1. Ice Storage for Peak Load Reduction Chris Smith NYSERDA NARUC 2007 Summer Meeting

2. NYSERDA’s Role Administrator –Design and Implement Programs Support Regulators –State Appliance Standards and Energy Code –Green Building Tax Credit –Renewable Portfolio Standard Facilitator –Robust Network of Energy Service Providers –Leveraged Financing Policy Maker –Executive Order “Green & Clean” Innovator –R&D Technologies

3. New York State Policy Environment New York Energy $mart sm Program –By Regulatory Order of the NYS Public Service Commission –NYSERDA as the system-wide, non-utility administrator –8-year program (thru June 2006); $962 million –Public purpose goals of energy efficiency and cleaner environment –SBC Advisory Group: “Independent Evaluator” –SBC Renewed thru June 2011; $895 million

4. New York State Policy Environment (Cont’d) Utility Rate Settlement Cases –NYC gas efficiency program – NYSERDA $5m & $14m –NYC demand management – starting 2006 Offset load growth by 2008 – 300 MW $120m to NYSERDA for system wide program Directives/Laws –Executive Orders – EE goals & product purchasing standards –NY Green Building Tax Credit - $50 m –Appliance/Equipment Standards & codes Renewable Portfolio Standards Gov. Spitzer’s “15 by 15” Clean Energy Strategy

5. Need for Demand Based Programs NYC is required to have 80% of it’s generation in city Imports from Hudson Valley are becoming increasingly difficult Load growth on an aging system has created the need for many near term distribution upgrades in NYC (Con Ed plans to spend $1.4 B this year) NYC is an underground network distribution system – costly to upgrade

6. Peak Load Reduction Program Piloted in 2000 Full Scale Program in 2001 Currently in Seventh year of full scale program Incentives are kW based, not kWh Program targets both Energy Efficiency and Demand Response

7. NYC Capacity Market NY has an administratively set demand curve –Capacity surplus results in lower prices –Capacity shortfall results in higher prices Summer 2006 Capacity Prices –Upstate – Roughly $2.50/kW per month –NYC – Roughly $12.50/kW per month Capacity prices significantly impact the social value of demand reduction measures

8. Social Value of Ice Storage Incentive programs should begin by targeting capacity constrained areas Societal benefit highly dependant on capacity prices and condition of distribution system In NY, lower upstate capacity prices result in B/C less than 1, while higher downstate capacity prices result in B/C greater than 1 Emissions Reduction – NYC Peak day NOx emissions are >5 lb/MWh, Ave. annual <1 lb/MWh

9. Rate Design Rates should strive to reflect the true cost of electricity at discrete times This should result in a significant day to night differential in energy prices This differential, in combination with demand charges should incent users to shift load –Only a fraction of end users will actually shift load, although even those that don’t will realize the social benefit caused by those that do

10. NYC Electric Rates Summer Demand Charges +/- $25/kW Summer 2006 Wholesale Energy Rates –June-Sept, 8AM-6PM - $.11/kWh –June-Sept 8PM-6AM - $.067/kWh Default Rate for large users is hourly pricing

11. Summer 2006 Load & Price

12. Ice Storage Benefits Increased cooling reliability for critical loads such as data centers Can delay the need for new generators Can delay the need for T & D upgrades Can increase chiller plant capacity without the addition of more chillers

13. Ice Storage Challenges Drive down capital cost to reduce customer paybacks and improve societal benefit Reduce floor space requirements Look to maximize benefit, minimize cost –Target capacity constrained areas –Ice rinks that already have high lift chillers –Demand Response program participation Electric rates sometimes mask the true cost of the marginal generation unit at a given time