In 1998 Energy Solutions designed and implemented our first distributor HVAC and motors program with Pacific Gas and Electric (PG&E). Since then, we’ve expanded to lighting, water heating, food service equipment, appliances and consumer electronics, with clients that include PG&E, Southern California Edison (SCE), Southern California Gas Company, Massachusetts Program Administrators, Xcel Energy Colorado, and many others throughout California, Nevada and the Pacific Northwest.
These midstream incentive programs have outperformed “downstream” customer rebate program models by 500%-1,000%, while yielding demonstrable market transformation impacts pertaining to stocking, and technology cost reductions and quality enhancements.
On February 9, 2016 the Southwest Energy Efficiency Project (SWEEP) posted on its Livewire blog “Utilities are Heading Upstream to Increase Energy Efficiency.” Among other programs, the post referenced the success Xcel Energy Colorado’s Midstream Cooling Program. In addition to the program savings, the program lead “Trane to build a distribution center in metropolitan Denver dedicated to providing only high efficiency commercial HVAC equipment” is a tremendous accomplishment for such a short period of time, and is an indication of market transformation.
The SWEEP blog post stated:
Xcel Energy Colorado’s Business Cooling Program
Xcel Energy Colorado introduced a midstream commercial heating and cooling program in 2015. Prior designs for this program used a downstream model, i.e., offered rebates directly to customers for purchasing approved equipment. The midstream component of this program began issuing rebates to HVAC distributors beginning in September, 2015. The program provides rebates to HVAC distributors to stock and sell a prescribed set of heat pumps and air conditioners, including high efficiency rooftop units, which are widely used in smaller commercial buildings, as well as other high efficiency commercial cooling products.
The midstream component of Xcel’s Cooling program had a soft launch in May, 2015 and began recording savings and participation data in September, 2015. In the fourth quarter of 2015 the midstream program issued incentives for 271 approved heating and cooling units, saving 684,000 kWh in first-year savings. By comparison, in the entire year of 2014, the downstream program issued incentives for 1,545 approved heating and cooling units that saved 1,140,000 kWh in first-year savings. In one quarter, shortly after the new approach was fully launched, the midstream program saved 60% of the electricity achieved over the entire year of 2014. Over the course of 2015, the entire program, including both downstream incentives and midstream incentives, the Cooling program saved 1,925,000 kWh in first-year savings.
Under the midstream approach, Xcel Energy works with heating and cooling distributors, such as Trane and Carrier, to stock high efficiency equipment. Distributors receive rebates based on their sales of high efficiency equipment, which encourages them to stock and upsell high efficiency HVAC units. This process transforms the market for commercial heating and cooling equipment by increasing the range of efficient products available for installation. Because efficient heating and cooling equipment is readily available, rather than being a special order, the likelihood that efficient equipment is installed greatly increases. The program led Trane to build a distribution center in metropolitan Denver dedicated to providing only high efficiency commercial HVAC equipment. Plans for 2016 include instituting a tiered rebate structure to align with the market’s characterization of HVAC product lines and to encourage installation of higher efficiency units.
Read SWEEP’s full blog post, click here.
For a presentation from Xcel’s Program Manager on “his journey upstream”, click here.
For more information on Energy Solutions’ Upstream/Midstream program implementation, please visit our Energy Efficiency Program web page or leave a comment below.