City of Boulder Meeting Kyoto -- Carbon Emissions Reduction: Commercial Lighting

1. City of BoulderMeeting Kyoto -- Carbon Emissions Reduction: Commercial Lighting

2. Discussion Overview • State of Play • Project Overview - Analysis I • Project Development and Goals • Model Review • Energy Efficiency Model Development and Overview • Findings and Implications • Key Assumptions • Areas for Model Refinement • Derivation of Potential and Cost of Efficiency • Technical, Economic and Achievable Potential • Cost of Efficiency Example Calculation • Levelized Cost of Energy • Questions and Discussions

3. State of Play

4. State of Play City of Boulder Emissions Projections by Source

5. Project Overview

6. Project Inception • Project Identification • Commercial sector poses a significant amount of energy efficiency potential • Increasing energy efficiency in commercial buildings is among the most cost-effective ways of reducing energy use and the associated carbon emissions • Project Development • Project ID prompted the proposal and development of a commercial energy efficiency potential model to: • Determine the feasible range of delivered cost per metric tonne of CO2 reductions • Determine the anticipated metric tonne reduction for a given investment

7. Analysis I - Delivered Price per mt CO2 Assessment Analysis I set out to answer the questions: • What is Boulder’s cost for delivered CO2 (cost CO2/metric tonne reduced)? • What are each of the components that make up the delivered CO2 price? • How much CO2 reduction can be expected with a given investment? • What influence does industry type, building type, etc. have on CO2 price?

8. Analysis I - Approach • Basis • Various energy efficiency potential studies and data sets exist • Itron 2006 California Energy Efficiency Potential Study • DEER (Database for Energy Efficiency Resources) • NYSERDA’s 2003 study for New York State • E-Source / Platts • California Commercial End-Use Survey • Others… • Integrate City of Boulder data • Develop the model to reflect Boulder’s • Climate zone • Building stock • Energy mix • Consumption projections • Program Development • Others…

9. Model Review

10. Model Overview

11. Analysis I - Findings • Boulder’s Budget Required for Achievable Potential ≈ $480,000 (Boulder’s LCOE: $0.0035/kWh) • Boulder’s Achievable Potential Year 3 ≈ 9,000 mt CO2

12. Analysis I - Findings • Boulder’s Annual Budget Target = $400,000 => Associated Annual CO2 Savings 8,300 mt CO2

13. Analysis I - Findings • Boulder Lighting Energy Efficiency Potential by Building Type

14. Analysis I - Findings • Boulder’s Program Administration Costs • Model Baseline ≈ 11% of measure costs • Analysis - 1% • Project Management - 3% • Strategic Positioning - 2% • Sales - 4% • Education an/Outreach - 1% • Compare to utility Demand Side Management/EE Programs • PA Costs modeled in range of the national average (10-18%) but above "best-in-class" utilities, which have more experience running programs than does the City of Boulder

15. Analysis I - Implications • Commercial lighting has significant EE potential • Boulder’s building stock is well positioned (i.e. significant savings from a few building types) • Small Office, Large Office, Retail and Health Care ≈ 87% of Achievable Potential • Targeted commercial EE can provide measurable and verified emission reductions • Cost sharing makes the commercial EE options more appealing for all stakeholders • Multi-party appeal • Understanding market segmentation will be critical for program development and sustained emission reductions.

16. Analysis I - Implications • System-wide Levelized Cost of Energy (LCOE) at $0.032/kWh, is comparable to leading industry analyses. • City of Boulder’s Cost of Carbon at $3.96/mt CO2, is significantly less than worldwide carbon market cost of carbon (e.g. EU ETS at ≈ $20.8/mt CO2 on Aug 18, 2009) • Achievable lighting efficiency has the potential to reduce overall commercial lighting energy use by 5%* • Achievable lighting efficiency has the potential to achieve nearly 12%* of Boulder’s commercial emissions reduction goal * Based on conservative Achievable Potential and “Ramp-up” percentages. Includes all energy savings from year 1, 2 and 3

17. Key Model Assumptions • Data set corrects for any measure double counting (i.e. measure XX negates the savings potential from measure YY) • Only readily available commercially implemented and proven measures included in model (i.e. no singular or extreme cutting-edge technologies) • System Consumption Projections: ≈ ½ % per year growth • Cost of CO2 offsets: $20/mt CO2 • Boulder Discount Rate: 2.04% • Ratepayer Discount Rate: 3.0% • Boulder’s Program Administration Costs: 11%

18. Areas for Model Refinement • As data becomes available: • Program Administration Costs • Sales, Analysis, Project Management, etc. • Utility and Federal Incentives • Achievable Potential • Boulder’s technology saturation, customer acceptance, etc. • Achievable Potential Ramp-up • Investment/Benefit change over time • Lighting Technology cost • Anticipate reduced costs as technology gains mainstream market acceptance

19. Derivation of Potential and Cost of Efficiency

20. Technical Potential • Boulder Building Stock • Energy consumption forecast • Commercial energy use break down by building type (sources: CBECS, Boulder) • End use breakdown by building type(sources: PLATTS, CEC CEUS) Top down Technical Potential • Efficiency Measure Data(by building type and climate zone) • Measure lifetime • Annual savings (kWh/unit) • Measure cost ($/unit) • # of units in building type Bottom up

21. Economic Potential Economic Potential (kWh/year) > 1 TRC < 1 Not included in Economic Potential Total Resource Cost (TRC) System Avoided Costs System Costs = System Avoided Costs System Costs Xcel:avoided cost of generation orwholesale purchase price Xcel:rebate, lost revenue Customer:Measure costs, net of rebate Customer:Avoided retail rateof electricity City of Boulder:Program administration costs City of Boulder:avoided cost of carbon offset

22. Achievable Potential Achievable Potential (kWh/year) EconomicPotential(kWh/year) Achievable Ramp-Up Factor (% achievable by year) Achievable Factor (% achievable, by end use and bldg type) x x = Achievable CO2 Savings(m tons/year) Achievable Potential (kWh/year) CO2 Intensity(m tons CO2/kWh) = x

23. Derivation of Cost of EfficiencyExample: Occupancy Sensor in Small Office • Source data for cost and performance of efficiency measures: Itron’s 2006 report “California Energy Efficiency Potential Study”

24. Derivation of CostExample: Occupancy Sensor in Small Office *Program Administration (PA) costs defined as % of measure capital cost: • Analysis (1%) • Project Management (3%) • Sales (2%) • Strategic Positioning (4%) • Education / Outreach (1%)

25. Derivation of CostExample: Occupancy Sensor in Small Office • Levelized Cost of Energy (LCOE) is the lifecycle cost of a measure, amortized over the measure’s lifetime, divided by the measure’s lifetime energy savings. • LCOE = [PMT(1) (measure cost + PA costs, @ Boulder’s discount rate, measure lifetime)] [(energy savings/year) × (lifetime)] • Occupancy sensor in small office: LCOE = [PMT(1) ($169.20 + (11% × $169.20), @ 2.04%, 8 years)] [(789 kWh/year) × (8 years)] measure cost PA Costs discount rate lifetime energy savings/year lifetime $ 25.96 788.9 kWh = = $0.033/kWh (1) PMT is a function that calculates the payment for a loan based on constant payments and a constant interest rate, using the present value of all future payments, the interest rate, and the number of payments (years) for the loan.

26. Derivation of CostExample: Occupancy Sensor in Small Office • How does this compare to the levelized costs of the rest of the measures modeled? Measures costing more than ≈$0.12/kWh are not economic ($0.12 = customer rate + city's avoided cost of CO2 offset alternative) $0.033/kWh

27. Xcel Costs = Customer Costs = Boulder Program Administration Costs = % of Total Measure Cost Incentive Cost Units Incentivized x Incentive per Unit = Incentive Cost Units Installed x Measure Cost per Unit — System Cost Breakdown Overall costs are further broken down by stakeholder:

28. Thank You!