Funding Energy Efficiency Efforts in Delaware

Reducing Energy Use Workgroup June 16, 2008

Phil Cherry, DNREC

Energy Efficiency• Energy Efficiency is the cleanest, cheapest source of

new power• Energy Efficiency saves ratepayers money• Energy Efficiency promotes energy security• Energy Efficiency reduces the need for costly

transmission• Energy Efficiency reduces peak demands and reduces

the overall cost of power to utilities• Energy Efficiency can promote economic development,

competitiveness, investment and job creation

Energy Efficiency

Residential Appliance ProfileDelaware Residential Electricity End-Uses

Space Heating11%

Water Heating11%

Air Conditioning8%

Electric Appliances31%

Other39%

Delaware Residential Sector Electric Appliance End Use

Lighting17.7% Clothes Dryers

11.8%

Freezers9.8%

Furnace Fans3.3%

Televisions9.8%

Cooking13.8%

Refrigerators29.5%

Ceiling Fans1.1%

Computers0.9%

Pool Pumps0.9% Well Pumps

0.7% Dehumidifiers0.7%

Commercial and Industrial ProfilesDelaware Commercial Sector Major Energy End Uses

(including electricity system losses)

Space Heating19%

Cooling8%

Ventilation5%

Water Heating5%

Lighting36%

Cooking2%

Refrigeration7%

Office Equipment9%

Other9%

Delaware Industrial Sector Major Energy End Uses (Excluding Refinery and Chlor/Alkalai End Users)

(including electricity system losses)

Boilers25%

Process Cooling/ Refrigeration

4%

Other6%

Process Heating16%

Lighting4%

Facility HVAC7%

Motors/ Machine Drive33%

Other Non-Process5%

7/3/2008 Source: ACEEE, October 2005

2003 Electric Energy Efficiency Spending per Capita

Rank State 2003 Spending/Capita 2000 Rank

1 Vermont $28.26 5

2 Massachusetts $21.49 2

3 New Hampshire $16.41 16

4 Washington $15.21 11

5 Rhode Island $14.31 3

47 District of Columbia - 28

48 Kansas - 50

49 Delaware - 20

50 Virginia - 51

51 Wyoming - 21

US Average $4.65

Efficiency and the Green Energy Fund

• System Benefit Charge (SBC) created by HB 10• Payable by Delmarva customers only (Muni’s and

Co-op have separate programs)• Mil charge = $0.000356/kwh

– Generates ~$3 million/year• 65% to the Green Energy Endowment Program • 25% to the Technology Demonstration Program• 10% to the Research and Development Program

• Existing Program focused on Renewables – by statute

• Efficiency Expenditures = $0.00

Energy An$wers Program

• Energy Efficiency Financial Incentives Act of 2006 - SB 281

• $8 million one time appropriation• Expenditure plan approved June, 2006• Provide incentives to residential and non-

residential ratepayers statewide• $100,000 set-aside for sustainable utility

study

Energy An$wers ProgramFour targeted segments tailored to different needs: • Flip the Switch Delaware – CFL Campaign (Twisty

Bulbs) – Program concluded• Delaware Energy An$wers for Home Appliances• Delaware Energy An$wers for Business

• Just An$wers – Grants for audits and feasibility studies• Prescribed An$wers – Grants for lighting, refrigeration,

motors, HVAC• Customized An$wers – Grants for unique projects or

comprehensive projects.• Delaware Energy An$wers for Home Performance

Energy An$wers Program• Flip the Switch Delaware!

– 71,340 Delawareans participated– 142,680 light bulbs distributed– Potential energy savings 40,239,144 kWh of energy

valued at $4,023,914 in energy costs– Preventing 63,497,940 pounds of greenhouse gas

emissions– Equal to removing 2258 cars from the road for 1 year. – Ranked #1 in the Nation for commitment to CFL’s– 25-35% increase new patron library cards (unofficial)

Flip the Switch and LibrariesBulbs per Library

4,232

9,800

13,888

1,8521,997

616 5041,320

2,334

9,708

2,951

1,368

4,700

2,8622,112

5,0005,770

11,826

456

4,404

5,9726,244

4,040

1,452

2,734

7,300

1,968

4,000

5,416

2,238

3,884

6,488

144

3,100

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Appoq

uinimink C

ommunit

y Libr

ary

Bear P

ublic

Librar

y

Brandy

wine H

undred

Libra

ry

Bridge

ville P

ublic Li

brary

Claymont

Public L

ibrary

Corbit-C

allow

ay M

emorial

Librar

y

Delaware

City

Public L

ibrary

Delmar

Public L

ibrary

Division

of Libr

aries

Dover

Public

Librar

y

Elsmere

Public

Librar

y

Frankfor

d Publi

c Libr

ary

Georgeto

wn Public

Librar

y

Greenwood

Pub

lic Lib

rary

Harringto

n Pub

lic Lib

rary

Hocke

ssin

Public L

ibrary

Kent C

ounty

Librar

y

Kirkwoo

d High

way Publi

c Libr

ary

La Bibl

iotec

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ueblo

Librar

y

Laure

l Pub

lic Li

brary

Lewes P

ublic L

ibrary

Milford

Distric

t Free P

ublic

Librar

y

Millsbo

ro Pub

lic Lib

rary

Milton P

ublic

Librar

y

New C

astle

Public

Librar

y

Newark

Free Li

brary

North W

ilmingto

n Bran

ch

Rehobo

th Bea

ch Pub

lic Lib

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Seafor

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rict L

ibrary

Selbyv

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Smyrna Pub

lic Li

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South

Coasta

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Susse

x Cou

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Energy An$wers Program• Energy An$wers for Home Appliances (as of 1/31/08)

– 4,577 Participants (Kent – 643; Sussex – 1286; New Castle – 2648)

– $735,289 total funds paid - $260,400 reserved– Average grant per applicant - $160– 8,333 Appliances– Estimated savings = 28,413,290 kWh lifetime – The Results:

• The cost of appliance efficiency $0.03/kwh• The cost of delivered power $0.14/kwh• CO2 not emitted 39,000,000 lbs • NOx not emitted 100,000 lbs • SO2 not emitted 320,000 lbs

Energy An$wers ProgramThru 1/31/08

550

1082

177

1993

873550

3108

0500

100015002000250030003500

Refrige

rators

Freezer

sTop

Load w

asher

Front lo

ad wash

erWind

ow A

CCent

ral A

CHot

water ta

nks

Energy An$wers Program• Energy An$wers for Business

– up to $100,000 per facility or $200,000 per businesses

– Must be engaged in business in Delaware and located in Delaware.

– Grants will not buy down any project with an 18-month or less simple payback

• Results as of 1/31/08– 11 Completed Projects totaling $365,000– 20 Pending projects potentially reserving an

additional $850,000 in grant funds– Total Application and Pending Projects $1.215M

Sustainable Energy Utility (SEU)

• New program designed to promote efficiency and customer cited renewables (PV, geo, wind)

• Unique approach - all fuels; all sectors• Private sector bonds used to capitalize initial

program• Shared savings model for long term• Average Yearly SEU Energy Efficiency

Spending: 2008-2010 projected $6.7 million for Residential Commercial/Industrial and Transportation (Source: UD CEEP, March 2007)

Regional Greenhouse Gas Initiative (RGGI) Background

• Designed to reduce CO2 emissions from fossil fired energy generating facilities

• 10 state Governor’s collaborative initiative• Delaware an original signatory state• “Cap and trade” program similar to NOx and Acid rain

programs already in place.• Stabilization of CO2 emissions thru 2015; 10%

reduction from current levels by 2019• Regulations being promulgated in 2008• Statutory change required to handle sale of CO2

allowances – SCR 28 Workgroup• Bill required this session for DE to participate - SB 263

Cap and Trade Basics• Successfully used previously for NOx and SOx• Proven technique – reductions at lowest possible cost• Ideal for use with “global” pollutant• How it works:

– Agree to a baseline (avg. annual emissions from 2000-2002)– Tally up all emissions (188 MMT in 10 states; 25+ MW power

plants)– Agree on a cap (stabilization to 2015; 10% by 2019)– Create and allocate “allowances” (via regulations in each

state)– Disburse allowances (allocate 40%, auction 60%?? )– Regulation requires generators to have allowances to “cover”

emissions– Reduce your emissions, trade or purchase allowances as

needed– Periodically surrender those allowances to stay in compliance

RGGI Specifics

• Auctioning of allowances - beginning at 60% in 2009 ramping up to 100% in 2013 – requires legislative approval

• Auction proceeds to:– Energy efficiency and renewables through the Sustainable Energy

Utility– Low income programs– Carbon abatement fund– Administrative expenses

• 1-2% increase in avg. energy price possible by 2015• Rate payer impacts mitigated by efficiency investments and low

income programs• Costs dependent on markets and allowance prices• Jump start on federal program (likely not until 2015)• Comprehensive Review of Program in 2012• Delaware enabling legislation required this year

RGGI Revenues for Efficiency?

• Using a base of 6.4 million allowances– At 60% auction level and $2 allowance

price = $7.7 million• With 65% to the SEU = $5 million/yr

– At 100% auction level and $2 allowance price = $12.8 million

• With 65% to the SEU = $8.32 million/yr– Other allowance prices yield other results

2004 Energy Efficiency Spending By StateWith and Without RGGI Revenue

Source: ACEEE 2007

0

5

10

15

20

25

Vermont

Oregon

Washington

New H

ampsh

ireNew

Jersey

Maine

Wisconsin

DELAWARE WITH R

GGI (#15)

Hawaii

Idaho

Washington DC

Texas

Nebras

kaOhio

New M

exico

Michigan

South Dakota

West Virg

iniaIndian

aIlli

noisMiss

ouriGeo

rgiaOkla

homaLouisi

ana

DELAWARE (#50

)Pe

r Cap

ita S

pend

ing

($)

$7.65$7.65