Chris Allwein spoke to the OCTC Annual Conference on May 3, 2016, about the legal requirements behind energy efficiency and the benefits for both provider and customer. Also included are presentations by Jon Williams on AEP Ohio Energy Efficiency and Energy Management Solutions, given by Gary Swanson.

1. z
How to Make
ENERGY
EFFICIENCY
Work for YOU
presented by Chris Allwein, Gary A. Swanson
and Jon Williams
OCTC Annual Conference - May 3, 2016

2. z
General Definitions

3. z
Using less energy to
provide the same service”

4. z
Managing and restraining
growth in energy consumption”

5. z
Contrast with
“Energy Conservation”
minimizing activity or
going without a service
to save energy

6. z

7. z

8. z

9. z
Ohio Law

10. z
Energy efficiency means
reducing the consumption of energy
while maintaining or improving the
end-use customer’s existing level of
functionality

11. z
Ohio law requires electric
distribution utilities to:
“…implement energy
efficiency programs that
achieve energy
savings….”

12. z
Energy efficiency must be
COST EFFECTIVE

13. z
How to Make EE
“Work” for YOU

14. z
Ensure adequate,
reliable, efficient +
reasonably priced service
1

15. z
Diversity of supplies +
suppliers
2

16. z
Facilitate State’s
effectiveness in the
global economy
3

17. z
more specifically…

18. z
Encourage development
of distributed + small
generation facilities
4

19. z
Encourage demand-side
management
5

20. z
Encourage use of energy
efficiency programs by
small businesses
6

21. z
Utilities offer
incentives for
customer energy
efficiency

22. z
How EE Works for
Businesses

23. OCTC Conference
AEP Ohio Energy Efficiency
Combined Heat and Power &
Continuous Energy Improvement
Opportunities
May 3, 2016

24. Overview
• AEP has over 5 million customers in 11 states
served by 7 operating companies: AEP Texas,
SWEPCO, PSO, Appalachian Power, Kentucky
Power, I&M and AEP Ohio.
• AEP Ohio serves 1.5 million electric customers.
• Industrial customers:
– 37% of retail electric sales are industrial.
– 45% of 2014 business energy savings from industrial.

25. The Big Picture for Energy Efficiency and AEP
Ohio
• Customers and AEP Ohio win:
– Financial benefits 3 to 4 times greater than costs
– Lessens the demand overall on the system benefitting
pricing
– Lowers participant costs through energy/demand
savings
• The Law: SB 221, SB 315, SB 310
• Changes could be coming in the Standards/Mandates
• Opportunities for customers
The Big Picture

26. • Prescriptive Programs
• Custom Program
• Custom Program - CHP/WER
• New Construction Program
• RetroCommissioning Program (RCx)
• Self-Direct Program
• Express Program for Small Business Customers
• Data Center Program
• Continuous Energy Improvement Program (CEI)
Energy Efficiency Programs
…for AEP Ohio Business Customers

27. Combined Heat and
Power/Waste Energy Recovery
(CHP/WER)
• Application Process
• Incentive Structure
• Summary of Benefits
Summary of Approved CHP
Projects – Solvay and Kraton

28. CHP/WER Application Process
• Individual joint filings with the PUCO
• Customer information requirements
• Commitment agreement
• Cost effectiveness
• Supporting attachments

29. CHP/WER Incentive Structure
• Solvay and Kraton - $0.005/kWh
metered net generation for 5 years
• Total $0.025/kWh
• No penalties or up front payments
• For these and other projects, individual
review of incentive payments/structure
• Future Plan considering parameters.

30. CHP/WER Benefits
• Solvay and Kraton combined:
– 89,429 MWhs and 10.8 MW CHP generation
– $2.2 million incentives projected over 5 years
• Can be highly cost effective from the
electric distribution utility view
• Typically limited to large customers with
high process loads or specialty
circumstances for waste energy recovery

31. CHP/WER Program
Assessment
2017 – 2019
CHP/WER Potential Planning

32. Units per Year
Per Unit Capacity (MW)
CHP Plant Size 2017 2018 2019
Large 1 1 1 7.1
Medium 2 2 2 3.6
Small 3 3 3 0.3
Cumulative Annual Savings 2017 2018 2019
Energy (GWh) 106 212 318
Peak Demand (MW) 15 30 45
Capital Costs – Total (2017 – 2019) $89 million
Program Costs – Total (2017 – 2019) $10,262,662
Incentives (for five years) $9,540,000
Marketing $38,160
Internal Labor/Admin $190,800
Materials/Other $0
Evaluation $493,702
Cost-Effectiveness Tests Ratio (2017 – 2019)
TRC 1.3
PCT 1.0
CHP/WER Analysis Results: 2017 – 2019 Installations
UCT 34.0

33. CHP/WER Program Design
Considerations
• Cost effectiveness
• Utility incentives can help with final
decision, but other reasons must be
major drivers
• Initial assessments need to define
good projects
• Economic development is key

34. Continuous Energy Improvement
(CEI) Program
• Process
• Performance Measurement
• Focus – Low Cost/No Cost
• Results
• Customer Feedback
• Economic development (again) is key

35. Planning
Energy Plan
Master Calendar
Team reports
Assessment
Management Involvement
Assign Executive Sponsor
Assign Energy Champion
Energy Policy & Goals
Form Energy Team
Employee Engagement
Events
Employee ideas
Communications
Training
Improvement Process
Opportunity Register
Prioritizing projects
Energy Scans
Energy Audits
Measurement
Baseline data
MT&R model
Analysis
Communications
Energy
Team
CEI Process

36. Performance Tracking Using Energy Model
Cumulative sum of differences (CUSUM)
36

37. • Turning equipment off when not needed
– Difficult to change behavior, but this is the #1 opportunity
• Fixing compressed air leaks
• Compressed air system optimization
• Production scheduling optimization
– Maximize operational equipment efficiency
• Formalizing equipment shutdown procedures
– During low production periods, weekends, and evenings
• Improving process yield
• Delamping
Low / No Cost Measures

38. 2014 CEI Results
38
37 Participants Cohorts 1-4
Realized
40.2 Million
KWh saved
in first year
130% above
our target
savings $3,217,835
annual electric bill
savings
(@ 8 cents/kWh)
Paid $804,460
incentives
(@ 2 cents/kWh)

39. 2015 CEI Results
39
37 Participants Cohorts 1-4
Realized 54.7
Million KWh
saved in
second year
35% increase
over Year 1
+14.5 Million
KWh $4,377,240 annual
electric bill savings
(@ 8 cents/kWh)
Paid $1,094,310
incentives
(@ 2 cents/kWh)

40. 2016 Status Report
- Manufacturers
- Hospitals
- Universities
Cohorts 1-4
37 Companies
Projecting
58 GWh
Cohorts 5-8
63 Companies
Projecting
47 GWh
Projecting
105 GWh
Savings
100 Total CEI Participants

41. CEI Customer Testimonials
“CEI has also given us metrics we have not had
before. In past all we had is our bills and now
we have a model to predict our usage.”
“ A great process for developing our
Energy Management Program.”
“Looking forward to working with
AEP on engaging management & staff
to realize additional energy savings.”
“I appreciate the discussion from
different companies. Very open,
and we all realize we are on the
same journey.”

42. 92% Customer Satisfaction
Energy Savings beyond Electricity
Other O&M savings
Energy Intensity Reductions
More Competitive
More Production
Sustainability
Beyond the Commodity and Vendor
to a Partnership
Building Better Relationships
Your Trusted Energy
Advisor

43. OCTC Annual Conference
May 3, 2016
Presented by: Gary A. Swanson, PE
Energy Management Solutions

44. Energy Management Solutions
Offices in Ohio, Chicago and Minneapolis
Audited over 10,000 Facilities
Saved Customers Over $500,000,000 in Energy Costs
100% Independent
100% No Risk
Professional Engineers in Ohio
175 Industrial Sites in Ohio Alone
95% of work

45. Energy Opportunities
• Low Hanging Fruit Already Picked?
Fruit does grow back
There are new technologies to pick higher fruit
• Most customers can still reduce costs by 30%
Rebates (last three years)
New Technologies
Procurement
DR
• Nearly 50% of the states have rebate programs

46. Case Study: Plant 1
• Electric Usage – 50,000,000 kWh
• Demand – 6.5 MW
• Annual Energy Cost - $3,000,000
Procurement – $0.015/kWh ($750,000/yr)
New Tariff – GS4 vs. GS3 ($250,000/yr)
Locked in future electric rates less than
today’s rate through 2019 ($750,000)
Build Substation ($400,000/yr @ 9 MW)

47. Rebates & Incentives - Plant 1
• $832,000 in rebates
Productivity
Lights
Motors/Drives
Air Compressors
Past 3 years of projects (Mercantile or
Self-Direct)
• Total $1,852,000 or 62%

48. Case Study: Plant 2
• Demand – 1.5 MW
• Annual Electric Cost - $100,000
• Procurement = $20,000
• DR = $42,000
• Rebates = $38,000
• Total = $118,000
• 118% of Annual Energy Cost

49. Rebate Examples
• Productivity – Reduced energy intensity
Customer saved 16,000,000 kWh
$720,000/yr energy savings
$518,000 rebate
• 4,000 HP Motor with Drive
Saved 9,630,000 kWh
$298,000 rebate
$433,000/yr (< 1 year payback)

50. Quick Payback Drives
• 250 HP Drive – 30% Savings @ 8760 hr
515,917 kWh savings
$23,216/yr savings
$25,000 installed cost
1.07 year payback before rebate
Rebate = $18,750
• 3 Month payback after rebate

51. Case Study: Air Compressor Project
• Controls alone
$22,000 cost & potential for $50,000 rebate.
Normal Rebate may only be 50% or $11,000
This case < 1 yr. Payback =$0 rebate
• Need to look at whole system
Added dryer upgrade to the total compressed air
improvements
Resulted in $125,000 rebate

52. Quick Payback Drives
• Two 750 HP drives on fans
No amp savings may result in no Rebate
• Look at whole picture - CFM or production
basis
CFM had increased
Compared kWh/CFM
Resulted in $53,000 rebate

53. Rebate Examples – Outside the Box
Drives Replacing Older Drives - $58,000
 Do not always qualify – Data log
Nitrogen Rental Equipment - $78,000
 Long term lease
Transformers - $128,000 Rebate
LED Lights – LED Tubes
Leave No Stone Unturned
 Customer found $75k in rebates (Lights-Drives)
 Other stones uncovered resulted in an additional $750k

54. Know the Rules!
• No rebate with less than 1 year payback
All costs included?
Install, engineering, disposal…
• Max 50% to 75% of project costs
Included all costs?
• Review Specific Programs with Each Utility
Each utility has different criteria for their
programs

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56. z
State Law + State
Policy Encourage
Energy Efficiency

57. z
Efficiency
Beneficial to
Utility + Customers

58. z
Potential for
Savings + Incentive
Beyond “Low-
Hanging Fruit”

59. z
Thank You!
Christopher J. Allwein
Kegler Brown Hill + Ritter
callwein@keglerbrown.com
keglerbrown.com/allwein
614.462.5496
Jon Williams
AEP Ohio, Manager
Energy Efficiency/Demand Response
jfwilliams@aep.com
330.438.7742
Gary A. Swanson, PE
Energy Management Solutions, Inc.
gswanson@EMSenergy.com
612.819.7975
EMSenergy.com