New York: Getting the Price Right for Energy Efficiency

New York officials are scrutinizing the cost of energy efficiency – especially when it’s needed fast – as they prepare for the possible shutdown of a nuclear plant.

Energy efficiency insiders will want to keep an eye on this public service commission proceeding for two reasons. First, it offers a potential 100 MW in business opportunity. Second, wide disagreement exists about what the resource will cost.

The 100 MW of energy efficiency would help make up for the potential loss of Indian Point. The nuclear plant’s federal licenses expire over the next couple of years, and it’s not clear whether or not it will win relicensing. State officials say they must prepare now. New York City relies on Indian Point’s power.

Consolidated Edison wants to provide 100 MW of permanent peak reduction as part of larger mix of generation and transmission to replace the plant.

At issue is the price tag.

Con Edison estimated it will cost as much as $300 million to achieve 100 MW of peak energy reduction. The New York State Energy & Research Development Authority pegs the cost at $155.5 million. And Consumer Power Advocates, an alliance of hospitals, colleges and other large non-profit energy users, estimates $200/kW, compared with Con Edison’s $3,000/kW.

In an April 19 order, the public service commission called the costs “sobering.” The commission wants to find ways to bring the price down. Competitive solicitations can do this, but they are time consuming, the commission said. And the schedule is tight – by energy planning standards. Licenses for Indian Point’s two units expire in September 2013 and December 2015.

The commission ordered Con Edison to file a plan within 45 days that provides more granular cost estimates and offers ways to lower the price tag.

Why were Con Edison’s initial costs so high? It has to do with the need for speed. The utility believes it must offer high incentives and rebates to get customers to sign on quickly enough to meet the 2016 reduction goal.

The strategy, which targets mostly large energy users, calls for several approaches to peak reduction, such as fuel switching, renewable distributed generation, lighting, and building management and control systems combined with efficient air conditioning.

The programs may go forward even if nuclear plant doesn’t close, according to Garry Brown, chairman of the public service commission.

“One of the things we will be looking at is the value of some of these upgrades —energy efficiency — even if Indian Point stays open. At least some of the projects would probably fall into the category of something that may be valuable under any circumstance,” Brown said at the commission’s April meeting.

Stay tuned. The commission wants to have the program goals and budgets in place before the end of the summer.

Elisa Wood is a long-time energy writer whose work appears in many of the industry’s top magazines and newsletters. She is publisher of the Energy Efficiency Markets podcast and newsletter.

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