Stop Conforming to Waste

Two weeks ago, I wrote that efficiency programs are designed to be evaluated. They are not designed to be effective. That quote, or paraphrase, came from the great Val Jensen, Exelon’s Senior VP of Strategy and Policy, as spoken at AESP’s 2019 Annual Conference. Val is great because he is genuine, authentic, and tells it like it is, at least as far as a utility spokesperson can take it. I’d love to hear him if we could remove his utility filter. That would be fantastic. There would be sufficient material for thousands of Rants.

Like many things with which I agree or decisions I make, I need to stop, think, and articulate the sentiment so readers understand. Mr. Jensen may be coming from different angles than I, but I will certainly give you clear reasons why efficiency programs are designed for evaluation and not effectiveness. This will be the culmination of many things I mentioned the last two weeks in Pay for Performance discussions.

Evaluators are at the front line of the firing squad featured in last week’s gauntlet. They conform to 1970s orthodoxy that:

• Efficiency must cost more than inefficiency.
• Building energy codes are sacrosanct.
• Efficiency has to be the primary factor in customer decision making.
• Customers must “get their money back”.
• The unfamiliar gets fifty cents on the dollar.
• Immortality is fantasy.

Whoa! These subjects may require more than one post.

Efficiency Must Cost More

Every program or portfolio I am aware of dictates that the efficient option must cost more than the inefficient alternative. As my mother used to say, “if you [that’d be me] put your mind to it,” I could think of at least a hundred cases where efficiency costs less than inefficiency, but allow me to indulge just a few.

But let me not assume anything. Programs promote spending more, and if it doesn’t cost more, it isn’t eligible for incentives. In many cases, efficiency costs less, and therefore, programs encourage precisely what they should not – spending more customer money and more ratepayer money. Does this make any sense?

Lighting

First, we have lighting, the spine of every portfolio, which I have witnessed my entire career to be incentivized to waste energy and cost more. Or, for new construction, numbers have to be finagled to produce a higher cost so an incentive can be paid. How can this be, Jeff?

Lighting replacement projects get prescriptive incentives – the more you spend, the more you “save.” NOT! Designers are encouraged to pack as many lights into a space as possible. For every unnecessary light, the clapping seal gets a herring.

Programs are not designed to be effective.

You can see the flip side for new construction. A smart lighting design that delivers only the light that is needed, where it is needed, probably costs less because fewer fixtures are required. It costs less! But it has to cost more, so tricks are played to justify the incentive based on a rationalized higher cost.

Programs are not designed to be effective.

Heating, Cooling, Etc., Equipment

A second case involves something similar: oversized equipment. Every heating system ever installed since 1900 is oversized by 30%-200%. The 200% oversized, or three times the capacity needed, were typical of the mid-20^th century. These plants still exist because the boilers never die (refer to immortality). Designers and installers less-egregiously oversize modern-day equipment by a mere 30%.

True story: a Northeast utility issued an RFP that included getting to the bottom of disparate furnace and boiler savings. They had received a couple evaluations that produced somewhat different results, but not vastly different. Both of those evaluations diverged substantially from the Technical Reference Manual (TRM) prescribed impacts. They asked for elaborate, painstaking, six-ways-to-Sunday analysis this time. Whoa! Call off the dogs.

Analysts determine TRM savings assuming equipment is properly sized. Savings are directly proportional to heating capacity. Therefore, the more heating capacity installed (cost), the greater the savings, according to the TRM. This, of course, is rubbish. Therefore, programs reward wasted capital cost, and some energy loss, by promoting oversized equipment, when just the opposite should happen. The program should reward lower first cost and better efficiency by promoting good design practice.

Programs are not designed to be effective.

Building Energy Codes are Sacrosanct

Building energy codes form the basis of savings in a portfolio. Savings are determined using the difference between what the law requires and what someone purchased out of their brilliance. This becomes more of a farce with every new energy code going back to 2004.

I submit that commercial and residential new construction programs are 80% ineffective, taking credit for the sunrise. Customers are rewarded for what their designers and contractors do all the time. Whose fault is this? The 1979 mindset of the evaluation and regulatory communities not getting it.

Consider building automation systems. These nerve centers collect thousands of points of input and deliver thousands of commands for things like valve and damper position, temperatures, and so forth. These are dumb systems, folks. They merely do what someone programs them to do. How is this done? Like it’s always been done, which includes various levels of bad.

If we were to take such a system and add a few points, review the programming algorithms to optimize them, and then ensure it’s all done right, ninety-plus percent of evaluators would claim that is all free rider because the contractor should be doing it anyway.

Well. They. Do. Not.

Programs are not designed to be effective.

To be continued.