Expanding energy efficiency and dual-fuel heating are core pathways toward achieving net-zero goals—and natural gas utilities are taking heed. As they accelerate toward emissions-reduction targets, utilities’ strategies are fueled with ambitious energy efficiency initiatives.
As noted in the American Gas Association’s 2022 landmark report, Net-Zero Emissions Opportunities for Gas Utilities, natural gas utilities can tailor gas-demand reduction pathways to accommodate considerations that include building and appliance stock, the regulatory environment, and local, state and regional net-zero goals. Here, three AGA members share their innovative approaches, partnerships and pilots in the residential realm, driving down emissions by extending energy-efficient technologies and programs to a broader swath of American homes.
From 2012 to 2019, funding for energy efficiency among North American gas utilities rose by 40%.
As seen in AGA’s 2019 Program Year National Gas Efficiency Programs Report, released in February 2022, the rise in energy efficiency programs parallels the emergence of aggressive net-zero goals in the United States and Canada. The survey detailed the scope of natural gas ratepayer-funded efficiency and conservation programs among AGA members. Their responses show historical commitment and growth across multiple measures:
Electric Partnerships “EmPOWER” Customers
In Maryland, Washington Gas forged a dual-fuel initiative with four electric utilities in its service territory. The EmPOWER Maryland Energy Efficiency Act has provided a statutory framework for utility energy efficiency programs since 2008, and around 2019, the state Public Service Commission called for balancing the energy efficiency landscape among fuel types.
Under the resulting Washington Gas program, electric utilities will continue conducting holistic, whole-house energy audits and weatherization projects, and now will include high-efficiency natural gas appliances in their assessments and recommendations. To minimize costs and confusion, the electric utilities remain the sole point of contact for participating homeowners. They also issue rebates for installation of ENERGY STAR®-certified equipment and other gas energy-saving measures.
Under the regulatory mechanism created for the effort, Washington Gas purchases the gas therm savings from the corresponding electric utility, essentially reimbursing it for the natural gas-related incentives and program costs. The arrangement helps “right-size” cost recovery between the paired utilities while also driving participation, said Josh McClelland, senior manager of energy efficiency at Washington Gas.
When the lingering effects of COVID-19 dampened participation in 2021, Washington Gas worked with the program vendor to increase its incentives, and the line graphs tracking participation climbed “like a hockey stick.”
“Talk about a huge win-win,” McClelland said. “That extra incentive from us spurred more electricity savings because more people were participating. We can have a big influence on how the electric utilities’ programs operate and how successful they are. [And] we’ve learned there are a lot more gas savings to be accrued as part of this program.”
The Washington Gas 2021–2023 program cycle also includes pilot testing on multiple innovative energy efficiency fronts, including demand response, financing, energy-saving insights for small businesses, virtual commissioning for commercial buildings and midstream incentives for distributors.
The cycle also includes a gas heat pump pilot in partnership with GTI Energy. With efficiencies over 100%, gas heat pumps could be a major contributor to achieving Maryland’s ambitious climate change goals. The technology is gaining market acceptance in Canada and northern U.S. states, but “there’s a big blind spot here in the mid-Atlantic,” McClelland said. “We want to try and fill that gap.”
Washington Gas’ pilot is intended to generate data to demonstrate for commissioners and stakeholders the energy savings and greenhouse gas emissions abatement possible and, from there, “make this technology a centerpiece of our programs in the future,” he added.
Since participating in an intensive work group that issued a 2022 report on the future of EmPOWER Maryland, utilities in the state are refocusing their conventional energy efficiency approaches to align with the state’s goals to reduce GHG emissions.
“EmPOWER Maryland is aptly named,” McClelland said. “We’re trying to empower people to be more energy conscious and more aware of all the ways they can improve habits and equipment to reduce their energy usage. We also want our customers to know that we’re on the cutting edge of the latest technologies and programs, which then leads to even more insights, tools and access to ways to reduce their emissions.”
A hybrid approach to expanding low-income spending
In May 2021, Minnesota’s Energy Conservation and Optimization, or ECO, Act updated and expanded the state’s energy efficiency framework. The ECO Act preserves and modernizes Minnesota’s longstanding Conservation Improvement Program, or CIP, an initiative going back nearly 40 years that, according to the Center for Energy and Environment, has saved Minnesotans $60 billion.
The ECO Act prompted Minnesota Energy Resources to revise its 2021–2023 CIP Triennial Plan. The modifications, developed in accordance with state regulations, demonstrate Minnesota Energy Resources’ updated approach to new low-income spending requirements.
Under previous CIP requirements, Minnesota Energy Resources and other investor-owned natural gas utilities were required to spend 0.4% of their three-year average gross operating revenue from residential customers to benefit low-income residents. That number was an increase from the previous 0.2%. The ECO Act increases the requirement to 1%.
The increased low-income spend got immediate attention, and the company has received approval to leverage hybrid market-rate and low-income programs to ramp up spending for low-income residents. “The new minimum spend requirement continues to reinforce a focus on increasing resources for low-income residents,” which empowers utilities to better serve low-income customers through more robust program portfolios, said Katie O’Rourke, senior program manager — AEG, Minnesota Energy Resources’ administrator for CIP.
Under newly established spending goals for the low-income portions of hybrid programs, the company:
In addition, Minnesota Energy Resources received permission to shift some of the budget to research and development spending, which will be used to help with the analysis and inform future program design of new ECO-related energy efficiency opportunities. Minnesota Energy Resources’ response to some aspects of the ECO Act, including optimizing energy use through load management and fuel switching, is still under evaluation for possible inclusion in its 2024–2026 CIP Triennial Plan.
Recent technical direction from state policymakers also includes guidance regarding the pre-weatherization measures for low-income programs. Minnesota Energy Resources responded with a July 2022 filing that would, if approved, establish a spending cap for pre-weatherization measures in dedicated low-income programs and expand the circumstances in which dedicated low-income programs will fund pre-weatherization measures. This will allow low-income programs a pathway to address obstacles that previously prevented projects from moving forward through CIP.
According to the company, it looks forward to expanding its CIP portfolio and continuing to discover innovative ways to serve the low-income community.
Putting Energy Efficiency Within Reach
In 2019, Vermont Gas Systems designed a new Climate Action Plan based on three key strategies: Assure dramatic thermal efficiency savings, significantly expand a renewable natural gas product and offer new behind-the-meter products and services to help customers decarbonize affordably.
To meet those commitments, VGS’ investment in its Energy Efficiency Utility Program has doubled in three years. Building out that spending for maximum impact requires scrutinizing technologies for solutions potential and feasibility, forging barrier-breaking partnerships and striving toward energy efficiency for all.
“With every new product and service we’re developing for our energy efficiency program, we’re very focused on ensuring accessibility and affordability for the broadest array of customers possible,” said Morgan Hood, new product development manager. “We’re thoroughly invested in the idea of an equitable transition to clean energy sources, and we see natural gas infrastructure as playing a key role.”
The EEU’s decarbonization portfolio strategically aligns with Vermont’s statewide GHG reduction requirements and folds into the VGS business plan to stay relevant amid a transformation in legacy fossil fuel utilities, said Richard Donnelly, director of energy innovation.
The EEU’s programs encompass the needs of cost-conscious consumers and those least able to afford energy efficiency technology or services, while adhering to the guideposts of climate goals, budget and core competencies, Donnelly adds. Equity enhancements woven into recent filings include:
Throughout many of these projects, a strong partnership network allows VGS and electric distribution utilities to find shared synergies and leverage each other’s skills in the mutual effort to serve customers more broadly, said Donnelly.
Internally, VGS is also breaking down traditional silos between the demand and supply sides, he added. The EEU coordinates with sales and marketing, field services and customer care teams in a shared quest to generate holistic experiences matching customers’ energy, financial, comfort and climate goals.
“We’re all united behind this idea of being the thermal-solution provider to our customers,” said Donnelly. “Our customers look to us for affordable, reliable and safe heating, and we want them to continue to look to us, but the services we’re delivering and the way it looks is inevitably going to change. This utilizes our existing strengths and our core competencies—that customer focus, that desire to keep people warm and comfortable.”
President and CEO Neale Lunderville added that the entire VGS organization has aligned with its Climate Action Plan goals to help customers reduce energy usage through weatherization and adopt the latest and most efficient in-home thermal heating solutions.
“VGS is deeply committed to the fight against climate change, and we will lead the way by leveraging our strong connection to customers, energy expertise and modern infrastructure,” Lunderville said.
The American Gas Association’s popular GEERs—the Gas Energy Efficiency Roundtables series—returned in fall 2022. With the launch of GEERs in May 2021, utilities have an action-oriented space for going beyond the data presented in AGA’s annual Natural Gas Efficiency Programs Report.
The roundtables are designed to demonstrate and grow the industry’s contribution to a clean energy economy, create networking opportunities for program administrators and facilitate the exchange of information about innovations in energy efficiency.
The four roundtables of 2022 focus on AGA’s efforts to align its own programs with the groundbreaking Net-Zero Emissions Opportunities for Gas Utilities report and help member utilities leverage the report’s pathways. The first GEERs roundtable, held in August, explored how utilities are harnessing pathways and technologies toward their net-zero goals. Topics through late fall 2022 include the incorporation of energy efficiency in the net-zero space, and utilization of such advantages as rebates and incentives to increase market adoption and penetration of energy-efficient technologies.
Utilities are encouraged to keep the conversation going. Those who would like to attend GEERs or speak about their accomplishments in this area can reach out to Sapna Gheewala at sgheewala@aga.org.