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How to MakeENERGY
EFFICIENCYWork for YOU
presented by Chris Allwein, Gary A. Swanson and Jon WilliamsOCTC Annual Conference - May 3, 2016
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General Definitions
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Using less energy to provide the same service”
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Managing and restraining growth in energy consumption”
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Contrast with “Energy Conservation”
minimizing activity or going without a service
to save energy
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Ohio Law
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Energy efficiency means reducing the consumption of energy while maintaining or improving the end-use customer’s existing level of
functionality
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Ohio law requires electric distribution utilities to: “…implement energy
efficiency programs that achieve energy
savings….”
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Energy efficiency must be COST EFFECTIVE
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How to Make EE “Work” for YOU
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Ensure adequate, reliable, efficient +
reasonably priced service
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Diversity of supplies + suppliers
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Facilitate State’s effectiveness in the
global economy
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more specifically…
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Encourage development of distributed + small generation facilities
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Encourage demand-side management
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Encourage use of energy efficiency programs by
small businesses
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Utilities offer incentives for
customer energy efficiency
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How EE Works for Businesses
OCTC ConferenceAEP Ohio Energy Efficiency
Combined Heat and Power &Continuous Energy Improvement
OpportunitiesMay 3, 2016
Overview• AEP has over 5 million customers in 11 states
served by 7 operating companies: AEP Texas, SWEPCO, PSO, Appalachian Power, Kentucky Power, I&M and AEP Ohio.
• AEP Ohio serves 1.5 million electric customers.• Industrial customers:
– 37% of retail electric sales are industrial. – 45% of 2014 business energy savings from industrial.
The Big Picture for Energy Efficiency and AEP Ohio• Customers and AEP Ohio win:
– Financial benefits 3 to 4 times greater than costs– Lessens the demand overall on the system benefitting
pricing– Lowers participant costs through energy/demand
savings• The Law: SB 221, SB 315, SB 310• Changes could be coming in the Standards/Mandates • Opportunities for customers
The Big Picture
• Prescriptive Programs• Custom Program• Custom Program - CHP/WER• New Construction Program• RetroCommissioning Program (RCx)• Self-Direct Program• Express Program for Small Business Customers• Data Center Program• Continuous Energy Improvement Program (CEI)
Energy Efficiency Programs…for AEP Ohio Business Customers
Combined Heat and Power/Waste Energy Recovery
(CHP/WER)
• Application Process• Incentive Structure• Summary of Benefits
Summary of Approved CHP Projects – Solvay and Kraton
CHP/WER Application Process
• Individual joint filings with the PUCO• Customer information requirements• Commitment agreement• Cost effectiveness• Supporting attachments
CHP/WER Incentive Structure
• Solvay and Kraton - $0.005/kWh metered net generation for 5 years
• Total $0.025/kWh• No penalties or up front payments• For these and other projects, individual
review of incentive payments/structure• Future Plan considering parameters.
CHP/WER Benefits• Solvay and Kraton combined:
– 89,429 MWhs and 10.8 MW CHP generation– $2.2 million incentives projected over 5 years
• Can be highly cost effective from the electric distribution utility view
• Typically limited to large customers with high process loads or specialty circumstances for waste energy recovery
CHP/WER Program Assessment2017 – 2019
CHP/WER Potential Planning
Units per Year Per Unit Capacity (MW)CHP Plant Size 2017 2018 2019Large 1 1 1 7.1Medium 2 2 2 3.6Small 3 3 3 0.3
Cumulative Annual Savings 2017 2018 2019Energy (GWh) 106 212 318Peak Demand (MW) 15 30 45Capital Costs – Total (2017 – 2019) $89 million Program Costs – Total (2017 – 2019) $10,262,662 Incentives (for five years) $9,540,000 Marketing $38,160 Internal Labor/Admin $190,800 Materials/Other $0 Evaluation $493,702 Cost-Effectiveness Tests Ratio (2017 – 2019)TRC 1.3PCT 1.0
CHP/WER Analysis Results: 2017 – 2019 Installations
UCT 34.0
CHP/WER Program Design Considerations
• Cost effectiveness• Utility incentives can help with final
decision, but other reasons must be major drivers
• Initial assessments need to define good projects
• Economic development is key
Continuous Energy Improvement (CEI) Program
• Process• Performance Measurement• Focus – Low Cost/No Cost• Results• Customer Feedback• Economic development (again) is key
PlanningEnergy PlanMaster CalendarTeam reportsAssessment
Management InvolvementAssign Executive SponsorAssign Energy Champion Energy Policy & GoalsForm Energy Team
Employee EngagementEvents Employee ideasCommunicationsTraining
Improvement ProcessOpportunity RegisterPrioritizing projectsEnergy ScansEnergy Audits
MeasurementBaseline dataMT&R modelAnalysisCommunications
Energy Team
CEI Process
Performance Tracking Using Energy ModelCumulative sum of differences (CUSUM)
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• Turning equipment off when not needed – Difficult to change behavior, but this is the #1 opportunity
• Fixing compressed air leaks• Compressed air system optimization• Production scheduling optimization
– Maximize operational equipment efficiency• Formalizing equipment shutdown procedures
– During low production periods, weekends, and evenings• Improving process yield• Delamping
Low / No Cost Measures
2014 CEI Results
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37 Participants Cohorts 1-4
Realized 40.2 Million KWh saved in first year
130% above our target
savings $3,217,835 annual electric bill
savings (@ 8 cents/kWh)
Paid $804,460 incentives
(@ 2 cents/kWh)
2015 CEI Results
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37 Participants Cohorts 1-4
Realized 54.7 Million KWh
saved in second year
35% increase over Year 1
+14.5 Million KWh $4,377,240 annual
electric bill savings (@ 8 cents/kWh)
Paid $1,094,310 incentives
(@ 2 cents/kWh)
2016 Status Report
- Manufacturers - Hospitals - Universities
Cohorts 1-437 Companies
Projecting58 GWh
Cohorts 5-863 Companies
Projecting 47 GWh
Projecting 105 GWh Savings
100 Total CEI Participants
CEI Customer Testimonials“CEI has also given us metrics we have not had before. In past all we had is our bills and now we have a model to predict our usage.”
“ A great process for developing our Energy Management Program.”
“Looking forward to working with AEP on engaging management & staff to realize additional energy savings.”
“I appreciate the discussion from different companies. Very open, and we all realize we are on the same journey.”
92% Customer SatisfactionEnergy Savings beyond ElectricityOther O&M savingsEnergy Intensity ReductionsMore Competitive More ProductionSustainabilityBeyond the Commodity and Vendor to a Partnership
Building Better Relationships
Your Trusted Energy Advisor
OCTC Annual ConferenceMay 3, 2016
Presented by: Gary A. Swanson, PEEnergy Management Solutions
Energy Management Solutions
Offices in Ohio, Chicago and MinneapolisAudited over 10,000 FacilitiesSaved Customers Over $500,000,000 in Energy Costs100% Independent100% No RiskProfessional Engineers in Ohio175 Industrial Sites in Ohio Alone95% of work
Energy Opportunities
• Low Hanging Fruit Already Picked?Fruit does grow backThere are new technologies to pick higher fruit
• Most customers can still reduce costs by 30%Rebates (last three years)New TechnologiesProcurementDR
• Nearly 50% of the states have rebate programs
Case Study: Plant 1
• Electric Usage – 50,000,000 kWh • Demand – 6.5 MW• Annual Energy Cost - $3,000,000
Procurement – $0.015/kWh ($750,000/yr)New Tariff – GS4 vs. GS3 ($250,000/yr)Locked in future electric rates less than today’s rate through 2019 ($750,000)Build Substation ($400,000/yr @ 9 MW)
Rebates & Incentives - Plant 1
• $832,000 in rebatesProductivityLightsMotors/DrivesAir CompressorsPast 3 years of projects (Mercantile or Self-Direct)
• Total $1,852,000 or 62%
Case Study: Plant 2• Demand – 1.5 MW• Annual Electric Cost - $100,000• Procurement = $20,000• DR = $42,000• Rebates = $38,000• Total = $118,000 • 118% of Annual Energy Cost
Rebate Examples
• Productivity – Reduced energy intensityCustomer saved 16,000,000 kWh$720,000/yr energy savings$518,000 rebate
• 4,000 HP Motor with DriveSaved 9,630,000 kWh$298,000 rebate$433,000/yr (< 1 year payback)
Quick Payback Drives
• 250 HP Drive – 30% Savings @ 8760 hr515,917 kWh savings$23,216/yr savings$25,000 installed cost1.07 year payback before rebateRebate = $18,750
• 3 Month payback after rebate
Case Study: Air Compressor Project
• Controls alone $22,000 cost & potential for $50,000 rebate.Normal Rebate may only be 50% or $11,000This case < 1 yr. Payback = $0 rebate
• Need to look at whole systemAdded dryer upgrade to the total compressed air improvementsResulted in $125,000 rebate
Quick Payback Drives• Two 750 HP drives on fans
No amp savings may result in no Rebate• Look at whole picture - CFM or production
basisCFM had increased Compared kWh/CFMResulted in $53,000 rebate
Rebate Examples – Outside the Box
Drives Replacing Older Drives - $58,000 Do not always qualify – Data log
Nitrogen Rental Equipment - $78,000 Long term lease
Transformers - $128,000 RebateLED Lights – LED TubesLeave No Stone Unturned Customer found $75k in rebates (Lights-Drives) Other stones uncovered resulted in an additional $750k
Know the Rules!
• No rebate with less than 1 year paybackAll costs included? Install, engineering, disposal…
• Max 50% to 75% of project costsIncluded all costs?
• Review Specific Programs with Each UtilityEach utility has different criteria for their programs
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State Law + State Policy Encourage Energy Efficiency
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Efficiency Beneficial to
Utility + Customers
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Potential for Savings + Incentive
Beyond “Low-Hanging Fruit”
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Thank You!Christopher J. AllweinKegler Brown Hill + [email protected]/allwein614.462.5496
Jon WilliamsAEP Ohio, ManagerEnergy Efficiency/Demand [email protected]
Gary A. Swanson, PEEnergy Management Solutions, [email protected]
