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Minnesota’s Next Decade of Energy Efficiency Potential

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8:30 a.m. – 9:00 a.m. Coffee and pastries

9:00 a.m. – 10:00 a.m. Welcome and kick-off (Jessica Burdette)

Project team presentation (Carl Nelson)

Audience Q&A

10:00 a.m. – 11:00 a.m. Panel Discussion (Moderated by Jessica Burdette)

Audience Q&A

Closing remarks

11:00 a.m. – Noon Reception

Thanks to Midwest Energy News for promotional support: energynews.us

Link to program: bit.ly/Pstudy

Minnesota’s Next Decade of Energy Efficiency Potential

February 13, 2019

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Background on Study

Long history of “CIP” (Conservation Improvement Programs)

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1989: All Public utilities were required to

operate conservation improvement programs. Oversight transferred from PUC, low-income requirements added.

1983: Utilities with revenues

greater than $50 million were required to operate at least 1 conservation program. Required “significant” investment.

1991: A specific level of spending was required (1.5% electric, 0.5% gas) & munis and

coops were included.

2007: Next Generation Energy Act Passes.

2010: 1.5% Savings Goal for Utilities takes Effect

2017: Municipal and cooperative utilities meeting a specific threshold exempted from CIP.

1980: PUC directed to initiate a pilot to demonstrate the “feasibility” of investments in EE.

Utility Mix in MN - Electric

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Utility Mix in MN – Natural Gas

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MN EE Achievements – Electric

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MN EE Achievements – Natural Gas

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Goals of Study

•Estimate statewide electric and natural gas energy efficiency for 2020-2029

•Produce actionable resources

•Engage stakeholders

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Study Team

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Study Results

High Level Methodology

Primary Data Collection Grounded Study Assumptions

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Types of Energy Efficiency Potential

Technical

Economic

Maximum Achievable

Program

Types of Energy Efficiency Potential (cont.)

Technical

Economic

Maximum Achievable

Program

• Maximum Achievable: Subset that is achievable considering market barriers, given the aggressive incentives and idealized programs • Rebates set at 100% • Technology adoption at theoretical

maximum

• Program Potential: Subset of achievable, given constrained incentives (50%) and program budgets

Results – Electric Utilities

Results – Electric Incremental by Year

Results – Electric Potential by End Use

Cumulative annual 2029 savings Program potential scenario

Results – Electric Top Five Residential Measures

Results – Electric Top Five Commercial Measures

Results – Gas Utilities

Results – Gas Incremental by Year

Results – Gas Potential by End Use

Cumulative annual 2029 savings Program potential scenario

Results – Gas Top Five Residential Measures

Results – Gas Top Five Commercial Measures

Results – Emissions Reduction from Electric Potential

2029 cumulative annual program potential

• Emissions reduction: 5,528,600 tons CO2e

• Equivalent to the annual emissions of

approximately one-third of Minnesota’s

1.6 million single family homes

Results – Emissions Reductions from Natural Gas Potential

2029 cumulative annual program potential

• Emissions reduction: 2,763,400 tons CO2e

• Equivalent to the annual emissions of

approximately one-sixth of Minnesota’s

1.6 million single-family homes

Results – Program Budgets and Savings

Electric Natural gas

Year Budget

(millions)

Incremental

savings

Budget

(millions)

Incremental

savings

2020 $205 1.70% $102 0.70%

2021 $237 2.00% $124 0.90%

2022 $250 1.60% $150 1.10%

2023 $282 1.70% $177 1.20%

2024 $315 1.80% $206 1.40%

2025 $329 1.80% $214 1.40%

2026 $346 1.90% $220 1.40%

2027 $363 1.90% $225 1.40%

2028 $380 1.90% $234 1.40%

2029 $379 1.80% $241 1.50%

Results – Cumulative Net Benefits (2020-2029)

Societal cost test

Utility cost test

(WACC discount rate)

Max

achievable Program

Max

achievable Program

Total net benefits (millions) $14,500 $10,100 $1,700 $4,000

Benefit-cost ratio 2.1 2.2 1.2 2.2

From an overall societal perspective, the program scenario results in $2.20 of benefits for every dollar spent

From the utility’s perspective, the program scenario also results in $2.20 of benefits for every utility dollar spent

Program Findings and Recommendations

Current MN Utility Program Findings

Minnesota has a strong foundation of effective CIP programs

•Minnesota currently has some of the lowest cost and best performing programs in the country

• Utilities in Minnesota – both IOUs and COUs – have been proactive in designing and implementing comprehensive, effective, and innovative program models

Partnerships have helped increase program effectiveness

• Deep relationships with trade allies have helped utilities deliver programs

• Smaller utilities face additional challenges in implementing programs, but the most successful COU programs involve cooperation among utilities

• Some utilities have achieved enhanced performance through joint natural gas-electric programs 31

Electric utilities will need to increase diversity of end-uses addressed by CIP programs

2017 2029

ASHPs – the new LEDs for Residential Sector?

Measures within residential space heating end use

Rural Cooperatives Heating

Heating fuel Water heating fuel

Rural Cooperatives

Statewide

Example of Air-Source Heat Pump (“mini-split”)

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Sources of Natural Gas Potential

Smart Thermostats Grow in Importance

Measure categories within gas space heating end use

Program Recommendations

Recommendations for Utility Programs:

• Continue to test promising new approaches.

• Offer comprehensive program designs for larger and harder-to-reach customers.

• Develop upstream incentives and associated program support in selected markets.

• Incorporate operational savings into commercial and industrial programs.

• Employ segment-specific strategies to reach customers.

• Deepen trade ally engagement and training efforts.

• Incorporate AMI-enabled capabilities into programmatic strategies.

• Leverage interest by local governments in energy efficiency.

Coordination among Utilities:

• More systematically share best practices and program successes.

• Coordinate more closely on trade ally outreach and training.

• Work further towards coordinated and/or joint implementation of programs.

Electricity Sales by Power Aggregator

Xcel Great River Energy

Mn Power

Otter Tail

Minnkota Power Cooperative

Dairyland Power Cooperative

East River Electric Cooperative

Southern MN Municipal PA

Missouri River Energy Services

MN Municipal PA

Central MN Municipal PA

Northern MN Municipal PA

Heartland Consumers Power District

Other Cooperatives

Other Municipals

Investor-owned utilities

Cooperative utilities

(by power aggregator)

Municipal utilities

(by power aggregator)

Policy

Advisory Committee

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1.5% Savings Goal Statute

•The 1.5% savings goal can continue to be achieved using the existing flexibility to adjust goals when justified.

•Consider allowing consumer-owned utilities to report savings in a multi-year framework.

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Regulatory Oversight of CIP

•Creation of CIP guide

•Consider formal advisory committee for CIP regulatory topics

•Continue to have strong research and development to support future savings

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Incorporating Demand Response & Efficient Fuel-Switching Into CIP

could provide significant co-benefits to end-use efficiency

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Demand Response

Efficient Fuel Switching

could open up new sources of energy efficiency

Any new policies should include safeguards to ensure that end-use efficiency is not decreased

Minnesota Energy Efficiency Potential Study Report

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Link to Report

Department’s Energy Data & Reports

Webpage CEE’s Potential Study Webpage

On-line reporting tool