An Energy Efficiency Strategy for New Jersey: Achieving the Energy Master Plan Goals

1. An Energy Efficiency Strategy for New Jersey: Achieving the Energy Master Plan Goals Presentation to the: NJ Board of Public Utilities By: Sue Coakley, Executive Director Northeast Energy Efficiency Partnerships April 16, 2009

2. NJ 2020 Energy Efficiency Strategy • Background • Results • Report Structure • Recommendations • Next Steps • 20% by 2020

3. NJ 2020 Energy Efficiency Strategy: Background Governor Corzine’s 2008 Energy Master Plan: “Place New Jersey at the forefront of a growing clean energy economy with aggressive energy efficiency and renewable energy goals and action items, and the development of a 21st century energy infrastructure.” • Goal 1: Maximize Efficiency - Reduce projected energy consumption by 20% by 2020 • http://nj.gov/nj/trans/http://nj.gov/nj/trans/ • 20% by 2020

4. NJ 2020 Energy Efficiency Strategy: Background Energy Efficiency Strategy Purpose: • Achieve the 2020 Master Plan energy savings goal cost-effectively and expeditiously • Develop a “best in class” program portfolio to overcome market barriers to cost-effective energy efficiency • 20% by 2020

5. NJ 2020 Energy Efficiency Strategy: Background Approach: • NEEP team of national experts • Address all customer sectors, all fuels, all demand side resources • Build on experience of successful programs in New Jersey and other states and regions • 20% by 2020 • Stakeholders to guide development – provide data and perspective • Cost-effectiveness assessment to support strategies

6. NJ 2020 Energy Efficiency Strategy: Background • NJ Assoc of Realtors • NJ Apartment Owners Assoc • NAESCo • Assemblyman Chivukula • Assemblyman McKeon • NJ Institute of Technology • Fuel Merchants Assoc. of NJ • NJ Business & Industry Assoc. • Alliance to Save Energy • The E-Cubed Company Participants: Stakeholder Comments: • Gas and electric utilities + NJUA • Office of Ratepayer Counsel • Rutgers CEEEP • NJ Homebuilders • Isles, Inc • CMC Energy Associates • Project Team: • NEEP • Dunsky Energy Consulting • Vermont Energy Investment Corporation • Optimal Energy Inc. • North Atlantic Energy Advisors • Ecos Consulting • Applied Energy Group • 20% by 2020

7. NJ 2020 Energy Efficiency Strategy: Results Efficiency Strategy Meets or Exceeds Energy Master Plan Goals • 20% by 2020 • ‡ EMP energy efficiency program goals ONLY •  EMP efficiency programs adjusted for the impact of new federal incandescent lamp standards • * Considers only efficiency programs and building energy rating policies). Excludes on-site power

8. NJ 2020 ENERGY EFFICIENCY STRAGEGY: RESULTS Efficiency program portfolio nearly meets total electric reduction goal. Codes + standards necessary to meet goal. 17,000 GWh EMP Total Electric Reduction Goal 14,000 GWh EMP Efficiency Program Goal

9. NJ 2020 ENERGY EFFICIENCY STRAGEGY: RESULTS Efficiency program strategies can exceed EMP peak reduction goals. 5,700 MW EMP Peak Reduction Goal

10. NJ 2020 ENERGY EFFICIENCY STRAGEGY: RESULTS Combined heat and power is important to meet EMP heating savings goal. Codes + standards necessary too. 110 trillion BTUs EMP Heating Savings Goal 75 trillion BTUs EMP Efficiency Program Goal

11. NJ 2020 ENERGY EFFICIENCY STRAGEGY: RESULTS Efficiency Strategy (w/o CHP) provides NJ consumers $16.8 billion in net savings (present value 2008 dollars). Benefit:Cost = 2.6 $28 billion total savings $11.2 billion total investment

12. NJ 2020 ENERGY EFFICIENCY STRAGEGY: RESULTS Savings from all customer sectors.

13. NJ 2020 Energy Efficiency Strategy: Results Achieving EMP Energy Reduction Goals needs: • Large scale effort: 30% savings in 60% of NJ homes and buildings 1.7 million homes 80,000 to 240,000 business and government facilities • Broad participation: All hands on deck • A concerted statewide effort: • All fuels – electric, gas, heating oil • Programs and policies • 20% by 2020 • $11.2 billion investment over 12 years • Visionary, long-term leadership

14. NJ 2020 Energy Efficiency Strategy: Report Recommendations detailed in: • Executive Summary • A Foundation for Success • Savings in Homes • Saving Energy in Business & Government • On-Site Power & Cross Cutting Strategies • Savings, Costs, Benefits • 20% by 2020

15. NJ 2020 Energy Efficiency Strategy: Recommendations #1 Establish the New Jersey Energy Efficiency Utility

16. NJ 2020 Energy Efficiency Strategy: Recommendations #2 Supportive Regulatory Oversight • Long-term view in setting goals • Results-oriented: financial incentives Efficiency as attractive as other regulated investments • Remove regulatory barriers to aggressive programs • Streamlined regulations - accountability for results • 4-year plans w/ annual reports & plan updates • Budget & program flexibility to meet goals • Active ongoing stakeholder process – stay informed, provide feedback • 20% by 2020

17. NJ 2020 Energy Efficiency Strategy: Recommendations #3 Flexible Energy Efficiency Program Strategies • Statewide programs – consistent, integrated, leveraged • Serve specific market segments with customer-oriented approach “sells” energy efficiency: • Make efficiency investments attractive, affordable and accessible - cost-effective “deal customers can’t refuse”. • Targeted marketing • Understand and address customer needs and barriers • Flexible program services and financial assistance • Whole solutions – all fuels, all cost-effective demand-side options • 20% by 2020 • Incentives and financing to close the deal, maximize cost-effective savings • Use and expand existing market channels • Statewide marketing campaign  use social marketing strategies, consistent messages

18. NJ 2020 Energy Efficiency Strategy: Recommendations #4 Aggressive State and Local Policies • Progressive building energy codes – net zero energy as long-term goal: • Auto update to national energy code updates • Adopt optional advanced “stretch code” • Allow third party certified inspectors • Time of Sale Building Energy Rating and Performance • Strong federal and state appliance standards • 20% by 2020 • State and local government “Lead by Example” (e.g., 21st Century Schools) • Government leveraged financing tools • State tax incentives

19. NJ 2020 Energy Efficiency Strategy: Recommendations #5 Energy Rates, Prices and Usage Information • Rate designs to encourage reduced energy consumption: • Inverted block rates residential and small commercial • Time of use rates and metering  customers with flexible loads • Bill comparisons: • Usage history relative to similar customers • Support building energy rating • Sub-metering for master-metered buildings • “Dashboard” products and building controls that inform actual usage • Pilot “smart” meters and devices for price-responsive load control (“prices to devices”) • Smart Grid to scale-up clean distributed generation  net zero energy buildings • 20% by 2020

20. NJ 2020 Energy Efficiency Strategy: Recommendations #6 Community Initiatives to Scale-Up • Community participation in NJ efficiency programs • Improve municipal facility energy performance • Social marketing campaigns to encourage program participation “be part of the solution” • Support door-to-door direct installation initiatives for residents and small businesses • Community-wide energy efficiency initiatives  achieve specific energy reduction goals • Municipal financing property-owners repay efficiency loans on property tax bill • Community workforce development initiatives – vocational training, community colleges, CEET • 20% by 2020

21. NJ 2020 Energy Efficiency Strategy: Recommendations #7 Consistent Evaluation, Measurement and Verification (EM&V) “Prove the efficiency resource” • Maintain comprehensive multi-year EM&V plan to inform: • Regulatory oversight of and accountability of ratepayer funding • Program planning, goal setting and budgeting; • Progress towards goals - energy, environmental, economic • Program implementation and resource allocation; • Award of performance incentives • Program participation in PJM capacity markets • 20% by 2020 • Fund EM&V (3-5% of program costs) • Provide statewide: • EM&V protocols, tools, inputs • Cost-effectiveness protocols, tools, inputs • Coordinate with regional and national EM&V

22. NJ 2020 Energy Efficiency Strategy: Recommendations #8 Workforce Development • Train and credential a wide range of green jobs: • Engineers, architects, designers • Tradesmen and women, builders, contractors, installers • Auditor, inspectors, building energy raters • Program planners, managers and evaluators • Financial product manager • Use reach of: • Universities, colleges and community colleges • Technical and vocational schools • Community development, trade and professional associations • Labor unions and employer training programs • Coordinate statewide – e.g., NJ Department of Labor - Industry Workforce Advisory Council • 20% by 2020

23. NJ 2020 Energy Efficiency Strategy: Recommendations #9 Ongoing Learning and Innovation • Give NJ Efficiency Utility goals and budgets to: • Attract creative ideas • Vet and fund promising delivery approaches • Assess new technologies and program designs  controlled studies and field trials • Improve or discontinue technologies, approaches not delivering • Efficiency Utility Efficiency Technical Committee: • Utilities, academia, state agencies, stakeholders • Review, vet new options for cost-effective savings • Complement EMP expansion of Edison Innovation Fund: • Clean Energy Technology Commercialization Fund • Clean Energy Manufacturing Fund • Energy Institute of New Jersey • 20% by 2020

24. NJ 2020 Energy Efficiency Strategy: Recommendations #10 Regional and National Coordination • Efficiency ramping up across the region  from $850 million in 2008 to $2 billion+ by 2011 • Manage and leverage this policy convergence to: • Build market momentum • Facilitate a culture to value increased energy efficiency • Engage the muscle and creativity of the market place • Address increased demand for high efficiency products • 20% by 2020 • Coordinate with relevant regional and national efforts: • Consistent messages, • Common standards, specifications, definitions, protocols • Share learning, R&D costs • Many vehicles – NEEP, NASEO, CEE, ASERTTI, ASE, etc.

25. NJ 2020 Energy Efficiency Strategy: Transition Plan Financing the Efficiency Expansion $11.2 billion over 12 years - $6.8 billion public/ratepayer + $4.4 billion participant cost Inflation adjusted dollars – not net present value

26. NJ 2020 Energy Efficiency Strategy: Funding Financing the Efficiency Expansion • Ratepayer Funding: Efficiency as a Least Cost Resource increase from $16 per capital to year up to $50 • Establish non-regulated heating fuels efficiency charge • Access federal funding  apply stimulus funding (e.g., oil heat) • Direct market-based revenues to fund efficiency • RGGI • PJM RPM Revenues from efficiency program participation • Utility Financing – on-bill and companion bill financing • 20% by 2020 • Municipal Financing – “Clean Energy Tax District” • Bond to create municipal fund for local efficiency investments • Repayment with property tax bill • Legislation approved in CA and Colorado

27. NJ 2020 Energy Efficiency Strategy: Funding Financing the Efficiency Expansion • Leveraging private investment: • Energy Service Companies • Performance based financing • Focus: Institutional and municipal buildings • Secured, wholesale energy efficiency loan fund • Offer attractive wholesale interest rates to retail lenders • Sourced by private capital • Secured by the State • Dedicated energy efficiency deposit fund • State financial account deposits to a local bank • Deposits exclusively fund energy improvements.  • Energy Efficient Mortgages • State and Federal Tax Incentives and Credits • 20% by 2020

28. NJ 2020 Energy Efficiency Strategy: Funding 2010 as Transition Year • Establish the NJ Energy Efficiency Utility concept • Adjust BPU program plan, budget filing requirements and schedules • Make financial resources available to implement the plan • Develop, approve a Statewide 2010 Program Plan, Goals and Budget • Transfer OCE Programs to NJ Energy Efficiency Utility • Expand CEEEP responsibilities and funding to provide technical support to the BPU • Establish a Public Policy Agenda to complement programs • 20% by 2020

29. Northeast Energy Efficiency Partnerships, Inc. Thank You Susan Coakley Executive Director 781-860-9177 ext. 112 scoakley@neep.org www.neep.org