Dive deeper into optimizing program design for emissions reductions, engaging stakeholders and participants, and the opportunities and challenges of electrification.
Many utilities have ambitious GHG emissions reductions targets, and customer demand side management (DSM) programs represent an opportunity to help utilities meet their goals. However, these mature programs often only measure their impact in terms of energy saved and demand reduced, addressing both consumption and capacity considerations. By valuing emissions impact and optimizing for emissions reduction, customer programs can provide utilities with a cost-effective pathway to net zero that does not only rely solely on highly capital intensive, supply-side interventions.
DNV and WattTime facilitated a working group of utilities to discuss these issues and share best practices that can provide value beyond meeting energy savings goals. Four key takeaways emerged from these sessions as considerations for incorporating emissions reduction into customer programs:
Identify key decision makers to champion emissions reductions
Every ambitious initiative needs a champion, and the shift to valuing customer programs by emissions impact is no different. Regulatory commissions and internal leadership are two types of key decision makers that can determine a utility’s ability to move toward more emissions-centric customer programs. There are a variety of regulatory frameworks that allow for the consideration of emissions; utilities should identify and engage with key stakeholders to move toward this program model within their given regulatory environments.
Measure actual emissions impacts rather than average emissions impacts
If utilities are looking to customer programs for quantifiable results toward their emissions reductions goals, it is important to consider how emissions impacts will be measured. Marginal emission rates take into account the emissions from the generation mix at the time of demand. As such, marginal emissions rates provide more accurate impact results than proxies (such as price, time, and/or average energy generation).
Prioritize programs that are designed to optimize for emissions reductions
Many utility DSM portfolios include various programs centered on providing customers with incentives to adopt technologies or practices that help them reduce their energy use. These different types of program designs have differing abilities to optimize for emissions:
- Rate design: use of pricing to reflect program goals (i.e. load shifting)
- Product rebates: incentives for purchasing energy saving devices
- Traditional demand response (DR): incentives for shifting time of energy use, based on notification
- Virtual Power Plants (VPP): a portfolio of resources that can be controlled to optimize for program goals
To optimize program impacts most effectively for emissions reductions, utilities should consider prioritizing rate designs, DR, and VPP program types. Utilities can also work with their regulators to incorporate emissions -reductions goals directly into the programs, so that they can be evaluated for performance based on emissions impacts.
Acknowledge and plan for the challenges and opportunities associated with electrification
Utilities are facing challenges like aging infrastructure and intensifying weather events. At the same time, load demands are growing from increasing electrification of areas that have long relied on fossil fuels via the adoption of electric vehicles (EVs), heat pumps, and induction ranges. This load growth represents an opportunity for utilities to provide customer service for the 21st century, but only if the load can be managed with programs like VPPs. Otherwise, utilities face expensive infrastructure upgrades. By coordinating grid modernization and emissions-reduction efforts, utilities and their customers can reach the full potential of electrification.
We can help!
DNV can help your utility customer programs evolve to meet the next generation of challenges. Explore innovative ways to value emissions through customer programs. Reach out to Daniel Jarvis for more information.
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