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Energy-Efficiency Funds and Demand Response Programs, New York

Updated August 2007

What public-purpose-funded energy efficiency programs are available in my state?

In 1998, as part of restructuring, the New York State Public Service Commission (PSC) designated the New York State Energy Research and Development Authority (NYSERDA) as the administrator of funding for energy efficiency and load management programs.

These programs, collectively known as the New York Energy $mart Programs, are paid for through a System Benefits Charge (SBC) on the electricity transmitted and distributed by six of the state's investor-owned utilities. In December 2005, the PSC extended these programs through 2011, and increased the total annual program funding to $175 million.

Customers of ConEdison, Orange and Rockland, National Grid (Niagara Mohawk), New York State Electric and Gas, Central Hudson Gas and Electric, and Rochester Gas and Electric are eligible for NYSERDA programs. Customers of Long Island Power Authority and New York Power Authority should refer to the section below on utility energy efficiency programs.

There are a number of NYSERDA's commercial and industrial programs that may be of interest to federal customers; several of these are profiled below.

  • Tier 3 of the Enhanced Commercial/Industrial Performance Program is a standard performance contracting program, offering incentives to energy service companies (ESCOs) who install cost-effective efficiency measures. Incentive payments are based on the measured annual savings: 5¢ per kWh for lighting efficiency, 10¢ per kWh for motors and other pre-approved measures such as variable speed drives and energy management and control systems, and 20¢ per kWh for cooling measures; additional summer demand reduction incentives are available for projects in Con Edison's electric service territory. Gas-saving and combined heat and power (CHP) projects in Con Edison territory are also eligible for incentives under this program. Incentives cannot exceed 30% of total project cost. Applications from ESCOs for the program are accepted by NYSERDA on a first-come, first-served basis.
  • Tier 1 of the same Enhanced Commercial/Industrial Performance Program (formerly the Smart Equipment Choices Program) provides incentives to offset up to $10,000 of the incremental cost of energy-efficient electrical equipment (ranging from LED exit signs to commercial kitchen equipment) in small renovations and equipment replacement projects. In addition, Con Edison firm gas customers can receive incentives for gas-saving equipment such as high-efficiency boilers and programmable thermostats.
  • The New Construction Program provides funding to (1) conduct technical assessments of energy efficiency in building designs, (2) help pay for designs that substantially (by 15% or more) exceed New York's energy code and/or meet certain "green" building qualifications, including compliance with LEED certification requirements, (3) offset up to 75% of the incremental capital costs to purchase and install energy-efficient equipment, and (4) subsidize commissioning in these buildings. Applicants may choose among pre-qualified equipment, custom measures, or whole building incentives. Electric energy-efficiency measures and certain heating measures are eligible for incentives.
  • Through the Flexible Technical Assistance (FlexTech) program, up to $50,000 per project is offered on a cost-shared basis for energy audits, rate analysis, aggregation studies, retro-commissioning, and other types of engineering analyses.

What utility energy efficiency programs are available to me?

Long Island Power Authority (LIPA) offers the Commercial Construction Program, which provides financial incentives for installing energy-efficient equipment in new construction or renovation projects, as well as technical assistance to help incorporate energy efficiency into the building design. The program has three basic options: the Prescriptive approach, the Custom approach, and the Comprehensive Whole Building approach. The appropriate option will depend on the scope of the project and the types of energy-efficient technologies installed. LIPA has recently (2007) added incentives for commissioning and LEED certification as part of this program.

The New York Power Authority offers its Energy Services Programs (ESP). Technical experts work with facility managers of public sector buildings to identify and design energy-saving projects, which are financed by NYPA and paid off from customers' electric bills.

In addition to the state-wide NYSERDA initiatives described above, Con Edison customers can also take advantage of several energy efficiency programs offered by the utility in partnership with NYSERDA that are aimed at helping relieve congestion in Con Ed's service territory. These offerings fall under the rubric of the Power-Saving Partners program and include incentives ranging from technical and financial assistance to performance incentives and equipment rebates.

What load management/demand response options are available to me?

The New York Independent System Operator (NYISO) is offering three demand response programs:

  • The Emergency Demand Response Program (EDRP) provides financial incentives for electricity users to voluntarily reduce consumption and/or operate on-site generation during periods of electricity reserve shortage in New York. NYISO provides 2-hour notice of curtailment events as well as day-ahead advisories. Participants receive the higher of $500/MWh or the Locational Based Marginal Price (LBMP) for their curtailments. Participation in any curtailment event is voluntary, and there are no penalties for non-performance. Individual customers can either participate directly in EDRP (if their load reduction is at least 100 kW) or through an authorized Curtailment Service Provider, such as a utility, energy service company, or curtailment customer aggregator. EDRP and ICAP/SCR (see below) are dispatched separately by NYISO, with ICAP/SCR resources dispatched first, and EDRP customers called only if additional resources are needed.
  • The Special Case Resources (SCR) ICAP program provides financial incentives for electricity consumers larger than 100 kW to reduce their electricity use or operate on-site generation during periods of electricity reserve shortage. NYISO provides 2-hour notice of curtailment events as well as 24-hour advisories. Participants receive two separate payment streams: a capacity payment based on their committed load reduction amount, and energy payments for their actual load reductions during curtailment events. Participants face non-compliance penalties if they do not curtail their committed amount when called by NYISO. Individual customers must participate through an authorized Responsible Interface Party (RIP) who coordinates transactions with NYISO.
  • The Day Ahead Demand Response Program (DADRP) provides electricity users with the opportunity to bid load reductions into New York's day-ahead wholesale electricity market, where their bids compete with generators' offers to meet the state's electricity demand. At their discretion, customers can submit load reduction bids on a day-ahead basis by indicating the load reduction amount, price (between $50 and $1,000 per MWh), and time period. If the customer's bid is accepted and the customer fully curtails, they receive payment for their accepted bid, based on the greater of the bid price or the day-ahead Locational Based Marginal Price (LBMP). If the customer fails to fully curtail, they will pay the higher of the day-ahead price or the real-time price for the amount of incomplete scheduled load reduction. Individual customers can either participate directly in DADRP if their load reduction is at least 1 MW, or through an authorized Curtailment Service Provider, such as a utility, energy service company, or a curtailment customer aggregator. Most of these providers require a customer to be able to reduce load by at least 100 kW in each hour. Unlike the EDRP and ICAP programs, standby generators are not eligible for participation.

NYSERDA's Peak Load Reduction Program offers up to $1 million in incentives and technical assistance for measures that facilitate permanent or short-term decreases in customer peak loads. Categories for incentives range from numerous electric conservation and renewable measures (such as efficient HVAC equipment and photovoltaic panels) to distributed generation equipment (ConEd territory only) and interval meters. Incentives vary by measure and are particularly generous in transmission-constrained New York City. Participants who receive incentives for measures that help them participate in demand response programs must enroll for at least two summers in either a real-time pricing (RTP) electric supply program or the New York ISO's Special Case Resources ICAP program (see above).

In addition to the NYISO initiatives described above, Con Edison customers can also take advantage of several load management/demand response programs offered by the utility aimed at helping relieve congestion in its service territory.

  • The Distributed Load Relief Program offers participants the greater of $0.50/kWh or the difference between the real-time locational marginal price and their retail rate for load drops of 50 kW or more during localized grid emergencies (i.e., emergencies called by ConEd that are not system-wide across New York; see NYISO's EDRP program, above, for the latter). Load reductions must be for at least four hours and are measured in comparison to average non-event day baselines. Remuneration is based on the number and length of responses, as well as a customer's willingness to participate in a mandatory "Summer Reservation Program."
  • The Steam Air-Conditioning Summer Discount Program provides steam customers with a $2 per 1,000 pound discount for steam used by new or replacement steam air-conditioning equipment (absorption or steam turbine) during the high electricity demand months of May through October.
  • Con Ed's Central Air-Conditioning Program provides free internet-controllable programmable thermostats to customers who agree to allow Con Ed to occasionally cycle their air-conditioning compressors using an overrideable radio signal to the thermostat.
  • Customers with load-shifting capability can take advantage of ConEd's Day Ahead Hourly Pricing rate. To take advantage of this rate, facilities must have 15-minute interval metering, but ConEd will pay the lesser of $2,000 or 65% of the cost of these meters. By gauging day-ahead pricing, customers can plan their load reduction strategies around high-price periods and, in turn, benefit from lower long-term electricity prices. Accounts with a peak load over 1,500 kW are defaulted into this rate if a competitive supply option is not chosen.

What distributed energy resource options are available to me?

The Database of State Incentives for Renewable Energy (DSIRE) provides information on programs that offer incentives for renewable distributed generation. The following programs may be of interest to federal customers:

  • NYSERDA's Photovoltaics Incentives Program and Wind Incentives Program both offer generous incentives. For PV, $4-4.50/Watt(DC) is available for up to 50 kW on new systems (though the whole array my be larger). For wind, incentives are based on a percentage of the installed cost, ranging from 15% of costs for systems larger than 80 kW, up to 50% for systems less than 10 kW. A maximum of $100,000 is available per wind-related project.
  • Through the Combined Heat and Power and Renewable Generation Technical Assistance Program, NYSERDA will cost-share up to $50,000 for studies that investigate the site-specific technical and economic feasibility of installing electric generation capacity fueled by renewable resources or CHP systems with efficiencies of 60% or higher.
  • The Distributed Generation and Combined Heat and Power Program supports the development and demonstration of distributed generation (DG) systems, including combined heat and power (CHP) applications. NYSERDA will support feasibility studies ($100,000 maximum subsidy) and demonstration projects ($1,000,000 max.). Funding for projects is available through a competitive solicitation. All proposals must be cost-shared at or above 50% (cash and in-kind), with preference given to proposals with higher contribution levels and higher cash portions of the contribution.

Are there energy efficiency programs sponsored by the state government?

Please see the section above on public-purpose-funded energy efficiency programs.

What additional opportunities are available to me?

Federal customers also have energy efficiency opportunities available with utilities that have area-wide contracts with GSA (e.g., Con Ed, Niagara Mohawk, and Keyspan) and, by extension, all other federal agencies. Federal Facilities should contact their account executive to determine the level of participation by their local utility.