Navigant Research Blog

AMI Data Brings New Possibilities for Energy Efficiency Measurement and Verification: Part 2

— August 4, 2017

Coauthored by Emily Cross and Peter Steele-Mosey

Part 1 of this blog series covered operational improvements and provided background on the role of advanced metering infrastructure (AMI) data in energy efficiency program evaluation, measurement, and verification (EM&V). This blog continues the discussion with a focus on program impact evaluation. Navigant Research examines these topics in detail in its report, Utility Strategies for Smart Meter Innovation: Energy Efficiency Measurement and Verification.

Program Impact Evaluation

The use of AMI data for program evaluation has the potential to substantially reduce evaluation costs. A major cost associated with the evaluation of large customer (commercial and industrial) energy efficiency program evaluation is onsite verification and metering. For some programs, it is possible to reduce the number of site visits required or reduce the frequency of site visits. Another opportunity for faster program evaluation using AMI data is large-scale validation of coincident demand savings for energy efficiency programs. With AMI data, it is a straightforward matter to isolate demand impacts occurring during utility system peak performance hours.

Programs operating in utility services areas with full penetration of smart meters, deploying energy efficiency measures with consistent load reduction patterns, are excellent candidates for evaluation using hourly or subhourly AMI data. Energy efficiency impact analysis using utility data assumes enough of the program participant savings are above a minimum measurable threshold. That is, the signal-to-noise, savings-to-baseline ratio must be high enough to see the savings in the meter data for a substantial number of participants in the program. Otherwise, program savings estimates may be statistically non‑significant even if savings are being achieved.

A hybrid EM&V approach, using a combination of advanced, automated AMI data analytics and targeted in‑depth evaluation, provides the most value to utility clients and regulators. Automated impact analysis using AMI data (M&V 2.0) can serve as an initial screening of participants. It can quantify realized savings measured at each participant meter using high accuracy pre-post time-of-week/time-of-year and temperature normalized savings models. Participant projects screened out of the automated analysis can be identified and sampled for deeper analysis, providing targeted insights to utility clients and regulators for more complex projects.

Where automated screening methods provide sufficient program feedback without further investigation into the reasons for measured savings, evaluation costs could be reduced relative to traditional methods. Automated M&V2.0 screening provides a high level, statistically significant measure of program performance without the need for follow-up evaluation for programs with established performance. The evaluator using such methods must demonstrate there is no bias introduced by using only projects with measurable savings to characterize program performance.

For mass-market (residential and small commercial) programs, traditional evaluation often involves the application of survey findings to validate and update deemed savings values. In many cases, an empirical econometric approach can deliver an answer with just customer AMI data and program tracking data if the key question to be answered is simply: how many kilowatt-hours (kWh) and kilowatts (kW) is this program giving me? Such empirically-based savings could reduce program implementation and evaluation costs by streamlining or eliminating the ex ante customer application process, provided savings are measurable at the meter.

 

Natural Gas Demand Response – Current Utility Programs: Part 3

— July 25, 2017

Coauthored by Paul Moran

As we discussed in our last blog, demand response (DR) in the natural gas sector has been less prevalent in the natural gas industry than in the electricity industry due to the lack of clear market signals that otherwise would enable market participants to put a price on deferred natural gas consumption. However, changing market factors are leading to increased interest in the practice. There are several utilities currently running innovative natural gas DR programs to discern the value of it alleviating system constraints.

Rebates for Home Heating

This year, Southern California Gas (SoCalGas) launched a natural gas DR program called the SoCalGas Advisory Thermostat Program, partially in response to supply concerns related to a leak at its Aliso Canyon natural gas storage facility. It offers program participants up to $50 in rebates while helping them reduce natural gas costs for home heating. To be eligible for the rebate, program participants agree to allow minor adjustments to their smart thermostat settings on days when a SoCalGas Advisory conservation event is called. SoCalGas manages the ecobee thermostats and makes adjustments remotely, using a software platform developed by EnergyHub. Participants are notified before any adjustments occur. This represents the first rebate program of this type offered by a natural gas utility for gas heating.

Interruptible Gas Has Its Perks

Xcel Energy has an interruptible gas program for large commercial and industrial customers that does not include physical control of the gas supply by the utility. It is used to allay pipeline or distribution constraints as well as economic concerns when gas prices increase or spike. Customers get a notice one hour prior to the need and then it is up to them to decide what to curtail or whether to go on a backup fuel supply. It can be isolated to certain geographic areas on the system rather than an all-or-nothing approach.

Pilot Programs in New England

The New England region is at the literal end of the gas pipeline infrastructure and is at risk of experiencing more supply shortages than other areas of the country. Even before the polar vortex, the Independent System Operator of New England instituted a winter fuel supply program, including winter DR. Some of the Massachusetts utilities have undertaken pilot programs with smart thermostat vendors like Nest to test the natural gas DR theory with residential customers by changing heating setpoints. The programs have not yet moved beyond the pilot stage.

Although the absence of a clear price signal is a significant impediment to the adoption of natural gas DR, these innovative programs demonstrate that utilities have a strong interest in exploring its promise to provide a less expensive means of alleviating pipeline constraints. In our final blog of this series, we will discuss how National Grid is exploring new applications for natural gas DR to reduce peak load and improve system efficiency across its service territory.

 

AMI Data Brings New Possibilities for Energy Efficiency Measurement and Verification: Part 1

— June 29, 2017

Coauthored by Emily Cross and Peter Steele-Mosey

Utility industry stakeholders have been debating whether the proliferation of advanced metering infrastructure (AMI), also known as smart meters, will change the way energy efficiency program evaluation, measurement, and verification (EM&V) are conducted. Many utilities remain unsure about what is realistically possible. This uncertainty is compounded by the fact that new firms seem to emerge each year, claiming to provide increasingly deep insights into customers’ energy reduction potential (such as appliance-level load disaggregation and building-specific identification and targeting) using little more than consumption data from the utility.

How Can AMI Data Be Used?

In the field of EM&V, what is AMI data good for? How can it be used by utilities, regulators, and stakeholders to reduce evaluation costs, deliver more accurate and precise estimated program results, and improve the effectiveness of program delivery?

To answer these questions, it is helpful to define the two key evaluation-driven use cases for AMI data:

  1. Operational improvements: Early indications of program achievement provide the opportunity for course correction. Due to the continual collection of AMI data, it should be possible to quantify the impacts of changes in marketing approach and customer targeting on energy efficiency achievement more quickly than is traditionally required for program evaluation.
  2. Program impact evaluation: What is the best estimate of the energy and demand savings that a program delivered? This type of information is required to track utilities’ progress against mandated energy efficiency targets, to enable energy efficiency programs to be bid into energy and capacity markets as resources, and to quantify overall program cost-effectiveness.

Part 1 of this blog covers operational improvements, while part 2 will cover program impact evaluation. This topic is covered in detail in Navigant Research’s new report, Utility Strategies for Smart Meter Innovation: Energy Efficiency Measurement and Verification.

Operational Improvements

Utilities are all too familiar with the frustration of waiting for results from evaluators. Typically, a full year of data is required and the evaluation itself may take several months. This lag between implementation and assessment limits the ability of program administrators to course correct underperforming programs or understand how to tailor messaging to maximize the recruitment of high potential customers.

AMI data is collected continually, and several firms have recently come to market with prebuilt software solutions designed to quickly plug and play with this data. In theory and depending on the type of program, it should be possible to obtain ongoing updates of program performance long before the actual evaluation even begins.

These software packages have their limitations and are no substitute for a custom econometric evaluation, as they tend to be one size fits most. Additionally, the innovative approaches they employ sometimes lack the support of academic and professional literature from which econometric approaches benefit.

There is no denying, however, that these prebuilt software solutions can deliver results much more quickly than the traditional approaches. The results may not be sufficiently robust for a regulatory environment, but they may (depending on the program and the vendor) be sufficient to allow program administrators to take greater control of their programs and monitor their progress in near real-time. Program administrators would have the opportunity to make more effective use of program budgets and increase the value of their programs for their shareholders and ratepayers. They could use these software solutions for programs where simply multiplying the implementer‑reported savings by the prior year’s realization rates is not expected to be accurate.

 

EnerNOC Loses Its Crown as the Last of the Pure-Play Public Demand Response Companies

— June 23, 2017

And then there were none. All the pure-play energy efficiency and demand response (DR) public companies have now been gobbled up by large industry players. First, Comverge went private in 2011 and was recently acquired by Itron. Then Opower was bought by Oracle in 2016. Now EnerNOC has been acquired by Enel Green Power North America (EGP-NA) for $300 million. It was no secret that this was going to happen, as EnerNOC had essentially put itself on the auction block earlier this year. The only suspense was who the buyer would be. I don’t know anyone that had EGP-NA in their betting pool. I saw EnerNOC’s CEO Tim Healy at the Edison Electric Institute’s annual conference in Boston last week, and he did a great job keeping his poker face on.

The likely scenarios seemed to include either being taken private by a private equity company, like what happened with Comverge, or being bought by a large vendor like General Electric (GE) or Schneider Electric. It was not probable that a US utility would be in the mix. But European utilities like ENGIE have been active in getting footholds in the US distributed energy resources (DER) market with more customer-facing solutions. EGP-NA had been one of the quieter ones. By adding the EnerNOC deal to its recent acquisition of energy storage software/project developer Demand Energy, EGP-NA has pushed itself toward the forefront of this market.

A Lot of Opportunity

EGP-NA has no existing DR infrastructure, so there should not be a lot of overlap in terms of personnel or resources. The move should help EnerNOC expand more quickly in the European markets. The press release on the deal quoted Healy as saying, “we look forward to accelerating the growth of our core businesses and to delivering ever more value to our customers as we lead the transition to a more sustainable, distributed energy future.” So it seems like there is a lot of opportunity for EnerNOC to pursue, but it will likely face integration risks as the deal gets consummated.

I am glad that it appears that EnerNOC’s main business and position in the DR industry will continue. I was worried that a private equity firm might pick it apart and sell the pieces. I look forward to seeing the company expand DR further around the globe.

On the downside, I won’t have any more exciting transactions to write about. I guess we’ll have to wait and see if all of these recent deals pan out in a few years or if the next wave of news will be the large players selling the smaller DER players after unsuccessful integration attempts.

 

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