Ex Ante Review of the SBD Program

1. Ex Ante Review of the SBD Program Energy Division Staff and Contractors Energy Efficiency Industrial/Agricultural Programs and Portfolio Forecasting California Public Utilities Commission June 10, 2015

2. Ex Ante Review-SBD Program • Speaker: • Peter Lai, CPUC Custom Projects Ex Ante Review Lead • Jeff Hirsch, CPUC Staff Consultant • Keith Rothenberg, CPUC Staff Consultant • Documents for this presentation: • ftp://deeresources.com/2013-14_ExAnte/ • CPUC_2015-06-10_Meeting-Presentation_SBD ExAnteReview.ppt • Background on Savings By Design Issues 2015-06-04.docx

3. Topics for Discussion • Program Influence • Eligibility Issues • Modeling Tools for Building Projects • Industrial / AG New Construction Projects

4. Overview of Ex Ante Review Process Deficiencies For all custom projects, D.11-07-030 requires that: • Pipeline projects shall not have signed incentive agreements before CPUC Staff have an opportunity to select or waive a project via the bi-monthly CMPA project list submission.

5. D.11-07-030 requirements • For projects selected for ex ante review, CPUC staff must have an opportunity to review and approve complete project documentation including ex ante savings estimates before incentive agreements are executed by the PA. PAs can choose, after submitting complete project documentation to move forward with the project with the understanding that the outcome of the Commission staff review and approval will become effective as if the project was waiting for the outcome.

6. Project installation shall not begin: • For all SBD projects • Until appropriate documentation allowing review of ex ante estimates has been compiled into the PA CMPA, • Ex ante savings parameter estimates have been developed and reviewed by the PA, • If the project has been selected for ex ante review, the complete project documentation has been uploaded to the CPUC CMPA such that Commission Staff have an opportunity to review project documentation and approve ex ante values or waive further review.

7. Project installation shall not begin: • Until a PA/customer agreement has been executed by both parties. • Applies to all projects whether selected for EAR or not selected for review. • Any exception to this for CPUC Staff selected projects shall be approved in advance by CPUC Staff.

8. SBD Program Key Areas of Deficiency Identified in Ex Ante Review

9. Deficiency Area 1: Lack of Evidence of Program Influence • New construction programs are designed to intervene in the design process and cause a change in the design so that it is more efficient. The SBD program has several key steps that ensure there is Program influence in guiding the customer to adopt more efficient design measures.

10. SBD Steps • Confirming that design changes are feasible and establishing initial energy efficiency targets for the project; • Working with participants to determine how to optimize the energy efficiency of the project; • Utility staff or contractors analyzing design documents and recommending energy efficiency enhancements and upgrades by comparing alternative systems and design options;

11. SBD Steps (con’t) • Prior to the customer ordering, purchasing, and/or installing the selected energy efficient options, the program administrator issues an Incentive Agreement to the Owner delineating the proposed project details, estimated incentive amounts, and terms and conditions.

12. Deficiency Area 1 Requirements • PA documentation must contain evidence of program influence. For CPUC selected ex ante review projects, before initial CPUC review is completed: • Incentive agreement must not be signed. • Construction must not have begun without CPUC Staff exception.

13. Area 1: Requirements • Documentation includes incentive agreement and evidence that it has been executed prior to project construction beginning. • CPUC Staff reviewer will reject projects which do not conform to these requirements • PA’s internal reviewers must also enforce these requirements

14. Deficiency Area 2: Eligibility Issues Based upon the SBD program handbook and CPUC expectations for the approved SBD program, the PA must: • Analyze design documents and recommend energy efficiency enhancements and make efficiency upgrade recommendations by comparing alternative systems and design options.

15. Area 2: Eligibility Issues • Provide an ex ante savings estimate prior to executing an incentive agreement. • Execute an incentive agreement before construction begins on the project. • Ensure all eligible measures exceed Code or Standard practice. • Often CPUC reviews do not see any evidence that these requirements have been followed.

16. Deficiency Area 2: Requirements PA documentation contains evidence of eligibility including: • A dated summary and analysis of the various alternatives proposed by the PA to the customer, with detailed descriptions, energy savings, incentive offers, simple paybacks, etc. • Ex ante savings estimates are provided prior to executing the incentive agreement;

17. Area 2: Requirements • Incentive agreement is executed before construction begins; • All eligible measures exceed code or ISP, and code or ISP is used as the baseline. • CPUC Staff reviewer will reject projects which do not conform to these requirements; • PA internal reviewers must also enforce these requirements.

18. Deficiency Area 3: Modeling Tool Usage • The building modeling activities (either via compliance software or SimCalc) appear to use some compliance building assumptions such as operating schedules and equipment set points or control parameters rather than schedules and parameters in agreement with DEER building types and/or actual building operation, as appropriate.

19. Modeling Tool Deficiencies • The peak demand used in the modeling tools does not always align with the DEER peak demand definition. • For building lighting only projects and system method calculations, deviation from DEER assumptions and methods should only be allowed when the building type does not match one included in DEER and those cases require post construction M&V.

20. Modeling Tool Deficiencies • Generally, post construction true-up of installed measures including, for cases of whole-building modeling not using deemed (i.e., DEER) assumptions, their operating parameters and conditions is required for all custom projects to support the over-ride of DEER assumptions adopted by the CPUC.

21. Modeling Tool Deficiencies • Lighting only projects are not expected in SBD and such projects are not allowed to use non-DEER methods or assumptions, therefore SimCalc (or other compliance software) appears not to be allowable for lighting only projects if such are allowed in SBD.

22. Modeling Tool Deficiencies • Technologies not approved for T24 performance trade-off (such as VRF and mini-split systems) need to be submitted for review and approval prior to use in savings calculations or must remain neutral between the standard and proposed cases.

23. Modeling Tool Deficiencies • Technologies that are acquired via an upstream program activity must remain neutral between the standard and proposed cases. • i.e., HVAC

24. Modeling Tool Deficiencies • Standard practice studies and standard practice determinations are not consistently (and in some cases not at all) following the requirements in the ISP Guidance document published on the CPUC ex ante webpage. • Building level such as Hospitals and Data Centers • Project specific technology determination such as process equipment (plastic extrusion machines)

25. Modeling Tool Requirements • Deviation from DEER assumptions and methods only allowed when the building type does not match DEER. • Require post construction M&V when not using deemed assumptions. • Lighting only projects are not expected in SBD. • Technologies not approved for T24 performance trade-off need to be submitted for review.

26. Modeling Tool Requirements • Technologies that are acquired via an upstream program activity must remain neutral.

27. Industrial / AG New Construction

28. Ind/Ag Project Challenges • Generally energy codes do not apply but often AQ or other regulatory requirements do apply. • Projects are often unique. • Projects are often highly technical • The PA should ensure staff or consultants with appropriate experience and expertise are made available to offer the customer assistance to increase the efficiency of their design.

29. Ind/Ag Project Challenges • Need to establish industry standard practice for baselines. • Need to establish customer standard practice for eligibility screening. • Larger customers often have other similar facilities, and they may be implementing similar measures elsewhere (i.e., the decisions were made before any applications to program and program influence is not a factor).

30. Ind/Ag Project Deficiencies • Simply taking a set of design documents and documenting savings impacts of an already planned design is not an acceptable approach, and is a poor use of ratepayer money • Opportunities for project enhancement must be explored for project eligibility.

31. Ind/Ag Project Deficiencies • CPUC staff understand that it can be costly for the PA to hire consultants with the correct process experience, to review designs on complex projects and create lists of alternative measures for customers to consider.

32. Ind/Ag Project Deficiencies • In many cases the customer may not adopt recommendations and the fees that were paid to the consultants cannot be recovered. The program administrators should consider passing on these kinds of projects, where there is no significant commitment from the customer to actually deviate from their plans.

33. Requirements Industrial / AG New Construction • Same as other New Construction projects-program influence, eligibility, with added attention to ISP or CSP baseline documentation.