Lincoln Electric System keeps refining efficiency incentives

Like rose bushes, customer energy-efficiency programs only flourish with careful attention, like Lincoln Electric System You are leaving Western's site. (LES) gives to its Sustainable Energy Program You are leaving Western's site..

The Nebraska municipal utility is funding its incentive program with $3 million this year to help customers make their homes and businesses more energy-efficient. The program is intended to encourage customer-owners to upgrade to equipment and systems that are more efficient than they would have purchased on their own.

Program participants are not the only LES customers who benefit, either. “The Sustainable Energy Program also reduces the need to purchase more expensive power during the summer months and delays the need for new power generation,” said Marc Shkolnick, LES manager of energy services. “This is a good investment for all our customer-owners.”

Broadening program
LES launched the Sustainable Energy Program in 2009 to reduce demand with energy efficiency and renewable energy to offset the utility’s projected five-year growth on a rolling basis. “We retooled a heat pump incentive to go after our summer peak,” explained Shkolnick. “Over time, we added more equipment and systems as we realized that it would take a more aggressive approach to ensure that all our customers were benefitting.”

LES offers funds to help customer-members upgrade insulation and seal their homes and businesses. (Photo by Lincoln Electric System)
LES offers funds to help customer-members upgrade insulation and seal their homes and businesses. (Photo by Lincoln Electric System)

The current version of the Sustainable Energy Program offers incentives for:

  • High-efficiency heat pumps and air conditioners for residential and commercial customers replacing existing cooling systems or installing them in newly built homes and buildings
  • Commercial and industrial energy-efficiency measures that achieve peak demand savings, such as commercial lighting retrofits, air conditioner or heat pump replacements, variable-frequency drive upgrades, compressed air system analysis and upgrade, energy management system installation, optimization or upgrade and system commissioning
  • Whole-house and facility sealing and insulation to seal penetrations and bring insulation levels to current code standards in existing homes and facilities

Air conditioner and heat pump upgrades are the most popular residential measures, and for commercial customers, “It’s lighting, by a slam dunk,” declared Shkolnick. “Over time, between the changes in technology and dropping prices, we’ve seen the most activity in lighting incentives.”

LES commercial customers overwhelmingly choose lighting upgrades to reduce their electricity bills. (Photo by Lincoln Electric System)
LES commercial customers overwhelmingly choose lighting upgrades to reduce their electricity bills. (Photo by Lincoln Electric System)

Spreading savings, awareness
Since 2009, residential customers have implemented 6,000 projects and commercial customers have completed 5,000 upgrades to save a cumulative estimate of 100,000 megawatt-hours. Leveraging $18.3 million in incentives, LES customers invested $87 million in energy-efficiency upgrades for an estimated annual savings of $7 million on electric energy bills, a win for the local economy, too.

In fact, trade allies have been among the program’s biggest promoters, noted Shkolnick. “People don’t think about these kinds of purchases until they need to. Contractors are talking to customers when they are ready to buy new equipment or systems, and they talk about the incentives,” he said. “LES promotes the program through the usual channels—bill stuffers, newsletters, ads—but the vendors are our most effective marketers.”

Getting off on the right foot with the local contractor pool—and staying there—helped. LES brought vendors in during the development of the Sustainable Energy Program to get their input. “We still do an annual orientation to update our trade allies on program changes, terms and conditions,” Shkolnick said. “Also, we moved the reimbursement system online to streamline the process and make it more user-friendly.”

Reaching out to contractors has paid off in more than program participation. A recent survey LES conducted showed not only a growing awareness among customer-owners about the Sustainable Energy Program, but also about energy use and reducing waste in general.

Making good even better
All of which is to say that the Sustainable Energy Program is doing a good job of saving energy and engaging customers. But is it keeping up with the times? Since LES launched the program, lighting technology has made great strides, building energy codes have tightened and federal efficiency standards have toughened.

Far from taking success for granted, LES recently hired a consultant to analyze seven years’ worth of data and experience. The third-party critique will review the program’s cost-effectiveness, and look at assumptions for claiming energy and demand savings and how the savings are modeled in the utility’s load forecast. “We want to make sure the program is following industry best practices,” said Shkolnick.

It takes work to build an effective energy-efficiency program—one that meets the needs of both customers and utility—and Lincoln Electric System is sowing what it wants to reap.

Energy department issues largest energy-efficiency standard ever

That boom you may have heard at the end of 2015 was the Department of Energy Appliance and Equipment Standards Program sending the year out with historic new efficiency standards for commercial air conditioners and furnaces. The new standards are expected to save 1.7 trillion kilowatt-hours over 30 years of sales, or almost as much energy as one year’s worth of coal generation in the United States.

Tons of savings
Rooftop air conditioners cool about half the commercial floor space in the nation. The DOE also set standards for commercial warm air furnaces, which are typically installed with the rooftop commercial air conditioners. Over the lifetime of the products, the standards will save businesses $167 billion on their utility bills and reduce carbon pollution by 885 million metric tons.

According to DOE estimates, the new rooftop air conditioner standards will save more energy and cut more emissions than any other standards completed by the agency. The previous record-setters were the 2014 standards that covered electric motors and the 2009 fluorescent tube lamp standards.


(Graph by Appliance Standards Awareness Project)

Takes teamwork
Representatives of individual manufacturers, installers, utilities, environmental groups and efficiency organizations actively contributed to the development of the standards. The American Council for an Energy-Efficient Economy You are leaving Western's site., the Appliance Standards Awareness Project You are leaving Western's site. (ASAP) and the National Resource Defense Council You are leaving Western's site. were among the 17 stakeholder groups participating in the Appliance Standards and Rulemaking Federal Advisory Committee (ASRAC).

ASRAC uses negotiated rule-making to engage all interested parties, gather data and attempt to reach consensus on establishing energy-efficiency standards. The proof of the process is in the savings—about 5 billion metric tons of emissions in 2014—and in the support for its work. In an interview with UtilityDive You are leaving Western's site., Marianne DiMascio of ASAP observed that the work of the committee often goes unnoticed because it is largely uncontroversial—a rare thing for a government agency in today’s political climate. “It doesn’t always make for exciting news to say there’s a policy that many people agree with, that is having a huge impact, and it’s about the type of motor your air conditioner uses [or the amount of insulation on a water heater],” she said.

Phasing in
These new commercial air conditioning and furnace standards will occur in two phases. The first phase will begin in 2018 and will deliver a 13-percent efficiency improvement in products. Five years later, an additional 15-percent increase in efficiency is required for new commercial units.

Visit the DOE website to learn more about the energy-efficiency standards for commercial air conditioners  and warm air furnaces.

Ask the Energy Experts: How does demand-response affect controlled equipment?

Western customers use our Energy Experts hotline, 800-769-3756, to ask questions about how programs or technology works in a utility setting. Recently, we heard through the grapevine that some customers have been talking among themselves about a particular topic. We assume there are others wondering about the same things, so Energy Services Manager Ron Horstman posed the question to the Energy Experts:

I would like to know if utility demand-reduction (DR) programs that remotely control end-use water heaters and HVAC [heating, ventilation, air conditioning] systems could potentially damage that equipment or void manufacturers’ warranties. Also, do DR programs create distribution system voltage sags when a large number of appliances resume full operation at the same time?

Based on initial research and discussions with experts in the field, it appears that DR controls have minimal effect on equipment:

  • End-use equipment nearly always survives occasional power outages without serious damage, and power outages are much more severe and widespread than demand response programs.
  • A search of literature in the Energy Experts database revealed little documentation of this as an issue.
  • DR specialists at companies including energy data analyst E Source and energy management technology provider Comverge noted few if any reports of such problems. However, one cautioned that equipment owners do need to be aware of conditions that can void manufacturer’s warranties, such as restricting shut-off times to a minimum of five minutes.
  • Demand response control may increase or decrease the number of operation cycles—the number of times the equipment turns off and on—depending on the length of time during the DR event the customer agrees to allow interruption of operation. As long as the equipment has time to cool down between interruptions, the change in the number of operation cycles during a DR event represents a tiny percentage of the equipment’s annual cycles, so it is unlikely to “wear out” the system.
  • Because peak demand programs are a common and widespread load management strategy, manufacturers have designed their equipment to accommodate remotely controlled cycling.
  • “Smarter” grids bring more nuanced capability for equipment control.

Changing with times
Nevertheless, because many customers and some utility professionals continue to be concerned about the effects of DR on equipment, the issue is worth exploring further. DR control can range from an add-on Wi-Fi kit to a thermostat with additional useful features to a fully integrated appliance. Utilities find it challenging to interface with the wide variety of HVAC control system makes and models, but technology and experience are improving.

More and more manufacturers are offering equipment specifically designed to interact with peak demand control systems. This includes a control input on the device that allows utilities to easily connect it to a compatible DR communication module. These more sophisticated interfaces facilitate smoother load shedding, as well as load-shifting strategies like precooling a space or preheating a water tank in preparation for a peak-demand event.

Controlling air conditioners
The most common DR approach to HVAC equipment is controlling the condensing unit outside the building, so the supply fans continue to operate. The fan uses just a fraction of the energy of the compressor. Shutting the unit off by remotely setting back the thermostat is another simple control method.

On some equipment, the condenser and thermostat are not separately powered. Window air conditioners are one example, and these units account for 58 percent of air conditioning in the U.S., according to the U.S. Energy Information Administration. ThinkEco, a smart-control developer and provider, offers a Wi-Fi-connected Smart AC kit that is installed between the electrical outlet and the plug-in air conditioner. The company reports that the kit works with 90 percent of window air conditioners. On the remaining units, the compressor either did not come back on after power was restored, or came back on after several minutes.

ThinkEco and Carrier teamed up to integrate Carrier’s Comfort-choice thermostats and ThinkEco’s Modlet (modern outlet) cloud platform. This gives utilities access to real-time load data for window air conditioners and real-time demand-response control capabilities, while giving users control of all aspects of their air conditioner through their smart phone. Another ThinkEco partnership with Frigidaire integrated the same capability into a window air conditioner that retails for $270. New York City, which has the largest stock of window AC units in the U.S., offers a $125 rebate to residents for installing this air conditioner.

Motor issues
Electric motor damage is another concern for program managers and equipment owners. It is true that turning a motor on and off many times per hour without allowing time in between for cooling can damage the windings. However, in a demand response scenario, utilities don’t cycle controlled equipment that frequently. Customers can typically choose to have their equipment turned off 50, 75 or 100 percent of the time during peak events.

What about water heaters?
Regarding heat pump water heaters (HPWHs), a paper by the National Rural Electric Cooperative Association’s Cooperative Research Network compares the performance of HPWHs in a demand response scenario with an electric resistance water heater. “How Will Heat Pump Water Heaters Perform in Demand Response Programs” mentions the possibility of damage to compressors due to cycling and product warranty voids. Authors also suggest that the cost-effectiveness of using HPWHs in a DR program calls for more study.

The graph below indicates that HPWH energy use doesn’t peak nearly as much as electric resistance water heaters during typical times of utility peaking events, and they use considerably less energy. So the best solution to those possible issues may be to simply not include the systems in DR programs.


Water heater manufacturers have begun to include a port for grid connection using Modular Communications for Energy Management (CEA 2045), a common communications protocol established in 2013. Even before that, the Department of Energy found that some water heater manufacturers not only supported grid-connected appliances, but were already developing the devices.

Designing for unique customer
Industrial equipment requires a different approach to demand response. These customers use much more energy than residential or commercial customers, making them an attractive target when utilities need to shed a lot of load quickly. However, abruptly interrupting production can cost plants hundreds of thousands of dollars. Utilities must work with industrial facilities managers on an individual basis to minimize the effect of DR programs on operations.

Powering back up
Finally, there is not a significant risk of creating a distribution system voltage sag when the DR event ends and the utility brings the controlled loads back online. Although an AC motor can have inrush currents of six to eight times more than full load, utilities plan demand response to bring groups of customer loads offline and online in stages. The impact of restoring isolated equipment to a subset of customers and in stages is far less severe than restoring full power to all customers all at once after a power outage.

Ultimately, most HVAC and water heating equipment can handle demand response controls—either by power interruption or by on-site controls—without damage or voided warranty, as long as the interruption allows enough to allow the unit to cool down. Manufacturers typically specify a minimum time of five minutes.  A safer approach is controlling HVAC systems by setting back web-enabled thermostats, allowing the on-site control system to ramp down and ramp up in a normal way rather than by a sudden power interruption.

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