002 2003 2004 2005 2006 .00 0.00 0.00 0.00 0.00 0.00 0 15.79 15.63 15.48 15.32 15.17 15.01 74.8 74.1 73.4 72.6 71.9 71.2 13.3. 13.1 13.0 12.9 12.7 12.6 -0.15 -0.15 -0.15 -0.08 -0.12 0.00 2.87 2.67 2.47 2.33 2.15 2.15 13.6 12.7 11.7 11.0 10.2 10.2 2.4 2.2 2.1 2.0 1.8 1.8 (98) (95) (95) (54) (77) 0 17 16 15 14 13 13 69 64 59 56 52 52 1.66 1.68 1.49 1.50 1.52 1.53 115 108 88 84 79 79 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 (80) (79) (80) (40) (64) 13 69 64 59 56 52 52 0.24 0.21 5.24 5.41 24.8 25.7 4.4 4.5 0.24 0.21 7.39 7.56 35-0 35.9 6.2 6.4 0.00 0.00 14.86 14.70 70.4 69.7 12.5 12.3 0.00 0.00 2.15 2.15 10.2 10.2 1.8 1.8 0 0 13 13 52 52 1.55 1.56 80 81 0 0 0 0 0 0 0 0 0 0 0 0 13 13 52 52 0.00 2.15 10.2 1.8 QO 13 52 1.58 82 oo oo 13 52 0.00 2.15 10.2 1.8 0 13 52 1.59 82 oo oo 13 52 60 -% WATER HEATER CONVERSION PROGRAM - 5 YEAR LIFE 2011 2012 2013 2014 2015 2016 MARKET-DRIVEN EFFECTS Particip. Units (1000s) 0.21 0.20 0.20 0.10 0.14 0.14 Cumulative Units (1000s) 5.95 6.06 6.18 6.19 6.18 6.18 GWh Savings 28.2 28.7 29.3 29.3 29.3 29.3 MW Savings 5.0 5.31 5.2 522 5:2 5:2 GROSS PROGRAM EFFECTS Particip. Units (1000s) 0.11 0.11 0.11 0.05 0.07 0.14 Cumulative Units (1000s) 7.94 7.89 7.84 7.74 7.57 7.56 GWh Savings 37.6 37.4 37.2 36.7 35.9 35.9 MW Savings 6.7 6.6 6.6 6.5 6.4 6.4 TECHNICAL POTENTIAL Particip. Units (1000s) 0.00 0.00 0.00 0.00 0.00 0.00 Cumulative Units (1000s) 14.10 13.88 13.66 13.43 13.08 12.72 GWh Savings 66.8 65.8 64.7 63.7 62.0 60.3 MW Savings 11.8 11.7 11.5 11.3 11.0 10.7 NET PROGRAM EFFECTS Particip. Units (1000s) -0.10 -0.10 -0.10 -0.05 -0.07 0.00 Cumulative Units (1000s) 1.99 1.82 1.66 1.55 1.38 1.38 GWh Savings 9.4 86 7.9 7.4 6.6 6.6 MW Savings Vo? 165° 126. 1.3 1.2 1.2 Initial Cost ($1000s) (66) (63) (63) (32) (44) 0 Maintenance Cost ($1000s) 12 1 10 9 8 8 Heating Fuel Use (GBtu) 48 44 40 37 33 33 Htg Fuel Price ($/MMBtu) 1.61 1.62 1.64 1.65 1.67 1.69 Htg Fuel Cost ($1000s) 77 71 66 62 56 56 PROGRAM COSTS ($1000s) Incentive Payments 0 0 0 0 0 0 Total Admin Costs 0 0 0 0 0 0 Startup Fixed Annual 0 0 0 0 0 0 Per Unit 0 0 0 0 0 0 Total Budgetary Cost 0 0 0 0 0 0 Nominal Budgetary Cost 0 0 0 0 0 0 NET RESOURCE COSTS Initial+Maint+Admin (54) (52) (53) (23) (36) 8 ($1000s) Htg Fuel Use (GBtu) 48 44 40 37 33 33 oo fo oO co 33 oo oo 33 2019 oo oo 33 7) oo 8 33 2022 2023 2024 2025 2026 0.10 0.09 0.09 0.02 0.02 0.02 5.78 5.55 5.32 5.01 4.54 4.07 27.4 26.3 25.2 23.7 21.5 19.3 4.9 4.7 4.5 4.2 3.8 3.4 0.05 0.05 0.05 0.01 0.01 0.02 6.99 6.58 6.17 5.72 5.05 4.58 33.1 31.2 29.2 27.1 23.9 21.7 5.9 5.5 5.2 468 42 3.8 0.00 0.00 0.00 0.00 0.00 0.00 10.46 9.86 9.26 8.66 7.77 6.88 49.6 46.7 43.9 41.1 36.8 32.6 8.8 8.3 7.8 7.3 6.5 5.8 -0.05 -0.04 -0.04 -0.01 -0.01. 0.00 1.20 1.03 0.85 0.71 0.51 0.51 5.7 4.9 4.0 3.4 2.4 2.4 1.0 0.9 0.7 0.6 0.4 0.4 (31) (29) (29) (5) (5) 0 7 6 5 4 3 3 29 25 20 17 12 12 1.77 1.79 1.81 1.83 1.85 1.86 51 44 37 31 23 23 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 (24) (23) (24) (1) (2) > 29 25 20 17 12 12 2027 oo co 12 2028 co oo 12 2029 oo oo 12 oo oo 12 WATER HEATER CONVERSION PROGRAM - 5 YEAR LIFE 2031 MARKET-DRIVEN EFFECTS Particip. Units (1000s) 0.00 1 Cumulative Units (1000s) 1.73 GWh Savings 8.2 MW Savings " 41.5 GROSS PROGRAM EFFECTS Particip. Units (1000s) 0.00 Cumulative Units (1000s) 2.08 GWh Savings 9.9 MW Savings Tet TECHNICAL POTENTIAL Particip. Units (1000s) 0 Cumulative Units (1000s) 2.66 GWh Savings 1 MW Savings is NET PROGRAM EFFECTS Particip. Units (1000s) 0.00 Cumulative Units (1000s) 0.35 GWh Savings V67 MW Savings 0.3 Initial Cost ($1000s) 0 Maintenance Cost ($1000s) 2 Heating Fuel Use (GBtu) 8 Htg Fuel Price ($/MMBtu) 1.96 Htg Fuel Cost ($1000s) 17 PROGRAM COSTS ($1000s) Incentive Payments 0 Total Admin Costs 0 Startup Fixed Annual 0 Per Unit 0 Total Budgetary Cost 0 Nominal Budgetary Cost 0 NET RESOURCE COSTS Initial+Maint+Admin 2 ($1000s) Htg Fuel Use (GBtu) 8 2032 °o co co n ° ° co oo n ° .e PNR CCORmNS eco co fo oO oo:e -~oo n ° ofoooCoCoSS co oo fF oO oo eo ee oaoooooce ny ° eo leo lO oo oor. le oo SS) ewmoo0000cod n ° oo oo oo-:- -. oo eoooocoodsd n co CoO 82 oO nN = oo oo nN = oo coo WATER HEATER CONVERSION PROGRAM - 10 YEAR LIFE Unit = Water Heater Rebate Amount = $500 Busbar Savings: kWh Savings/Unit = 4,740 kWh/yr PROGRAM COSTS ($1000s) kW Savings/Unit = 0.84 kW Startup = 50 Htg Btus Consumed = 5,080 Btu/kWh Annual Fixed = Per Unit = 0.088 Initial Cost = $650 /unit Program Life = 10 Annual Maintenance = $6 /yr Lifetime = Remaining Bldg Life Discount Rate = 4.0% When Installed = Normal Replcmnt Analysis Start = 1991 REGIONAL IMPACTS Anchorage 67% Mat-Su 20% Kenai. 13% Fairbanks 0% KRKEKKEKKEKKEKKEEKERKEEK KEKE KKEKKKKKEKKEKKEKEKRKERKKEKKERKEKKKKKKEKKKKKKKKKKKKKKKKKEE RESULTS a DISCOUNTED SUMS ----- 50 yr 20 yr ELECTRICITY SAVINGS (GWh) Market Driven 365 202 Gross Program 691 452 Technical Potential 1,044 722 Net Program 326 250 18 GWh/yr LOAD FACTOR = 64% NET RESOURCE COST ($1000s): Initial 2,485 40% Maintenance 413 7% Fuel 2,618 42% Program Admin 736 12% 6,252 19 mills/kWh BUDGETARY COST ($1000s) : Admin 736 16% Incentive 3,908 84% Nominal =s2aase== Sum 4,644 14 mills/kWh 8159 Starting Year = 1991 Total Initial Stock = 17.21 heaters (1000s) Maximum Building Age for Retrofit = 40 years Replacements Occur Every 10 years 1991 — PARTICIPATION RATES ------ vintage Market Program Potential Age Pattern 1992 23.0% 60.0% 100.0% 0 0.65% 1992 23.0% 60.0% 100.0% 1 0.65% 1993 23.0% 60.0% 100.0% 2 0.65% 1994 23.0% 60.0% 100.0% 3 0.65% 1995 23.0% 60.0% 100.0% 4 0.86% 1996 23.0% 60.0% 100.0% 5 0.86% 1997 23.0% 60.0% 100.0% 6 0.86% 1998 23.0% 60.0% 100.0% 7 5.16% 1999 23.0% 60.0% 100.0% 8 5.16% 2000 23.0% 60.0% 100.0% 9 5.48% 2001 23.0% 23.0% 100.0% 10 5.48% 2002 23.0% 23.0% 100.0% 11 4.19% 2003 23.0% 23.0% 100.0% 12 4.19% 2004 23.0% 23.0% 100.0% 13. 5.16% 2005 23.0% 23.0% 100.0% 14 5.16% 2006 23.0% 23.0% 100.0% 15 5.16% 2007 23.0% 23.0% 100.0% 16 3.48% 2008 23.0% 23.0% 100.0% 17 3.48% 2009 23.0% 23.0% 100.0% 18 3.48% 2010 23.0% 23.0% 100.0% 19 3.48% 2011 23.0% 23.0% 100.0% 20 3.48% 2012 23.0% 23.0% 100.0% 21 2.06% Z2Or3 23.0% 23.0% 100.0% 22 2.06% 2014 23.0% 23.0% 100.0% 23 2.06% 2OTS 23.0% 23.0% 100.0% 24 2.06% 2016 23.0% 23.0% 100.0% 25 2.06% 2017 23.0% 23.0% 100.0% 26 1.29% 2018 23.0% 23.0% 100.0% 27 1.29% 2019 23.0% 23.0% 100.0% : 28 1.29% 2020 23.0% 23.0% 100.0% 29 1.29% 2021 23.0% 23.0% 100.0% 30 1.29% 2022 23.0% 2313 0% 100.0% 31 0.90% 2023 23.0% 23.0% 100.0% 32 0.90% 2024 23.0% 23.0% 100.0% 33 0.90% 2025 23.0% 23.0% 100.0% 34 0.90% 2026 23.0% 23.0% 100.0% 35 0.90% 2027 23.0% 23.0% 100.0% 36 0.90% 2028 23.0% 23.0% 100.0% 37 0.90% 2029 23.0% 23.0% 100.0% 38 0.90% 2030 23.0% 23.0% 100.0% 39 0.90% 2031 23.0%. 23.0% 100.0% 40 0.90% 2032 23.0% 23.0% 100.0% 41 0.72% 2033) 23.0% 23.0% 100.0% 42 0.72% 2034 23.0% 23.0% 100.0% 43 0.72% 2035 23.0% 23.0% 100.0% 44 0.72% 2036 23.0% 23.0% 100.0% 45 0.72% 2037 23.0% 23.0% 100.0% 46 0.72% 2038 23.0% 23.0% 100.0% 47 0.72% 2039 23.0% 23.0% 100.0% 48 0.72% 2040 23.0% 23.0% 5 _ 39 100.0% 49 0.72% CE = WATER HEATER CONVERSION PROGRAM - 10 YEAR LIFE MARKET-DRIVEN EFFECTS Particip. Units (1000s) Cumulative Units (1000s) GWh Savings MW Savings GROSS PROGRAM EFFECTS Particip. Units (1000s) Cumulative Units (1000s) GWh Savings MW Savings TECHNICAL POTENTIAL Particip. Units (1000s) Cumulative Units (1000s) GWh Savings MW Savings NET PROGRAM EFFECTS Particip. Units (1000s) Cumulative Units (1000s) GWh Savings MW Savings Initial Cost ($1000s) Maintenance Cost ($1000s) Heating Fuel Use (GBtu) Htg Fuel Price ($/MMBtu) Htg Fuel Cost ($1000s) PROGRAM COSTS ($1000s) Incentive Payments Total Admin Costs Startup Fixed Annual Per Unit Total Budgetary Cost Nominal Budgetary Cost NET RESOURCE COSTS Initial+Maint+Admin ($1000s) Htg Fuel Use (GBtu) 576 151 50 101 728 859 618 17 6.6 1.2 449 8 34 1.35 46 560 98 658 811 556 34 0.69 2.09 9.9 1.8 449 13 50 1.38 69 560 98 658 848 560 50 0.42 2.51 11.9 2.1 271 15 60 1.42 86 338 59 397 535 345 60 0.57 3.08 14.6 2.6 372 18 74 1.45 108 464 82 546 768 472 74 0.57 3.65 17.3 3.1 372 22 88 1.49 131 464 82 546 803 476 88 1.51 11.38 53.9 9.6 0.56 4.21 20.0 3.5 363 25 101 1.52 154 453 80 80 533 819 468 101 1.34 12.72 60.3 10.7 0.50 4.71 22.3 4.0 323 28 113 1.56 177 403 71 474 761 422 ats) 0.50 5.21 24.7 4.4 323 31 125 1.59 199 403 71 474 795 425 125 0.69 5.90 28.0 5.0 451 35 142 1.62 230 563 662 1,161 586 142 0.00 0.00 15.79 15.63 74.8 13.3 -0.15 - 5.69 74.1 13.1 0.15 5.49 -0.15 5:29 0.00 72.6 12.9 -0.08 - hb 0.00 71.9 12.7 0.12 4.97 0.00 15.32 15.17 15.01 71.2 12.6 “0-12 4.79 -0.12 4.62 0.00 14.70 69.7 12.3 -0.10 4.46 27.0 26.0 25.1 24.4 23.6 22.7 21.9 21.2 4.8 (98) 34 137 1.66 228 oo oo (64) 137 4.6 (95) Sa) 132 1.68 222 oo oo (62) 132 4.4 (95) pel 127 1.49 190 oo oo (63) 127 4.3 (54) 31 124 1.50 186 oo oo (23) 124 4.2 (77) 30 120 1.52 182 oo oo (47) 120 4.0 (77) 29 115 1.53 177 oo oo (48) 115 3.9 (75) 28 111 1-55 172 oo oo (47) 111 a7: (66) 27 107 1.56 168 coo oo (39) 107 -0.10 4.30 20.4 3.6 (66) 26 104 1.58 164 oo oo (40) 104 0.00 14.32 67.9 12.0 -0.14 4.08 19.3 3.4 (92) 24 98 1.59 156 oo oo (67) 98 WATER HEATER CONVERSION PROGRAM - 10 YEAR LIFE . 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 MARKET-DRIVEN EFFECTS Particip. Units (1000s) 0.21 0.20 0.20 0.10 0.14 0.14 0.14 0.11 0.11 0.14 0.10 0.09 0.09 0.02 0.02 0.02 0.01 0.01 0.01 0.01 Cumulative Units (1000s) 5.95 6.06 6.18 6.19 6.18 6.18 6.17 6.14 6.11 6.01 5.78 5.55 5.32 5.01 4.54 4.07 3.60 3.22 2.84 2.34 GWh Savings 28.2 28.7 29.3 29.3 29.3 29.3 29.3 29.1 29.0 28.5 27.4 26.3 25.2 23.7 21.5 19.3 17.1 15.3 13.5 11.1 MW Savings 5.0 5.1 5.2 5.2 5.2 5.2 5.2 S.2 5.1 50 6.9 47 65 4.2 3.8 3.6 3.0 2.7 2.4 2.0 GROSS PROGRAM EFFECTS Particip. Units (1000s) 0.11 0.11 0.11 0.05 0.07 0.07 0.07 0.06 0.06 0.07 0.05 0.05 0.05 0.01 0.01 0.01 0.01 0.01 0.01 0.01 Cumulative Units (1000s) 9.87 9.82 9.77 9.67 9.50 9.33 9.15 8.96 8.78 8.44 8.03 7.62 7.21 6.76 6.09 5.42 4.75 4.21 3.66 2.95 GWh Savings 46.8 46.5 46.3 45.8 45.0 44.2 43.4 42.5 41.6 40.0 38.1 36.1 34.2 32.1 28.9 25.7 22.5 19.9 17.4 14.0 MW Savings 8.3 8.2 8.2 8.1 8.0 7.8 7.7 7.5 7.4 7.1 6.7 6.4 6.1 5.7 5.1 4.6 4.0 3.5 3.1 2.5 TECHNICAL POTENTIAL Particip. Units (1000s) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Cumulative Units (1000s) 14.10 13.88 13.66 13.43 13.08 12.72 12.37 12.01 11.66 11.06 10.46 9.86 9.26 8.66 7.77 6.88 6.00 5.27 4.55 3.61 GWh Savings 66.8 65.8 64.7 63.7 62.0 60.3 58.6 56.9 55.3 52.4 49.6 46.7 43.9 41.1 36.8 32.6 28.4 25.0 21.6 17.1 MW Savings 11.8 11.7 11.5 11.3 11.0 10.7 10.46 10.1 9.8 9.3 8.8 8.3 7.8 7.3 6.5 5.8 5.0 4.4 3.8 3.0 NET PROGRAM EFFECTS Particip. Units (1000s) -0.10 -0.10 -0.10 -0.05 -0.07 -0.07 -0.07 -0.05 -0.05 -0.07 -0.05 -0.04 -0.04 -0.01 -0.01 -0.01 -0.01 -0.01 -0.01 -0.01 Cumulative Units (1000s) 3.92 3.76 3.59 3.48 3.31 3.14 2.98 2.82 2.67 2.43 2.25 2.07 1.89 1.76 1.55 1.35 1.15 0.99 0.82 0.61 GWh Savings 18.6 17.8 17.0 16.5 15.7 14.9 14.1 13.4 12.6 11.5 10.7 9.8 9.0 8.3 7.4 6.4 5.5 4.7 3.9 2.9 MW Savings 3.3. 3.2 3.0 2.9 2.8 2.6 2.5 2.4 2.2 2.0 1.9 1.7 1.6 1.5 1.3 1.1 1.0 0.8 0.7 0.5 Initial Cost ($1000s) (66) (63) (63) (32) (44) (44) (43) (35) (35) (45) (31) (29) (29) (5) (5) (5) 64) 4) 4) HD Maintenance Cost ($1000s) 23 23 22 21 20 19 18 17 16 15 13 12 1 1 9 8 7 6 5 4 Heating Fuel Use (GBtu) 9% 90 87 84 80 76 72 68 64 58 54 50 46 42 37 33 28 24 20 15 Htg Fuel Price ($/MMBtu) 1.61 1.62 1.64 1.65 1.67 1.69 1.70 1.72 1.74 1.76 1.77 1.79 1.81 1.83 1.85 1.86 1.88 1.90 1.92 1.94 Htg Fuel Cost ($1000s) 151 147) «-1420-««139) 133) 128)=— 122,117,112 103 96 89 83 77 69 61 52 45 38 28 PROGRAM COSTS ($1000s) Incentive Payments 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Total Admin Costs 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Startup Fixed Annual 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Per Unit 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Total Budgetary Cost 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Nominal Budgetary Cost 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 NET RESOURCE COSTS Initial+Maint+Admin (42) (41) (42) (11) (24) (25) (25) (19) (19), (30), 17), (17) (18) 6 4 5) 3 2 1 0 ($1000s) Htg Fuel Use (GBtu) 94 90 87 84 80 76 72 68 64 58 54 50 46 42 37 33 28 24 20 15 Se-7 WATER HEATER CONVERSION PROGRAM - 10 YEAR LIFE MARKET-DRIVEN EFFECTS Particip. Units (1000s) Cumulative Units (1000s) GWh Savings MW Savings GROSS PROGRAM EFFECTS Particip. Units (1000s) Cumulative Units (1000s) GWh Savings MW Savings TECHNICAL POTENTIAL Particip. Units (1000s) Cumulative Units (1000s) GWh Savings MW Savings NET PROGRAM EFFECTS Particip. Units (1000s) Cumulative Units (1000s) GWh Savings MW Savings Initial Cost ($1000s) Maintenance Cost ($1000s) Heating Fuel Use (GBtu) Htg Fuel Price ($/MMBtu) Htg Fuel Cost ($1000s) PROGRAM COSTS ($1000s) Incentive Payments Total Admin Costs Startup Fixed Annual Per Unit Total Budgetary Cost Nominal Budgetary Cost NET RESOURCE COSTS Initial+Maint+Admin ($1000s) Htg Fuel Use (GBtu) 1 1.96 21 oo oo 1 0.0 0 NNOWSOS = = 238 -=0 x oo ° . NOR S2OSNUGS coo oo nN eof? o so ANWeo-AaWS oo oo oo -o MBN ROmuUCS oo coo . og nN oor. FANCO=FA0 eco oO oo ee we oo We-cooW nN ° oo co ee v8 nN . co: = . oo NO-CCON oo -© oo oo -NSCSCCOANG n co oo co: -+o9o eonrocoooeoSS n co oo 2.7 Efficient Electric Water Heater Rebate Program 2.7.1 Program Summary The Residential Efficient Water Heater Program would provide $40 dealer rebates for the purchase of electric water heaters with at least a 95% efficiency. Included with the rebate would be one set of thermal traps and one efficient showerhead for each qualifying water heater. The dealer would provide/install these devices for the customer when the water heater is sold. The program would be available in all areas of the Railbelt. Thermal traps are one-way valves installed where the cold and hot water pipes enter a water heater. The valves prevent within-pipe thermosiphon loops that heat up the pipes connected to the water heater and create energy loss. Conversations with local plumbing and heating contractors indicate that these devices are typically not installed on water heaters. Efficient showerheads are showerheads that use less water but are designed to still deliver a satisfying shower. Their cost-of-conserved-energy (CCE) is very low, about 3 mills/kWh. However, they are not widely used, partly because of past experience with poor quality models that failed to deliver a comfortable shower. The showerheads used in this program would only be of the highest quality to ensure that a reasonable fraction are actually utilized. A recent Consumer Reports article rated about 20 models and identified 3 with the best performance. In the assumptions concerning energy savings, it is conservatively assumed that a large fraction of the showerheads and thermal traps will not be installed. However, their CCE is so low that the economics of their giveaway are still favorable. The National Appliance Energy Conservation Act of 1987 requires electric water heaters sold after 1990 to have minimum efficiencies of 87% - 91%, depending on tank size. However, a number of units sold on the market now have efficiencies in excess of 95%. The rebate would target these super-efficient units. These units also tend to be of higher quality construction and have longer lives than standard units. This program competes to some extent with the Water Heater Conversion Program in the southern Railbelt. However, the rebate for converting a water heater to gas is ~12 times the rebate for buying a more efficient electric model. Therefore, the Efficient Water Heater Rebate Program should not reduce noticeably the participation in the Water Heater Conversion Program. An additional concern is the effect of the Efficient Water Heater Program on new construction water heater fuel choice. In the Conversion Program, rebates are only paid if a conversion occurs. Rebates are not paid for all sales of gas water heaters. Thus, the prices of gas and oil water heaters for new construction at an appliance dealer are unaffected by the program. The rebates for the efficient electric water heaters will lower the price of electric heaters relative to gas and could cause a higher electric share in new construction. To compensate for this effect, a similar rebate could be offered for efficient gas water heaters. Efficient natural gas water heaters have a cost-of-conserved-gas of about 2 - 36 $1.30/MMBtu, so the rebate program would reward cost-effective efficiency investments. 2.7.2 Energy Savings As discussed in the Energy Savings section of the Water Heater Conversion Program, new purchases of electric water heaters in the Railbelt are expected to have an average efficiency of 91% after the efficiency standards are enacted in 1990 and are expected to consume approximately 4,500 kWh/year. The minimum water heater efficiency for the rebate program would be 95%, probably resulting in an average efficiency of 95.5% for rebate program participants. Thus, savings at the water heater will be: 4,500 kWh/yr x (1 - 0.91/0.955) = 212 kWh/year. Measured savings of thermal traps range from 280 - 480 kWh/year ("Saving Water Heater Energy", Energy Auditor and Retrofitter, Jan - Feb 1985, p. 12).” We assume a savings of 340 kWh/year if the thermal trap is installed, and estimate the probability of installation at about 50%. Thus, the expected savings per rebated water heater are 170 kWh/year. Typical showerheads in the Railbelt use from 2 to 6 gallons per minute. High quality energy-saver showerheads use from 1.8 to 2.5 gallons per minute. We assume a 1 gallon per minute saving on average. Assuming inlet water heater temperatures of 45 degrees, shower water temperatures of 105 degrees, and 12 minutes of showering per day, the savings from the showerhead are: 1 gal/min x 12 min/day x 365 d/yr x 8.34 pound/gal x (105 - 45) deg F / 3,413 Btu/kWh = 640 kWh/year. With a 33% probability of installation, the savings are: 210 kWh/year. Expected savings for the package of measures are: 212 + 170 + 210 = 592 kWh/year. Adjusting for distribution losses gives 592 kWh/year * 1.053 = 620 kWh/year. The efficiency improvement in the water heater unit itself serves to reduce "standby" losses, the heat the transfers from the hot tank of water through the tank insulation to the surrounding air. This heat loss is relatively constant over time, since it only depends on the difference in temperature between water in the tank and the ambient. The loss actually drops slightly during periods of peak water use because water in the tank is cooler during these periods). Thermal traps also serve to reduce standby loss. To determine demand savings at the period of utility system peak from these two measures, we assume that the savings at utility peak are 90% of average savings (111% effective load factor): (212 + 170) kWh/year x 0.9 x 1.053 / 8766 hrs/yr = 0.041 kW. Savings from the energy-saver showerhead are assumed to have a 60% load factor, so peak savings are: 210 kWh/yr x 1.053 / 8766 / 0.60 = 0.042 kW. Total demand savings from the three measures are: 0.041 + 0.042 = 0.083 kW. If an electric water heater is located in the living space, a reduction in standby losses will cause an increase in heating demand for that space. If the space needs heat from the The energy loss that thermal traps address, the heat loss from pipes connected to the water heater, is not counted in the efficiency rating of the water heater unit itself. 2 - 37 heating system (as opposed to free heat from the sun, people, and other appliances) for 70% of the year, approximately 70% of the standby loss provides useful heat (albeit expensive electric heat). Since water heaters are more likely to be located in semi-heated spaces such as garages and crawl-spaces, a more accurate useability fraction is 40%. Therefore, each 1 kilowatt-hour reduction in standby water heater loss increases auxiliary heat demand by 0.4 kWh x 3,413 Btu/kWh = 1,365 Btus. The reduction in hot water use resulting from the efficient showerhead does not significantly increase heating fuel consumption. The energy added to the hot water does not heat the residence but instead goes down the drain, literally. The additional heating fuel requirements from that component of the electricity savings is essentially zero. Since the showerhead savings make up a third of the electricity savings, the effective heat factor is 1,365 Btu/kWh x 0.67 = 915 Btu/kWh. If the heat is provided by a heating system with 70% efficiency, the increased heating fuel consumption is 915 Btu/kWh / 0.7 = 1,310 Btu/kWh saved at that water heater. Expressed per kWh saved at the input to the distribution system: 1,310 Btu/kWh / 1.053 = 1,240 Btu/kWh. The heating fuel price used to determine the cost of this additional heating fuel use is a blended price for Railbelt residential heating fuels (see the General Assumptions Section). Because of the correlation between the existence of an electric water heater in a residence and the existence of a non-natural gas heating system, a higher blended price is used in the analysis of this program. 2.7.3 Technology Costs Lawrence Berkeley Laboratory data (McMahon, input data sets for LBL-REM end-use forecasting model) shows that 96% efficient electric water heaters are approximately $30 more expensive than 91% efficient electric water heaters, once scaled according to typical 1987 Alaskan water heater prices. No additional maintenance cost or savings are assumed for the efficient units, although they typically are of higher quality than standard units. Thermal traps cost $20 in bulk and cost $10 to install. With a 50% installation probability, the total cost is $25. High-quality efficient showerheads cost $12 in bulk and the expected installation cost is $5 x 0.33 = $2, for a total cost of $14. The cost of the three measures combined is $30 + $25 + $14 = $69. All measures are assumed to last 10 years, the typical life of an Alaskan electric water heater. (National data shows water heaters lasting 13 years. This figure was reduced to account for the presence of hard water in the Railbelt, which leads to more rapid tank failure.) 2.7.4 Program Costs Start-up costs are estimated at $30,000 per year, and ongoing administrative costs are assumed to be 15% of the annual budget, or $12.70 per water heater. Program administration tasks combine well with tasks from the other appliance rebate programs. The effective incentive payment from the program sponsor is $40 (rebate) + $20 (thermal trap) + $12 (showerhead) = $72 per water heater. 2 - 38 2.7.5 Participation Rates All purchasers of electric water heaters are potential participants in the program. To be conservative, it is assumed that the Water Heater Conversion Program is also in operation, and the pool of potential participants is reduced according to participation projections for that program. Electric water heater purchases for new construction are also possible participants. The purchases of electric water heaters over time were taken from the base case residential electric forecast and adjusted for the effects of the water heater conversion program. The Efficient Electric Water Heater Rebate Program is assumed to not affect the timing of water heater purchases--i.e. people participate in the program when they normally replace their water heater. It is assumed that initially 7% of purchasers (growing to 8.5% by 2010) of electric water heaters would purchase this efficient water heater package under the Market-Driven Scenario (a higher percentage would probably purchase a 95%+ efficient water heater, but a lesser percentage would purchase the thermal traps and efficient showerheads). Under the Program Scenario, 65% are assumed to purchase the efficient package. The program is assumed to last 20 years. Energy savings are assumed to be distributed across regions according to the regional distribution of electric water heaters minus the water heaters that are converted by the Water Heater Conversion program: Anchorage 38% Mat-Su 17% Kenai 20% Fairbanks 25% 2.7.6 Model Output WG Or EFFICIENT WATER HEATER Levelized Electricty Savings 6.5 GWh/Year (20 Year, Net) Load Factor 85% Net Resource Cost $2.5 Million, PV 23 mills/kWh Budgetary Cost $2.0 Million, PV 19 mills/kWh Net Resource Cost ($ Million, Present Value) Initial 58% \ Program Admin 14% $0.3 Fuel 29% $0.7 $2.5 Million 23 mills/kWh Electricity Savings GWh/ Year 80 ————--.--—_ 60 40 20 1991 1993 19956 1997 1999 2001 2003 20065 2007 2009 Year Savings Type ME Market Driven KW net Program Eg Untapped Potential Budgetary Cost ($ Million, Present Value) Admin 17% $0.3 Incentive 83% $17 $2.0 Million 19 mills/KWh EFFICIENT ELECTRIC WATER HEATER PROGRAM Unit = Water Heater Incentive Payment $72 Busbar Savings: kWh Savings/Unit = 620 kWh/yr PROGRAM COSTS ($1000s) kW Savings/Unit = 0.083 kW Startup = 30 Htg Btus Consumed = 1,250 Btu/kWh Annual Fixed = Per Unit = 0.013 Initial Cost = $69 /unit Program Life = 20 Annual Maintenance = $0 /yr Lifetime = 10 yrs Discount Rate = 4.0% When Installed = Normal Rplcmnt New Construction Analysis Start = 1991 REGIONAL IMPACTS Anchorage 38% Mat-Su 17% Kenai 20% Fairbanks 25% KEKKKKKKKKEKKEKKKEKKKKEKEKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKK KKK KKK KKK KKK KE RESULTS a DISCOUNTED SUMS ----- 50 yr 20 yr ELECTRICITY SAVINGS (GWh) Market Driven 14 12 Gross Program Loe 100 Technical Potential 188 53) Net Program 108 88 6.5 GWh/yr LOAD FACTOR = 85% NET RESOURCE COST ($1000s): Initial 1,422 58% Maintenance 0 0% Fuel 704 29% Program Admin 333 14% 2,458 23 mills/kWh BUDGETARY COST ($1000s): Admin 333 17% Incentive 1,682 83% Nominal Sssseee== Sum 2,015 19 mills/kWh 5, o53 Item Life = 10 years Starting Year = 1991 TOTAL PURCHASES == —------- PARTICIPATION RATES ------ (1000s) Market Program Potential 1992 1.76 7.1% 65.0% 100.0% 1993 2.01 7.1% 65.0% 100.0% 1994 2.355 7.2% 65.0% 100.0% 1995 2.39 7.3% 65.0% 100.0% 1996 2.68 7.4% 65.0% 100.0% 1997 2.79 7.4% 65.0% 100.0% 1998 3.00 7.5% 65.0% 100.0% 1999 3.11 7.6% 65.0% 100.0% 2000 2.94 7.7% 65.0% 100.0% 2001 2.92 7.7% 65.0% 100.0% 2002 2.76 7.8% 65.0% 100.0% 2003 2.63 7.9% 65.0% 100.0% 2004 2.97 8.0% 65.0% 100.0% 2005 2.87 8.0% 65.0% 100.0% 2006 2.98 8.1% 65.0% 100.0% 2007 3.09 8.2% 65.0% 100.0% 2008 3.29 8.3% 65.0% 100.0% 2009 34d 8.4% 65.0% 100.0% 2010 geaa 8.5% 65.0% 100.0% 2 - 42 ty -7 EFFICIENT ELECTRIC WATER HEATER PROGRAM 1991 1992 1993 1994 1995 1996 1997 — 8 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 MARKET-DRIVEN EFFECTS Particip. Units (1000s) 0.11 0.12 0.14 0.17 0.17 0.20 0.21 0.23 0.24 0.23 0.23 0.22 0.21 0.24 0.23 0.24 0.25 0.27 0.29 0.28 Cumulative Units (1000s) 0.11 0.23 0.38 0.55 0.72 0.92 1.13 1.35 1.59 1.81 1.93 2.02 2.08 2.15 2.21 2.25 2.30 2.34 2.39 2.45 GWh Savings 0.07 0.14 0.23 0.34 0.45 0.57 0.70 0.84 0.98 1.12 1.20 1.25 1.29 1.33 1.37 1.40 1.42 1.45 1.48 1.52 MW Savings 0.01 0.02 0.03 0.05 0.06 0.08 0.09 0.11 0.13 0.15 0.16 0.17 0.17 0.18 0.18 0.19 0.19 0.19 0.20 0.20 GROSS PROGRAM EFFECTS Particip. Units (1000s) 1.01 1.14 1.31 1.53 1.55 1.74 1.81 1.95 2.02 1.91 1.89 1.80 1.71 1.93 1.87 1.94 2.01 2.14 2.22 2.18 Cumulative Units (1000s) 1.01 2.16 3.46 4.99 6.55 8.29 10.10 12.05 14.07 15.99 16.87 17.52 17.92 18.32 18.63 18.83 19.02 19.20 19.40 19.67 GWh Savings 0.63 1.34 2.15 3.10 4.06 5.14 6.26 7.47 8.73 9.91 10.46 10.86 11.11 11.36 11.55 11.67 11.79 11.91 12.03 12.19 MW Savings 0.08 0.18 0.29 0.41 0.54 0.69 0.84 1.00 1.17 1.33 1.40 1.45 1.49 1.52 1.55 1.56 1.58 1.59 1.61 1.63 TECHNICAL POTENTIAL Particip. Units (1000s) 1.56 1.76 2.01 2.35 2.39 2.68 2.79 3.00 3.11 2.94 2.92 2.76 2.63 2.97 2.87 2.98 3.09 3.29 3.41 3.35 Cumulative Units (1000s) 1.56 3.32 5.33 7.68 10.07 12.75 15.54 18.55 21.65 24.60 25.95 26.96 27.57 28.19 28.67 28.97 29.26 29.55 29.85 30.26 GWh Savings 0.97 2.06 3.30 4.76 6.25 7.91 9.64 11.50 13.42 15.25 16.09 16.71 17.09 17.47 17.77 17.96 18.14 18.32 18.51 18.76 MW Savings 0.13 0.28 0.44 0.64 0.84 1.06 1.29 1.54 1.80 2.04 2.15 2.24 2.29 2.34 2.38 2.40 2.43 2.45 2.48 2.51 NET PROGRAM EFFECTS Particip. Units (1000s) 0.90 1.02 1.16 1.36 1.38 1.54 1.61 1.73 1.78 1.69 1.67 1.58 1.50 1.69 1.64 1.69 1.75 1.87 1.93 1.89 Cumulative Units (1000s) 0.90 1.92 3.09 4.45 5.83 7.37 8.98 10.70 12.49 14.18 14.94 15.50 15.84 16.17 16.43 16.58 16.72 16.86 17.01 17.21 GWh Savings 0.56 1.19 1.91 2.76 3.61 4.57 5.57 6.64 7.74 8.79 9.26 9.61 9.82 10.03 10.18 10.28 10.37 10.45 10.55 10.67 MW Savings 0.07 0.16 0.26 0.37 0.48 0.61 0.75 0.89 1.046 1.18 1.24 1.29 1.31 1.34 1.36 1.38 1.39 1.40 1.41 1.43 Initial Cost ($1000s) 62 70 80 94 95 107 111 #119 123 116 115 109 103 117 113 117 121 129 133 131 Maintenance Cost ($1000s) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Heating Fuel Use (GBtu) 0.7 1.5 2.4 3.4 4.5 5.7 O 8.3 9.7 11.0 11.6 12.0 12.3 12.5 12.7 12.8 13.0 13.1 13.2 13.3 Htg Fuel Price ($/MMBtu) 4.57 4.62 4.66 4.71 4.76 4.80 4.85 4.90 4.95 5.00 5.05 5.10 5.15 5.20 5.25 5.31 5.36 5.41 5.47 5.52 Htg Fuel Cost ($1000s) 3.2, 6.9 11.2 16.2 21.5 27.4 33.8 40.6 47.9 54.9 58.5 61.3 63.2 65.2 66.9 68.2 69.4 70.7 72.1 73.7 PROGRAM COSTS ($1000s) Incentive Payments ré} 82 94 110 112 «125 131 141 145 138 136 129 123 139 134 139 144 154 160 157 Total Admin Costs 43 15 17 20 20 23 24 25 26 25 25 23 22 25 24 25 26 28 29 28 Startup 30 Fixed Annual 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Per Unit 13 15 17 20 20 23 24 25 26 25 25 23 22 25 24 25 26 28 29 28 Total Budgetary Cost 116 97 111 «1300 «1320148 154 166 172,—'s«1638—— “161 153) 1450 164 159 165 «170s 182.189) «185 Nominal Budgetary Cost 137, 120. 143,175, 186 218 = 237) 266 288) 285) 295) 292 290 343) 347) 376) 407) 453) 491 504 NET RESOURCE COSTS Initial+Maint+Admin 105 85 97 114 115 129 134 145 149 141 140 132 126 142 137 142 147 156 162 159 ($1000s) Htg Fuel Use (GBtu) 0.7 1.5 2.6 3.6 4.5 5.7 7.0 8.3 9.7 11.0 11.6 12.0 12.3 12.5 12.7 12.8 13.0 13.1 13.2 13.3 2022 2023 2024 2025 2026 2027 2028 2029 2030 1.35 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.54 0.36 0.18 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.57 0.28 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 0.35 0.18 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 0.05 0.02 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 1.09 0.83 0.56 0.28 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 sgeceoxe 888s oto Sooo o ssssecese eosse ots sooo ° esesececo eoso oto ooco ° sgssseceexe eoso Hr) ocooo 3% eoooocoone oosco os br erie oro cooo ° 0. 0. 6.06 6.10 6.16 6.22 6.28 6.35 6.4 0.0 8.9 ssssece ooco = 0.0 ecoooo esos coco 0.0 0.0 oeooooo oosco coco 0.0 ecoooo eooo coco 0.0 0.0 eocoooco esss Sccoco 0.0 0.0 eoanwoo COnre oeeo 1.5 eomkno x Ssmaccocen cot ee mon oo coo oo oo oo oo oo oo coo oo co oo oo coo coo oo oo oo oo 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 EFFICIENT ELECTRIC WATER PROGRAM 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1.95 18.98 16.11 13.13 10.05 6.76 3.35 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 3.61 11.77 9.99 8.14 6.23 4.19 2.08 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Cumulative Units (1000s) 17.77 15.98 14.27 12.34 10.47 8.54 6.53 4.39 2.18 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Nn fn N omMmMno wen w So Meo n au So SSRs OxX%SS oooo as Sumo wn Foes See Rk See ee o-oo no on wo “Ah ewrner an ss So Seco wo - Sono ws onnrm ww o-oo te - Sou "ae s nw no Nn bate o- 2 SRECONSS Oero o- - Sonne on me orcnnr -—- ocouw Sonics on Sosun onan SAS ae " oman uo cs Led oONwo = oF onON onan Sud z 3 vie ~ al 2 a =3 853 25 a 25 2 Saas a” ss a cs eo ss a -oo - = So oo So S8a83#8 o o=- eo co = o=- a o=- oeo w -~ w - < -~ - -~ ovrv-rso ~ ~ u ~~ - ~ oe ~ o a _ a uo e a we a —¥ Owen w aw w o =z ow nu naw a 2 - 2 5 gst & s2 ess, zicte Zi eee e wre e Oo” Ow wires <'c oO'e5 ‘£5 a —-o aia o ers oa ara oa z;2 o sess 2: 328 8: 23 2: 823 2: .SPacse2re Biasee wiacsan wiance Si arce = rigcec fidcee Biscee 3: ecee_s -' OoaBa>r 9 o> —:' o@8a> @:'o@mgara ess wie DN © Di-= “on Ziw=+%* @ Qt et DA Oe we Mie ao So - a zie a i od Oeetw gisdg, Git8a, S:884, sissggtsies 2 Siasa z ora zg YH aad zravo 252222 £ Fixed Annual Per Unit Startup Nominal Budgetary Cost PROGRAM COSTS ($1000s) Incentive Payments Total Admin Costs Total Budgetary Cost Sp-7t Efficient Electric Water Heater Program 620 kWh/yr per Unit Ml Annual Savings Equipment Life = 10 years Additional Htg Fuel = 1,250 Btu/(kWh Saved) Maintenance = 0.0 mills/(kWh Saved) Net Energy Savings (GWh) 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 #2008 2009 2010 | | 1 | 0.56 0.56 0.56 0.56 0.56 0.56 0.56 0.56 0.56 0.56 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2 | 0.56 1.19 1.19 1.19 1.19 1.19 1.19 1.19 1.19 1.19 0.63 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 3 | 0.56 1.19 1.91 1.91 1.91 1.91 1.91 1.91 1.91 1.91 1.35 0.72 «0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 4 [| 0.56 1.19 1.91 2.75 2.75 2.75 2.75 2.75 2.75 2.75 2.19 1.56 0.84 0.00 0.00 0.00 0.00 0.00 0.00 0.00 5 | 0.56 1.19 1.91 2.75 3.61 3.61 3.61 3.61 3.61 3.61 3.05 2.42 1.70 0.86 0.00 0.00 0.00 0.00 0.00 0.00 6 [| 0.56 1.19 1.91 2.75 3.61 4.56 4.56 4.56 4.56 4.56 4.01 3.37 2.65 1.81 0.95 0.00 0.00 0.00 0.00 0.00 @ | 0.56 1.19 1.91 2.75 3.61 4.56 5.56 5.56 5.56 5.56 5.00 4.37 3.65 2.81 1.95 1.00 0.00 0.00 0.00 0.00 8 | 0.56 1.19 1.91 2.75 3.61 4.56 5.56 6.63 6.63 6.63 6.08 5.44 4.72 3.88 3.03 2.07 1.07 0.00 0.00 0.00 9 | 0.56 1.19 1.91 2.75 3.61 4.56 5.56 6.63 7.74 7.74 7.18 6.55 5.83 4.98 4.13 3.17 2.18 1.10 0.00 0.00 10 | 0.56 1.19 1.91 2.75 3.61 4.56 5.56 6.63 7.74 8.79 8.23 7.60 6.88 6.03 5.18 4.22 3.22 2.15 1.05 0.00 1 | 0.56 1.19 1.91 2.75 3.61 4.56 5.56 6.63 7.74 8.79 9.26 8.63 7.91 7.07 6.21 5.26 4.26 3.19 2.08 1.04 12 | 0.56 1.19 1.91 2.75 3.61 4.56 5.56 6.63 7.74 8.79 9.26 9.61 8.89 8.05 7.19 6.24 5.24 4.17 3.06 2.02 13 [| 0.56 1.19 1.91 2.75 3.61 4.56 5.56 6.63 7:74 8.79 9.26 9.61 9.82 8.98 8.12 7.17 6.17 5.10 3.99 2.95 14 | 0.56 1.19 1.91 2.75 3.61 4.56 5.56 6.63 7.74 8.79 9.26 9.61 9.82 10.03 9.17 8.22 7.22 6.14 5.04 3.99 15 | 0.56 1.19 1.91 2.75 3.61 4.56 5.56 6.63 7.74 8.79 9.26 9.61 9.82 10.03 10.19 9.23 8.23 7.16 6.06 5.01 16 | 0.56 1.19 1.91 2.75 3.61 4.56 5.56 6.63 7.74 8.79 9.26 9.61 9.82 10.03 10.19 10.28 9.28 8.21 7.11 6.06 17 [| 0.56 1.19 1.91 2.75 3.61 4.56 5.56 6.63 7.74 8.79 9.26 9.61 9.82 10.03 10.19 10.28 10.37 9.29 8.19 7.14 18 | 0.56 1.19 1.91 2.75 3.61 4.56 5.56 6.63 7.74 8.79 9.26 9.61 9.82 10.03 10.19 10.28 10.37 10.45 9.35 8.30 19 | 0.56 1.19 1.91 2.75 3.61 4.56 5.56 6.63 7.74 8.79 9.26 9.61 9.82 10.03 10.19 10.28 10.37 10.45 10.55 9.50 20 [| 0.56 1.19 1.91 2.75 3.61 4.56 5.56 6.63 7.746 8.79 9.26 9.61 9.82 10.03 10.19 10.28 10.37 10.45 10.55 10.67 Efficient Electric Water Heater Program Net Energy Savings (GWh) Program Life 2017 «2018 «= 2019 2020. 202102022) 2023S 2024 «= 2025 2026 )=— 2027S 2028 )= 2029 = 2030 nN Ss nN ° Nn nN o w nN = S nN S au nN ° a w uw u 94-7 | | =: =: = = 1 [20:5 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2 | 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 3 | 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 4 [| 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 5 | 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 6 | 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 7 | 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 8 | 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 9 | 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 10 | 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 11 | 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 12 | 0.98 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 13 | 1.91 0.93 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 14 | 2.96 1.98 1.05 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 15 | 3.97 2.99 2.06 1.02 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 16 | 5.02 4.04 3.11 2.06 1.05 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 17 | 6.11 5.13 4.20 3.15 2.13 1.09 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 18 | 7.27 6.29 5.36 4.31 3.29 2.24 1.16 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 19 | 8.46 7.48 6.55 5.51 4.49 3.44 2.36 1.20 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 20 | 9.63 8.66 7.73 6.68 5.66 4.61 3.53 2.37 1.17 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2.8 Gas Dryer Rebate Program 2.8.1 Program Summary The Electric Dryer Conversion Program would provide $170 rebates for the installation of gas piping within a residence and $50 rebates for the purchase of a gas dryer. Both rebates would be paid to the installer/dealer in order to lower administrative costs and to facilitate consumer participation in the program. The program would not be offered in areas without natural gas, currently Homer and Fairbanks. : Two substantially more efficient designs for electric clothes dryers are under development with expected commercialization in the early 1990s. One design employs a heat pump and the other utilizes a microwave drying cycle (under consideration by General Electric). Both designs expect to lower electric use by over 60%, so provide roughly the same source energy reductions as gas dryer conversions. If these designs reach commercialization with reasonable prices (preliminary assessments indicate 2-3 cent/kWh cost-of-conserved energy), they should be included in the rebate program. Being electric, their pool of possible users would extend to households without access to natural gas and would probably increase the impact of the dryer rebate program. 2.8.2 Energy Savings The American Council for an Energy Efficient Economy uses 932 kWh/year as the consumption of a new standard electric clothes dryer. Average household size in the southern Railbelt is approximately 6% larger than the U.S. average. The electricity use of a residential clothes dryer is roughly proportional to household size, since very. few households have more than one clothes dryer. Making this adjustment gives a usage of 990 kWh/year. 95% of this electricity use is eliminated by conversion to gas (the motor of gas dryer consumes electricity). Thus, the electricity savings from conversion is 0.95 x 990 kWh/yr = 941 kWh/yr. Adjusting for distribution losses gives 941 kWh x 1.053 = 990 kWh/year of savings. From the LBL hourly load analysis (Ruderman, 1985), an electric clothes dryer has a load factor relative to the Railbelt system peak of about 59%. Thus, peak demand reduction is 990 kWh/yr / 8766 hrs/yr / 0.59 = 0.19 kW. Natural gas dryers burn the natural gas directly in the air that dries the clothing. There is no heat transfer loss between the combustion process and the final use of the heat. However, some of the energy released in combustion is unavailable for drying because it is manifested in the latent heat of the water vapor combustion products. Therefore, the efficiency of gas dryer relative to an electric dryer is approximately 85%, the 15% loss being the latent heat of the gas combustion products (and unburnt hydrocarbons). Gas pilot lights for dryers were eliminated by the National Appliance Energy Conservation Act of 1987, eliminating that additional source of loss. For each 1 kilowatt-hour of electricity saved at the appliance, 3,413/0.85 = 4,015 Btus of gas are required. Expressing this result per kWh at the input to the electrical distribution system: 4,015 x .95 = 3,810 Btu/kWh Saved. 2-47 2.8.3 Technology Costs The initial cost of the conversion is: Gas Piping within Residence: $250 Incremental Gas Dryer Cost: $40 Gas piping costs were determined from conversations with local plumbing and heating contractors. $250 represents an average of those residences that already have piping installed but not utilized to those residences where installing gas piping is difficult. For new residences, the gas piping is less expensive and frequently displaces the cost of a 230 volt electric dryer circuit. The $40 incremental cost for a gas dryer is the extra amount charged by Sears for the gas dryer version of any electric model in their line. The dryer conversion program is assumed to not affect the timing of dryer purchases, only the decision as to which type of dryer to buy. According to a 1980 report by MTSC, Inc., the average life of residential clothes dryers is 19 years. Their estimation was based on actual shipment and stock data for the U.S. We conservatively assign the same life to the gas piping, although it certainly lasts longer. We assume no maintenance costs differences between gas and electric dryers. 2.8.4 Program Costs The model assumes that everyone who purchases a gas dryer receives the incentive payment. All gas dryer purchasers receive the $50 gas dryer rebate. However, only those that install gas piping receive the $170 gas piping rebate. Since a substantial number of residence already use gas dryers or have the piping already installed (most of the free- riders already have gas piping), we assume that only half of the gas dryer purchasers get the gas piping rebate. Thus, the average rebate cost is $50 + 0.5x $170 = $135. Start-up costs are assumed to be $40,000, and ongoing administrative costs are assumed to be 15% of the annual budget, or $24 per rebate. The gas piping rebate portion of this program involves substantial interaction with plumbing and heating contractors. The Water Heater Conversion program also involves the same group of people. Thus, the administration of the two programs, if they both were pursued, would probably be combined. The dryer rebate component of this program also combines well with the other appliance rebate programs suggested here. 2 - 48 2.8.5 Participation Rates We assume that the eligible pool of participants consists of those dryer purchasers who have gas available in their residence. The figure below shows how the fraction of residences that are gas customers is expected to change over time. The 1987 fractions for each region are based on our residential end use survey. The initial change in the fraction (i.e. the slope of the curve in 1987) is based on the actual customer additions for 1987. The ultimate fraction (very distant future) is estimated from the electric heat conversion scenarios used in the residential load forecast. The difference between the 1987 fraction and the ultimate fraction is assumed to exponentially decay away. Gas Customer Fractions % of Residences 100% 90%F aaa — 0% L 1 L 1 1 —L—|_ {if 1 1 1987 1992 1997 2002 2007 Year —— Anchorage —— Mat-Su ——Kenai ~~ Average Figure 2-3 - Fraction of Residences that are Natural Gas Customers Although there are substantial regional variations, the southern Railbelt average stays relatively constant at about 80% over the period of concern because of the dominance of Anchorage in the weighting. Thus, of the households making dryer purchases, 80% have the ability to choose a gas dryer (although possibly requiring investment in within-residence gas piping). In the Market-Driven scenario, 32% of the total purchases are assumed to be gas dryers, which corresponds to 40% of the people able to purchase gas dryers, 32%/0.8. This is consistent with the residential end-use demand forecast. For the program scenario, 56% 2-49 of the purchases are assumed to be gas dryers, 70% of the potential. The total purchases of dryers over time were estimated by the residential load forecasting model, and include both the replacement of existing dryers and expansion of the total stock of dryers. The program is assumed to last 20 years. To determine the regional distribution of the program induced savings, the total household distribution across regions was weighted by the average Gas Customer Fraction during the program operation period (Anchorage = 90%, Mat-Su = 50%, Kenai = 50%). The resulting distribution of electricity savings is: Anchorage 84% Mat-Su 71% Kenai 9% Fairbanks 0% 2.8.6 Model Output TS - GAS DRYER REBATES Electricity Savings GWh/ Year 80 Levelized Electricty Savings 13 GWh/Year (20 Year, Net) “ Load Factor 59% 40 Net Resource Cost $9.3 Million, PV 20 32 mills/kWh Budgetary Cost $8 0 Million PV neat : 1993 1995 1907 1999 2001 2003 2006 2007 2009 28 mills/kWh “— Savings Type WME Market Driven KGnet Program Untapped Potential Net Resource Cost Budgetary Cost ($ Million, Present Value) ($ Million, Present Value) Initial 67% $6.2 Admin 16% $1.2 Y Program Admin 13% Incentive 84% $1.2 $6.8 Fuel 19% = $8.0 Million $9.3 Million 32 mills/kWh 28 mills/KWh GAS DRYER REBATE PROGRAM Unit = Dryer Incentive Payment $135 Busbar Savings: kWh Savings/Unit = 990 kWh/yr PROGRAM COSTS ($1000s) kW Savings/Unit = 0.190 kW Startup = 3 40 Htg Btus Consumed = 3,810 Btu/kWh Annual Fixed = Per Unit = 0.024 Initial Cost = $290 /unit Program Life = 20 Annual Maintenance = $0 /yr Lifetime = 19 yrs Discount Rate = 4.0% When Installed = Normal Rplcmnt New Construction Analysis Start = 1991 REGIONAL IMPACTS Anchorage 84% Mat-Su 7% Kenai 9% Fairbanks 0% HRKKKKKKKKKKKKKKKKKKKKK KKK KKK KKK KKK KKK KKK KKK KKK KKK KKK KKK RESULTS a) DISCOUNTED SUMS ----- 50 yr 20 yr ELECTRICITY SAVINGS (GWh) Market Driven 388 236 Gross Program 679 412 Technical Potential 969 589 Net Program 291 177 13.0 GWh/yr LOAD FACTOR = 59% NET RESOURCE COST ($1000s): Initial 6,236 67% Maintenance 0 0% Fuel La od 19% Program Admin 1,243 13% 9,260 32 mills/kWh BUDGETARY COST ($1000s) : Admin i243 16% Incentive 6,774 84% Nominal 22S Sum 8,017 28 mills/kWh 23914 Item Life = 19 years Starting Year = 1991 TOTAL PURCHASES = =—_ ==--=-- PARTICIPATION RATES ------ (1000s) Market Program Potential 1991 L. 77. 32.0% 56.0% 80.0% 1992 au 32.0% 56.0% 80.0% 1993 3.70 32.0% 56.0% 80.0% 1994 4.06 32.0% 56.0% 80.0% 1995 4.64 32.0% 56.0% 80.0% 1996 6.63 32.0% 56.0% 80.0% 1997 6.85 32.0% 56.0% 80.0% 1998 7.76 32.0% 56.0% 80.0% 1999 8.46 32.0% 56.0% 80.0% 2000 923.6 32.0% 56.0% 80.0% 2001 10.56 32.0% 56.0% 80.0% 2002 10.41 32.0% 56.0% 80.0% 2003 9.83 32.0% 56.0% 80.0% 2004 9.37 32.0% 56.0% 80.0% 2005 8.52 32.0% 56.0% 80.0% 2006 7.59 32.0% 56.0% 80.0% 2007 7.04 32.0% 56.0% 80.0% 2008 6.65 32.0% 56.0% 80.0% 2009 6.43 32.0% 56.0% 80.0% 2010 6.52 32.0% 56.0% 80.0% pS -T GAS DRYER REBATE PROGRAM MARKET-DRIVEN EFFECTS Particip. Units (1000s) Cumulative Units (1000s) GWh Savings MW Savings GROSS PROGRAM EFFECTS Particip. Units (1000s) Cumulative Units (1000s) GWh Savings MW Savings TECHNICAL POTENTIAL Particip. Units (1000s) Cumulative Units (1000s) GWh Savings MW Savings NET eae ECIECTS Particip. Units (1000s) Cumulative Units (1000s) GWh Savings MW Savings Initial Cost ($1000s) Maintenance Cost ($1000s) Heating Fuel Use (GBtu) Htg Fuel Price ($/MMBtu) Htg Fuel Cost ($1000s) PROGRAM COSTS ($1000s) Incentive Payments Total Admin Costs Startup Fixed Annual Per Unit Total Budgetary Cost Nominal Budgetary Cost NET peSoURce COosTS InitialsMaint+adnin ($1000s) Htg Fuel Use (GBtu) 1991 40 24 198 234 187 1.6 1992 245 302 229 4.1 1993 1. 25 0.89 2.0 2.0 0.38 258 7.4 1.38 10.3 280 50 50 330 425 307 7.4 1994 3.25 9.8 9.7 1.87 0.97 2.9 2.9 0.56 282 11.1 1.42 15.8 307 55 55 361 486 337 11.1 1995 2.60 OLS 9.4 1.80 1.11 4.1 4.0 0.77 323 15.3 1.45 22.2 351 62 62 413 581 385 1996 2.12 7.5 75 1.43 5.31 18.8 18.7 3.58 1.59 5.7 5.6 1.07 462 21.3 1.49 31.8 502 89 89 591 869 551 1997 518 92 92 610 1998 587 104 104 691 937 1,110 569 645 1999 639 114 114 753 1,264 702 2000 13.4 13.3 2.55 652 0 50.7 1.62 82.1 708 126 126 834 1,462 777 2001 8.45 53.2 52.7 10.12 2.53 16.0 15.8 3.03 735 0 60.2 1.66 100.0 798 142 142 940 1,723 877 2002 8.33 61.6 61.0 11.70 2.50 18.5 18.3 3.51 725 69.7 1.68 117.0 787 140 140 927 1,776 865 2003 7.87 69.4 68.7 15.19) 2.36 20.8 20.6 3.96 78.6 1.49 117.1 743 132 132 875 1,752 816 2004 3.00 30.8 30.5 5.85 5.25 53.9 53.3 10.23 7.50 76.9 76.2 14.62 2.25 23.1 22.8 4.39 652 87.1 1.50 2.05 25.1 24.9 4.77 593 94.8 1.52 2006 1.82 26.9 26.7 5.12 528 101.6 1.53 130.6 144.0 155.5 708 126 126 834 1,745 778 15.3 21.3 27.5 34.6 42.2 50.7 60.2 69.7 78.6 87.1 644 115 115 759 1,658 708 574 102 102 676 1,544 630 2007 2008 2009 2010 -73 3.60 3.65 5 74.1 76.8 -8 73.4 76.0 0 14.09 14.59 5.64 5.32 5.14 5.22 95.5 100.8 105.9 109.7 94.5 99.8 104.9 108.6 18.14 19.15 20.13 20.85 1.69 1.60 1.54 1.57 28.6 30.2 31.8 32.9 28.4 29.9 31.5 32.6 5.44 5.74 6.04 6.25 490 463 448 454 108.0 114.0 119.9 124.2 1.55 1.56 1.58 1.59 167.4 177.9 189.4 197.4 533 503 486 493 0 0 0 0 95 89 86 88 627 593 573 581 1,497 1,478 1,492 1,581 585 553 534 542 94.8 101.6 108.0 114.0 119.9 124.2 SS -7@ GAS DRYER REBATE PROGRAM 2011 2012 MARKET-DRIVEN EFFECTS Particip. Units (1000s) 0.00 0.00 Cumulative Units (1000s) 43.0 41.8 GWh Savings 42.6 41.4 MW Savings 8.17 7.95 GROSS PROGRAM EFFECTS Particip. Units (1000s) 0.00 0.00 Cumulative Units (1000s) 75.3 73.2 GWh Savings 74.5 72.5 MW Savings 14.30 13.91 TECHNICAL POTENTIAL Particip. Units (1000s) 0.00 0.00 Cumulative Units (1000s) 107.5 104.6 GWh Savings 106.4 103.5 MW Savings 20.43 19.87 NET PROGRAM EFFECTS Particip. Units (1000s) 0.00 0.00 Cumulative Units (1000s) 32.3 31.4 GWh Savings 31.9 31.1 MW Savings 6.13 5.96 Initial Cost ($1000s) 0 0 Maintenance Cost ($1000s) 0 0 Heating Fuel Use (GBtu) 121.7 118.3 Htg Fuel Price ($/MMBtu) 1.61 1.62 Htg Fuel Cost ($1000s) 195.4 191.9 PROGRAM COSTS ($1000s) Incentive Payments 0 0 Total Admin Costs 0 0 Startup Fixed Annual 0 0 Per Unit 0 0 Total Budgetary Cost 0 0 Nominal Budgetary Cost 0 0 NET RESOURCE COSTS Initial+Maint+Admin 0 0 ($1000s) Htg Fuel Use (GBtu) 121.7 118.3 2013 0.00 70.9 70.2 13.47 0.00 101.3 100.3 19.25 VinWo Pos =nRS = S oo= ekaood eco eco fo © 0 0.00 68.3 67.6 12.98 co eco fo © 0 2014 ° oo oo 0 2016 0 2017 _2018 2019 0 eco co fo oO 0 0.00 66.4 65.7 12.61 “MSss ye wo Wome aRuccCBNOS Sra N ° co co oo 0 114.6 110.4 104.4 98.2 91.2 83.6 75.1 2020 0.00 40.5 40.1 7.70 0.00 57.9 57.3 11.00 coo oo 0 65.5 2021 oo co 0 56.1 2022 2023 2024 2025 0.00 16.7 16.5 S217 0.00 8.5 8.4 1.62 0.00 0 23.9 1 23an) +) 4.55 3 Nomo Fawos 0.00 27.4 27.1 5.20 0.00 21.5 21.1 4.05 0.00 6.4 6.3 1.22 24.1 1.85 44.5 oo oo oo oo oo oo oo eco 0 0 0 0 47.2 38.7 31.0 24.1 2026 co oe oo 0 17.7 2027 oo oo 0 11.7 0.00 2.1 2.1 0.40 0.00 3.7 3.6 0.69 0. 30 5.9 1.90 11.2 coo oo 5.9 0.00 0.0 0.0 0.00 0.00 -0.0 -0.0 -0.00 -0.0 1.92 -0.0 ° eco oo -0.0 0.00 0.0 0.0 0.00 0.00 0.0 0.0 0.00 0.00 -0.0 -0.0 -0.00 -0.0 1.94 -0.0 oo oo -0.0 9S -7T Gas Dryer Rebate Program 990 kWh/yr per Unit I Annual Savings Equipment Life = 19 years Additional Htg Fuel = 3,810 Btu/(kWh Saved) Maintenance = 0.0 mills/(kWh Saved) Net Energy Savings (GWh) Program Life 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 | | 1 | 0.43 0.43 0.43 0.43 0.43 0.43 0.43 0.43 0.43 0.43 0.43 0.43 0.43 0.43 0.43 0.43 0.43 0.43 0.43 0.00 2 | 0.43 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 1.08 0.65 3 | 0.43 1.08 1.96 1.96 1.96 1.96 1.96 1.96 1.96 1.96 1.96 1.96 1.96 1.96 1.96 1.96 1.96 1.96 1.96 1.53 4 | 0.43 1.08 1.96 2.92 2.92 2.92 2.92 2.92 2.92 2.92 2.92 2.92 2.92 2.92 2.92 2.92 2.92 2.92 2.92 2.49 5 | 0.43 1.08 1.96 2.92 4.02 4.02 4.02 4.02 4.02 4.02 4.02 4.02 4.02 4.02 4.02 4.02 4.02 4.02 4.02 3.59 6 | 0.43 1.08 1.96 2.92 4.02 5.59 5.59 5.59 5.59 5.59 5.59 5.59 5.59 5.59 5.59 5.59 5.59 5.59 5.59 5.17 7 [| 0.43 1.08 1.96 2.92 4.02 5.59 7.22 7.22 7.22 7.22 7.22 7.22 7.22 7.22 7.22 7.22 7.22 7.22 7.22 6.79 8 | 0.43 1.08 1.96 2.92 4.02 5.59 7.22 9.06 9.06 9.06 9.06 9.06 9.06 9.06 9.06 9.06 9.06 9.06 9.06 8.63 9 | 0.43 1.08 1.96 2.92 4.02 5.59 7.22 9.06 11.07 11.07 11.07 11.07 11.07 11.07 11.07 11.07 11.07 11.07 11.07 10.64 10 | 0.43 1.08 1.96 2.92 4.02 5.59 7.22 9.06 11.07 13.30 13.30 13.30 13.30 13.30 13.30 13.30 13.30 13.30 13.30 12.87 1 | 0.43 1.08 1.96 2.92 4.02 5.59 7.22 9.06 11.07 13.30 15.80 15.80 15.80 15.80 15.80 15.80 15.80 15.80 15.80 15.37 12 [| 0.43 1.08 1.96 2.92 4.02 5.59 7.22 9.06 11.07 13.30 15.80 18.28 18.28 18.28 18.28 18.28 18.28 18.28 18.28 17.85 13 | 0.43 1.08 1.96 2.92 4.02 5.59 7.22 9.06 11.07 13.30 15.80 18.28 20.61 20.61 20.61 20.61 20.61 20.61 20.61 20.19 14 | 0.43 1.08 1.96 2.92 4.02 5.59 7.22 9.06 11.07 13.30 15.80 18.28 20.61 22.84 22.84 22.84 22.84 22.84 22.84 22.41 15 | 0.43 1.08 1.96 2.92 4.02 5.59 7.22 9.06 11.07 13.30 15.80 18.28 20.61 22.84 24.87 24.87 24.87 24.87 24.87 24.44 P 16 | 0.43 1.08 1.96 2.92 4.02 5.59 7.22 9.06 11.07 13.30 15.80 18.28 20.61 22.84 24.87 26.67 26.67 26.67 26.67 26.24 17 | 0.43 1.08 1.96 2.92 4.02 5.59 7.22 9.06 11.07 13.30 15.80 18.28 20.61 22.84 24.87 26.67 28.34 28.34 28.34 27.92 18 | 0.43 1.08 1.96 2.92 4.02 5.59 7.22 9.06 11.07 13.30 15.80 18.28 20.61 22.84 24.87 26.67 28.34 29.93 29.93 29.50 19 | 0.43 1.08 1.96 2.92 4.02 5.59 7.22 9.06 11.07 13.30 15.80 18.28 20.61 22.84 24.87 26.67 28.34 29.93 31.45 31.03 20 | 0.43 1.08 1.96 2.92 4.02 5.59 7.22 9.06 11.07 13.30 15.80 18.28 20.61 22.84 24.87 26.67 28.34 29.93 31.45 32.58 a, “8-7 Gas Dryer Rebate Program Net Energy Savings (GWh) Program Life | 2011 2012 2013 «2014 «2015. 2016) 2017, 2018 )9— 2019 2020. 2021 202202023 2024 2027 2028 «=62029 = 2030 nN ° nN a ny ° nN os 1 [| 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2 | 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 3 | 0.88 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 4 | 1.84 0.96 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 5 | 2.94 2.06 1.10 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 6 | 4.51 3.63 2.67 1.57 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 7 | 6.14 5.26 4.30 3.20 1.62 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 8 | 7.98 7.10 6.14 5.04 3.47 1.846 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 9 | 9.99 9.11 8.15 7.05 5.47 3.85 2.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 10 | 12.22 11.34 10.38 9.28 7.70 6.08 4.24 2.23 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1 | 14.72 13.84 12.88 11.78 10.21 8.58 6.74 4.73 2.50 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 12 | 17.20 16.32 15.35 14.26 12.68 11.06 9.22 7.21 4.98 2.48 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 13 | 19.53 18.65 17.69 16.59 15.02 13.39 11.55 9.54 7.32 4.81 2.34 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 14 | 21.76 20.88 19.92 18.82 17.25 15.62 13.78 11.77 9.54 7.04 4.56 2.23 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 15 | 23.79 22.91 21.95 20.85 19.28 17.65 15.81 13.80 11.57 9.07 6.59 4.26 2.03 0.00 0.00 0.00 0.00 0.00 0.00 0.00 16 | 25.59 24.71 23.75 22.65 21.08 19.45 17.61 15.60 13.37 10.87 8.40 6.06 3.83 1.80 0.00 0.00 0.00 0.00 0.00 0.00 17 [ 27.26 26.38 25.42 24.32 22.75 21.13 19.29 17.28 15.05 12.54 10.07 7.73 5.50 3.47 1.67 0.00 0.00 0.00 0.00 0.00 18 | 28.85 27.97 27.01 25.91 24.33 22.71 20.87 18.86 16.63 14.13 11.65 9.32 7.09 5.06 3.26 1.58 0.00 0.00 0.00 0.00 19 | 30.37 29.49 28.53 27.43 25.86 24.24 22.39 20.38 18.16 15.65 13.18 10.84 8.61 6.58 4.78 3.11 1.52 0.00 0.00 0.00 20 | 31.93 31.05 30.09 27.41 25.79 23.95 21.94 19.71 17.21 14.73 12.39 10.17 8.14 6.34 4.66 3.08 1.55 0.00 0.00 8 2.9 Efficient Refrigerator Rebate Program 2.9.1 Program Summary The Efficient Refrigerator Rebate Program would provide $50 rebates to purchasers of efficient refrigerators. The rebate would be paid directly to appliance dealers and would be available in all areas of the Railbelt. The rebate level is set slightly higher than the incremental efficiency cost in order to more markedly affect purchase decisions. A $50 rebate is still less than 10% of a typical refrigerator price. The National Appliance Energy Conservation Act of 1987 establishes relatively strict standards for refrigerator/freezer energy consumption, which will take effect in 1990. A 17 cubic foot automatic-defrost unit with a top-mounted freezer will be required to use less than 870 kWh/year, whereas the Railbelt stock average in 1987 was 1,100 kWh/year. The best mass-produced US manufactured unit available in this class in 1988 used 767 kWh/year (numerous prototypes, hand-made, and foreign-manufactured units use less than this). The number of current models below the 1990 standard is limited. However, engineering data from the appliance manufacturers used in setting the standard indicate that more efficient models could be produced at relatively low cost. The advantages of product diversification suggest that manufacturers will produce these more efficient models. In fact, the state of California has already adopted refrigerator standards to take effect in 1992 that are substantially more stringent than the national standards, 670 kWh/year for a typical 17 cubic foot model. Thus, there is sufficient evidence suggesting that a variety of refrigerator/freezer models that significantly exceed the national efficiency standard will be sold. 2.9.2 Energy Savings Capital cost versus electricity use data developed by Lawrence Berkeley Laboratory in conjunction with appliance manufacturers is presented in the table below. The data is used in the residential end-use load forecasting model, so represents reasonable expectations about the range of refrigerator efficiencies available in the early 1990s. The cost data was adjusted according to typical 1987 Railbelt refrigerator prices. The third and fourth columns calculate the average and marginal cost-of-conserved electricity for the sequence of efficiency improvements (4% real discount rate, 19 year life, 13 mills/kWh added for increased heating fuel use). The average CCE is with respect to the Standard refrigerator (approximately as efficient as the national appliance efficiency standard requires), and the marginal CCE is with respect to the model one step less efficient. When the marginal CCE exceeds the cost of supplying electricity, the efficiency step being evaluated is not cost-effective. As can be seen by the chart, for electricity supply costs found in the Railbelt, the movement to the 621 kWh/year model is the last efficiency step that is cost effective, and the rebate is set at this level. Assuming that the non-free-rider participants in the rebate program would have bought refrigerators which on average consume 10% less electricity than the standard, and they now buy refrigerators 3% less consumptive than the rebate level, the savings are: 870 2 - 58 kWh/yr x 0.97 = 182 INITIAL AVG MARGINAL kWh/year. Adjusting for USE COST CCE CCE distribution losses gives kWh/yr $ mills/kWh mills/kWh savings of: 182 kWh/year me x 1.053 = 192 Standard 863 866 -- -- 783 875 21.0 21.0 kwWh/year, 749 879 21.4 22.4 707 890 24.8 33.9 From the LBL hourly pebate 621 909 26.5 29.7 load analysis (Ruderman, 577 925 28.7 40.3 1985), a refrigerator load 522 979 38.1 87.1 factor relative to the 472 1,019 42.6 73.8 Railbelt utility system 433 1,050 45.5 74.5 peak is approximately 299 1,155 52.0 72.7 89%. Thus, peak load reduction from the table 2-2 - Refrigerator Electricity Use vs. Cost. Source: (isa EWih/von) 7 (RICE Lawrence Berkeley Laboratory, costs increased 5% for Railbelt. hrs/year) / 089 = 0.025 kW. The additional consumption of heating fuel because of the reduction in heat gain from the more efficient refrigerator is calculated as follows. Assume that the space where the refrigerator is located needs heat from the heating system for 70% of the hours in the year. The heat is produced with a 70% heating system efficiency. Therefore, each kilowatt- hour saved requires an additional heating fuel consumption of 3,413 Btu/kWh x 0.7 / 0.7 = 3,410 Btu/kWh saved. Adjusting this value to the input of the electrical distribution system gives: 3,410 Btu/kWh x 0.95 = 3,240 Btu/(kWh of Electricity Saved). 2.9.3 Technology Costs In the above table, the move from the 783 kWh/year model (about 10% less consumptive than the standard) to the 621 kWh/year model (about 2% less consumptive than the rebate level) costs $34 and saved 162 kWh/year. Adjusting this cost figure according to the expected savings of the rebate program: $34 x 182/162 = $38. It is assumed that no additional maintenance costs or savings are incurred from use of the efficient refrigerator. 2.9.4 Program Costs Start-up costs are assumed to be $30,000, and ongoing administration costs are $8.80 per rebate. 2.9.5 Participation Rates The program is assumed not to change the time-distribution of refrigerator purchases, i.e. 2-59 no early retirements are induced by the program. Since refrigerators have a more diverse set of characteristics than, for example, water heaters, it is more difficult to capture as much market share with a rebate program. For example, the efficient model qualifying for the rebate at the customer’s favorite appliance dealer may not have the desired type of ice maker. Under the program scenario, it is assumed that 45% of the refrigerator purchases will be for rebated models. Because the rebate level corresponds to a relatively high level of efficiency, it is assumed that only 5% of the refrigerator purchases in the Market-Driven scenario would have been this efficient. The total purchases of refrigerators over time were taken from the base case of the residential end-use load forecast. The regional distribution of energy savings is assumed to correspond to the distribution of refrigerator purchases: Anchorage 60.8% Mat-Su 9.6% Kenai 10.9% Fairbanks 18.8% 2.9.6 Model Output 19 > REFRIGERATOR REBATES Levelized Electricty Savings 6.1 GWh/Year (20 Year, Net) Load Factor 88% Net Resource Cost $4.3 Million, PV . 31 mills/kWh Budgetary Cost $3.5 Million, PV 25 mills/kWh Net Resource Cost ($ Million, Present Value) Initial 46% $2.0 Y Program Admin 13% $0.5 Fuel 41% $18 $4.3 Million 31 mills/kWh Electricity Savings GWh/ Year 80 1991 1993 1996 1997 1999 2001 2003 2006 2007 2009 Year Savings Type MMM Market Driven QNet Program £223 Untapped Potential Budgetary Cost ($ Million, Present Value) Admin 16% $0.5 Incentive 84% $2.9 $3.5 Million 25 mills/kKWh EFFICIENT REFRIGERATOR PROGRAM Unit = Busbar Savings: kWh Savings/Unit = kW Savings/Unit = Htg Btus Consumed = Initial Cost = Annual Maintenance = Lifetime = When Installed = REGIONAL IMPACTS Anchorage Mat-Su Kenai Fairbanks KEKKKKEKKEKKEKKEKKEKEKKEKEEKKKKEKKEKEKKEKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKR KKK KEE RESULTS ELECTRICITY SAVINGS (GWh) Market Driven Gross Program Technical Potential Net Program LOAD FACTOR = Refrigerat 192 0.025 3,240 kWh kW Btu $38 $o /un /yr 19 yrs Normal Rpl New Constr 60.8% 9.6% 10.9% 18.8% NET RESOURCE COST ($1000s): Initial Maintenance Fuel Program Admin BUDGETARY COST ($1000s): Admin Incentive 1,992 0 1,779 548 or Incentive Payment $50 /yr PROGRAM COSTS ($1000s) Startup = 30 /kWh Annual Fixed = Per Unit = 0.0088 it Program Life = 20 Discount Rate 4.0% cmnt uction Analysis Start 1991 SCOUNTED SUMS ----- 20 yr 10 94 208 83 6.1 GWh/yr 46% 0% 41% 13% 31 mills/kWh 16% 84% Nominal Sum 25 mills/kWh 10572 Item Life Starting Year = TOTAL PURCHASES (1000s) 19 years 1991 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% EFFICIENT REFRIGERATOR PROGRAM MARKET-DRIVEN EFFECTS Particip. Units (1000s) Cumulative Units (1000s) GWh Savings MW Savings GROSS PROGRAM EFFECTS Particip. Units (1000s) Cumulative Units (1000s) GWh Savings MW Savings TECHNICAL POTENTIAL Particip. Units (1000s) Cumulative Units (1000s) GWh Savings MW Savings NET PROGRAM EFFECTS Particip. Units (1000s) Cumulative Units (1000s) GWh Savings MW Savings Initial Cost ($1000s) Maintenance Cost ($1000s) Heating Fuel Use (GBtu) Htg Fuel Price ($/MMBtu) Htg Fuel Cost ($1000s) PROGRAM COSTS ($1000s) Incentive Payments Total Admin Costs Startup Fixed Annual Per Unit Total Budgetary Cost Nominal Budgetary Cost NET RESOURCE COSTS Initial+Maint+Admin ($1000s) Htg Fuel Use (GBtu) 1991 0.44 0.4 0.08 0.01 3.96 4.0 0.76 0.10 8.81 8.8 1.69 0.22 no alow FSSuN We Wane 3. 198 65 30 35 263 311 199 2.2 8.33 17.1 3.29 0.43 3.35 6.9 1.32 0.17 127 4.3 3.38 14.4 188 33 33 221 272 160 4.3 3.46 11.2 2.15 0.28 3.08 9.9 1.91 0.25 117 6.2 3.42 21.1 173 30 30 204 262 147 6.2 6.15 31.0 5.95 0.77 2.46 12.4 2.38 0.31 93 7.7 3.45 26.6 138 24 24 163 219 118 7.7 2.40 16.3 3.14 0.41 5.34 36.3 6.98 0.91 3.49 31.5 120 21 141 199 102 9.0 3. 38 0.44 116 10.9 3.52 38.5 172 30 202 297 146 10.9 3.43 23.2 4.46 0.58 7.62 51.6 9.91 1.29 3.05 20.6 3.96 0.52 116 12.8 3.56 45.7 172 30 30 202 310 146 12.8 8.33 59.9 11.51 1.50 3.33 24.0 4.60 0.60 127 14.9 3.59 53.6 187 33 33 220 354 160 14.9 1999 9.04 69.0 13.24 1.72 3.62 27.6 5.30 0.69 137 1752 3.63 62.2 203 36 36 239 401 173 17.2 pees @ wrral RaoiIRakR Nw =e N 217 38 255 448 185 4.32 35.8 6.87 0.89 164 22.2 3.70 82.3 243 43 286 523 207 0.54 5.0 0.96 0.13 4.83 45.1 8.65 1.13 10.73 100.1 19.23 2.50 4.29 40.1 7.69 1.00 163 24.9 3.74 93.1 242 43 43 284 544 206 0.55 5.6 1.07 0.14 10.94 111.1 21.33 2.78 4.38 44.4 8.53 1.11 166 27.6 3.77 104.3 246 43 43 290 579 210 2002 72003 2004 0.60 6.2 1.18 0.15 5.38 55.4 10.63 1.38 11.96 123.1 23.63 3.08 4.79 49.2 9.45 1.23 182 30.6 3.81 116.7 269 47 47 317 662 229 12.77 135.8 26.08 3.40 5.11 54.3 10.43 1.36 194 33.8 3.85 130.1 287 51 338 738 245 2005 12006 13.21 149.0 28.61 3.73 5.28 59.6 11.45 1.49 201 37.1 3.89 144.2 297 52 52 350 798 253 19.6 22.2 24.9 27.6 30.6 33.8 37.1 6.17 79.4 15.24 1.98 13.67 13.71 162.7 176.4 31.24 33.87 4.07 4.41 13.48 189.9 36.46 4.75 13.28 194.4 37.32 4.86 5.39 5.31 76.0 77.7 14.58 14.93 1.90 1.94 205 202 5.47 65.1 12.50 1.63 208 5.48 70.6 13.55 1.76 208 47.2 4.01 189.3 40.5 3.93 159.0 43.9 3.97 174.2 48.4 4.05 195.7 308 308 303 299 54 54 53 53 53 53 357 929 351 957 362 863 363 904 262 «263 «258 = 254 40.5 43.9 47.2 48.4 9-7 EFFICIENT REFRIGERATOR PROGRAM 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 MARKET-DRIVEN EFFECTS Particip. Units (1000s) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Cumulative Units (1000s) 9.3 8.9 8.6 ss | 6.0 |/17:6 ~ 7-2) (6.7 6.2 5.7 || 5.2) 6.6) 4.0 3.6 257 | 220 13027 (020) 0.0 GWh Savings 1.71 1.65 +53 (1.46 1.38 1.09 0.99 0.88 0.77 0.65 0.52 0.39 0.26 0.13 0.00 0.00 2 1. 1 1 1 0 MW Savings 0. 0.22 0.22 0.21 0.20 0.19 0.18 0. 0.14 0.13 0.12 0.10 0.08 0.07 0.05 0.03 0.02 0.00 0.00 Rai oe uy as GROSS PROGRAM EFFECTS Particip. Units (1000s) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Cumulative Units (1000s) 83.7 80.2 77.5 75.1 71.6 68.2 64.5 60.4 56.0 51.2 46.4 41.4 36.1 30.3 24.4 18.2 12.0 6.0 -0.0 -0.0 GWh Savings 16.07 15.41 14.88 14.41 13.75 13.10 12.38 11.60 10.76 9.83 8.90 7.96 6.92 5.82 4.68 3.50 2.31 1.15 -0.00 -0.00 MW Savings 2.09 2.01 1.94 1.88 1.79 1.71 1.61 1.51 1.40 1.28 1.16 1.04 0.90 0.76 0.61 0.46 0.30 0.15 -0.00 -0.00 TECHNICAL POTENTIAL Particip. Units (1000s) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Cumulative Units (1000s) 186.0 178.3 172.2 166.8 159.2 151.6 143.2 134.2 124.5 113.8 103.0 92.1 80.1 67.3 54.1 40.5 26.8 13.3 0.0 0.0 GWh Savings 35.72 34.24 33.06 32.03 30.57 29.10 27.50 25.77 23.91 21.84 19.78 17.68 15.38 12.93 10.39 7.77 5.14 2.55 0.00 0.00 MW Savings 4.65 4.46 4.30 4.17 3.98 3.79 3.58 3.36 3.11 2.84 2.58 2.30 2.00 1.68 1.35 1.01 0.67 0.33 0.00 0.00 NET PROGRAM EFFECTS Particip. Units (1000s) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Cumulative Units (1000s) 74.4 71.3 68.9 66.7 63.7 60.6 57.3 53.7 49.8 45.5 41.2 36.8 32.0 26.9 21.7 16.2 10.7 5.3 -0.0 -0.0 GWh Savings 14.29 13.70 13.22 12.81 12.23 11.64 11.00 10.31 9.57 8.74 7.91 7.07 6.15 5.17 4.16 3.11 2.06 1.02 -0.00 -0.00 MW Savings 1.86 1.78 1.72 1.67 1.59 1.52 1.43 1.34 1.25 1.14 1.03 0.92 0.80 0.67 0.54 0.40 0.27 0.13 -0.00 -0.00 Initial Cost ($1000s) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Maintenance Cost ($1000s) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Heating Fuel Use (GBtu) 46.3 44.4 42.8 41.5 39.6 37.7 35.6 33.4 31.0 28.3 25.6 22.9 19.9 16.8 13.5 10.1 6.7 3.3 -0.0 -0.0 Htg Fuel Price ($/MMBtu) 4.09 4.13 4.17 4.21 4.25 4.30 4.34 4.38 4.43 4.47 4.52 4.56 4.61 4.65 4.70 4.75 4.79 4.84 4.89 4.94 Htg Fuel Cost ($1000s) 189.2 183.2 178.6 174.8 168.5 162.0 154.7. 146.4 137.2 126.5 115.7 104.5 91.8 78.0 63.3 47.8 31.9 16.0 -0.0 -0.0 PROGRAM COSTS ($1000s) Incentive Payments 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Total Admin Costs 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Startup Fixed Annual 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Per Unit 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Total Budgetary Cost 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Nominal Budgetary Cost 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 NET RESOURCE COSTS Initial+Maint+Admin 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ($1000s) Htg Fuel Use (GBtu) 46.3 44.4 42.8 41.5 39.6 37.7 35.6 33.4 31.0 28.3 25.6 22.9 19.9 16.8 13.5 10.1 6.7 3.3 -0.0 -0.0 99 -Z Efficient Refrigerator Program 192 kWh/yr per Unit 19 years Annual Savings Equipment Life I Additional Htg Fuel 3,240 Btu/(kWh Saved) Maintenance = 0.0 mills/(kWh Saved) Net Energy Savings (GWh) life | 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1 | 0.68 0.68 0.68 0.68 0. 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.68 0.00 2 [|| O68)) ('1232:) 19232) | 9-32: | 232) | W232) | 1-32),) 1-32) 1232) | 1-32) |fzs2)) 4232 | 1332) | 1327) 4.32) 4:32) ) 4.32) | 4232! | 1.32) [0-64 3 | 0.68 1.32 1.91 1.91 1.91 1.91 1.91 1.91 1.91 1.91 1.91 1.91 1.97 1.91 1.91 1.91 1.91 1.91 1.91 1.23 4 | 0.68 1.32 1.91 2.38 2.38 2.38 2.38 2.38 2.38 2.38 2.38 2.38 2.38 2.38 2.38 2.38 2.38 2.38 2.38 1.70 3 | 0.68 1.32 1.91 2.38 2.79 2.79 2.79 2.79 2.79 2.79 2.79 2.79 2.79 2.79 2.79 2.79 2.79 2.79 2.79 2.11 6 | 0.68 1.32 1.91 2.38 2.79 3.38 3.38 3.38 3.38 3.38 3.38 3.38 3.38 3.38 3.38 3.38 3.38 3.38 3.38 2.70 7 | 0.68 1.32 1.91 2.38 2.79 3.38 3.96 3.96 3.96 3.96 3.96 3.96 3.96 3.96 3.96 3.96 3.96 3.96 3.96 3.29 8 | 0.68 1.32 1.91 2.38 2.79 3.38 3.96 4.60 4.60 4.60 4.60 4.60 4.60 4.60 4.60 4.60 4.60 4.60 4.60 3.93 9 [| 0.68 1.32 1.91 2.38 2.79 3.38 3.96 4.60 5.30 5.30 5.30 5.30 5.30 5.30 5.30 5.30 5.30 5.30 5.30 4.62 10 | 0.68 1.32 1.91 2.38 2.79 3.38 3.96 4.60 5.30 6.04 6.046 6.04 6.046 6.04 6.04 6.04 6.04 6.04 6.04 5.36 1 | 0.68 1.32 1.91 2.38 2.79 3.38 3.96 4.60 5.30 6.04 6.87 6.87 6.87 6.87 6.87 6.87 6.87 6.87 6.87 6.19 12 | 0.68 1.32 1.91 2.38 2.79 3.38 3.96 4.60 5.30 6.04 6.87 7.69 7.69 7.69 7.69 7.69 7.69 7.69 7.69 7.02 13 | 0.68 1.32 1.91 2.38 2.79 3.38 3.96 4.60 5.30 6.04 6.87 7.69 8.53 8.53 8.53 8.53 8.53 8.53 8.53 7.86 14 | 0.68 1.32 1.91 2.38 2.79 3.38 3.96 4.60 5.30 6.04 6.87 7.69 8.53 9.45 9.45 9.45 9.45 9.45 9.45 8.78 15 | 0.68 1.32 1.91 2.38 2.79 3.38 3.96 4.60 5.30 6.046 6.87 7.69 8.53 9.45 10.43 10.43 10.43 10.43 10.43 9.76 16 | 0.68 1.32 1.91 2.38 2.79 3.38 3.96 4.60 5.30 6.06 6.87 7.69 8.53 9.45 10.43 11.45 11.45 11.45 11.45 10.77 17 | 0.68 1.32 1.91 2.38 2.79 3.38 3.96 4.60 5.30 6.046 6.87 7.69 8.53 9.45 10.43 11.45 12.50 12.50 12.50 11.82 18 | 0.68 1.32 1.91 2.38 2.79 3.38 3.96 4.60 5.30 6.06 6.87 7.69 8.53 9.45 10.43 11.45 12.50 13.55 13.55 12.87 19 | 0.68 1.32 1.91 2.38 2.79. 3.38 3.96 4.60 5.30 6.06 6.87 7.69 8.53 9.45 10.43 11.45 12.50 13.55 14.58 13.91 20 | 0.68 1.32. 1.91 2.38 2.79 3.38 3.96 4.60 5.30 6.04 6.87 7.69 8.53 9.45 10.43 11.45 12.50 13.55 14.58 14.93 19->% Efficient Refrigerator Program Net Energy Savings (GWh) Program Life | 2011 2012 2013 «2014 +2015 §=2016 §=2017 2018 )=— 2019 2020-2021 «2022 2023 2024 «= 2025 2026) 2027 = 2028 2029 2030 1 | 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2 | 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 3 | 0.59 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 4 | 1.06 0.47 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 5 | 1.47 0.88 0.41 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 6 | 2.06 1.47 1.00 0.59 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 7 [| 2.65 2.06 1.58 1.17 0.59 0.00 0.00 0.00: 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 8 | 3.29 2.70 2.22 1.81 1.22 0.64 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 9 | 3.98 3.39 2.92 2.51 1.92 1.33 0.70 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 10 | 4.72 4.13 3.66 3.25 2.66 2.08 1.44 0.74 0.00 0.00 0.00 0.00 0.00 0.00. 0.00 0.00 0.00 0.00 0.00 0.00 11 | 5.55 4.96 4.49 4.08 3.49 2.90 2.27 1.57 0.83 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 12 | 6.38 5.78 5.31 4.90 4.31 3.73 3.09 2.39 1.65 0.82 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 13 | 7-22 6.63 6.15 5.74 5.16 4.57 3.93 3.24 2.49 1.66 0.84 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 14 | 8.14 7.55 7.07 6.66 6.07 5.49 4.85 4.15 3.41 2.58 1.76 0.92 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 15 | 9.12 8.53 8.05 7.64 7.06 6.47 5.83 5.14 4.39 3.57 2.74 1.90 0.98 0.00 0.00 0.00 0.00 0.00 0.00 0.00 16 | 10.13 9.54 9.07 8.66 8.07 7.48 6.84 6.15 5.41 4.58 3.76 2.91 1.99 1.01 0.00 0.00 0.00 0.00 0.00 0.00 17 | 11.18 10.59 10.12 9.71 9.12 8.53 7.90 7.20 6.46 5.63 4.81 3.96 3.05 2.06 1.05 0.00 0.00 0.00 0.00 0.00 18 | 12.23 11.64 11.17 10.76 10.17 9.59 8.95 8.25 7.51 6.68 5.86 5.02 4.10 3.12 2.10 1.05 0.00 0.00 0.00 0.00 19 [| 13.27 12.68 12.21 11.79 11.21 10.62 9.98 9.29 8.55 7.72 6.89 6.05 5.13 4.15 3.14 2.09 1.03 0.00 0.00 0.00 20 | 14.29 13.70 13.22 12.81 12.23 11.64 11.00 10.31 9.57 8.74 7.91 7.07 6.15 5.17 4.16 3.11 2.05 1.02 0.00 0.00 2.10 Efficient Freezer Rebate Program 2.10.1 Program Summary The Efficient Freezer Rebate Program would provide $50 rebates to purchasers of efficient freezers. The rebate would be paid directly to appliance dealers and would be available in all areas of the Railbelt. The National Appliance Energy Conservation Act of 1987 establishes relatively strict standards for freezer energy consumption, which will take effect in 1990. An average new freezer will consume about 670 kWh/year under the standard. As explained in the Efficient Refrigerator Rebate program, freezers exceeding the efficiency standard are likely to be sold in the 1990's. 2.10.2 Energy Savings Capital cost versus electricity use data for freezers (McMahon, 1988, Lawrence Berkeley Laboratory) are presented in the table below. The data is used in the residential end-use load forecasting model, so represents reasonable expectations about the range of freezer efficiencies available in early 1990’s. The cost data was adjusted according to typical 1987 Railbelt freezer prices. The second and _ third AVG MARGINAL columns calculate the USE COST CCE CCE average and marginal kWh/yr $ mills/kWh mills/kWh cost-of-conserved —— a electricity for the Standard 658 540.10 -- - sequence of efficiency 589 554.60 25 5/ 25.7 improvements (4% real a . A Br . > na . : discount rate, 19 year life, rebate 435 603.43 31.3 18.5 9.7 mills/kWh added for 425 605.96 31.2 28.9 additional heating fuel 384 618.54 31.5 33.1 use). The average CCE 273 704.00 42.1 68.3 is with respect to the Standard freezer (approximately as efficient as the national appliance’ efficiency standard requires), and the marginal CCE is with respect to the model one step less efficient. The rebate level is chosen to be the 435 kWh/year level. LLL EE TLD TT LT TT TL I EE Table 2-3 - Freezer Electricity Use vs. Cost. Source: Lawrence Berkeley Laboratory, costs increased 8% for Railbelt. Assuming that the non-free-rider participants in the rebate program would have bought freezers which use on average 10% less electricity than the standard, and they now buy freezers using 3% less than the rebate level, the savings are: 658 kWh/yr x 0.9 - 435 kWh/yr x 0.97 = 170 kWh/year. Adjusting for distribution losses gives savings of: 170 kWh/year x 1.053 = 179 kWh/year. 2 - 68 From the LBL hourly load analysis (Ruderman, 1985), a freezer load factor relative to the Railbelt utility system peak is approximately 102% (greater than 100% because its average power consumption is more than its power consumption during the Railbelt system peak). Thus, peak load reduction from the efficient freezer is: (192 kWh/year) / (8766 hrs/year) / 1.02 = 0.020 kw. The additional consumption of heating fuel because of the reduction in heat gain from the more efficient freezer is calculated as follows. Assume that the space where the freezer is located needs heat from the heating system for 50% of the hours in the year (this is a smaller fraction of the year than assumed for refrigerators because freezers are often located in semi-heated garages and basements. The heat produced with a 70% heating system efficiency. Therefore, each kilowatt-hour saved requires an additional heating fuel consumption of 3,413 Btu/kWh x 0.5 x 0.95 / 0.7 = 2,320 Btu/kWh saved. (The 0.95 translates the result to the input of the electrical distribution system). 2.10.3 Technology Costs In the above table, the move from the 589 kWh/year model (about 12% less consumptive than the standard) to the 425 kWh/year model (about 2% less consumptive than the rebate level) costs $51 and saves 164 kWh/year. Adjusting this cost figure according to the expected savings of the rebate program: $51 x 170/164 = $53. It is assumed that no additional maintenance costs or savings are incurred from use of the efficient freezer. 2.10.4 Program Costs Start-up costs are assumed to be $30,000, and ongoing administrative costs are $8.80/rebate. ~ 2.10.5 Participation Rates The program is assumed to not change the time-distribution of freezer purchases, i.e. no early retirements are induced by the program. Freezers exhibit less diversity than refrigerators, so a slightly higher market penetration for the freezer rebate program is assumed. Under the program scenario, it is assumed that 55% of the freezer purchases will be for rebated models. Because the rebate level corresponds to a relatively high level of efficiency, it is assumed that only 5% of the refrigerator purchases in the Market-Driven scenario would have been this efficient. The total purchases of freezers over time were taken from the base case of the residential end-use load forecast. The regional distribution of energy savings is assumed to correspond to the distribution of freezer purchases: Anchorage Mat-Su Kenai Fairbanks 2.10.6 Model Output 55.5% 12.6% 12.7% 19.2% TAG c FREEZER REBATES Levelized Electricty Savings (20 Year, Net) 4.0 GWh/Year Load Factor 102% Net Resource Cost $3.2 Million, PV 35 mills/kWh Budgetary Cost $2.5 Million, PV 27 mills/kWh Net Resource Cost ($ Million, Present Value) Initial 61% Fuel 26% $0.9 $3.2 Million 35 mills/kWh Program Admin 12% $0.4 80 60F 40 207 Electricity Savings GWh/ Year 19 91 1993 1996 199 1999 2001 2003 2006 2007 2009 Year Savings Type HB Market Driven MSS Net Program Untapped Potential Budgetary Cost ($ Million, Present Value) Admin 16% $0.4 Incentive 84% $2.1 $2.5 Million 27 mills/KWh EFFICIENT FREEZER PROGRAM Unit = Freezer Busbar Savings: kWh Savings/Unit = 179 kW Savings/Unit = 0.020 Htg Btus Consumed = 2,320 Initial Cost = $53 Annual Maintenance = $0 Lifetime = 19 When Installed = Normal New Con REGIONAL IMPACTS Anchorage 555s Mat-Su 12.6% Kenai 2 oe Fairbanks 19.2% KREKKKKKKKKKEKKKKKEKKKKKKKKEKKKKKK KKK KKKEKEKKKEKEKKKKKKEKKEKKKEKKKKKKKKKKKKEE = Incentive Payment $50 kWh/yr PROGRAM COSTS ($1000s) kW Startup = 30 Btu/kWh Annual Fixed = Per Unit = 0.0088 /unit Program Life = 20 /yr yrs Discount Rate = 4.0% Rplcemnt struction Analysis Start = 1991 RESULTS 50 yr ELECTRICITY SAVINGS (GWh) Market Driven 9 Gross Program 101 Technical Potential 184 Net Program 92 LOAD FACTOR = 102% NET RESOURCE COST ($1000s): Initial 1,997 Maintenance 0 Fuel 858 Program Admin 394 3,249 BUDGETARY COST ($1000s): Admin 394 Incentive 2,073 2,467 20 yr 5 60 109 55 61% 0% 26% 12% 35 mills/kWh 16% 84% 27 mills/kWh 4.0 GWh/yr Nominal Sum 7,537 Item Life = 19 years Starting Year = 1991 TOTAL : PURCHASES = =—- == ----- PARTICIPATION RATES ------ (1000s) Market Program Potential 1991 L715 5.0% 55.0% 100.0% 1992 2.02 5.0% 55.0% 100.0% 19938 2.68 5.0% 55.0% 100.0% 1994 SZ 5.0% 55.0% 100.0% 1995) 4.36 5.0% 55.0% 100.0% 1996 5.93 5.0% 55.0% 100.0% 1997 5.83 5.0% 55.0% 100.0% 1998 6.06 5.0% 55.0% 100.0% 1999 6.45 5.0% 55.0% 100.0% 2000 6.97 5.0% 55.0% 100.0% 2001 Tes 5.0% 55.0% 100.0% 2002 7.50 5.0% 55.0% 100.0% 2003 7350) 5.0% 55.0% 100.0% 2004 7.83 5.0% 55.0% 100.0% 2005 72.91 5.0% 55.0% 100.0% 2006 7.74 5.0% 55.0% 100.0% 2007 7.42 5.0% 55.0% 100.0% 2008 6.93 5.0% 55.0% 100.0% 2009 6.41 5.0% 55.0% 100.0% 2010 6.01 5.0% 55.0% 100.0% EFFICIENT FREEZER PROGRAM 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Particip. Units (1000s) 0.09 0.10 0.13 0.16 0.22 0.30 0.29 0.30 0.32 0.35 0.39 0.37 0.38 0.39 0.40 0.39 0.37 0.35 0.32 0.30 Cumulative Units (1000s) 0.1 0.2 0.3 0.5 0.7 1.0 1.3.1.6 1.9 2.3 2.7 3.0 3.4 3.8 4.2 4.6 4.9 5.3 5.6 5.8 GWh Savings 0.02 0.03 0.06 0.09 0.13 0.18 0.23 0.29 0.34 0.41 0.47 0.54 0.61 0.68 0.75 0.82 0.89 0.95 1.01 1.04 MW Savings 0.00 0.00 0.01 0.01 0.01 0.02 0.03 0.03 0.04 0.05 0.05 0.06 0.07 0.08 0.08 0.09 0.10 0.11 0.11 0.12 GROSS PROGRAM EFFECTS Particip. Units (1000s) 0.96 1.11 1.48 1.80 2.40 3.26 3.21 3.34 3.55 3.83 4.25 4.12 4.13 4.31 4.3! Cumulative Units (1000s) 1.0 2.1 3.5 5.3 7.7 11.0 14.2 17.5 21.1 24.9 29.2 33.3 37.4 41.7 46. GWh Savings 0.17 0.37 0.64 0.96 1.39 1.97 2.54 3.14 3.78 4.46 5.22 5.96 6.70 7.47 8. MW Savings 0.02 0.04 0.07 0.11 0.15 0.22 0.28 0.35 0.42 0.50 0.58 0.67 0.75 0. 5 4.26 4.08 3.81 3.52 3.31 1 50.3 54.4 58.2 61.8 64.1 5 9.01 9.74 10.43 11.06 11.48 2 1.01 1.09 1.16 1.24 1.28 TECHNICAL POTENTIAL Particip. Units (1000s) 1.75 2.02 2.68 3.27 4.36 5.93 5.83 6.06 6.45 6.97 7.73 7.50 7.50 7.83 7.91 7.74 7.42 6.93 6.41 6.01 Cumulative Units (1000s) 1.7 3.8 6.5 9.7 14.1 20.0 25.8 31.9 38.4 45.3 53.1 60.6 68.1 75.9 83.8 91.5 99.0 105.9 112.3 116.6 GWh Savings 0.31 0.68 1.16 1.74 2.52 3.58 4.63 5.71 6.87 8.11 9.50 10.84 12.18 13.58 15.00 16.39 17.71 18.95 20.10 20.86 MW Savings 0.03 0.08 0.13 0.19 0.28 0.40 0.52 0.64 0.77 0.91 1.06 1.21 1.36 1.52 1.68 1.83, 1.98 2.12 2.25 2.33 NET PROGRAM EFFECTS Particip. Units (1000s) 0.87 1.01 1.34 1.64 2.18 2.96 2.92 3.03 3.23 3.48 3.87 3.75 3.75 3.92 3.96 3.87 3.71 3.47 3.20 3.01 Cumulative Units (1000s) 0.9 1.9 3.2 4.9 7.0 10.0 12.9 16.0 19.2 22.7 26.5 30.3 34.0 37.9 41.9 45.8 49.5 52.9 56.2 58.3 8 0. GWh Savings 0.16 0.34 0.58 0.87 1.26 1.79 2.31 2.86 3.43 4.06 4.75 5.42 6.09 6.79 7.50 8.19 8.86 9.48 10.05 10.43 MW Savings 0.02 0.04 0.06 0.10 0.14 0.20 0.26 0.32 0.38 0.45 0.53 0.61 0.68 0.76 0.84 0.92 99 1.06 1.12 1.17 Initial Cost ($1000s) 46 54 71 87 115 157 155 161 «171 «185 205. 199199 208 «= 210 205) 197) 184 170 159 Maintenance Cost ($1000s) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Heating Fuel Use (GBtu) 0.44 0.8 1.3 2.0 2.9 4.2 5.4 6.6 8.0 9.4 11.0 12.6 14.1 15.8 17.4 19.0 20.5 22.0 23.3 24.2 Htg Fuel Price ($/MMBtu) 3.35 3.38 3.42 3.45 3.49 3.52 3.56 3.59 3.63 3.66 3.70 3.74 3.77 3.81 3.85 3.89 3.93 3.97 4.01 4.05 Htg Fuel Cost ($1000s) 1.2, 2.6 4.6 7.0 10.2 14.6 19.1 23.8 28.9 34.5 40.8 47.0 53.3 60.1 67.0 73.9 80.7 87.2 93.4 98.0 PROGRAM COSTS ($1000s) Incentive Payments 48 56 7% 90 120 163 160 167 177 192 213 206 206 215 218 213 204 191 176 165 Total Admin Costs 38 10 13 16 21 29 28 2a 34 37 36 360 38 OBO 3634 31 29 Startup 30 Fixed Annual 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Per Unit 8 10 13 16 21 29 28 29 31 34 37 36 36 38 38 37 36 34 31 29 Total Budgetary Cost 87 65 87 106 141 192 189 196 209 225 250 243 243 253 256 250 240 224 207 19% Nominal Budgetary Cost 102 81 112 142 198 282 290 315 350 395 458 464° 485 530 559 571 573 559 540 529 NET RESOURCE COSTS Initial+Maint+Admin 85 63 84 103 137 186 183 190 202 218 242 235 235 246 248 243 233 217 201 188 ($1000s) Htg Fuel Use (GBtu) 0.4 0.8 1.3 2.0 2.9 4.2 5.4 6.6 8.0 9.4 11.0 12.6 14.1 15.8 17.4 19.0 20.5 22.0 23.3 24.2 Siac EFFICIENT FREEZER PROGRAM Particip. Units (1000s) Cumulative Units (1000s) GWh Savings MW Savings GROSS PROGRAM EFFECTS Particip. Units (1000s) Cumulative Units (1000s) 63.0 11.28 GWh Savings MW Savings TECHNICAL POTENTIAL Particip. Units (1000s) Cumulative Units (1000s) 114.5 20.50 GWh Savings MW Savings NET PROGRAM EFFECTS Particip. Units (1000s) Cumulative Units (1000s) 57.3 10.25 GWh Savings MW Savings Initial Cost ($1000s) Maintenance Cost ($1000s) Heating Fuel Use (GBtu) Htg Fuel Price ($/MMBtu) 4.09 Htg Fuel Cost ($1000s) PROGRAM COSTS ($1000s) Incentive Payments Total Admin Costs Startup Fixed Annual Per Unit Total Budgetary Cost Nominal Budgetary Cost NET RESOURCE COSTS Initial+Maint+Admin ($1000s) Htg Fuel Use (GBtu) 2011 2012 2013 2014 0.00 5.7 1.03 0.11 0.00 5.2 4.9 0.93 0.10 0.00 5.6 1.00 0.11 0.00 5.4 0.97 0.11 0.00 0.00 61.5 11.01 10.69 10.26 1.23, 1.19 0.00 54.1 9.68 1.26 1.08 0.00 0.00 0.00 111.9 20.02 19.44 2.29 2.24 2.17 2. 0.00 0.00 0 55.9 54.3 52.1 10.01 9 1.15 1.12 1 0 0 0 0 23.8 23.2 4.13 4.17 97.2 95.9 eco eo oOo oe co eo oo co co fo Oo ee ee co oe 0 0 0 0 0 23.8 23.2 22.5 21.6 20.4 0.00 50.9 9.10 1.02 coo oo 19.2 0.00 47.5 8.51 0.95 Oonzro swe - oO no Yocc8e ys S co co fo oo 17.9 oxse Saos NFo we eco oc © @2Raoo co 0 16.6 2019 2020 2021 0.00 3.6 0.65 0.07 Sz oe Ronis Aaus ara Sie —Wnoo oo oe oe oo 0 15-2 0.00 3.3 0.58 0.07 0.00 35.9 6.42 0.72 13.6 0.00 57.8 10.34 1.16 0.00 28.9 5.17 0.58 12.0 4.52 54.2 co co 12.0 0.00 27.6 4.95 0.55 0.00 50.3 9.00 1.01 0.00 25.1 4.50 0.50 10.4 4.56 47.6 co co 10.4 0.00 235 4.18 0.47 0.00 42.4 7.59 0.85 4. 61 40.6 oo oo 8.8 2024 0.00 1.7 0.31 0.03 0.00 19.0 3.40 0.38 co co 7.2 etc 0.00 13.4 2.40 0.27 5.6 4.70 26.1 oo oo 5.6 ° os oO no st. 25 oo oo co 4.0 o-- 0.00 0. i" 0.01 0.00 6.8 1.22 0.14 0.00 12.4 2.22 0.25 — +S o New GR ha RSnRCON=NS co co oe coo 2.6 0.00 3.3 0.59 0.07 0.00 6.0 1.08 0.12 0.00 3.0 0.54 0.06 1.2 4.84 6.0 oo oo 1.2 0.00 0.0 0.00 0.00 0.00 0.0 0.00 0.00 0.00 0.0 0.00 0.00 0.0 4.89 0.0 co x) 0.0 0.00 0.0 0.00 0.00 0.00 0.0 0.00 0.00 0.00 0.0 0.00 0.00 0.0 4.94 0.0 coo oo 0.0 9L-T Efficient Freezer Program Annual Savings 179 kWh/yr per Unit Equipment Life = 19 years Additional Htg Fuel = 2,320 Btu/(kWh Saved) Maintenance = 0.0 mills/(kWh Saved) Net Energy Savings (GWh) 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 | | 1 | 0. 0.16 0.16 0.16 0.16 0.16 0.16 0.16 0.16 0.16 0.16 0.16 0.16 0.16 0.16 0.16 0.16 0.16 0.00 2 | 0.16 0.34 0.34 0.34 0.346 0.34 0.34 0.36 0.34 0.34 0.34 0.34 0.34 0.34 0.34 0.34 0.346 0.34 0.34 0.18 3 | 0.16 0.34 0.58 0.58 0.58 0.58 0.58 0.58 0.58 0.58 0.58 0.58 0.58 0.58 0.58 0.58 0.58 0.58 0.58 0.42 4 | 0.16 0.34 0.58 0.87 0.87 0.87 0.87 0.87 0.87 0.87 0.87 0.87 0.87 0.87 0.87 0.87 0.87 0.87 0.87 0.71 5 | 0.16 0.34 0.58 0.87 1.26 1.26 1.26 1.26 1.26 1.26 1.26 1.26 1.26 1.26 1.26 1.26 1.26 1.26 1.26 1.10 6 | 0.16 0.34 0.58 0.87 1.26 1.79 1.79 1.79 1.79 1.79 1.79 1.79 1.79 1.79 1.79 1.79 1.79 1.79 1.79 1.63 c | 0.16 0.34 0.58 0.87 1.26 1.79 2.31 2.31 2.31 2.31 2.31 2.31 2.31 2.31 2.31 2.31 2.31 2.31 2.31 2.16 8 | 0.16 0.34 0.58 0.87 1.26 1.79 2.31 2.86 2.86 2.86 2.86 2.86 2.86 2.86 2.86 .2.86 2.86 2.86 2.86 2.70 9 | 0.16 0.34 0.58 0.87 1.26 1.79 2.31 2.86 3.43 3.43 3.43 3.43 3.463 3.43 3.43 3.43 3.43 3.43 3.43 3.28 10 | 0.16 0.34 0.58 0.87 1.26 1.79 2.31 2.86 3.43 4.06 4.06 4.06 4.06 4.06 4.06 4.06 4.06 4.06 4.06 3.90 cn | 0.16 0.34 0.58 0.87 1.26 1.79 2.31 2.86 3.43 4.06 4.75 4.75 4.75 4.75 4.75) 4.75 4.75) 4.75 4.75459 12 | 0.16 0.34 0.58 0.87 1.26 1.79 2.31 2.86 3.43 4.06 4.75 5.42 5.42 5.42 5.42 5.42 5.42 5.42 5.42 5.26 13 [| 0.16 0.346 0.58 0.87 1.26 1.79 2.31 2.86 3.43 4.06 4.75 5.42 6.09 6.09 6.09 6.09 6.09 6.09 6.09 5.94 14 | 0.16 0.34 0.58 0.87 1.26 1.79 2.31 2.86 3.43 4.06 4.75 5.42 6.09 6.79 6.79 6.79 6.79 6.79 6.79 6.64 15 | 0.16 0.34 0.58 0.87 1.26 1.79 2.31 2.86 3.43 4.06 4.75 5.42 6.09 6.79 7.50 7.50 7.50 7.50 7.50 7.35 16 | 0.16 0.34 0.58 0.87 1.26 1.79 2.31 2.86 3.43 4.06 4.75 5.42 6.09 6.79 7.50 8.19 8.19 8.19 8.19 8.04 17 | 0.16 0.34 0.58 0.87 1.26 1.79 2.31 2.86 3.43 4.06 4.75 5.42 6.09 6.79 7.50 8.19 8.86 8.86 8.86 8.70 18 | 0.16 0.34 0.58 0.87 1.26 1.79 2.31 2.86 3.43 4.06 4.75 5.42 6.09 6.79 7.50 8.19 8.86 9.48 9.48 9.32 19 | 0.16 0.34 0.58 0.87 1.26 1.79 2.31 2.86 3.43 4.06 4.75 5.42 6.09 6.79 7.50 8.19 8.86 9.48 10.05 9.90 20 | 0.16 0.34 0.58 0.87 1.26 1.79 2.31 2.86 3.43 4.06 4.75 5.42 6.09 6.79 7.50 8.19 8.86 9.48 10.05 10.44 Efficient Freezer Program Net Energy Savings (GWh) Program Life | 2011 2012 2013 «2014 «2015 «2016 «2017 2018)» 2019-2020. 20212022) 2023 2024 += 2025 2026 = 2027 2028 = 2029 2030 | =: == 222! =: ==: 1 | 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2 | 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 5 | 0.24 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 4 | 0.53 0.29 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 5 | 0.92 0.68 0.39 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 6 | 1.45 1.21 0.92 0.53 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 7 | 1.98 1.74 1.44 1.05 0.52 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 8 | 2.52 2.28 1.99 1.59 1.07 0.54 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 9 | 3.10 2.86 2.56 2.17 1.64 1.12 0.58 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 to 10 | 3.72 3.48 3.19 2.80 2.27 1.74 1.20 0.62 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 ' 1 [| 4.41 4.17 3.88 3.49 2.96 2.44 1.89 1.32 0.69 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 =] 12 | 5.08 4.846 4.55 4.16 3.63 3.11 2.57 1.99 1.36 0.67 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 13 | 5.75 5.51 5.22 4.83 4.30 3.78 3.24 2.66 2.06 1.34 0.67 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 14 | 6.46 6.22 5.92 5.53 5.00 4.48 3.94 3.36 2.74 2.04 1.37 0.70 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 15 | 7.17 6.93 6.63 6.24 5.71 5.19 4.65 4.07 3.45 2.75 2.08 1.41 0.71 0.00 0.00 0.00 0.00 0.00 0.00 0.00 16 | 7.86 7.62 7.32 6.93 6.40 5.88 5.34 4.76 4.14 3.45 2.77 2.10 1.40 0.69 0.00 0.00 0.00 0.00 0.00 0.00 17 | 8.52 8.28 7.99 7.60 7.07 6.55 6.00 5.43 4.80 4.11 3.44 2.77 2.07 1.36 0.66 0.00 0.00 0.00 0.00 0.00 18 | 9.14 8.90 8.61 8.22 7.69 7.17 6.62 6.05 5.42 4.73 4.06 3.39 2.69 1.98 1.29 0.62 0.00 0.00 0.00 0.00 19 | 9-72 9.48 9.18 8.79 8.26 7.74 7.20 6.62 6.00 5.30 4.63 3.96 3.26 2.55 1.86 1.19 0.57 0.00 0.00 0.00 20 | 10.25 10.02 9.72 9.33 8.80 8.28 7.74 7.16 6.54 5.84 5.17 4.50 3.80 3.09 2.40 1.73 1.11 0.54 0.00 0.00 2.11 Fluorescent Lamp Rebate Program 2.11.1 Program Summary The Fluorescent Lamp Rebate Program would provide dealer rebates ranging from $0.30 to $5.00 for each energy-efficient fluorescent lamp purchased. The size of the rebate would be determined both by the size of the lamp and the improvement of efficacy with respect to a standard lamp of the same type. Efficacy is the ratio of the lamp light output (lumens) to the lamp power consumption (Watts). Rebate amounts for some common lamp sizes are presented in the table below. The rebate levels were chosen to be large enough to affect purchasers’ decisions and are about equal to the full incremental cost of some of the most economical efficient lamps. These rebate amounts are calculated from the formula: Rebate Amount ($) = (1-E,/E,) x F where, E, = Efficacy of standard lamp of same size (lumens/Watt) E, = Efficacy of efficient lamp (lumens/Watt) F = $12 for 4-foot Rapid Start Lamps and 8-foot Instant Start Lamps (F would have other values for the other types of fluorescent lamps) POWER EFFICACY COST REBATE LAMP TYPE W lumen/W $/lamp $/lamp 40 Watt Cool White 4' Rapid Start 40 78. SNNNIS22 2ONNIIISOL00 34 Watt Cool White 4' Rapid Start 34 80.9 $3.10 $0.32 34 Watt Lite White 4' Rapid Start 34 86.0 $3.30 $1.02 32 Watt Lite White 4' Rapid Start 32 91.4 $3.80 $1.66 40 Watt Advantage X 4’ Rapid Start 40 92.5 $7.80 S178 75 Watt Cool White 8' Instant Start 1D 84.0 $5.60 $0.00 60 Watt Cool White 8’ Instant Start 60 91.7 $6.52 $1.01 60 Watt Lite White 8’ Instant Start 60 97.05) $6.94 $1.66 Table 2-4 - Rebate levels for various energy-efficient lamps. Costs are Sylvania list prices, except the Advantage X lamp, which is a Phillips lamp. An important feature of this type of rebate structure is that it pays rebates for high-efficacy lamps that have the same power consumption as the equivalent standard lamp. For example, the 40 Watt Advantage X lamp (Philips) uses the same amount of power as a standard 40 Watt lamp, but its light output is 17.5% higher, thus resulting in higher efficacy. A simple one for one replacement with these lamps would result in no energy savings, only increased light levels. However, these lamps are valuable energy-savers in some situations, because their increased light output can make delamping possible (i.e. the net removal of some of the lamps in a building) or can allow the use of fewer fixtures in new buildings or remodel jobs. The Frontier building in Anchorage recently used increased light output lamps (not the above mentioned model) in a 2-to-1 delamping project. The lamps higher- than-standard light output and their improved color rendition sufficiently compensated for 2-78 the loss of light from delamping. Thus, it is beneficial to encourage the use of this type of lamp with rebates. 2.11.2 Energy Savings To calculate the savings from use of energy-efficient fluorescent lamps, we assume that the applications are of three types (% of total lighting power affected given in parentheses) : substitutions of 34 Watt 4-foot lamps for 40 Watt lamps (52%) substitutions of 32 Watt 4- foot lamps for 40 Watt lamps (35%) and substitutions of 60 Watt 8-foot lamps for 75 Watt lamps (13%). The relative split between 4-foot and 8-foot lamps is roughly consistent with national sales data (weighted by lamp life) for these lamps. We conservatively do not count any savings from delamping made possible by increased-light output lamps. The table below gives the before and after power consumption for each of the applications and the estimated kWh/year savings based on 4,050 hours/year of operation. The average operation time was estimated from analysis of our onsite survey of ~130 commercial establishments. This is consistent with other surveys nationwide (a field survey in the territory of Houston Lighting & Power Company found an average on-time of 5,480 hours/year in the commercial sector--other surveys tend to show less hours than this). The savings per fixture are converted to a savings per 1,000 square feet of commercial floor area, the unit of analysis for this program. This conversion is based on an estimated 1.74 Watts of fluorescent lighting per square foot of commercial floorstock.* After weighting by the relative occurrence of each application in the Railbelt, an average of 1,060 kWh/yr per 1,000 square feet of floor area is calculated. Computer building use simulations by Adams, Morgenthaler Company, on contract to ISER, showed that a 1 kWh reduction in lighting typically results in a 0.033 kWh reduction in ventilation and air-conditioning electricity use in Alaskan commercial buildings (more reduction would be shown for new buildings because downsizing of the cooling and ventilation would be possible). Making this adjustment and adjusting for distribution losses: 1,060 kWh/yr x 1.033 x 1.053 = 1,150 kWh/year per 1,000 square feet of floor area. For an average building that operates 4,050 hours/year, the demand reduction while the lights are on is 1,150 kWh/yr / 4,050 hrs/yr = 0.284 kW. During the Railbelt system peak period, the probability that a commercial building’s lights are on is about 95%, so the peak savings are 0.284 kW x 0.95 = 0.27 kW. The savings derived from low-wattage lamps cannot be predicted from wattage rating of the lamp alone. Actual conditions within a fixture, especially temperature, affect energy use. The figures in the table are meant to reflect savings resulting from operation in typical fixtures. The savings in the table are based on operation with standard ballasts, which make up over 90% of the ballasts used in the Railbelt. As the stock of ballasts is replaced over time, the National Appliance Energy Conservation Act of 1987 has ensured that only energy-efficient =the commercial end-use forecast estimates 724 GWh/year of lighting energy use in the commercial sector. Our onsite commercial survey estimates that 96% of that is interior lighting and 84% of the interior lighting is fluorescent, 584 GWh/year. With an annual operation time of 4,050 hours/year, this translates to 144,000 kW of commercial fluorescent lighting. Given 82.7 million square feet of commercial space in the Railbelt, the fluorescent lighting power density is 1.74 Watts/ft2. 2-79 PRE POST SAVINGS @ SAVINGS WEIGHTED POWER POWER SAVINGS 4050 h/yr FIXTURES /1000 ft2 % OF SAVINGS 4-Lamp 4! Troffer 40 to 34 Watt LW 176 = 153 23 93 9.89 921 52% 479 4-Lamp 4! Troffer 40 to 32 Watt LW 176 145 31 126 9.89 1,241 35% G34 2-Lamp 8' Strip 75 to 60 Watt LW 177 148 29 117 9.83 1,155 /1000 ft2 Table 2-5 - Energy Savings of Energy-Efficient Fluorescent Lamps. Savings based on measurements by Lithonia Lighting, XO Laboratories, and Analysis North. core/coil ballasts will be used. The energy-efficient lamp conversion with these ballasts does not result in substantially different absolute savings (kWh/year), so the above calculation remains valid. The computer building energy simulations also showed that 1,700 Btus of additional heating fuel were required on average for each 1 kWh reduction in lighting energy use. Adjusting this figure so that it applies to the input of electrical distribution system: 1,700 x 0.95 = 1,620 Btu/kWh of savings. This figure will be used in subsequent commercial sector program analyses. 2.11.3 Technology Costs CONVERT CONVERT WEIGHTED COsT FIXTURES Cost % OF CONVERT FIXTURE LAMP CONVERSION $/Fixture /1000 ft2 $/1000 ft2 APPLIC cost 4-Lamp 4' Troffer 40 to 34 Watt LW $4.48 9.89 $44.31 52% $23.04 4-Lamp 4' Troffer 40 to 32 Watt LW $9.45 9.89 $93.46 35% $32.71 2-Lamp 8' Strip 75 to 60 Watt LW $3.89 9.83 $38.24 13% $4.97 $60.72 /1000 ft2 AAT TTL OC ALT EET LLL LIN POT TTT TE a a a TPT Tit SARTO RAT Table 2-6 - Efficient Fluorescent Lamp Conversion Costs. Based on Lite-White lamp phosphor. Life of 32 Watt lamps assumed to be 13% less than 40/34 W lamps. Table 2-6 shows the costs of the most common lamp conversions that would occur under this rebate program. The "Convert Cost" is the additional cost of the efficient lamps for the indicated fixture. For example, for the 40 to 34 Watt conversion, The "Convert Cost" is $1.12 x 4, because $1.12 is the extra cost of a Lite-White 34 Watt lamp relative to the standard 40 Watt Cool-White lamp. For the 40 to 32 Watt conversion and the 75 to 60 Watt 8 foot conversion, cost adjustments were made to make the figures comparable to the nominal 20,000 operating hour life of a standard 4-foot lamp. 32 Watt lamps were assumed to have a 17,500 hour life (average of GE and Sylvania published lives), and both 75 and 2 - 80 60 Watt 8-foot lamps were assumed to have 12,000 hour lives. The conversion costs were then expressed per 1,000 feet of commercial floor area, the unit of analysis for this efficiency program. Weighting by the relative occurrence of these applications gives a technology cost of $61 per 1,000 square feet of floor area converted. As stated in the previous paragraph, this cost is calibrated to a 20,000 hour lamp life. With 4,050 hours/year of use, this lamp life corresponds to a 5 year technology life. No additional maintenance costs or savings are attributable to the efficient lamps. 2.11.4 Program Costs UNADJ ADJ REBATE WEIGHTED REBATE REBATE FIXTURES cost % OF REBATE FIXTURE LAMP CONVERSION $/Fixture $/Fixture /1000 ft2 $/1000 ft2 APPLIC cost 4-Lamp 4' Troffer 40 to 34 Watt LW $4.08 $4.08 9.89 $40.35 52% $20.98 4-Lamp 4' Troffer 40 to 32 Watt LW $6.64 $7.57 9.89 $74.87 35% $26.20 2-Lamp 8' Strip 75 to 60 Watt LW $3.32 $4.81 9.83 $47.28 13% $6.15 $53.33 /1000 ft2 Table 2-7 - Calculation of Rebate per 1,000 Square Feet of Lighting Converted Table 2-7 shows how rebate amounts are calculated per 1,000 square feet of floor area. Using the 40 Watt to 34 Watt conversion as an example, the "Unadj Rebate" is the rebate for 4 34 Watt Lite-White lamps, 4 x $1.02. The "Adj Rebate" amount increases this cost by a factor of 1.14 because the 32 Watt lamps are assumed to last only 17,500 hours instead of the standard 20,000 hours. This adjusted rebate is expressed per 1,000 square feet of floor area and then weighted by the expected occurrence of the conversion in the Railbelt. The result of the calculation shows that the lamp rebates, on average, cost $53 per 1,000 square feet of converted lighting. Program start-up costs are assumed to be $40,000, and ongoing administrative costs are $9.40 per 1,000 square feet. 2.11.5 Participation Rates Our onsite commercial survey indicated that about 20% of the fluorescent lamps currently in use were energy-efficient. A canvass of local electrical distributors indicated a range of 2% - 25% for the share of current sales. Energy-saver lamps have been in existence for about 10 years, and the market share has not been changing rapidly according to the local GE lighting representative. The national market share is about 31% and ranges over 50% in areas with high electric costs or standards requiring their use. We assume a linear growth in market share from 20% in 1987 to 40% in 2010 in the Market-Driven Scenario. Since the rebates eliminate most or all of the cost differential between the efficient lamps 2-81 and standard lamps, we assume that a relatively high rate of participation is achieved in the Program scenario, 70% of sales. The rebate program is assumed to be applicable to normal lamp replacements in existing buildings and lamps installed in newly constructed buildings. A stock/flow model based on 5 year lamp replacement cycles, the current age-distribution of commercial buildings, and projected additions to the commercial building floorstock is used to calculate lamp replacements. The rebate program is applicable to replacement lamps and lamps installed during new construction. A stock/flow model of the commercial floorstock was used to estimate ballast sales based on new additions to commercial floorstock and a 5 year life for lamps in existing buildings. The number of lamps per 1,000 square feet of new commercial floorstock was assumed to be 20% less than the existing stock, because of improvements in fixture efficiency and higher light output lamps. We assume the savings are distributed across regions according to the distribution of commercial floor stock: Anchorage: 67.3% Mat-Su: 5.9% Kenai: 10.8% Fairbanks: 15.9% 2.11.6 Model Output Fluorescent Lamp Rebates Levelized Electricty Savings 38 GWh/Year (20 Year, Net) Load Factor 49% Net Resource Cost 11.4 Million, PV 21 mills/kWh Budgetary Cost 11.2 Million, PV 20 mills/kWh Net Resource Cost ($ Million, Present Value) Initial 56% £8 Program Admin 15% $17 Fuel 29% $3.3 $11.4 Million 21 mills/kWh Electricity Savings Savings Type Budgetary Cost ($ Million, Present Value) $11.2 Million 20 mills/kWh Admin 15% $1.7 FLUORESCENT LAMP REBATE PROGRAM Unit = 1,000 ft2 Incentive Payment $53 Busbar Savings: kWh Savings/Unit = 1,150 kWh/yr PROGRAM COSTS ($1000s) kW Savings/Unit = 0.270 kw Startup = 40 Htg Btus Consumed = 1,620 Btu/kWh Annual Fixed = Per Unit = 0.0094 Initial Cost = $61 /unit Program Life = 20 Annual Maintenance = $0 /yr Lifetime = 5 yrs Discount Rate = 4.0% When Installed = Normal Rplcmnt New Construction Analysis Start = 1991 REGIONAL IMPACTS Anchorage 67.3% Mat-Su 5.9% Kenai 10.8% Fairbanks 15.9% KREKKKKKEKKKRKKRKKKKKKKKKKKKK KKK RESULTS ----- DI 50 yr ELECTRICITY SAVINGS (GWh) Market Driven 399 Gross Program 952 Technical Potential 1,360 Net Program 553 LOAD FACTOR = 49% NET RESOURCE COST ($1000s) : Initial 6,341 Maintenance 0 Fuel 3, Bad, Program Admin 1,720 11,381 BUDGETARY COST ($1000s): Admin 1,720 Incentive 9,480 11,199 KReKKKKKKKKKKKKKKKKKKKK KKK KK KKK KEK SCOUNTED SUMS ----- 20 yr 355) 873 a7 518 38.1 GWh/yr 56% 0% 29% 15% 21 mills/kWh 15% 85% Nominal sum 20 mills/kWh 32129 Item Life = 5 years Is New Constr. Eligible? ¥ New Constr. Density Adjustment 80% Starting Year = 1991 FLOORSTOCK ------ PARTICIPATION RATES ------ ADDITIONS Market Program Potential 1991 0.50 20.0% 70.0% 100.0% 1992 1.32 21.1% 70.0% 100.0% 1993 1.70 22.1% 70.0% 100.0% 1994 2.60 23.2% 70.0% 100.0% 1995 2ue2 24.2% 70.0% 100.0% 1996 1.74 25.3% 70.0% 100.0% 1997 1.84 26.3% 70.0% 100.0% 1998 Zeolr 27.4% 70.0% 100.0% 1999 2.86 28.4% 70.0% 100.0% 2000 Zi a 29.5% 70.0% 100.0% 2001 2.36 30.5% 70.0% 100.0% 2002 2.44 31.6% 70.0% 100.0% 2003 2.30 32.6% 70.0% 100.0% 2004 3.05 33.7% 70.0% 100.0% 2005 3.34 34.7% 70.0% 100.0% 2006 3.56 35.8% 70.0% 100.0% 2007 3.96 36.8% 70.0% 100.0% 2008 3.92 37.9% 70.0% 100.0% 2009 4.03 38.9% 70.0% 100.0% 2010 3.89 40.0% 70.0% 100.0% FLUORESCENT LAMP REBATE PROGRAM 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 MARKET-DRIVEN EFFECTS Particip. Units (1000s) 2.9 3.2 3.4 4.7 5.0 3.9 4.3 4.6 63 65 5.1 5.5 5.9 8.0 8.1 66 7.1 7.6 10.0 9.8 Cumulative Units (1000s) 2.9 6.1 9.5 14.2 19.3 20.3 21.3 22.5 24.1 25.6 26.7 28.0 29.2 30.9 32.5 34.0 35.6 37.4 39.3 41.1 GWh Savings 3.4 7.0 10.9 16.4 22.2 23.3 24.5 25.9 27.7 29.4 30.7 32.1 33.6 35.5 37.4 39.1 41.0 43.0 45.2 47.2 MW Savings 0.79 1.65 2.57 3.85 5.20 5.47 5.75 6.08 6.51 6.90 7.22 7.55 7.89 8.34 8.77 9.17 9.62 10.09 10.62 11.09 GROSS PROGRAM EFFECTS Particip. Units (1000s) 10.2 10.7 10.7 14.3 14.5 10.8 11.3 11.8 15.5 15.4 11.7 12.1 12.6 16.6 16.3 12.8 13.6 14.1 17.9 17.1 Cumulative Units (1000s) 10.2 20.9 31.6 45.9 60.4 61.1 61.7 62.7 64.0 64.9 65.7 66.5 67.3 68.4 69.2 70.4 71.8 73.4 74.6 75.5 GWh Savings 11.7 24.0 36.3 52.8 69.5 70.2 71.0 72.1 73.6 74.6 75.5 76.5 77.4 78.7 79.6 81.0 82.6 84.4 85.8 86.8 MW Savings 2.76 5.64 8.53 12.39 16.32 16.49 16.66 16.94 17.27 17.51 17.73 17.95 18.18 18.47 18.70 19.02 19.40 19.80 20.15 20.39 TECHNICAL eee Particip. Units (1000s) 14.6 15.2 15.3 20.4 20.7 15.5 16.2 16.8 22.2 22.0 16.7 17.3 18.0 23.7 23.2 18.3 19.4 20.1 25.6 24.5 Cumulative Units (1000s) 14.6 29.8 45.1 65.6 86.3 87.2 88.2 89.6 91.4 92.6 93.8 95.0 96.2 97.7 98.9 100.6 102.6 104.8 106.6 107.9 GWh Savings 16.8 34.3 51.9 75.4 99.3 100.3 101.4 103.1 105.1 106.5 107.9 109.2 110.6 112.4 113.8 115.7 118.0 120.5 122.6 124.0 MW Savings 3.94 8.05 12.19 17.71 23.31 23.55 23.80 24.20 24.68 25.01 25.33 25.65 25.97 26.38 26.71 27.17 27.71 28.29 28.78 29.12 NET PROGRAM EFFECTS Particip. Units (1000s) 7.29 7.46 7.34 9.58 9.50 6.93 7.06 7.16 9.24 8.92 6.57 6.66 6.72 8.62 8.19 6.27 6.42 6.46 7.94 7.34 Cumulative Units (1000s) 7.3 14.7 22.1 31.7 41.2 40.8 40.4 40.2 39.9 39.3 38.9 38.5 38.1 37.5 36.8 36.5 36.2 36.0 35.3 34.4 8 GWh Savings 4 17.0 25.4 36.4 47.3 46.9 46.5 46.3 45.9 45.2 44.8 44.3 43.8 43.1 42.3 41.9 41.7 41.4 40.6 39.6 MW Savings 1.97 3.98 5.96 8.55 11.11 11.02 10.91 10.86 10.77 10.61 10.51 10.41 10.29 10.12 9.93 9.84 9.78 9.71 9.53 9.30 Initial Cost ($1000s) 445 455 447 584 579 422 431 437 563 544 401 406 410 526 499 383 392 394 484 448 Maintenance Cost ($1000s) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Heating Fuel Use (GBtu) 13.6 27.5 41.1 59.0 76.7 76.0 75.3 74.9 74.3 73.2 72.6 71.8 71.0 69.8 68.5 67.9 67.5 67.0 65.7 64.2 Htg Fuel Price ($/MMBtu) 3.35 3.38 3.42 3.45 3.49 3.52 3.56 3.59 3.63 3.66 3.70 3.74 3.77 3.81 3.85 3.89 3.93 3.97 4.01 4.05 Htg Fuel Cost ($1000s) 45.5 93.0 140.6 203.6 267.3 267.6 267.6 269.1 269.5 268.2 268.5 268.4 268.0 266.3 263.7 264.2 265.1 265.8 263.4 259.6 PROGRAM COSTS ($1000s) Incentive Payments 541 565 568 759 770 574 600 623 824 816 618 643 667 881 861 680 718 747 948 908 Total Admin Costs 136 100 101 135 136 102 106 110 146 145 110 114 118 156 153 121 127 132 168 161 Startup 40 Fixed Annual 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Per Unit 96 100 101 135 136 102 106 110 146 145 110 114 118 156 153 121 127 132 168 161 Total Budgetary Cost 677 666 669 893 906 676 706 733 970 961 727 757 785 1,037 1,014 801 846 879 1,117 1,069 Nominal Budgetary Cost 799 821 862 1,203 1,275 994 1,085 1,177 1,628 1,685 1,333 1,451 1,572 2,168 2,216 1,829 2,019 2,193 2,910 2,910 NET RESOURCE COSTS sae alata 581 555 548 719 716 524 537 547 710 689 511 521 528 682 652 503 519 527 652 609 ( is) Htg Fuel Use (GBtu) 13.6 27.5 41.1 59.0 76.7 76.0 75.3 74.9 74.3 73.2 72.6 71.8 71.0 69.8 68.5 67.9 67.5 67.0 65.7 64.2 18-7 FLUORESCENT LAMP REBATE PROGRAM 2011 2012 2013 2014 2015 MARKET-DRIVEN EFFECTS Particip. Units (1000s) 0.0 0.0 Cumulative Units (1000s) 34.5 27.4 GWh Savings 39.7 31.5 MW Savings 9.32 7.39 GROSS PROGRAM EFFECTS Particip. Units (1000s) 0.0 0.0 Cumulative Units (1000s) 62.7 49.1 GWh Savings 72.1 56.5 MW Savings 16.92 13.26 TECHNICAL POTENTIAL Particip. Units (1000s) 0.0 0.0 Cumulative Units (1000s) 89.5 70.2 GWh Savings 102.9 80.7 MW Savings 8.94 NET PROGRAM EFFECTS Particip. Units (1000s) 0.00 0.00 Cumulative Units (1000s) 28.2 21.7 GWh Savings 32.4 25.0 MW Savings 7.60 5.87 Initial Cost ($1000s) 0 0 Maintenance Cost ($1000s) 0 0 Heating Fuel Use (GBtu) 52.5 40.5 Htg Fuel Price ($/MMBtu) 4.09 4.13 Htg Fuel Cost ($1000s) 214.5 167.2 PROGRAM COSTS ($1000s) Incentive Payments Total Admin Costs Startup Fixed Annual Per Unit ° Total Budgetary Cost Nominal Budgetary Cost oo oo o o eco oo NET RESOURCE COSTS Initial+Maint+Admin 0 0 ($1000s) Htg Fuel Use (GBtu) 52.5 40.5 40. 3 9.46 0.0 50.0 57.5 13.51 0 28.5 co co fo oc 0 13.7 4.25 eco co fo oc 2016 0.0 -0.0 -0.0 2017 2018 2019 0.0 -0.0 -0.0 0.0 -0.0 -0.0 -0.00 -0.00 -0.00 oo oo coo oo eco eco fo oO 0.0 -0.0 -0.0 2020 0.0 -0.0 -0.0 2021 0.0 -0.0 -0.0 2022 0.0 -0.0 -0.0 2023 0.0 -0.0 -0.0 2024 2025 2026 2027 0.0 -0.0 -0.0 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 oo oo 0.00 0.0 4.47 0.0 co oe oo 0. 00 0.0 4.52 0.0 oo eco co 0. 00 0.0 4.56 7) co co o oo coo oe co 0.0 -0.0 -0.0 -0.00 0.00 0.0 0.0 0.00 0 0 0.0 4.70 0.0 co oo 0.0 0.0 -0.0 -0.0 -0.0 -0.0 -0.00 -0.00 0.0 0.0 0.0 0.0 0.0 0.0 0.00 0.00 0.0 0.0 0.0 0.0 0.0 0.0 0.00 0.00 0.00 0.00 0.0 0.0 0.0 0.0 0.00 0.00 0 0 0 0 0.0 0.0 4.75 4.79 0.0 0.0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.0 0.0 2028 0.0 -0.0 -0. 00 ane -_o ooo o S oo oFo008 co co co co 2029 0.0 -0.0 -0. 00 S ° ° o:o *_ oo: = OF -©o ewoococo0d coo co 0. 00 0.0 4.94 0.0 oo oo Fluorescent Lamp Rebate Program Annual Savings = 1,150 kWh/yr per Unit Equipment Life 5 years Additional Htg Fuel 1,620 Btu/(kWh Saved) Maintenance = 0.0 mills/(kWh Saved) Net Energy Savings (GWh) Program Life | 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 =2010 88-7 1 | 8.4 8.4 8.4 8.4 8.4 0.0 0.0 0.0 0.0 0.0 0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2 | 8.4 17.0 17.0 17.0 17.0 8.6 0.0 0.0 0.0 0.0 0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3 | 8.4 17.0 25.4 25.4 25.4 17.0 8.4 0.0 0.0 0.0 0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4 | 8.4 17.0 25.4 36.4 36.4 28.0 19.5 11.0 0.0 0.0 0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 5 | 8.4 17.0 25.4 36.4 47.3 39.0 30.4 21.9 10.9 0.0 0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 6 | 8.4 17.0 25.4 36.4 47.3 46.9 38.4 29.9 18.9 8.0 0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 7 | 8.4 17.0 25.4 36.4 47.3 46.9 46.5 38.0 27.0 16.1 1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 8 | 8.4 17.0 25.4 36.4 47.3 46.9 46.5 46.3 35.2 24.3 4 8.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 9 | 8.4 17.0 25.4 36.4 47.3 46.9 46.5 46.3 45.9 34.9 0 18.9 10.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 10 | 8.4 17.0 25.4 36.4 47.3 46.9 46.5 46.3 45.9 45.2 2 29.1 20.9 10.3 0.0 0.0 0.0 0.0 0.0 0.0 1 | 8.4 17.0 25.4 36.4 47.3 46.9 46.5 46.3 45.9 45.2 -8 36.7 28.4 17.8 7.6 0.0 0.0 0.0 0.0 0.0 12 | 8.4 17.0 25.4 36.4 47.3 46.9 46.5 46.3 45.9 45.2 44.8 44.3 36.1 25.5 15.2 7.7 0.0 0.0 0.0 0.0 13 | 8.4 17.0 25.4 36.4 47.3 46.9 46.5 46.3 45.9 45.2 44.8 44.3 43.8 33.2 22.9 15.4 Wate 0.0 0.0 0.0 14 | 8.4 17.0 25.4 36.4 47.3 46.9 46.5 46.3 45.9 45.2 44.8 44.3 43.8 43.1 32.9 25.3 17.6 9.9 0.0 0.0 15 | 8.4 17.0 25.4 36.4 47.3 46.9 46.5 46.3 45.9 45.2 44.8 44.3 43.8 43.1 42.3 34.7 27.1 19.3 9.4 0.0 16 [| 8.4 17.0 25.4 36.4 47.3 46.9 46.5 46.3 45.9 45.2 44.8 44.3 43.8 43.1 42.3 41.9 34.3 26.5 16.6 7.2 17 | 8.4 17.0 25.4 36.4 47.3 46.9 46.5 46.3 45.9 45.2 44.8 44.3 43.8 43.1 42.3 41.9 41.7 33.9 24.0 14.6 18 [| 8.4 17.0 25.4 36.4 47.3 46.9 46.5 46.3 45.9 45.2 44.8 44.3 43.8 43.1 42.3 41.9 41.7 41.4 31.4 22.0 19 | 8.4 17.0 25.4 36.4 47.3 46.9 46.5 46.3 45.9 45.2 44.8 44.3 43.8 43.1 42.30 41.9 41.7 41.4 40.6 31.2 20 [| 8.4 17.0 25.4 36.4 47.3 46.9 46.5 46.3 45.9 45.2 44.8 (44.3 43.8 43.1 42.3 41.9 41.7 41.4 40.6 39.6 Fluorescent Lamp Rebate Program Net Energy Savings (GWh) Program Life 2011 2012 «62013 «2014 «2015-2016 )= 2017, 2018 392019 2020. 2021S 2022) 2023S 2024 «= 2025 2026 )9=— 2027 )9=— 2028 )9= 2029 = 2030 | | 22: 2: 2 = = === =: 1 | 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 e | 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Ss | 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4 | 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 5 | 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 6 | 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 7 | 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 8 | 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 9 | 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 w 10 | 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 ’ 1 | 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 eS 12 | 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 13 | 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 14 | 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 15 | 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 16 | 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 17 | 7.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 18 | 14.8 7.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 19 | 23.9 16.6 on 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 20 | 32.4 25.0 17.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.12 Electronic Ballast Rebate Program 2.12.1 Summary This program would provide a $13 rebate for each fluorescent electronic ballast (for 2 4- foot lamps) purchased as a replacement ballast or as part of a new light fixture ($18 rebate for dimmable models). The ballast is the device that starts and provides proper operating conditions for fluorescent lamps. Electronic ballasts internally waste less energy than conventional magnetic ballasts, and they also supply high frequency current to the fluorescent lamps causing them to operate more efficiently. Only electronic ballast factors with a ballast factor in excess of 0.925 (standard lamps) would be eligible for the program. The ballast factor is a specification indicating how much light a standard lamp will produce when operated with the ballast. The low-quality electronic ballasts found in economy grade fluorescent fixtures will not meet this specification. Other ballast sizes would be eligible for rebates also. One approach would be to rebate based on the wattage of the lamps driven by the fluorescent ballast. $13 per 4-foot 2-lamp ballast (designated 2-F40) corresponds to $0.183 per standard lamp watt. Thus, an 8-foot slimline 2-lamp ballast would receive a $24 rebate since 8-foot slimline lamps use 75 Watts per lamp. 2.12.2 Energy Savings A test by Lithonia, the world’s largest OEM (original equipment manufacturer) purchaser of fluorescent lamp ballasts,” showed that electronic ballasts save 12.5 watts average when used with standard lamps (40 W) and 10 watts when used with energy-saver lamps (34 W). These results are for 2-F40 ballasts, and the savings are calculated with respect to energy- efficient magnetic ballasts, the only ballasts that can be sold after 1990 according to the National Appliance Energy Conservation Act. For estimating total savings we assume that the Fluorescent Lamp Rebate program is in place, so that approximately 65% of the lamps in use are reduced-wattage energy-saver lamps. Thus, the average savings from use of an electronic ballast are 0.65 x 10 Watts + 0.35 x 12.5 Watts = 10.9 Watts. For the existing commercial floorstock, calculations for the Fluorescent Lamp Rebate program showed that there are the equivalent of 9.9 4-lamp 4-foot fixtures per 1,000 square feet of floor area, or 19.8 2-F40 ballast equivalents. With 4,050 hours/year of operation, adjustment for additional ventilation and air-conditioning savings, and adjustment for distribution loss, (see the Lamp Rebate section) the savings are: 0.0109 kW x 19.8 x 4,050 hrs/yr x 1.033 x 1.053 = 950 kWh/yr per 1,000 square feet. With a 95% probability of the lights being on during the Railbelt system peak, peak demand reduction from use of electronic ballasts is 950 kWh/yr / 4,050 x 0.95 = Printed in "The State of the Art Lighting", March 1988, Competitek, an information service of the Rocky Mountain Institute, p. 173. 2-90 0.22 kW per 1,000 square feet. As in the fluorescent lamp rebate program, additional heating fuel is estimated at 1,620 Btu/kWh of savings. All of these calculations were based on 2-F40 ballasts, the predominant type of fluorescent ballast. Savings and costs for ballasts that drive 8-foot lamps are similar on a per square foot basis, so a more accurate accounting of different types of fluorescent lighting systems would not change the results significantly. This calculation only considers the "intrinsic savings" possible with electronic ballasts--the savings from reduced ballast loss and improved lamp efficiency from high frequency operation. Further savings are theoretically possible in new construction and remodel applications because of better predictability of the light output of a fixture when using an electronic ballast. The light output of a fluorescent fixture changes depending on the voltage applied to it and the temperature of the environment. These variations are significant for fixtures using magnetic ballasts, and engineers have compensated by designing spaces with enough light to suffice under worst conditions. The use of well-regulated electronic ballasts eliminates a large part of this variation because of better light regulation characteristics. If engineers altered their design practices to account for this, spaces could be designed with less lamps, thereby saving energy. Some estimate the potential savings to be 10% or about 6 Watts per 2-F40 electronic ballast. A more conservative estimate would be 5% or about 3 Watts per ballast (a 27% increase in the above calculated savings per 1,000 square feet of floor area). Since many of the ballasts that are affected by this program are replacement ballasts, and because the necessary changes in engineering practices may not occur, we do not consider this type of energy savings in the analysis. Probably the most promising feature of electronic ballasts is the ability to include circuitry in the ballast to allow for continuously variable dimming. Currently there are about three firms producing quality electronic ballasts that include this feature, and XO Industries is the only firm with pricing competitive with non-dimmable ballasts. However, other firms, including General Electric and Advance, have designs in process. The dimming feature makes possible other methods for saving energy, the most promising being automatic compensation for light-loss due to dirt and lamp-aging, automatic compensation for overlighting in design, and automatic compensation for natural lighting through windows. Such techniques can increase the savings from electronic ballasts in some situations by a factor of 1.5 to 4, with some additional ballast and control wiring cost. They are most appropriate in new construction and remodel jobs. Because of the current limited availability of competitively-priced ballasts with the continuous dimming feature, we do not consider these savings in this program analysis. However, the product offering should broaden substantially within the next few years. 2.12.3 Technology Costs Case quantities of 2-F40 electronic ballasts can be purchased for about $35, whereas energy- efficient magnetic ballasts cost about $20 (from conversations with local GE lighting representative). (A recent order of 175,000 electronic ballasts by a Wisconsin school district garnered a price of $16.32 per electronic ballast. The University of Alaska, Anchorage recently purchased ~ 1000 for under $25.) We assume an incremental cost with respect to 2-91 an energy-efficient magnetic ballast of $15. With 19.8 2-F40 equivalent ballasts per 1,000 square feet, the incremental cost is $15 x 19.8 = $300 per 1,000 square feet. No additional maintenance costs are assumed. Life of a standard magnetic ballast is typically assumed to be 7 - 13 years. The energy-efficient magnetic ballasts are expected to last significantly longer because of cooler operation temperatures. Early versions (late 1970’s) of electronic ballasts had premature failure problems. These problems have been corrected, and all electronic ballasts carry a 3-year warranty. No empirical data exists yet on their expected lifetime, but computer analyses indicate 25+ year life for some models. We assume 18 years for this analysis. Substantial decreases in the costs of electronic ballasts are expected as integrated circuit technology is applied to the designs. Some analysts expect electronic ballasts to actually become less expensive than magnetic ballasts and thereby capture all of the ballast market. We do not consider any such expected price decreases in this analysis. 2.12.4 Program Costs The rebate provided by the program is $13 per 2-40 ballast equivalent. With 19.8 ballast equivalents per 1,000 square feet the cost is: $13 x 19.8 = $260 per 1,000 square feet. Start-up costs are assumed to be $40,000, and annual administrative costs are $46 per 1,000 square feet that participate. 2.12.5 Participation Rates National sales data indicates that electronic ballasts currently have a ~ 1.2% market share, but the share is growing rapidly (0.1% in 1982). No users of electronic ballasts were found in our commercial building survey. However, the Sohio building in Anchorage uses electronic ballasts, and the University of Alaska, Anchorage recently bought over 1,000 units. We assume a linear growth in share from 1.2% in 1987 to 20% in 2010 for the Market-Driven participation rate.” For the program participation rate, a 65% share of the ballast sales is assumed. The rebate program is applicable to replacement ballasts and new construction. A stock/flow model of the commercial floorstock was used to estimate ballast sales based on new additions to commercial floorstock and a 14 year life for ballasts in existing buildings. The number of ballasts per 1,000 square feet of new commercial floorstock was assumed to be 20% less than the existing stock, because of improvements in fixture efficiency and higher light output lamps. We assume the savings are distributed across regions according to the distribution of commercial floor stock: 3S. 7 : 5 : . a : , Given the previous assumption that the real price of electronic ballasts will remain constant, this increase in market share is probably not warranted. We assume the growth in market share in order to remain conservative in our estimate of net savings. 2 - 92 Anchorage: 67.3% Mat-Su: 5.9% Kenai: 10.8% Fairbanks: 15.9% 2.12.6 Model Output v6 - Electronic Ballast Rebates Electricity Savings Levelized Electricty Savings 36 GWh/Year 120 (20 Year, Net) 100 Load Factor 49% a Net Resource Cost 24.1 Million, PV = — a. 35 mills /kWh ° <i . Budgetary Cost 20.1 Million, PV 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 29 mills/kWh Year Savings Type WE Market Driven KGnet Program Ee Untapped Potential Net Resource Cost Budgetary Cost ($ Million, Present Value) ($ Million, Present Value) Initial 69% $16.7 Admin 15% $3.1 ro min 13% Incentive 85% $17.0 Fuel 18% $4.4 iN $20.1 Million 35 mills/kWh 29 mills/kWh ELECTRONIC BALLAST REBATE PROGRAM Unit = 1,000 Busbar Savings: kWh Savings/Unit = 950 kW Savings/Unit = 0.220 Htg Btus Consumed = 1,620 Initial Cost = $300 Annual Maintenance = $o Lifetime = 18 When Installed = Normal New Construction REGIONAL IMPACTS Anchorage 67.3% Mat-Su 5.9% Kenai 10.8% Fairbanks 15.9% ft2 kWh/yr kW Btu/kWh /unit /yr yrs Rplcmnt Incentive Payment $260 PROGRAM COSTS ($1000s) Startup = 40 Annual Fixed = Per Unit = 0.046 Program Life = 20 Discount Rate = 4.0% Analysis Start = 1991 KEKKEKKEKKKEKKKKKKKKEKKKKKKKKKKKKKKKKKKKKKKKKKKKK KKK KKK KK KKK KKK KKK KKK DISCOUNTED SUMS 20 yr RESULTS 50 yr ELECTRICITY SAVINGS (GWh) Market Driven 125 Gross Program 820 Technical Potential 1,261 Net Program 695 LOAD FACTOR = 49% NET RESOURCE COST ($1000s): Initial 16,668 Maintenance 0 Fuel 4,420 Program Admin 3,053 24,142 BUDGETARY COST ($1000s): Admin 3,053 Incentive 17,040 20,093 69% 0% 18% 13% 35.5 GWh/yr 35 mills/kWh 15% 85% 29 mills/kWh Nominal Sum 57224 Item Life = 14 years Is New Constr. Eligible? y New Constr. Density Adjustment 80% Starting Year = 1991 FLOORSTOCK <------ PARTICIPATION RATES ------ ADDITIONS Market Program Potential 1991 0.50 1.2% 65.0% 100.0% 1992 1.32 222% 65.0% 100.0% 1993 1.70 362% 65.0% 100.0% 1994 2.60 4.2% 65.0% 100.0% 1995 2.22 5.2% 65.0% 100.0% 1996 1.74 6.1% 65.0% 100.0% 1997 1.84 721% 65.0% 100.0% 1998 Zede 8.1% 65.0% 100.0% 1999 2.86 9.1% 65.0% 100.0% 2000 Centl h 10.1% 65.0% 100.0% 2001 2.36 11.1% 65.0% 100.0% 2002 2.44 12.1% 65.0% 100.0% 2003 2.30 pe i F 65.0% 100.0% 2004 3.05 14.1% 65.0% 100.0% 2005 3.34 5.1% 65.0% 100.0% 2006 3.56 16.0% 65.0% 100.0% 2007 3.96 17.0% 65.0% 100.0% 2008 3.92 18.0% 65.0% 100.0% 2009 4.03 19.0% 65.0% 100.0% 2010 3.89 20.0% 65.0% 100.0% 16-7 ELECTRONIC BALLAST REBATE PROGRAM 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 ony 2010 sasssssesssssssssessse=sssse2222222==52=5=2 MARKET-DRIVEN EFFECTS Particip. Units (1000s) 0.1 0.1 0.2 0.3 0.3 0.5 0.6 1.0 0.8 0.7 O45 0.9 0.9 1.1 1.0 1.3 1.7 1.6 1.5 1.9 Cumulative Units (1000s) 0.1 0.2 0.44 0.7 1.0 1.4 2.1 3.0 3.9 4.6 5.1 5.9 6.9 7.9 9.0 10.2 11.9 13.5 14.9 16.7 GWh Savings 0.1 0.2 0.46 0.7 0.9 1.4 2.0 2.9 3.7 4.3 4.8 5.6 6.5 7.5 8.5 9.7 11.3 12.8 14.2 15.9 MW Savings 0.01 0.04 0.09 0.16 0.22 0.32 0.45 0.66 0.85 1.00 1.12 1.31 1.51 1.74 1.97 2.25 2.61 2.97 3.28 3.68 GROSS PROGRAM EFFECTS Particip. Units (1000s) 3.1 3.7 5.1 4.4 3.5 4.8 5.6 7.7 6.0 45 3.0 4.7 45 4.9 4.5 5.1 6.3 5.8 5.1 6.3 Cumulative Units (1000s) 3.1 6.8 11.9 16.3 19.8 24.6 30.2 37.9 43.9 48.4 51.4 56.1 60.6 65.5 70.0 75.1 81.4 87.2 89.3 91.8 GWh Savings 2.9 6.5 11.3 15.4 18.8 23.4 28.7 36.0 41.7 45.9 48.8 53.3 57.6 62.3 66.5 71.4 77.3 82.9 84.8 87.2 MW Savings 0.68 1.50 2.61 3.58 4.36 5.41 6.64 8.33 9.65 10.64 11.30 12.33 13.33 14.42 15.41 16.53 17.91 19.19 19.64 20.20 TECHNI Particip. Units (1000s) 4.7 5.7 7.8 6.7 5.5 7.4 8.6 11.8 9.2 6.9 4.6 7.2 7.0 7.6 6.9 7.8 9.7 9.0 7.9 9.6 Cumulative Units (1000s) 4.7 10.5 18.3 25.0 30.5 37.8 46.4 58.3 67.5 74.4 79.0 86.2 93.2 100.8 107.8 115.6 125.3 134.2 137.3 141.2 GWh Savings 4.5 9.9 17.3 23.8 28.9 35.9 44.1 55.4 64.1 70.7 75.1 81.9 88.6 95.8 102.4 109.8 119.0 127.5 130.5 134.2 MW Savings 1.04 2.30 4.02 5.50 6.70 8.32 10.22 12.82 14.84 16.37 17.38 18.97 20.51 22.18 23.71 25.42 27.56 29.53 30.22 31.07 NET PROGRAM EFFECTS Particip. Units (1000s) 3.02 3.60 4.82 4.11 3.26 4.33 4.98 6.73 5.13 3.81 2.48 3.83 3.62 3.88 3.45 3.82 4.65 4.21 3.61 4.34 Cumulative Units (1000s) 3.0 6.6 11.4 15.5 18.8 23.1 28.1 34.9 40.0 43.8 46.3 50.1 53.7 57.6 61.1 64.9 69.5 73.8 74.3 75.1 GWh Savings 2.9 6.3 10.9 14.8 17.9 22.0 26.7 33.1 38.0 41.6 44.0 47.6 51.1 54.7 58.0 61.6 66.1 70.1 70.6 71.3 MW Savings 0.66 1.46 2.52 3.42 4.14 5.09 6.19 7.67 8.80 9.64 10.18 11.02 11.82 12.67 13.43 14.28 15.30 16.23 16.36 16.52 Initial Cost ($1000s) 907 1,080 1,445 1,232 978 1,300 1,495 2,020 1,539 1,143 745 1,148 1,087 1,163 1,036 1,147 1,396 1,264 1,083 1,301 Maintenance Cost ($1000s) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Heating Fuel Use (GBtu) 4.7 10.2 17.6 23.9 28.9 35.6 43.3 53.6 61.5 67.4 71.2 77.1 82.7 88.7 94.0 99.9 107.0 113.5 114.4 115.6 Htg Fuel Price ($/MMBtu) 3.35 3.38 3.42 3.45 3.49 3.52 3.56 3.59 3.63 3.66 3.70 3.74 3.77 3.81 3.85 3.89 3.93 3.97 4.01 4.05 Htg Fuel Cost ($1000s) 15.6 34.5 60.2 82.6 100.9 125.4 153.9 192.7 223.3 247.0 263.6 288.2 312.2 338.1 361.9 388.4 420.4 450.4 458.5 467.7 PROGRAM COSTS ($1000s) Incentive Payments 800 «6969 1,317 1,141 921 1,244 1,456 2,001 1,552 1,173 779 1,223 1,180 1,286 1,169 1,320 1,639 1,516 1,327 1,628 Total Admin Costs 182 171 «4233 «202 «69163 =220 258 #354 275 207 138 216 209 228 207 234 290 268 235 288 Startup 40 Fixed Annual 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Per Unit 142° 171-233) «202. 163) 220. 258 «= 354 275) 207) 138 «= 216 |S 209 2280 207) 234 290 268 «= 235 288 Total Budgetary Cost 982 1,140 1,550 1,342 1,084 1,465 1,714 2,355 1,826 1,380 917 1,439 1,389 1,514 1,376 1,553 1,929 1,784 1,562 1,916 Nominal Budgetary Cost 1,159 1,406 1,997 1,808 1,525 2,154 2,633 3,782 3,065 2,420 1,680 2,755 2,779 3,165 3,006 3,547 4,604 4,449 4,071 5,219 NET RESOURCE COSTS Initial+Maint+Adnin 1,088 1,251 1,678 1,434 1,141 1,520 1,753 2,374 1,814 1,350 883 1,365 1,296 1,390 1,243 1,381 1,686 1,532 1,318 1,589 ($1000s) Htg Fuel Use (GBtu) 4.7 10.2 17.6 23.9 28.9 35.6 43.3 53.6 61.5 67.4 71.2 77.1 82.7 88.7 94.0 99.9 107.0 113.5 114.4 115.6 ELECTRONIC BALLAST REBATE PROGRAM 2023 2024 2025 2026 2012 2013 2014 2015 2016 2017 ao 2019 2020 2011 MARKET-DRIVEN EFFECTS Particip. Units (1000s) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Cumulative Units (1000s) 16.5 16.2 15.9 15.5 14.9 13.9 13.1 12.4 11.8 11.0 10.1 9.0 7.9 6.7 5.0 3.4 1.9 0.0 0.0 0.0 GWh Savings 15.7 15.4 15.1 14.7 14.1 13.2 12.4 11.7 11.2 10.44 9.6 8.5 7.5 6.4 4.8 3.2 1.8 0.0 0.0 0.0 MW Savings 3.63 3.56 3.50 3.40 3.27 3.06 2.87 2.72 2.60 2.41 2.21 1.98 1.75 1.47 1.11 0.75 0.42 0.00 0.00 0.00 GROSS PROGRAM EFFECTS Particip. Units (1000s) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Cumulative Units (1000s) 86.7 82.4 78.8 74.0 68.4 60.7 54.8 50.3 47.3 42.6 38.0 33.1 28.6 23.5 17.2 11.4 6.3 0.0 0.0 0.0 GWh Savings 82.4 78.2 74.9 70.3 65.0 57.7 52.0 47.7 44.9 40.4 36.1 31.4 27.1 22.3 16.3 10.8 5.9 0.0 0.0 0.0 MW Savings 19.08 18.12 17.34 16.29 15.05 13.36 12.05 11.06 10.40 9.36 8.36 7.28 6.29 5.17 3.78 2.50 1.38 0.00 0.00 0.00 TECHNICAL POTENTIAL Particip. Units (1000s) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Cumulative Units (1000s) 133.5 126.7 121.3 113.9 105.3 93.4 84.3 77.3 72.7 65.5 58.5 50.9 44.0 36.2 26.5 17.5 9.6 0.0 0.0 0.0 GWh Savings 126.8 120.4 115.2 108.2 100.0 88.8 80.0 73.5 69.1 62.2 55.6 48.3 41.8 34.3 25.1 16.6 9.2 0.0 0.0 0.0 MW Savings 29.36 27.88 26.68 25.06 23.16 20.56 18.54 17.01 16.00 14.40 12.87 11.19 9.67 7.95 5.82 3.85 2.12 0.00 0.00 0.00 NET PROGRAM EFFECTS Particip. Units (1000s) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Cumulative Units (1000s) 70.3 66.2 62.9 58.6 53.6 46.8 41.7 37.9 35.4 31.6 28.0 24.1 20.6 16.8 12.2 7.9 4.3 0.0 0.0 0.0 GWh Savings 66.8 62.9 59.8 55.6 50.9 44.5 39.6 36.0 33.6 30.0 26.6 22.9 19.6 16.0 11.6 7.6 4.1 0.0 0.0 0.0 MW Savings 15.46 14.56 13.84 12.88 11.79 10.31 9.18 8.34 7.79 6.95 6.15 5.30 4.54 3.70 2.68 1.75 0.95 0.00 0.00 0.00 Initial Cost ($1000s) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Maintenance Cost ($1000s) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Heating Fuel Use (GBtu) 108.1 101.8 96.8 90.1 82.5 72.1 64.2 58.3 54.5 48.6 43.0 37.1 31.8 25.9 18.7 12.2 6.7 0.0 0.0 0.0 Htg Fuel Price ($/MMBtu) 4.09 4.13 4.17 4.21 4.25 4.30 4.34 4.38 4.43 4.47 4.52 4.56 4.61 4.65 4.70 4.75 4.79 4.84 4.89 4.94 Htg Fuel Cost ($1000s) 442.0 420.4 403.6 379.6 350.8 309.7 278.6 255.7 241.3 217.4 194.3 169.1 146.3 120.4 87.9 58.0 32.0 0.0 0.0 0.0 PROGRAM COSTS ($1000s) Incentive Payments 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Total Admin Costs 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Startup Fixed Annual 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Per Unit 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Total Budgetary Cost 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Nominal Budgetary Cost 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 NET RESOURCE COSTS Initial+Maint+Admin 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ($1000s) Htg Fuel Use (GBtu) 108.1 101.8 96.8 90.1 82.5 72.1 64.2 58.3 54.5 48.6 43.0 37.1 31.8 25.9 18.7 12.2 6.7 0.0 0.0 0.0 Electronic Ballast Rebate Program 950 kWh/yr per Unit 18 years Annual Savings Equipment Life Additional Htg Fuel = 1,620 Btu/(kWh Saved) Maintenance = 0.0 mills/(kWh Saved) Net Energy Savings (GWh) 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1 " 66 - 7 1 2.9 2.9 2:9 2.9 i) 2.9 2.9 2.9 2.9 2.9 2.9 2.9 9 2.9 2.9 2.9 2.9 2.9 0.0 0.0 2 2.9 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3 3 6.3 6.3 6.3 6.3 6.3 3.4 0.0 3 2.9 6.3 10.9 10.9 10.9 10.9 10.9 10.9 10.9 10.9 10.9 10.9 10.9 10.9 10.9 10.9 10.9 10.9 8.0 4.6 4 2.9 6.3 10.9 14.8 14.8 14.8 14.8 14.8 14.8 14.8 14.8 14.8 14.8 14.8 14.8 14.8 14.8 14.8 11.9 8.5 2 2.9 6.3 10.9 14.8 17.9 17.9 17.9 17.9 17.9 17.9 17.9 17.9 17.9 17.9 17.9 17.9 17.9 17.9 15.0 11.6 6 2.9 6.3 10.9 14.8 17.9 22.0 22.0 22.0 22.0 22.0 22.0 22.0 22.0 22.0 22.0 22.0 22.0 22.0 19.1 15.7 t 2.9 6.3 10.9 14.8 17.9 22.0 26.7 26.7 26.7 26.7 26.7 26.7 26.7 26.7 26.7 26.7 26.7 26.7 23.8 20.4 8 2.9 6.3 10.9 14.8 17.9 22.0 26.7 33.1 33.1 33.1 33.1 33.1 33.1 33.1 33.1 33.1 33.1 33.1 30.2 © 26.8 9 2.9 6.3 10.9 14.8 17.9 22.0 26.7 33.1 38.0 38.0 38.0 38.0 38.0 38.0 38.0 38.0 38.0 38.0 35.1 31.7 10 2.9 ° 6.3 10.9 14.8 17.9 22.0 26.7 33.1 38.0 41.6 41.6 41.6 41.6 41.6 41.6 41.6 41.6 41.6 38.7 35.3 1 2.9 6.3 10.9 14.8 17.9 22.0 26.7 33.1 38.0 41.6 44.0 44.0 44.0 44.0 44.0 44.0 44.0 44.0 41.1 37.7 12 2.9 6.3 10.9 14.8 17.9 22.0 26.7 33.1 38.0 41.6 44.0 47.6 47.6 47.6 47.6 47.6 47.6 47.6 44.7 41.3 13 2.9 6.3 10.9 14.8 17.9 22.0 26.7 33.1 38.0 41.6 44.0 47.6 51.0 51.0 51.0 51.0 51.0 51.0 48.2 44.7 14 2.9 6.3 10.9 14.8 17.9 22.0 26.7 33.1 38.0 41.6 44.0 47.6 51.0 54.7 54.7 54.7 54.7 54.7 51.9 48.4 15 2.9 6.3 10.9 14.8 17.9 22.0 26.7 33.1 38.0 41.6 44.0 47.6 51.0 54.7 58.0 58.0 58.0 58.0 55.1 51.7 16 2.9 6.3 10.9 14.8 17.9 22.0 26.7 33.1 38.0 41.6 44.0 47.6 51.0 54.7 58.0 61.6 61.6 61.6 58.8 55.3 17 2.9 6.3 10.9 14.8 17.9 22.0 26.7 33.1 38.0 41.6 44.0 47.6 51.0 54.7 58.0 61.6 66.0 66.0 63.2 59.8 18 2.9 6.3 10.9 14.8 17.9 22.0 26.7 33.1 38.0 41.6 44.0 47.6 51.0 54.7 58.0 61.6 66.0 70.0 67.2 63.8 19 2.9 6.3 10.9 14.8 17.9 22.0 26.7 33.1 38.0 41.6 44.0 47.6 51.0 54.7 58.0 61.6 66.0 70.0 70.6 67.2 20 2.9 6.3 10.9 14.8 17.9 22.0 26.7 33.1 38.0 41.6 44.0 47.6 51.0 54.7 58.0 61.6 66.0 70.0 70.6 71.3 Electronic Ballast Rebate Program Net Energy Savings (GWh) Program life | 2011 2012 2013 «©2014 «2015-2016 )= 2017S 2018 = 2019 nN oS nN ° 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 1 | 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2 | 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3 | 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4 | 3.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 5 | 7.0 3.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 6 [11.1 7.2 4.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 wo 7 | 15.8 11.9 8.8 4.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 ' 8 | 22.2 18.3 15.2 11.1 6.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 = 9 | 27.1 23.2 20.1 16.0 11.3 4.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 s 10 | 30.7 26.8 23.7 19.6 14.9 8.5 3.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 11 | 33.1 29.2 26.1 22.0 17.2 10.8 6.0 2.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 12 | 36.7 32.8 29.7 25.6 20.9 14.5 9.6 6.0 3.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 13 | 40.2 36.3 33.2 29.1 24.3 17.9 13.1 9.4 7.1 3.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 14 | 43.9 39.9 36.9 32.7 28.0 21.6 16.7 13.1 10.8 tA 5.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 15 | 47.1 43.2 40.1 36.0 31.3 24.9 20.0 16.4 14.0 10.4 7.0 3.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 16 | 50.8 46.9 43.8 39.6 34.9 28.5 23.6 20.0 17.7 14.0 10.6 6.9 3.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 17 [| 55.2. 51.3 48.2 44.1 39.3 32.9 28.1 246.4 22.1 18.4 15.0 11.3 8.0 4.4 0.0 0.0 0.0 0.0 0.0 0.0 18 | 59.2 55.3 52.2 48.1 43.3 36.9 32.1 28.4 26.1 22.4 19.0 15.3 12.0 8.4 4.0 0.0 0.0 0.0 0.0 0.0 19 | 62.6 58.7 55.6 51.5 46.8 40.4 35.5 31.9 29.5 25.9 22.4 18.8 15.5 11.8 7.4 3.4 0.0 0.0 0.0 0.0 20 | 66.7 62.8 59.7 55.6 50.9 44.5 39.6 36.0 33.6 30.0 26.6 22.9 19.6 16.0 11.6 7.6 4.1 0.0 0.0 0.0 2.13 Incandescent to Fluorescent Conversions 2.13.1 Program Summary This program would provide rebates for compact fluorescent lamps, adapters, and fixtures. Compact fluorescents are small fluorescent lamps that come in sizes appropriate for replacing small to medium wattage incandescent lamps. Recent advances in fluorescent lamp technology have dramatically increased the amount of light that can be produced for _a given size fluorescent lamp. Philips, Panasonic, and Osram (a large West German lamp manufacturer that sells in the U.S. also) now manufacture a 6.7 inch compact fluorescent lamp that produces 25% more light than a standard 2-foot fluorescent tube. The color rendering properties of these fluorescent lamps have also been substantially improved. On a color rendering index (CRI) of 0-100, incandescent lamps rate about 95, warm-white fluorescents have a CRI of 52, and most compact fluorescents have CRI’s of ~81. This program would give $7 ($10 for floodlight units) rebates for self-ballasted compact fluorescent lamps and $9 rebates for adapters that accept unballasted compact fluorescents ($12 for floodlight units and compact fluorescent fixtures).” All fluorescent lamps must have a ballast to start and properly operate the lamp. A ballast is either a electrical coil assembly or an electronic circuit. Some models of compact fluorescents are manufactured with an integral ballast and screw directly into a normal incandescent light socket. When the unit fails, the lamp and ballast are thrown-away together. These are the "self-ballasted" models referred to above. Other compact fluorescents are manufactured as normal fluorescent lamps are, i.e. without a ballast. The ballast for these compact fluorescents is either provided in a light fixture specially-designed for the lamp or is provided in an adapter unit that can screw into a normal incandescent socket. When the lamp fails, the ballast can be reused with a new lamp, making these types of units more economically attractive (although they tend to be aesthetically less attractive). Both types of compact fluorescents are available with reflectors that make them suitable for replacing incandescent floodlights. Being more costly, these models are awarded larger rebates. Note that replacement lamps for the adapters and fixtures are not given rebates. The analysis of this program is based on the effects in the commercial sector. There is actually more energy consumed in incandescent lamps in the residential sector (~ 130 GWh/year vs. ~90 GWh/year), although it is more difficult to convert and dispersed across relatively low-usage sockets. If this program is structured as a dealer rebate program, residential lamp suppliers could easily be included. Significant additional savings could accrue through participation by the residential sector. 2.13.2 Energy Savings The unit of analysis for this program is 1,000 square feet of typical commercial floorstock. The onsite commercial survey determined that of the 695 GWh/year interior lighting energy 26 aaa ‘ ; ‘ A useful definition of a compact fluorescent lamp is a fluorescent lamp that produces less than 2,500 lumens and has no dimension in excess of 1 foot. 2-101 ~12.8% is used by incandescent lamps, or about 89 GWh/year. From the survey average on-time was determined to be 3,420 hours/year. Thus, the average lighting power density of incandescent lighting in the commercial sector is 0.32 Watts/square foot. Four typical incandescent to fluorescent retrofits were analyzed to determine potential electric savings and costs. The capital costs, operation and maintenance costs (or savings), and energy savings of each application were weighted by the expected share for the application to determine average characteristics. The applications are described below: Application 1 (33% share): Replacement of 60 Watt A-lamp (normal bulb type) long-life (2,500 hours) incandescents with 15 Watt self-ballasted compact fluorescents. Application 2 (33% share): Replacement of 60 Watt A-lamp long-life incandescents with compact fluorescent adapters utilizing PL-9 lamps (the Philips designation for a small U- shaped lamp--also manufactured by GE, Sylvania, and Osram). Application 3 (20% share): Replacement of 75 Watt R30 floodlamps with compact fluorescent floodlights utilizing Quad PL-13 lamps. Application 4 (14% share): Replacement of Energy-Saver 120 Watt R40 Floodlamps with compact fluorescent floodlights utilizing 28 Watt Quad lamps. Table 2-8 gives characteristics for each of the applications and applies the share weightings to determine averages. Each application is assumed to consist of 320 Watts of incandescent lighting operating 3,400 hours per year, the average amount of incandescent lighting for 1,000 square feet of Railbelt commercial floorstock. Columns 3 through 8 list the wattage per lamp, cost per lamp, and lamp life in hours for the original incandescent system and the replacement fluorescent system. For the fluorescent system the lamp cost does not include the adapter or fixture cost in the case of applications 2, 3, and 4. These are counted as capital costs listed under the "Convert Cost" column. The "Convert Life" is the lifetime of the compact fluorescent fixture or adapter and is based on a 30,000 hour ballast operation life. To the right of the vertical line are outputs of the analysis. "Lamp Qty" is the number of lamps required for the theoretical 320 Watts of incandescent lighting. The analysis assumes a one-for-one lamp conversion, so Lamp Qty is also the number of fluorescent lamps. "Capital" is the total capital cost for the conversion. "O&M" is the additional annual lamp cost and lamp replacement labor cost required by the conversion. For all applications except #1, it is negative because of the long life of the compact fluorescent lamps. "kWh_SAV" is the annual electricity savings (kWh/year) from the conversion. Share- weighted averages are given at the bottoms of key columns. The table shows that the average energy savings are 831 kWh/year. Adjusting for additional HVAC savings and distribution losses: 831 kWh/year x 1.033 x 1.053 = 900 kWh/year per 1,000 square feet. With an average on-time of 3,400 hours per year and a 95% probability of the lights being on during Railbelt system peak, the peak demand reduction is: 900 kWh/yr / 3,400 hr/yr x 0.95 = 0.25 kW per 1,000 square feet. 2 - 102 -- Incandescent -- --- Fluorescent --- CONVERT CONVERT | LAMP 1 33% 60 $1.03 2,500 15 $14 9,000 $0 2.65 5.3 $17 2 33% 60 $1.03 2,500 12 $5 10,000 $12 8.82 5.3 ($3) 3 20% 75 $2.90 2,000 18 $10 10,000 $26 8.82 | 4.3 ($12) 4 14% 120 $3.80 2,000 34 $13 «9,000 $30 8.82 | 2.7 $54.5 $1.1 831 Table 2-8 - Incandescent to Compact Fluorescent Conversions. Typical 1,000 square feet of Railbelt commercial floorstock. Additional heating fuel requirements are 1,620 Btu/kWh (see Fluorescent Lamp Rebate write-up). 2.13.3 Technology Costs Table 2-8 also shows that the average capital (initial) cost is $55 per 1,000 square feet. Increased maintenance costs (lamp + replacement labor) are $1.1 per 1,000 square feet. The applications using separate lamp and ballast assemblies had lives of 9 years. Application 1 was considered to have no capital cost (all costs were included in the O&M cost), so its life is irrelevant. 2.13.4 Program Costs Table 2-9 shows that weighted average rebate cost for the four applications is $67 APPLIC LAMP REBATE TOTAL per 1,000 square feet (the rebate cost for # SHARE QTY /LAMP REBATE Application 1 was scaled up to be consistent with a 9 year life). Program 1 33% 5.3 $7 $111 start-up costs are assumed to be $40,000, 2 33% 5.3 $9 $48 and annual administrative costs are 3 20% 4.3 $12 $51 assumed to be $11.80 per 1,000 square feet. ‘ eo ey 912 $32 $67 2.13.5 Participation Table 2-9 - Rebates for Incandescent to Although incandescent lamps are changed Flourescent Conversions at least once a year, we model participation in the program as though the stock of incandescents turn-over at a 9 year rate, the estimated life of the fluorescent conversion. Thus, a 100% participation rate in a given 2 - 103 year actually means that 11% of the incandescent lighting is converted.” National sales data indicates that about 1% of incandescent type applications are utilizing compact fluorescents, but the share is rising rapidly (35% of the applications were added in 1987 alone).* Because only 11% of the incandescents are assumed to be up for replacement in the stock/flow model, the 0.35% additions of compact fluorescents in 1987 corresponds to a 0.35/0.11 = 3% participation rate. In the Market driven scenario, we assume this 3% rate grows linearly to 20% in 2010. Because of the somewhat increased size of compact fluorescents and the current inability to dim all but a few models, we assume that participation rate is only 40% in the Program Driven scenario (i.e. 4.4% of incandescents convert in the first year). Newly constructed commercial buildings are eligible, but for modeling purposes, they are entered into the stock/flow model assuming 30% less incandescent power density. We assume the savings are distributed across regions according to the distribution of commercial floor stock: Anchorage: 67.3% Mat-Su: 5.9% Kenai: 10.8% Fairbanks: 15.9% This is done for analytical convenience only. Such a modification makes it impossible for the participation model to deal with a conversion rate of faster than 11% of the floorstock per year. *Data from "The State of the Art: Lighting", March 1988, Competitek information service, Rocky Mountain Institute, p. 78. 2 - 104 SOI -7@ Incandescent Conversions Electricity Savings GWh/ Year 140 -————_ Levelized Electricty Savings 19 GWh/Year (20 Year, Net) Load Factor 41% Net Resource Cost . pel Raion, PY i : Budgetary Cost $4.7 Million, PV 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 16 mills/kWh Year Savings Type MM Market Driven Net Program [J Untapped Potential Net Resource Cost Budgetary Cost ($ Million, Present Value) ($ Million, Present Value) Initial 44% Admin 16% $0.7 Maintenance 7% Z $0.4 J a 14% Incentive 84% $4.0 $5.1 Million $4.7 Million 18 mills/kKWh 16 mills/kWh INCANDESCENT CONVERSION REBATE PROGRAM Unit = 1,/000 £2 Incentive Payment $67 Busbar Savings: kWh Savings/Unit = 900 kWh/yr PROGRAM COSTS ($1000s) kW Savings/Unit = 0.250 kW Startup = 40 Htg Btus Consumed = 1,620 Btu/kWh Annual Fixed = Per Unit = 0.0118 Initial Cost = $55 /unit Program Life = 20 Annual Maintenance = Sica /yE Lifetime = 9 yrs Discount Rate = 4.0% When Installed = Normal Rplcmnt New Construction Analysis Start " hr 0 0 rh REGIONAL IMPACTS Anchorage 67.3% Mat-Su 5.9% Kenai 10.8% Fairbanks 15.9% KREKKKEKEKKKEKEKEKEKKEKEKEKKKKKKKKEKKKKEKKKKKEKEKKKKKKKKK KKK KKK KKK KKK RESULTS <== DISCOUNTED SUMS ----- 50 yr 20 yr ELECTRICITY SAVINGS (GWh) Market Driven 125 98 Gross Program 413 354 Technical Potential 1,034 885 Net Program 288 256 18.9 GWh/yr LOAD FACTOR = 41% NET RESOURCE COST ($1000s): Initial 2,279 44% Maintenance 352 7% Fuel Lpigp2 34% Program Admin 740 14% 5,124 18 mills/kWh BUDGETARY COST ($1000s): Admin 740 16% Incentive ~ 3,981 84% Nominal sassec= Sum 4,720 16 mills/kWh 12974 Item Life = 9 years Is New Constr. Eligible? Y New Constr. Density Adjustment 70% Starting Year = 1991 FLOORSTOCK ------ PARTICIPATION RATES ------ ADDITIONS Market Program Potential 1991 0.50 6.0% 40.0% 100.0% 1992 1.32 6.7% 40.0% 100.0% 1993 1.70 7.4% 40.0% 100.0% 1994 2.60 8.2% 40.0% 100.0% 1995 2.22 8.9% 40.0% 100.0% 1996 1.74 9.7% 40.0% 100.0% 1997 1.84 10.4% 40.0% 100.0% 1998 Zee 11.1% 40.0% 100.0% 1999 2.86 11.9% 40.0% 100.0% 2000 2.77 12.6% 40.0% 100.0% 2001 2.36 1353's 40.0% 100.0% 2002 2.44 14.1% 40.0% 100.0% 2003 2.30 14.8% 40.0% 100.0% 2004 3.05 15.6% 40.0% 100.0% 2005 3.34 16.3% 40.0% 100.0% 2006 3.56 17.0% 40.0% 100.0% 2007 3.96 17.8% 40.0% 100.0% 2008 3.92 18.5% 40.0% 100.0% 2009 4.03 19.3% 40.0% 100.0% 2010 3.89 20.0% 40.0% 100.0% 2 - 107 801 - Z INCANDESCENT CONVERSION REBATE PROGRAM 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 MARKET-DRIVEN EFFECTS Particip. Units (1000s) 0.55 0.9 1.1 1.0 0.8 0.7 1.0 0.9 O09 £3 41.9 2:2 Cumulative Units (1000s) 0.5 1.4 2.5 3.5 4.3 5.1 6.0 6.9 7.8 8.5 9.5 10.6 GWh Savings 05 1.3 2.3 3.2 3.9 4.5 5.4 6.2 7.0 7.7 8.6 9.6 MW Savings 0.13 0.36 0.63 0.88 1.09 1.26 1.51 1.73 1.95 2.14 2.38 2.66 GROSS PROGRAM EFFECTS Particip. Units (1000s) 3:6 9553 5-869 (3-7) 2:9 3.8 3.2 2.9 4.1 5.6 6.2 5.3 4.3 3.5 4.4 3.9 3.7 4.8 6.0 Cumulative Units (1000s) 3.6 8.9 14.7 19.7 23.4 26.3 30.1 33.3 36.2 36.7 37.0 37.4 37.7 38.3 38.9 39.4 40.2 40.9 41.6 42.0 GWh Savings 3.2. 8.0 13.3 17.7 21.0 23.7 27.1 30.0 32.6 33.0 33.3 33.6 34.0 34.5 35.0 35.5 36.1 36.8 37.5 37.8 MW Savings 0.90 2.22 3.68 4.92 5.84 6.58 7.52 8.32 9.05 9.17 9.25 9.34 9.43 9.58 9.72 9.86 10.04 10.24 10.40 10.50 TECHNICAL POTENTIAL Particip. Units (1000s) 9.0 13.2 14.6 12.3 9.3 7.3 9.4 8.0 7.2 10.3 14.0 15.5 13.2 10.7 8.8 10.9 9.8 9.2 12.0 14.9 Cumulative Units (1000s) 9.0 22.2 36.8 49.2 58.4 65.8 75.2 83.2 90.5 91.7 92.5 93.4 94.3 95.8 97.2 98.6 100.4 102.4 104.0 105.0 GWh Savings 8.1 20.0 33.1 44.2 52.6 59.2 67.7 74.9 81.4 82.6 83.2 84.1 84.9 86.2 87.5 88.8 90.4 92.1 93.6 94.5 MW Savings 2.25 5.56 9.21 12.29 14.61 16.44 18.80 20.80 22.61 22.93 23.12 23.36 23.58 23.94 24.29 24.65 25.10 25.59 26.01 26.25 NET PROGRAM EFFECTS Particip. Units (1000s) 3.07 4.41 4.75 3.93 2.88 2.23 2.80 2.31 2.04 2.81 3.73 4.02 3.33 2.61 2.08 2.50 2.18 1.97 2.48 2.99 Cumulative Units (1000s) 3.1 7.5 12.2 16.1 19.0 21.3 24.1 26.4 28.4 28.1 27.5 26.7 26.2 25.9 25.7 25.4 25.3 25.2 24.9 24.2 GWh Savings 2.8 6.7 11.0 14.5 17.1 19.1 21.6 23.7 25.6 25.3 24.7 24.1 23.5 23.3 23.2 22.9 22.8 22.7 22.4 21.7 MW Savings 0.77 1.87 3.06 4.04 4.76 5.31 6.01 6.59 7.10 7.04 6.87 6.69 6.54 6.47 6.43 6.36 6.33 6.31 6.23 6.04 Initial Cost ($1000s) 169 242 261 216 158 123 154 127 112 155 205 221 183 144 114 137 120 108 136 164 Maintenance Cost ($1000s) 3 8 13 18 21 23 26 29 31 31 30 29 29 28 28 28 28 28 27 27 Heating Fuel Use (GBtu) 4.5 10.9 17.8 23.5 27.7 31.0 35.1 38.4 41.4 41.0 40.1 39.0 38.1 37.7 37.5 37.1 36.9 36.8 36.3 35.2 Htg Fuel Price ($/MMBtu) 3.35 3.38 3.42 3.45 3.49 3.52 3.56 3.59 3.63 3.66 3.70 3.74 3.77 3.81 3.85 3.89 3.93 3.97 4.01 4.05 Htg Fuel Cost ($1000s) 15.0 36.9 60.9 81.3 96.7 109.1 124.7 138.1 150.2 150.4 148.2 145.7 143.9 143.9 144.5 144.2 144.9 146.0 145.5 142.6 PROGRAM COSTS ($1000s) Incentive Payments 241 355 391 331 248 197 253 215) «194 275) 3750 416 355) 286) 235) 292 263) 246320 401 Total Admin Costs 83 62 69 58 44 35 45 38 34 48 66 73 63 50 41 51 46 43 56 71 Startup 40 Fixed Annual 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Per Unit 43 62 69 58 44 35 45 38 34 48 66 73 63 50 41 51 46 43 56 71 Total Budgetary Cost 324 417 460 389 292 232 298 252 228 324 441 489 418 337 276 343 309 289 377 471 Nominal Budgetary Cost 382 «514 «4592 «524 411 341 457 405 383 568 809 937 836 704 604 783 737 722 982 1,283 NET RESOURCE COSTS Initial+Maint+Admin 255 313 344 292 223 181 225° 194 177 234 301 324 275 222 184 217 194 180 220 262 ($1000s) Htg Fuel Use (GBtu) 4.5 10.9 17.8 23.5 27.7 31.0 35.1 38.4 41.4 41.0 40.1 39.0 38.1 37.7 37.5 37.1 36.9 36.8 36.3 35.2 601 - 7 INCANDESCENT CONVERSION R PROGRAM 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Particip. Units (1000s) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Cumulative Units (1000s) 15.6 13.7 12.0 10.6 8.7 7.0 5.3 3.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 GWh Savings 14.1 12.3 10.8 9.5 7.9 6.3 4.8 2.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 MW Savings 3.91 3.42 3.01 2.65 2.18 1.75 1.32 0.75 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 GROSS PROGRAM EFFECTS Particip. Units (1000s) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Cumulative Units (1000s) 35.8 30.5 26.2 22.7 18.4 14.4 10.8 6.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 GWh Savings 32.2 27.4 23.6 20.4 16.5 13.0 9.7 5.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 MW Savings 8.95 7.62 6.55 5.68 4.59 3.61 2.69 1.49 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 TECHNICAL POTENTIAL Particip. Units (1000s) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Cumulative Units (1000s) 89.5 76.2 65.5 56.8 45.9 36.1 26.9 14.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 GWh Savings 80.5 68.6 59.0 51.1 41.3 32.5 24.2 13.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 MW Savings 22.37 19.06 16.38 14.19 11.47 9.02 6.73 3.74 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 NET PROGRAM EFFECTS Particip. Units (1000s) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 oo Cumulative Units (1000s) 20.1 16.8 14.2 12.1 9.6 7.4 5.5 3. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 GWh Savings 18.1 15.1 12.8 10.9 8.7 6.7 4.9 2.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 MW Savings 5.04 4.20 3.55 3.03 2.40 1.86 1.37 0.75 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Initial Cost ($1000s) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Maintenance Cost ($1000s) 22 18 16 13 11 8 6 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ° \e 70 4.75 4.79 4.84 4.89 4.94 0 —@BFEWo ° ° ° ° ° o °o o Heating Fuel Use (GBtu) 29.4 24.5 20.7 17.7 14.0 10.9 8.0 4. . A eB 0.0 0.0 0. 0.0 0.0 0.0 0.0 0.0 Htg Fuel Price ($/MMBtu) 4.09 4.13 4.17 4.21 4.25 4.30 4.34 4.38 4.43 4.47 4.52 4.56 4.61 4.65 4. Htg Fuel Cost ($1000s) 120.0 101.2 86.3 74.4 59.7 46.6 34.6 19. 0.0 0.0 0.0 0.0 0.0 0.0 Oo. 0.0 0.0 0.0 0.0 0.0 PROGRAM COSTS ($1000s) Incentive Payments 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Total Admin Costs 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Startup Fixed Annual 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Per Unit 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Total Budgetary Cost 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Nominal Budgetary Cost 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 NET RESOURCE COSTS Initial+Maint+Admin 22 18 16 13 1 8 6 5 0 0 0 0 0 0 0 0 0 0 0 0 ($1000s) Htg Fuel Use (GBtu) 29.4 24.5 20.7 17.7 14.0 10.9 8.0 4.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 OIT -2 Incandescent Conversion Rebate Program Annual Savings Equipment Life 900 kWh/yr per Unit 9 years ul Additional Htg Fuel = 1,620 Btu/(kWh Saved) Maintenance = 1.2 mills/(kWh Saved) Net Energy Savings (GWh) 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 uw " " a " 1 | 2.8 2.8 8 2.8 2.8 2.8 2.8 2.8 2.8 0.0 0.0 0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2 | 2.8 6.7 6.7 6.7 6.7 6.7 6.7 6.7 6.7 4.0 0.0 -0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3 | 2.8 6.7 11.0 11.0 11.0 11.0 11.0 11.0 11.0 8.2 4.3 -0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4 | 2.8 6.7 11.0 14.5 14.5 14.5 14.5 14.5 14.5 11.8 7.8 5) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 5 | 2.8 6.7 11.0 14.5 17.1 17.1 17.1 17.1 17.1 14.4 10.4 ot 2.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 6 | 2.8 6.7 11.0 14.5 17.1 19.1 19.1 19.1 19.1 16.4 12.4 8.1 4.6 2.0 0.0 0.0 0.0 0.0 0.0 0.0 7 | 2.8 6.7 11.0 14.5 17.1 19.1 21.7 21.7 21.7 18.9 14.9 10.7 7.1 4.5 2.5 0.0 0.0 0.0 0.0 0.0 8 | (2.8 6.7 11.0 14.5 17.1 19.1 21.7 23.7 23.7 21.0 17.0 12.7 9.2 6.6 4.6 een 0.0 0.0 0.0 0.0 9 | 2.8 6.7 11.0 14.5 17.1 19.1 21.7 23.7 25.6 22.8 18.8 14.6 11.0 8.4 6.4 3.9 1.8 0.0 0.0 0.0 10 | 2.8 6.7 11.0 14.5 17.1 19.1 21.7 23.7 25.6 25.3 21.4 17.1 13.6 11.0 9.0 6.4 4.4 2.5 0.0 0.0 11 | 2.8 6.7 11.0 14.5 17.1 19.1 21.7 23.7 25.6 25.3 24.7 20.5 16.9 14.3 12.3 9.8 Tot 5.9 3.4 0.0 12 | 2.8 6.7 11.0 14.5 17.1 19.1 21.7 23.7 25.6 25.3 24.7 24.1 20.5 17.9 15.9 13.4 11.3 9.5 7.0 3.6 13 | 2.8 6.7 11.0 14.5 17.1 19.1 21.7 23.7 25.6 25.3 26.7 24.1 23.5 20.9 18.9 16.4 14.3 12.5 10.0 6.6 14 | 2.8 6.7) 11.0 14.5 17.1 19.1 21.7 23.7 25.6 25.3 24.7 26.1 23.5 23.3 21.3 18.8 16.7 14.9 12.3 9.0 15 | 2.8 6.7 11.0 14.5 17.1 19.1 21.7 23.7 25.6 25.3 24.7 24.1 23.5 23.3 23.2 20.6 18.6 16.7 14.2 10.8 16 | 2.8 6.7 11.0 14.5 17.1 19.1 21.7 23.7 25.6 25.3 24.7 24.1 23.5 23.3 23.2 22.9 20.8 19.0 16.4 13.1 17 | 2.8 6.7 11.0 14.5 17.1 19.1 21.7 23.7 25.6 25.3 24.7 24.1 23.5 23.3 23.2 22.9 22.8 20.9 18.4 15.0 18 | 2.8 6.7 11.0 14.5 17.1 19.1 21.7 23.7 25.6 25.3 24.7 24.1 23.5 23.3 23.2 22.9 22.8 22.7 20.2 16.8 19 | 2.8 6.7 11.0 14.5 17.1 19.1 21.7 23.7 25.6 25.3 24.7 24.1 23.5 23.3 23.2 22.9 22.8 22.7 22.4 19.1 20 | 2.8 6.7 11.0 14.5 17.1 19.1 21.7 23.7 25.6 25.3 24.7 24.1 23.5 23.3 23.2 22.9 22.8 22.7 22.4 21.7 TEL - 2% Incandescent Conversion Rebate Program Net Energy Savings (GWh) CeONAURWND = ee ee ee ee ee SOUANAURWNAO 2011 i — i — i — wooooececeeaeeaeo oo on un 11.4 13.2 15.4 18.1 10. 12. 15. Parnooovnececeaccccd a — i — 2 -e0vrccocoeo eo ooo oO oO oO oO oo > ° 10.1 12.8 2014 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.3 4.2 6.0 8.2 10.9 PaAWwWnoonoccscccceFc FC OC OOO CO oO eo NONOOCOOCOCCOCCOeOC ooo oOo CoO Coe 2016 a — i — 2 2 — NOMPODOST COC COCO oOo oOo oO oOo oO CO oO 2017 i — 2 — — — — — — —) eonooo0e000090 09 CFC FG Gee eo oe 2018 a — i — 2 2 2 — 2 2 — — — —) NoooooooeoeceoeeeoeeooO eC oe 2019 cooooe oo oO oO oO OOOO OOO oO oO coooeoeeeceecee eo ooo oO oO oO oO 2020 (— cODTD OOOO OOOO OOO oOo oOo I 2021 coooeceoee eo oO oO oO OOOO CO oO fe (a — 2 2 — 2 2 2 2 | 2022 0. 0. 0. 0. 0. 0. 0. 0. 0. 0. 0. 0. 0. 0. 0. 0; 0. 0. 0. 0. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2023 — cooooeoeoeceeceeoeo oo oOo oOo oO Oe 2024 cooooeeoeoececeoc ooo eo oOo eo Cot cooooeoeoeeeeo ee oe oOo oC Oo Ft 2025 i — i — ceooooeoeoeeee eo eo oOo oOo oC ot 2026 cooooeoeeoeoeceo ooo oOo oO oO oO cecooooeoeeeeeo ooo oO oO OO eo Of 2027 (— coooecoeoeeceoeceeo eo oo oOo eo CoO 8 2028 (a — coooeoeoee ooo oOo oO OO oO COO 8 2029 i — i — i — coooooeeo ooo oOo oO oO OO oO oO eo 2030 coooeoeoe ooo oOo oO oO OOO CO CO Oo (2 2 2 2 | 2.14 Sliding-Scale New Construction Rebates 2.14.1 Program Summary This program would pay rebates to building owners and engineer/architects for the installation of energy-efficient lighting and ventilation systems in new construction and remodel projects. The rebate system would be set up on a sliding-scale basis so that more efficient buildings would receive larger rebates. The determination of efficiency would be done by determining the lighting or ventilation power density (watts per square foot) by a simple audit of the completed building or remodel. Credit would be given for the presence of automatic control systems (e.g. occupancy sensors, daylight compensation controls, timeclock controls, variable speed drives or inlet vanes for ventilation fans) on any of the ighting or ventilation systems. For example, occupancy sensors are typically found to reduce energy consumption by about 30% in office spaces. For calculation purposes, the wattage of any office spaces controlled by occupancy sensors would be reduced by 30%. Sliding-Scale Rebate Program Lighting Rebates Rebate Amount, $/ft2 $2.00 $1.50 F- $1.00 F----—— $0.50 F $0.00 ‘ ; . : in 0.0 0.5 1.0 1.5 2.0 Lighting Power Density, Watts/ft2 Figure 2-4 - Example Lighting Rebate Curve for Office Space. Zi 112 The rebate would be paid on a per square foot of floor area basis. A rebate curve, such as the one shown in Figure 2-4 would be developed for each different building type (offices, retail, schools, etc.). The example curve shown indicates that for newly constructed or remodeled office space with a lighting density of 1.4 Watts per square foot and no automatic controls, a $0.45 rebate per square foot is paid. It is recommended that this rebate be divided between the building owner (85%) and the architect/engineer (15%) for the project. The two important parameters of the rebate curve are its slope and the $0 Rebate point. The slope determines the additional rebate paid for each 1 Watt/square foot reduction in power density. A 1 Watt/square foot reduction in power density translates to a 4 kWh/ft’ reduction in annual energy use, given a typical operation time of 4,000 hours/year. We suggest that the slope of the curve for both lighting and ventilation be $1 per Watt/ft?. For a 20 year system life, this corresponds to a budgetary cost of about 18 mills/kWh (based on gross energy savings, not net). The $0 rebate point (the point where the curve crosses the horizontal axis) is more difficult to set. The Fluorescent Lamp Rebate program and the Electronic Ballast Rebate program have already provided incentives for the use of these technologies. Thus, the $0 rebate point should be set so the use of efficient lamps and ballasts is not rewarded twice. A lighting system using efficient lamps, electronic ballasts, and standard fixtures will maintain about 43 footcandles of illumination for every 1 Watt per square foot (fixture coefficient of utilization = 0.64, light loss factor = 0.75, lamp/ballast efficacy of 90 lumens/watt). For offices, typical design lighting levels are 70 footcandles, so about 1.60 Watts per square foot are required. This power density assumes the space is designed without any excess light. A more reasonable $0-rebate power density might be 1.85 Watts per square foot to give architects and engineers the incentive to avoid one spaces. Similar calculations can be made for other space types. No other programs address energy use in ventilation, so the $0 rebate point can be less stringent. For larger buildings, ventilation power densities are near 1 Watt per square foot. 0.80 Watts/square foot might be a reasonable $0-rebate power density. However, more engineering analysis should be applied before determining these parameters. 2.14.2 Energy Savings Numerous other lighting efficiency measures are available beyond efficient lamps and ballasts. Obvious and inexpensive savings come from more accurate lighting design to avoid excess light. The light output stability that electronic ballasts provide along with the wide range of light outputs for efficient lamps (2900 lumens - 3700 lumens in the 4-foot size) allows a lighting designer to more accurately meet required light levels. Improved optical fixture efficiency is another area with potential. New standard fluorescent light fixtures can deliver about 64% of the light output of the lamps to the work surface. Some models that use a parabolic grate instead of a plastic sheet lens can deliver 74% of lamp output to the work surface (14% energy and lamp maintenance savings). The most efficient fixtures fitted with silver mirrored reflectors can deliver just over 81% of the lamp 2 - 113 light output to the work surface (21% energy/lamp maintenance savings).” Resource costs range from 30 - 60 mills/kWh for these improvements without giving any credit for the better quality low-glare light that is produced. The mirror-like reflectors can also be retrofitted into existing light fixtures, sometimes making possible the removal of lamps.” In offices task/ambient lighting systems can reduce lighting power density by about 40%. The lighting from ceiling troffers can be reduced in half while 0.2 Watts per square foot of compact fluorescent task lighting are added at the work surface. Resource costs are about 10 - 30 mills/kWh. Occupancy sensors that automatically shut-off lights in vacant offices cost from $0.20 - $0.65/square foot and can save 1 - 2 kWh/ft’, saving energy at ~35 mills/kWh over their 10 year expected life. Automatic dimming systems made possible through dimmable electronic ballasts probably hold the most promise for inexpensively saving energy. Perimeter zones in buildings can receive over half their lighting needs from natural lighting, even in Alaska. Averaged over the building the savings could easily be 25% (1.6 kWh/ft’). The incremental cost of a perimeter daylight dimming system, assuming the existence of electronic ballasts, is ~$0.20/ft® resulting in a CCE of 10 mills/kWh.” All of these figures are based on an initial lighting power density of 1.6 Watts/square foot and do not account for increased heating fuel use or HVAC capital/energy cost savings from the efficiency measures. When combined, each incremental measure is more costly per saved kWh than indicated above because of the reduced lighting power density from the previous measures. Such efficiency measures have been practically realized in numerous buildings around the U.S. Task/ambient lighting systems typically produce office buildings with lighting power densities of about 0.8 Watts per square foot. The new lab/classroom building for the University of Alaska Anchorage campus, designed by the local engineering firm Adams, Morgenthaler, will have offices lighted with 1.15 Watts per square foot. Electronic ballasts, efficient lamps, fixtures utilizing specular silver reflectors, and accurate lighting design combine to produce this highly-efficient building. According to our onsite commercial building survey, the existing stock of office space in the Railbelt has an average lighting power density of 2.9 Watts per square foot.” Thus, the office spaces in the future University building will use 60% less electricity per square foot. Figure 2-5 plots some of the above-described lighting options. The left vertical axis gives the power density and the right vertical axis gives the energy use per square foot assuming All of these figures depend on the room shape, and wall/ceiling/floor reflectances. Existing fixtures can sometimes be less than 50% efficient because of degraded paint reflectivity and poor optical design. *\These costs based on XO Industries dimmable electronic ballast system. The XO ballast costs only slightly more than non- dimmable ballasts, and the photocell control option requires running low-voltage wire from a $200 (installed) control to up to 100 ballasts. This is the average power density for office spaces within buildings, i.e. it does not average in the lower power densities of hallways, conference rooms, etc. found in office buildings. 2-114 Office Lighting Efficiency Potential Improvements Watts/ft2 kWh/ft2/year +1 3 Existing Railbelt Stock 2 2.55 = °o Effic. Magnetic Ballasts, No Excess Light Efficient Lamps 1.54 Electronic Ballasts a Future UAA Building Nn T Ta scsiteieeeese inceeeeel selina @ » Task/Ambient Designs °o a r 4 np °o °o Figure 2-5 - Power Densities and Annual Energy Use of Various Office Lighting Designs. 4,000 hours per year of lighting operation. The existing Railbelt stock average of office spaces is 2.9 Watts per square foot. A new design with standard lamps, efficient magnetic ballasts (required by the National Appliance Energy Conservation Act), standard fixtures, and no excess light will use about 2.2 Watts per square foot. Adding efficient lamps drops the power density to 1.9 Watts per square foot. Substitution of an electronic ballast (with no dimming capability) results in 1.6 Watts per square foot. The future UAA lab/classroom building will use 1.15 Watts/ft’, and buildings utilizing task/ambient lighting designs are at about 0.8 Watts/ft’. Efficiency improvements in the ventilation end use are possible through more accurate design of air flows (10-20% savings); use of low pressure drop filters, coils, and ductwork (10-50% savings); use of variable-air-volume systems (20-70% savings); use of energy- efficient motors and fans (5-25%); and better fan shut-off control.” Savings are not additive; a 20% savings from one measure and a 25% savings from another combine to a 1-0.8x 0.75 = 40% savings. Most of the measures cost about $1 per watt of ventilation power reduction, although more accurate flow design and efficient motors provide cheaper savings. * See "Commercial Sector Conservation Technologies", Usibelli et al., February 1985, for a discussion of efficiency measures for ventilation systems. 2-115 For analysis of this program we assume that for those buildings that participate, a total power reduction of 0.30 Watts per square foot is achieved for the lighting and ventilation end use. A substantial portion of this could be achieved through more accurate engineering design, thus the importance of paying part of the rebate to the building designer. With a 4,000 hour per year operation time, a 1,000 square foot analysis unit, and an adjustment for distribution loss, the savings are: 0.30 W / 1000 W/kW x 1,000 ft? x 4,000 h/yr x 1.053 = 1,260 kWh/year per 1,000 square feet. With a 95% probability of the equipment being operated during Railbelt system peak, the peak demand reduction is 1,260 kWh/yr / 4,000 h/yr x 0.95 = 0.30 kW per 1,000 square feet. As before, additional heating fuel consumption is 1,620 Btu/kWh. 2.14.3 Technology Costs We assume an average cost of $1 per Watt of reduction. Total cost is: $1/Watt x 0.30 W/ft? x 1,000 ft? = $300 per 1,000 square feet. The lighting and HVAC systems are assumed to last 20 years, and no additional maintenance costs are assumed. 2.14.4 Program Costs The 0.3 Watt/ft? reduction garners a $300 rebate per 1,000 square feet. Start-up costs are estimated at $130,000 and ongoing administration costs are assumed to be $53 per 1,000 square feet. 2.14.5 Participation 30% of the new construction and remodels are assumed to participate in the program, and 5% achieve the estimated savings without the program in the Market Driven scenario. In this analysis, the Technical Potential scenario does not represent the maximum possible savings that could be achieved by the program. The Technical Potential scenario represents the savings that would occur if all remodels and new construction participated in the program and saved an additional 0.3 Watts/ft’. If all efficiency-improving opportunities were actually utilized, savings greater than 0.3 Watts/ft? would occur. The stock/flow model used assumes that lighting and HVAC remodels occur every 20 years in commercial buildings. We assume the savings are distributed across regions according to the distribution of commercial floor stock: Anchorage: 67.3% Mat-Su: 5.9% Kenai: 10.8% Fairbanks: 15.9% 2.14.6 Model Output 2 - 116 AE SS Sliding-Scale Rebates Levelized Electricty Savings 17 GWh/Year (20 Year, Net) Load Factor 48% Net Resource Cost $10.2 Million, PV 27 mills/kWh Budgetary Cost $9.0 Million, PV 24 mills/kKWh Net Resource Cost ($ Million, Present Value) Initial 62% Y Program Admin 14% $1.5 Fuel 24% $2.4 $10.2 Million 27 mills/KWh Electricity Savings GWh/Year 140-—_—____ 120 100 80 60; 40 20+ WE Market Driven Year Savings Type Net Program 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 Budgetary Cost ($ Million, Present Value) Incentive 84% $7.5 $9.0 Million 24 mills/kKWh Admin 16% $15 SLIDING SCALE REBATE PROGRAM Unit = Busbar Savings: kWh Savings/Unit = kW Savings/Unit = Htg Btus Consumed = Initial Cost = Annual Maintenance Lifetime = When Installed = REGIONAL IMPACTS Anchorage Mat-Su Kenai Fairbanks 1,000 f£t2 1,260 kWh/yr 0.300 kW 1,620 Btu/kWh $300 /unit $0.0 /yr 20 yrs Remodel New Construction 67.3% 5.9% 10.8% 15.9% Incentive Payment $300 PROGRAM COSTS ($1000s) Startup = 130 Annual Fixed = Per Unit = 0.053 Program Life = 20 Discount Rate = 4.0% Analysis Start = 1991 KEKKKKEKEKEKEKEKEKKKKEKEKEKKKEEKKEKEEEREEKKEKEKKKEKKEKKKKKKKKKKK KKK KK KKK KEE RESULTS ELECTRICITY SAVINGS (GWh) Market Driven Gross Program Technical Potential Net Program LOAD FACTOR = NET RESOURCE COST ($1000s): Initial Maintenance Fuel Program Admin BUDGETARY COST ($1000s): Admin Incentive <= DISCOUNTED SUMS ----- 50 yr 20 yr ZS 47 448 279 1,494 931) 373 233 17.1 GWh/yr 48% 6,291 62% 0 0% 2,410 24% 1,459 14% 10,159 27 mills/kWh 1,459 16% 7,549 84% Nominal Sessa Sum 9,008 24 mills/kWh 25381 2 - 118 Item Life = 20 years Is New Constr. Eligible? Mi New Constr. Density Adjustment 100% Starting Year = 1991 FLOORSTOCK ------ PARTICIPATION RATES ------ ADDITIONS Market Program Potential 1991 0.50 5.0% 30.0% 100.0% 1992 1.32 5.0% 30.0% 100.0% 1993 1.70 5.0% 30.0% 100.0% 1994 2.60 5.0% 30.0% 100.0% 1995 2.22 5.0% 30.0% 100.0% 1996 1.74 5.0% 30.0% 100.0% 1997 1.84 5.0% 30.0% 100.0% 1998 2.37 5.0% 30.0% 100.0% 1999 2.86 5.0% 30.0% 100.0% 2000 2.77 5.0% 30.0% 100.0% 2001 2.36 5.0% 30.0% 100.0% 2002 2.44 5.0% 30.0% 100.0% 2003 2.30 5.0% 30.0% 100.0% 2004 3.05 5.0% 30.0% 100.0% 2005 3.34 5.0% 30.0% 100.0% 2006 3.56 5.0% 30.0% 100.0% 2007 3.96 5.0% 30.0% 100.0% 2008 3.92 5.0% 30.0% 100.0% 2009 4.03 5.0% 30.0% 100.0% 2010 3.89 5.0% 30.0% 100.0% 2 - 119 SLIDING SCALE REBATE PROGRAM 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Saeeessssesssssssssssessssss222ss2222222222222222222222 MARKET-DRIVEN EFFECTS Particip. Units (1000s) 0.2 0.2 0.2 0.44 0.4 0.3 0.3 0.3 0.8 0.3 0.2 0.44 0.4 O58 O15 0.3 0.3 0.3 0.3 0.3 Cumulative Units (1000s) 0.2 0.44 0.6 0.9 1.3 1.6 1.9 2.2 2.6 29 3.1 3.5 3.9 44 49 5.2 5.5 5.7 6.0 6.3 GWh Savings Oc2 | 0.5) 10.7) (T.2) | 157) 259 2.4 2.8 3.2 3.6 3.9 4.4 4.9 5.5 6.1 66 6.9 7.2 7.6 8.0 MW Savings 0.05 0.11 0.18 0.28 0.39 0.49 0.58 0.66 0.77 0.86 0.93 1.05 1.16 1.32 1.46 1.56 1.64 1.72 1.80 1.90 GROSS PROGRAM EFFECTS Particip. Units (1000s) 1.0 1.35 1.3 2.4 22 1.9 1.7 81.7 “2.1 1.9 1.4 2.2 2.6 3.1 2.7 2.0 1.6 1.6 1.6 1.9 Cumulative Units (1000s) 1.0 2.30 3.6 5.7 7.9 9.8 11.5 13.3 15.4 17.2 18.7 20.9 23.3 26.4 29.2 31.2 32.8 34.4 36.0 37.9 GWh Savings 1.3.0 2.9 4.5 7.2 10.0 12.4 14.5 16.7 19.4 21.7 23.5 26.3 29.3 33.3 36.7 39.3 41.3 43.3 45.3 47.8 MW Savings 0.31 0.69 1.07 1.71 2.37 2.95 3.46 3.99 4.61 5.17 5.60 6.27 6.98 7.93 8.75 9.36 9.83 10.32 10.79 11.37 TECHNICAL POTENTIAL Particip. Units (1000s) 3.4 4.2 4.3 7.1 7.4 6.4 537 3:8 69 6:3 6.7 7.5 7.9 10.5 9.1 6.8 5.3 5.6 5.3 6.6 Cumulative Units (1000s) 3.4 7.6 11.9 18.9 26.3 32.8 38.5 44.3 51.2 57.5 62.2 69.7 77.6 88.1 97.2 104.0 109.3 114.6 119.9 126.4 GWh Savings 4.3 9.6 15.0 23.9 33.2 41.3 48.5 55.8 64.5 72.4 78.4 87.8 97.7 111.0 122.5 131.0 137.7 144.5 151.1 159.2 MW Savings 1.03 2.28 3.57 5.68 7.90 9.83 11.55 13.29 15.36 17.25 18.66 20.91 23.27 26.42 29.16 31.20 32.78 34.39 35.98 37.91 NET PROGRAM EFFECTS Particip. Units (1000s) 0.86 1.04 1.07 1.77 1.85 1.61 1.43 1.45 1.73 1.57 1.18 1.87 1.97 2.62 2.29 1.70 1.32 1.34 1.32 1.61 Cumulative Units (1000s) 0.9 1.9 3.0 4.7 6.6 8.2 9.6 11.1 12.8 14.4 15.6 17.4 19.4 22.0 24.3 26.0 27.3 28.7 30.0 31.6 GWh Savings 1.1 2.4 3.7 6.0 8.3 10.3 12.1 14.0 16.1 18.1 19.6 22.0 24.4 27.7 30.6 32.8 34.4 36.1 37.8 39.8 MW Savings 0.26 0.57 0.89 1.42 1.97 2.46 2.89 3.32 3.84 4.31 4.67 5.23 5.82 6.60 7.29 7.80 8.20 8.60 8.99 9.48 Initial Cost ($1000s) 258 313 320 530 554 483 429, 435 519 471 353 562 590 786 686 509 396 403 396 482 Maintenance Cost ($1000s) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Heating Fuel Use (GBtu) 1.8 3.9 6.1 9.7 13.4 16.7 19.6 22.6 26.1 29.3 31.7 35.6 39.6 44.9 49.6 53.1 55.8 58.5 61.2 64.5 Htg Fuel Price ($/MMBtu) 3.35 3.38 3.42 3.45 3.49 3.52 3.56 3.59 3.63 3.66 3.70 3.74 3.77 3.81 3.85 3.89 3.93 3.97 4.01 4.05 Htg Fuel Cost ($1000s) 5.9 13.1 20.7 33.4 46.8 58.9 69.8 81.2 94.8 107.5 117.5 133.0 149.4 171.3 191.0 206.4 219.0 232.1 245.2 260.9 PROGRAM COSTS ($1000s) Incentive Payments 310 376 «4384 635 665 580 515 522 623 566 424 675 708 944 823 611 475 484 475 578 Total Admin Costs 185 66 68 112 117 102 2] 92. 110 100 75 119 125 167 145 108 84 86 84 102 Startup 130 Fixed Annual 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Per Unit 55 66 68 112 117 102 1 92 110 100 75 #119 125 «167 «4145 108 84 86 84 «102 Total Budgetary Cost 494 442 452 748 782 682 605 614 733 665 499 794 833 1,110 968 718 559 570 559 681 Nominal Budgetary Cost 583 545 583 1,007 1,101 1,003 930 986 1,231 1,167 915 1,520 1,667 2,322 2,116 1,641 1,334 1,421 1,457 1,853 NET RESOURCE COSTS Initial+Maint+Admin 443 379 «9388 «69642 «42671 «(585 520 527 630 571 428 681 715 953 831 617 480 489 480 584 ($1000s) Htg Fuel Use (GBtu) 1.8 3.9 6.1 9.7 13.4 16.7 19.6 22.6 26.1 29.3 31.7 35.6 39.6 44.9 49.6 53.1 55.8 58.5 61.2 64.5 ia =< SLIDING SCALE REBATE PROGRAM 2011 MARKET-DRIVEN EFFECTS Particip. Units (1000s) 0.0 Cumulative Units (1000s) 6.1 GWh Savings 7.7 MW Savings 1.84 GROSS PROGRAM EFFECTS Particip. Units (1000s) 0.0 Cumulative Units (1000s) 36.9 GWh Savings 46.5 MW Savings 11.06 TECHNICAL POTENTIAL Particip. Units (1000s) 0.0 Cumulative Units (1000s) 122.9 GWh Savings 154.9 MW Savings 36.87 NET PROGRAM EFFECTS Particip. Units (1000s) 0.00 Cumulative Units (1000s) 30.7 GWh Savings 38.7 MW Savings 9.22 Initial Cost ($1000s) 0 Maintenance Cost ($1000s) 0 Heating Fuel Use (GBtu) 62.7 Htg Fuel Price ($/MMBtu) 4.09 Htg Fuel Cost ($1000s) 256.4 PROGRAM COSTS ($1000s) Incentive Payments Total Admin Costs Startup Fixed Annual Per Unit Total Budgetary Cost Nominal Budgetary Cost co co fo © NET RESOURCE COSTS Initial+Maint+Admin 0 ($1000s) Htg Fuel Use (GBtu) 62.7 2012 2013 2014 2015 saaeesessssesssss2 0.0 0.0 0.0 0.0 5.9 5.7 5.4 5.0 7.5 7.2 6.8 6.3 1.78 1.72 1.61 1.50 0.0 0.0 0.0 0.0 35.6 34.3 32.2 30.0 44.9 43.3 40.6 37.8 10.69 10.30 9.67 9.00 0.0 0.0 0.0 0.0 118.7 114.5 107.4 100.0 149.6 144.2 135.3 126.0 35.62 34.34 32.22 30.01 0.00 0.00 0.00 0.00 29.7 28.6 26.9 25.0 37.4 36.1 33.8 31.5 8.91 8.58 8.06 7.50 0 0 0 0 0 0 0 0 60.6 58.4 54.8 51.0 4.13 4.17 4.21 4.25 250.2 243.6 230.8 217.1 oo oo o o oo oo o o co eo co eco eo fo oe 0 0 0 0 60.6 58.4 54.8 51.0 2016 2017 2018 2019 2020 2021 eco eco oo 47.8 eco eco co oc 44.8 eco eo fo oe 41.9 Rey NA eeis ase. 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Timing of Efficiency Program Implementation A.1 Electronic Ballast Example One important issue when structuring efficiency programs is the timing of implementation. A program could be structured as an intensive retrofit of the existing stock of energy-using equipment, or it could be structured as a long term incremental program to affect the efficiency of equipment when that equipment normally retires. The purpose of this appendix is to explore differences between these types of programs with the aid of a specific example. The energy savings and resource costs of two different implementation approaches for using electronic fluorescent lamp ballasts are analyzed. After the example, a general discussion of investment in energy efficiency during a period of excess capacity is presented. The focus of this example is a 2-lamp 4-foot fluorescent light fixture utilizing two standard 40 Watt lamps and one standard magnetic ballast. It is assumed that the ballast has 6 years of life remaining; i.e. it is about half way through its normal life. The lamps are not analyzed in this example, so no assumption concerning their remaining life is required. The fate of this light fixture is investigated under three scenarios. It is important to notice that there are three types of ballasts involved in the scenarios: standard ballasts, the least efficient type of ballast whose sale will be banned after 1990; energy-efficient magnetic ballasts, which are more efficient than standard ballasts; and high-frequency electronic ballasts, which are the most efficient ballasts. No Electronic Ballast Program - When the standard ballast fails at the beginning of Year 7, it is replaced with an energy-efficient magnetic ballast, a level of efficiency required by the National Appliance Energy Conservation Act of 1987. All subsequent replacements of this ballast (life = 18 years) are also assumed to be energy-efficient magnetic ballasts. Incremental Electronic Ballast Program - When the standard ballast fails in the beginning of Year 7, an efficiency program provides sufficient incentive so that an electronic ballast is installed (life = 18 years). When this ballast fails, no efficiency program is active, and an energy-efficient magnetic ballast is installed, just as in the "No Program" scenario. This program is typical of those proposed in this report. The efficiency of the energy-using equipment is upgraded at the time of normal equipment retirement. Blitz Retrofit Electronic Ballast Program - A blitz retrofit program provides sufficient incentive to cause the immediate replacement of the standard ballast with an electronic model lasting 18 years. When this ballast fails, no efficiency program is active, and, as in the other scenarios, an energy-efficient magnetic ballast is installed. Table A-1 shows the ballast cost and energy consumption associated with each of these three scenarios. The analysis period was chosen to be 25 years, because the state of the fixture is the same in year 25 and beyond for all three scenarios. Ballast costs are A-1 expressed on an annualized basis to facilitate the treatment of different ballast replacement times across the three scenarios. In the No Program and the Incremental Program scenarios, no ballast cost is listed for years 1 through 6. From an economic perspective, the cost of the existing ballast is considered sunk, and the services it provides are essentially free until it fails.” In the No Program case the annualized cost of $1.97 represents the cost of the efficient magnetic ballast. In the other 2 cases the $3.16 is the annualized cost of the more efficient electronic ballast. The power consumption of the fixture depends on the type of ballast in use: standard ballast - 90 Watts, energy-efficient magnetic ballast - 80 Watts, electronic ballast - 68 Watts (power ratings are typical of operation in a warm fixture). Annual energy consumption is based on 4,050 hours per year of use. Table A-2 compares the differences in costs and energy use among the three scenarios shown in Table A-1. The first set of columns compares the Incremental Program scenario with the No Program scenario. The Incremental Program results in a net increase in ballast cost for years 7 through 24 because of use of the more expensive electronic ballast instead of an energy-efficient magnetic ballast. 49 kWh/year of energy also are saved in years 7 through 24. By taking the present value of the costs and dividing by the discounted sum of the energy savings, a cost-of-conserved-energy (CCE) can be calculated. The value is shown at the bottom of the column. As is done in the rest of this report, the CCE is adjusted to account for additional ventilation and air-conditioning savings (3.3%) and a reduction in distribution losses. The cost of additional heating fuel consumption and an estimate of the program administration cost are added to the CCE. The next set of columns compares the Blitz Retrofit Program to No Program. Finally, the Blitz Retrofit program is compared against the Incremental program. Since the Blitz program is an expansion of the incremental program (it saves more energy) it is appropriate to consider the marginal costs and benefits of the Blitz compared to the Incremental. Figure A-1 provides the clearest presentation of the results. Starting in the upper left corner and working clockwise, the first graph shows the Incremental versus No Program comparison. A level block of savings from year 7 through 24 is produced at a cost of 33 mills/kWh.* In the second graph the Blitz Retrofit program is compared against No Program. This is the relevant comparison if the if the Blitz program is possible, but the Incremental program is not. The net savings in the first six years are high because the electronic ballast displaces the use of an inefficient standard ballast. In years 7 through 18, the savings attributable to * This is only true because there is no significant salvage value for used standard ballasts. 35, This CCE is slightly less than that calculated in the analysis of the electronic ballast rebate program. In the program analysis, savings of the electronic ballast accounted for the use of energy-saver lamps in some fixtures. Savings from the electronic ballast are less in those applications, explaining the higher CCE. A-2 the electronic ballast are reduced because in the no program scenario the standard ballast has failed and been replaced by an energy-efficient magnetic ballast (required by the federal conservation standard). Relative to no program, the Blitz program produces more total savings than the Incremental program because the first 6 years of use of the electronic ballast generate a high level of savings. However, the unit cost of the savings is higher, 39 mills/kWh. This is because a working ballast was prematurely retired in the Blitz program. Finally, the third graph compares the Blitz program with the Incremental program. This is the relevant comparison when both programs are possible, and a decision is being made as to the cost-effectiveness of the additional savings produced by the Blitz program. The Blitz program effects a block of savings in years 1 through 6 but actually results in a net increase in energy use in years 19 through 24. This is because the electronic ballast in the Blitz program fails at the end of year 18, whereas the electronic ballast in the Incremental program still has 6 years of remaining life at the end of year 18. The initial block savings is greater than the energy increase in the latter years. The net savings produced by the Blitz program compared to the Incremental program cost about 43 mills/kWh. The discussion to this point has focused on the costs and timing of savings generated by the two types of electronic ballast programs. The final graph on the page indicates the nature of the benefits of the electricity savings. The graph shows the cost per kilowatt-hour of electrical generation fueled by natural gas in the Railbelt for the years 1991 through 2015 (the graph assumes the load has a 49% load factor, the approximate load factor of the fluorescent fixture in this example). It is assumed that there is excess generation capacity until 1999. Thus, electricity savings in years 1991 through 1998 only serve to reduce the use of generation fuel and reduce the cost of variable operation and maintenance, a total of about 20 mills per kilowatt-hour saved. In 1999 and beyond, electricity savings also reduce the need for generation capacity and its associated capital cost and fixed operation and maintenance cost, bringing the total avoided cost to about 34 mills/kWh.” The generation cost graph shows that savings after the year 1999 are substantially more valuable than savings before 1999. Considering this, a reexamination of the three savings graphs is useful. The savings of the Incremental Program relative to no program are the cheapest and also occur during the period when the savings have the highest value. Some of the savings of the Blitz Retrofit program extend into the post 1999 period, but the bulk occur during the period of excess capacity and its concomitant low avoided generation costs. Finally, the third graph shows that the extra savings brought about by the Blitz Program over and above the Incremental program all occur in early years during the excess capacity period. An increase in electricity use actually occurs during years when generation is more expensive. Even though the initial block of savings in years 1 through 6 is larger than the block of electricity use increase in years 19 through 24, the economic benefits from net savings are almost zero (without even deducting the cost of the savings) because of the large disparity in avoided generation cost between the two periods. In addition, the savings are relatively costly, 43 mills/kWh. *“This benefit analysis was defined to be outside the scope of this report. However, its general discussion is important to the issue of implementation timing. The drop in generation cost in 2002 is due to the drop in gas cost projected by the APA in that year. A-3 In this particular example, the Incremental program clearly should be chosen before the Blitz program.” Its savings are cheapest, and they fall during the period of maximum avoided generation cost. The extra savings garnered by the Blitz program are poorly timed and costly (43 mills/kWh) relative to the generation resources they avoid. However, if the Incremental program is not possible, the relevant comparison is the Blitz versus No Program, graph 2. For the efficiency measure analyzed here, it is unlikely that the program will be cost-effective. The savings cost about 39 mills/kWh, but the avoided cost is somewhere between 20 mills/kWh (excess capacity era) and 34 mills/kWh (post 1999 era). A.2. General Conclusions A number of general conclusions can be derived from the specific example above concerning incremental efficiency programs versus immediate retrofit programs. An obvious conclusion is that the savings resulting from retrofit programs occur before the savings effected by incremental programs. In a situation of excess generation capacity, this characteristic is a disadvantage of retrofit programs. Avoided generation costs are low in the present and substantially higher during the future period when capacity is needed. In situations without excess capacity, this characteristic could count as an advantage because the present value of any net benefits produced by the program would be larger. In the ballast example, the total savings from the retrofit program were larger than the total savings from the incremental program. This will be true in general if there is a market- driven improvement in efficiency over time. In the example, the electronic ballast installed in the retrofit program was installed early enough to displace a very inefficient standard ballast. In the incremental program, the installation of the electronic ballast was delayed and only saved energy relative to an energy-efficient magnetic ballast. The total resource cost (not per unit cost) of a retrofit program is always more than the cost of an incremental program, assuming the same number of efficiency measures are installed. With the incremental program, the only net cost of the efficiency measure is the price premium of the efficient technology over and above the cost of the standard technology, because the appliance or piece of energy-using equipment has failed and must be replaced. With the retrofit program, the standard technology is not in immediate need of replacement, so the replacement cost of the technology is not immediately avoided. The difference in total resource cost between the two programs is a function of the ratio of the total cost of the efficient technology to the incremental cost of the technology and is also a function of how early the equipment is retired in the retrofit program. In the ballast example, the total installed cost of the electronic ballast is $40. The incremental cost of the electronic ballast with respect to the energy efficient magnetic ballast is $15. Thus, the net resource cost in the incremental program is $15. The 33 mills/kWh cost of the Incremental program relative to No Program indicates that it may be slightly preferable to No Program, since generation costs are approximately 34 mills/kWh during the period when the savings occur. A-4 If the retrofit program replaces a ballast that was brand new one day prior to the retrofit, the net resource cost of the retrofit program is the full installed cost, $40. If the retrofit program replaces a ballast that will fail in a short period of time, the net resource cost is close to $15, the incremental cost. Thus, the resource cost of the retrofit program can be as high as 2.7 times the resource cost of the incremental program, or it can be the same as the resource cost of the incremental program if all ballasts are on the verge of failing when the retrofit occurs. Most efficient technologies have larger full cost to incremental cost ratios than those in the ballast example. Efficient fluorescent lamps have a full cost to incremental cost ratio of about 4, and efficient refrigerators have a ratio of about 15. The additional costs of a retrofit program relative to an incremental program become substantial for technologies with high ratios. If downward trends in the cost of efficient technologies exist, incremental programs have a further cost advantage. The investment in the efficient technology occurs later in time, so the cost is less. Such is the case with many technologies, especially efficient lighting technologies. Higher total resource costs for retrofit programs also imply that larger financial incentives will be required to induce consumers to participate. Thus, the total budgetary cost of retrofit programs will be larger. The resource cost per unit of savings for retrofit programs is uswally higher than the unit cost for incremental programs. The above discussion showed that the total resource cost is larger for the retrofit program. However, the savings are also typically larger because of the increase in market-driven efficiency over time. In the specific electronic ballast example, the percentage increase in resource cost was larger than the percentage increase in savings resulting from the retrofit program; thus per unit costs for the retrofit are higher than per unit costs for the incremental program. Because other efficiency measures typically have at least as large full to incremental cost ratios as electronic ballasts, retrofit unit costs are usually more than the unit cost for efficiency upgrades at the time of normal replacement. Even if unit costs for a retrofit program exceed unit costs for the incremental program, it does not follow that the retrofit program is not cost-effective. In the ballast example, the unit cost for the incremental program was 33 mills/kWh and the unit cost for retrofit program was 39 mills/kWh. The retrofit program saved more energy than incremental program, and the extra savings relative to the incremental program cost 43 mills/kWh. If the generation cost where the program is implemented is higher than 43 mills/kWh, the retrofit program is cost-effective. The extra kilowatt-hours saved by the program cost less than generation cost avoided. In the case of the Railbelt, the generation cost (given the timing of the extra savings) is far less than 43 mills/kWh, so this particular retrofit program is not cost-effective. These conclusions apply to efficiency measures that involve the replacement of a particular appliance or piece of equipment with another more efficient appliance or piece of equipment. Not all efficiency measures are of this type. Some measures are add-on A-5 measures such as occupancy sensors for controlling lights. Analysis of implementation timing for these measures would be different. A.3 Energy Efficiency During a Period of Excess Capacity The presence of excess generation capacity may suggest that no energy efficiency activities are justified. This is not necessarily the case. The savings from some energy efficiency measures actually cost less than the short term avoided fuel and variable O&M costs, 20 mills/kWh in the above example. Even if these efficiency measures retire before capacity is needed, net benefits can be shown from savings in generation fuel and avoidable O&M. Other measures may be more expensive than short-term avoided cost, but last into the period when capacity is needed. If their cost-of-conserved-energy is less than the average cost of supply for the life of the measure, and they cannot easily be deferred into the future, then investment in the efficiency measure may make economic sense. As an example consider the lighting system in a new commercial building. Many features of the system will last at least 20 years, significantly into the period when generation capacity is needed. Furthermore, changes to certain aspects of the system can be very expensive on a retrofit basis (e.g. fixture layout, fixture type, daylighting features). Thus, investment in an efficient lighting design may make sense, even if its energy savings cost more than short- term generation cost. The short-term losses can be more than cancelled by net benefits accruing during the period when electrical generation capacity is needed. These situations have the potential to be "Lost Conservation Opportunities". The only opportunity for cost- effectively improving efficiency is when the building is being constructed or when the appliance is first being purchased. A-6 (/ - [-V aansiy seyovoiddy uonruewsiduy wreiZ01g Aous1yyq lueleIG WO sisop uoNeeued pue ssulAeg AtOINDeTq Jo uONNQMIsIq SUIT], Incremental vs. No Program 33 mills/kWh kWh/year Savings 100 80 60 40 20 °o -20 -@Q 24 4p t t + + 1 6 n 16 21 Year Blitz vs. Incremental Program 43 mills/kWh kWh/year Savings 100 80 60 40 20 -60 ap pp 1 6 n 16 21 Year 100 80 60 407 207 oO sal -40} -60 Blitz vs. No Program kWh/year Savings onto 1 6 39 mills/kKWh ts " 16 21 Year Railbelt Generation Cost Fuel = Natural Gas, Load Factor = 49% milla/kWh (real) TIME DISTRIBUTION OF COSTS AND ENERGY USE FOR THREE EFFICIENCY PROGRAM SCENARIOS TABLE A-1 Discount Rate = 4.0% Usage = 4,050 hrs/yr INSTALLED ANNUAL COST Electronic Ballast Effic. Core/Coil $25 18 $1.97 NO PROGRAM INCREMENTAL PROGRAM BLITZ RETROFIT PROGRAM 1 2 3 YR BALLASTS WATTS kWh/yr YR BALLASTS WATTS kWh/yr YR BALLASTS WATTS kWh/yr 1 90.0 365 1 90.0 365 1 $3.16 68.0 275 2 90.0 365 2 90.0 365 2 $3.16 68.0 275 3 90.0 365 5 90.0 365 5 $3.16 68.0 275 4 90.0 365 4 90.0 365 4 $3.16 68.0 275 5 90.0 365 5 90.0 365 5 $3.16 68.0 275 6 90.0 365 6 90.0 365 6 $3.16 68.0 275 7 $1.97 80.0 324 7 $3.16 68.0 275 7 $3.16 68.0 275 8 $1.97 80.0 324 8 $3.16 68.0 275 8 $3.16 68.0 275 9 $1.97 80.0 324 9 $3.16 68.0 275 9 $3.16 68.0 275 10 $1.97 80.0 324 10 $3.16 68.0 275 10 $3.16 68.0 275 11 $1.97 80.0 324 1 $3.16 68.0 275 1 $3.16 68.0 275 12 $1.97 80.0 324 12 $3.16 68.0 275 12 $3.16 68.0 275 13 $1.97 80.0 324 13 $3.16 68.0 275 13 $3.16 68.0 275 14 $1.97 80.0 324 14 $3.16 68.0 275 14 $3.16 68.0 275 15 $1.97 80.0 324 15 $3.16 68.0 275 15 $3.16 68.0 275 16 $1.97 80.0 324 16 $3.16 68.0 275 16 $3.16 68.0 275 17 $1.97 80.0 324 17 $3.16 68.0 275 17 $3.16 68.0 275 18 $1.97 80.0 324 18 $3.16 68.0 275 18 $3.16 68.0 275 19 $1.97 80.0 324 19 $3.16 68.0 275 19 $1.97 80.0 324 20 $1.97 80.0 324 20 $3.16 68.0 275 20 $1.97 80.0 324 21 $1.97 80.0 324 21 $3.16 68.0 275 21 $1.97 80.0 324 22 $1.97 80.0 324 22 $3.16 68.0 275 22 $1.97 80.0 324 23 $1.97 80.0 324 23 $3.16 68.0 275 23 $1.97 80.0 324 24 $1.97 80.0 324 24 $3.16 68.0 275 24 $1.97 80.0 324 25 $1.97 80.0 324 25 $1.97 80.0 324 25 $1.97 80.0 324 ENERGY SAVINGS AND CCE COMPARISON FOR THREE ENERGY EFFICIENCY PROGRAM SCENARIOS TABLE A-2 Heating Fuel Use = Distribution Loss and HVAC Savings Adjuster = INCREMENTAL vs. NO PROGRAM WOONDNFWNHEH 2 COST SAVINGS $/yr kWh/yr $0.00 0 $0.00 0 $0.00 0 $0.00 0 $0.00 0 $0.00 0 $1.19 49 $1.19 49 $1.19 49 $1.19 49 $1.19 49 $1.19 49 $1.19 49 $1.19 49 $1.19 49 $1.19 49 $1.19 49 $1.19 49 $1.19 49 $1.19 49 $1.19 49 $1.19 49 $1.19 49 $1.19 49 $0.00 0 CCE = 24.5 Adjusted £2.35 Htg Fuel 6.3 Admin 4.0 33 mills/kWh WOONDUF WHE 6.3 mills/kWh 92% BLITZ vs. NO PROGRAM 3-1 COST SAVINGS $/yr kWh/yr $3.16 89 $3.16 89 $3.16 89 $3.16 89 $3.16 89 $3.16 89 $1.19 49 $1.19 49 $1.19 49 $1.19 49 $1.19 49 $1.19 49 $1.19 49 $1.19 49 SLsL9 49 $1.19 49 $1.19 49 $1.19 49 $0.00 0 $0.00 0 $0.00 0 $0.00 0 $0.00 0 $0.00 0 $0.00 0 CCE = 30.7 Adjusted 28.2 Htg Fuel 6.3 Admin 4.0 39 mills/kWh A-9 WANDUF WHER BLITZ vs. INCREMENTAL 3 - 2 COST SAVINGS S/yr kWh/yr $3.16 89 $3.16 89 $3.16 89 $3.16 89 $3.16 89 $3.16 89 $0.00 ) $0.00 0 $0.00 0 $0.00 0 $0.00 0 $0.00 0 $0.00 0 $0.00 0 $0.00 0 $0.00 0 $0.00 0 $0.00 0 ($1.19) -49 ($1.19) -49 ($1.19) -49 ($1.19) -49 ($1.19) -49 ($1.19) -49 $0.00 0 CCE = 39.5) Adjusted 36.4 Htg Fuel 6.3 Admin 0.8 43 mills/kWh Appendix B Review of Electric Energy Efficiency Incentive Programs For Residential and Commercial Buildings James E. McMahon and Edward L. Vine REVIEW OF ELECTRIC ENERGY EFFICIENCY INCENTIVE PROGRAMS FOR RESIDENTIAL AND COMMERCIAL BUILDINGS James E. McMahon and Edward L. Vine Authors are staff scientists at Lawrence Berkeley.Laboratory, University of California, Berkeley, California, USA. (Institutional affiliation given for identification purposes only.) All opinions of those of the authors. ACKNOWLEDGEMENTS: This report was prepared under funding from the University of Alaska, In- stitute of Social and Economic Research, Anchorage, Alaska. The authors are indebted to many research- ers, and to those industry and and goverment employees who contributed information on programs. July, 1988 TABLE OF CONTENTS Section We Ned Name a) ks Page 0 ABSTRACT 1 FOREWORD 1 2 CONCEPTUAL FRAMEWORK 2 3 METHODOLOGY 5 4 NEW CONSTRUCTION 5 Technology Demonstration and Demonstration Programs Financial Incentives Programs Direct Incentives Reduced utility rates and hookup fees Reduced rates on loans and loan qualifications Guaranteed savings Consumer Information and Marketing Energy rating and labeling Energy awards Technical Information Professional guidelines Design tools Design assistance Standards-related training, compliance, and quality control Site and Community Planning Landscaping and solar access protection Community planning and development 5 EXISTING CONSTRUCTION Technical Assistance Financial Assistance Concluding Remarks 6 APPLIANCE INCENTIVE PROGRAMS Overview Free Riders Evaluations 7 APPLICABILITY TO ALASKA RAILBELT 29 36 41 REVIEW OF ELECTRIC ENERGY EFFICIENCY INCENTIVE PROGRAMS FOR RESIDENTIAL AND COMMERCIAL BUILDINGS James E. McMahon and Edward L. Vine ABSTRACT This report summarizes electricity conservation programs implemented by governments and utility companies, affecting residential and commercial sectors. The primary sources of information include pub- lished reports and personal interviews. The emphasis has been on programs with potential applicability to the Alaska Railbelt region. Program types include information programs, financial incentives (rebates, loans, etc.), and regula- tions. Where possible, quantitative information on program costs, participation rates, and measured benefits is identified. Administrative costs are distinguished from technology costs wherever possible. Issues pertinent to evaluation of programs are discussed, including attempts to separate incremental effects of programs from market-based behavior. July, 1988 REVIEW OF ELECTRIC ENERGY EFFICIENCY INCENTIVE PROGRAMS FOR RESIDENTIAL AND COMMERCIAL BUILDINGS James E. McMahon and Edward L. Vine FOREWORD For over ten years, energy conservation programs for new and existing residential and commercial buildings have been implemented by local, state, and federal government agencies, utility companies, and private organizations. Most of these programs have been designed and implemented in isolation from one another and have emphasized different technical and marketing designs. Because of the interest in these programs in Alaska, it is important to understand how effective they have been in penetrating the con- struction market, in saving energy, and in influencing the design and construction of energy-efficient build- ings. Our program review focuses more on new construction than existing buildings, due to two reasons. First, in Alaska, where there is now a surplus of electric generation capacity, new construction should be considered a ‘“‘durable good” that will last for 3 to 5 decades or more; any delay in constructing energy- efficient buildings represents a “lost opportunity” to save energy. And second, it is often easier and less expensive to construct an energy-efficient building from the beginning than to retrofit an existing building later. We also focus on nonmandatory programs instead of regulatory programs, due to three reasons. First, Alaska has just revised the state’s residential building standards, so there is a general reluctance to further tighten the energy-efficiency requirements until other, nonregulatory approaches have been explored. For appliances, federal efficiency standards have largely superceded the efforts of individual states. Second, the experience of several programs demonstrates that Alaskan utilities can become active participants in promoting energy-efficient construction without being linked by their customers with the imposition of mandatory standards. And third, for innovative approaches not covered by standards, and by presenting training workshops and material for educating the building community and thus enhancing compliance with standards (thereby, reducing the cost of compliance to builders, and the cost to govern- ment of code enforcement). In sum, these programs may not only provide a receptive environment for pro- posed standards and ease the process of upgrading existing standards, but also, in some cases, help pro- mote building practices that exceed state or local standards. CONCEPTUAL FRAMEWORK Our investigation was guided by a perspective on how programs address the barriers to widespread adoption of energy-efficient design and better end-use technologies in new and existing construction. Different frameworks have been used in the investigation of barriers in residential and commercial build- ings, and our categorization reflects these earlier perspectives. We considered four types of barriers: infor- mation, initial cost, technological, and perceived risk. These barriers are not mutually exclusive and often interact: ° Designers, architects and engineers, builders and developers, and the lending community need infor- mation on energy-efficient design and product availability, as well as data on their costs and energy performance. In addition, there is a widespread need for better energy design tools and improved methods for evaluating new technologies as they relate to a specific building. The lack of this infor- mation and the perception of problems regarding new technologies may prevent even highly motivated individuals from investing in cost-effective, energy-efficient measures and buildings, or inhibit design professionals from recommending such measures. ° Most of the actors involved in the design, construction, and ownership of energy-efficient buildings are very sensitive to initial costs and less concerned with long-term operating costs. Similarly, any time delays in designing and constructing a building represent increased costs that someone must bear. This is of special concern to small developer-builder firms, to owners or developers of ‘“‘specula- tive” commercial space, to many governmental agencies, and to prospective home buyers with lim- ited budgets. Frequently, an increase in initial costs is passed through to the buyer (possibly affecting his ability to qualify for a loan) and to tenants in apartments and leased commercial build- ings. Accordingly, market demand for more efficient buildings may be lessened if the initial costs are perceived as too high, and the corresponding savings in energy operating costs viewed as too small. ° The availability of some new energy-efficient technologies may be limited (e.g., electronic ballasts and point-of-use water heaters), especially in those areas where there is no established market. Also, new products are currently being introduced into the marketplace at a fast rate by a large number of manufacturers. As a result, problems arise related to the quality, performance, reliability, and possi- ble adverse impacts of these products on occupant health and comfort. The lack of a support infras- tructure that is willing and ready to service these products may compound these problems. Further- more, these technologies may not be adopted without the availability of measured, long-term perfor- mance data from a credible source, or some sort of quality assurance from an established institution. e For some individuals, the perceived risks associated with constructing (or owning) an energy-efficient building may be considered too high, compared to a “current practice” building. In the absence of adequate financial incentives, individuals may prefer to wait until new energy-efficiency standards are required, or until the advantages of these new technologies have been demonstrated beyond any doubt (e.g., energy-efficient design may be a good marketing device, or may lead to increased status), or until they are more familiar with the performance of the new designs and products. Each of these suggests, in turn, possible strategies to overcome barriers to energy-efficient investments in new and existing residential and commercial buildings. In organizing the information on the wide range of programs examined, we developed a typology that reflects different approaches to overcome the barriers to energy-efficient investment mentioned above (Table 1). Several of the programs we examined have multi- ple objectives and may overlap the program categories described in Table 1. Moreover, at different stages in the implementation of a given program, the objectives and emphasis may change, thereby changing the nature of the program. For example, demonstration efforts tend to evolve toward technical information programs. Similarly, financial incentives may be phased out once they achieve a certain amount of visibil- ity and market acceptance, to be replaced by information, marketing, and design assistance activities. Table 1. Types of nonmandatory programs. Programs Barriers Addressed Technology Demonstrations and Demonstration Programs Financial Incentives Direct Incentives Reduced Utility Rates and Hookup Fees Reduced Rates on Loans and Loan Qualifications Guaranteed Savings Tax Credits Consumer Information and Marketing Energy Rating and Labeling Energy Awards Technical Information Professional Guidelines Design Tools Design Assistance Standards-related Training, Compliance, and Quality Control Site and Community Planning Information Yes Yes Yes Yes Yes Yes Yes Yes Cost [Yes] il Yes Yes Yes Yes Yes No Technological Yes [Yes] [Yes] [Yes] [Yes] [Yes] Risk Yes [Yes] [Yes] [Yes] Yes [Yes] Yes [Yes] Yes Yes Yes ‘Yes Yes — * A [Yes] response indicates that the barrier addressed is not the primary focus of the program. METHODOLOGY In selecting programs for new and existing residential and commercial buildings, we conducted exten- sive literature searches and contacted key organizations and knowledgeable individuals in the field. Our interests included programs that were completed (or otherwise terminated), are presently being conducted, and, in some cases, those about to be initiated. Some of the programs were considered successful by their sponsors, while others were not. The common strand linking these programs was that valuable lessons could be learned from their experience. In the following 2 sections, we focused on programs that promote energy-efficiency investments and the design and construction of energy-efficient buildings, with a particular emphasis on the building shell or envelope. However, we did include programs that address both shell and equipment efficiencies. Section 4 deals with new construction. Section 5 treats retrofits of existing buildings. Those programs that simply promote the purchase of energy-efficient appliances (e.g., rebates for installing efficient lighting equipment, heat pumps, and other space conditioning equipment), without addressing the building envelope, are treated in Section 6. Conservation-oriented rate design, such as time-of-use rates and demand charges, were not included in this review. Using these criteria, we examined a total of 69 programs for new buildings: 37 programs for new residential buildings, 21 for new commercial, and 11 for both residential and commercial buildings. We examined 25 programs for existing buildings: 15 programs for residential buildings, and 10 programs for commercial. For appliance incentives, we report on 3 reviews, totaling 51 programs in 1983; 59 programs in 1986; and 12 recent programs. (These reviews overlap slightly.) ENERGY CONSERVATION PROGRAMS FOR NEW CONSTRUCTION Table 2 lists the 69 programs reviewed in this report: 37 programs for new residential, 21 for new commercial, and 11 for new residential/commercial. The columns in this table are based on categories used in the conceptual framework described previously. Several programs make use of multiple strategies and could be listed under more than one category. In these cases, we assigned a "primary category" and cross-referenced the program’s other features. Technology Demonstrations and Demonstration Programs Demonstration programs have often played an important role in field-testing new technologies -- or simply in proving the “buildability", performance, economics and marketability of energy-efficiency features. Sometimes these demonstrations are targeted as much to the staff of the sponsoring agency as to the local building or lending communities. Demonstration programs often select a small number of sites to test the performance of new technologies in occupied buildings and to prove that the technology works.” Such technology demonstration sites differ from a second type of demonstration program that is aimed at testing a new program approach on a small-scale, pilot basis: if successful, the program is then expanded to a larger-scale. Many of the demonstration programs included in this category have included both objec- tives: to test new technologies and new programs. In Table 2, we have differentiated those demonstration programs emphasizing "technology testing" from those focusing on “program testing." Exemplary programs of technology testing are the Bonneville Power Administration’s (BPA) Residential Standards Demonstration Program (RES-23) and Residential Construction Demonstration Pro- gram (RES-24 and RES-32), and the Minnesota Housing Finance Agency’s Energy Efficient Housing Demonstration (RES-28). Exemplary programs of program testing are the Solar Energy Research Institute’s (SERI) Denver Metro Home Builders’ Program (RES-26), BPA’s Energy Edge Program (COM- 9) and Code Adoption Demonstration, Early Adopter, and Model Conservation Standards Implementation Assistance Programs (RES/COM-8), the U.S. Department of Energy’s (DOE) Passive Solar Nonresidential Buildings Program (COM-16) and the Passive Solar Manufactured Buildings Program (RES/COM-3), and the City of Tacoma’s Early Adopter Program (RES/COM-9). Aside from a few cases (RES-23, COM-16, RES/COM-3, RES/COM-9), there has been very little evaluation of demonstration programs (in many cases, a number of buildings have yet to be evaluated 1 Detailed characteristics of each program are available from the authors. Each program is referenced by the number listed in the last column. (RES-24, RES-28, RES-32, and COM-9)). Thus, the real role of demonstration programs may be not only (or mainly) to obtain evaluation data, but also for other reasons, as discussed below. As a result, there are few quantitative data on program effectiveness. Although we do have such data for a few programs, it is hard to tell how representative these may be. Although market penetration was not emphasized in most of these programs (see discussion below), the number of buildings participating in these programs varied over a wide range. We grouped the demonstration programs by the number of buildings involved in a particular program. Many of the pro- grams were small (less than 30 buildings) (e.g., RES-22, RES-27, RES-26, RES-31, COM-9, and COM-16), a few programs were medium-sized (about 150 buildings) (e.g., RES-25, RES-28, and RES-32), and a few programs were large (over 400 buildings) (e.g., RES-23, COM-17, RES/COM-8, and RES/COM-9). A few of the programs in the last category were promoting the adoption of energy efficiency standards and trying to maximize penetration (e.g., 937 residential and 84 commercial buildings in RES/COM-8). The cost of administering demonstration programs has been quite high, ranging from $150,000 (where 12 homes were built, RES-26) to $30 million (where 706 buildings were built, COM-17). These costs include costs for planning, administration, monitoring, evaluation, or incentives. For example, DOE’s Solar in Federal Buildings Demonstration Program (COM-17) cost $30 million to administer (most of this money went into the monitoring of the buildings and for data analysis; an additional $29 million was spent for incentives), and DOE’s Passive Solar Nonresidential Buildings Program (RES/COM-3) cost $5.5 million to administer. Building energy savings were measured and/or estimated in five programs: Table 3. Energy savings for new buildings. Program # Name of Program Sponsor Savings Measured savings RES-23 Residential Stds. Demo. Pgm. BPA 45% annual elec. space heating RES/COM-9 Tacoma’s Early Adopter Pgm. | Tacoma 42% annual elec. space heating COM-16 Passive Solar Nonres. Bldgs. DOE 45% annual energy Estimated savings RES-23 Residential Stds. Demo. Pgm. BPA 40% annual elec. space heating RES-31 SolarSave Pgm. Maine OER | 31% annual energy COM-9 Energy Edge BPA 30% annual elec. use The incremental cost of building energy-efficient homes was reported in two programs in the Pacific Northwest: BPA’s Residential Standards Demonstration Program (RES-23) reported energy-efficient homes to cost $2.90 per square foot less than conventional homes, and Tacoma’s Early Adopter Program (RES/COM-9) reported an incremental cost of $1.50 to $2.00 per square foot. Thus, energy efficient homes were not significantly more expensive than conventional homes. In commercial buildings, the extra design time and energy modeling in the early stages of design often led to substantial energy savings while reduc- ing initial construction costs (e.g., due to smaller equipment sizes and more efficient lighting and mechani- cal systems) (COM-16). In fact, the design and construction of energy-efficient buildings did not require significant changes in building practices (RES-23, RES-25, RES-26, COM-9, and RES/COM-9). And, in commercial buildings, simple designs were found to be the most cost-effective designs (COM-9). Some problems have been found related to the design, installation, and operation of energy-efficient technologies, but these can often be corrected with proper guidance and training during the implementa- tion of the program (RES-23, RES-25, COM-16). Accordingly, there is a need for greater quality control in the design, construction, and operation of energy-efficient technologies. Also, the training and education of architects and engineers, designers, and builders were found to be very effective in obtaining their parti- cipation in the program and for improving the quality of building construction (RES-21, RES-23, COM-9, RES/COM-8). Although difficult to quantify, demonstration programs have also helped create the infrastructure and capability to deliver large-scale energy conservation programs for new residential and commercial buildings. Thus, demonstration programs have helped create new markets (or expand existing markets) for energy-efficient homes, materials, and equipment. Some programs have changed builders’ attitudes towards energy-efficient homes and builders’ construction practices, so that most home construction in the area is energy efficient (e.g., RES-26). Moreover, some builders who participated in the demonstration program continued to build energy-efficient homes and to experiment with innovative building technologies after the demonstration programs in Colorado (RES-26), Minnesota (RES-25), South Dakota (RES-21), and in the Pacific Northwest (RES-23) were completed, and builders in one community later supported a local home energy rating and labeling program (RES-26). Finally, these programs have also helped create networks among designers, builders, and utility and government program sponsors, all of whom are more receptive to innovative methods, materials, and technologies (RES-23, RES-26, COM-9). Demonstration programs have often targeted designers, architects, engineers, builders, building own- ers, and developers at the "leading edge" so that others would be encouraged to copy or model these inno- vators ("market-leaders"). Buildings and programs have also been showcased as models for other commun- ities: some commercial buildings constructed in BPA’s Energy Edge program (COM-9) have become proto- types for future buildings in the region, and SERI’s Denver Metro Home Builders’ Program (RES-26) was replicated in the Pacific Northwest, and Washington State’s Design Assistance Program for new commer- cial buildings (COM-11) was the model for BPA’s Energy Smart Design Assistance Program (COM-10) in the Pacific Northwest. Similarly, the impacts of demonstration programs continue after the programs themselves have ended. For example, building and design criteria have formed the basis for: (a) subdivi- sion approval requirements (RES-37), (b) prescriptive and performance energy regulations and guidelines (RES-25), (c) home energy rating and labeling programs (RES-26), and (d) public subsidy funding guide- lines (RES-27). Finally, demonstration programs have helped program sponsors by establishing their "familiarity" with the technology and with the program. After experiencing problems with technologies and program implementation, sponsors feel more capable and are more willing to expand their program. In sum, market penetration rates are not really relevant for demonstration programs; the impact of the demonstra- tion on the target community and on its effect on other programs is what is important. Financial Incentive Programs Financial incentives play a very important supportive role in the implementation of programs as marketing tools and often complement technical assistance, training and education activities. Implicit in the promotion of incentives is the belief that building codes will follow building practice, contrary to argu- ments supporting building regulations. Where innovative technologies are introduced, and learning curves are long, incentives are promoted for assisting the training and education of builders. In contrast to the use of incentives in existing buildings, we did not find any programs using third-party financing in the pro- motion of energy-efficient new construction. Financial incentives have also legitimized and emphasized the public policy pronouncements and goals regarding the need for energy conservation investments. A program’s willingness to subsidize a por- tion of the cost of the investments acts as a "seal of approval" that encourages energy-efficiency invest- ments and reduces the risk of loss of political support. On the other hand, the introduction of incentives may lead to more political risks as controversy develops around the issues concerning incentives. These issues should be kept in mind when we discuss the following types of financial incentives: direct incentives (rebates or in-kind assistance), reduced utility rates and hookup fees, reduced rates on loans and loan qualifications, guaranteed savings, and tax credits. Direct incentives Direct incentives are used to reduce the up-front purchase price and risk of energy-efficient technolo- gies to the target audience (e.g., the consumer or builder). The reduction of the initial cost may be seen as financially and psychologically more important than the slight reductions in mortgage payments in the long run. These incentives are usually rebates and direct cash payments, often benefitting building owners, and are considered a one-time event. Sometimes constraints are placed on how the money is used: for instance, the money can only be used in advertising the program. As seen in Table 2, very few programs offer financial incentives alone. The greatest impact of direct incentive programs occurred when the incentives were offered in conjunction with other programs, such as technical assistance, training, and education. Most programs use direct incentives with other features to market their program. Incentives vary depending on building type (single-family, multifamily, 10 manufactured home, commercial), target audience (builders, home owners, manufacturers, dealers, designers), and objective of program (demonstration or established program): (1) the largest incentives (in total dollars, not dollars per square foot) are usually targeted for builders of commercial buildings partici- pating in demonstration programs, (2) the incentives for builders in residential demonstration programs are typically in the range of $1,000 to $3,000, while the number of participating buildings is limited (usu- ally less than 500), and (3) the incentives for builders in home energy rating and labeling programs (see below) are relatively low (less than $500), while the number of participating buildings is large (over 4,000). In sum, the size of an incentive was not positively correlated with market penetration; the presence of an incentive may have been more important than its magnitude. A number of energy conservation programs offer incentives for installing energy-efficient measures as well as for subsidizing actual design costs. For measures, incentives can either be "prescriptive" (based on specified payments for a list of measures) or "customer-defined" (based on dollars per square foot or dollars per kWh saved). Examples of the former are incentives for high-efficiency heat pumps offered by the Pub- lic Service Company of Oklahoma (COM-8), and Southern California Edison’s daylighting controls (COM-20). The City of Palo Alto (a municipal utility) allows customers to choose either a prescriptive or performance approach to reduce their cooling loads; rebates are provided as long as demand is reduced during the City’s summer peak demand period (COM-21). In general, we did not include in this report technology-specific financial incentives for new or existing buildings. There are numerous programs that offer rebates for installing thermal energy storage, heat pumps, efficient water heaters, and solar hot water and space heating systems, and these programs are discussed in a separate chapter. Some programs also offer incentives to designers to reimburse (subsidize) their costs of participating in the program and of redesigning their buildings for incorporating energy-efficient measures. In Washing- ton State’s Design Assistance program (COM-11), for example, incentives to designers ranged from $0.046 to $0.44 per square foot. Reduced utility rates and hookup fees Utility companies have an arsenal of rates to promote the installation of energy conservation meas- ures: demand rates, time-of-use rates, off-peak rates, seasonal rates, inverted rates, variable levels of a service, promotional rates, and conservation rates. These rates, however, are not designed specifically to reinforce demand-side management programs, except in a very general sense. While these rates apply pri- marily to existing construction, new construction can take advantage of these rates if they are designed and built correctly. Two important features differentiate rate reductions from rebates and other direct incentives: the target audience and time. The percentage reduction in rates typically last for the lifetime of the home (or homebuyer) ("continuing incentives"); on the other hand, rebates often occur only once: at the beginning of a program, or after a building has been completed or piece of equipment installed. Reduced rates typically benefit homeowners. Builders indirectly benefit from these rates by the assumed increased demand in energy-efficient housing by consumers wanting lower rates, as experienced in some home energy rating pro- grams (see below). In contrast, rebates, while having a mixed target audience (see Table 5), often benefit the builders of energy-efficient buildings. Consumers indirectly benefit from the rebates by the increased supply of energy-efficient housing and equipment. Ideally, programs would use both rebates and continu- ing incentives for promoting energy-efficient buildings, and we discuss this strategy later in the paper. We focused on those programs using conservation rates, the principal type of rate promoting energy-efficient new construction. In these programs, customers meeting the utility’s criteria for energy efficiency are placed in a separate (lower) rate category. Utilities having conservation rates include the fol- lowing: Duke Power (RES-12), Carolina Power and Light (RES-11), South Carolina Electric and Gas (RES-13), Virginia Electric and Power, Arizona Public Service Company, Kansas City Power and Light, Central Maine Power, United Illuminating, Central Power and Light, Gulf States Utilities, and Utah Power and Light (Cogan, 1983, 1987). In conclusion, conservation rates may be an effective strategy for promoting energy-efficient construc- tion. Both the utility and the customer liked the reduced rates: they were easy to adopt, reduced peak loads, and provided long-term incentives for expanding the market for energy-efficient buildings. Another method available to utility companies is the hookup (connect) charge. For example, a util- ity might promote energy conservation and reduce peak loads by allowing owners of new energy-efficient buildings and equipment to pay reduced connect charges. This approach was attempted in Maine, but 12 failed due to political opposition by the building community. Because this approach has not been imple- mented anywhere in the U.S., it is unclear on how effective the strategy is in promoting energy-efficient construction. Reduced rates on loans and loan qualifications A homeowner’s ability to purchase a home is often contingent on his ability to qualify for a mort- gage loan, and that qualification is a function of current income, total debt, and the price of the house. Lending policies affect the owner’s ability to purchase a home and revolve around estimates of a borrower’s ability to meet credit obligations. Traditionally, lending institutions have implicitly penalized energy efficiency by not including reduced energy costs in their loan calculations. In the last seven years, there has been a substantial change in this situation. This has been largely due to the development of home energy rating systems (HERS, see below) which provide the means for ascertaining energy efficiency and energy costs. The lower energy expense anticipated from an energy-efficient structure enables a borrower to pay for a larger loan than would otherwise have been the case. Thus, buyers are now able to qualify for homes that previously were considered too expensive. Alternatively, this means that borrowers who would not normally qualify for a loan (marginal borrowers) could now meet the standards. The number of HERS accepted by secondary loan institutions is increasing at a greater rate than in the past. For example, the National Association of Home Builders’ (NAHB) Thermal Performance Guide- lines have been readily accepted by lenders, and any HERS based upon these guidelines has a good chance of success with the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), two important secondary lenders which buy mortgages from banks, savings and loans associations, and credit unions (primary lenders). Connection to the NAHB’s program has been very helpful: NAHB has approved 35 to 40 HERS for use with their guidelines (RES-6). However, there is little evidence of the impact of secondary lending institutions on home buying. We were unable to find data where the energy efficiency of the home had an impact in the loan approval process. Primary lenders, the local banking and credit union institutions, can potentially have a greater impact since their contacts with consumers are closer. However, relatively few banks actually consider energy efficiency in their lending decisions. Consequently, Freddie Mac and Fannie Mae endorsement has mainly been of 13 greater marketing value to the HERS agencies in dealing with recalcitrant builders, or in arguing the potential of HERS to realtors, than in creating greater demand for energy-efficient housing by the general public. In contrast to lowering loan qualifications, reduced loans (interest rate buy-downs or write-downs), where interest rates on mortgages are reduced through subsidies, for builders complying with energy efficiency standards is another strategy attempted in a few demonstration programs (RES-6, RES-21, RES-22, and RES-25). Most of these Ht an have not lasted for long periods of time, have encountered resistance among key actors in the financial community, and have had limited impact in creating market demand for energy-efficient housing in their regions. Guaranteed savings Another financial incentive used by some institutions and builders to promote energy-efficient build- ings is "guaranteed savings:" a builder or utility markets the energy-efficient building with a guaranteed maximum (or a guaranteed zero) utility bill for the first few years of ownership: for example, all utility bills over $100 a year will be paid. For example, a builder in Butte, Montana, captured 60% of its four- county housing market in three years with simple superinsulated homes sold with a guaranteed $100 per year maximum electric heating bill (Rocky Mountain Institute, 1987). The builder had to deliver on the guarantee only twice (once for $3 per year and once for $17 per year). At least two home energy rating and labeling programs (HERS, see below) guarantee the savings of their energy-efficient homes to the home buyer: Virginia Power and Watt Count Engineering, Inc.. These guarantees benefit developers by facilitating the rapid sale of new buildings, ensuring greater profitability and market share. By guaranteeing savings, these incentives had other noneconomic benefits: they increased the trustworthiness of the sponsor providing the incentives and, in the case of HERS, increased the value of the home energy rating system. However, while these guarantees are risk-free for the homeowner, they entail risk for the providers: utility companies may have to increase rates, or builders increase selling prices, to recover their costs if savings do not occur. 14 Tax credits During the 1970s, federal and state governments adopted conservation tax credits and solar tax credits as incentives to help reduce the first cost of energy efficiency and renewable energy investments. Many of the incentives subsidized the installation of energy equipment (e.g., solar hot water heaters) rather than the shell of the building. With the passage of the Tax Reform Act of 1986, all the federal energy con- servation tax credits for residential use were allowed to expire; a few credits for commercial use were extended (Klepper and Christie, 1986/1987). The federal energy tax credit for solar technologies, including photovoltaics was extended. Some state tax credits remain, but not in Alaska. In their review of studies of the market stimulation effects of solar tax credits, Sawyer and Lancaster (1985) found that the exact nature of the effect and how the effect varied with the magnitude of the credit rate remained uncertain. However, these studies did confirm that a larger tax credit led to greater use of the credit. However, the level or amount of the tax credit may not be as important as the presence of a tax credit (Carpenter and Durham, 1985). In a study examining the factors predicting the purchase of solar hot water heaters, the awareness of availability of state tax credits was consistently significant for several models while the variable for the level of the state tax credit was not found to be significant (ibid). Thus, the authors suggest that large state credits were higher than necessary and that the same result might have been achieved with a lower credit. The presence of a tax credit has been found to be useful for promoting energy efficiency investments. While many low-cost energy efficiency measures were installed by consumers, some investments with high initial costs were made as a result of the tax credit. However, the tax credit has primarily benefitted high-income homeowners who have the resources to make energy efficiency investments and who normally file tax returns. The widespread use of tax credits in the future appears to be very limited as federal and state governments attempt to reduce budget deficits, for example, by eliminating tax credits. Further- more, the issuance of tax credits has been limited to state and federal government; utilities, regional power distributors, and local government cannot use tax credits as a program strategy. 15 Consumer Information and Marketing Information/marketing programs can be used to publicize energy conservation programs ("program marketing") as well as to help expand and intensify the market for energy-efficient products (“market enhancement"). Many programs include both objectives by increasing the target audience’s (consumers, builders, developers, etc.) awareness, acceptance, and support of particular energy conservation programs. Several types of marketing methods are used, often in combination with one another: education through bill inserts, brochures, information packets, displays, and direct mailings; direct contact through face-to- face communication in workshops and seminars; trade ally cooperation through cooperative advertising and marketing and certification; advertising and promotion through mass media (radio, television, and newspaper) and point-of-purchase advertising. General information programs (e.g., speaker bureaus, edu- cation programs, and displays) that increase consumer awareness of energy conservation programs were not emphasized in this report because of their limited usefulness in directly influencing consumer behavior to save energy or reduce demand. Two types of consumer information and marketing programs are considered in the following discus- sion: home energy rating systems (HERS) and energy awards. The former is an excellent example of how different marketing strategies can be used in an integrated fashion to successfully promote conservation programs to several target audiences. In contrast, the latter is directed to designer/builder professionals, and, by itself, has limited impact. However, when combined with other features, such as building energy ratings, the impact of energy awards becomes more significant. Energy rating and labeling The energy rating and labeling of new buildings has been an important activity for a number of years, and marketing appears to be one of the most important determinants of program success in this field (Vine et al., 1987a). In an evaluation of 34 home energy rating and labeling programs (HERS) being conducted around the country, it was found that HERS that were actively marketed, had a comprehensive appreciation of the market, were adaptive to the needs of particular users, and included user participation in the operation and revision of the program, were more successful in terms of penetration rates and in improving the energy efficiency of the building sector (ibid). Exemplary programs include the Tennessee 16 Valley Authority’s Energy Saver Home Program (RES-4), Canada’s R-2000 Home Program (RES-5), the Salt River Project’s Energy Efficient Home Program (RES-7), Bonneville Power Administration’s Super Good Cents Program (RES-9), and Southern Electic’s Good Cents Commercial Program (COM-7). In con- trast, programs that had a restrained approach to the implementation of HERS—by insisting on treating implementation problems as basically technical, engineering problems (e.g., focusing on the accuracy of the tool), or by taking a laissez-faire approach to marketing (e.g., simply meeting a demand for energy efficiency, rather than helping to create more demand)—or programs that had adopted an active approach but were not responsive to the needs of their target groups, had a poor track record. Home energy rating systems have been very effective in the new housing market, especially when two market criteria are met: (1) the HERS was introduced in a recessionary period, when builders are most receptive to novel ways of promoting their buildings, in ways that involve actual savings to future homeowners; and (2) the HERS is actively promoted by the HERS agency, with widespread media cam- paigns and extensive support of builders, including cooperative advertising, and marketing materials and assistance. Three additional features were especially important to the success of HERS: (1) the credibility and trustworthiness of the HERS sponsor (e.g., some consumers were suspicious about the potentially contrad- ictory objectives of utility companies sponsoring HERS: promoting energy efficiency versus making money by selling energy); (2) cooperation with local, state, and national building associations (some of these organizations actively researched the market, promoted the success of building innovators, and helped develop local and regional HERS); and (3) cooperative advertising between sponsors and the building and financing communities (e.g., a HERS sponsor would pay 50% of a builder’s advertising expenses, if the HERS name (logo) and energy efficiency were prominently displayed in the advertisement). Aside from a few home energy rating programs (e.g., Duke Power, Conn Save, and the state pro- grams of Florida and Pennsylvania), low-income households rarely participated in HERS (Vine et al., 1987a). This was particularly true for manufactured housing, whose principal buyers were low-income consumers. For example, in Arkansas Power and Light’s Energy Saver Manufactured Home Award Pro- gram (RES-29), low-income homebuyers were more interested in initial housing costs than lifecycle costs 17 and were not willing to spend an additional upfront cost of $2,000 to $3,000. HERS have both direct impacts (influencing the behavior of participants) and indirect impacts (influencing the behavior of the general housing market, such as by generally raising expectations with regard to energy efficiency). Consequently, these complexities make it very difficult to evaluate the impact of HERS and, therefore, measure the success of these programs. To date, there has been no attempt to measure the complete impact of HERS. Nevertheless, we present some data from an earlier report (Vine, Barnes, and Ritschard, 1988) on HERS market penetration and energy — that present a partial pic- ture of the success of HERS; although HERS often target both new and existing construction, we limit our remarks to the former. The range in market penetration rates has been large: from 2% for a manufactured home rating pro- gram (RES-29) to 100% where all new homes are constructed to the HERS standard. The programs obtaining a high annual market penetration rate were Alabama Power (78% for multi-family units), Pub- lic Service of New Mexico (about 100%), Kansas City Power and Light (100%), the Salt River Project (60%) (RES-7), Duke Power (90-95%), and the Texas Electric Utility Company (60%). The average market penetration rate was around 40% for new construction. However, the high percentages are some- what deceptive because the size of the new housing market is often small; exceptions to this fact are those utilities that have rated more than 10,000 homes, including Alabama Power, the Salt River Project (RES- 7), Virginia Electric Power, Florida Power (RES-14), Mississippi Power and Light, and the Tennessee Val- ley Authority (RES-4). Typically, the reported success of a HERS was inferred from rough estimates of energy savings made under certification programs. HERS authorities often had some notion of the average saving per certified structure, and they also had some concrete data on the number of residences actually certified. Simple arithmetic produced a value used to index the success of the program. Some HERS qualified their estimates by noting that many HERS had an impact beyond that represented in the number of actual ratings as building practices and standards changed throughout the industry. The estimates of the savings attributed to construction to a certain HERS standard were based on either computer simulation studies or on some, usually limited, field tests. Major exceptions to this were 18 large utility companies and companies that metered the heating and cooling consumption of homes (e.g., Alabama Power and Public Service Company of New Mexico). Savings were estimated in dollars or in energy consumption units (kWh, therms, Btus) and were often made in relative terms with a shifting refer- ence base. The reference base could be a fixed minimum standard (e.g., a state minimum standard of a prior year), or an estimate based on typical "current building practice” ("average construction"). Only two rating programs used state standards for their comparisons: Kansas City Power and Light estimated over 50% energy savings and Virginia Electric Power estimated 20-45% energy savings. For the programs using average construction for their comparisons, estimated energy savings ranged from 15-50% and measured energy savings ranged from 30-50%. While the ranges of energy savings are similar for the different methodologies, one should be aware of the limitations of these methodologies. Estimates based on a past regulatory standard are deceptive because the standard might be a poor indication of what builders are currently building in the marketplace. In this situation, a HERS would exaggerate the energy savings attributed to a HERS because it did not control for the upgrading expected through normal market forces and the diffusion of innovations and higher standards adopted without the presence of a HERS. In con- trast, estimates based on current typical building practices are most likely to be "guesstimates," since current building practice is poorly defined, not practiced by everyone, has uncertain energy use implica- tions, is usually estimated rather than measured, and does not take into account the influence of HERS on non-participants. Because of these limitations, those utilities offering estimates based on current standards were the most cautious of the utilities. They were wary of the utility’s liability and did not want to deceive consumers with uncertain promises. Hence, their saving estimates were conservative, underestimat- ing actual savings. Recently, energy rating programs have started to be used in the commercial sector. One of the most ambitious programs is the Good Cents Commercial Program by Southern Electric International (SEI) (COM-7). SEI’s program addresses the technical, promotional, and managerial aspects of rating programs, and each program is customized to a utility’s specifications. Currently, four utilities are participating in this program: Public Service Company of Oklahoma (COM-8), Gulf Power Company, Wisconsin Electric Power Company, and Mississippi Power. In addition, the Bonneville Power Administration is rating new 19 commercial buildings in two programs (Energy Edge (COM-9) and the Energy Smart Design Assistance Program (COM-10)). Energy awards Energy awards are sometimes presented in recognition of those design professionals whose work demonstrates energy efficiency in new construction (i.e., "the best” energy-efficient buildings). The primary objective of design competitions and awards is to generate interest in the design community to design energy-efficient buildings. However, the programs have limited impact by themselves and often no techni- cal assistance is provided to the competitors on how to design these buildings; that is, there is no interac- tion between designers and sponsors of the program. In other cases, the design competition may be part of a demonstration program, and the winning designs may become the prototypes of buildings built in the program (e.g., New England Electric’s Energy Efficient Home Program (RES-16)). In summary, energy awards were most effective in promoting energy-efficient construction when they were featured as part of comprehensive energy efficiency programs. The principal sponsors of energy award programs are utilities (Pennsylvania Power and Light (COM-1), Florida Power (COM-2)); professional organizations (the Energy Efficient Building Association (RES-19), the American Society of Heating, Refrigerating, and Air-Conditioning Engineers (COM-3); government (Canada (COM-5)); and trade organizations (the Edison Electric Institute (COM-4) and the Owens-Corning Fiberglas Corporation (RES/COM-7)). The principal focus of the award programs is the commercial and industrial sectors. Technical Information: Professional guidelines The provision of technical information for design practitioners and building professionals is often considered one of the first resources to be developed in the promotion of energy-efficient construction. One source of technical information are guidelines on designing and constructing energy-efficient buildings issued by professional organizations. While guidelines are also offered in many programs, as part of the interactive discussions between program sponsors and target groups, the guidelines considered in this 20 section are those that are generic for all building types for the entire United States. The American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) is a technical society that develops voluntary consensus standards and guidelines to assist industry and the public. ASHRAE standards are often approved or modified, then adopted, by code-setting organizations on the local, state, national, and international levels. Over 60 ASHRAE standards are currently available. One of them, Standard 90, "Energy Conservation in New Building Design,” has served as the basis for building code provisions in all 50 states (Standard 90.2 is for low-rise residential and Standard 90.1 is for all other buildings) and is undergoing a process of refinement. Another source of professional guidance comes from the federal government, the U.S. Department of Energy (RES/COM-6). The standards established by ASHRAE and DOE have been very important in establishing new norms of professional practice, new design guidelines, and new local and state building codes. These norms have provided the technical and institutional underpinnings for much of the changes in design and construction practices. However, state and local design professionals may need more indivi- dual design assistance on a project-specific basis than a set of written guidelines or standards. In addition, the relatively lengthy amount of time it takes for innovative building designs, materials, and techniques to be recognized by professional organizations and federal agencies acts as an incentive for innovative design professionals to look elsewhere for more immediate, personal, and interactive assistance, as discussed below. Design tools As part of most design assistance programs (see next section) and as part of information transfer activities of other programs, special design tools for evaluating energy-efficiency features have been developed and made available to the design community. The available design tools are varied, including workbooks, guidebooks, energy nomographs, calculator programs, daylighting models, and microcomputer or mainframe computer software. In some cases, the same tools have been used for both complying with local or state energy codes and for improved design that goes beyond the standards (e.g., the design manu- als for complying with California’s building standards (RES/COM-4). 21 We encountered three programs primarily directed to the production of design tools. New England Electric’s Energy Efficient Home Program (RES-16) produced plans for three passive solar homes and dis- tributed 35,000 copies of the plans. The U.S. Department of Energy is currently revising their General Design Criteria (COM-19) and developing Whole Building Energy Design Targets (COM-18) for new com- mercial buildings. Design tools that were simple, low-cost and readily available and that provided reliable, useful information on the energy performance of proposed design measures were the goal of many conser- vation programs, and were developed in many programs. As in the case with energy awards, design tools themselves have a limited impact in promoting energy-efficient construction. When the design tools are featured as part of a comprehensive energy efficiency program, such as a design assistance program, the tools become an important resource to use in educating, training, and convincing design professionals about the value of energy-efficient design. Design assistance Aside from programs providing direct rebates for appliances and equipment, one of the most com- mon types of energy-efficiency programs offered by utilities and governmental agencies to new residential and commercial customers has been the provision of technical assistance in designing energy-efficient build- ings. As part of the design process, these design assistance programs often include consulting services and site-specific design review between energy experts and the architect and engineering team and their client. These programs tend to be most successful when they introduce energy efficiency options as early as possi- ble in the design stage, where key actors are often most open to new ideas and suggestions. Other key actors (such as lenders and real estate agents) may be included in these early discussions in order to edu- cate them about the potential energy and financial savings resulting from energy-efficient improvements. Because money and time are at a premium at the design stage, both the design team and the client (and lender) must be convinced that the benefits of the increased design effort and expense are worthwhile, in terms of energy efficiency and marketability of the property. To stimulate greater participation in the early stages, design assistance is frequently combined with marketing and financial assistance. For exam- ple, in BPA’s Energy Edge Program (COM-9), designers were reimbursed for their costs of participating in the program and were paid for the cost of redesigning their buildings for incorporating energy-efficient 22 measures. In addition to review of architectural and engineering drawings, computer modeling is often provided to simulate the effect on energy performance and cost-effectiveness of different building configurations, orientations, design features, and energy technologies. Computer programs are most often used to esti- mate the energy needed for heating and cooling a building and the operating costs for heating and cooling. Sometimes, energy used for lights, water heating, and other appliances is also estimated, as well as peak electricity demand or energy usage by time-of-use (as defined in the rate design). Both peak demand and energy by time-of-use are of increasing concern as factors affecting energy operating costs. While design assistance is offered to professionals working in the residential sector (e.g., Alaska’s Alaska Craftsman Home Program (RES-34) and Arizona’s Building Industries Short Course Program (RES-35)), the best examples of design assistance occur in the commercial sector, especially: Tennessee Val- ley Authority’s New Construction Energy Design Assistance Program (COM-6), Bonneville Power’s Energy Smart Design Assistance Program (COM-10), Washington State’s Design Assistance for New Commercial Buildings Program (COM-11), Sacramento’s Technical Assistance Program (COM-12), and Northeast Util- ities’ Energy Conscious Construction Program (COM-20). Design assistance can be provided by professionals either in-house or outside the sponsoring agency. For example, the Tennessee Valley Authority (TVA) (COM-6) uses its own architects and engineers to work with private architects and engineers on specific projects on a one-to-one basis. If in-house expertise is not available, architectural and engineering firms might be able to provide the necessary resources for providing design assistance. For instance, the Washington State Energy Office (COM-11) used a competi- tive selection process for selecting four firms to work with developers and builders in their Design Assis- tance program. Washington State chose this approach because (1) they didn’t have design engineers in their office, (2) there were experienced consulting firms in the state, (3) they hoped to create a larger market for energy design firms in the state, and (4) they wanted better oversight of the program (e.g., through the use of standardized forms). A third option—allowing utilities to choose their own experts (in- house or outside the utility)—is planned for the Bonneville Power Administration’s (BPA) Energy Smart Design Assistance Program (COM-10). 23 Aside from a few cases, there has been very little evaluation of design assistance programs. As a result, there are few quantitative data on program effectiveness. Although we do have such data for a few programs, it is hard to tell how representative these may be. Market penetration was quite low: most pro- grams targeted professionals at the "leading edge" so that others would be encouraged to copy these inno- vators. In addition, lengthy, personal discussions between the design professional and the sponsoring organization limited the number of program participants. TVA, for example, only reached about 3% of the design community in their region. From 1980 to 1986, design assistance was provided by TVA to architects and engineers on 430 projects (usually, one building per project). The national design assistance demonstration programs were expensive and usually one-time events, in contrast to the ongoing design assistance programs of utility companies. For example, DOE’s Solar in Federal Buildings Demonstration Program cost $30 million to administer (most of this money went into the monitoring of the buildings and for data analysis; an additional $29 million was spent for incentives), and DOE’s Passive Solar Nonresidential Buildings cost $5.5 million to administer. Energy savings were measured in only one program: DOE’s Passive Solar Nonresidential Buildings were found to be saving an average 45%, compared to estimates for comparable “base case" buildings. Moreover, operating costs were found to be 51% less than the base case. On the other hand, energy sav- ings were estimated in three programs: BPA estimates a 30% annual electric savings in their Energy Edge Program (COM-9) and a 10-30% annual electric savings in their Energy Smart Design Assistance Program (COM-10), and the California Energy Commission predicts 40-50% annual electric savings from office buildings complying with the state’s new building standards (RES/COM-4). The more recent design assistance programs have shown that the initial reluctance of some designers to have their plans "reviewed" can be overcome when both the design firm and the client are clearly shown the benefits of designing energy-efficient buildings: long-term energy cost savings, the potential for first- cost savings in some cases, improved professional reputation and status, and an increased competitive edge. The experience of these programs has shown that, in many cases, substantial gains could be made in energy efficiency without any significant cost increases or significant changes in building practices. Design assistance programs were most successful when energy efficiency options were introduced as early as 24 possible in the design stage, so that delays in construction would be minimized. In some programs, the added amount of time spent in design and energy modeling in the early stages of a project led not only to energy savings but also reduced initial construction costs, generally as a result of down-sizing HVAC equipment to meet reduced loads, or by installing fewer but more efficient lighting fixtures (COM-9). These programs have also had important indirect effects, by helping to create a-network among designers, builders, and utility and government program sponsors, all of whom are more receptive to inno- vative methods, materials, and technologies. For example, one developer participating in a design assis- tance program in the Pacific Northwest has decided to use his prototype for future buildings in the region (COM-9). Furthermore, a new private service industry has emerged to assist the residential and commer- cial design and construction community in complying with new standards. Consequently, an opportunity exists for targeting programs to this industry in demonstrating to them new technologies and new designs that go beyond present standards. Standards-related training, compliance, and quality control Technical workshops and seminars are sometimes conducted, as part of energy conservation pro- grams, “to provide technical information and training to architects, engineers, building owners and managers, builders, developers, building code officials, appraisers, commercial real estate professionals, and staff of financial institutions. These training activities are especially important to encourage conformance with mandatory standards or voluntary guidelines. For example, one of the most important findings in the evaluation of Washington State’s commercial energy code was that most officials responsible for the commercial energy code did not feel adequately trained or educated to enforce it (O’Neill, 1988). As a result, mechanical and lighting code requirements, in particular, were largely being ignored by the building officials in most jurisdictions. In response to and in expectation of these kinds of problems, the California Energy Commission (CEC) has conducted numerous training workshops around the state for promoting compliance with its new mandatory energy conservation requirements for new commercial buildings (RES/COM-4). In addi- tion, several design manuals have been prepared for the CEC by local architectural firms. BPA’s residen- tial demonstration programs (the Residential Standards Demonstration Program (RES-23) and the 25 Residential Construction Demonstration Program (RES-24)) have also included extensive training seminars for the building community to meet the proposed energy efficiency standards (the Model Conservation Standards) in the Pacific Northwest. Similarly, energy rating and labeling programs (see above) for homes (e.g., Canada’s R-2000 Program (RES-5)) and commercial buildings (Southern Electric International’s Good Cents Commercial program (COM-7)) have emphasized the training of design and building practi- tioners for meeting the voluntary standards in their programs. A very innovative training program is taking place in Alaska which encourages builders to go beyond state standards in constructing high quality new homes. The Alaska Craftsman Home Program (RES-34) has selected 24 builders from around the state to take part as volunteer regional trainers. These individu- als, already possessing expertise in building homes in Alaska, receive extensive training in the latest state- of-the-art superinsulated building technologies. They then return to their regions to train other builders and serve as resource persons for their area. In addition to ongoing education and training activities, quality control inspections are sometimes made during the construction process and/or after the building has been completed to ensure that the building has been constructed properly and the equipment are working as designed. Quality control inspections are especially important for those programs that rate buildings. The Public Service Company of Oklahoma’s Good Cents New Commercial Program (COM-8) includes final inspections to make sure the constructed building is a Good Sense building, and TVA’s Energy Saver Home Program (RES-4) and BPA’s Super Good Cents Program (RES-9) conduct inspections during the construction phase prior to certification. Canada’s R-2000 Program (RES-5) requires an air leakage test prior to awarding the house a R-2000 certificate. It is expected that the emphasis on quality control will increase as more attention is paid to what happens to a building after the design stage. Potential problems with the performance of building systems will need to be addressed at the pre-design, design, and construction stages, rather than await their arrival during post-construction. Accordingly, building owners, designers, contractors, and manufacturers will need to cooperate and coordinate their activities and responsibilities as part of a quality assurance or building commissioning team. 26 Site and Community Planning Site planning refers to those measures taken outside of the building that influence the amount of energy used inside the building. The most common methods revolve around protecting solar access, while more extensive means relate to community planning and development. There are very few examples of site planning and building-level strategies, nor of linking utilities with community planning. However, we feel the potential impact of these activities is significant and are in need of further demonstration. Landscaping and solar access protection During the late 1970s and early 1980s, a number of local and state governments passed legislation encouraging the use of solar energy through solar tax credits (see above) and through the protection of solar access for both new and existing buildings. The control of vegetation to protect solar access was enforced through zoning provisions, subdivision amendments, and requirements that the development pro- cess include consideration of the issue. For example, in California, the Solar Rights Act amended the state Subdivision Map Act to require that local governments consider solar access. Many of these ordinances continue to be enforced, and new ordinances have been adopted to protect solar access; however, we do not know how many of these ordinance provisions have been applied to actual development proposals. We do know, however, that community solar access plans are being used as models for other communities (e.g., the City of Nampa’s (Idaho) Residential Solar Access Protection Program (RES-37). In some ordinances, only fully weatherized homes can qualify for solar access protection, as in Wood- burn, Oregon (Wilcox, 1981). Moreover, the adoption of these codes has led to an increased awareness of solar access issues among builders and developers, and an increased awareness of the potential for solar design in home plans. For example, since the Ashland, Oregon solar access ordinance went into effect, approximately 20% of all the dwelling units constructed in Ashland have had some solar application (either solar hot water, solar greenhouses, or passive solar design) (Fregonese, 1981). While solar access protection is currently not a high priority item for most local and state governments, the groundwork for these kind of programs has been completed, so that future programs can be more easily implemented. Community planning and development 27 In most states, state legislation permits localities to amend most planning and zoning guidelines to consider and encourage energy conservation, renewable resource use, and energy-efficient patterns of development. Integrating energy efficiency with community planning and development has been tried in existing communities as well as in new towns and economic development areas. In existing communities, zoning incentives, in the form of increased dwelling unit density ("density bonus"), have been used to pro- mote compliance with energy efficiency standards. In 1979, the City of Lincoln, Nebraska, authorized a 20% increase in dwelling unit density to developers of community unit plans who complied with a set of energy conservation standards adopted by the city council (J. Johnson, 1979 and 1980). As opposed to a more usual subdivision, a community unit plan is generally characterized by smaller lots, clustered hous- ing, and more open green space commonly shared by all homeowners. Approximately 80% of Lincoln’s new developments proceed through the community unit plan process rather than the subdivision process. Developers were advised to take several factors into consideration in drafting their community unit plans, including site selection, street layout, lot layout, building siting, building form, and landscaping. In Ashland, Oregon, developers who employed passive solar energy designs and other energy-saving features, including superinsulation and heat pumps, may be eligible for up to a 40% increase in dwelling unit density if the designs of the housing units exceeded minimum requirements established by the city (Wilcox, 1981; Fregonese, 1981). The energy-efficient density bonus was based on the expected thermal performance of the structure (Btu/degree day/sq. ft.). Most developers using simple passive solar designs have received density bonuses of 2-25%. The density bonus is considered by the city to be a powerful incentive for promoting energy-efficient construction. Energy-efficient buildings can also be promoted as part of a larger program in which an entire com- munity or economic development area is built using the latest energy efficiency technologies. This kind of undertaking requires a large amount of resources that public agencies do not normally have or are willing to commit. Consequently, the private sector, with some public assistance, has been the principal planner and developer of new communities. The best examples of integrating energy-efficient construction in a new community are St. Paul’s Energy Park in Minnesota (RES/COM-11) and Milton Keynes’ Energy Park Demonstration in England (RES/COM-10). 28 ENERGY CONSERVATION PROGRAMS FOR EXISTING CONSTRUCTION Technical Assistance The main type of program offered by utilities to promote energy conservation for existing residential and commercial customers is direct technical assistance, primarily in the form of energy audits (Table 4). The audits serve multiple purposes: encourage customer investments in energy-efficient measures; provide customized energy management assistance to customers; improve customer relations; and provide feedback to the utility about customer needs and concerns. Information collected during the audit is used to make recommendations on ways of reducing energy use, and estimates of their cost. The customer is also sup- plied with additional information on how to implement these recommendations (e.g., lists of contractors who can install recommended measures and names of lending institutions that can finance the work). Since 1980, the federal government’s key technical assistance program, the Residential Conservation Ser- vice (RCS), has required local electric and gas utilities to provide onsite home energy audits to households on request. In the early stages of RCS, the average cost of the RCS audit exceeded $180; more recently, this cost declined and stabilized at about $100 apiece. In a similar program for commercial customers, the federal government’s Commercial and Apartment Conservation Service (CACS), utilities usually offer one of two types of audits for their customers: a ‘‘walk-thru” audit or a more comprehensive audit. For com- mercial construction, the structure and fee charged for the audit varies, according to size of building, amount of energy use, or level of energy demand. In the commercial sector, utilities often segment their market in targeting their energy audit pro- grams. For example, Seattle City Light’s Walk-Through Survey Program targeted smaller commercial and industrial customers whose annual electric consumption was less than one million kWh. In this pro- gram, commercial customers received a one-time energy audit of the lighting, space heating, space cooling, hot water and other energy systems in their business facilities. They also received a letter from the utility which identified energy conservation measures that, if implemented, would reduce the facilities’ energy consumption, and the potential costs, payback periods, and energy savings for these measures. In contrast, Seattle City Light’s Energy Management Partnership Program targeted larger commer- cial and industrial customers whose annual electric consumption was more than one million kWh. The 29 major difference between the previous program and the Partnership Program was that the latter provided technical conservation assistance to each participant over a six to twelve-month period, in contrast to a one-time audit. This assistance included developing an energy utilization index with the customer; con- ducting an energy audit in the facility; researching and identifying tuning, maintenance, operation, and retrofit measures that would aid the customer in reducing their energy usage; and providing estimates of costs, payback periods, and energy savings for these measures. The federal government also targets specific groups for technical and financial assistance. Since 1980, the U.S. Department of Energy has conducted the Institutional Conservation Program (ICP), which provides energy conservation matching grants to not-for-profit elementary and secondary schools, colleges and universities, and hospitals. The ICP program is implemented through state energy offices, and the financial assistance supports technical audits of facilities to identify appropriate energy conservation meas- ures, and the design, purchase, and installation of these measures. Market segmentation also occurs in the residential sector, but to a lesser degree. For example, low- income households, high energy users, and tenants in multifamily buildings might receive specialized audits and special salesmanship to encourage them to invest in energy-efficient retrofits. As in the commercial sector, the federal sector has conducted technical assistance and financing programs for specific groups. For example, the U.S. Department of Energy’s Weatherization Assistance Program (WAP) provides funds to states to weatherize low-income households’ dwellings at no charge to the residents. As in the case for new construction, there has been very little evaluation of technical assistance pro- grams. Some quantitative data exist, although the representativeness of the data is uncertain. Market penetration rates in the commercial sector were generally low. In BPA’s Commercial Audit Program, 4,400 audits were conducted (the percentage is low since there are a lot of commercial buildings in the region). In Northeast Utilities’ EnergyCHECK program, 3,500 commercial building audits were conducted (there are 90,000 commercial and industrial customers in the region). However, in smaller regions for specific market segments, penetration rates can be high: Sacramento Municipal Utility District audited all of their large commercial buildings. 30 Market penetration rates in the residential sector were also generally low. In the case of the RCS program, about 2% of eligible households have been audited each year (as of March 1987, over 5 million audits had been completed). However, programs by six states and 10 utilities reached more than 15% of their eligible customers (e.g., in Michigan, the annual audit completion rate was 5%). These state pro- grams proved that it was possible to reach a greater fraction of households if states operate well- coordinated programs and utilities aggressively promote RCS audits. The WAP program has weatherized approximately 1.5 million households of the 13.1 million eligible (11%) in seven years (1979-85). The low participation rates in the residential programs were caused in some cases by ineffective utility marketing, limited local potential for cost-effective conservation, and the absence of a national priority for residential and commercial conservation activities. Finally, the Hood River Conservation Project in Oregon, a major residential retrofit project that sought to test the upper limits of a utility retrofit program, audited 91% of the eligible households. The rate of implementing recommended measures varied considerably: in Northeast Utilities’ Ener- gyCHECK program, 34% of recommended measures were implemented one year after the audit, and another 11% in the second year after the audit; in BPA’s Commercial Audit Program, the percent of recommended measures that were implemented ranged from 0% to 19%. In contrast, in the Hood River Project, 83% of the measures recommended in the energy audits were installed. Audits were effective in stimulating some type of investment: in Michigan’s Small Business Energy Analysis Program, 89% of the participants did one or more of the recommended audit actions within 6 months of receiving the audit report. In the Hood River Project, 85% of the homes had one or more meas- ures installed. Energy savings were measured in several audit programs in the residential and commercial sector. For commercial buildings, annual electricity savings ranged from 2% in Seattle City Light’s Energy Management Partnership Program to 11% in the Sacramento Municipal Utility District’s Large Commer- cial Energy Auditing Program. A recent evaluation of the ICP Program reported savings of 8-12% of preprogram energy use as a result of their grants. For residential buildings, the RCS Program reported an average energy savings of 3-5% beyond those attained by nonparticipants. Both the Hood River Project 31 and Michigan’s Low-Income Weatherization Program reported an average energy savings of 15%. Some evidence suggests additional savings may occur in the second or third year after an RCS audit, as participants gradually implement more recommended measures. For example, the Michigan RCS pro- gram found that net savings increased slightly, from 4% to 5%, by the end of the second year; however, in the third year, the difference between audited and nonaudited households declined somewhat from the first to the third year of the programme: In addition, the overall rate of conservation activity, for both audited and nonaudited households, was much less in the third year than in the previous two years. These data suggest that there is a shrinking potential market for audits and an overall decrease in conservation activity for those programs that are conducted for more than two years; new market segments need to be targeted. Research projects and demonstration programs have shown that properly carried out retrofits of low-income housing can save substantial energy (e.g., 24% space-heat savings). However, other results were less encouraging: a national sample of more than 1700 low-income homes weatherized in 1981 showed an average space-heating-fuel savings of only 13-14%, and 23% of the households sampled actually used more space-heating fuel after weatherization. Moreover, a major evaluation of Wisconsin’s low-income weatherization program showed a typical heating energy savings of only 6-10%. Some audit programs were cost-effective. In the commercial sector, the cost-benefit ratio of Michigan’s Small Business Energy Analysis Program was 3.5 for the first year. The net present value of Seattle City Light’s Walk-Through Survey Program was $1,860 for the utility and $8,767 for the region, and the net present value of their Energy Management Partnership Program was $11,273 for the utility and $48,396 for the region. In the residential sector, some local programs using lower-cost conservation packages improved the cost-effectiveness of WAP programs: e.g., the Sun Power Consumer Association in Colorado operates a furnace efficiency program at a cost of $150 per unit (instead of $2,000-$3,000); the measured savings averaged 12% of an annual heating bill of $724, yielding an average payback of less than two years (instead of 10 years or more). 32 Financial Assistance Direct technical assistance does not automatically result in energy savings. Once energy conservation opportunities are identified, incentives are often provided to encourage energy conservation investments and the penetration of particular equipment into service territories. Incentives may take the form of low- interest (zero-interest) loans (especially, in the residential sector for weatherization), gifts ("free-financing") (e.g., giving away weatherization and high-efficiency light bulbs to low-income people), and rebates. Rebates may be tied to a specific device or equipment, or tied to a group of conservation measures. More recent rebate programs offer "generic rebates:" for example, Pacific Gas and Electric’s Customized Pro- gram offers incentives for installing high efficiency appliances and insulation, and it is up to the customers to decide what options they want to pursue. For electric-heated buildings, the utility provides a rebate of 3 cents per kWh saved for the first year, not to exceed 30% of direct project cost (maximum rebate of $100,000). For gas-heated buildings, the utility provides a rebate of 20 cents per therm saved for the first year, not to exceed 30% of direct project cost (maximum rebate of $100,000). Other rebate programs are discussed in greater detail in another chapter. Innovative financing (often third-party financing) programs are beginning to be offered to commercial customers in selected regions (innovative financing occurs in the residential sector, but to a very limited extent). Bonneville Power Administration’s Purchase of Energy Savings (PES) Program was one of the earliest and more prominent programs, and its design is being modeled in other parts of the country. In this program, private sponsors are responsible for: marketing the program to attract participation, audit- ing commercial buildings to identify potential energy savings, and coordinating the financing, installation and maintenance of the energy conservation measures on behalf of the building owners. In return, sponsors receive incentive payments from BPA over a number of years based on either estimated or measured energy savings from the building retrofits. Sponsors included energy service companies (ESCos), architec- tural and engineering firms, equipment manufacturers, utilities, and building owners. The initial phase, the PES Field Test, began in 1984 and was completed in 1986, and the PES Pilot Program was completed in 1987. In the Field Test, in response to a Request for Proposals (RFP), sponsors presented preliminary audits of buildings they intended to retrofit and preliminary agreements with 33 building owners and financial entities. A competitive selection process resulted in the selection of five spon- sors offering to retrofit a total of 29 buildings. Once selected, BPA required the sponsors to conduct a detailed energy analysis using computer modeling for buildings with multiple zones. The results of these audits were reviewed by BPA. Once approved, the measures were installed by the sponsors and inspected by BPA. Following inspections, BPA made monthly payments to the sponsors for the completed work. If the owner chose not to install the approved measures, BPA paid for the audit. If the owner did the instal- lation, the cost of the audit was included in the calculation of the incentive. BPA paid sponsors an incen- tive up to 40 mills per kWh of savings, not to exceed the cost of the project. Primary emphasis was placed on energy audits as a means of controlling the quality and cost of each job. Technical requirements for conducting energy audits were developed. These requirements specified auditor qualifications, auditing requirements, and energy savings estimating and cost estimating pro- cedures. In the reviews of audits in the PES Field Test, it was found that there was no single way to do an audit, and both art and science were part of audits. BPA decided to include a quality control approach in the PES Pilot Program: engineering firms were hired by BPA to review the assumptions about the types of measures typically required for the type of building being audited. If the assumptions or measures were inconsistent with expectations about costs and savings, the reviewer visited the site and discussed their concerns with the sponsor. Two types of financial incentives were offered: one incentive was available only to small commercial customers (between 6,000 kWh and 48,000 kWh) and another for medium to large commercial customers (more than 48,000 kWh). For the small commercial customer in the Seattle area, BPA agreed to reimburse the utility for 65% of the installed cost of certain presribed measures. The customer would pay the remain- ing 35% of the costs. For the medium to large customers, BPA would reimburse the utility for the difference between the total installed cost of conservation measures identified in an energy audit and the value, at customer rates, of 2.5 years’ worth of energy savings. In other words, BPA required that the cus- tomer accept a 2.5-year payback on investments in conservation measures before receiving any additional incentive money. BPA would reimburse the utility for the amounts paid to the medium to large customers in five equal annual installments plus interest at 14%. 34 In an evaluation of the PES Field Test, it was found that selecting appropriate sponsors was very important in assuring program success. The most successful sponsors were locally based (versus national firms), enthusiastic about the program, and willing to accept the process of the program. Also, in field test- ing the PES approach, it was noted that the sponsors requested rather high incentive levels and short pay- back periods for the commercial buildings to be retrofitted. This indicated that some sponsors were mainly identifying low cost, quick payback conservation measures through their preliminary audits and substitut- ing BPA’s payments for the building owner’s contribution towards the cost of the job. In field testing PES, BPA paid a set percentage of the cost of each job. The problem with setting incentives based on cost of the job is that the approach does not recognize the value of the energy savings to the sponsor/building owner. For example, if a job cost $20,000, BPA would pay the same fraction of that amount regardless of whether there were 1,000 kWh saved annually or 100,000 kWh saved annually. Under the PES Pilot Program, the incentive structure was changed to take into account the value of the energy savings to the sponsor/building owner from a specific job. BPA negotiated with each sponsor a rate of return (ROR) on investment necessary to attract financing to retrofit buildings (average ROR was 25%). Concluding Remarks In addition to the technical and financial assistance programs examined in this report, several of the programs implemented for new construction are also being conducted for existing buildings. For example, reduced utility rates can be obtained by owners of existing buildings if they are upgraded to the conserva- tion standards established by the utility company. Similarly, existing buildings that receive low ratings in home energy rating programs can be upgraded (retrofited) in order to receive higher energy ratings. Finally, as in new construction, we see no geographic barriers to implementing these programs in Alaska or elsewhere. Implementation is not easy, and there are many failures. The challenge of utilities and other program sponsors is to meet the needs of their target groups and to promote energy-efficient construction. 35 APPLIANCE INCENTIVE PROGRAMS Overview Utility incentive programs have been reviewed by George, et al (1988): by EPRI (1988); and by Dickey et al (1984). Incentive programs originated around 1978, perhaps with the Tennessee Valley Authority. Such programs were widespread through the 1980’s, few such programs persisted continuously for multi-year periods, as evidenced by the starting dates of programs in the EPRI report. On the other hand, Northern States Power has had an applinace rebate program in place since 1982. The EPRI report contains results of a survey of 157 utilities, with information on 59 energy efficiency rebate programs. For each utility, the program characteristics reported include: contact person, duration of program, rebate amounts, minimum efficiency requirements, annual budget, description of evaluation effort (but not results), and (in some cases) program cost information. The EPRI survey covered 132 responding utilities, representing 78% of all customers of investor-owned utilities (IOU) and 17.8% of all customers of non- investor owned utilities. The Dickey survey included 76 utilities representing an estimated 62% of residen- tial electricity sales by IOUs, and 45% of non-IOUs. The EPRI report notes that in 1986, "35 to 50% of the nation’s electric utility customers are served by utilities that have some form of an energy efficiency rebate program.” The Dickey report notes that in 1983, 67% of sales were similarly served. Most programs pay the purchaser, while the minority pay both purchaser and dealer or just the dealer. Respondents to the newer survey indicate an interest in increasing the participation of dealers. Both surveys agree that residential rebate programs dominate, and that air conditioning and heat pumps are the most common equipment covered. Other products for which substantial programs have been implemented include: refrigerators, room air conditioners, and water heaters. 36 Rebate amounts vary considerably, sometimes depending on capacity or efficiency. Average rebate amounts (and range) in 1986 are: Refrigerator $ 40 ($ 3-125) Water heater $ 63 ($ 5-186) Freezer $10 ($ 3-100) Fluorescent tubes $1 ($ .25-2.50) Fluorescent ballast $3 ($ .60-12.00) Administrative costs consume 27% of the overall budget on average for these programs, with a stan- dard deviation of 21%. Costs of peak demand reduction range from $ 84/kW to $ 1285/kW, with an average of $ 300/kW. For the residential sector alone, the average cost was $ 372/kW. Rebates for com- mercial lighting are most cost effective (per kW), followed by residential air conditioning and heat pumps, and commercial HVAC equipment. Rebates for refrigerators, freezers, and water heaters are most expen- sive per kW in these predominantly summer afternoon/evening peaking utilities. (For Alaska, with a winter morning peak, at least lighting and water heating should be examined for cost-effectiveness.) Innovative programs are identified, including: incentives for thermal measures in electrically-heated homes (Pennsylvania Power and Light); incentives per peak kW saved for a combinations of measures (Oklahoma Gas and Electric Company) or for commercial lighting (Jersey Central Power and Light, Metropolitan Edison Company, and Southern California Edison); and removal of second refrigerators (Pacific Gas and Electric Company). Though most utilities (82%) claim to do quantitative evaluations, only 32% could estimate the per- centages of appliances sold locally that could qualify for the rebates, and 32% could estimate the incre- mental purchases of efficient models resulting from their programs. The EPRI report notes that the preci- sion of quantitative evaluations is suspect. Several on-going experiments, with potential for interesting evaluation results, are identified by EPRI as of early 1987, including: Bonneville Power Administration (solar and heat pump water heaters); New York State Electric and Gas Corporation, and Wisconsin Power and Light (varying refrigerator 37 rebate amounts), and Niagara Mohawk Corporation (varying rebate amounts). Recent work sponsored by New York utilities has extended the EPRI analysis of rebate programs. Barakat, Howard $ Chamberlin, Inc (1988) report on "mature programs that had at least three years of program implementation experience." The utilities with the highest estimated participation rates for each appliance are: Appliance Utility Percent of Estimated Annual Purchases Refrigerators PG&E 23 NSP 17 Freezers NSP 67 Water heaters | NSP 8 NSP = Northern States Power PG&E = Pacific Gas & Electric The BHC report also contains 14 proposed programs for Long Island Lighting Company, including esti- mates of program costs and savings. Free Riders Three sources of information about free-riders are referenced: NSP (1983), Krause (1987), and George (1988). The issue of free riders is controversial, and clear conclusions are not available. Initial sur- veys (e.g. Northern States Power) of participants in incentive programs showed a high percentage of self- reported free riders. Further, surveys after rebates had been received reported even higher percentages of free-riders than did point-of-purchase surveys in the same program. On the other hand, only 40% of eligi- ble purchasers actually applied for a rebate. The George (1988) report notes the contradiction between reported high free rider percentages, but low ranking of energy efficiency as a basis for selecting an appli- ance. These inconsistencies make interpretation difficult. A possible interpretation of programs having a high percentage of (self-reported) free riders is that the minimum equipment efficiency specified for qualification for the incentive was set too low. That is, if 38 the minimum efficiency is low enough that most purchases would exceed it in any case, then most partici- pants may be free riders. A hypothetical explanation for the low percentage of qualified applicants is that the rebate amounts may have been too low. Kraus (1987), in reviewing data from 2 California utilities, argues that the self-reported percentages of free-riders are too high, in comparison to an estimate using a state-wide trend as a control. He con- cludes that the free rider percentage is about 10% for refrigerator and freezer incentive programs, and about 7% for lighting. He also notes that in a two-tier incentive program for refrigerators, the percentage of free riders is lower in the higher efficiency tier. This lends support to the argument that if the target efficiency range for incentive programs is set high enough, the free rider problem is reduced. Evaluations of Incentive Programs The success of a program can be measured in different ways, and from different perspectives. To a utility, a program may be successful if it spends a certain budget, or if it satisfies a regulatory body. other measures of success may be kWh or kW saved, either estimated or measured. Savings may also be given a value, as in $/kWh or $/kW, or. cost/benefit ratio. Perspectives may include participants, ratepayers, the utility, or society. The value of future savings can be characterized and discounted in a variety of ways. While the cost-effectiveness of several technol- goies can be demonstrated, the cost-effectiveness of conservation programs is more difficult to obtain from available published sources. Most sources of information about conservation programs fail to answer questions about effectiveness of the programs, often lacking a control group. Often, the funds budgeted for a program are reported spent, but the savings are not directly measured. Estimated savings are often too conservative or too ad hoc to be taken with confidence. Administrative costs are often difficult to account for, since the adminis- trators are typically involved in many things at once, and separation of costs for a particular program is not completely successful. Alternatively, the staff time and resources expended are not fully accounted for, much of them attributed to general duties. 39 Stern, et al (1986) reviewed evaluations of many incentive programs for residential energy conserva- tion. Krause (1987) evaluates costs of conserved energy and costs of peak power, relative to short-run and long-run marginal costs. His report includes reported costs of incentive programs, particularly the experi- ence of 2 large California utilities (Pacific Gas and Electric and Southern California Edison). Based on these reviews, Krause (1987) gives estimates of administrative costs, per appliance or household, for each incentive program proposed for Michigan. Each proposed program includes a description, estimated impact, program phases and timing, eligible fraction, annual program penetration, incentive level, admin- istrative costs, discussion of free riders, equation for calculating annual energy savings and program costs, and technical potential energy savings. Incentive programs for refrigerator-freezers, freezers, air condition- ers, lighting, space heating, and water heating are described. Dispatchable options include: demand sub- scription, thermal storage, water heater interruption, and air conditioner load shedding. The costs of dispatchable options are presented per kW saved, while incentive programs are characterized by cents/kWh. A document proposing a methodology for least-cost utility planning is in preparation for the National Association of Regulatory Utility Commissioners (Krause and Eto, 1988), including discussions of alternative cost/benefit perspectives, free-riders, and evaluation methods. The review by George (1988), was performed for the California Energy Commission, and focuses on 7 California incentive programs, and 5 other programs (out of California). This report contains a good con- ceptual framework and a critical review of evaluations. Among the issues raised are the accuracy of survey results in characterizing purchaser behavior; participation bias (initial participation in programs is often high, and not sustained); persistence of program impacts; data collection issues and biases; and data analysis (interpretation) issues. The importance of using different media (radio, newspaper, brochures, bill inserts) to target appropriate population segments is emphasized. Measured sales data and a well-defined control group are suggested as means to improve evaluations. 40 APPLICABILITY TO ALASKA RAILBELT When reviewing utility electricity conservation programs in the US, a selection process must be developed to identify those most applicable to the Alaska Railbelt. This process must recognize the unique features of the Alaska Railbelt, perhaps including: cold climate, small utilities, substantial rural popula- tion, younger population and housing stock, higher average income levels. The goals of the Alaska utilities must also be explicit in order to identify programs that are desirable. These unique features lead to elimination from consideration of a number of the largest and most studied programs in the lower 48 states. The summer-peaking characteristics of many utilities led to major programs for conserving air conditioning energy - a subject of much less interest in Alaska. This points up the need to tailor a program selection process to the local end-use energy consumption, including seasonal and time-of-use effects, and explicit definition of the problems to be addressed. Only by taking an end-use perspective, and including data on the housing stock, population, appliance mix, and energy con- sumption patterns of the Alaska Railbelt, will a good match between programs and goals be likely. For example, if electricity demand is projected to outrun supply, several interpretations are possible: 1. the demand projection method may be optimistic, giving high demand growth as a result, or too uncer- tain, in which case the utility must plan supply adequate for the worst case; 2. programs to reduce electricity consumption in general may appear desirable; 3. programs to reduce peak demand may receive high priority; and 4. additional supply may be needed. One approach achieving increasing acceptance is to compare demand and supply alternatives, and to implement the most cost-effective programs. Note the added benefit that programs which reduce consump- tion may also reduce uncertainty in the demand projections. The information in this report is not sufficient by itself to make judgments about what programs to implement. We do have some suggestions about factors to consider when making such a selection. Risk is an important element in all considerations of alternatives. Hirst (1988a) makes suggestions about the par- ticipation of the state regulatory agencies in utility integrated resource planning. His Table 1 lists key 41 elements of integrated resource planning. His Table 2 shows potential areas of PUC responsibility for elec- tric utility integrated resource plans. In related work (Hirst, 1988b) indicates several lessons to be learned by utilities: © internal cooperation is essential; o developing a viable planning process takes time; o the commitment of the utility management is essential; o use of a small staff who must interact with people in many departments can lead to broader acceptance of programs within the utility. The general conclusion is that the focus should be on developing a good planning process, not a plan. Krause (1987) also summarizes elements of successful program planning and implementation, includ- ing: o building in monitoring, feedback, and quality control, including well-designed pilot studies; © utilization of existing market forces, including market segmentation to target particular groups, and promotion of demand-side measures in terms appealing to participants; o significant incentives are necessary, but not always sufficient, to reach some target populations; o efficiency standards and incentives complement each other. There are other factors worth repeating. First, the goals of the utilities must be considered. Mean- ingful utility participation occurs when the conservation program also fits the utility goals. Second, a definition of success must be made for each program. This can be a number of rebates given out, or some amount of energy conserved. Third, there must be feedback between the different elements within a utility and among the program sponsors and participants. This means that workshops, training seminars, and other such face-to-face exchanges are important. Fourth, as much advance planning as possible should go into any program, including test marketing and pilot evaluations. Designing data collection into the pro- gram from the beginning, such that success can be measured and bugs detected and corrected, is impor- tant. The program must be monitored from its earliest stages. 42 Based on limited data, we speculate that the end-uses of most importance in the Alaska Railbelt are: heating, water heating, lighting, and major appliances (e.g., refrigerators). Fuel substitution is a viable strategy for reducing electricity consumption for heating and water heating. Thermal integrity measures appear worthy of consideration to reduce heating loads. Reabtes or giveaways for efficient lighting should be considered. Audits can begin to estimate the potential savings, in both residential and commercial sec- tors, for heating, lighting, and water heating. Rebate programs for appliances, especially refrigerators and freezers, may be viable, but must be analyzed in the context of federal efficiency standards. A general methodology for comparing diverse programs, including demand-side and supply options, is proposed in the literature on least-cost utility planning. (See, for example, Krause and Eto, "Conceptual and Methodological Issues for Least-Cost Planning,” forthcoming.) Two other recent attempts to develop proposed programs, which may serve as guides are Barakat, et al (1988), "Demand-Side Management Pro- gram Analysis," and Krause, et al (1987), "Analysis of Michigan’s Demand-Side Electricity Resources in the Residential Sector.” 43 Table 2. Energy conservation programs for new buildings. Name of Program Sponsor Program Features (V = Primary Feature) Program # TD DP DI UR LL | RL | EA DT DA | TC Technology Demonstrations | Energy-Efficient Home Proj. of Oregon BPA Vv ° ° e ° RES-22 Residential Stds. Demo. Pgm. BPA Vv . e ° . RES-23 Residential Constr. Demo. Pgm. BPA Vv ° e ° . RES-24 Energy Efficient Housing Demo. Minn. HFA Vv e . . ° RES-25 Superinsulated Housing Demo. St. Louis Vv e e e RES-27 Energy Efficient Housing Demo. Baltimore DHCD Vv ° ° . RES-28 Resid. Constr. Demo. Manuf. Housing Prj. | BPA Vv e . ° . . . RES-32 Class B Passive Solar Perf. Eval. Pgm DOE Vv ° RES-36 Solar in Federal Bldgs. Demo DOE Vv e e COM-17 Demonstration Programs Denver Metro Home Bldrs.’ Pgm. SERI . Vv . ° . RES-26 Affordable Comfort in Manuf. Housing NCAEC Vv ° RES-30 SolarSave Programm Maine OER Vv . RES-31 Energy Edge BPA ° Vv ° . ° . e COM-9 Passive Solar Nonres. Bldgs. DOE . Vv . . ° COM- 16 Passive Solar Manufactured Bldgs. DOE/SERI . Vv ° ° RES/COM-3 Code Adoption Demonstration, Early BPA e Vv ° . RES/COM-8 Adopter & Model Conservation Stds. Implementation Assistance Pgms. Tacoma’s Early Adopter Pgm Tacoma . v . . e . RES/COM-9 Direct Incentive Programs New Construction Rebate Pgm PG&E v ° e COM-13 New Construction Incentive Palo Alto Vv COM-21 Utility Rates and Hookup Fees Conservation Rate Discount Carolina P&L Vv . RES-11 Residential Conservation Rate Duke Power Vv RES- 12 Residential Service Conserv. Rate So. Carolina E&G Vv . RES-13 | Proposed Hookup Charge Maine PUC v RES-15 Key to Features: TD = Technology Demonstration Site(s) DP = Demonstration Program DI = Direct Incentives LL = Low-interest Loans UR = Utility Rates & Hookup Fees RL = Rating & Labeling EA = Energy Awards DT = Design Tools DA = Design Assistance TC = Training, Compliance, & Quality Control Table 2 Continued. Energy conservation programs for new buildings. Name of Program Sponsor Program Features (Vv = Primary Feature) | Program # TD pp_| DI | UR LL RL EA DT DA | TC | Reduced Loans and Loan Qualifications Energy-Efficient Mortgage Pilot Pgm. ASE e Vv e RES-6 Cut Home Energy Costs Loan Pgm. Manitoba EXM Vv RES-20 Energy-Efficient Construction So. Dakota HA ° . Vv . ° RES-21 Energy Rating and Labeling Energy Value Home NE Utilities ° Vv RES-3 Energy Saver Home TVA . Vv ° . RES-4 Super Energy-Efficient (R-2000) Home EM&R (Canada) Vv . ° ° RES-5 Energy Efficient Home Salt River Project Vv RES-7 Thermal Crafted Home Owens-Corning Vv . . RES-8 Super Good Cents BPA . Vv . . . RES-9 Energy Conservation Home PG&E ° Vv . RES-10 Super Saver Award Florida Power . ° Vv RES-14 Energy Efficient Home Award Nevada Power Vv RES-18 Energy Saver Manufactured Home Award Arkansas P&L . Vv RES-29 Energy-Qualified (EQ) Home Owens-Corning . Vv . RES-33 Good Cents Commercial So. Electric Vv ° . . COM-7 Good Cents New Commercial PSC of Oklahoma ° Vv . . . COM-8 Energy Award Programs Energy Efficient Bldg. Design Competition | EEBA Vv RES- 19 Architect and Engr. Energy Award Penn. P&L Vv COM-1 Energy Conservation Design Award Florida Power Vv COM-2 Energy Award ASHRAE Vv COM-3 Commercial & Industrial Awards Edison Electric Vv COM-4 Low-Energy Bldg. Design Award EM&R (Canada) Vv COM-5 Energy Conservation Awards Owens-Corning Vv RES/COM-7 Professional Guidelines Whole Bldg. Performance Stds. DOE ° RES/COM-6 1 Key to Features: TD = Technology Demonstration Site(s) DI = Direct Incentives LL = Low-interest Loans EA = Energy Awards DA = Design Assistance DP = Demonstration Program UR = Utility Rates & Hookup Fees RL = Rating & Labeling DT = Design Tools TC = Training, Compliance, & Quality Control Table 2 Continued. Energy conservation programs for new buildings. Name of Program Sponsor Program Features (V = Primary Feature) Program # t | pp |p| ur | uw |rt| za | vr | pa [ tc Design Tool Programs Energy Efficient Home New England Electric . . Vv . RES-16 Whole-Bldg. Energy Design Targets DOE/PNL Vv COM-18 General Design Criteria DOE Vv COM-19 Design Assistance Programs Resid. New Construction SMUD ° ° ° Vv RES-1 Passive Solar Home SMUD . Vv RES-2 Design Assistance Va. Dept. Energy ° Vv RES-17 Alaska Craftsman Home Alaska DCRA Vv . RES-34 Bldg. Industries Short Course Arizona Energy Dept. Vv RES-35 New Construction Energy Design Assistance TVA . . Vv . COM-6 Energy Sinart Design Assistance Pgm BPA . . . ° . ° Vv . COM-10 Design Assistance for New Commercial Washington State . . ° Vv . COM-11 Technical Assistance SMUD ° Vv COM- 12 Energy Conscious Construction NE Utilities ° Vv COM-14 Daylighting and Thermal Analysis SCE . . . Vv COM-20 Design Assistance for New Bldgs San Antonio ° Vv RES/COM-1 Solar Design Strategies PsIC ° Vv RES/COM-2 Training, Compliance, and Quality Control Lighting Code Compliance Training OSU Extension . . . Vv COM-15 Calif.’s Conservation Stds. (Title 24) Calif. Energy Comm. . . Vv RES/COM-4 Fla. Energy Code and Mktng. Pgm. Fla. Energy Office . ° Vv RES/COM-5 Landscaping and Solar Access Protection Resid. Solar Access Protection Nampa (Idaho) . . . . RES-37 Community Planning Milton Keynes Energy Park Demo. Milton Keynes (England) ° . ° RES/COM-10 Saint Paul Energy Park Saint Paul RES/COM-11 Key to Features: TD = Technology Demonstration Site(s) DI = Direct Incentives LL = Low-interest Loans EA = Energy Awards DA = Design Assistance DP = Demonstration Program UR = Utility Rates & Hookup Fees RL = Rating & Labeling DT = Design Tools TC = Training, Compliance, & Quality Control —_ , ==> 5 Table 2 Continued. Energy conservation programs for new buildings. ASE ASHRAE BPA DCRA DHCD DOE E&G E&M EEBA EM&R HA HFA NCAEC OER OSU PG&E PNL P&L PSC PSIC PUC SCE SERI SMUD TVA Key to Sponsors Alliance to Save Energy American Society of Heating, Refrigerating, and Air-Conditioning Engineers, Inc. Bonneville Power Administration Department of Community and Regional Affairs Department of Housing and Community Development. U.S. Department of Energy Electric and Gas Energy and Mines Energy Efficient Building Association Energy, Mines and Resources Housing Agency Housing Finance Agency North Carolina Alternative Energy Corporation Office of Energy Resources Oregon State University Pacific Gas and Electric Company Pacific Northwest Laboratories Power and Light Public Service Company Passive Solar Industries Council Public Utilities Commission Southern California Edison Solar Energy Research Institute Sacramento Municipal Utility District Tennessee Valley Authority Table 4. Energy conservation programs for existing buildings. Name of Program Sponsor Location Program # Commercial Energy CHECK Northeast Utilities Conn. RES/COM2-1 Purchase of Energy Savings BPA Pacific NW | COM2-1 Commercial Audit BPA Pacific NW | COM2-2 Commercial Audit 3 Northern States Power Minn COM2-3 Small Business Energy Analysis Program Michigan Energy Admin Mich COM2-4 Nonresidential Audit Program SDG&E San Diego COM2-5 Walk-Through Survey Program SCL Seattle COM2-6 Energy Management Partnership Program SCL Seattle COM2-7 Purchase of Energy Savings SCL Seattle COM2-8 Large Commercial Energy Auditing Program | SMUD Sacramento | COM2-9 Customized Rebate Program PG&E No. Calif COM2-10 Residential Hood River Conservation Project BPA et al. Pacific NW | RES2-1 RCS Program SCE So. Calif RES2-2 RCS Program Michigan Energy Admin. | Mich RES2-3 Energy Fitness Program Santa Monica, City of Calif. RES2-4 Zero Interest Program (ZIP) PG&E No. Calif. RES2-5 Low-Income Weatheriz. Program Wisconsin utilities Wisc. RES2-6 Elmhurst Pilot Program Elmhurst Wash. RES2-7 Long-Term Resid. Weatheriz. Program BPA Pacific NW | RES2-8 Low-Income Weatheriz. Program Madison Gas & Elec. Wisc. RES2-9 RCS Program Wisconsin Elec. Power Wisc. RES2-10 RCS Program PEPCO Wash. D.C. | RES2-11 RCS Program SMUD Sacramento | RES2-12 Low-Income Weatheriz. Program New Hampshire N.H. RES2-13 Low-Income Weatheriz. Program Mass. Mass. RES2-14 Low-Income Weatheriz. Program Michigan Energy Admin. | Mich. RES2-15 Legend: Sponsor: PG&E = Pacific Gas and Electric SCE = Southern California Edison SCL = Seattle City Light SDG&E = San Diego Gas and Electric WP&L = Wisconsin Power and Light BPA = Bonneville Power Administration PEPCO = Potomac Electric Power Company SMUD = Sacramento Municipal Utility District to 10. RESIDENTIAL AND COMMERCIAL INCENTIVE PROGRAMS BIBLIOGRAPHY Ackerman, A., M. Cox, L. Schuck, and E. Tarini, The Massachusetts Home Energy Rating System Project, Report No. 4763, Pacific Northwest Laboratory, Richland, Wash., 1983. 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Sawyer and John R. _Armstrong, Westview Press, Boulder, Colo., 1985. Woehrle, Lori A., “Banking on Home Energy Efficiency,” Public Power, pp. 40-50, May-June 1984. Yates Associates, Inc., Rental Housing Energy Efficiency Rating System, Yates As- sociates, Inc., Portland, Oregon, 1986. Yates Associates, Inc., Rental Housing Energy Efficiency Rating System: Literature Review Report, Yates Associates, Inc., Portland, Oregon, 1986. Young, Eugene E., “Iowa Power Marketing Philosophy,” in Strategic Planning and Marketing for Demand-Side Management: Selected Seminar Papers (Report EA- 4808), Electric Power Research Institute, Palo Alto, Calif., 1985. Appendix Cc Comments and Responses to Draft Version of Report Matanuska Etectric Association, Inc. P.O. BOX 2929 TELEPHONE PALMER, ALASKA 99645-2929 (907) 745-3231 ee ee ed DES 28 1988 December 27, 1988 ALASKA PUWech AUTHORITY Alaska Power Authority P. O. Box 190869 701 East Tudor Road “nchorage, Alaska 99519-0869 Attention: Richard Emerman SUBJECT: COMMENTS ON 28 NOVEMBER DRAFT REPORT ANALYSIS OF ELECTRICAL END USE EFFICIENCY PROGRAMS FOR THE ALASKAN RAILBELT Again, we appreciate the opportunity to provide our comments on these important studies. We have carefully reviewed this document and offer the following comments: 1. This study identifies candidate conservation programs which will be economi- cally evaluated by Decision Focus in final railbelt intertie feasibility analysis. Accordingly, the report should only recommend programs for eco- nomic feasibility analysis. The executive summary implies a strong recom- mendation to implement selected programs through a "one-time appropriation of $67 million," yet the report has not shown the "recommended programs" to be feasible based upon a full cost/benefit analysis. 2. Section 1.2, "Motivation for Efficiency Programs" is replete with unsup- ported statements of the need and benefits of efficiency programs. If these statements were supported by appropriate economic analysis, this study and additional economic analysis would not be required. If these are opinions then the credentials of the author should be presented. Alternatively, if these statements are based upon the work of others, appropriate reference and supporting documents should be included. We consider this section inappropriate. 3. The decision to utilize oil as the marginal generation source for Fairbanks (page 1-8) is inappropriate considering the new GVEA/CEA/Marathon agreements. Oil will continue to be a minor source of generation fuel in the Fairbanks area. The effect of this is to overstate the efficiency bene- fits of the candidate programs. 4. The selected dollar "incentive" amounts for each program are not supported by analysis. Certainly, if the program is feasible, the economic incentive should be based upon the market incentive need (which should not exceed expected resource savings.) ALASAA’S FIRST REC—iINCORPORATED 1941—ENERGIZED ‘342 Alaska Power Authority Page 2 December 27, 1988 7. Sincerely, mes F. Palin The opinions offered in paragraph 2.6.6 (page 2-18) are not appropriate to the scope of this study and should be deleted. We also find many statements to be incorrect. MEA, based upon strong cost/benefits analysis is installing (not investigating) a water heater control program. Such programs also reduce energy losses and do impact conservation of resources. The hard economics of this program are not based directly on conservation and, accordingly, do not compete with the proposed program. In general we found the program costs to be understated and the electric energy savings to be overstated. The study openly recognizes this conser- vative set of assumptions and justifies their use "so as not to eliminate programs and technologies that have some chance of being cost effective." This may be appropriate to "screen" programs but the program costs and bene- fits will also reflect these assumptions and the final APA economic analysis will be biased toward the conservation options. The basic assumptions should be re-evaluated and a middle of the road approach utilized. We question the technical feasibility of the program to replace incandescent light bulbs with compact fluorescence bulbs. It is our understanding that existing incandescent fixtures are not rated (by U.L. or appropriate stan- dard) for use with the new compact fluorescence bulbs. In fact, excessive base heat from compact fluorescence fixtures have caused failures and safety hazards. Unless this situation is corrected, new compact flourescent lamps would need a new fixture also (if they exist today.) Your findings in this area would be appreciated. General Manager MY:BB 358-1.1222.1,2 Reply to: Matanuska Electric Association, James F. Palin 1. The comment is correct in indicating that the report only "recommends" programs for further economic benefit analysis by Decision Focus. In the final version of the report, we have attempted to further clarify the fact that a full benefit/cost analysis of efficiency programs was not done. The statement on page ES-6 concerning a "one-time appropriation of $67 million" was not meant as a policy recommendation. The intent of the paragraph was to explain the difference between the "present value of budgetary costs" and the "nominal budgetary requirements", two very different ways of expressing program budgetary cost. 2. End use efficiency programs are relatively new to Alaska. We felt that it was important to indicate the reasons why other utilities and governments have intervened in the market and promoted efficiency programs. The reasons opposing the promotion of end use efficiency programs are also addressed in the study. Poor cost-effectiveness is one reason efficiency programs are opposed. This study combined with the Decision Focus efficiency program benefit analysis address this issue. The other main reason efficiency programs are opposed is their equity impacts. This issue is discussed in section 1.3 of this report. 3. The assumption that oil is the marginal generation source in Fairbanks was only done in the screening analysis of the end use technologies. The screening process determined which technologies/programs would be forwarded for in-depth cost/benefit analysis. Once again, no final assessment of economic benefits for the efficiency programs was done in this report. The final benefit assessment was done by Decision Focus utilizing a model of the Railbelt generation and transmission system. This system model clearly accounts for the fact that oil provides the marginal kWh of electricity in Fairbanks for only part of the year. 4. Little empirical data exists on the relationship between financial incentive levels and participation rates in efficiency programs. In addition, the relationship is a continuous one; a slightly higher incentive level gives a slightly higher participation rate. Because there are no obvious thresholds in the relationship, identifying one proper incentive level is difficult, even with good information on the relationship between incentives and participation. Ideally, it should be set so that the last increment of conservation induced has a benefit to cost ratio of one. A discussion of why we chose aggressive financial incentive levels is presented near the end of section 1.4. Also, a discussion of the uncertainty of results due to uncertain estimates of participation rates is presented in section 2.4. 5. We have expanded this section to explain how current price signals give a strong economic incentive to MEA to implement a water heater shut-off program. However, we still believe that from a state-wide resource cost perspective the program does not generate significant net benefits. Calculations are given in the section to substantiate the claim. In cases where natural gas is available, the program does compete with a water heater conversion program. Either the water heater can be converted to gas or it can remain electric and be remotely controlled; the options are mutually exclusive. 6. The reviewer does not indicate specific instances where the costs were understated and the electricity savings were overstated. There was no attempt to bias the estimates in the study in the indicated direction. Note that the study does not consider the possibility of any technological progress in the design of efficiency technologies. Such progress has been substantial in the last 10 years, making conservation more cost effective. A continuation of that trend was not assumed in the.study. The quote in the comment ("so as not to eliminate...") was taken out of context. The full sentence this phrase was taken from is: "So as not to eliminate programs and technologies that have some chance of being cost-effective, we used the oil generation cost curve to screen demand-side measures for Fairbanks" (italics added here). This lenient screening criteria in no way affects the final benefit/cost assessment of the efficiency programs. It was only used in the determination of which efficiency programs would be forwarded to Decision Focus for economic benefit analysis. 7. Fixtures are stamped with a maximum lamp wattage rating in order to avoid excessive heat in the fixture. The heat generated in the fixture is essentially equal to the wattage of the lamp (minus a small fraction of the energy that leaves the fixture in the form of light). Therefore, compact fluorescent lamps generate substantially Jess heat than incandescent lamps for the same amount of light, since they are more energy efficient. Violating UL standards for the fixture because of excessive heat should not be a problem with their use. The compact fluorescent lamps themselves are not very tolerant of heat. Even though switching to compact fluorescent lamps results in a decrease in the temperature inside a fixture, premature failure of the lamp ballast can occur if the fixture is too warm. Thus, some compact fluorescent lamps are not recommended for use in sealed, unventilated fixtures. This is stated on the box that the lamp comes in. This constraint is less of a problem in commercial buildings because many of the incandescent lamps are found in down-lighting can-shaped fixtures. The aperture where the light leaves the fixture is open, providing ventilation for the fixture. We spoke with industry experts and did not learn of any hazardous ballast failure episodes for compact fluorescents. The major suppliers of screw-in compact fluorescent lamps, such as Phillips and Panasonic, have UL approval for their units. Dy ELECTRIC ASSOCIATION. INC. 5601 MINNESOTA DRIVE * FO BOX 196300 * ANCHORAGE ALSSKA 99519-6300 * PHONE 907-563-7492 FACSIMILE 907-562-0027 e:.tO yt cr 29 1988 December 28, 1988 KA rOWCR AUTHORITY ALAS Alaska Power Authority P.O. Box 190869 Anchorage, Alaska 99519-0869 Attention: Mr. Richard Emerman Subject: Analysis of Electrical End Use Efficiency Programs for the Alaska Railbelt Dear Mr. Emerman: Chugach Electric Association has reviewed the end-use efficiency study performed by ISER. Conservation activities are of consid- erable interest and have played an important role in Chugach's operations. We support the continued study of the potential for benefit to the consumer from conservation activities. This study may provide the basis from which end-use efficiency programs can be implemented. However, based on our experience with the CARES and other programs, we do have several observa- tions and questions pertaining to the study. These include the following: 3 The energy savings shown in the report are divided between those savings from consumers that will implement fuel switching or efficiency improvements without a specific external program (market driven) and those savings that will result from specific program incentives (total). The load forecast recently performed by ISER should contain the effects only of the market driven conservation savings. Are these two reports consistent? 2. We note that several programs suggested in the report have relatively high amounts of market driven participation. The current unavailability of market participation data casts doubt upon the accuracy of the identified participation rates. The total cost and effectiveness of a program may be significantly affected by the participation rate assump- tions. Mr. Richard Emerman 2 December 28, 1988 Bi The water heater conversion program does not appear to distinguish between owner occupied and rental housing. Chugach has found that participation rates are much lower in the latter category. Does ISER or the Power Authority have any data on the possible number of conversions in each category? 4. Chugach has found that although people may think they know what type of fuel is used for their water héater, at times they are mistaken. One possible method of getting a feel for the accuracy of the survey results might be to check against sales data in the area. Has ISER or the Power Authority done this; and if not, is it possible? Se The benefits of the appliance conversions are based in part on the survey results of the age of the appliances. This again is an area of questionable accuracy of the statistics, and sensitivity analysis for various age data may be in order. Overall, the report appears to provide a useful starting point for continued investigation of the electric conservation poten- ‘tials. Sincerely, / Lard ( Wao— ta ./Dovas, Manager Planning & Rates TAL/MDH/GMM/ts 895.GMM File 801 RF Reply to: Chugach Electric Association, Thomas A. Lovas 1. We maintained consistency between the end use electrical load forecast and the end use program analysis in this regard. 2. The participation rate assumptions are the most uncertain elements in the analysis. The implications of this uncertainty are discussed in section 2.4. In general, the uncertainty in participation rates causes there to be uncertainty in the total projected cost of the programs and the total projected electrical savings. The cost effectiveness of the programs is less affected by uncertainty in participation rates. Because of relatively low fixed program costs, achieving only half of the expected program participation will cut the cost of the program nearly in half and will cut the electrical savings in half. Cost per unit of savings is approximately the same, and thus the benefit-cost ratios calculated by Decision Focus will be similarly unchanged. 3. Our end use survey shows that 71% of the electric water heaters in the southern Railbelt are in owner occupied housing, 27% are in rentals, and 2% are in residences occupied without cash rent. Another interesting breakdown is across housing types. 56% of electric water heaters in the southern Railbelt are in single family dwellings, 16% are in mobile homes, and 28% are in attached housing units (e.g. condos, zero-lot line homes, apartments). | We agree that rental units would be slower to convert. However, incentive levels are relatively high, so some conversion activity should be induced in this market segment. 4. We did a small canvass of appliance dealers in the southern Railbelt to find out the fuel type split for sales of residential appliances. Only 9 appliance dealers were polled and their responses were based on their judgement, not an actual review of their sales data. The canvass indicated that gas ranges and dryers are becoming popular in the Mat-Su and Kenai. It also indicated that there still is a significant market share (~35%) for electric water heaters in the Mat-Su. : This kind of a sales survey can only indicate current trends in appliance purchases. Historical sales data (and retirements) are needed to determine the status of the existing stock of appliances. Acquiring historical appliance sales data for the Railbelt region would be difficult. Instead, the end use survey was used to determine the characteristics of the current stock of appliances. For each question in the end use survey, a "Don’t Know" option was available. If respondents who did not know their water heater type actually answered "Don’t Know’, then they were removed from the calculation of the electric water heater fraction. However, if respondents did not know their water heater type, but they decided to guess, error could be introduced into the estimated electric water heater fraction. The error could go either way, depending on how respondents tend to guess. The problem is universal to all surveys. Uncertainty in the estimate of the electric water heater fraction causes there to be uncertainty in the participation estimate for the water heater conversion program. This is only one of the sources of uncertainty in the substantially uncertain estimate of program participation. Again, the consequences of this uncertainty are described in section 2.4. 5. The age distribution of appliances is relevant to energy calculations in two ways. First, it is a factor in determining the efficiency of the existing stock of appliances. For example, refrigerators manufactured in the early 70s were very inefficient. However, the efficiency of the existing stock of appliances is not important in the evaluation of the efficiency programs in this report. None of the end use programs attempt to encourage the early replacement of existing appliances. The programs are targeted at upgrading efficiency when new units are purchased. Thus, the program benefits are determined by comparing the appliances people will purchase with the program in place to the appliances people would have purchased in the absence of the program. The efficiency of the existing stock of appliances is irrelevant in this calculation of benefits. The age distribution of the existing stock of appliances also determines when appliances will be replaced. This is relevant to the analysis of the efficiency programs in this report. Efficiency improvements can only happen when an appliance is being replaced. Errors in estimation of the replacements over time will cause errors in the time distribution of program participation. However, the error is most likely to be one of timing of the achieved savings, not an error in the total amount of savings. If the analysis assumes that a particular water heater is replaced this year, but in reality it will be replaced two years from now, the savings from an efficiency upgrade will be delayed two years but will be of the same general magnitude. USIBELLI COAL MINE, INC. MARKETING 2173 University Avenue So. Suite 101 Fairbanks, Alaska 99709 (907) 479-2630 FAX 479-2793 December 29, 1988 Alaska Power Authorit P.O. Box 190869 Anchorage, Alaska 99519-0869 Ke Attn: Richard Emerman, Senior Economist Re: Comments to Draft Report “Analysis of Electrical End Use Efficiency Programs for the Alaskan Railbeit Dear Mr. Emerman; Thank you for the opportunity to comment on the referenced report. The following comments.are limited to the contents of the executive summary. Generally, most of the information presented is believable and from the information presented it seems clear that a rebate type efficiency program is not economically sound. It would seem that a conclusion statement as such would be appropriate for the executive summary. This conclusion is drawn from four primary areas in the executive summary: aby) Page ES-2 and ES-3 list two residential programs that should be removed from consideration, those dealing with the conversion of electric appliances to gas appliances. Since a majority of electricity is generated with gas, there would be little, if any, real conservation of energy resources. Since the southern railbelt is essentially a closed system with respect to natural gas, a costly program that merely redistributes consumption does not qualify as efficient. 2) The total net program benefit of 270 gwh by the year 2010 will do little to stave off the need for additional generation capacity. This savings equates to about a 35 megawatt base load reduction, which is less than 3 percent of existing capacity and would be eaten up by even a small spurt in economic activity. If railbeit power costs were very high or electric generating capacity was near exhaustion, the small savings in consumption could yield much benefit. Neither of these conditions exist. 3) The average cost per kwh of savings is stated as 27 mills on page ES-6 and the average cost of gas generated power is stated as 30 mills. However, the incremental cost of gas generated power is more on the order of 15 mills, which is a more valid comparison. Generating units currently on line have excess spinning reserve capacity and additional power can be supplied at very low cost, whereas loss of demand drives the average cost higher for all consumers. 4) The $67 million it would take to fund this program could be used to build a new generating station that would yield about the same net capacity (about 35 megawatts) but would yield benefits to railbelt energy consumers long after the end of an efficiency rebate program. In general, the subject report should be regarded as a good reference for the magnitude and type of benefits that can be achieved. However, the days when public oil money flows like a flood throughout the state are over and we cannot afford a program with such a large negative bottom line, as this one has at this time. Sincerely yours, ays Usibelli Coal Mine, Inc. by Steve W. Denton Reply to: Usibelli Coal Mine, Inc., Steve W. Denton Introduction: (See response to MEA, comment #1). A full benefit/cost assessment of efficiency programs was not done in this report. No statements concerning cost- effectiveness can be derived from the report. 1. It is true that most of the electricity in the Railbelt is generated with gas. An even higher fraction of the marginal kilowatt-hour is generated by gas, since hydro and coal plants are base-loaded, and the natural gas plants are left to respond to changes in demand. Converting from electric heat to natural gas heat in a building or appliance is in actuality converting from one form of natural gas heat to another. However, there are substantial differences in the efficiencies of the two types natural gas heating methods. As explained in section 1.6 "Residential Electric Space Heat Conversions", the electric resistance heating process is about 25% efficient because of electrical generation, transmission, and distribution inefficiencies, whereas appliances that use natural gas directly are 50 to 97% efficient. Natural gas appliances are therefore 2 to 4 times more efficient than electric resistance appliances. Electric to natural gas conversions save substantial amounts of natural gas. 2. Because the 270 GWh reduction in 2010 has a load factor of about 54%, the associated peak demand reduction is 57 MW, measured at the input to the distribution system. With 5% transmission losses and a 30% capacity reserve margin, this peak demand reduction avoids the need for 79 MW of generation capacity. Again, the economic benefit of this capacity savings is determined in the Decision Focus electrical system modeling effort. 3. This is an economic benefit issue, addressed by Decision Focus. However, demand reductions can also decrease spinning reserves. A demand reduction when a generation unit is lightly loaded can allow the generation unit to be shut-down, thereby decreasing spinning reserves. 4. Energy reductions and peak demand reductions attributable to the efficiency programs will last from 5 to 30 years after the end of the efficiency programs, depending on the program. The appliances affected have lifetimes in this range. Senate Advisory Council PO. Box V State Capitol Juneau, Alaska 99811 Phone: (907) 465-3114 MEMORANDUM TO: Richard Emerman Senior Economist Alaska Power Authority FROM: Kurt S. Dzinich / Senior Advisor kD Senate Advisory Council DATE: January 5, 1989 SUBJECT: Review of Draft Report -- Costs and Estimated Impacts of Electric End-Use Conservation Program in the Railbelt In general the basic report is comprehensive and good. Unfortunately, the same can not be said of the executive summary which appears to be advocating a course of action not entirely supported by the facts and discussion of the main report. For example, the executive summary fails to adequately address why it is justified to offer aggressive financial incentives for demand-side programs in view of the existing surplus generation capacity. One can onl imagine the uproar that would ensue if a supply-side project was to be advocated under the same circumstances! Further, on pg ES-4 in the middle of the summary paragraph, what is the point of the sentence relating to the Bradley Lake project and the speculative projected savings due to the efficiency programs? Nothing above should be taken as opposing cost-effective energy conservation programs which would result in smaller rate increases than alternative supply-side program(s). It is clear however that the optimal amount of demand-side programs will be inversely related to the current status of energy supply i.e. an energy surplus would call for less conservation while and energy deficit would justify more cost-effective conservation. Related to the above discussion, the report fails to adequately address the issue of fairness for all of the ratepayers. Most ratepayers do not understand the present worth analysis and are much more comfortable with nominal rates - and any increases or decreases - as an indicator of whether (3) they are better or worse off. In that regards a "no losers test" would be the most appropriate methodology for assuring that a proposed supply or demand side program is fair to all and results in adoption of the least-cost option. Richard Emerman January 5, 1989 Page 2 Finally, given the current Railbelt energy surplus, the report should emphasize even more the critical role and importance of education to include credible data dissemination which would allow ratepayers to make the appropriate choices based more on the market place signals than on government intervention. In this regard it is appropriate for government to specify some minimum cost-effective energy consumption criteria for new facilities and equipment based on the long term view and well defined goals or objectives of the program. KD: bsp Reply to: Senate Advisory Council, Kurt S. Dzinich 1. There are some separate issues involved in this comment. One is "Are the programs justified during a period of excess capacity?" and another is "If the programs are justified, then what is the proper level of financial incentive to use?". If the answer to the first question is no, then the second question is irrelevant. If the programs are not justified, then no level of financial incentive is proper. We could not quantitatively address the first question because it relates to the economic benefits of efficiency programs. This analysis was performed by Decision Focus in conjunction with their Railbelt electrical system modeling. We did qualitatively address the issue in Appendix A, section A.3. We did choose an answer to the second question, and we modeled aggressive financial incentives for the reasons stated in section 1.4. Efficiency programs involving smaller incentives could be implemented. These programs would have the advantage of smaller budgetary requirements, but the amount and breadth of participation would be less. In addition, the fraction of the participants who are "free-riders" (those that would have purchased the efficiency without the program) would be larger. The sentence relating to Bradley Lake report was included to give the reader who is unfamiliar with GWh magnitudes a comparative sense of the size of the efficiency program savings in the year 2010. We have clarified the statement in this report to indicate that the conservation savings peak at 270 GWh, and the output from Bradley Lake is constant at 370 GWh for 50+ years. 2. & 3. Most ratepayers do not know what their electric rate is. However, most ratepayers do know what their electric bill (rate x quantity) is, because this is the amount of money they actually pay for the services provided by electricity. Load reductions in the Railbelt will increase the rate paid for electricity, but they will most definitely decrease the total electric bills of Railbelt consumers. Less load means that consumers as a whole have less generation fuel to pay for and less generation capacity to pay for. The resource cost analysis done in this report combined with the resource benefit analysis performed by Decision Focus determine whether the cost of the efficiency programs is more or less than this resultant reduction in electric bills. The report does address the issue of ratepayer equity in some detail in section 1.3. The example in Box 1-1 traces out the distributional impacts of a hypothetical efficiency program for a hypothetical utility. However, the distributional effects of the particular efficiency programs analyzed in this report are outside the scope of the study because they deal with utility economics and impacts on electrical generation costs, factors addressed in the Decision Focus study. As far as we know, the "no losers" test, formally known in economics as the "Pareto criterion" or "unanimity rule", has never been proposed as the standard in the evaluation of any energy policy or other type of policy suggestion in Alaska or elsewhere. It seems obvious why. A program that imposes a cost on one citizen of $10 but delivers $100 of benefit to each of 10 citizens would fail the no losers test but clearly increases the general welfare. Each of the 10 could still be better off after compensating the one individual for his loss. (For a further exposition of the severe limitations the "unanimity rule" imposes on public choice see for example Public Microeconomics, Neil Singer, Little Brown & Co., Boston, 1972, p. 105.) 4. The report analyzed a group of financial incentive programs to promote energy efficiency. Education programs can also be effective means of promoting efficiency and may even deliver more efficiency per dollar invested. However, the total magnitude of impact in the short to medium term of education programs is generally less than those programs utilizing financial incentives. For this reason we chose to analyze financial incentive programs. Department Of Energy Alaska Power Administration P.O. Box 020050 Juneau, Alaska 99802-0050 December 16, 1988 Alaska Power Authority ATTN: Richard Emerman P.O. Box 190869 Anchorage, Dear Mr. AK 99519-0869 Emerman: I’ve looked over ISER’s draft report "Analysis of Electrical End Use Efficiency Programs for the Alaska Railbelt," and have the following comments: ae I do not believe the report provides sufficient support to place the two electric to gas conversion programs in the recommended category. There is no question the electric demand and energy use can be reduced by switching from electric to natural gas water heaters and clothes dryers. However, the report simply does not demonstrate that such switches would be in the interest of the electric utilities and their customers nor does it provide justification for spending electric utility dollars to subsidize such switches. At page 2-18, the report has a very misleading set of comments on the water heater control programs. Certainly, MEA and its customers would benefit through lower power purchase costs to the extent that demand is lowered by programs such as interruptible hot water heaters. I appreciate the opportunity to comment. Sincerely, i) iz Wider C Vasa Robert J. Cross Administrator Reply to: Alaska Power Administration, Robert J. Cross. 1. See reply #1 to Usibelli Coal Mine. The electric to gas conversions have very similar impacts to those of other electrical efficiency measures such as efficient lighting. Both types of efficiency measures cause a reduction in the amount of generation capacity required, and both types of measures effect a net reduction in natural gas use. With the electric to gas conversions, the reduction in the natural gas used for electrical generation is substantially more than the increase in natural gas used directly by the new gas appliance. 2. We have clarified this section to indicate that MEA consumers may realize significant savings from the program. However, we still believe that the net resource impact of the program is probably not favorable. See reply #5 to MEA.