CLEAN POWER PLAN

States seek to validate efficiency projects for carbon rule compliance

Tennessee officials are leading a multistate effort to streamline the evaluation of energy efficiency investments, which could help these projects qualify for compliance with U.S. EPA's Clean Power Plan, officials said.

The Department of Energy has earmarked an $800,000 planning grant for the project, designed to create a voluntary national energy efficiency registry, which would standardize benchmarks for evaluating energy investment projects, ranging from traditional building insulation installations to advanced technologies that improve power grid efficiency.

Tennessee expects grant terms to be settled and the award finalized by early December, with a two-year completion period, according to Eric Ward, deputy communications director for the Tennessee Department of Environment and Conservation.

The National Association of State Energy Officials (NASEO) assembled a group of environmental agencies for the project from six states: Georgia, Michigan, Minnesota, Oregon and Pennsylvania, in addition to Tennessee. The team also includes APX Inc., which develops operating programs for energy and environmental markets, and the Climate Registry, an 8-year-old nonprofit that designs and runs greenhouse gas reporting programs.

Stephen Cowell, a pioneering energy efficiency executive who now heads the Massachusetts nonprofit E4theFuture, said his organization provided a grant to launch the energy efficiency registry proposal.

He said the registry would act as an "umpire" to review and authenticate energy efficiency investments. "We really felt it would help the states if they had that kind of support mechanism to facilitate energy efficiency," he said.

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In addition to the state environment officials working on the project, engineering services companies like Siemens and Johnson Controls also support it, he said.

"They agree there needs to be a central umpire to check the box and say, 'Yes, these are genuine energy efficiency investment megawatt-hours that can be accepted as part of compliance,'" Cowell said. That isn't the job of state air regulators, he added.

A trading platform

DOE said a registry would "streamline EE [energy efficiency] project verification, provide recognition of public/private investments, and support state energy and environmental planning." It could also serve as the basis for a future market-based program for trading energy efficiency credits, DOE said.

NASEO Executive Director David Terry discussed the program yesterday at a conference on "Smart Grid and Climate Change," held by the Association for Demand Response and Smart Grid, in Washington, D.C.

Terry said that while the registry was not tailored specifically for Clean Power Plan compliance, it could be used by states that choose either a rate- or mass-based carbon reduction CPP strategy. The challenge, he said, "was how to make it streamlined enough to be attractive to utilities and state regulators and still be rigorous. It is very much a work in progress."

A possible energy efficiency registry was an example of new regulatory strategies that are urgently needed to help states meet the challenges of the Clean Power Plan and the fast-moving changes in energy technologies, speakers at yesterday's conference said.

"Lots of times, we ask our regulatory utility commissioners to make sometimes difficult, controversial political decisions," Terry said, rather than handling them on the policy side. Getting a policy consensus first, before asking regulators to move forward, would help them a lot, he added.

Jeff Burleson, vice president at Southern Co., said policymakers need to understand the requirement for balancing objectives of grid operators. "The [state] regulators recognize the need for balance. You've got to balance clean, safe, reliable and affordable."

"If you get any one of those out of balance and put too much emphasis on any one, it creates problems," Burleson said. "In some cases ... EPA, in our view, has a lot of focus on clean, but not so much focus on reliability and affordability."

"There is a need for policy change around pricing and also around technologies that would signal the right price to customers ... to consume electricity at different times of day," said Eric Schmitt, vice president for operations for the California Independent System Operator, the state's wholesale power grid operator. The rapid growth of solar energy generation and electric car use is profoundly changing energy demand patterns in parts of the state, making it increasingly important to prompt consumers to shift energy use to low-demand parts of the day whenever possible. The key is flexible retail electricity rates that rise or fall during the day, depending on supply and demand, he said.

"We need not only innovation in technology, we need innovation in the institutions around those technologies," said Bryan Hannegan, associate laboratory director at the National Renewable Energy Laboratory. "If regulations don't allow innovation around rate design" and prices, "utilities will have no way to get compensated," he said.

Twitter: @PeteBehrEENews Email: pbehr@eenews.net

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