Programmes to procurement – or Californian Dreamin’?

I have written and spoken before about the move towards metering energy efficiency and treating it like any other energy source in the energy supply system, a move no enshrined in Californian law. Matt Golden, one of the real pioneers in this movement, sent me a job description that PG&E, the largest utility in California, recently issued – a lead manager for procuring energy efficiency. This is significant and here is why.

Traditionally energy efficiency has been delivered through programmes that are centrally managed and with a highly variable outcome. The programmes entail some kind of mandate or incentive that leads to investment in the stuff that produces energy efficiency – new boilers, new air conditioning, new controls, insulation etc. There has been little or no measurement of results of this on a project by project basis, usually programmes are evaluated by taking samples and extrapolating. The cost of a kWh (really a negawatt hour) delivered by energy efficiency programmes is highly variable. In the US at least there is a whole mini-industry of programme evaluation.

Under the new Californian legislation incentives will be paid on measured energy efficiency – savings compared to a dynamic baseline. This offers the possibility of real markets for energy efficiency developing, instead of markets for stuff which we have now – stuff which we buy but rarely know how it performs. If we reward actual results the quality of results will improve, those that cannot produce them will go out of business. Utilities can also have more confidence in the results of energy efficiency, allowing them to procure it more like other energy sources, rather than somewhat begrudgingly having to implement programmes because they have to, and build it into capacity planning. Furthermore metered efficiency offers the prospect of a strip of negawatt hours being financeable through an equivalent to a Power Purchase Agreement (PPA) – maybe a Efficiency Purchase Agreement (EPA), Savings Purchase Agreement (SPA) or a Negapower Purchase Agreement (NPA).

Technologies like Open EE Meter (developed by Matt Golden) offer the prospect of a real market for efficiency developing – one that delivers reliable results just like power generation technologies. If we can get to that point I believe the level of energy use reduction that will be achieved will be very surprising.