Experience you can trust.

Californial Industrial Energy Efficiency PotentialCALMAC/MAESTRO MeetingSan Francisco, CAJuly 27, 2006

Fred Coitofred.coito@kema.com

2

Acknowledgements Key study contributors: KEMA, LBNL, Quantum

Consulting Study funded through the California public goods

charge for energy efficiency Managed for the CPUC by PG&E Review and input from the California IOUs

– PG&E

– SCE

– SCG

– SDG&E

3

Types of DSM Potential

Achievable Program

Technical

Economic

Naturally Occurring

Technical – complete penetration of measures analyzed in applications where deemed technically feasible from an engineering perspective.

Economic – technical potential of measures that are cost-effective when compared to supply-side alternatives

Achievable Program – subset of economic potential captured with specific program funding and measure incentive levels (Incorporates real-world customer behavior)

Naturally Occurring – the amount of reduction estimated to occur as a result of normal market forces, that is, in the absence of any utility programs

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Estimating DSM Potential

Building DataEnd Use Saturation

End Use ConsumptionLoadshapes

Building ft2, # Homes

Building DataEnd Use Saturation

End Use ConsumptionLoadshapes

Building ft2, # Homes

Measure DataCosts

SavingsCurrent Saturation

Measure DataCosts

SavingsCurrent Saturation

Program Data and

Adoption Inputs

Economic Potential

Economic Potential

TechnicalPotentialTechnicalPotential

NaturallyOccurring Efficiency

NaturallyOccurring Efficiency

Model InputsModel Inputs

Sc en ar io sEconomic Data

Avoided CostsRates

Discount/Inflation Rate

Economic DataAvoided Costs

RatesDiscount/Inflation Rate

Program PotentialProgram Potential

(Achievable)

5

Key Inputs Measure data

– Costs, savings, applicability, saturation– Source: LBNL-process measures, KEMA-lighting/HVAC

Industrial energy consumption data– Electricity and natural gas use by end use and industry– Utility billing data, MECS, Program evaluations

Economic data– Avoided costs, energy rates, discount rates, inflation rate– CPUC avoided cost study, CEC rate forecast, current California

assumptions

Utility program data– Budgets, accomplishments, goals– California utilities

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Measures

Process HVAC LightingHE equipment HE chillers/DX T8-EBControls Controls CFLsO&M Tune-ups ControlsSystem optimization Window filmEfficient processes Insulation OtherASDs Heat exchangers Power recoveryProper sizing ENERGY STARLoad control TransformersInsulationHeat recovery

7

Baseline Energy Consumption

0 1,000 2,000 3,000 4,000 5,000

Food

Textiles,Apprel

Lumber,Furniture

Paper

Printing

Chemicals

Petroleum

Rubber,Plastics

Stone,Clay,Glass

Prim Metals

Fab Metals

Ind Mach

Electronics

Transp Equip

Instruments

Misc.

GWh

0 500 1,000 1,500

Food

Textiles,Apprel

Lumber,Furniture

Paper

Printing

Chemicals

Petroleum

Rubber,Plastics

Stone,Clay,Glass

Prim Metals

Fab Metals

Ind Mach

Electronics

Transp Equip

Instruments

Misc.

Million ThermsNote: ~ 50% of Petroleum use is as feedstocks

Electricity Natural Gas

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Baseline Energy Consumption

Proc Heat11%

Proc Cool8%

Pumps15%

Fans8%

Comp Air9%

Proc Drives21%

Proc Other2%

HVAC11%

Lighting10%

Other5%

Boiler40%

Proc Heat46%

Other Process Use

2%

HVAC7%

Other5%

Excludes gas used for feedstocks

Electricity Natural Gas

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Estimated Technical and Economic Potential

FuelTechnicalPotential

% ofBase Use

EconomicPotential

% ofBase Use

Electricity

GWh 5,485 17% 4,973 15%

MW 755 16% 657 14%

Natural Gas

Mth 469 13% 468 13%

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Technical and Economic Potential

2,411

2,762

311

2,200

2,495

278

0

500

1,000

1,500

2,000

2,500

3,000

3,500

PG&E SCE SDG&E

GW

h

TechnicalEconomic

11

Technical and Economic Potential

328

381

46

287

330

40

0

50

100

150

200

250

300

350

400

450

PG&E SCE SDG&E

Peak

MW

Technical

Economic

12

Technical and Economic Potential

211229

29

211229

29

0

50

100

150

200

250

300

PG&E SCG SDG&E

Mill

ions

of T

herm

s pe

r Yea

r

TechnicalEconomic

13

Technical and Economic PotentialElectricity Natural Gas

0 500 1,000 1,500 2,000

Compressed Air

Fans

Pumps

Drives

Heating

Refrigeration

Cooling

Lighting

Other

GWh per Year

TechnicalEconomic

0 50 100 150 200 250 300

Boilers

HVAC

Process Heat

Millions of Therms

TechnicalEconomic

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Electricity Supply Curve

O&M cost savings are not included.

$0.00

$0.05

$0.10

$0.15

$0.20

$0.25

$0.30

$0.35

$0.40

$0.45

$0.50

0% 2% 4% 6% 8% 10% 12% 14% 16% 18%

Savings Potential as a % of Base Energy Use

Leve

lized

$/k

Wh

Save

d

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Natural Gas Supply Curve

O&M cost savings are not included.

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

0% 2% 4% 6% 8% 10% 12% 14%

Savings Potential as a % of Base Gas Use

Leve

lized

$ p

er T

herm

Sav

ed

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Program Funding Scenarios

*Incentives are not paid on equipment maintenance measures.

Program Budget Components % of Measure Funding Scenario Administration Marketing Incentives Total Cost Paid*

Electricity Base Achievable $5.2 $12.7 $16.1 $34.0 20%-60% Advanced Achievable $7.5 $14.3 $30.1 $51.9 45%-90%

Maximum Achievable $7.1 $15.9 $54.4 $77.4 100% Natural Gas Base Achievable $1.3 $1.7 $2.1 $5.1 50%-70% Advanced Achievable $3.9 $3.2 $6.8 $14.0 75%-85% Maximum Achievable $8.6 $5.7 $14.9 $29.3 100%

Average Expenditures Over the 2005-2016 Analysis Period in Millions of $ per Year

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Achievable Electricity Potential

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Cum

ulat

ive

GW

h/ Y

ear S

avin

gs

Maximum Achievable

Advanced Achievable

Base Achievable

Naturally Occurring

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Achievable Electricity Potential

0

50

100

150

200

250

300

350

400

450

500

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Cum

ulat

ive

MW

Sav

ings

Maximum AchievableAdvanced AchievableBase AchievableNaturally Occurring

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Achievable Natural Gas Potential

0

50

100

150

200

250

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Cum

ulat

ive

Mth

/Yea

r Sav

ings

Maximum Achievable

Advanced Achievable

Base Achievable

Naturally Occurring

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Potential Savings by Utility

Electricity Natural Gas

0 500 1,000 1,500 2,000 2,500 3,000

PG&E

SCE

SDG&E

GWh per Year

EconomicMaximum AchievableAdvanced AchievableBase Achievable

0 50 100 150 200 250

PG&E

SCG

SDG&E

Mth per Year

EconomicMaximum AchievableAdvanced AchievableBase Achievable

Cumulative net savings: 2005-2016

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Potential Savings by Industry GroupCumulative net savings: 2005-2016

Electricity Natural Gas

0 100 200 300 400 500

Food

Textiles,Apparel

Lumber,Furniture

Paper

Printing

Chemicals

Petroleum

Rubber,Plastics

Stone,Clay,Glass

Prim Metals

Fab Metals

Ind Mach

Electronics

Transp Equip

Instruments

Misc.

GWh per Year

Maximum AchievableAdvanced AchievableBase Achievable

0 10 20 30 40 50 60

Food

Textiles,Apparel

Lumber,Furniture

Paper

Printing

Chemicals

Petroleum

Rubber,Plastics

Stone,Clay,Glass

Prim Metals

Fab Metals

Ind Mach

Electronics

Transp Equip

Instruments

Misc.

Mth per Year

Maximum AchievableAdvanced AchievableBase Achievable

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Potential Savings by End UseCumulative net savings: 2005-2016

Electricity Natural Gas

0 200 400 600 800 1,000

Compressed Air

Fans

Pumps

Drives

Heating

Refrigeration

Space Cooling

Lighting

Other

GWh per Year

Maximum Achievable

Advanced Achievable

Base Achievable

0 50 100 150

Boilers

HVAC

Process Heat

Mth per Year

Maximum Achievable

Advanced Achievable

Base Achievable

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Key Measures

Electricity Measures% Base

Achievable Natural Gas Measures% Base

Achievable Pumps - System Optimization 24.2% Improved boiler insulation 35.0% T8 Lighting 12.8% Load control - boilers 26.3% Pumps - Controls 7.5% Process Controls & Mgmt – proc heat 24.0% Compressed Air - System Optimization 7.0% Maintain boilers 4.2% CFLs 5.2% Fouling control - proc heating 3.7% Pumps - ASD (100+ hp) 4.7% Improved process control - boilers 2.8% Optimization - Refrigeration 3.5% Automatic steam trap monitoring 1.4% Fans - System Optimization 2.9% Water treatment - boilers 1.2% Comp Air - ASD (100+ hp) 2.7% Process integration - proc heat 0.5% Compressed Air-O&M 2.4% Heat Recovery - proc heat 0.2% Pumps - O&M 2.3% Efficient burners - proc heat 0.1% Fans - ASD (100+ hp) 2.2% Optimize furnace operations – proc heat 0.1% Compressed Air- Sizing 1.6% Improve ceiling insulation - HVAC 0.1% Fans - Controls 1.4% EMS installation - HVAC 0.07% Pumps - Motor practices-1 (100+ HP) 1.3% EMS optimization – HVAC 0.07%

Top 15 Total 81.9% Top 15 Total 99.7%

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Electric Cost - Benefit

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

Pres

ent V

alue

in $

Bill

ions

Total Benefits

Participant Costs

Program Incentives

Program Admin and Marketing

Base Achievable Maximum Achievable

Net Benefits:$0.9 Billion

Net Benefits:$1.3 Billion

Advanced Achievable

Net Benefits:$1.1 Billion

Cumulative: 2005-2016

Value of benefits and costs over life of measures, nominal discount rate = 8 percent, inflation rate = 3 percent.

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Natural Gas Cost - BenefitCumulative: 2005-2016

$0.0

$0.2

$0.4

$0.6

$0.8

$1.0

$1.2

$1.4

$1.6

$1.8Pr

esen

t Val

ue in

$ B

illio

ns

Total Benefits

Participant Costs

Program Incentives

Program Admin and Marketing

Base Achievable Maximum Achievable

Net Benefits:$0.4 Billion

Net Benefits:$1.3 Billion

Net Benefits:$0.9 Billion

Advanced Achievable

Value of benefits and costs over life of measures, nominal discount rate = 8 percent, inflation rate = 3 percent.

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Summary of Net Achievable Potential Results

Electricity Natural Gas

Result Base

Achievable Advanced Achievable

Maximum Achievable

Base Achievable

Advanced Achievable

Maximum Achievable

Program Costs (Mil.) $317 $493 $770 $48 $126 $275

Participant Costs (Mil.) $285 $305 $247 $24 $48 $61

Avoided Cost Benefits (Mil.) $1,523 $1,946 $2,353 $497 $1,027 $1,608

Net Benefits (Mil.) $921 $1,149 $1,336 $426 $853 $1,271

Net Savings 1,706 GWh/Yr 2,284 GWh/Yr 2,748 GWh/Yr 47 Mth/Yr 122 Mth/Yr 192 Mth/Yr

216 MW 301 MW 378 MW

Program TRC Ratio 2.5 2.4 2.3 7.0 5.9 4.8

Cumulative: 2005-2016

Value of benefits and costs over life of measures, nominal discount rate = 8 percent, inflation rate = 3 percent.

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Summary and Conclusions Over the 2005-2016 period:

– Achievable electric potential: 5% - 8% of base usage– Achievable gas potential: 1% - 5% of base usage

Maximum achievable savings are 60% higher than base achievable savings for electricity and 300% higher than base savings for natural gas– Considerable uncertainty in Maximum achievable estimates, especially for

natural gas savings

Improved process controls, system optimization, and operation and maintenance measures are key components of potential savings.– These measures are more difficult to implement than typical efficiency

measures and customer adoption questions contribute to forecast uncertainty.

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Report

The full report is available at the CALMAC website(www.calmac.org)

– Main Report:http://www.calmac.org/publications/Industrial_Potential_Vol_1_Main_Report_KEMA.pdf

– Appendiceshttp://www.calmac.org/publications/Industrial_Potential_Vol_2_Appendixes_KEMA.pdf