Pathway to Full Value: Market Structures to Monetize Energy Efficiency Northwest Energy Efficiency Leadership Forum James Newcomb | Oct 17, 2016 | Portland, OR Transforming global energy use to create a clean, prosperous, and secure low-carbon future.

“Today, the world meets the moment, and if we follow through on the commitments that this Paris agreement embodies, history may well judge it as a turning point for our planet.” President Barack Obama, October 5, 2016

Getting below 2 degrees Source: Energy Transitions Commission; ENERDATA (2015)

U.S. buildings: 3-4x energy productivity worth 4x its cost (site energy intensities in kWh/m2-y; U.S. office median ~293) ...➝≤50 (–83% to –85%) 2015 new ~277➝173 (–38%) 2010 retrofit 284➝85 (–70%) 2013 retrofit ...➝30 (–77%) 2013 new Yet all the technologies in the 2015 example existed well before 2005!

Technology Improvements are Driving Increased Opportunities and Value for Energy Optimization LEDs serve as an example of the trajectory of building technology, both in cost reduction and increased quality. Between 2010 and 2015 Costs have declined by 87% Performance has increased by 92% These trends are expected to continue over the next 15 years.

Demand Growth has Slowed in the PNW… Source: NW Council

…and is Projected to Continue to Grow Slowly Source: NW Council

BPA Real Power Rates Have Held Steady Source: BPA

Mid-Columbia Wholesale Power Prices are Falling Source: SNL Financial

Source: NW Council

PSE/Snohomish Conservation Contract Could Be a Model Might allow utilities to invest in efficiency in other utility territories PSE paid to have EE measures installed in Snohomish service territory Snohomish continued to buy the same volume of power from BPA as if they had not installed the EE measures, creating a surplus of energy Snohomish transferred the surplus energy to PSE (~450,000 MWh over 11 years) PSE counted the energy savings towards their efficiency goals Contracting and accounting was novel Benefits Snohomish had low avoided costs, making EE measures less cost effective in their territory PSE’s avoided costs were higher than in Snohomish BPA revenue remained whole

CAISO EIM Already Expanding Regionally By the end of 2018, all investor-owned utilities in the PNW other than Avista and NorthWestern will be part of the CAISO Energy Imbalance Market CAISO EIM has resulted in $88 million in benefits since Nov 2014 by facilitating interregional transfers of energy and reducing curtailment Better interregional coordination should help CA to achieve aggressive renewable and GHG reductions goals, incentivizing continued expansion CAISO EIM expansion is paving the way for full CAISO market expansion across the West Source: CAISO

CAISO Expansion Could Enable PNW to CA Sales CAISO + PAC Regional ISO

CAISO Expansion Could Facilitate PNW to CA Sales Potential Benefits CAISO expansion would make it easier for utilities or BPA to sell EE power into CA market Currently, to get power into CAISO can require moving across several balancing areas, incurring additional transmission costs at each interface PNW hydro could provide the additional flexibility needed in light of increasing renewable generation in CA Regional ISO would result in better utilization of current transmission capacity Coal retirements could unlock additional transmission capacity Bilateral contracts result in underutilization of transmission capacity Regional transmission planning could lead to additional transmission being built between the PNW and CA Carl mentioned that there are some transmission contracts into CA that aren’t being fully utilized according to a WECC study—so there’s transmission capacity that is contracted but not being fully utilized In moving to a regional ISO, there would be some issues with unwinding existing contracts Carl mentioned that this would be similar to the role that Norway plays in northern Europe in providing flexibility to the rest of the region, where renewables are rapidly growing Carl mentioned that BPA is already interested in providing flexibility to CA

CA Has Set Aggressive RPS and GHG Reduction Goals NW EE power could help meet GHG reduction

Community Choice Aggregation in CA Growing Rapidly Customer preference for low-carbon power could be served by PNW EE power Total population of communities considering CCA is 17.7 million Potential population of communities implementing CCA by 2017 is 6.4 million 4 of the 5 CCAs going online by the end of 2016 specifically highlight non-RPS large hydro as a zero-carbon source of power The Pacific Northwest is highlighted as a potential source for zero-carbon hydropower in addition to in-state resources Portland General Electric already sells power to Marin Clean Energy

Discussion Contact: James Newcomb Managing Director Rocky Mountain Institute jnewcomb@rmi.org 720-317-1019

Peak Car Ownership

Autonomous vehicles could reach cost parity with conventional vehicle ownership by 2018

Electric vehicles will have significant cost advantages as service vehicles

Automated Mobility Services Could Reach ~10% of US mobility market value by 2025

A Fast Transition Could Deliver Large CO2 Reductions

Washington Energy Independence Act Set Statewide Goals Utilities in the state are currently exceeding goals for renewable energy and energy efficiency Goals Progress Energy Efficiency Utilities set targets for 2-year periods GHG Reductions Clean Air Rule (effective Oct 17) sets cap on carbon pollution 50% below 1990 levels by 2050 Renewable Energy 9.0% 15% Renewables by 2020 9.7% Note: Reported MWh are annual MWh savings from EE Source: Washington UTC SEO-AAA123-20040406-

Renewable Energy and EE Goals Set for Oregon Energy Efficiency Original RPS targets were set by Oregon Renewable Energy Act of 2007 Targets were updated by SB 1547 in 2016 Renewables source: https://www.eia.gov/forecasts/aeo/er/pdf/0383er(2016).pdf Energy Trust of Oregon set targets for current period in 2015-2019 Strategic Plan released in 2014 Sources: DSIRE, Energy Trust of Oregon

No Statewide EE or RPS Targets or Goals in ID or MT All large investor-owned utilities include EE in IRP process Idaho Power 84 average MW by 2019 PacifiCorp Idaho 87,030 annual MWh through 2019 Avista Idaho 24,460 annual MWh for 2016-2017 NorthWestern Energy 6 average MW per year Note: Montana’s RPS ended in 2015 Source: Idaho Power, PacifiCorp, Avista, NorthWestern

EE is Most Cost-Effective to Meet Demand Needs Utilities across the region are currently exceeding goals for EE, which could create surplus energy Source: NW Council