Building Energy Efficiency Program Portfolio Development Presented to: NJ Energy Master Plan

1. Building Energy Efficiency Program Portfolio Development • Presented to: • NJ Energy Master Plan • Energy Efficiency Stakeholders • By: Susan Coakley, Executive Director • Northeast Energy Efficiency Partnerships (NEEP) • December 13, 2007

2. Overview • About NEEP • A Historical Perspective of Efficiency in the Northeast • Emerging Trends and Issues • Strategies to Procure All Cost-Effective Efficiency • NJ Program Portfolio Development Process • Opportunities for Stakeholder Input

3. Northeast Energy Efficiency Partnerships “Facilitating partnerships to advance the efficient use of energy in homes, buildings and industry.” • Regional non-profit organization since 1996. • Serving New England, New York and Mid-Atlantic states Our mission: To promote the efficient use of energy in homes, buildings and industry in the Northeast U.S. through regionally coordinated programs and policies that increase the use of products, services and practices that achieve a cleaner, more reliable and affordable energy system.

4. A Brief Northeast History of Efficiency • The Past: Energy efficiency based on resource acquisition 1985-1995 • The Present: Efficiency as a public benefit program 1995 – 2007 in most states • Since 2006: Renewed interest in efficiency as a resource – potential to double-triple savings to: • Reduce carbon emissions • Meet capacity needs • Reduce energy costs

5. Annual Ratepayer Efficiency Funding Historical High: $900 million plus 1994 New England + New Jersey + New York Post Industry Restructuring: $450 million 1997 $623 million plus 2007 New England + New Jersey + New York Future: On track to exceed $1.5 billion/year!

6. Efficiency Impact 1995 – Present Lowered energy growth: kept at 1.5% per year

7. Emerging Trends and Issues Policy:Efficiency as the most cost-effective, readily available resource to meet multiple policy objectives: Power System Reliability • ISO New England Forward Capacity Market  DSM resources • FERC order to PJM to integrate energy efficiency into the RPM • Increased Short-term demand response programs – RTOs • Geographically targeted efficiency  T&D constraints - VT, CT, NY • PSE&G procurement of energy efficient T&D equipment Environmental • RGGI – 100% consumer allocation of allowance revenues • State Climate Change Policies – efficiency as top priority • NJ Master Plan Goal – 20% savings by 2020 • NY 15% Challenge – 15% savings by 2015 • New England Governors/Eastern Canadian Premiers - Energy Affordability • Procure all cost-effective energy efficiency – CT, RI, ME, MA, VT • More gas efficiency programs • State appliance efficiency standards

8. Emerging Trends and Issues Program/Technology:Increasing savings • Program Ramp-up to Increase Resource Acquisition • Increasing Discretionary Retrofit as budgets increase • Infrastructure development to increase capacities • Statewide programs with Regional Coordination • Consistent programs, requirements, joint marketing, co-branding • Co-promotions with manufacturers, distributors and retailers • Community-Based Program Strategies – VT, MA, NY • Increased focus on Whole Building Solutions • Home Energy Performance • Northeast Collaborative for High Performance Schools • LEED, Advanced Buildings, ASHRAE 189 • NetZero Energy Homes and Buildings • New Technologies/Big Opportunities: • ENERGY STAR electronics (telephony, TVs, VCRs, external power supplies) • Ductless mini-split air conditioning • Solid State Lighting (still emerging)

9. Procure All Cost-Effective Efficiency The Policy Framework • Statewide planning: • Goals – Procure all cost-effective efficiency • Statewide multi-year goals to address multiple objectives • Continually assess efficiency potential and cost-effectiveness • Address all fuels and coordinate with building integrated renewables • Strategies to achieve aggressive efficiency goals: • R&D to identify new opportunities • Voluntary programs + state procurement to build market adoption • Market mechanisms to value energy and demand savings • Regulation to lock in market gains (codes and standards) • Stable funding  cost recovery, decoupling, incentives, multi-year budgets • Coordinated programs & policies – statewide, regionally and nationally • Evaluation, tracking and reporting • Address multiple policy objectives (energy, environment, economic) • Consistent protocols to participate in regional markets

10. Procure All Cost-Effective Efficiency The Program Framework • Statewide programs designed to: • Maximize net benefits • Minimize lost opportunities • Address all market sectors • Overcome market barriers by market sector – targeted information, technical assistance and incentives • Achieve long-term impacts – market transformation • Leverage resources and engage market participation • Coordinate with related public policies – buildingcodes, standards, tax incentives, state procurement policies • Flexible program implementation  respond to developments • Evaluation and data collection  embedded in program implementation

11. Program Design Evolution to Increase Cost Effectiveness • First Generation • Information and loans, e.g., Audit programs Cheap but not cost-effective – low savings! • Second Generation • Rebates and performance contracting • Focus on retrofit  pay full avoided cost Cost-effective savings but not cheap! • Third Generation • Strategic market interventions – overcome market barriers – incentives, tech assistance, target marketing • Priority to new construction and equipment replacement • Discretionary retrofit • Near-term savings and long-term market transformation • Tie to regulations building energy codes and standard Cost-effective, cheap, long lasting!

12. Ramp-up to Meet Aggressive Efficiency Goals Wider and deeper building energy efficiency More participants More savings per building and transaction More and new technologies New programs – all market sectors New strategies and partners New market mechanisms – resource acquistion Next Generation Energy Efficiency

13. Elements: New Construction – target net zero energy buildings Equipment purchase and replacement – comprehensive high efficiency, right sized, controls to maintain high performance Retrofit– comprehensive, customized services  customer focused Integrated strategies: Whole house/whole building – all end uses All fuels All technologies - demand response, distributed generation, building integrated renewables Performance based – results oriented Next Generation Energy Efficiency

14. Elements: Move Upstream Engage retailers, manufacturers, distributors as partners Engage franchise, multiple property owners and managers Complementary Public Policies Regular updates to building energy codes, appliance strategies Building labeling requirements Tax incentives – state and federal to leverage big shifts Integration with state and local procurement and construction requirements Next Generation Energy Efficiency

15. Market Transformation for High Efficiency Clothes Washers In New England

16. Elements: Increase customer awareness and participation More and better controls Instantaneous energy use information Increased energy labeling – buildings and products Community Partnerships Engage community leadership to motivate the public Community energy planning – all facilities Community challenges and special promotions Build Infrastructure Ready access to high efficiency products and services Professional development Workforce training and certification Next Generation Energy Efficiency

17. Procure All Cost-Effective Efficiency The Evaluation Framework • Research and Evaluation Plan – set requirements up-front to address multiple policy and program objectives: • Track impacts – energy, carbon, capacity, dollars • Award performance incentives • Data methods and schedules identified upfront • Program baselines established (cooperative, regional studies) • Consistent protocols and inputs – state + regional coordination • Process evaluation to guide program effectiveness – identify mid-course corrections • Impact evaluation - to verify savings estimates • Tracking and reporting - Consistent statewide protocols, integrated processes

18. Procure All Cost-Effective Efficiency Program Administration and Oversight • Many models: • One statewide efficiency administrator – VT, ME, RI, NJ • Coordinated/collaborative administration – MA, CT, NH • Issues/Needs: • Arms length regulatory oversight • Focus on performance, results vs. program detail • Performance metrics that address near-term and long-term goals • Access to customer data marketing, tracking • Addressing multiple fuels – electric, gas, oil – to provide integrated service and solutions • Coordination with renewable energy programs • Coordination with other state agency programs

19. NJ Energy Master Plan Efficiency Program Portfolio Project

20. NJ Master Plan Efficiency Program Portfolio Project 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 • Address all customer sectors • Build on experience of successful programs in New Jersey as well as other states and regions

21. NJ Master Plan Efficiency Program Portfolio Project Approach: • NEEP lead team of national experts to develop a “best in class” program portfolio to overcome market barriers to cost-effective energy efficiency • Address all customer sectors, all fuels, all demand-side resources • Build on experience of successful programs in New Jersey as well as other states and regions • Stakeholders input to guide development - provide data and perspective • Build stakeholder support for the recommended program portfolio throughout process

22. NJ Master Plan Efficiency Program Portfolio Project Portfolio Elements: • Residential Strategies • Commercial Building Strategies • Institutional Strategies • Industrial Facility Strategies • Municipal Strategies • Strategies for Plug-in Electronics • Community Partnerships

23. NJ Master Plan Efficiency Program Portfolio Project Development Process (preliminary): Phase I – Program Development • Characterize customer sectors to be served • Establish program development criteria • Develop cost-effectiveness assessment methods and inputs • Review current NJ programs, identify gaps • Identify successful models NJ and elsewhere to address gaps • Establish program development priorities • Develop statewide comprehensive portfolio of NJ program strategies with four-year goals and budgets for all customer sectors • Project overall program impacts – savings, participants and cost-effectiveness • Establish research, evaluation, tracking and reporting and implementation recommendations Phase II – Infrastructure Development • Assess job impacts – recommend workforce development priorities

24. NJ Master Plan Efficiency Program Portfolio Project Deliverables and Schedule(preliminary): Interim Reports • Interim Report #1 – Market Characterization, Development Criteria, Cost-Effectiveness – January? • Interim Report #2 – Gap Analysis and Program/Strategy Development Priorities – February? • Interim Report #3 - Program Portfolio Recommendations with Impacts and Research, Evaluation, Tracking, Reporting Recommendations – April? Final Report • Executive Summary of Findings and Recommendations with appendices – May?

25. NJ Master Plan Efficiency Program Portfolio Project Stakeholder Input: • Use meetings of the NJ Energy Master Plan Energy Efficiency Committee to solicit input from stakeholders on particular topics • Review notes and materials from previous NJ BPU efficiency forums to inform program development • Conduct targeted outreach to stakeholders to get input and guide development • Circulate draft materials for comment and input

26. NJ Master Plan Efficiency Program Portfolio Project Project Team: • Susan Coakley – Project Manager • Philippe Dunsky – Portfolio Manager • Chris Neme - Residential • Doug Baston – Commercial, Industrial, Municipal • Carter Wall - Institutional • Jonathan Livingston – Plug-in Electronics • Bob Obeiter, Michael Ambrosio – Research, Evaluation • Blair Hamilton – Community Partnerships • Others to be confirmed

27. Stakeholder Questions Today • Criteria to Guide Program and Portfolio Development • Information Resources • Project Development Comments and Suggestions • Policy Framework to Implement Program Portfolio: Questions and Issues to Address

28. Northeast Energy Efficiency Partnerships, Inc. Thank You Susan Coakley Executive Director 781-860-9177, ext. 12; scoakley@neep.org www.neep.org