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Energy-Efficiency Funds and Demand Response Programs, New York

Updated September 2008

Below you will find questions and answers regarding New York's utility energy efficiency programs, including options for load management, demand response, and distributed energy resources, and information about state-sponsored energy efficiency programs.

Between its public-purpose-funded programs (including those directed at residential and low-income customers) and programs offered directly by utilities, New York spent over $250 million in 2007 to promote increased energy efficiency in the state. This sum is expected to grow considerably over the next few years.

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

In 1998, as part of its 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.

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.

  • The Existing Facilities Program provides both pre-qualified and performance-based incentives. Pre-qualified incentives are tailored for smaller projects. Applicants can receive per-unit incentives of up to $30,000 per project for a variety of pre-qualified energy-efficiency and conservation measures, include lighting, HVAC, motors, and interval meters,. Performance-based incentives are available for CHP equipment to offset a portion of the technology cost of participating in demand response programs. Also offered as performance-based incentives are payments for one year's worth of verifiable gas and electricity savings. Gas savings are incentivized at $40/Mcf (up to $25,000) for National Gas customers and $2/therm (up to $500,000) for ConEdison customers. Electric efficiency savings are compensated at $0.12/kWh upstate and $0.16/kWh in Con Edison territory. Energy storage is remunerated at $300/kW upstate and $600/kW for Con Ed customers.

  • The New Construction Program provides funding to (1) conduct technical assessments of energy efficiency in building designs and evaluate green building opportunities, (2) provide financial incentives based on anticipated energy performance relative to that of New York's energy code, and (3) subsidize commissioning, peak load management, advanced solar, and daylighting and other green building technologies in these buildings. Applicants may choose among custom measures, whole building incentives, or a "Green Building Option." Certain cooling measures are also eligible for rebates. Specialized financial incentives are offered for customers in ConEd territory and upstate New York

  • Through the Flexible Technical Assistance (FlexTech) program, financial support is offered on a cost-shared basis for energy audits, rate analysis, aggregation studies, retro-commissioning, and other types of engineering analyses performed by a pre-qualified consultant. (Technical Assistance is also available if assessment provided by a non-pre-qualified consultant.) Customers with electricity bills of less than $75,000/year may be eligible for low-cost energy audits through the Energy Audit Program.

  • The NY Energy $mart Loan Program provides very low interest loans of up to $1 million for as long as ten years to new construction and major renovation projects aimed at improving energy efficiency and/or incorporating renewable energy.

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 also offers 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.

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

The New York Independent System Operator (NYISO) is offering two demand response programs and two programs that allow demand to participate in the Day-Ahead market for electricity:

  • 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.

  • NYISO also offers a Demand-Side Ancillary Services Program (DSASP), through which loads can provide 10-minute and 30-minute non-spinning operating reserves. To participate, registered demand-side resources submit availability bids to the Day-Ahead market. If these bids are accepted, the demand-side customer is paid the market clearing price for that level of reserves (e.g. 10-minute or 30-minute). In return, the customer must comply with load reduction signals from the NYISO. If the resource is asked to actually reduce demand in real-time it will also be paid the real-time price of energy. If the customer changes its operating reserve offer in real-time, the difference between this and the day-ahead reserve amount is financially settled at the real-time operating reserve price. A demand-side resource cannot offer the same capacity in the DADRP and DSASP in the same day.

NYSERDA's Demand Response Performance Based Incentive offers incentives for equipment necessary to participate in Demand Response programs, such as load-shedding controls and automation equipment. This program supports building of new on-site generation that meets New Source Performance Standards within Con Edison's territory. Incentives are $200/kW in Con Edison and $100/kW elsewhere, and cannot exceed 75% of total project cost. Participants who receive incentives for measures that help them participate in demand response programs must enroll for at least two summers in either the New York ISO's Special Case Resources ICAP program or the DSASP (see above).

In addition to the NYISO and NYSERDA 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 voluntary 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). Customers committed to mandatory load reduction receive monthly payments. 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 with a peak demand less than 100 kW 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, the cost of which may be offset under NYSERDA's Demand Response Performance Based Incentive (see above). 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, $4-5/WattDC) is available for up to 50 kW on new systems (though the whole array may be larger). For wind, incentives are based on the specific turbine installed (see website for these details). For both programs, installation must be done by an eligible installer identified by NYSERDA.

  • 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 as 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 demonstration projects ($2,000,000 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. Check the website for application deadlines.

  • LIPA offers rebates for installation of solar PV, wind and geothermal heating and cooling.

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?

NYSERDA maintains a comprehensive list of all Funding Opportunities. It contains information about all programs listed here plus additional ones.

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.