Establish Budget and Goals
Establishing Program Performance Goals
Every successful incentive program will have clearly defined goals established before commencement. These goals must meet the utility's unique energy supply and demand characteristics in order to provide a net benefit. If there is too little demand reduction, the limited benefits will render the program essentially useless, and the program will not be a worthwhile application of utility resources. If there is too much demand reduction, the energy savings will create a significant drop in the utility's revenue stream.
The utility should use the Cost-Benefit Analysis (CBA) Tool to help establish program goals. In order to provide the go/no-go decision to creating the incentive program, the CBA Tool requires inputs on utility demand savings goals. By adjusting these goals within the CBA Tool and looking at the different outcomes, the utility can hone in on a particular goal that maximizes the utility benefits of a demand-side management (DSM) program.
Establishing a Realistic Program Budget
Establishing a budget and then abiding by it may be the best way to ensure program success. During program delivery, it is important to periodically reevaluate program results and budget status to ensure the program is performing as expected. Overages can harm the growth of the program and future efficiency efforts. Meanwhile, if the program is not spending the money in its budget, it is likely that program will not meet the required performance targets.
Budget items can typically be split between administration, marketing, and incentive costs. Administrative costs include the salary and benefits for the energy service manager (ESM) along with the equipment he or she needs to get the job done. Marketing costs include physical and/or electronic marketing materials, as well as efforts of the ESM to recruit energy consumers and enlist the help of trade allies. Incentive costs include the money paid to energy consumers in order to entice them to implement energy efficiency measures.
A sample budget is provided in the table below. Please note that the values in this table are only samples and will vary by utility based on region. A utility will have to assess its unique situation to determine its specific program goals and budget. Using the CBA Tool can help in the budget process. The CBA Tool requires budgetary information to provide a go/no-go decision. By adjusting budget details within the CBA Tool and looking at the different outcomes, a utility can establish a budget that maximizes the program's benefit for the utility.
|Sample DSM Lighting Annual Program Budget|
|ESM Lighting Assessment Equipment||$2,000|
|Trade Allies Meeting||$6,000|
|10,000 CFL Light Bulbs @ $1/bulb||$10,000|
|2,000 T8 Light Fixtures @ $12/fixture||$24,000|
|500 kW Reduction @ $150/kW||$75,000|
|Annual Program Budget Total||$243,000|