Concurrent Session: Industrial Sector Priorities Pursuing Major Industrial Opportunities

1. CEE Winter Program Meeting January 16-17, 2008 Long Beach, CA Concurrent Session: Industrial Sector PrioritiesPursuing Major Industrial Opportunities

2. Objectives • Review energy trends in the industrial sector • Summarize CEE industry program accomplishments and priorities • Discuss goals/next steps

3. Industrial Sector Is a Big Opportunity U.S. industry represents: • 37% of U.S. natural gas demand • 29% of U.S. electricity demand • 30% of U.S. greenhouse gas emissions • More energy use than any other single G8 nation • Large opportunities for • Energy reduction • Emissions reductions • Fuel flexibility • 32 quads of energy • >200,000 sites • 14.3 million jobs • $5,900 billion in shipments • $980 billion in exports

4. Baseline Energy Consumption (CA)(Source: California Industrial Existing Construction Energy Efficiency Potential Study, May 2006)

5. Industrial Sector CEE Coverage CEE Initiatives: Motors Motor Mgmt. Motor Systems Compressed Air Pump Systems Transformers Water/Wastewater Fired Heaters 31% Motor Systems 23% Steam 26% Process Cooling2% Facilities 10% Other 4% Electro-chemical4%

6. Relevance to members Alignment with CEE’s mission Technical potential Indicators of market change Key stakeholder relationships Other potential assets Level of effort required Makes use of CEE’s unique role Fills a gap Time frame Decision-making Criteria for CEE Efforts in the Industrial Sector

7. Session Context

8. Premium-Efficiency Motors

9. Premium-Efficient Motors Initiative • Launched in 1996 • Based on EPAct 1992 scope of motors: • Aligned with NEMA PremiumTM in 2001 • For motors covered under EPACT • Forty-seven participants in 2006-7 • Majority offer prescriptive programs for 1-200 hp motors • Custom programs for larger motors and motor systems

10. Scope of Covered Products • CEE Specification • 1 – 200 Hp • Low-voltage • General-purpose • NEMA Premium Specification • 1-200 Hp • Low-voltage • General- purpose • ----PLUS---- • 250 – 500 Hp • Medium-voltage • Special & definite purpose

11. Major Accomplishments in Motors • Revised CEE Premium-Efficiency Motor Initiative to include a guidance specification for large, low-voltage electric motors (250-500 hp) • Released the 2007 Motor and Drive Program Summary describing the program offerings of 47 CEE members Available on CEE’s website: www.cee1.org. • Current motor research: • Impacts to programs of the recently enacted federal minimum efficiency standards for motors • Exploring medium-voltage, special and definite purpose motors • Exploring 50hz motors (most commonly found in Europe) given limited baseline information and industry proposed performance levels.

12. 2008 Priorities • Prepare for implementation of Energy Independence and Security Act • Anticipate motor standards’ impact on industrial market and on programs. • For example: • Develop best practice repair guidance for programs • Review energy performance and market readiness of advanced motor technologies • Develop consistent language to facilitate customer education

13. 2008 Priorities • Monitor proposed tax credits for motors prior to the new standards going into effect. • Purchasers of qualified energy efficient motors would be allowed a credit in an amount equal to $15 per horsepower of qualified energy efficient motors placed in service by the taxpayer during the taxable year. • Potential implications: • Encourage end-use consumers to invest in premium efficiency • Encourage replacement rather than extend the life of inefficient motors

14. Motor Management: Motor Decisions MatterSM • A national campaign designed to improve the way industrial motor repair/replace decisions are made by promoting the financial and performance benefits of sound motor management policies to industrial managers • Increase industry’s awareness of motor management opportunities • Increase demand for NEMA PremiumTM motors & best practice motor repair • Encourage the market to engage in motor planning • Collaborate nationally to enhance local effectiveness

15. Motor Manufacturers ABB Inc. A.O. Smith Electrical Products Company Baldor Electric Emerson Motors GE Industrial Systems Regal-Beloit Corporation Rockwell Automation / Reliance Electric Siemens Energy & Automation TECO-Westinghouse Motor Company Toshiba International WEG Electric Motor Corporation Trade Associations CDA, Inc. EASA NEMA Efficiency Program Administrators Advanced Energy BC Hydro ComEd, a division of Exelon Corporation LIPA MidAmerican Energy Company National Grid USA NYSERDA NW Alliance NSTAR Electric & Gas PG&E SMUD SCE WI Department of Administration Xcel Energy Supporting Organizations U.S. Department of Energy MDM Sponsors

16. Major Accomplishments in Motor Management • CEE accelerated sponsor delivery of the Motor Decisions Matter campaign via annual conference, spotlight calls, webinars, and a regional meeting in Austin. • 4 Spotlight Calls: Xcel Energy, PG&E, SCE, NStar & NGrid • 2 Educational Webinars • Increase Profitability Through Motor Management • Jump Start Customer Conversations with MDM Tools • CEE worked with members individually to help them leverage the resources and relationships that MDM has cultivated over the past six years. CEE worked with industrial program staff from Southern California Edison, Austin Energy, and BC Hydro

17. Major Accomplishments in Motor Management • CEE assisted the editors of trade and business publications to develop 16 articles describing the benefits of premium-efficiency motors, motor management and the MDM campaign. These publications have a combined circulation of 157,100 readers • www.motorsmatter.org (in 2007) received over 600,000 hits with 23,000 unique visitors

18. 2008 Priorities • Continue to Implement MDM Phase 3 • Expand delivery of Campaign message • Increase level coordination and collaboration • Develop “sponsor participation” guidelines • Identify integration opportunities • Position the campaign to respond to new standards • Prepare for post Phase 3 transition

19. Motor Systems:Municipal Water and Wastewater Facilities

20. Water/Wastewater Initiative • Objective: Increase awareness of and demand for energy efficiency within the municipal water and wastewater sector • Strategy: To build a template of nationally consistent tools and messages for members to incorporate into their programs and to deliver nationally

21. Current Projects and the Initiative • ENERGY STAR Benchmarking Field Test • Education at Operator Level • Forum for programs • Way to coordinate on national level • ECM Framework • Forum • Coordinate national research projects, program research • Program guidance • MA DEP & CEE Members • Awareness • Funding procedures

22. Benchmarking in Programs • How can efficiency programs use this tool? • ComEd, BPA, WI FOE, NYSERDA, TVA, NStar, NGrid • Process versus results • Lessons Learned • Hurdles to Implementation

23. Framework for Evaluating ECMS • Analyze opportunity to develop guidelines for efficiency measures in W/WW • Methodology: • Industry literature (AwwaRF, WEF, EPRI, EPA) • Program Documents/Studies (PG&E, BC Hydro, WI FOE) • Solicit data on past projects • Alliant • CEC • Efficiency Vermont • NYSERDA • SCE • Snohomish • Xcel Energy

24. Supporting MA DEP Project • 14 facilities in Massachusetts • CEE Members • Bay State Gas • Berkshire Gas • Cape Light Compact • National Grid • NStar • Unitil • Benchmarking WW • Using list of ECMs from Framework Project • Follow through to Funding

25. Priorities for 2008 • Benchmarking Integration • Expand ECM Framework • New Technologies • Project Implementation • Funding Process • Supplier Role • Drinking Water Benchmark

26. Industrial Program Planning

27. What is the opportunity? • Current environment for broader and deeper energy savings is driving members to re-assess industrial energy savings in the process area and to identify program opportunities. • identifying cross-cutting, process-specific measures • targeting industrial sub-sectors

28. Process Energy Use by SIC and Application

29. The refining, chemical, paper and metal industries together use 71% of total inputs of energy for heat, power, and electricity generation. Industrial Sector Energy Use by Sub-sector

30. Emerging Program Models Sector-Specific Approaches • Northwest Energy Efficiency Alliance is focusing on food processing and pulp and paper • PG&E and SCE are focusing on data centers, bio-tech, water treatment, agriculture, food processing, wineries and oil refining • NYSERDA is focusing on sector-specific strategies, such as hospitality, municipal water and wastewater and industry.

31. Industrial Process Energy is an Emerging Opportunity for Programs • CEE members are coming together through the Industrial Program Planning Committee: • to provide a forum for members to share program strategies in the industrial sector • to tap into the collective experience of member industrial efficiency programs (Technical Assistance, Custom Projects, Demonstration Projects, SPC/Standard Offer) • to identify and prioritize industrial opportunities & resources (DOE, EPA) • to recommend program strategies, as appropriate

32. Priorities for 2008 • Review member program needs and priorities in the industrial sector in order to understand where the greatest opportunities are for programs nationally • Continue to explore opportunities for an enhanced performance specification for distribution transformers (particularly low-voltage, dry-type) • Establish a framework to assess savings opportunities by industrial sub-sector and cross-cutting technologies (system, process, etc.)

33. Priorities for 2008 • Assess available DOE and EPA research and resources that could potentially support member programs • Map DOE and EPA industrial program offerings to member priorities • Identify program initiatives aimed at particular industrial sub-sectors and/or process opportunities • Explore a process to accelerate market acceptance of newly developed industrial technologies

34. Questions?

35. C&I Distribution TransformersBack-up Slides

36. CEE’s C&I High-Efficiency Distribution Transformer Initiative • Launched in 1998, serves as a platform for programs to build demand for more efficient transformers in the commercial and industrial sector. • The initiative consists of four key components: • A voluntary low voltage transformer efficiency performance specification • Guidelines for using cost-of-ownership methods in transformer purchases • Awareness building • Incentives (where possible) • Energy Star began labeling low-voltage transformers soon afterwards.

37. The Opportunity for an Enhanced Performance Specification • The Energy Policy Act of 2005 (EPAct 2005) established federal minimum standards for low-voltage, dry-type distribution transformers which went into effect on January 1, 2007. • New standard is equivalent to the NEMA specifications supported by CEE and ENERGY STAR on a voluntary basis since 1998. • During the last few months of 2006 and early in 2007, a CEE subcommittee met to explore the development of specifications for dry-type, low voltage transformers based on the analysis developed by DOE during a transformer rulemaking process. • DOE rulemaking in process for medium-voltage products.

38. Major Accomplishments in Distribution Transformers • The CEE Distribution Transformers Committee has • reviewed DOE research on low-voltage, dry-type distribution transformers • explored the availability of products that exceed the new federal minimum standard. • The Committee is considering an enhanced specification for low-voltage products that will be vetted with industry later this year. • The Committee has also identified “super-efficient” performance level for distribution transformers that are not currently available on the market.