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ABSTRACT

This article provides a brief comparison of the public sector vs. private sector in terms of characteristics, applicable incentives, and decision- making criteria for participating in new, untried endeavors like demand-side programs, using water agencies in California as the public sector example. Recommendations on characteristics of utility demand-side programs likely to be attractive to public agencies are provided.

INTRODUCTION

The government sector has been notoriously slow to participate in new demand-side programs. This article provides a brief comparison of the public sector vs. private sector in terms of characteristics, applicable incentives, and decision-making criteria for participating in new, untried endeavors like demand-side programs. While the public sector example provided here represents public water agencies in California, the same general principles will apply to any public agency.

Water agencies in California are the single largest electricity user in the state. Water pumping and treatment use seven percent of the total electricity consumption in the state, and accounts for five percent of the peak electricity demand*. This amount is only going to increase, as treatment requirements increase, and desalinization projects are developed.

In conjunction with storage, many water agencies have significant flexibility in their operations. Water stored at an elevation is basically stored energy derived from electricity. Water agency summer on-peak capacity reductions, typically over 400 MW, are due primarily to response to time-of-use tariff pricing*. However, this on-peak demand reduction has not changed materially since before 2000, despite a plethora of new programs to encourage demand response. The electric utilities spend close to $1 billion per year on energy efficiency and demand-response programs. The water agencies, in spite of being the single largest consumers of electricity in the state, typically have very little participation in utility demand-side programs, receiving an average of approximately one percent of the utilities' annual expenditures on energy efficiency and demand response since 2002. This article delineates some of the critical differences between public and private sector participants, and recommends some characteristics of programs that will be likely to result in more public sector participation in demand-side programs.

GENERAL CHARACTERISTICS

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Lon W. House, PhD, CEM, CSDP, is a Water and Energy Consultant with over 25 years of experience. Dr. House has a Bachelors, two Masters, and a PhD in Engineering and Economics from UC Davis. He is a Certified Energy Manager (CEM) and a Certified Sustainable Development Professional (CSDP) with the Association of Energy Engineers. Dr. House taught engineering in Graduate School at UC Davis for a number of years and was the Founder and Co-Director for Hydropower at the UCD Energy Institute. He worked for the California Energy Commission as a utility planner, and was the chief utility planner for the California Public Utilities Commission.

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