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Part 1: Facility Managers Need To Understand Changing Market To Maximize Utility Incentives and Rebates
By Loren Snyder
February 2014 -
Energy Efficiency Article Use Policy
Utility incentives and rebates can be useful, particularly for managers and owners who want to upgrade equipment to more energy-efficient models, and who can use rebates or incentives to help mitigate expenditures and ensure return on investment. But to maximize utility incentives and rebates, facility managers need to understand the changing utility market.
First, a bit of history: The 1973 energy crisis provided one of the first spurs for utilities to create incentive programs. Many of those programs matured over the next 20 to 25 years, but were curtailed or eliminated in the late 1990s as part of electricity market deregulation.
Galen Barbose, scientific engineering associate at Lawrence Berkeley National Laboratory, says that the western energy crisis of 2000-2001 brought renewed attention to energy efficiency as a strategy for managing and containing costs for electric utility customers. This renewed push also brought increased investments by utilities.
Barbose says that during the latter half of the past decade, spending on electric and gas utility customer-funded energy efficiency programs (excluding load management) more than doubled, from roughly $2 billion in 2006 to $4.8 billion in 2010, consisting of $3.9 billion for electric energy efficiency programs.
Particularly in the last two years, however, some other changes have happened — besides utility spending on incentive programs that's pushed north of the $6 billion mark.
According to Roger Flanagan, director of energy services business for Lockheed Martin, in the last 18 months, there's been more interest in smaller energy users. Historically, utilities have focused on their largest consumers, because that's where the so-called low-hanging fruit exists. Increasingly, however, Flanagan says that 'strategic energy management' — for large consumers and small businesses alike — is part of any given utility's incentive measures.
"Strategic energy management is where you look at behavioral changes or non-technical/non-technology measures," Flanagan says. "These are a series of utility-sponsored incentives, such as training for facility managers and owners. They might maximize, tune up or retrocommission existing facilities, but they also look at human side and help determine how behavioral changes can save energy."
Although Flanagan says it's too early to tell definitively, some early efforts and anecdotal evidence indicate that simple behavioral changes by occupants might net 20 to 30 percent savings.
Given the scope and scale of utility incentives, and given that states have endemic incentive programs — a complication for multi-state organizations — facility and energy managers might feel overwhelmed at the prospect of incentive programs.
The best bet, experts say, is to be methodical, look at the entire organization's energy needs, and solicit help.
Phil Welker, director, PECI, says the best way to start in this process is to get a comprehensive analysis done and find opportunities for retrofits and retrocommissioning.
"The key aim is high-quality operations and building acumen," he says.
According to Roger Flanagan, director of energy services business for Lockheed Martin, the integration of demand management and renewable energy components can be a good place to start, especially for FMs concerned with cost-effectiveness or about deploying efficiency in a small footprint.
He also says that there are two resources every FM should tap: Advisory or consulting services that utilities or energy service companies make available, and the FM's own CFO.
"Early on, engage the internal CFO," he says. "They're invested in the financial decisions as well as operational requirement any incentives might bring."
— Loren Snyder
Part 2: Trend In Utility Incentive Programs Is Toward More Monitoring, Proof Of Performance
Part 3: Utility Incentive Programs Will Require Stricter Monitoring, Offer Greater Benefits