The Capacity Energy Efficiency Program with Emergent Energy Solutions
Emergent Energy Solutions (EES) partners with contractors and building owners who have completed energy efficiency projects and offers them the opportunity to participate in the Capacity Energy Efficiency Program. These energy efficiency projects are recognized by PJM as capacity resources and can be bid into PJM’s capacity market. PJM Interconnection operates the wholesale market for electricity in thirteen states and the District of Columbia. (To learn more about PJM please visit, www.pjm.com)
EES compensates our contractors and building owner partners based on PJM’s capacity market auction results, and so provides a means for owners to receive additional payments for energy efficiency improvements they have already completed. The energy efficiency credit dollars will vary by a projects overall impact on the electrical grid’s peak demand (KW) period. Typically the PJM credits will be about 30% of any available rebates from your local utility.
EES aggregates many smaller and intermediate projects, to achieve a scale that makes participating in the wholesale capacity market possible for all.
What is PJM?
PJM Interconnection, LLC is a regional transmission organization (RTO) that coordinates the movement of wholesale electricity in all or parts of 13 states and the District of Columbia. PJM operates the competitive wholesale electricity market and manages the high-voltage electricity grid to ensure reliability for more than 58 million people in its geographic territory extending from New Jersey to Illinois. PJM is the largest wholesale electricity market in the world and handles over $40 billion of electric transaction a year. Membership in PJM includes power generators, transmission owners, electricity distributors, power marketers and large consumers. The organization is headquartered in Valley Forge, Pa.
The Capacity Energy Efficiency Program
To participate in the program, EES asks for your authorization to bid the demand savings (KW) achieved at your facilities into the PJM capacity market auction. Your contractor will work with EES to complete all the pre-qualification tasks related to bidding the energy efficiency project into the market. Your responsibility, as the project owner, is simply to to complete, sign and return the Capacity Rewards agreement form and provide acknowledgement of continued use of the energy efficiency project for each qualified year.
Compensation is based on the PJM Capacity Auction. While capacity auction results will vary, most newer resources that are eligible can participate in the auctions and receive compensation for up to four delivery years. Capacity rewards are paid to owners over the four delivery years. EES’ compensation is a share of the successful auction proceeds.
This program is separate from utility rebates or state incentives for energy efficiency, and taking advantage does not preclude participation in the other.
What is an Energy Efficiency Resource?
PJM defines an Energy Efficiency (EE) Resource as a project that involves the installation of more efficient devices/equipment, or the implementation of more efficient processes/systems. The EE Resource must achieve a permanent, continuous reduction in electric energy consumption (during the summer peak demand period). A good example of such a project is the installation of energy efficient lighting.
What Determines a Project’s Value?
The value of an EE Resource is based upon the project’s expected electric demand reduction (kw savings) and the auction pricing results. The demand reduction is easily calculated; auction pricing always varies.
What are the obligations of Building Owners/Customers?
Obligations are minimal. Building owners/customers are required to sign a simple one page agreement that acknowledges that an EE project has been complete and authorizes EES to exclusively bid their energy efficiency project into PJM’s capacity market auction.
Finally, the building owner is asked to annually document continued use of the energy efficient equipment. (This can be a simple statement via email, or letter.)
Who pays the building owner/customer?
EES will provide payment directly to customers for the committed energy efficiency project resources that have cleared in the PJM auction. Payments are made based on the KW saved, according to the terms of agreements.
When does the company get paid? What type of payment will it be? Over what period of time will we be paid?
Payments will be made by check from EES directly to building owner/customers. Each energy efficiency project is unique and is eligible for payment from one year to four years. The eligibility is defined in the commercial arrangement with EES. The Building Owner/Customer is paid in December of the delivery year and the following June.
Is this program the same as utility rebates or state incentives?
No. This is a completely separate program from utility rebates or state incentive programs, and does not preclude participation in either of those. Much of the project detail needed by EES is similar to that required for most rebate programs. Together these programs can all improve the bottom line of energy efficiency projects.
What type of projects will qualify?
Energy projects will qualify for energy efficiency credits if it delivers permanent reduction in operational load (KW) for any specific utility service account within the PJM territory. Projects types includes but is not limited to lighting, HVAC, Refrigeration, Compressed Air, LEED and other measures that reduces electrical demand on the grid during PJM’s peak hours.
Some examples of possible projects include:
A customer completes a custom (non-prescriptive) compressed air project that incorporates a well-integrated sequencer, zero-loss drains, storage, and a new VFD compressor for $150,000. The project is able to obtain $50,000 in utility incentives for the investment. The generated PJM Credits will deliver another $10,000 to 15,000 in additional incentives.
A customer completes a lighting project that includes conversions from Metal Halide high bays and T-8 Fluorescent lighting to LED lighting throughout their facility. At the same time, the site expands and adds an additional 250,000 SQFT of warehouse space that exceeds ASHRAE’s lighting and HVAC efficiency standards for the addition. Since the utility customer both reduced and increased electrical load, this will be handled in 2 different components. On the reduction end, utility rebates and PJM Credits are obtained for the lighting upgrade as KWH and KW reduced. Since the new addition exceeds ASHRAE’s efficiency standards, the new addition is able to once again qualify for utility rebates and PJM credits based on the percent improved using ASHRAE as the baseline condition.
Utility Companies that qualify for PJM Credits:
Allegheny Power Systems
American Transmission Systems, Inc.
American Electric Power Co., Inc.
Atlantic Electric Company
Baltimore Gas and Electric Company
Dayton Power and Light Co.
Delmarva Power and Light Company
Duke Energy Ohio and Kentucky
Eastern Kentucky Power Cooperative
Jersey Central Power and Light Company
Metropolitan Edison Company
PPL Electric Utilities
Pennsylvania Electric Company
Potomac Electric Power Company
Public Service Electric and Gas Company
Rockland Electric Company