Industrial Utility Efficiency

Energy Trust of Oregon's Production Efficiency Incentive Program

Energy Trust of Oregon is an independent nonprofit organization dedicated to helping utility customers benefit from saving energy and tapping renewable resources. Our services, cash incentives and energy solutions have helped participating customers of Portland General Electric, Pacific Power, NW Natural and Cascade Natural Gas save nearly \$600 million on energy bills. Our work helps keep energy costs as low as possible, creates jobs and builds a sustainable energy future. Energy Trust has invested public purpose funds since March 2002 to help Oregon utility ratepayers save money, improve energy efficiency and generate renewable energy. Energy Trust contributes to local economies statewide and demonstrates how Oregon’s least-cost sustainable energy goals can be accomplished, with valuable benefits for Oregon ratepayers, and without using government funds. Electric efficiency programs are funded by a portion of a three percent charge on utility bills established in 1999 by the Oregon Legislature (SB 1149) and paid by Oregon customers of PGE and Pacific Power. Additional funding for natural gas efficiency programs comes from a utility bill charge paid by Oregon customers of NW Natural and Cascade Natural Gas. These charges were requested by the utilities and established in 2003 (NW Natural) and 2006 (Cascade Natural Gas) through Oregon Public Utility Commission tariffs. Out of the 3% public purpose charge, 74% is distributed by ETO, 16% goes Oregon Housing and Community Services for low-income housing weatherization, and 10% goes to the Oregon Department of Energy for energy efficiency of K-12 school buildings. Please describe the energy savings realized, in compressed air systems, by the Production Efficiency incentive program offered by the Energy Trust of Oregon. In 2008 the program delivered energy savings, related to compressed air systems, of 15.3 million kWh per year. The ETO has three categories of incentive offerings; custom-track, small-industrial, and prescriptive. Custom-track incentives generated 14.0 million kWh of the savings, small-industrial incentives generated 1.2 million kWh, and prescriptive incentives generated 7000 kWh. In 2009, a poor economic year, the annual kWh savings related to compressed air systems equated to 10.2 million per year. Custom-track projects totaled 7.3 million kWh, small-industrial was 2.8 million kWh, and prescriptive was almost 30,000 kWh. Our 2010 forecast calls for 18 million kWh of energy savings per year related to compressed air systems. Custom-track projects are projected to be nearly 16 million kWh while small-industrial is 2.3 million kWh. More than 5% (2.8 million kWh) of the increased energy savings from custom-track projects will be from “O&M” energy efficiency measures (EEM’s). Please describe the new “O&M” measure and incentive. Crews at Oregon-based steel mill prepare for installation of new energy efficient material handling system. A 2009 pilot enhancement to the custom-track process added compressed air “Operations & Maintenance” (O&M) as an allowable EEM which clearly identified the opportunity for significant energy conservation throughout the industrial business realm. As opposed to supply-side capital equipment upgrades, we wanted to focus on “O&M” opportunities like leak detection and repair, tuning of the systems (running compressors efficiently), minimizing use of compressed air, and behavioral modifications. An example of behavioral modifications is operating and maintaining existing air compressor control systems. We find a high percentage of the control systems (could be 40%) that are hanging on the wall are not being used. We guess that changes in personnel and ownership responsibilities can lead to situations where personnel do not understand how the control systems work. The old-school industrial thinking is that compressed air is free and this requires a behavioral change. We focus on helping them learn how to set up and manage their control systems. A big part of this behavioral-change process is top-down. We help a company put together an energy team. It’s important to get employee buy-in for making these changes. We also help them make changes to their Standard Operating Procedures for O&M duties. We provide tools, such as low-cost compressed air flow meters, so participants now have a tool to monitor changes in their dead load. We call “dead load” the situation when all process equipment is off while their compressed air system remains pressurized. The dead load is any compressed air being consumed that isn’t benefiting them in production. Some of this dead load is necessary while the remaining load is typically as a result of air leaks. This “leak load” occurs primarily from leaking pipe connections and fittings or from air leaks at the production equipment. The flow meters we provide help with persistence strategies designed to maintain energy savings. They are normally installed after the compressed air treatment equipment and before the general distribution piping to the plant. Flow meters will also be placed in different areas during the data logging process when establishing the baselines of a system assessment. In 2010, O&M incentives have become a standard offering of our Production Efficiency program. Retrofits to Fume Filtration System at precious metals smelter cuts use of compressed air by nearly 70%. Describe the actual incentive program structures. When determining custom-track incentives, we have to separate capital measures from O&M measures. The main difference is in the measure life period that we claim energy savings for as a result of the action taken. It is a 10 year life for capital measures and for O&M it is 3 years. The Custom-Track incentives for capital projects pay 25 cents per kWh saved, up to a maximum of fifty percent (50%) of the total project cost. If the ROI is less than one year before incentives, it drops to 2 cents per kWh. Many facilities in Oregon will not implement energy efficiency projects without an incentive. There are incentive dollar limits of \$500,000 per-site, per-year combined for no matter what type of project or incentive. The small-industrial track project incentive has the same structure as custom-track.

Custom-Track incentives for O&M projects are 8 cents per kWh, capped at 50% of a project cost. If the ROI is less than one year before incentives, it drops to 2 cents per kWh.

For those who wonder why paying these incentives makes sense to the rate payers of Oregon and our utilities, consider this; from a utility perspective, every \$1.00 investment in energy efficiency offsets \$4.00 of investment in new generation. Energy conservation is considerably more cost effective than energy generation so incentive programs are the most effective use of capital.

What process does one follow to qualify for an incentive?

We have a few key energy efficiency engineering organizations working as Program Delivery Contractors (PDC’s) for the program, which will do energy evaluations within the state of Oregon. The PDC’s help participants identify opportunities, quantify energy and cost savings and streamline the receipt of Energy Trust incentives through completion and coordination of paperwork and other program requirements. They have targets and goals to meet including a specific amount of kWh savings per year.

These evaluations (scoping reports) can be initiated by the PDC (contractor) or by the customer/participant. Sometimes the participant will initiate and ask the PDC to come out. They may ask the PDC to come help evaluate a purchasing decision. Let’s say they are using a non-VFD controlled air compressor and it’s not energy efficient. We will help them buy a VFD and have it installed to improve the efficiency of the compressor. There is no cost to the participant for the evaluation. The scoping report typically includes rate schedule, production schedule, process description, references to similar projects done in the past, a discussion of potential energy efficiency opportunities, and a forecast of energy-savings to be realized. I review these scoping reports to verify that the potential energy savings opportunity is sound.

If further engineering study is required to determine the current energy use baseline, efficiency improvement options, estimated project costs, and/or how much energy use will be reduced, I will solicit proposals to complete a Technical Analysis Study (TAS). We have a pool of well qualified engineering contractors who perform technical studies in areas of their expertise, like for compressed air. The participant has not paid a single penny for any of these services. They are getting many thousands of dollars of engineering done for them on energy efficiency – at no cost. This is a tremendous service when one considers that we routinely find, in compressed air, several hundred thousand kWh in energy savings per site.

How important is speed to the process?

Speed is very important to making the incentive program work. The TAS comes to me (Ray) and is reviewed. If it’s deemed to be acceptable and justifiable, then the study is shared with the participant and they can determine what measures they want to implement. Based upon that, we put together an incentive offer based upon the kWh savings. The whole process, from scoping to an offer made to the participant, typically takes three to eight weeks depending upon the data logging required. Data logging can last 1-3 weeks depending upon the operation. If the operation is very consistent, it may only be one week. If it’s erratic or cyclical, where things are changing, up to three weeks may be necessary. If a facility has a SCADA system, able to provide the required data without logging, we can cut the time down.

Once the participant signs an incentive offer, they can start purchasing equipment. We like the projects to be done within a few months - but some take a year or two. Compressed air projects are usually done within a few months. Once implementation is complete, the PDC goes out and verifies that the new equipment was installed, that the old/inefficient equipment is decommissioned, that the recommended set points are being used, and that the projected energy savings should be realized. Once this is verified, the PDC sends a verification report into Energy Trust and we process the incentive payment at this point.

Energy Efficiency Improvements reduce power consumption of kiln by more than 30% at remote mining operation.

I understand you sometimes offer “Blue-Light Specials”?

Yes! Sometimes the Energy Trust will provide a limited time special incentive bonus offering depending on a variety of factors. We have notably higher goals in 2010 and thus have decided to focus a lot of effort on short cycle projects that will complete within this year.

Right now, for example, we have a “90 by 90 Industrial O&M Special Offer” incentive for O&M projects. “90 by 90” means we will offer eight cents per kWh for up to 90% of the project cost - if the implementation is done within 90 days of the incentive offer being made. Since this offer was announced on April 1st, the volume of projects has increased significantly. Participants have until August 31st to receive an offer of this type. All projects have to be done by November 30th. This special 90 by 90 incentive offer motivates participants because the bang for their buck is tremendous.

Thank you for describing the compressed air incentive programs offered by the Energy Trust of Oregon.