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NYS Looks to Change Utilities’ Role in Energy Projects

Energy Manager Today, November 10, 2016

Last week, a mandated report entitled “Energy Efficiency Metrics and Targets Options Report,” which was written by the Clean Energy Advisory Council, was released.

The report draws heavily on work by Energy Innovation, a think tank based in San Francisco. Michael O’Boyle, a Sector Transformation Expert with the firm, told Energy Manager Today that the changes under consideration are significant. “They want utilities to serve as market makers and provide platforms for distributed energy resources to provide enhanced electric service and more choice and cleaner electricity for customers in New York,” he said.

The key is the focus on enabling and encouraging the transition to new and more efficient equipment. From a high level standpoint, the idea is to make it more profitable for utilities to encourage projects than for them to invest in new utility infrastructure, which O’Boyle says is the way the system works now. The utilities will take on the role of market makers and facilitate deals which would directly or indirectly encourage energy efficiency.

The proposed approach is best illustrated through an example. Under the current system, a manufacturing company interested in retrofitting its plant with an energy efficient HVAC system would reach out to a vendor and seek incentives from the utility. The amount of incentives, however, may be depressed due to the age of the current equipment. If its end of life was five years in the future, the amount allotted in incentives would be less. The logic is that the company is close to a replacement anyway, so it is entitled to proportionately less money in incentives.

The proposed approach turns that dynamic on its head. The age of the equipment being replaced and other details become irrelevant. The new role of the utility would be to proactively link the HVAC vendor and the potential customer. In this vision, the emphasis is on achieving energy efficiencies, not debating every nickel and dime. “This approach steps beyond that and empowers the utility to innovate and find partners that can maximize energy savings no matter where coming from,” said O’Boyle. The new equipment would be more efficient and, therefore, the company which would pay less for energy.

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