FERC’s new rule on compensation for demand resources tips the market balance toward negawatts. Arguably the commission’s economic analysis is flawed, and the rule represents a covert policy...
The Efficiency Mandate: Net-Zero Neighborhoods
Utilities explore the potential of zero-energy homes.
a customer investment to help us attain those goals. In California, all investor-owned utilities have programs like ours. They haven’t quite achieved the market penetration we have, but they’re coming along.”
Tucson Electric Power has pursued similar goals since the advent of its Guarantee Home Program in 1999, but along a slightly different trajectory. Owned by UniSource Energy, TEP initially saw the program as a way to increase electric sales in the winter.
“When the program began, part of the idea was to create heating load,” says TEP spokesman Joe Salkowski. “We had a restriction in the program that precluded the use of a gas furnace. The concept was to make more efficient use of our generating resources, which peak in the summer here. We have to build resources to meet our summer peak.”
Like the SMUD initiative, Guarantee Home provides incentives to improve insulation, HVAC and other energy efficiency solutions in new homes. The utility works with builders to certify higher standards. The builders in turn sell homes that qualify for discounted electric rates and a pre-set cap on total heating and cooling costs.
As the program evolved, TEP found the efficiency gains were more significant than winter market share, so TEP dropped the gas heat restriction to stimulate more participation.
“Over time we’ve become more and more focused on energy efficiency. We didn’t want that restriction to get in the way of adoption of this program,” Salkowski says. “By creating energy-efficient homes that reduce consumption during peak load hours, we reduced our need to invest in generation. It helps shave our load.”
More than half the new homes in TEP’s service area now participate in the program, and the investments are starting to pay dividends.
“Through the end of 2008, we’ve shaved about 21 MW off our peak load, thanks to the program,” Salkowski says. “We also calculate that, over the length of the program, we’ve saved 82,760 MWh, as well as 4,165,643 therms of natural gas.”
Offsetting generation construction also is a principal goal for the efficiency program at municipal utility, Austin Energy.
“In today’s environment where carbon is such an issue, there’s a business case to be made for avoiding the capital cost of building new generation, particularly peaking generation,” says Duncan. “We actually took a coal plant out of our long-range generation plan and replaced it with energy efficiency.”
Austin Energy’s residential and commercial efficiency programs go all the way back to 1982, and include renovations as well as new construction. Today, 85 local companies provide energy assessments to Austin customers and certify improvements to insulation, ductwork and all types of solar technology.
Over the last four years the programs reduced peak demand by an average of 59 MW and saved 45,700 participating customers an average of 103 million kWh. That translates into an average of $9.8 million in savings per year on electric bills by those customers.
That savings leads to a secondary motivation for the utility—strengthening its relationships with customers.
“Our customer rebates and incentive programs create more contact with our