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Equipment Lease Program Design Delivering the Benefits of Demand Response and Energy Efficiency

Equipment Lease Program Design Delivering the Benefits of Demand Response and Energy Efficiency. CVPS Heat Pump Water Heater Pilot Overview. Customer Eligibility Location & Free Air Space L ocation & Condensate Drainage Location & Height Clearance (>72’’) Results

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Equipment Lease Program Design Delivering the Benefits of Demand Response and Energy Efficiency

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  1. Equipment Lease Program Design Delivering the Benefits of Demand Response and Energy Efficiency

  2. CVPS Heat Pump Water Heater Pilot Overview • Customer Eligibility • Location & Free Air Space • Location & Condensate Drainage • Location & Height Clearance (>72’’) • Results • EPRI ‘Aquisuite’ Monitoring Package • Annual Average COP = 1.9 • Low hot water usage (as measured by low occupancy) • Uninsulated basements in a cold climate. Delivering the Benefits of Demand Response and Energy Efficiency Shawn Enterline, Sr. Consultant

  3. Customer Expectations & Satisfaction Delivering the Benefits of Demand Response and Energy Efficiency Shawn Enterline, Sr. Consultant

  4. 96% Customer Satisfaction Delivering the Benefits of Demand Response and Energy Efficiency Shawn Enterline, Sr. Consultant

  5. Barriers to Utility Water Heater Lease Programs • Risk Aversion • A function of education, familiarity & experience. • Solution: Education. Extended Warranty. • Corporate Priorities • Lease programs are typically a side business. • Solution: A customer focus. • Field Service Readiness • What happens if it breaks? Can contractors quickly fix it? • Solution: Education & Training. RFP for support services. • Financial • Some utilities do not want to “clutter” their balance sheet. • Solution: 3rd party leasing companies. Delivering the Benefits of Demand Response and Energy Efficiency Shawn Enterline, Sr. Consultant

  6. Barriers to Efficiency Program Participation • Vendor & Equipment Neutrality • “We can’t favor (pick winners) one lease company (or manufacturer) over another.” • Solution: Offerings (and RFPs) that are vendor neutral. • “Reverse” Fuel Switching & Load Building • “We can’t promote it if it doesn’t reduce electric use.” • Solution A: Funding for “thermal” efficiency is also a barrier. • Solution B: Policy that support fuel neutral metric. • Measure Lifetime • The term of the lease must meet minimum installation times or the measure will not meet cost effectiveness tests. Delivering the Benefits of Demand Response and Energy Efficiency Shawn Enterline, Sr. Consultant

  7. Business Model for Equipment Lease Programs The Customer & the Equipment Discounted (TOU) Rate Rebate The customer gets immediate dollar savings with no first costs. Efficiency Program Utility Demand Response Energy Efficiency Lease Company Lower Lease Payment Joint Marketing Zero ‘First Costs’ Buy Down Delivering the Benefits of Demand Response and Energy Efficiency Shawn Enterline, Sr. Consultant

  8. The Efficiency Program Customer Choices • Ownership • $250 rebate • Lease • Apply the same $250 and reduce the lease by $20-30/yr. • This equates to about one free lease payment per year. • Advantages of the Lease • Customer: • 24/7 service. $0 up front cost. Immediate dollar savings. • Efficiency Program • Professional installation and higher market penetration. • Utility • An energy efficient (and controllable) load & satisfied customers. Delivering the Benefits of Demand Response and Energy Efficiency Shawn Enterline, Sr. Consultant

  9. Customer Economics for Water Heating “Pay $1,250 now & wait 3 years to get your $ back.” “20 – 20 Value Proposition” “Pay $20/month now plus save another $20/month.” Delivering the Benefits of Demand Response and Energy Efficiency Shawn Enterline, Sr. Consultant

  10. Non Utility Leasing & AWHR • Equipment • GE Geospring 50 • Ownership • AWHR owns the equipment. • Service • Full Installation & 24/7 service • Repair or replacement is included. • Cost • $10-30/mo. • 24 month term, then monthly. • $150 early termination fee. Delivering the Benefits of Demand Response and Energy Efficiency Shawn Enterline, Sr. Consultant

  11. AWHR FAQs • What happens if the property is sold? • The lease is transferrable. • The equipment is removed if the lease is not transferred. • How are permit requirements handled? • AWHR handles all permit requirements during installation. • How are the monthly payments made? • Standard monthly bill, credit card, online, ACH, ect. Delivering the Benefits of Demand Response and Energy Efficiency Shawn Enterline, Sr. Consultant

  12. Program Design Elements • Joint marketing and promotion. • Vendor Neutral • Must be available to other leasing companies. • Equipment Neutral • The qualified product list includes multiple manufacturers • Lease Term = Minimum Measure Life Delivering the Benefits of Demand Response and Energy Efficiency Shawn Enterline, Sr. Consultant

  13. A Note on New England Heating Fuel Prices • Fuel prices compete within 3 bands. • With heat pumps, electricity falls into the 1st band. • Could an equipment lease program transform the market? 1 2 3 300% $14.65 Delivering the Benefits of Demand Response and Energy Efficiency Shawn Enterline, Sr. Consultant

  14. Shawn Enterline,Senior Consultant(802) 540-7805senterline@veic.org

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