Do The Math: Strategic Value of Energy Efficiency

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Do The Math Strategic Value of Energy
Efficiency
How to Develop and Implement Home Energy
Efficiency Programs Workshop Montrose,
Colo. September 6, 2006
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To identify opportunities to save money, we must
determine

• How does the supply side economics work?
• How does the demand side economics work?
• Which technologies (supply or demand) can be
  applied to provide economic value to our
  members?

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First from the members pocketbook perspective
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Lets look at a typical residential member

• Follow along as we simulate a typical residential
  load in the morning (6 am to 9 am)
• Even though residential members rates typically
  only reflect energy and base charges, we must
  understand how electricity is purchased for
  resale by the coop
• All loads combined become the total system load
• Examine a DMEA load curve with respect to
  economics (from the member and the coop)

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Energy Calculation
Tuesday April 8, 2003
32 kwh
What is the total kwh used in April if the daily
usage remained the same?
960 kwh
Monthly member electric bill base charge
(energy used rate) 12.00 (960 kWh
.08426/kWh) 92.89 (Feb 2005 rates)
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Our members choices determine our monthly
economic fate an example
Tuesday April 8, 2003 600 AM to 900
Calculate the Peak Coincident Demand
5.1 kw
(2.72.36.46.47.25.6)/65.1 kW
Toaster
6400
6400
Hair Rollers
7200
Water Heater
5600
Hair Dryer
2300
Refrigerator
2700
Coffee Maker
Lights
Television
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Now the coops perspective
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Demand Calculation
Tuesday April 8, 2003 600 AM to 900
What is the total kwh used in April if the daily
usage remained the same?
960 kwh
5.7 kw
5.1 kw
3.6 kw
2.1 kw
1.8 kw
.25 kw
Coop Monthly electric bill (energy used rate)
(demand rate) (960 kWh .02056/kWh)
(5.1 kW 16.66/kW) 104.70
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What?

• For this month, it actually COST the cooperative
  (subsidy?) 11.81 to serve this member. Even
  though residential rates do not bill for demand
  componentsthey are incurred by DMEA on the
  members behalf. Residential pricing mechanisms
  do not generally have demand components but they
  could.

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Strategy

• Manage the demand side with energy efficiency and
  load control (optimize load factor) Flatten the
  load curve - economics
• Supply Side base load purchases from base load
  plants least cost (external social costs
  excluded)
• Supply Side peak opportunities for renewable and
  other economic distributed solutions Flatten the
  purchase curve economics
• Renewable supply may help flatten the
  curveavailable when needed ?, risk?, consequence
  of failure must follow purchase economics. Most
  renewable purchases will be only avoiding energy
  purchases at .02056.

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Big Question
What demand side technologies (efficiencies) are
deployable to manage these variables in a
sustained way?
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Demand side technologies

• Lighting (day lighting, LED, etc?) (demand in
  most cases and energy)
• GeoExchange (solar derivative)? (demand and
  energy more if load controllable if load
  controllable)
• Overall building envelope improvement (demand and
  energy)
• Water heating efficiency (and controlled) (demand
  and energy)
• The current economics dictate that these
  technologies must be sustainable, i.e. put into
  service and maintained.

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Recommendation

• Continue Load Factor (Demand Side) Improvement
  Initiatives
• Continue to educate ourselves and others on
  effective use of energy.
• Continue to integrate energy efficient
  technologies at the end use. (Life Cycle Cost)

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So how does GeoExchange fit into this complicated
economic puzzle?

• You ask

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Again what is the problem statement?

• How much does the member pay DMEA (revenue for
  whole residence not just heating cooling)?
• How much does DMEA pay TSGT (expense)?
• We hold the difference as margins to pay
  salaries, materials and supplies, taxes, debt
  service, interest, etc.

What is "time sensitive" meter spin worth?
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The setting

• Using the Automated Meter Reading (AMR) system
  installed and tested on North Mesa Substation
  circuits. (YesREAL LIVE DATA.)
• Roughly 100 residential members have AMR data
  available from December 2004 to perform time
  sensitive analysis on
• Five of the members homes are heated with
  GeoExchange systems.
• One members home is heated with non GeoExchange
  all electric heat (Baseboard).

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0600
1200
1800
Typical TSGT peak
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0600
1200
1800
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Net Margin SummaryGeo vs. Electric Heat
GeoExchange meters on AMR and one other
All AMR meters
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50
86
90
93
101
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Why?

• The GeoExchange systems did not contribute as
  much to the TSGT peak as much as home heated with
  other electric heat. (Each kW on peak costs DMEA
  13.12)
• The GeoExchange systems do not require as many
  kilowatt hours of energy to provide the BTUs
  necessary to heat the homes (remember, they get
  roughly ¾ of them from the ground).
• The GeoExchange systems typically maintain a
  constant temperature in the home and thereby do
  not follow as consistent of a cyclical pattern.
  (The typical electric resistance heater is cycled
  as folks turn their thermostats up and down
  depending on occupancy, not temperature.)

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GeoExchange Value

• DMEAs economic gains (utility cost test)
• New source of revenue (15,000 loan)
• Electric energy sales (net of cost of power)
• 5,484.60 present value over 30 years (2.5
  discount rate)
• 7,801 without a discount rate
• Incremental margins from CO-Z (5 arbitrage)
• 9,662.00 value over 15 years (per unit)
• We report 7,617 per Co-Z contract (not
  17,463.00)
• 5 year loan life on discounted kWh

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GeoExchange Value

• Utility perspective
• Instead we charge 7.5 interest and make our
  return on incremental energy sales (8.6)
• Future energy conservation or carbon credits can
  only sweeten the pot (75-750)

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GeoExchange Value

• Customer perspective (participant test)
• Piece of mind
• Maintenance Contract Option
• Stable heating cooling costs (up to 5 year rate
  lock)
• Utility grade customer service
• Annual savings of 250 to 1,000
• No investment!
• Immediate positive cash flow
• 7,500 to 30,000 over 30 years
• FV of 17,000 to 69,600 at 5 i !!!

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GeoExchange Value

• Average margin for GeoExchange members
• 91.05/month (from AMR analysis)
• Average margin for all members
• 56.83/month
• Incremental margin (91.05- 56.83)
• 34.22/mo

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GeoExchange Value

• 34.22/mo 12 months/year
• 410.64/year
• 410.64 100 units (annual unit goal)
• 41,064/year
• 1,231,920 over 30 years

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What are the lessons learned?

• These GeoExchange systems spin the DMEA meter
  and our margins in a more positive way than those
  with other technologies.
• These GeoExchange systems are better heating
  loads to be placed on our lines and substations
  than the other technologies (Less demand placed
  on the infrastructure).
• The GeoExchange systems provide more comfort at
  less cost to the member while adding more margins
  to the DMEA bottom line.

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Future Analysis

• All members with AMR will be analyzed to
  determine their contribution to margin
• Fingerprint analysis will be done to determine
  what types of space heating is deployed by doing
  analysis first and then asking for end use
  penetrations.

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Summary

• DMEA is working to
• Provide technology and know-how to our members
  for them to use energy wisely. Energy efficiency
  doesnt costIt pays.
• Continue to stay involved in our communities and
  listen to what they want.
• Example Downtown LEDs

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Questions?
How to Develop and Implement Home Energy
Efficiency Programs Workshop Montrose,
Colo. September 6, 2006