Utility Industrial Energy Efficiency Programs in the Southwest
Industrial customers account for a significant percentage of electricity consumption in the Southwest states, ranging from 16 percent in Arizona to 58 percent in Wyoming. All of the major electric utilities in the Southwest have programs to help industrial and other large customers improve the efficiency of their electricity use. These programs help the utilities achieve their energy saving goals while helping industrial customers to stay profitable and competitive.
SWEEP’s Role in Utility Industrial Energy Efficiency Programs
SWEEP encourages the electric and gas utilities in our region to adopt best practice programs to help industrial customers reduce their energy consumption through improved efficiency. We do this through on-going dialogue with each utility’s commercial and industrial demand-side management (DSM) program manager, and through providing comments on the utilities’ new DSM plans as they are being developed and finalized.
Best-Practice Programs and Southwest Examples
Here is a menu of industrial energy efficiency programs, progressing from basic to more advanced and sophisticated.
- Prescriptive incentives. The best industrial energy efficiency programs offer prescriptive incentives for a variety of common measures including premium efficiency motors, efficient air compressors, refrigeration equipment, etc. For example, Xcel Energy’s prescriptive incentives are listed here.
- Custom incentive program. Ideally, a custom incentive program should be integrated with high-quality technical assistance (e.g. energy assessments), using contractors with good industrial expertise. This type of integration helps the customer identify new measures, and makes the process of applying for custom incentives more user-friendly. Another best practice for custom measures is to allow up to two years for the completion of larger projects, once the incentive is offered. Salt River Project’s technical assistance and custom energy efficiency business rebates program is a good example of integrating technical assistance and custom incentives.
- Self-direction program. Self-direction programs allow larger customers to use a portion of their own energy efficiency program fees to fund on-site energy efficiency projects. This type of program can be a good option if large customers are threatening to “opt-out” from paying the energy efficiency fees entirely. A good self-direct program should require that the utility or program administrator approve the customers’ projects in advance, and should also require customers to verify the energy savings after projects have been implemented. Xcel Energy and Rocky Mountain Power each allow larger customers to choose self-direct vs. custom incentives for any given project; the self-direct option pays higher incentives but requires the customer to do all the up-front and post-implementation analysis of energy savings. Read more on Xcel Energy’s Self-Direct program here.
Those are the basic programs, which we recommend establishing as a foundation. We also suggest that utilities adapt and market these programs for specific industrial sectors, as appropriate. In addition, we suggest that utilities consider these additional programs as new demand-side management plans are developed:
- Industrial re-commissioning. This program is similar to commercial re-commissioning, but it focuses on industrial systems such as compressed air, refrigeration, process cooling, and pumping, and requires good contractor(s) with industrial expertise. Learn more about Rocky Mountain Power’s industrial re-commissioning program, and read SWEEP’s recent report on industrial re-commissioning.
- Industrial trade ally program. This type of program identifies common custom projects for small or medium-size industrial or agricultural customers, and employs a streamlined process to get them approved quickly and smoothly. This program also requires good contractors/trade allies with industrial expertise. Learn more about Rocky Mountain Power’s trade ally network through this presentation on the program’s highlights.
- Technical assistance with multi-year planning. This type of program is an enhanced version of technical assistance integrated with the normal prescriptive and custom incentives. These programs provide a comprehensive energy assessment to identify opportunities, using a contractor with strong industrial expertise. Then the utility/contractor works with the customer to develop a plan for implementing some or many of the recommendations over a two or three year period, with the help of the utility’s incentives. For example, learn more about Xcel Energy’s Process Efficiency program.
- Energy project manager (EPM) co-funding. This program provides incentives to pay for all or part of an energy manager’s salary, based on projected energy savings. Part of the incentive can be paid up-front, and the remaining incentive amount is paid at the end of the 12- or 18-month performance period, based on actual energy savings. For example, learn more about Rocky Mountain Power’s Energy Project Manager Co-funding program, and read SWEEP’s recent report on energy manager co-funding programs.
- Strategic energy management (SEM). SEM programs provide training and coaching to help customers develop systems for continuous improvement in energy management. Training in SEM principles can be provided to customers individually or through a group/cohort of 10-15 customers. Most SEM programs also provide incentives for operations and maintenance (O&M) savings achieved during the 2- or 3-year performance period. Highlights of Rocky Mountain Power’s SEM program are provided in “Utility SEM Programs from the Southwest,” an ACEEE Summer Study paper co-authored by SWEEP. Xcel Energy also provides SEM training on an individual customer basis through its Energy Information Systems program. SWEEP’s 2013 SEM report provides a good introduction to and overview of SEM programs.