Secrets of ConEdison’s Energy Incentive Program Revealed – Investing in Energy Efficiency and Ingenuity.
Utility companies around the Country such as ConEdison have funds available to help businesses offset costs of energy efficiency upgrades. These Incentive Programs intend to provide enough incentive for businesses to build energy efficiency into their premises. Utility companies use incentive programs to reduce energy demand and prolong the need to develop new supplies of electric energy. Use of Incentive Programs is an economical and responsible means of prolonging the building of power plants . Utility companies like ConEdison typically offer this financial assistance as “rebates” or “cash incentives” to businesses.
Our Firm, LC Associates
has been securing cash incentives for businesses for over 18 years and encompasses over thirty years of experience. The process of securing these incentives are complex and involved. The minimum time spent on any project is at least 200 man-hours. It is not unusual for Clients to assume that the process merely consists of filling out a form and engaging a design engineer. Clients with this frame of thinking tend to forego the use of a seasoned Energy Consultant. The Customer then expects the design engineer to “chase down” the incentives. This wishful thinking typically results in a low value incentive or no incentive at all.
When it comes to cash incentives for energy efficiency projects, nothing is more important than businesses ensuring that they send in their application on time. Utility companies, ConEdison included, mete out cash incentives under strict guidelines with multiple-party oversight. The Utility company must ensure that recipients of cash incentives use them appropriately. Utility companies must insure that their return on investment, namely energy (kWh) and demand (kW) savings are measured, verified and realized. In other words, there is a process involved.
To view the ConEdison Incentives page, click here.
The Application Process
The application process includes due diligence on the part of the business customer and requires gathering field data and interval metered data. Most businesses engage LC Associates to provide services required for the application process. The due diligence also requires a project write-up that encompasses energy savings projections, scopes of work and projected costs. The Utility company requires this information to be bundled up into an application and submitted to them for review.
There typically is a lot of time consuming back-and-forth conversations between customer and utility provider. Applications much include a project description, data, projections and a scope of work. We recommend to our Customers to provide the required information at least one to three months before the due date. By doing so, the Customer can obtain an accurate scenario, depicting in detail the benefits of the applicable rebates.
What happens next?
The Desk Review
In ConEdison’s case, the Utility company sends your application package to a third party reviewer as part of the Desk Review process. The reviewers are typically energy engineers who validate the project’s merits. These merits include it’s scope of work and energy projections. The reviewer will validate the energy projections and generate a report of their findings. ConEdison will then evaluate the reviewer’s report and generate a PIOL.
Successful businesses will engage LC Associates to prepare the application, the energy projections and the project’s scope. Our Firm submits incentive applications and includes all of the pertinent information in a concise, clear and easy to read format. ConEdison’s reviewers may have questions and it is important to have a seasoned energy consultant to address the reviewers inquiries.
After performing due diligence, the third party consultant issues a preliminary finding, or “Desk Review” and an M&V Plan. Our Firm conducts a peer review of the “Desk Review”. If all is well, the Utility company, in this case ConEdison, issues a “Preliminary Incentive Offer Letter” (PIOL). The PIOL is ConEdison’s offered cash incentive payment. The PIOL is subject to measurement and verification (M&V), and a few other terms and conditions.
If you make it past the Desk Review, the next step is the most important….the “Pre-Inspection”.
Once the Customer accepts ConEdison’s Desk Review results and the proposed M&V Plan, the utility company will direct the third party reviewer to set up a “Pre-Inspection” of your project.
The pre-inspection entails a third party engineering consultant to visit the premise and verify the existing conditions. The third party consultant will take pictures of all the effected equipment and tag them. Interval metering data from your BMS will be extracted if available or else temporary M&V metering equipment will need to be installed for two weeks to one month.
It may seem like it will only take a day or two, however the pre-inspection can be time consuming. The Pre-Inspection has the potential to uncover unforeseen site conditions. These unforeseen conditions could have a positive or adverse effect. They could also have a neutral effect. If the former is true, Utility companies require adjustments to the energy projection.
Business customers should note that the Pre-Inspection can occur thirty days after businesses submit their original application.
This time required to schedule the pre-inspection doesn’t include the thirty to ninety days needed to prepare the application. The underlying message here is to engage your LC Associates’ team of seasoned energy consultants early on in the planning process. ConEdison needs to have enough time to process your application in accordance with the rules of the various programs.
DO NOT START DEMOLITION BEFORE THE PRE-INSPECTION.
The third party consultant engaged by ConEdison will also confirm whether the project has commenced.
If the Customer commences the project before the pre-inspection, then they may have to forfeit the cash incentive. Businesses should note that there is a difference between a cash incentive and a rebate. A “rebate” is typically a lower cash offering than a cash incentive. Rebates may not require a pre-inspection. Cash Incentives are typically larger payments and require a more involved process. If businesses commence projects before a pre-inspection, Utility companies may be deem the project as not needing an incentive in the first place. Most utilities including ConEdison are not allowed to offer incentives for projects that have already commenced.
Unfortunately there have been many cases where businesses have had to forfeit their incentives. Most cases are the result of commencing a project before the pre-inspection. Our Firm works closely with our Customers to coordinate project schedules in an effort to limit exposure to forfeitures.
Businesses can commence their energy efficiency upgrades once the third party reviewer completes the pre-inspection and the Utility company issues a notice to proceed. During this process, well…. things can change, and usually do. Businesses tend to value-engineer scopes of work to trim costs which can result in a reduced scope, or even a larger incentive amount.
During implementation, the project team discovers unforeseen conditions. Unforeseen conditions may result in adverse affects on budgets. These adverse effects put pressure on businesses to swap out specified equipment for lower cost alternatives. Unfortunately however, cheaper equipment may not meet minimum performance criteria. Utility companies require minimum equipment performance criteria to comply with cash incentive programs.
A good example are chillers, which must exceed the ashrae standard by 2% to qualify for an incentive payment. There have been many cases where businesses receive a PIOL and then swap out the specified equipment. The swapped equipment is typically a less efficient and cheaper model. If Businesses swap out scheduled equipment with less efficient models, they risk forfeiting their incentive. Our engineers review equipment specifications for Clients to help them safeguard their incentives.
Act of Reconciliation
Once the project is substantially complete, then it is time to call in your energy consultant. A good energy consultant will go through due diligence and M&V the performance of your project. Our Firm will install interval meters on the new equipment and verify performance and operation. We run the data from the interval meters through proprietary analytic tools to identify inefficiencies or over-performance.
Inefficiencies lower your incentive payment. Over-performance would allow us to seek a larger cash incentive. If an inefficiency is noticed then we would work with the business to help cure it and re-run the M&V effort.
In one interesting case, a project consisted of installing a new chiller with a VFD and controls. The customer sited the new chiller in a plant with six chillers. The project entailed installing VFD’s on the primary pumps as well. The chillers were all electric. The protocol was to operate the VFD driven chiller at part load conditions. At design conditions, the VFD driven chiller and a standard efficient chiller would be energized. The VFD’s on the pumps would modulate as well in response to the VFD-driven chiller.
As part of the M&V process, we trended the chilled water plant for a month and later found that the energy savings were less than projected. Our analysts set up an analytics algorithm and ran the data through a series of tests. We observed that the energy efficient chiller with the VFD and controls was taken off line halfway through the M&V interval. Our project manager inquired if the chiller was ever taken offline, and the engineers swore up and down that it was not. The project manager then presented the M&V data to the operating engineers who then recollected that the chiller was indeed shut down for a “few days”. We found that the insulation contractor had to finish a punch list item on the new chiller with the VFD and had it taken off line.
This story did end well however as we re-ran the M&V process and got the customer their cash incentive payment.
LC Associates generates a Project Installation Report (PIR) after each project completion.
Our engineers will conduct due diligence to verify the project’s performance once completed and commissioned. If all is well, we notify the Utility company to schedule a third-party post-inspection. The utility company engages a third party engineering firm to visit the site and inspect the project. Pictures will be taken, M&V tasks will be conducted and PIR will be generated by the third party consultant.The Utility company compares the two PIR reports. If the comparison is acceptable, the Utility will ask to see supporting costs. If the Utility company feels that the two PIR documents are not in sync, then they will call a meeting between the third party reviewer and the customer’s energy consultant to reconcile. It important to note that businesses who file direct with the Utility typically forego the customer sided PIR report. Relying solely on the third party consultant’s PIR is equivalent to handing over one’s bank statements to the IRS, and asking them to figure out the taxes each year. LC Associates generates a customer-sided PIR document for each project.
Project Cost Reconciliation
Once the Utility company completes the post-inspection process, we move onto the project costs. It is important to note that cash incentives only cover 50% to 70% and sometimes 100% of the project costs. Predictably the Utilities will never pay out cash incentives in excess of project costs. Project costs typically include both soft and hard costs and exclude in-house labor.In layman’s terms, if your cash incentive is $100,000 with a 50% incentive cap, your project has to cost at least $200,000. For example, if a business implements the project with in-house labor, and the cost ends up being $150,000, the Utility company may reduce the cash incentive to $75,000. Careful planning with your seasoned energy consultant would identify these opportunities to keep value-engineered items back in the project scope.
Now the good part, well in most cases. If all goes well and your project meets the pledged energy savings, and you can support your project costs, the utility company issues a payment to LC Associates who will disperse the appropriate funds to the building Owner and or Contractor. If not, then the Utility company may offer a partial payment typically paid out in 60%/40% milestones. The first milestone is met when the project is implemented and the second milestone when a proper M&V plan is conducted and reconciled.
About LC Associates
Our Company is a 20 person firm which started with humble beginnings back in 2002. It’s founder has worked for one of the top engineering design firms, Vanderweil Engineers
for 10 years. At the time, businesses would contact engineering design firms to chase down cash incentives. Design firms were great at designing energy efficient solutions for buildings. However the nuances of securing the energy incentive itself is a niche market requiring specialized skills. The need for an energy consultant to complement engineering design firms manifested itself, and LC Associates was founded.
For the past 18 or so years, our Firm has perfected energy consulting. With over $150M in filed incentive applications, LC Associates is at the top of its game. New York businesses view LC Associates as the VIP market participant when it comes to energy consulting services. Some of New York’s most iconic institutions and Fortune 100 enterprises, employ LC Associates. These businesses view our Firm as their trusted energy consultant and adviser. A significant part of our business also comes from small and medium sized businesses. Our expertise spans commercial real estate, multifamily housing, institutional and industrial markets. Give us a call! 212.579.4236
Contributing Author: Alex Young (AlexC@cutone.org)
Alex Young was an intern at LC Associates for the Summer 2018 season. Alex is a collegiate scholar majoring in Environmental and Sustainability Planning for Communities. Mr. Young started this blog in an effort to educate the business community. Specifically, Alex wanted to educate his peers on these incentive programs after he started asking why they are so confusing and convoluted. Alex realized that these processes were necessary to protect the integrity and transparency of the programs. These incentive programs benefit the community and environment as a whole and we thought we should write about it.