1. Prioritization of VC HP Measures Variable Capacity Heat Pump Measure RTF Sub-Committee June 22, 2011 meeting

2. Prioritization Overview  Roadmapping generated a list of over 30 VC HP applications, which were screened for the 5 highest priority measures.  These 5 measures were further evaluated in this prioritization.  Questions were sent to over 20 people and 11 responses were received.  The prioritization consisted of four questions, evaluating: 1. Expected savings potential for each measure; 2. Payback periods for each measure; 3. Capture measure specific drivers 4. Capture measure specific barriers.. 2

3. Top Five VC HP Measures 1) Install a DHP mini split, replacing electric resistance heat without any air conditioning for a commercial application in a converted house. 2) Install DHP mini splits in small retail (less than 20,000 SF), conditioned by split- system heat pumps. 3) Install a VRF multi split-system in a small or medium office (less than 100,000 SF), replacing the existing rooftop heat pumps or air conditioning units with a energy-recovery-ventilator (ERV). 4) Install a VRF multi split-system with heat recovery capability in a small or medium office (less than 100,000 SF), conditioned by multiple air-source heat pumps or air conditioning units with electric heat. 5) Install a VRF multi split-system with heat recovery capability in any commercial building with constant heat source, such as a data center, replacing electric heat. 3

4. Evaluation Results - By Score 4 VC HP Measure Scores

5. Ranked VC HP Measure Scores Top 5 VCHP Measure Ranking Commercial application in a converted house: electric resistance replaced by DHP mini split Small and medium office: heat pump or AC with electric heat, replaced by VRF with heat recovery Small and medium office: rooftop unit replaced by VRF with energy recovery ventilator Small retail: split system heat pump replaced by DHP mini split Small and medium office: heat pump or A/C with electric heat replaced by VRF Expected Energy Savings 12354 Payback Period 15423 Total Scores Combined (equal weights) 12345 12 Ranked as the best within the corresponding criteriaRanked as the second best within the corresponding criteria

6. Measure Specific Drivers What are the things you like about each application? Mike Cundiff Duane Lewellen Mira Joel Jackman (PSE) Mark Jerome Aquila Velonis (Cadmus) Erin Rowe Chris Wolgamott O. Mattias Jarvegren Aaron Winer 1) Commercial application in a converted house: electric resistance replaced by DHP mini split Better zoning, instant energy savings Electric res to HP greatest savings Low cost, low ambient performance reduces winter peaks, simple measure Save fan energy if existing is furnace; occupant will like cooling benefit Good savings & quick payback Easy to implement (similar to res applications) Giving A/C without having to install duct work. Should improve comfort as well Easy install, easy to offer incentive. Low cost, fast installation with quick payback. 2) Small retail: split system heat pump replaced by DHP mini split Lower demand on grid Zoned heat pump vs central system Low cost, low ambient performance reduces winter peaks Fan savingsSome energy savings Easy to implement (similar to res applications) get a lot of reqests for this in small retail Increase unit efficiency to a level higher than most split systems Easy install, easy to offer incentive. Low cost, fast installation with quick payback 3) Small and medium office: rooftop unit replaced by VRF with energy recovery ventilator Excellent energy savings, improved control and zoning, Potential for heat reclaim from core zones and exhaust systems Large potential ventilation energy savings, low ambient performance reduces winter peaks ERV is dedicated OA system. Can use DCV with CO2 sensor. Reduce fan energy should be good energy savings/ ventilation will be efficient not really applicable to new construction Not sureVentilation added. Larger efficiency impacts, would "clean up" equipment 4) Small and medium office: heat pump or A/C with electric heat replaced by VRF Excellent energy savings, improved control and zoning Potential heat reclaim no electric strip for aux low ambient performance reduces winter peaks, simpler measure A/C w/ elec Ht will save most. both will save fan energy Should be good energy savings get a lot of requests for this Not sureEasy install, easy to offer incentive. Combining existing functionality into one system 5) Small and medium office: heat pump or AC with electric heat, replaced by VRF with heat recovery Energy recovery between zones Doas ventilation plus zoned hp plus vrf Low ambient performance reduces winter peaks A/C w/ elec Ht will save most. both will save fan energy Should be good energy savings/ ventilation will be efficient get a lot of requests for this Not sureVentilation added. Combining existing functionality into one system, high tech solution 6

7. Measure Specific Barriers What are the potential problems or concerns with each application? Mike Cundiff Duane Lewellen Mira Joel Jackman (PSE) Mark Jerome Aquila Velonis (Cadmus) Erin Rowe Chris Wolgamott O. Mattias Jarvegren Aaron Winer 1) Commercial application in a converted house: electric resistance replaced by DHP mini split Life of building am unclear whether existing electric resistance heat is kept as back-up, unoccupied temperature setback may not occur, adds cooling loads Ventilation required; cooling load reduces savings aestheticsPoor installation practices Don't foresee a huge uptake for this measure How many of these still have electric resistance heat at this point No problems or concerns. Occupant education re: operation 2) Small retail: split system heat pump replaced by DHP mini split Retail turnover unoccupied temperature setback may not occur, difficult to coordinate ventilation system operation Ventilation required; reduced fan energy aestheticMinimal energy savings cost-effectiveness is main concern since the efficiency gain from a code heat pump to mini split isn't huge Lease vs Own, who going to pay for the retrofit No ventilation.Occupant education re: operation 3) Small and medium office: rooftop unit replaced by VRF with energy recovery ventilator Initial cost high unoccupied temperature setback may not occur, difficult to coordinate ventilation system operation If old RTU is used as ERV it may require significant refurbishment. May be better to replace it. more complicated commissioning and installation office size could really impact cost- effectiveness significantly High costs, long payback Added ventilation with VRF complicates install and increases cost. Occupant education re: operation, medium-high initial cost 4) Small and medium office: heat pump or A/C with electric heat replaced by VRF High initial cost unoccupied temperature setback may not occur, difficult to coordinate ventilation system operation Ventilation required. more complicated commissioning and installation size of office could impact cost- effectiveness significantly High costs, long pay back No ventilation.Occupant education re: operation, high initial cost 5) Small and medium office: heat pump or AC with electric heat, replaced by VRF with heat recovery Data Room application may require redundant system High initial cost unoccupied temperature setback may not occur, difficult to coordinate ventilation system operation more complicated commissioning and installation design criteria to ensure adequate heat recovery could vary significantly per project and energy savings would be hard to predict High costs, long pay back Added ventilation with VRF complicates install and increases cost. Occupant education re: operation, high initial cost 7

8. Discuss Other Approaches for VC HP Measures Upstream incentives Equipment incentives based on EER Whole building performance incentives Other 8