2010-2012 Ex Ante Measure Cost Study

371 Pages·2014·6.04 MB·English

2010-2012 WO017
Ex Ante Measure Cost Study
Final Report

Submitted to:

California Public Utilities Commission
505 Van Ness Avenue
San Francisco, CA 94102

Submitted by:

Itron, Inc.
1111 Broadway, Suite 1800
Oakland, CA 94607
[phone]

With assistance from:

Davis Energy Group
DNV GL
Energy & Resource Solutions
Quantum Energy Services & Technologies
TRC Energy Services
VACOM Technologies

May 27, 2014
Table of Contents
ES Executive Summary ........................................................................................... i
1 Introduction ........................................................................................................ 1-1
1.1 Regulatory Use of Ex Ante Measure Costs ................................................. 1-1
1.2 Scope and Objectives of MCS Update ........................................................ 1-2
1.3 Roadmap to Report..................................................................................... 1-4
2 Research Approach and Methodology ............................................................. 2-1
2.1 Request for Qualifications ........................................................................... 2-2
2.2 Needs Assessment ..................................................................................... 2-4
2.3 Define Measure List and Scope .................................................................. 2-6
2.3.1 Measure List Development Approach ........................................................................ 2-6
2.3.2 Measure Groups and Characteristics ......................................................................... 2-8
2.3.3 Prioritization Criteria and Scores ................................................................................ 2-9
2.3.4 Final Prioritization Rankings and Deemed Measure Scope ..................................... 2-13
2.4 Develop Data Collection Strategies .......................................................... 2-14
2.4.1 Data Collection and Analysis Objectives .................................................................. 2-14
2.4.2 Retail Unit Equipment Prices .................................................................................... 2-15
2.4.3 Installation Labor Costs ............................................................................................ 2-20
2.5 Conduct Data Analysis .............................................................................. 2-21
2.5.1 Data Cleaning and Backfilling .................................................................................. 2-22
2.5.2 Hedonic Price Modeling ........................................................................................... 2-23
2.5.3 Built-up and Simple Average Estimates ................................................................... 2-29
2.5.4 Validation and Benchmarking ................................................................................... 2-30
2.5.5 Uncertainty ............................................................................................................... 2-31
3 Unit Equipment Prices – Final Data Sources and Results .............................. 3-1
3.1 Appliances and Electronics ......................................................................... 3-1
3.1.1 Data Development Process ........................................................................................ 3-1
3.1.2 Market Assessment Findings ..................................................................................... 3-2
3.1.3 Modeling Process ....................................................................................................... 3-3
3.1.4 Roll-up Weights ........................................................................................................ 3-11
3.1.5 Model Results and Findings ..................................................................................... 3-11
3.2 Residential Lighting................................................................................... 3-14
3.2.1 Data Development Process ...................................................................................... 3-14
3.2.2 Market Assessment Findings ................................................................................... 3-15
3.2.3 Modeling Process ..................................................................................................... 3-16
3.2.4 Roll-up Weights ........................................................................................................ 3-24
3.2.5 Modeling Results and Findings ................................................................................ 3-24
3.3 Residential HVAC, Water Heating, and Shell ........................................... 3-27
3.3.1 Data Development .................................................................................................... 3-27
3.3.2 Market Assessment Findings ................................................................................... 3-28
3.3.3 Modeling Process ..................................................................................................... 3-29
3.3.4 Roll-up Weights ........................................................................................................ 3-35
3.3.5 Modeling Results and Findings ................................................................................ 3-35
3.4 Nonresidential Lighting ............................................................................. 3-42
Itron, Inc. i Table of Contents
Measure Cost Study – Final Report (Deemed Measures)
3.4.1 Data Development Process ...................................................................................... 3-42
3.4.2 Market Assessment Findings ................................................................................... 3-43
3.4.3 Modeling Process ..................................................................................................... 3-44
3.4.4 Roll-up Weights ........................................................................................................ 3-53
3.4.5 Model Results and Findings ..................................................................................... 3-53
3.5 Nonresidential HVAC, Water Heating, and Shell ...................................... 3-57
3.5.1 Data Development Process ...................................................................................... 3-57
3.5.2 Market Assessment Findings ................................................................................... 3-59
3.5.3 Modeling Process ..................................................................................................... 3-60
3.5.4 Roll-up Weights ........................................................................................................ 3-70
3.5.5 Model Results and Findings ..................................................................................... 3-70
3.6 Commercial and Industrial Refrigeration ................................................... 3-81
3.6.1 Data Development and Modeling Process ............................................................... 3-81
3.6.2 Market Assessment Findings ................................................................................... 3-81
3.6.3 Results and Findings ................................................................................................ 3-82
3.7 Commercial Food Service and IR Film ..................................................... 3-85
3.7.1 Data Development Process ...................................................................................... 3-85
3.7.2 Market Assessment Findings ................................................................................... 3-86
3.7.3 Modeling Process ..................................................................................................... 3-87
3.7.4 Results and Findings ................................................................................................ 3-88
3.8 HVAC Maintenance, SHW Distribution, Pool Covers, and Appliance
Recycling .................................................................................................. 3-90
3.8.1 Data Development Process ...................................................................................... 3-90
3.8.2 Market Assessment Findings ................................................................................... 3-90
3.8.3 Modeling Process ..................................................................................................... 3-90
3.8.4 Results and Findings ................................................................................................ 3-91
3.9 Network Power Management Software ..................................................... 3-93
3.9.1 Data Development Process ...................................................................................... 3-93
3.9.2 Market Assessment Findings ................................................................................... 3-93
3.9.3 Modeling Process ..................................................................................................... 3-94
3.9.4 Results and Findings ................................................................................................ 3-94
4 Labor and Non-Equipment Installation Costs – Final Data Sources and
Results ................................................................................................................... 4-1
4.1 Split-System and Packaged DX and HP ..................................................... 4-3
4.1.1 Data Development Process ........................................................................................ 4-3
4.1.2 Results and Findings .................................................................................................. 4-5
4.2 Linear Fluorescent Lighting and Occupancy Sensors ................................. 4-9
4.2.1 Data Development Process ........................................................................................ 4-9
4.2.2 Results and Findings ................................................................................................ 4-11
4.3 Other Nonresidential HVAC, Shell, and Lighting ....................................... 4-14
4.3.1 Data Development Process ...................................................................................... 4-14
4.3.2 Results and Findings ................................................................................................ 4-18
4.4 Water Heating, Other Residential HVAC, Other Commercial Ventilation,
and MSB Lamps Installation Costs ........................................................... 4-26
4.4.1 Data Development Process ...................................................................................... 4-26
4.4.2 Results and Findings ................................................................................................ 4-30
4.5 Commercial and Industrial Refrigeration ................................................... 4-35
4.5.1 Data Development Process ...................................................................................... 4-35
4.5.2 Results and Findings ................................................................................................ 4-36
4.6 HVAC Maintenance and SHW Distribution ............................................... 4-38
4.6.1 Data Development Process ...................................................................................... 4-38
4.6.2 Results and Findings ................................................................................................ 4-39
Itron, Inc. ii Table of Contents
Measure Cost Study – Final Report (Deemed Measures)
5 Discussion of Results ........................................................................................ 5-1
5.1 Mapping Results to DEER and Workpaper Measure Definitions ................ 5-1
5.2 Key Differences from Previous Ex Ante Estimates ..................................... 5-4
5.2.1 Appliances and Electronics ........................................................................................ 5-5
5.2.2 MSB Lighting .............................................................................................................. 5-5
5.2.3 Linear Fluorescent Lighting ........................................................................................ 5-5
5.2.4 Residential HVAC ....................................................................................................... 5-6
5.2.5 Residential Water Heating .......................................................................................... 5-7
5.2.6 Nonresidential HVAC ................................................................................................. 5-7
5.2.7 Nonresidential Water Heating .................................................................................... 5-8
5.2.8 Food Service .............................................................................................................. 5-8
5.3 Discussion of Uncertainty ........................................................................... 5-9
5.4 Lessons Learned ...................................................................................... 5-10
5.5 Recommendations and Future Work ........................................................ 5-12
5.5.1 Technology-specific Recommendations .................................................................. 5-13
5.5.2 Methodological and Process-related Recommendations ......................................... 5-15
Appendix A Commission Staff Memorandum – Final In-scope Measure List . A-1
Appendix B DNV-GL Technical Memoranda on Residential Lighting Data
Collection and Analysis ....................................................................................... B-1
B.1 Technical Memorandum 1A: Shelf Survey Data Development
B.2 Technical Memorandum 2: Hedonic Regression Results
B.3 Technical Memorandum 3: Lamp Grouping, Lumen Ranges, and
Wattage to Lumen Equivalencies
B.4 Interim Retail Channel Sales Weight
Appendix C VACOM Summary Report – Commercial and Industrial
Refrigeration Measures ....................................................................................... C-1
Appendix D Joint HVAC Contractor Survey Details .......................................... D-1
D.1 Survey Script (Measure Cost Study Battery)
D.2 Sample Frame Development Memorandum
D.3 Sample Design and Final Disposition
D.4 Expansion Weights
Appendix E Joint Lighting Contractor Survey Details ...................................... E-1
E.1 Survey Script (Measure Cost Study Battery)
E.2 Sample Frame Development Memorandum
E.3 Sample Design and Final Disposition
E.4 Expansion Weights
Appendix F Ex Ante Measure Cost Estimates Based on READI v.1.0.4
Definitions for In-scope Measures .......................................................................F-1
F.1 Hedonic Model Estimates
F.2 Simple Average and Built-Up Estimates
Appendix G Participation-Weighted Statewide Labor Rate Index.................... G-1

Itron, Inc. iii Table of Contents
Measure Cost Study – Final Report (Deemed Measures)
List of Tables
Table 2-1: Subcontractor Roles and Scopes for MCS ............................................ 2-3
Table 2-2: Data Sources and Primary Data Collection Activities Used to Support
Development of Large Samples of Actual Retail Price Observations ............. 2-17
Table 2-3: Data Sources and Primary Data Collection Activities Used to Support
Development of Built-up Retail Prices ............................................................ 2-19
Table 2-4: Data Sources and Primary Data Collection Activities to Support
Development of Installation Labor Hours by Measure Group ......................... 2-21
Table 3-1: Final Data Sources for Unit Price Estimates – Appliances and
Electronics ........................................................................................................ 3-2
Table 3-2: Relative Sales Volume of Televisions Sold in California by Type,
2010-2012 (source: NPD) ................................................................................ 3-3
Table 3-3: Hedonic Price Model Results for Residential Refrigerators ................... 3-5
Table 3-4: Hedonic Price Model Results for Residential Clothes Washers ............ 3-6
Table 3-5: Hedonic Price Model Results for Televisions ........................................ 3-8
Table 3-6: Incremental Equipment Price Estimates for Residential Refrigerators,
Clothes Washers, and Televisions ................................................................. 3-12
Table 3-7: Final Data Sources for Unit Price Estimates – Residential Lighting .... 3-14
Table 3-8: Hedonic Price Model Results for Residential Lighting ......................... 3-18
Table 3-9: Incremental Equipment Price Estimates for Residential Lighting ........ 3-26
Table 3-10: Final Data Sources for Unit Price Estimates – Residential HVAC,
Water Heating, and Shell ............................................................................... 3-28
Table 3-11: Hedonic Price Model Results for Residential HVAC, Water Heating,
and Shell ........................................................................................................ 3-30
Table 3-12: Incremental Equipment Price Estimates for Residential HVAC,
Water Heating, and Shell ............................................................................... 3-37
Table 3-13: Final Data Sources for Unit Price Estimates – Nonresidential
Lighting........................................................................................................... 3-43
Table 3-14: Hedonic Price Model Results for Nonresidential Lighting .................. 3-45
Table 3-15: Incremental Equipment Price Estimates for Nonresidential Lighting . 3-55
Table 3-16: Final Data Sources for Unit Price Estimates – Nonresidential HVAC,
Water Heating, and Shell ............................................................................... 3-59
Table 3-17: Hedonic Price Model Results for Nonresidential HVAC, Water
Heating, and Shell .......................................................................................... 3-62
Table 3-18: Incremental Equipment Price Estimates for Nonresidential HVAC,
Water Heating, and Shell (Excluding Chillers and Boilers) ............................. 3-73
Itron, Inc. iv Table of Contents
Measure Cost Study – Final Report (Deemed Measures)
Table 3-19: Incremental Equipment Price Estimates for Chillers ......................... 3-79
Table 3-20: Incremental Equipment Price Estimates for Boilers .......................... 3-80
Table 3-21: Incremental Equipment Price Estimates for Commercial
Refrigeration ................................................................................................... 3-83
Table 3-22: Incremental Equipment Price Estimates for Commercial Food
Service and IR Film ........................................................................................ 3-89
Table 3-23: Incremental Equipment Price Estimates for HVAC Maintenance,
SHW Distribution, Pool Covers, and Appliance Recycling ............................. 3-92
Table 3-24: Incremental Equipment Price Estimates for Network Power
Management Software ................................................................................... 3-94
Table 4-1: Installation Scenarios Used in HVAC Contractor Survey ...................... 4-4
Table 4-2: Final Data Sources for Installation Costs – Split-System and
Packaged DX and HP ...................................................................................... 4-5
Table 4-3: Installation Cost Estimates for Split-System and Packaged DX and
HP .................................................................................................................... 4-6
Table 4-4: Installation Scenarios Used in Lighting Contractor Survey .................. 4-10
Table 4-5: Final Data Sources for Installation Costs – Linear Fluorescent
Lighting and Occupancy Sensors ................................................................... 4-11
Table 4-6: Installation Cost Estimates for Linear Fluorescent Lighting and
Occupancy Sensors ....................................................................................... 4-12
Table 4-7: Installation Scenarios Used in Artificial Bids for Other Nonresidential
HVAC ............................................................................................................. 4-16
Table 4-8: Installation Scenarios Used in Artificial Bids for Nonresidential Shell
and Lighting .................................................................................................... 4-17
Table 4-9: Final Data Sources for Installation Costs – Other Nonresidential
HVAC, Shell, and Lighting .............................................................................. 4-18
Table 4-10: Installation Cost Estimates for Other Nonresidential HVAC, Shell,
and Lighting .................................................................................................... 4-20
Table 4-11: Installation Labor Hours Models Developed for Water Heating, Other
Residential HVAC, and Other Commercial Ventilation Based on RSMeans
Data ............................................................................................................... 4-27
Table 4-12: Final Data Sources for Installation Costs – Water Heating, Other
Residential HVAC, Other Commercial Ventilation and MSB Lamps .............. 4-29
Table 4-13: Installation Cost Estimates for Water Heating, Other Residential
HVAC, Other Commercial Ventilation and MSB Lamps ................................. 4-30
Table 4-14: Installation Cost Estimates for Commercial/Industrial Refrigeration .. 4-37
Itron, Inc. v Table of Contents
Measure Cost Study – Final Report (Deemed Measures)
Table 4-15: Installation Cost Estimates for HVAC Maintenance, SHW
Distribution, Pool Covers, and Appliance Recycling ....................................... 4-39
Table 5-1: Capacity Conversions Applied to Match READI Capacity Units ............ 5-3

List of Figures
Figure 2-1: Flowchart of Overall MCS Research Approach and Tasks .................. 2-2
Figure 2-2: Overview of Measure List Development Approach .............................. 2-8
Figure 2-3: Quality of Current Estimate Scoring .................................................... 2-11
Figure 2-4: Portfolio Incentive Contribution Scoring .............................................. 2-12
Figure 2-5: Future Codes, Standards, & Labeling Scoring .................................... 2-13
Figure 2-7: Variables in Itron Cost Models vs. Variables in DEER/WP Definitions,
Refrigerator Example ..................................................................................... 2-27
Figure 2-8: Aggregating Itron Cost Model Results to Match DEER/WP Measure
Definitions, Refrigerator Example ................................................................... 2-27

Itron, Inc. vi Table of Contents
Acknowledgements
The execution and completion of this study would not have been possible without the
contributions of many individuals from a number of different firms and organizations.
We would like to extend special thanks to our CPUC project manager, Katie Wu, for her steady
guidance over the course of the study, as well as to members of the DEER team (Jeff Hirsch,
Kevin Madison, and Paul Reeves) and Pete Jacobs (Building Metrics) for their feedback on the
early versions of our research plan, priority ranking methods, and data collection and analysis
plans. We are also very grateful to Erik Page (JJH and Associates) for his early review and
feedback on our nonresidential lighting models and results.
We would like to thank all of the staff from our subcontractor team, with particular thanks to
Andrew Stryker (DNV-GL), Bob Rispoli and Mark Berman (Davis Energy Group), Colman
Snaith and Carrie Lally (TRC Energy Services), Stephen Achilles and Bruce Harrington (Energy
and Resource Solutions), Doug Wiedwald and David Jump (Quantum Energy Services and
Technologies), Doug Scott and Brian Dobbs (VACOM Technologies), and Aaron Heffron (NPD
Group).
A large number of Itron staff made direct contributions to this study, but several deserve
individual recognition. Luke Scheidler, Jeremy Eddy, Phillip Kelsven, Collin Elliot, Vanessa
Arent, and Sue Burris conducted the vast majority of the data cleaning and analysis. Jean
Shelton, Aaiysha Khursheed, and George Jiang led the development, implementation, and
analysis of the lighting and HVAC contractor surveys and provided custom queries from the
Commercial Market Share Tracking database. Bob Ramirez provided micro data from the
California Commercial End-Use Survey. Priya Sathe provided custom queries from the
Residential Market Share Tracking POS database. Mike Rufo and Leonel Campoy provided
strategic guidance and valuable review of our work products.
Finally, we would like to thank Amy Morgan and Peter Strait (CEC) for providing the complete
set of program invoices from the California Energy Commission’s Cash for Appliances program,
Jarred Metoyer (DNV-GL) for providing custom queries from the California Lighting and
Appliances Saturation Survey database, Ellen Steiner (EMI) for providing the complete list of
C20 licensees in California, and all of the staff from Pacific Gas and Electric, Southern
California Edison, SoCal Gas, and San Diego Gas and Electric who provided responses to our
data requests.
ES

Executive Summary
This report presents the results and findings from Work Order 17 – the Ex Ante Measure Cost
Study. The primary objective of the study is to provide the California Public Utilities
Commission (CPUC) and the Investor Owned Utilities (IOUs) with improved ex ante measure
cost estimates to support fulfillment of CPUC policy requirements.
The scope of this study initially included all deemed measures contained in the Database for
Energy Efficient Resources (DEER), as well as non-DEER deemed measures. This scope was
distinctly different from those in previous measure cost studies conducted in California, which
have been strictly limited to DEER measures. Given the diversity of deemed measures in the
IOU portfolios and their differing overall importance in total portfolio-level expenditures and
impacts, the study team developed a ranking methodology to identify the highest priority deemed
measures for which to develop updated measure cost estimates. These rankings were based on
measure-specific assessments of three specific criteria: the overall quality of the current DEER
or IOU workpaper measure cost estimate; the expected contributions to total 2013-2014 portfolio
incentive expenditures, and the expected magnitude of interactions with future revisions to
building codes, appliance standards, and labeling programs. After examining the relative priority
rankings produced with this methodology and soliciting feedback from the IOUs, Commission
staff determined the final scope of the study, which included 63 measure groups and over 100
unique technologies.
Before developing measure-specific data collection strategies for in-scope measures, the study
team developed a set of specific research objectives that built directly upon the detailed review
and assessment of the data sources and methods underlying the current set of incremental cost
estimates in DEER and the IOU workpapers. These specific objectives were:
 Use substantially larger sample sizes from highly representative sample frames
 Increase use and improve specification of regression-based cost models
 Use systematic, independent validation of results
 Incorporate anticipated interactions with future codes, standards, and labeling programs
 Develop additional lifecycle cost data
 Streamline data acquisition and development for future updates

Itron, Inc. i Executive Summary
Measure Cost Study – Final Report (Deemed Measures)
To develop estimates of the average retail unit price for in-scope deemed measures, the study
team used two general approaches to data collection and development. For mass market
measures that are primarily sold directly to final consumers through retail channels, the study
team collected and developed large samples of actual retail price observations at the point of sale
from two primary sources: 1) large point-of-sale (POS) datasets acquired from third-party
marketing firms, and 2) a large sample of in-store retail price observations (also known as retail
shelf surveys). Collecting and developing such samples allowed incremental costs due to
efficiency to be estimated using regression-based cost modeling (also known as hedonic price
modeling).
For measures that are procured and sold to consumers primarily or exclusively via contractors,
the study team used a “retail price build-up” approach where unit price data was collected at the
distributor level and supplemented by explicit estimation of bulk purchase discounts, contractor
mark-ups, warranties, and other factors that determine the average retail price faced by final
consumers. This approach closely mirrors the equipment and project pricing practices used by
contractors, energy service companies, and program implementers who procure and install
energy efficiency measures on behalf of customers. Through a Request for Qualifications
process conducted explicitly for this study, Itron identified five firms that regularly specify,
procure, and install energy efficiency technologies on behalf of customers and have established
relationships with the relevant equipment distributors in California. These firms then solicited
equipment price lists from distributors on behalf of the study team.
Upon assembling and cleaning the equipment price datasets, the study team then developed and
tested hedonic price models. This method is a statistical approach to isolating and estimating the
relative influence of various individual product features on the product’s final, observed price.
In the case of this study, the key product feature of interest is usually the energy performance of
the equipment as measured by metrics such as the Seasonal Energy Efficiency Ratio for air
conditioners or the annual unit energy consumption for refrigerators. Hedonic price modeling
has many attributes that make it highly appealing for incremental cost estimation. First and
foremost, it allows incremental cost estimates to be explicitly controlled for cost-influencing
factors that are not related to efficiency performance. Second, it allows incremental costs to be
estimated across a continuum of technology specifications and can be applied to both program-
level and measure-level planning activities. Third, it allows for the explicit quantification of the
uncertainty associated with the result for each independent variable.
It should be noted that for a significant subset (roughly one quarter) of in-scope measures, it
proved difficult, inappropriate, or unnecessary to estimate incremental cost using hedonic
modeling. In these cases, the study team used built-up costs developed by specialized
subcontractors or simple averaging (either on a matched pair basis or whole-sample basis).

Itron, Inc. ii Executive Summary