1. City of Boulder Meeting Kyoto -- Carbon Emissions Reduction: Commercial Lighting

2. Slide: 2 August 2009 Discussion Overview  State of Play  Project Overview - Analysis I  Project Development and Goals  Model Review  Energy Efficiency Model Development and Overview  Findings and Implications  Key Assumptions  Areas for Model Refinement  Derivation of Potential and Cost of Efficiency  Technical, Economic and Achievable Potential  Cost of Efficiency Example Calculation  Levelized Cost of Energy  Questions and Discussions

3. State of Play

4. Slide: 4 August 2009 State of Play City of Boulder Emissions Projections by Source

5. Project Overview

6. Slide: 6 August 2009 Project Inception  Project Identification  Commercial sector poses a significant amount of energy efficiency potential  Increasing energy efficiency in commercial buildings is among the most cost-effective ways of reducing energy use and the associated carbon emissions  Project Development  Project ID prompted the proposal and development of a commercial energy efficiency potential model to:  Determine the feasible range of delivered cost per metric tonne of CO 2 reductions  Determine the anticipated metric tonne reduction for a given investment

7. Slide: 7 August 2009 Analysis I - Delivered Price per mt CO 2 Assessment Analysis I set out to answer the questions: 1.What is Boulder’s cost for delivered CO 2 (cost CO 2 /metric tonne reduced)? 2.What are each of the components that make up the delivered CO 2 price? 3.How much CO 2 reduction can be expected with a given investment? 4.What influence does industry type, building type, etc. have on CO 2 price?

8. Slide: 8 August 2009 Analysis I - Approach  Basis  Various energy efficiency potential studies and data sets exist  Itron 2006 California Energy Efficiency Potential Study  DEER (Database for Energy Efficiency Resources)  NYSERDA’s 2003 study for New York State  E-Source / Platts  California Commercial End-Use Survey  Others…  Integrate City of Boulder data  Develop the model to reflect Boulder’s  Climate zone  Building stock  Energy mix  Consumption projections  Program Development  Others…

9. Model Review

10. Slide: 10 August 2009 Model Overview

11. Slide: 11 August 2009 Analysis I - Findings  Boulder’s Budget Required for Achievable Potential ≈ $480,000 (Boulder’s LCOE: $0.0035/kWh)  Boulder’s Achievable Potential Year 3 ≈ 9,000 mt CO 2

12. Slide: 12 August 2009 Analysis I - Findings  Boulder’s Annual Budget Target = $400,000 => Associated Annual CO 2 Savings 8,300 mt CO 2

13. Slide: 13 August 2009 Analysis I - Findings  Boulder Lighting Energy Efficiency Potential by Building Type

14. Slide: 14 August 2009 Analysis I - Findings  Boulder’s Program Administration Costs  Model Baseline ≈ 11% of measure costs  Analysis - 1%  Project Management - 3%  Strategic Positioning - 2%  Sales - 4%  Education an/Outreach - 1%  Compare to utility Demand Side Management/EE Programs  PA Costs modeled in range of the national average (10-18%) but above "best-in- class" utilities, which have more experience running programs than does the City of Boulder

15. Slide: 15 August 2009 Analysis I - Implications  Commercial lighting has significant EE potential  Boulder’s building stock is well positioned (i.e. significant savings from a few building types)  Small Office, Large Office, Retail and Health Care ≈ 87% of Achievable Potential  Targeted commercial EE can provide measurable and verified emission reductions  Cost sharing makes the commercial EE options more appealing for all stakeholders  Multi-party appeal  Understanding market segmentation will be critical for program development and sustained emission reductions.

16. Slide: 16 August 2009 Analysis I - Implications  System-wide Levelized Cost of Energy (LCOE) at $0.032/kWh, is comparable to leading industry analyses.  City of Boulder’s Cost of Carbon at $3.96/mt CO 2, is significantly less than worldwide carbon market cost of carbon (e.g. EU ETS at ≈ $20.8/mt CO 2 on Aug 18, 2009)  Achievable lighting efficiency has the potential to reduce overall commercial lighting energy use by 5% *  Achievable lighting efficiency has the potential to achieve nearly 12% * of Boulder’s commercial emissions reduction goal * Based on conservative Achievable Potential and “Ramp-up” percentages. Includes all energy savings from year 1, 2 and 3

17. Slide: 17 August 2009 Key Model Assumptions  Data set corrects for any measure double counting (i.e. measure XX negates the savings potential from measure YY)  Only readily available commercially implemented and proven measures included in model (i.e. no singular or extreme cutting-edge technologies)  System Consumption Projections: ≈ ½ % per year growth  Cost of CO 2 offsets: $20/mt CO 2  Boulder Discount Rate: 2.04%  Ratepayer Discount Rate: 3.0%  Boulder’s Program Administration Costs: 11%

18. Slide: 18 August 2009 Areas for Model Refinement  As data becomes available:  Program Administration Costs  Sales, Analysis, Project Management, etc.  Utility and Federal Incentives  Achievable Potential  Boulder’s technology saturation, customer acceptance, etc.  Achievable Potential Ramp-up  Investment/Benefit change over time  Lighting Technology cost  Anticipate reduced costs as technology gains mainstream market acceptance

19. Derivation of Potential and Cost of Efficiency

20. Slide: 20 August 2009 Technical Potential Boulder Building Stock Energy consumption forecast Commercial energy use break down by building type (sources: CBECS, Boulder) End use breakdown by building type (sources: PLATTS, CEC CEUS) Efficiency Measure Data (by building type and climate zone) Measure lifetime Annual savings (kWh/unit) Measure cost ($/unit) # of units in building type Top down Bottom up Technical Potential

21. Slide: 21 August 2009 Economic Potential Total Resource Cost (TRC) = System Avoided Costs System Costs TRC < 1 > 1 Not included in Economic Potential Economic Potential (kWh/year) Customer: Avoided retail rate of electricity Xcel: avoided cost of generation or wholesale purchase price City of Boulder: avoided cost of carbon offset System Avoided Costs Customer: Measure costs, net of rebate Xcel: rebate, lost revenue City of Boulder: Program administration costs System Costs

22. Slide: 22 August 2009 Achievable Potential Economic Potential (kWh/year) Achievable Factor (% achievable, by end use and bldg type) Achievable Ramp-Up Factor (% achievable by year) x x = CO 2 Intensity (m tons CO2/kWh) x = Achievable Potential (kWh/year) Achievable CO 2 Savings (m tons/year)

23. Slide: 23 August 2009 Derivation of Cost of Efficiency Example: Occupancy Sensor in Small Office  Source data for cost and performance of efficiency measures: Itron’s 2006 report “California Energy Efficiency Potential Study” Each measure defined as:Example for City of Boulder: TechnologyOccupancy sensor - plug load End-useLighting Building typeSmall Office Climate zone California Energy Commission Climate Zone 16 (“high, mountainous, semiarid region above 5,000 feet in elevation”)

24. Slide: 24 August 2009 Derivation of Cost Example: Occupancy Sensor in Small Office *Program Administration (PA) costs defined as % of measure capital cost:  Analysis (1%)  Project Management (3%)  Sales (2%)  Strategic Positioning (4%)  Education / Outreach (1%) Efficiency Measure/Bldg. TypeOccupancy Sensor/Small Office Measure energy savings per year789 kWh per year per unit Measure cost$169.20 per unit Measure lifetime8 years City of Boulder Data Used for Cost Analysis: Discount rate2.04% Program administration costs*Total of 11% of measure cost

25. Slide: 25 August 2009 Derivation of Cost Example: Occupancy Sensor in Small Office  Levelized Cost of Energy (LCOE) is the lifecycle cost of a measure, amortized over the measure’s lifetime, divided by the measure’s lifetime energy savings.  LCOE = [PMT (1) (measure cost + PA costs, @ Boulder’s discount rate, measure lifetime)] [(energy savings/year) × (lifetime)]  Occupancy sensor in small office: LCOE = [PMT (1) ($169.20 + (11% × $169.20), @ 2.04%, 8 years)] [(789 kWh/year) × (8 years)] = $0.033/kWh (1) PMT is a function that calculates the payment for a loan based on constant payments and a constant interest rate, using the present value of all future payments, the interest rate, and the number of payments (years) for the loan. measure cost PA Costs discount rate lifetime energy savings/year lifetime $ 25.96 788.9 kWh =

26. Slide: 26 August 2009 Derivation of Cost Example: Occupancy Sensor in Small Office  How does this compare to the levelized costs of the rest of the measures modeled? $0.033/kWh Measures costing more than ≈$0.12/kWh are not economic ($0.12 = customer rate + city's avoided cost of CO 2 offset alternative)

27. Slide: 27 August 2009 System Cost Breakdown Xcel Costs = Customer Costs = Boulder Program Administration Costs = % of Total Measure Cost Units Installed x Measure Cost per Unit — Units Incentivized x Incentive per Unit Incentive Cost = Overall costs are further broken down by stakeholder:

28. Thank You!