EBCE Will Soon Offer Energy Efficiency Programs

EBCE is launching a new program to help businesses be more energy efficient. The program will pay for delivered efficiency gains that benefit the business and all of EBCE

EBCE has received the go-ahead from state regulators to start offering its first ratepayer-funded energy efficiency program.

The Commercial Pay for Performance (P4P) Program will offer incentives for non-residential customers to cut demand, with a focus on peak load management and building electrification.

The new three-year program will be funded at $4.5 million per year, and is expected to save 9 million kilowatt-hours in the first year. Funding comes from “non-bypassable” fees charged to all customers under state law. While EBCE customers paid about $74 million into these funds in 2021, these funds go toward regional programs offered by PG&E and BayREN, a project of the Association of Bay Area Governments, which serve EBCE and other customers.

Traditional energy efficiency programs rely on a set of approved measures with forecasted savings, like light bulbs, insulation, and energy efficient appliances. While these measures certainly reduce energy demand, the savings may not happen at the right times to capture maximum value. Because the savings are uncertain, they are valued less than they could be. Plus, payments are based on estimated savings instead of what is actually delivered.

Also, general energy saving measures may not always align with EBCE’s specific procurement goals. EBCE’s proposed program aligns savings targets and price signals with EBCE’s procurement portfolio, ensuring that the energy efficiency programs offer the greatest potential cost and greenhouse gas savings for EBCE’s customers.

Through the Pay for Performance approach, EBCE pays energy efficiency contractors based on their ability to reduce demand during high-value morning and evening peak hours, while delivering verified savings to targeted customers.

“Rather than running complicated solicitations, picking winners, and absorbing the risk of poor performance, EBCE pays for actual energy reductions delivered by vendors,” says Beckie Menten, EBCE’s Program Manager for Building Electrification and Energy Efficiency. “Because we have access to customer meter data, savings can be verified with actual data.”

While businesses account for only 9.5% of EBCE’s customer accounts, they consume almost half of all energy demand. Commercial customers are required to be on time-of-use rates, giving them an extra incentive to cut demand during peak hours.

EBCE is using advanced data analytics capabilities to identify the highest opportunity customers, such as those with high peak demand, high consumption relative to their industry peers, and who have participated in EE programs in the past.

The P4P program builds on a set of pilot projects EBCE ran in recent years aimed at testing performance-based approaches to single-family residential, commercial, and low-income residential customers.

The commercial-sector pilot was a success, with interest in the program surpassing the available funding. Overall, the commercial pilot is projected to deliver 177,000 kWh of savings per project.

EBCE also proposed a 3-year, $3 million program to build on the pilot for low-income customers, but it was rejected by the CPUC. While the CPUC encourages “equity” programs for low-income customers, they apply different cost-effectiveness requirements for new administrators like a community choice energy provider, resulting in a preference for traditional providers.

EBCE released a solicitation on October 26th to identify vendors to implement the commercial P4P program and anticipates a launch in Q2 of 2023. The program will run for three years, with the possibility of renewal.

The solicitation will also invite innovative proposals to provide complementary grid services, like load shifting and load management. This program will be paid for with EBCE procurement funds, and is directly related to offsetting EBCE’s procurement costs during the most expensive morning and evening peak hours. This will help test whether providing load management benefits from behind-the-meter resources is ready for market.