Preliminary Industrial EM

1
Preliminary Industrial EMV ResultsJennifer
Fagan

• June 18, 2009

2
EMV Status

• Data collection and analysis well underway for
  both gross and net impact work
• Findings to-date demonstrate there is a fairly
  significant gap between assumed ex-ante
• Baseline conditions
• Net-to-gross ratios
• Continuing to find high rates of free ridership
  for large industrial custom projects as well as
  for pump-off controller projects

3
Free Ridership What Can be Done?

• Efforts to reduce free ridership appear to have
  been minimal over the 1999-2008 period.
• There are, however, a number of strategies
  available to mitigate free ridership, which have
  been recommended in several past evaluations of
  the SPC program and in the Large CI Custom Best
  Practices Report.
• These strategies are in no special order and are
  offered here as merely food for thought.

4
Free Ridership Reduction Strategies

• Optimize incentive levels.
• One approach to consider, with care, is
  increasing incentives for higher payback
  measures, particularly for emerging technologies.
  
• A tiered incentive structure, with a lower base
  incentive level for more common technologies, and
  a higher incentive level for emerging
  technologies, would accomplish this purpose
• Implement a minimum payback threshold
• Minimum payback periods of 6 to 18 months are
  common
• Provide a bonus for first-time participants
• Alternatively, incentives could be decreased for
  projects that individual customers repeat in the
  program year after year this would also
  encourage bigger projects (with larger savings)
  upfront.

5
Free Ridership Reduction Strategies (contd)

• Set a minimum percentage for incentive payments.
  
• The obvious goal of this approach is to draw
  those into the program who require more than a
  token incentive level in order to participate.
• Screen and exclude obvious free riders
• Allow the program administrators the flexibility
  to simply exclude projects from the program that
  they believe have a high probability of being
  free riders.
• Customers would still be allowed to participate,
  however, they would be expected to select an
  alternative project which they were not already
  planning to implement on their own

6
Free Ridership Reduction Strategies (contd)

• Encourage greater participation by trade allies
  at the project identification stage.
• Findings from participant surveys suggest that
  trade allies play a pivotal role in influencing
  the customers decision to install energy
  efficient equipment as long as they are involved
  early on
• Only about one-third of Industrial projects
  involve trade allies that have been engaged in
  the project at an early stage
• When trade allies are involved at a later stage,
  their role is of order taker with little or no
  influence on the customers decision to install
  EE equipment

7
Free Ridership Reduction Strategies (contd)

• Influence customer adoption at the earliest
  stages of the design process.
• Free ridership can often be reduced by working
  with customers at the earliest possible point in
  their equipment- and process-related decision
  making. In large industrial sector, such early
  intervention must occur months and often even
  years before project installation.
• The CEI approach being proposed seeks to
  accomplish this through formation and use of
  program-led customer teams which jointly develop
  ideas for future EE projects.