CWEB.042/June.29.1999
Transforming markets for energy-efficient goods and services takes a long, broad and ultimately self-sustaining view to fostering the efficient use of energy.
It tries to make energy efficiency a standard in particular markets, not just another choice made by individual households, businesses, governments, industries or farms.
Market transformation is ambitious, challenging, risky, sometimes initially expensive and somewhat limited in applications--but it's also a very encouraging (and in some cases already productive) means to cost-effectively improve the efficient use of energy over time. It is gaining currency in the Pacific Northwest and beyond among utilities, governments, businesses, public-interest groups and others, at a time of fundamental electric industry transformation--with its debilitating influence on traditional energy conservation programs--and the pre-eminence of markets.
"Recently utilities and governments have begun to alter the way they approach energy conservation and efficiency objectives--from audits and rebates to strategic market interventions designed to effect sustainable shifts toward more efficient products and services," write Margaret Suozzo and Steven Nadel in a 1996 report from the American Council for an Energy-Efficient Economy. " . . . utilities have sought alternatives to traditional demand-side management programs. Governments have assumed a market-stimulating role in energy efficiency. Both have sought to leverage private capital and ingenuity to improve the efficiency of energy-using products. And the concept of market transformation has been born and evolved."
Market transformation has already had demonstrable successes, along with a few less-successful experiences. It has led to the creation of the Northwest Energy Efficiency Alliance (see related story) and other market-transforming organizations. It has also staked a claim to public-purposes funding in many states with restructured electric industries, and was specifically recommended for public-purpose funding in the 1996 Regional Review.
In the Northwest, the Alliance and market transformation represent what former Washington utility regulator Anne Levinson called "a tool--a very promising tool--toward reinvigorating our regional commitment to maximizing efficient, environmentally sound power."
For the electric utilities that fund the Alliance through ratepayer dollars--Bonneville Power Administration and the six investor-owned utilities serving the region--market transformation amounts to a significant share of their total conservation spending. Idaho Power, for example, in 1998 allocated nearly 60 percent of its $2.9 million efficiency program spending on the Alliance. The Alliance's total budget for 1997 through 1999 is $65 million--tiny in the context of the region's annual electric system revenues of many billions of dollars, but large in the context of shrunken utility conservation budgets.
There is considerable hope and interest and a fair amount of money invested in market transformation.
So what's it all about?
What Is Market Transformation?
Although market transformation has no single universal definition, it does share some widely accepted attributes.
Here's a sampling of ideas:
Under any definition, market transformation is distinct from traditional utility demand-side management programs. "While it's trying to achieve the same goal of cost-effective conservation,"said Gardner, "it's really doing it in a way that's different from efforts in the past." A 1995 Energy Services Journal article by Ralph Prahl and Jeff Schlegel describes the shift as "moving from a focus on influencing individual purchase decisions to a focus on improving the functioning of energy efficient markets," which, they add, "appears to be highly compatible with the general trend of relying more heavily on market forces to enact energy policy."
These markets generally exist beyond individual utility service territories and even state boundaries--thus the imperative for "collective action, policies, and programs," as described by Suozzo and Nadel.
This transformation, when it succeeds, can bring significant advantages. "Mostly it's the big bang for the bucks," said Gardner, achieving large and lasting energy savings, and their attendant benefits, from the initial investments.
Keating, Eckman, Goldstein and Miller put it like this: "The term 'Market Transformation' developed from the concept that programs that concentrated on changing the way energy efficiency was received in markets would lead to larger, longer lasting, better accepted, or more cost-efficient efficiency improvements. Programs could alter the relationships between market actors--consumers, retailers, distributors, producers, suppliers, etc.--rather than just addressing consumer demand, and thus might have longer-lasting effects."
How Does Market Transformation Work?
Just as there is no single description of market transformation, there exist many different ways of pursuing it. Approaches range from providing information to offering limited rebates to developing trained professionals to commercializing promising technologies to buying efficient products in bulk.
One of the early national market transformation initiatives, the Super-Efficient Refrigerator Program, established a $30 million financial incentive for the refrigerator manufacturer that could best develop and market an energy-efficient, CFC-free model. SERP, funded by utilities including BPA and PacifiCorp, selected Whirlpool as the winner. Although SERP model sales were relatively sluggish and its market impacts modest, the initiative contributed to a 30-percent increase in federal refrigerator efficiency standards, effective in 2001, by helping to establish the technological and manufacturing viability of super-efficient, CFC-free refrigerators.
"The ultimate goal was to transform the market so that super-efficient, environmentally friendly models were the only ones to get sold," NRDC's Goldstein told Con.WEB in 1997. "That has been achieved almost beyond our wildest hopes by the adoption of the [federal] Department of Energy Standards." He called SERP the most successful market transformation initiative in the country to date. (See Con.WEB, July 25, 1997). It also led to the formation of CEE, a national market transformation collaborative. "We're . . . the companion organization set up to follow on the coattails of SERP," explained CEE executive director Marc Hoffman.
In the Northwest, the Manufactured Housing Acquisition Program in the early 1990s also provided manufacturers with financial incentives--$2,500 per home at one point--to build their homes to Super Good Cents efficiency standards. MAP captured virtually the entire Northwest market, but the program, and the manufacturer rebates, ended in 1995. Although other non-rebate efforts arose to promote efficient manufactured housing, the market share of SGC electrically heated and Natural Choice gas-heated homes plummeted to about 50 percent by 1997, according to a 1998 Pacific Energy Associates report for the Alliance, which sponsors the Super Good Cents Manufactured Housing program. The market-share problem is hampered by competitively priced alternatives to SGC homes, changes in the industry structure, and high turnover in the retail sales force, according to PEA. Still, PEA noted that virtually all Northwest manufactured homes "have significiant energy efficiency features above what would be required by Federal standards." A more recent PEA assessment, from February, found continuing strong price competition for manufactured housing, along with signs of slowing market erosion for SGC models. PEA also concluded the Alliance's SGC marketing efforts were influencing manufactured housing retailers.
"I like to think of the rebate as a technique rather than a program," said CEE's Hoffman. "Historically under DSM the rebate was used to acquire x number of units of efficiency . . . Under market transformation rebates are used more strategically to introduce a product, kick a product off, bring attention to it, with the clear intention it's a temporary strategy."
CEE is big on creating common efficiency specifications for national market transformation initiatives, largely for the benefit of manufacturers. It did so with a premium-efficiency motors program, setting the qualifying levels slightly above minimum federal standards--which can still cut motor losses by 20 percent or more, according to a CEE fact sheet. At least five motor manufacturers have substantially committed to this program.
Market Transformation Strategies
The Suozzo and Nadel report lists a number of other market transformation strategies, including technology procurement (defined as "coordinated mass purchases of high-efficient technologies"), voluntary product labeling and cooperative research and development. "While there are many different approaches for promoting market transformation, the best approach or set of approaches will depend on the nature and status of the technology being promoted and the barriers that need to be overcome." It also takes time, they caution, sometimes up to 10 years, "before a market is significantly transformed."
Their review of numerous early market transformation ventures led them to conclude that "those that strive to increase efficiency (at low or no incremental cost to the consumer) appear to be most successful in effecting rapid shifts in the market." In addition, "A number of efforts demonstrate that large increases in efficiency are possible when there are significant monetary incentives or public image benefits."
The Alliance's portfolio of projects is marked by diverse strategies for transforming markets. In the residential sector, for example, the Energy Star High-Efficiency Residential Windows program (see related story) focuses on marketing, while lighting ventures provide financial incentives to manufacturers. Among commercial-sector orientations are training (Building Operators Certification) and education (Architecture + Energy, Commissioning Public Buildings in the Northwest). And industrial ventures generally use the model of what Gardner called "demonstrate and disseminate . . . These are typically newer products, so we demonstrate and document that they work in the field or in the lab and then disseminate that information to key players," as is the case with the Speed Control for Fan, Pump and Blower Applications and the Evaporator Fan VFD initiatives.
Measuring Success
Gauging the effectiveness of market transformation ventures is no simple matter, confounded as it is by the inherent complexities of markets.
The Alliance focuses on market penetration rates in its evaluations of a project's long-term impacts, according to a recent paper from the collaborative. However, "simply monitoring the changes in the market penetration rate before and after venture implementation will in most cases be insufficient to gain an accurate estimate of the venture's effects. This is because markets are not static and unchanging, but dynamic and constantly evolving . . . we are confronted with the challenge of projecting what would have happened, absent the venture, in the market."
Beyond basic market penetration rates, the Alliance looks for other indicators of transformation, such as the emergence of new products or services; price changes; greater availability and awareness of products or services; and changes in common practice. Tracking and attributing energy savings is yet another issue, particularly tricky in service-oriented markets.
"Market transformation isn't a static concept or a static state," said CEE's Hoffman. "There isn't such a thing as a transformed market. It's not an end game; it's really a process of either removing or lowering barriers . . . It's not something you can say when everybody has this high-efficiency clothes washer the market will be transformed." He thinks less about total market saturation of an energy-efficient product or service, and more about sucessfully addressing barriers to their adoption.
Market Transformation Limitations
For all its promise and examples of performance, market transformation is not the be-all solution for advancing energy efficiency, as even its practitioners acknowledge.
It faces many of the same generic challenges as any other pursuit of conservation, such as higher initial costs, split incentives, lack of information and difficulty in accessing capital. It also sometimes involves newer technologies or services, adding an element of risk.
Market transformation also isn't neccessarily oriented to customer service, particularly for ventures that work primarily with manufacturers, retailers and distributors. It also requires extensive collaboration among entitites with differing interests, which can pose challenges of its own. And market transformation isn't a suitable strategy for every market. "There are some areas, such as distribution transformers or weatherization in low-income housing, that it's really hard to imagine a market transformation approach," said Gardner.
Market transformation and local conservation initiatives are both needed, believes Nancy Hirsh, policy director of the Northwest Energy Coalition and an Alliance board member. "Market transformation is a new way to leverage upstream changes that result in energy efficiency improvements, and to capture those improvements in a much wider marketplace. But I don't see market transformation as the sole driver of energy conservation investments. It shouldn't be a replacement for locally delivered energy efficiency programs that may not be market transforming, but still are cost-effective and still have benefits to the consumer and to the environment."
Stan Price, executive director of the Northwest Energy Efficiency Council, makes a similar point. "Some efficiency results simply won't lend themselves to market-transforming program initiatives," he said. "It also seems prudent to consider that the real long-term and persistent market effects we desire from market transformation efforts may not turn out to be as profound as we would like. Balancing utility financed [market transformation] efforts with more traditional DSM approaches would hedge our bets somewhat."
Looking Back and Ahead
Market transformation can be traced to collaborative efforts to sustainably change markets for efficient products beginning in the 1980s, according to the Keating/Eckman/Goldstein/Miller paper. These disparate experiences in the field--including some in the Northwest--led to the development of market transformation theory in the early 1990s.
Now market transformation has gained regional and national momentum as a viable means to increase energy efficiency. And CEE's Hoffman is among those who believe market transformation will thrive in the future. "I think we're going to see more uses and wider spread adoption of market transformation strategies because they're highly leveraged; you can do more with less money," he said. "It also works well with a less regulated market. That's really a large part of it. The competing market will determine the appropriate mix of resources; what market transformation focuses on is removing barriers so the markets can work.
"It's not so much the old paradigm, where in a regulated market there wasn't enough efficiency being provided so we intervened and bought efficiency," he continued. "Now the paradigm is we're going to have market forces driving efficiency as well as supply . . . That's why I think it will expand and make sense for a restructured market."--Mark Ohrenschall
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The Pacific Northwest is engaged in a unique $65 million campaign to transform markets for energy-efficient goods and services.
The Northwest Energy Efficiency Alliance formed 2-1/2 years ago as a regional market transformation collaborative funded with $65 million from Bonneville Power Administration and the region's six major investor-owned utilities. It became the only organization of its kind in the nation.
Now the Alliance is nearing the end of its initial three-year charter, amid indications it will continue into the foreseeable future with additional utility funding. BPA anticipates providing about $11 million in fiscal years 2000 and 2001 and about $8 million in FY 2002, but other monies are needed from some combination of IOUs, large publicly owned utilities and state public-purposes funding to maintain the regionality of the organization. "I can say things look promising," said Alliance executive director Margie Gardner. "I'm very positive and feel strongly this is likely to continue." Her 18-member board of directors--primarily from utilities along with government, public-interest and private-sector representatives--has agreed there is much more market transforming to accomplish and the Alliance should be doing it.
Having undergone a somewhat bumpy start as a fledgling entity, the Alliance now has adopted 32 projects in the industrial, commercial, residential, and agricultural sectors as well as several special information projects. These initiatives are in various stages of progress, but some, notably the Energy Star Resource-Efficient Clothes Washers venture, have already made positive impacts. Others are too new to really assess, while a handful found great challenges in transforming their target markets.
The Alliance and its work have gained increasing visibility around the region and even the nation, and the collaborative has also earned extensive although not universal support in the Northwest. [Editor's note: An article on opinions about the Alliance is planned for the July issue of Con.WEB.]
While there have been rough spots along the way, the Alliance is widely seen as an idea still worth pursuing.
Market transformation represents what former Washington utility regulator Anne Levinson called "a tool--a very promising tool--toward reinvigorating our regional commitment to maximizing efficient, environmentally sound power."
A Little History
The Alliance came together at an unlikely time, 1996, as utilities faced the prospect of electric industry restructuring by, among other actions, generally cutting energy efficiency initiatives. Ralph Cavanagh of the Natural Resources Defense Council recalled this time as a "crisis of confidence" for regional demand-side management.
Yet the Northwest had a long and successful history of energy conservation, including market transformation initiatives in the areas of residential and commercial energy codes, manufactured housing, refrigerators, compact fluorescent lighting, motors and other technologies. BPA and the six IOUs in the region decided to pursue market transformation in a more systematic and institutionalized fashion, and in concert with stakeholders they officially formed the Alliance in late 1996.
Opening the first Alliance board meeting in October of that year, Dick Watson of the Northwest Power Planning Council noted that the future of energy conservation in a competitive electric marketplace was very much uncertain. However, he noted, market transformation enjoyed widespread support. "The willingness of all parties to compromise . . . to find a way to make this work, has brought us to where we are today."
BPA deputy chief executive officer Jack Robertson said he envisioned the Alliance as "one place where we can, I hope, create a neutral zone, where we can all collaborate on trying to take the value of the [Columbia] River . . . and figure out a way to make it more efficient and more productive and extend it into the 21st Century. Bonneville feels this is the core of how we want to deal with energy conservation in the future. We think it will produce excellent results." Seattle City Light superintendent Gary Zarker called the Alliance a "great example" of the Northwest's national and even international leadership in energy efficiency: "I hope this is the start of something that will continue this tradition and make it even better." And Rich Sonstelie, chief executive officer of Puget Sound Power & Light (now Puget Sound Energy), said the Alliance represents "a group of people who refuse to accept the conventional wisdom . . . that energy efficiency and competitive markets are incompatible."
From that beginning the Alliance set out to establish itself as a regional market transformation collaborative--with no similar models to follow. It chose Dave Houser of Montana Power as the first board chairman, and Will Lutgen as the first executive director. Lutgen, however, resigned after about six months on the job, citing personal reasons. He was replaced by Gardner, who had been Alliance deputy director and previously a Power Council conservation staffer.
"It was pretty difficult," said Alliance communications coordinator Stacey Hobart. "We didn't have staff, we were run out of the Council offices, we lost our executive director . . . It was kind of a slow start." Assuming the Alliance gets renewed funding, she added, "We'll be in a much better position to start this next round." The Portland-headquartered Alliance now employs 19 people and has a 1999 operating budget of $2.3 million (encompassing salaries and administrative expenses).
Elizabeth Klumpp of the Washington Department of Community, Trade and Economic Development's Energy Policy Group--who represents Washington Gov. Gary Locke on the Alliance board--believes the Alliance "has evolved in a very positive direction" from its beginnings. "First," she said, "the board has evolved from one with strained internal relationships and unclear objectives to a board that has a clear mission [and] can readily make decisions." She also noted the Alliance now has a full staff of "talented individuals" working on collaborative market transformation. "Finally, what began as an organization with a dubious future has since become a nationally recognized model for successfully achieving energy savings through market transformation."
A number of the initial projects were already in some form of progress when the Alliance took them on, including ventures for compact fluorescent light bulbs (now known as LightWise) and resource-efficient washing machines (Energy Star Resource-Efficient Clothes Washers). The Alliance gradually expanded its portfolio of market transformation projects through two separate requests for proposals, issued in 1997 and 1998. These processes of selecting new ventures, as well as deciding whether to renew existing programs, were occasionally contentious and settled only on split board votes--which often reflected different ideas about the nature of market transformation. For example, in a December 1997 decision to add up to $5.7 million to the then WashWise budget, the Alliance board first debated some basic issues: What constitutes a transformed market? How should money be spent, and how much? And when should the Alliance declare victory and go home? (See related story for more on market transformation.) These were questions that had to be answered by the Alliance directors, since at the time there were no other organizations to look to for ideas about how to proceed.
Alliance Hallmarks
The Alliance's strategic plan, adopted in 1997, describes the organization's basic goals: cost-effective electric energy efficiency through market transformation; incorporating energy efficiency into the marketplace for products and services; seeking a portfolio of projects balanced by regional geography, customer class and market transformation phase; evaluating projects appropriately; and building for the future.
Other features mark the collaborative. For one, the Alliance is essentially regional in scope. "I think there are substantial benefits to do it as a region," said Gardner. The Northwest is home to more than 120 publicly owned and investor-owned utilities, and markets for energy-efficient products and services cross both service territory and political boundaries. "It's very important to try to aggregate customers of large enough size to get the attention of distributors, retailers and manufacturers," she noted. The Northwest is home to less than 5 percent of the nation's population, which doesn't provide a huge market leverage--but it's more than individual utilities and states can muster.
This regional focus also challenges the Alliance to work effectively in smaller markets outside the populous Interstate 5 corridor and large cities east of the Cascades, such as Spokane and Boise.
The Alliance also is collaborative, among utilities, governments, businesses, public-interest groups and others with an interest in energy efficiency, including electric customers. This distinguishes market transformation from traditional demand-side management ventures, Gardner noted. It also poses new challenges, given the different interests involved.
This collaborative spirit doesn't end at the regional border. The Alliance has worked with California, and nationally with federal Energy Star programs and the Massachusetts-based Consortium for Energy Efficiency. "I find the Alliance is a very powerful ally in national [market transformation] initiatives," said CEE executive director Marc Hoffman. "It's really critical to the success of national initiatives that the Alliance is on board." The Alliance actively participates with CEE on clothes washer, motor and lighting ventures, among other initiatives, he noted.
Another important element of the Alliance's work is adaptive management. "I consider us a learning organization," said Gardner, "learning from each others' knowledge and mistakes and positive outcomes."
This approach has been notably manifested in the approach to the large and significant regional motor market. Initially, the Alliance sought to promote premium-efficient motors among businesses and industries through financial incentives to motor dealers, motor testing, and education, training and technical services. This didn't create much impact on the market, so the Alliance scrapped this strategy and developed the Drive Power inititive, which aims to improve the average "fleet efficiency" of Northwest motors. The Alliance-funded project, implemented by the Electric League of the Pacific Northwest, "will work with industrial companies in the region to encourage energy-efficient motor-management practices," according to a recent news release. It will promote the purchase of premium-efficient motors, develop a market for quality motor repair, and help customers decide whether to replace or repair failed motors.
Performance
Market transformation is a long-term process, and the Alliance's work can't be fully judged for many years to come. Nevertheless, some near-term indicators are available.
In the way of energy savings, Gardner said the Alliance has documented nearly 11 average megawatts of direct efficiencies gained to date from its ventures. As for long-term efficiencies, the Alliance projects its ventures, if successful, will save almost 400 aMW over 10 years, at a total cost of less than 1 cent per kilowatt-hour.
The single most influential Alliance venture to date appears to be Energy Star Resource-Efficient Clothes Washers (formerly known as WashWise), which Gardner called "the flagship: big megawatts, it's low-cost, huge non-energy benefits." The washers save up to 40 percent of the water used by conventional models. Since the Energy Star Resource-Efficient Clothes Washer program began in 1997, the regional market share of resource-efficient washers has jumped from negligible to more than 10 percent. It exceeded 15 percent in three months during 1998, according to a recent Pacific Energy Associates report, and averaged 13 percent for the year--even with the end of consumer rebates last September. The number of participating manufacturers has grown to 30, and PEA noted a "modest trend toward lower prices," although the incremental cost of resource-efficient models still averages about $350 over comparable standard washers.
And, significantly for market transformation, "The positive results in the Northwest are having an impact on the federal appliance standards process," according to PEA. New standards for appliance efficiency levels should be published next year. WashWise has shown that manufacturers can cost-effectively make, and consumers will accept, resource-efficient models, Gardner believes.
"The [Resource-Efficient Clothes Washer] program has been a very successful introduction and acceleration of the market for RECWs, and a sustainable market for RECWs has been established," PEA concluded. At the same time, illustrating the difficulties faced even by apparently successful market transformation initiatives, PEA cautioned about "substantial barriers" remaining: the uncertain standards process, continuing high costs of resource-efficient models, limited competition among U.S. manufacturers, and only moderate consumer awareness of the benefits of resource-efficient washers.
Lessons Learned
The Alliance, as Gardner noted above, seeks to be a "learning organization." Among the market transformation lessons it has learned are the importance of non-energy benefits and the value of partnerships with local utilities.
"Unless the energy benefits are overwhelming, there are enough other issues to changing people's ways of doing business, enough of the barriers . . . The low cost of energy in this region is not likely to prod them enough to make those decisions without non-energy benefits," said Alliance board member Ken Keating, BPA's market transformation coordinator.
Front-loading versions of the resource-efficient washers use 60 percent less electricity than standard machines, but they also conserve water and detergent, and clean clothes more gently than standard models. Variable-frequency drives in refrigerated storage warehouses also save considerable energy, while at the same time they may reduce the mass loss of stored fruit--a huge and profitable advantage for the industry. Trained building operators can save energy in their facilities, but they also make those buildings more comfortable and less expensive to maintain.
Energy efficiency plays a part in promoting these products and services, Keating said, but, "It's the non-energy benefits that are going to sell it in the Northwest." These non-energy benefits will help make these products and services profitable, a necessary condition for marketplace sustainability.
Another key to selling market transformation, the Alliance has found, is allying with local utilities. Consumer awareness "is an important part" of market transformation, said Hobart, and, "Utilities play a really significant role in that, if they want to. There's a benefit to doing that, providing information to their customers." She estimated that 75 percent of all Northwest utilities currently promote at least one Alliance venture in some fashion. Still, former Alliance board member Jim Todd of Seattle City Light believes these alliances can be improved: "The Alliance needs to work more effectively with the utilities of the region in the implementation of its market transformation programs," he said, because utilities have substantial interest in, knowledge of and stake in their outcomes.
"The most powerful messages you can send are the regional market transformation combined with a local effort that dovetails and gets consumers to pull the products from their side while we're pushing the products from the manufacturers' side," said Gardner.
Future
The Alliance expects to know its funding future by this fall. If it comes together as Gardner and other Alliance officials anticipate--although Seattle City Light's Todd believes funding will be an ongoing challenge--the organization will move into a new phase of its existence.
Organizationally, one likely change is the addition of consumer representatives on the board, an issue that publicly surfaced at the most recent board meeting, in Eugene in April (see Con.WEB, May 29, 1999). Gardner described the board as "very eager, I would say, to both understand the customer perspective better for different program approaches, and also as an ambassador back to particular customer segments." The board's composition could change even more substantially over time, particularly if and when other funding sources, such as state-legislated public-purposes money, emerge for the Alliance.
The Alliance also is beginning to think about how it would go about transforming markets with an infusion of new money. It has, in this regard, formally solicited "professional services to participate in a long-range planning exercise . . . to assess and identify electric energy-saving market transformation opportunities in the Pacific Northwest." New projects may be adopted beginning in summer 2000, using both general and targeted requests for proposals.
It's too early to know exactly what directions the Alliance will head, Gardner said. "It may be brand-new areas. It may be different takes on the same markets. It's really invigorating to think about if you had a clean slate of paper what would you do and how do your current efforts fit into that . . . We've really broadened our ability to understand what tools you can use in a market . . . I do see us applying that much more diverse array."--Mark Ohrenschall
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The Northwest Energy Efficiency Alliance and Siemens Solar Industries allied in April 1998 to cut energy use, production time and costs in the manufacture of silicon crystals for photovoltaic cells and computer chips. Since then the $2 million project--funded in equal parts by the Alliance and the company--has produced substantial technological improvements in the crystal-growing process and energy savings of about 51 percent at Siemens' Vancouver, WA plant. It has increased the company's productivity, improved product quality and lowered costs. In keeping with the initiative's stated goal of transferring the efficiencies to at least two other crystal manufacturers, project sponsors report that candidate companies have already toured Siemens' facility and have been involved in "business-to-business" talks about using the improved technology. But until a market evaluation report is made public--expected soon--details will remain sketchy on just how Siemens and the Alliance intend to package the silicon-growing efficiencies for wider consumption.
Project Genesis and Technology
Crystal-growing furnaces produce silicon ingots, which are subsequently sliced into wafers for use in PV cells and semiconductors. To make the ingots, raw polysilicon is placed in a crucible and melted at 1,200 degrees Celsius. A small piece of pure silicon is then lowered into the spinning crucible; it touches the liquid silicon and slowly draws out the material to produce the ingot. Argon gas is also used in the process to regulate furnace temperature.
Siemens Solar Industries is the world's largest manufacturer of PV equipment, and ingot production--the sole focus of the company's Vancouver plant--contributes a substantial amount to the cost of producing solar modules. The company thus had a natural interest in improving the efficiency of the process, and by the time it approached the Alliance with the project proposal in 1997, it had already conducted preliminary modeling on prospective efficiencies in its crystal-growing furnaces.
Specific improvements that Siemens pitched as part of its proposal included insulation of the crucible in which the silicon is melted; installing a heat shield to permit more rapid cooling of the crystal as it is pulled from the crucible; and redesigning the argon gas management system.
"It's a matter of livelihood for us to get our costs down," said Greg Mihalik, senior process engineer for Siemens Solar. "Power and argon are some of our higher-ticket items as far as consumable supplies, so our early efforts focused on methods to reduce those costs," he explained. "Then we realized that eliminating those costs would produce some nice side effects in terms of conservation, reducing emissions and pollutants. We thought what we were doing here would be a nice match with the Alliance's goals."
Siemens Solar is part of the large German-based multinational Siemens AG group, but Mihalik pointed out that operations at the Vancouver plant remain "relatively small . . . and with a project like this, you're looking at long-term payback," which may not appear particularly attractive to investors.
"We don't have an R&D center," he said of Siemens' Washington facility. "Our growers are already at 140 percent of capacity, and what we don't make, we have to buy." So in addition to the company's direct investment in research, Mihalik said devoting a furnace to experimenting with technological innovations represented "a double whammy" in terms of costs.
"We had to find ways to supplement our income in lieu of production time on our machinery, and look at other ways to promote this project," he said. "That's where the Alliance came in."
Project Goals
The project initially promised energy savings on the order of 40 to 50 percent in the crystal-growing furnaces, each of which use an average of 250 kilowatts in reaching extremely hot temperatures. It was estimated that Siemens' Vancouver facilities alone could save 1.5 average megawatts over the 2-1/2-year term of the project, and that potential efficiencies could reduce production time for silicon ingots by 15 percent and argon gas use by 50 percent.
Roughly half all U.S. silicon crystal and wafer production is located in the Pacific Northwest, and the sponsors reasoned that, in addition to Siemens-specific efficiencies, the project could generate even more substantial energy savings if the technological improvements are transferred to other ingot manufacturers--particularly those in the semiconductor industry--which use the same type of crystal-growing furnaces.
Assuming that at least two other manufacturers adopt the improvements, energy savings could reach 52 aMW over 10 years. And the total resource cost--which includes energy and non-energy benefits--was estimated by the Alliance staff at less than 1 cent per kilowatt-hour.
Results
In terms of sheer energy saved the project has exceeded expectations. Mihalik said that by making the proposed technological changes Siemens has reduced the power requirements for its furnaces 51 percent. The company has already converted about a quarter of its machinery, and will have all of its furnaces converted within the next 12 months. "We're experiencing some dramatic energy savings--within a period of one year, we will have saved over a quarter of a million--or 257,000 KWh," Mihalik reported.
The new technology has also increased furnace productivity between 20 and 40 percent. Mihalik noted that ingot quality has improved, while the innovations have reduced the amount of silicon waste generated by the process. Argon gas use has been reduced by 85 percent. "We've got higher yields, a better quality product and we're doing it at a lower cost," Mihalik observed.
Market Transformation
While Siemens' results have been overwhelmingly positive, the next challenge is to transfer the innovations to other silicon crystal manufacturers. Mihalik said Siemens and the Alliance own the technology, and a patent application has been filed. "How we decide to disseminate this is still under discussion," he said.
"Some companies might want the entire package, and other organizations might be interested in specific elements of what we've done," Mihalik added. "We're still not sure how we're going to go about it," he said, "but there should be some sort of financial payment for the technology development."
He said Siemens has had "informal discussions" with some companies in the Northwest, and that a number of organizations have taken tours of the Vancouver plant. Mihalik added that measuring "success" of market transformation might be difficult, because it's difficult to know what kind of technology other manufacturers--some of them, Siemens' competitors--are using.
"There have been discussions with two semiconductor manufacturers in the region," added the Alliance's Blair Collins. He said there has been talk of further research and collaboration on product testing--particularly with regard to issues of ingot quality in transferring the technology from PV cells to semiconductor crystals. "It's safe to say we've been working on a business-to-business model, and have initiated a dialogue with other folks within the region on how to use the information garnered from this project."
Collins said the Alliance is currently in the process of reviewing the silicon crystal-growing project, and has hired a contractor to assess the market for the new technology. A draft evaluation report should be made public before the end of July, including "a case study on how to package what we've found, so we can get this information out in a manner that is transforming."--Angela Becker-Dippmann
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Energy efficiency is a fine attribute in windows, but it's not necessarily a major selling point for consumers.
Energy-efficient windows, however, have several other desirable features: greater indoor comfort, less fading of carpets and furniture, reduced glare, minimal condensation. Those qualities do help sell windows and, it is anticipated, will help transform the Northwest market for energy-efficient windows.
"What we've found is the things people interact with on a daily basis are what you want to address," said Gary Curtis of D & R International. "The fact it saves energy and saves money is sort of a deal sweetener."
Curtis' firm is the lead contractor on a Northwest Energy Efficiency Alliance venture working to boost consumer demand and increase market share for energy-efficient residential fenestration products--primarily windows, but also patio doors and skylights.
"It's a marketing program," explained Curtis. "We just wanted [manufacturers] to sell more. They'll generally sell what there's a demand for."
The Energy Star High Efficiency Residential Windows program--which works in partnership with the fenestration industry and the federal Energy Star windows program--has apparently made a difference since it began in early 1998. In 1997, according to a baseline market assessment by Macro International released in January, Energy Star-qualifying windows and patio doors accounted for about 15 percent of the total Northwest market (skylights, a much smaller component of the total fenestration market, were at 80 percent).
Now the total Energy Star market share has risen above 40 percent. "It's way beyond where we thought we'd be at this point," Curtis noted. And, given manufacturer commitments, he is "pretty confident" the venture will achieve its goal of 54-percent regional market share for Energy Star-qualifying fenestration products by the end of 2001.
Alliance executive director Margie Gardner called the market share gains "a pretty dramatic shift" in a relatively short time, and she attributes much of it to "partnering with manufacturers . . . It was the manufacturers who came to us and said they'd like to participate."
Although the Alliance project is oriented to changing the marketplace, it potentially could lead to more efficient energy-code requirements for windows and other fenestration products. "In practice, if 65- or 70-percent of the product being sold into new construction meets Energy Star criteria, it would be easy to incorporate it as a code change," according to Curtis.
Fenestration Market
Energy-efficient windows, patio doors and skylights promoted by the Alliance are widely available in the marketplace. Many of the manufacturers are moving toward spectrally selective low-emissivity products and minor frame design adjustments to reach the Energy-Star qualifying level of .35 U-factor for windows and patio doors, .45 U-factor for skylights (U-factor measures heat transmission through a window). Some manufacturers can now produce products that meet the .35 U-factor Energy Star requirements without adding argon gas between the glazing layers. "It is off-the-shelf technology," said Curtis.
Expanding customer demand and market share, then, is the central market transformation challenge.
The residential fenestration market has four distinct segments--single-family, multifamily, manufactured housing and remodeling--all served by a complex network of manufacturers, distributors and retailers, as outlined in the baseline market assessment. Although these markets are distinct, the products used in them are basically the same.
The Alliance focuses on the single-family home construction market, both new and remodel, which accounted for about 70 percent of 1997 Northwest residential construction. And the venture works within the existing framework of how windows and other fenestration products are made, distributed and sold. "If we can make it so it's part of the normal way of doing business, so Home Depot and Milgard are making money . . . they're probably going to keep doing it," said Curtis. This, goes the thinking, will lead to market transformation.
As an example of taking a business-as-usual approach, the Alliance and a couple of manufacturers will reward top salespeople for Energy Star-qualifying products with a trip to Seattle's new Safeco Field for a Mariners baseball game and other goodies.
Market Transformation Strategy
Manufacturers, said Curtis, "have really never sold these products on the basis of features and benefits." Among those are the above-mentioned advantages to consumers of energy-efficient windows, as well as the values to the industry of ready availability, lifetime warranties and the third-party seal of approval from Energy Star.
" . . . the core strategy is to use traditional marketing, promotion and advertising to attract customer interest," according to an Alliance project summary. "This project builds on existing business relationships between manufacturers and retailers, distributors, builders and remodelers to deliver the Energy Star message to customers. Incentives and support are provided to manufacturers to encourage promotion through traditional channels."
The message is spread through the likes of advertising and articles in trade publications as well as mass media, trade-show booths, point-of-purchase materials and literature from the national Energy Star program.
The Energy Star tie-in offers a couple of primary advantages for the Northwest. The Alliance venture originally set the efficiency criteria for qualifying products at a more energy-efficient .30 U-factor, but switched to Energy Star's .35 U-factor to avoid confusion in the marketplace. Aligning with Energy Star also provides what Curtis described as "nice leveraging" in promotional activities.
"We try to stay really flexible," said Curtis. The project team also tries to listen to its customers in the window industry: "What are you trying to do? What are your problems? How can we help you? How can Energy Star help you accomplish your goals? Rather than, 'We've got this program. This is what we're going to do.'"
Cost and Other Barriers
There are reasons why Energy Star-qualifying products still are not the majority of total fenestration sales in the Northwest. Cost is one--and that's the main reason the Alliance is working in this market. These windows on average cost about 10 percent more, and the baseline market assessment found that retailers rank price first among customer consideration in buying window products, followed in order by quality, appearance and, last, energy efficiency.
Curtis acknowledged the incremental cost, which leads to simple paybacks in the range of three to seven years, but he believes it is "not that significant" a barrier given the many benefits of energy-efficient window products.
Other hurdles he cited include lack of awareness about Energy Star-level windows, which is gradually changing, and the popular notion that energy-code requirements guarantee energy efficiency. Oregon requires windows with a .40 U-factor, 15 percent less efficient than Energy Star, while Washington requires a .40 U-factor for electrically heated homes. In both those states and in Idaho, according to the baseline market study, builders generally select windows on the basis of residential energy-code requirements. Climate is the main criteria in Montana.
But in these challenges also lie market transformation opportunities.
D & R's Jim Russell put it like this in a program newsletter: "Windows in a new house are like tires on a new car. Windows can make a statement on the quality of a building. Or . . . not! Everything we do seems high tech. How windows are made is high-tech. Our high-tech computers need "windows"! This is a great time to tell our story. Cool sounding technical, multisyllabic words (like spectrally selective), interactive displays, and terrific energy efficient window products! Windows are finally cool, they can be something we talk about over lattes at Starbucks . . .
"The Northwest Energy Star window project makes windows count, our opportunity to tell a story about something we look right through every day."--Mark Ohrenschall
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A Northwest Energy Efficiency Alliance program designed to help farmers get a better handle on how much to irrigate their crops--and when--is gaining momentum in all four Northwest states.
As the Scientific Irrigation Scheduling program enters its second growing season, the number of farmers participating has doubled in just about every state. And although it's too soon to tell just how much energy and water farmers are saving through SIS, program officials are optimistic about transforming the irrigation market with SIS.
"The Alliance's success is dependent on whether they're increasing acceptance of the practice [so farmers] are willing to continue it and pay for it on their own," said Ken Keating, Bonneville Power Administration market transformation coordinator and Alliance board member. Ideally, non-participating irrigators will see the positive results achieved through SIS and adopt the practice themselves.
Elaine Miller, lead SIS project coordinator for the Alliance, said the Alliance is in the process of evaluating the program, but all the data is not yet collected. Her colleague Phil Degens said the Alliance will have a better estimate next year of energy and water savings--although SIS "might help crop yield rather than save energy or water." Degens added that farmers who have participated in the SIS project are recommending the process to others.
What is Scientific Irrigation Scheduling?
Scientific Irrigation Scheduling uses precise readings of soil moisture and evapotranspiration, comprehensive and accurate weather data, and information on a specific crop's moisture needs to determine how much and how often to irrigate a field. The farmer--or an SIS project coordinator--uses soil moisture sensors to regularly measure a field's moisture level. With that information in hand, the farmer checks the weather data for the upcoming week to determine the amount of water needed and when to apply it to the crop.
Most farmers can access weather information via their home computers through AgriMet, a data information system developed by the federal Bureau of Reclamation and BPA. Some 40 remote stations automatically collect weather data and translate that into local crop water-use information. That data is transferred via satellite to the Bureau's computer system.
Although scientific irrigation scheduling has been around since the 1980s, it has yet to catch on among the majority of farmers. Those most likely to have adopted the process, said BPA's Keating, are larger farmers who focus on more valuable crops. Savings can be significant: an irrigation management program conducted in the early 1990s by Grant County PUD and BPA indicated average water and energy savings of about 30 percent.
The success of the Grant PUD/BPA program was one of the catalysts for the Alliance's SIS project. Another, said Degens, is the Alliance's intention to develop market transformation ventures that benefit all areas of the region. "The irrigation sector is fairly large in the Pacific Northwest, and one of the goals of the Alliance is to be fair to all customer classes," he said. The SIS proposal was "one of the few to target irrigation customers. We thought that this was one that could serve this customer class."
SIS State by State
Under the Alliance program each of the four Northwest states takes a slightly different approach to SIS. "We are looking at different ways to target this group," Degens said.
Washington's program has several components, according to coordinator Brian Leib of Washington State University Cooperative Extension in Prosser. These include two types of demonstrations, hands-on work with local farmers and development of a software program. The software program--Washington Irrigation Scheduling Expert, or WISE--uses PAWS (Public Agricultural Weather System) to calculate evapotranspiration and develops irrigation schedules. The farmer plugs in data gathered from the soil moisture sensors to tailor the WISE information to a specific field.
Washington has also developed a demonstration program to learn about different types of soil moisture sensors, Leib said. There are five demonstration sites--two on WSU land and three on farmers' fields--with a variety of crops and irrigation systems. The sites are also used for field demonstration days; Leib said about 70 people attended the alfalfa site field day earlier this summer. A potato site field day is scheduled for July.
Another part of Washington's SIS program is working with the local farmers and actually doing irrigation scheduling. During the first growing season, "We were doing everything," Leib recalled. This season, the focus in on getting more people involved. Last season, five farmers and 15 fields participated; this season, eight farmers and 16 fields are committed to the program.
Lieb said the goal is to get the farmers to produce their own schedules and monitor the soil moisture themselves. "People like having soil moisture information," Leib said. "We hope they organize around the schedules if they develop them themselves."
To help promote the program, Leib's staff has produced newsletters, held educational meetings and conducted hands-on and computer demonstrations during the winter months. A Web site also is under development; Leib said 75 percent of the farmers contacted have computers and 50 percent have modems.
Montana SIS
Montana's approach is primarily one-on-one, according to coordinator Phil Oestreich of Soil and Water Conservation Districts of Montana and Brood Water Conservation District. "Things are going good, except we're dry," Oestreich said. In spite of the second year of extremely dry weather, Oestreich said participation in the area around the south end of Flathead Lake has grown from 20 farmers last year to 58 this year. In the Deer Lodge area, participation has increased from 12 to 16.
"Word is getting around that SIS is a good thing to do," Oestreich said. Farmers "want to learn how to manage the water better." That's especially true of the area near Flathead Lake, he added, where the water delivery system is based on a quota and costs $18 per acre-foot. "But you don't always get a foot," he said. And "it took 18 inches last year to grow a decent crop."
During the program's first year Oestreich said staffers provided participating farmers with technical assistance on a weekly basis, including taking soil moisture readings. This year that's been cut back to once every two weeks. Staffers use hand-held sensors made in Bozeman, along with sampling the soil by hand for feel and appearance, to test soil moisture. "These guys can do it on their own, [with the] method they want to," he said. "Keep it simple."
But it still takes a lot of time in the field, Oestreich said. It's difficult to get the whole group together in Big Sky country, so "we'll go and ferret them out . . . the [irrigation] management aspect comes into play when they're out there and actually seeing what's going on."
SIS also has advertised on the radio in some parts of Montana, and the program has a Web site up and running--http://www.mtim.org.
Idaho SIS
In Idaho the SIS program has an "advisory plus" element, meant to broaden the scope of the SIS program beyond the demonstration portion, which is limited to an area of southern Idaho outside Twin Falls. SIS staff talk to farmers about irrigation scheduling and help them with in-field evaluations, said SIS project coordinator Warren Weihing of the Idaho Department of Water Resources. Nearly twice as many farmers have signed up for the demonstration program this year--25 compared to 14, with 50 fields included in the program. "We'll probably talk to about 25 more farmers about irrigation scheduling," he said.
Farmers participating in the demonstration program are provided with soil moisture measurements, taken with neutron probes, every two weeks. That information is plugged into AgriMet data on evapotranspiration on a weekly basis to develop the irrigation schedules.
Weihing said participating farmers should soon be able to get information over the phone, via the "Irri-Talk" program. Farmers will be able to call, enter their farm and field numbers, get evapotranspiration data and do "SIS by phone for individual fields."
Weihing added, however, this has been a tough season so far for Idaho farmers. "Weather has its own spin," he said. But "if a farmer uses SIS, he has a better idea of what's happening in the field, regardless of weather problems--and has a better understanding of the effect of the problem on the field."
Oregon SIS
Oregon's SIS program
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| Rich Topielec in a primrose field in the Grand Ronde Valley Photo by Mark Ohrenschall |
The program purchases the soil moisture sensors and other equipment needed to monitor fields. The sensors are installed in the fields--from one to three sensors per field, depending on the crop and the characteristics of the field--and SIS technicians manually read the sensors twice weekly. As in the other states, the soil moisture data is combined with the appropriate AgriMet weather and evapotranspiration information to develop an irrigation schedule.
Because of weather anomalies, including this season's cool spring and a hailstorm last summer that wiped out some crops, evaluation data won't be available from the Oregon program until the end of this year. But Topielec, like the other state coordinators, is positive about SIS. "We're doing as well as the weather will let us," he said, and the farmers are much more interested.
"We'll have an effect on the market," predicted Idaho's Weihing, but the project must be continuous. "This is like changing a habit; it takes constant awareness to change it."
That's the hope of the Alliance. The program's exit strategy, said Degens, involves marketing some of the Web-based SIS services for a fee, making AgriMet self-supporting, and increasing the number of independent providers of SIS services. The goal of the demonstration is to "get farmers to ask for these services." --Jude Noland
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When a building is constructed things can happen, such as mechanical or electrical systems that don't quite operate as designed.
This fact of life is the reason for building commissioning. And making commissioning standard practice for public-sector buildings is the reason for a Northwest Energy Efficiency Alliance market transformation venture.
The Alliance and its allies in this project believe education is vital to expand commissioning of Northwest public buildings. They are embarking on 29 demonstration commissioning projects around the region, and will share the resulting case studies with public-sector facility officials, showing the process and benefits of ensuring building systems work as intended.
In addition to education, the project will help develop model commissioning policies and procedures for government agencies. "It's a subtle effort to provide the information and help them come to a decision to either recommend or require commissioning in new capital projects," said Alliance project coordinator John Jennings.
Commissioning can save energy and cut down operating costs, as well as make buildings more comfortable and productive for occupants, among other benefits. Eventually, the Alliance believes, commissioning will become institutionalized in the policies and practices of government agencies--a market transformed.
"It's growing, and I think those that become involved with it see the wisdom in going with commissioning," said Toby Benson of the Montana Department of Environmental Quality. He works with state government colleagues in the other three Northwest states, and the Alliance, on this $1.9 million project.
"We are suddenly getting a tremendous amount of interest, and particularly in the state agencies," said Gwen Haynes of the Washington Department of General Administration. Why? "All the frustrations and headaches they've had on past projects. They see this as an opportunity to make it work the first time." She believes commissioning has "great potential for us to have a lot more efficient buildings."
Regional Commissioning Practice
The state of regional commissioning practice is documented in a 1998 study for the Alliance by SBW Consulting, which included information from 41 public-sector building owners that had substantially completed 228 building projects from 1995 to 1998, representing more than 9 million square feet of floor area. Owners representing 46 percent of those projects had previously commissioned in some form at least one building, the study found, while 63 percent had conducted functional performance testing. It was less common to include a separate commissioning section in project specifications and to have a separate commissioning line item in project budgets (both 17 percent). All the owners were familiar with commissioning--although Haynes noted the term means different things to different people--and a clear majority (71 percent) at least knew about functional performance testing, a major component of commissioning.
Among the major benefits of functional performance testing cited by public-sector owners were reductions in contractor callbacks, warranty claims, litigation and complaints by occupants and operators. Increased equipment lifetime, greater energy efficiency, better operations and maintenance training and reduced operations and maintenance expenses also were considered primary advantages.
Among the major barriers to increased functional performance testing cited by public-sector owners: added costs, lack of documented benefits, lack of standardized test procedures and tester certification, disruption of construction schedules, and the notion that such testing should be standard practice.
The most common refrain from commissioning skeptics is, "'Why should I do it?'" reports Andrzej Pekalski of the Oregon Office of Energy. These people view commissioning as an added and not integral part of building construction. "The perception is if you have well-developed specifications and everybody does what the specifications say, then the project should come up together without any need for commissioning. We know that the realities of life are different . . . We are pressed for time, for finances, and sometimes the process of project scrutiny isn't followed as it should be. All of these little slipups at the end of the day result in a major malfunction."
Commissioning can offer quality control from the beginning of a building's design phase, Pekalski said. It costs additional money, to be sure, but "if you look a little bit deeper into the benefits then one can discover very quickly that this initial cost pays off in a very short time." Minimized change orders, reduced absenteeism, avoided legal liabilities--"These are difficult to quantify yet they can save a lot of troubles, aggravation and, effectively, money." Average energy savings from commissioning range from 15 percent to 30 percent, according to an OOE commissioning publication.
Transforming The Market
Education is the critical element in the Alliance's strategy to transform this market.
The 29 demonstration projects lined up around the region cover a wide range of public-sector buildings, including universities, schools, local government facilities, a hospital, a prison--and even an armory. Some are existing buildings, others are new.
"There's a feeling nothing speaks better than a picture and some hard dollar figures," said Pekalski. "That's why we go through a whole variety of applications . . . so practically everybody [in the public sector] will have something very similar." Case studies on these commissioned facilities should begin to be available by early 2001.
The Alliance project pays up to two-thirds of the cost of commissioning services for participating facilities, typically performed by outside consulting engineers. "In return," said Pekalski, "we want the internal project manager to become a champion [for commissioning] in their own organization."
The Alliance does not envision working to incorporate commissioning into energy code requirements, as the city of Seattle has done. "If we can do it through operating procedures and internal rules it's a lot easier than to go the code route," Jennings noted.
Another aspect of this project, separate from the public-sector work, nurtures the nascent industry of commissioning service providers. The Alliance has provided some initial funding for the fledgling Building Commissioning Association, formerly known as the Building Commissioning Association-Northwest. This 26-member trade group "promotes building commissioning practices that maintain high professional standards, and fulfill building owners' expectations," according to its Web site. The Alliance is working to help create a viable commissioning industry to serve the public and private sectors, Jennings noted, although the current venture doesn't specifically address private-sector buildings.--Mark Ohrenschall
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Portland General Electric has received regulatory approval for a new residential energy efficiency program.
Earth Smart--also the name of an earlier PGE program that ended in 1997--will apply to single-family, multifamily and manufactured homes built after the program tariffs take effect July 1. Under the fuel-blind Earth Smart initiative, qualifying homes will be required to exceed energy code standards by 15 percent, and meet minimum requirements for indoor air quality and resource efficiency.
The Oregon Public Utility Commission approved PGE's program filing June 22, after PGE agreed to restructure the Earth Smart program to record program costs, including rebates and builder revenue "below the line"--as shareholder expenses--and receive "above the line" cost recovery in customer rates based on program performance. In PGE's initial filing, participants and ratepayers covered program costs.
In earlier hearings PUC staff had expressed concern about the proposed venture's cost-effectiveness. Ratepayers would be covering the initial costs, staff pointed out, while the benefits were unclear: kilowatt-hour savings weren't guaranteed and wouldn't be known until later in the program. Commissioners asked staff and PGE to look into incentives or risk sharing that might alleviate staff's concerns, which led to the proposal approved June 22.
"It was my sense . . . that the commissioners were pleased to see this type of innovation and response in what had become something of an impasse" between supporters who believed the program was cost-effective and PUC staffers who still had concerns, said Jack Breen, OPUC program manager for electric rates and planning.
How Earth Smart Works
The program is fuel-blind, not limited to electrically heated new homes, as was the earlier Earth Smart program. Earth Smart homes will be required to exceed Oregon's new residential construction energy efficiency standards by 15 percent, which will be measured in total Btu energy savings rather than kilowatt-hour savings. And the Earth Smart program also sets minimum requirements for healthier indoor air and resource efficiency.
Builders will pay a $500 annual contract fee to participate in Earth Smart, as well as a per-home fee to cover inspection and certification that the new dwelling meets the program's efficiency requirements. The per-home fee varies from $200 per home for 100 or more homes annually to $500 per home for five or fewer homes each year.
"It's very innovative and creative for a utility program, with a real participatory piece for the builders," said Carol Brown, PGE manager of distribution marketing. "As deregulation is new and different, the efficiency programs will have to change accordingly," she added. The new Earth Smart is a step in that direction.
Home-builders may receive incentive payments for certain efficiency measures, such as compact fluorescent fixtures and wastewater heat-recovery systems. Some items also earn points for meeting efficiency standards in other categories. Energy-efficient dishwashers might qualify for resource efficiency points, since they cut down on water use. Special bathroom vents fit under the healthier indoor air category, as do air filters added to the heating system or whole-house air filtering systems. Use of formaldehyde-free kitchen cabinets adds points under healthy air, while installing carpeting from recycled materials earns resource efficiency points.
PGE's goal is to certify 250 new Earth Smart housing units during the first year of the new program and sign up significicantly more by the end of June 2000. An OPUC report said PGE wants to limit program expenditures, excluding rebates, to $1.8 million over three years.--Jude Noland
A coastal Washington school district expects to have improved facilities at no additional taxpayer cost under a comprehensive energy services project with its local utility and the Conservation and Renewable Energy System (CARES).
The $1.8 million project, announced in May, will provide the Hoquiam School District with a broad array of energy-related upgrades financed by low-interest bonds. And the district will pay for the improvements through savings in energy use, maintenance costs and deferred capital investment, according to energy services manager Joanne Hansen of Grays Harbor PUD. The reduced energy consumption, primarily in electricity, should save the district about $190,000 in annual utility bills.
Hansen, though, said district officials aren't especially concerned about saving energy per se: "They'll modernize their schools, make it more comfortable for their students, improve air quality; just making it better. This is a way to get it done without having to go out and ask the taxpayers for more money."
This is the first such comprehensive energy services project under the CARES Energy Services Enterprise, which was created in 1997 by CARES and its public utility district members. The comprehensive option "provides an integrated suite of energy-related products and services for commercial, industrial and institutional customers of the member utilities, all in one transaction," according to a CARES news release
Hansen, whose utility is one of six CARES members, called it "basically one-stop shopping." She said ESE is involved with the initial customer visits, detailed energy studies, the bidding process, procurement of financing, project management and training of maintenance staff.
Hansen and Grays Harbor PUD had worked with Hoquiam schools before on Bonneville Power Administration conservation programs. CARES and Grays Harbor also had managed a $1.3 million modernization of three buildings in the adjacent Aberdeen School District--work that CARES managing director John Graham described as a "prototype for our new comprehensive project services. In the end we were able to do a lot more work than the school district had originally intended," Graham said in the news release.
When the former Hoquiam superintendent retired, Hansen said, she paid a visit to current superintendent Tim McCarthy to talk about CARES' comprehensive offerings. "He just said, 'We have a definite need here. We're short on capital.' They were very interested in the financing; they didn't have to go out for voter approval." U.S. Bank is the financing entity for the bonds, which are issued in the name of Hoquiam School District, according to Graham. Washington law allows school districts to take on small amounts of debt without a vote, he explained, and energy efficiency is one of the allowed uses.
Energy-Related Measures
Energy-related upgrades are planned for the Hoquiam high school and middle school and two elementary schools. Among the conservation measures to be installed are instantaneous water heaters, new kitchen equipment, variable-speed-drive water pumps, variable-speed ventilation in the high school cafeteria and gymnasium, energy-efficient lighting fixtures, new rooftop heating and ventilaton equipment, a new boiler at an elementary school and energy management systems. In addition, according to CARES, two other elementary school buildings will get "minor operational modifications."
The newest school involved, the high school, is 30 years old, Hansen noted. The district maintenance staff "is spending all their time trying to catch up just to keep things working. They're not improving the quality inside the building. Through installing all this modern equipment, modern ventilation, it's helping out the maintenance staff also. They can spend time on other things that need to be fixed in these buildings." CARES will also train school facilities personnel on the new equipment, which Hansen noted should help the energy savings persist. Anticipated energy savings were unavailable, as were projected costs per kilowatt-hour saved. However, said CARES consultant Mike O'Bryant, "It's cost-effective according to what the customer needs."
The comprehensive project in Hoquiam resembles an energy savings performance contract, except the contracting party is not a private-sector firm. Hansen said CARES and the PUD "don't have a product to sell. We're an unbiased third-party on the whole thing." And, she added, "We're not cream-skimming" the easiest and most lucrative efficiencies.--Mark Ohrenschall
The Idaho Public Utilities Commission recently approved Idaho Power's proposal to use 1998 revenue-sharing dollars to fund the utility's remaining unamortized deferred investments in demand-side management.
But the IPUC also adjusted the amount of recoverable DSM costs to account for extra revenue the utility is receiving because of power sales growth since the IPUC last looked at this issue in 1997.
Idaho Power attorney Larry Ripley said the order, which took effect May 16, will not change customers' current rates.
In 1997 the commission ruled Idaho Power could increase rates to recover DSM expenditures it had incurred, but that had not yet been approved for recovery in rates. In the same decision, the PUC said Idaho Power could amortize those expenses over a shortened time period--12 years instead of 24 years. That accelerated recovery is pending on appeal before the Idaho Supreme Court (see Con.WEB, Nov. 25, 1998).
In the case decided May 11 the utility asked for recovery of DSM expenses it had incurred since 1997, as well as a review of spending in its Commercial Lighting program, which the PUC did not approve for recovery in the 1997 case. Idaho Power proposed using its 1998 revenue-sharing account to cover those expenses, so customer rates would not change. Under a 1995 agreement with the IPUC, the utility splits between customers and shareholders any earnings in excess of 11.75 percent. Idaho Power's 1998 earnings were 12.2 percent.
IPUC staff pointed out that since the 1997 decision, Idaho Power's revenues have increased by 3.3 percent because of more power sales. As a result, staff said the utility would recover a significant portion of its requested DSM expenditures through rates. Therefore, staff suggested--and the commission agreed--that the amount to be offset by the company's revenue-sharing account should be decreased to reflect those additional revenues. "We find that it would be unreasonable to use anything other than the most updated data in calculating the recovery of a finite, non-recurring expenditure that will not change regardless of customer or sales growth or any other outside factors," commissioners said in their order.
The order, which is now final, allowed recovery of $1.7 million in DSM expenses, offset by additional revenues of $688,200. The total to be offset through revenue- sharing is $1,039,500.
The recovery allowed by the IPUC included $274,000 in Commercial Lighting program expenses incurred from 1995 through August 1997--the amount disallowed in the earlier case--as well as $396,000 Idaho Power has spent on the program since August 1997. The program ended in 1998. The IPUC initially disallowed the 1995 through 1997 expenses because the company "failed to demonstrate that the expenditures it made in that program were prudent." While the IPUC allowed recovery in this case, commissioners said in their order that Idaho Power "utterly failed to conduct any of the program evaluations that it promised with respect to the CLP."
But that failure notwithstanding, "we find that the company has presented sufficient evidence in this case from which to conclude that the CLP was a cost-effective program and that the company's expenditures in that program were prudently made." Commissioners noted that Idaho Power estimated energy savings achieved under the Commercial Lighting initiative cost .73 cents per kilowatt-hour--"well below Idaho Power's avoided cost . . . " But the commissioners admonished the utility "for its failure to conduct the evaluations and studies it promised in its initial application . . . We remind Idaho Power of its obligation to honor the representations it makes to this commission or to seek authority to deviate from those representations."
Approval of the CLP expenditures "was a no-brainer," said IPUC attorney Brad Purdy. Although the commission wanted to express displeasure at the utility's failure to live up to its promises, "The economics were there . . . the CLP was such a guaranteed winner." When the IPUC initially rejected recovery of CLP expenses, he said, "We had received no data at all" on the program.
Also approved for recovery were Idaho Power's expenditures on the Partners in Industrial Efficiency, Manufactured Housing Acquisition and Agricultural Choices programs. The IPUC said Idaho Power can recover an additional $424,000 for costs under the Agricultural Choices program, once those costs are incurred and audited by PUC staff. PIE and MAP are defunct, and Agricultural Choices was cancelled in 1998 although some projects can still be completed through June 1999.--Jude Noland
Energy offices in each of the four Northwest states have been awarded funding under the U.S. Department of Energy's State Energy Program Special Projects Initiative.
DOE, in a May 28 news release, announced nearly $17 million in total funding to 45 states and the District of Columbia for 168 special projects "that will help improve the energy efficiency of schools, homes and office buildings."
The Northwest state-by-state breakdown: Idaho, $532,911, for Codes and Standards, Rebuild America, Home Energy Ratings and Remote Renewables; Montana, $150,355, for Industrial Technologies and Remote Renewables; Oregon, $853,853, for Alternative Fuels, Industrial Technologies, Codes and Standards, Rebuild America and Remote Renewables; and Washington, $945,329, for Alternative Fuels, Industrial Technologies, Codes and Standards, Rebuild America, Federal Energy Management and Remote Renewables.
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The Atmosphere Alliance and the Energy Outreach Center have joined to form Climate Solutions, an Olympia, WA-based organization with the goal to "combat global warming by making the Pacific Northwest a world leader in practical and profitable solutions."
This merger unites more than 20 years experience in global warming, energy conservation and renewables, transportation and sprawl, according to a Climate Solutions news release.
Climate Solutions will "[e]ducate Northwesterners about the realities of global warming; [a]dvocate local, state and national policies to curb greenhouse-gas emissions, promote new-generation clean energy technologies, and encourage smart growth and transportation; and [p]rovide citizens in the region access to practical opportunities to make a difference in electricity and heating needs, transportation, and building construction."
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Avista Labs has chosen a Spokane-based company to manufacture, assemble and test at least 200 proton exchange membrane fuel cells for the Avista Corp. affiliate.
The one-year agreement with Logan Industries, announced in late April, "places Avista Labs one step closer to bringing its unique fuel cell power generators to industrial, commercial and residential markets," said Avista Labs president Kim Zentz in a news release.
Avista Labs will be installing demonstration PEM fuel cells throughout the country, according to the news release. The company eventually plans to commercialize its PEM fuel cells as primary and/or backup power for home and business applications.
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