NYSERDA and DPS Plans for Pay-for-Performance Efficiency in New York

March 6, 2018

On February 23rd, the The New York State Energy Research and Development Authority (NYSERDA) and the New York Department of Public Service presented a conceptual framework for pay-for-performance energy efficiency in New York State, and hosted a roundtable to solicit feedback on the plan from a wide range of industry players and advocates.

Pay-for-performance promises to revolutionize energy efficiency by replacing centralized programs with animated markets that are flexible, technology-agnostic, and that pay efficiency aggregators for actual savings at the meter. New York’s plan represents a major validation of this approach and is similar to efforts in California, Oregon, and Massachusetts.

Pay-for-performance aligns with New York REV goals to animate markets and drive innovation in the delivery of energy savings, while attracting private capital to finance efficiency in the same way grid infrastructure is financed. By leveraging initial New York smart meter deployments, these pilots will set the foundation for time and locational energy efficiency to support non-wires and pipes alternatives. They will also provide valuable load balancing resources to support the continued deployment of clean, renewable, and intermittent energy resources as New York drives toward a goal of 50 percent renewable generation by 2030.

NYSERDA is proposing to invest at least $50 million in a series of metered pay-for-performance pilots. Initially, NYSERDA will partner with Con Edison on small to medium businesses (SMB) in Westchester and Staten Island, and with National Grid on residential in Clifton Park, Half Moon, and potentially the Capital District.

As in other P4P programs, qualified aggregators (companies or other third parties that bundle efficiency) will bid for the opportunity to join the program based on estimated savings, market intervention plan, and bid price. Those that win will work with contractors to implement sets of interventions and be paid quarterly based on savings achieved.

However, pay-for-performance doesn’t mean that building owners or aggregators need to wait to get paid. Aggregators will have the option to secure private project finance investment and performance insurance upfront, in the same way one would finance an investment in infrastructure such as a power plant.

In the recent stakeholder meeting, the NYSERDA team explained that it would be adopting the CalTRACK methods to calculate efficiency results. CalTRACK is a set of open source, empirically validated and replicable methods for calculating energy savings by comparing weather normalized pre-and post-retrofit energy use for a given customer or portfolio of customers.

CalTRACK methods are the basis for the OpenEEmeter, which is a 100 percent open-source calculation engine that is available to all parties as python code, a desktop application, or a free web based tool for single assets. For utilities and aggregators interested in a scalable turnkey version of this platform, OpenEE provides an enterprise cloud hosted SaaS platform that can track millions of meters and provide a range of advanced analytics and security.

The three-phased NYSERDA initiative will issue annual RFPs for aggregators from 2018 to 2020. Each phase is intended to test different approaches and use cases in order to learn which P4P approaches are most effective. 

With the inauguration of P4P in New York, two of three of the largest states in the U.S. will now have efficiency programs that use markets to incentivize metered efficiency performance, based on the same open-source CalTRACK methods to track savings.

Open Energy Efficiency is helping support pay-for-performance programs and procurements with utilities and regulators in New York, California, Massachusetts, and Oregon, as well as supporting the aggregator businesses that will be participating in these exciting new markets. To learn more, contact OpenEE for a demonstration and discussion.

The Secret Plan for Decarbonization: How Demand Flexibility Can Save Our Grid

Read our Electricity Journal article to learn how behind the meter flexibility can work as a true grid and climate resource.

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