Customer Case Studies
Market Based Energy Efficiency
MME/DOE Industrial Energy Efficiency Conference
Rio de Janeiro, Brazil – Aug. 10, 2011
FACTS ABOUT DUKE ENERGY
 150+ years of service
 4 million customers
 Fortune 500
 $57+ billion in assets
 Stock dividends for 80+ years
 Traded on NYSE as DUK
 Dow Jones Sustainability Index
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OUR ASPIRATIONS
 Decarbonize our power generation
 Help make our communities the most energy efficient in the world
“These aspirations are grounded in our
commitments to provide our customers
with clean, affordable and reliable
electric and gas services.”
Jim Rogers
Chairman, President and CEO
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HOW WE WILL ACHIEVE OUR ASPIRATIONS
 Build new, more efficient generation and retire older, coal-fired units
 Make energy efficiency the “fifth fuel” by implementing our save-a-watt
model in each of our jurisdictions
 Modernize our grid by replacing less efficient analog technology with
advanced digital technology
CLIFFSIDE PLANT
CONSTRUCTION
WATER HEATER
BLANKET
INTELLIGENT
SWITCH
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THE BUSINESSES WE’RE IN
U.S. Franchised
Electric & Gas
Commercial
Power
Duke Energy
International
Regulated generation,
electric and gas
transmission and
distribution systems
Unregulated
generation
Primarily Latin
American assets
Duke Energy Carolinas
Duke Energy Ohio
Duke Energy Kentucky
Duke Energy Indiana
Duke Energy
Generation Services
(DEGS) and
Duke Energy Retail
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U.S. FRANCHISED ELECTRIC AND GAS
 5 states: North Carolina,
South Carolina, Indiana,
Ohio and Kentucky
 50,000 square miles of
service area
 27,000 MW of regulated
generating capacity
 4.0 million retail electric
customers
 500,000 retail gas
customers
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U.S. FRANCHISED ELECTRIC AND GAS – NEW BASELOAD GENERATION
Cliffside Unit 6 – North Carolina
 825-MW advanced coal unit
 Upon completion in 2012, will
replace 1,000 MW of older
coal units
 State-of-the-art emissions
controls
Edwardsport – Indiana
 630-MW integrated gasification
combined-cycle (IGCC) unit
 Upon completion in 2012, will
replace 160 MW of older coal units
 Potential for carbon capture
and storage
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NEW NUCLEAR GENERATION
 We operate three nuclear stations
in the Carolinas
 We are the nation’s third-largest
Catawba
nuclear plant operator
 The Lee Nuclear Station could
come on line in the 2021 time frame
McGuire
Oconee
Lee
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U.S. FRANCHISED ELECTRIC AND GAS – RENEWABLE GENERATION
Wind Generation
 Buying 100 MW of wind capacity from
Indiana’s first commercial wind farm
Solar Power
 Installing solar panels to create an
8-MW generation network in
North Carolina
 Buying 4 MW of electricity from
independently owned North Carolina
solar farm – the state’s largest at
16 MW when completed
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ENERGY EFFICIENCY
 Duke Energy is committed to helping customers save power and
money through energy efficiency
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SMART GRID
 Building a smarter power grid is an essential part of Duke Energy’s effort to
provide customers with affordable, reliable and increasingly clean energy.
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COMMERCIAL POWER
MIDWEST GENERATION
 Approx. 7,550 net MW of
unregulated generation
 Over 50% of generation is
dedicated to Ohio customers
DEGS
 Manages approximately 5,800
MW of power generation at 20
facilities throughout the U.S.
 Responsible for renewable
energy investments
 Working to build commercial
transmission capacity
COMMERCIAL POWER – RENEWABLE GENERATION
WIND GENERATION
 DEGS has 735 MW of wind power in
commercial operation
SOLAR
 DEGS entered commercial solar power
business in early 2010
BIOMASS
 DEGS with AREVA formed ADAGE
– a joint venture that will develop green
biopower energy solutions for customers
in the United States
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DUKE ENERGY INTERNATIONAL
 Approx. 4,000 MW of
generating capacity
 6 countries:
Argentina, Brazil, Ecuador,
El Salvador, Guatemala
and Peru
 4th largest generator in
Latin America
(based on net capacity)
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OUR COMMITMENT TO THE ENVIRONMENT
 Pollution control
 Community programs
 Address climate change
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COMMITTED TO SUSTAINABILITY
 At Duke Energy, sustainability means doing business in a way that is good
for people, the planet and profits
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Partly Cloudy With a Chance of Rain Forest
Scientific field research builds upon legacy of
environmental stewardship at Duke Energy
8/5/2011
Six Duke Energy employees recently completed a weeklong scientific expedition to the Rio Cachoeira Nature
Reserve in Paraná, Brazil, to assist with research on
the impact of climate change on the Atlantic Rain
Forest.
Two employees from the U.S. and four Duke Energy
International employees from Latin America were
selected to participate. This environmental education
pilot project was sponsored by Duke Energy’s Energy
and Environmental Policy department in partnership
with the Earthwatch Institute, a non-profit
conservation organization.
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Partly Cloudy With a Chance of Rain Forest
Legacy of Environmental Stewardship
The purpose of this pilot project is to provide Duke Energy with insight into the impacts of climate change globally
and to understand how employee education and engagement on environmental issues can benefit the company.
The environmental stewardship strategy mirrors Duke’s energy and environmental policy efforts, which are
focused on securing certainty for our customers in a carbon-constrained future.
“In a world where increasing environmental regulation is anticipated, we need to take a long-term view on the impact
of climate on our business,” said John Stowell, vice president, Energy and Environmental Policy. “Pilots such as
the Brazilian expedition help employees experience firsthand how the issue is relevant to our company, our
shareholders and our customers.”
About the Expedition
The Atlantic Rain Forest is one of the most endangered tropical forests in the world, offering a unique opportunity for
study. The landscape includes new and old growth in low-level and elevated terrain. Scientists have long known
that forests have tremendous potential to hold carbon in trees and soils. Duke Energy employees helped
scientists better understand the pressures on forests by engaging in data collection and field research.
“Since the time of colonization, the Atlantic Rain Forest had been deforested by 93 percent. Due to reforestation
efforts, it has since risen to 11 percent of forested growth,” said Kris Knudsen, EHS environmental specialist, who
took part in the research. “Each day we’d walk several kilometers to the laboratory or up into the forest.
Experiments included taking measurements on hundreds of trees, analyzing when trees produce fruit, weighing
bee hives to determine honey production, collecting leaves and flowers, and measuring and weighing dried
vegetation that had previously been harvested. We also took the opportunity to plant new trees.”
“This is the second time that Duke has participated in an Earthwatch expedition,” said Stowell. “In 2008, four
employees ventured to Iceland, studying potential effects of climate change on glacier lands. Expeditions like the
one in Brazil are one way for employees to engage directly in stewardship activities on the international level and
form perspectives that they can then use to help Duke achieve sustainability at home.”
The team not only contributed to the science of climate study; but formed closer working relationships with
employees across our company. For additional information and photos of the work by the Brazilian team, view
the slide presentation(PDF) (photos courtesy of Kris Knudsen).
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Energy Efficiency Plan
 What is Duke Energy’s Energy Efficiency Plan?
 Duke Energy is committed to finding new ways to help your business address rising
energy costs with environmentally sound, low-cost options. Our Energy Efficiency Plan
is a new regulatory approach to energy efficiency. The plan supports the development
of energy efficiency conservation programs to help our customers save money and
energy. By using less energy, we can help keep energy rates lower and reduce the
need to build additional power plants.
 Features & Benefits
 Provides all customers with new Energy Efficiency programs, including energy
assessments and incentive rebates, making access to energy-saving equipment easy
and affordable.
 Reduces electricity consumption, helping Duke Energy avoid building new generation
facilities.
 Represents an important departure from traditional energy efficiency regulatory models
where utilities are compensated based on how much they spend rather than the results
they produce. Under the plan, Duke Energy will only be paid for verified energy
reductions.
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Energy Efficiency Plan
 How It Works
 Duke Energy will assist customers in “saving watts” rather than relying solely on
building new power plants to meet energy demands.
 Duke Energy will provide all customers with energy efficiency programs to help them
conserve energy.
 After four years, the energy efficiency programs are projected to displace the need for
1,700 megawatts (MW) of capacity, or about 745,000 megawatt hours. As the results
from new energy efficiency programs are realized, the company will retire older coal
plants, significantly reducing emissions. This MW reduction lessens the need for new
power generation and helps keeps rates lower.
 The cost associated with implementation of our Energy Efficiency Plan will be shared
among all customers. Through active participation in these program offerings some
large business customers could see up to a 15 percent reduction in their electric bills.
 Some Duke Energy industrial customers and qualifying large commercial customers in
can “opt out” of the program if they’ve developed their own energy efficiency programs
or intend to do so in the near term.
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CONSERVATION AND DEMAND RESPONSE PROGRAMS
Large Business Energy Assessments
 Program offers three levels of Assessments: On-line, Off-Site, On-site
Smart $aver Nonresidential Incentive Program - Prescriptive
 Program offers defined incentives to nonresidential electric customers to help offset
incremental cost differences between standard and high-efficiency equipment
Smart $aver Nonresidential Incentive Program - Custom
 Program offers customers financial assistance for projects involving more complicated or
alternative technologies, or those measures which are not covered by other prescriptive
incentive offerings. Available to all assigned customers, not just schools
PowerShare
 Program offers customer incentives for providing capacity in emergency and economic
constrained times
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DEVELOPING A SUSTAINABLE ENERGY PLAN
 How can I improve my company’s energy efficiency?
 Develop a sustainable energy plan (SEP)
 A critical step for success
 Make sure you understand the “who” and “what” of the plan
– Who will champion the plan and make implementation decisions?
– What financial criteria will be used to evaluate opportunities?
– Attend our SEP workshops, offered twice annually in your state/region
 Establish benchmarks and goals based on current performance
 Benchmark metrics can be total energy or based on unit of production, square footage, per
student or employee, etc.
 Energy reduction goals – both short-term and long-term objectives
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SMART $AVER ENERGY ASSESSMENTS
 Energy Assessments Offerings
 On-line assessment – free
 Available through the Business Services Newsline
 Tools You Can Use
– Benchmark data by business segment
– C&I energy efficiency recommendations by end use and segment
– Facility Assessment Wizard
 The Facility Assessment Wizard provides recommendations tailored to your business
or industry
 Recommendations address lighting, HVAC, energy management systems, boilers,
process heating and cooling, etc.
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SMART $AVER ENERGY ASSESSMENTS
 Energy Assessment Offerings (cont.)
 Off-site assessment – no charge for customers who have not opted out
 An off-site assessment is a conference call with the customer to help you identify energyconsuming equipment and energy efficiency opportunities
 The customer is provided a worksheet questionnaire for collecting facility information
 A phone-based interview, typically one to two hours, is conducted with the customer by an
assessor
 At the conclusion of the interview, the customer, assessor and Duke Energy decide if an onsite assessment is warranted
 If not, the assessor prepares a report and reviews the recommendations with the customer
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SMART $AVER ENERGY ASSESSMENTS
 Energy Assessment Offerings (cont.)
 On-Site Assessment – Available to customers who have not opted out
– $3,000 for a one-day on-site analysis and report
– $600 per additional day on-site
The on-site assessment follows the phone-based, off-site assessment.
Additional data is gathered, and measurements are taken during the on-site work
The assessor compiles the report and submits to Duke Energy for review
The report is presented to the customer for review, and a live meeting or face-to-face
meeting is scheduled to step through the results
 Customers can recover their portion of the costs dollar-for-dollar when they use Smart
$aver incentives (i.e., for every dollar of incentive they are eligible for, they will
receive two dollars up to the cost of the assessment).




Note:
 Customer costs are based on Duke Energy paying for approximately 50% of the total cost – varies but
approximately $6,000 plus $1,200 per additional day.
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SMART $AVER ENERGY ASSESSMENTS
 What is included in the On-Site assessment report?
 The report includes an extensive executive summary of recommendations and
supporting information, including:





Energy conservation measures – describes each opportunity
Implementation costs – estimates equipment and labor requirements
Annual energy savings – estimates project’s utility bill savings
Smart $aver incentives – Prescriptive and Custom Incentives
Financial metric – simple payback or internal rate of return
 The report will also identify demand response opportunities and savings from
participating in PowerShare® if applicable.
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SMART $AVER™ INCENTIVE PROGRAM
 Offers incentives to Duke Energy nonresidential electric customers to
help offset
the incremental cost differences between standard and high-efficiency
equipment
 Incentives typically do not exceed 50% of the incremental cost difference
 Helps move the market to more efficient equipment
 Increased demand results in lower costs as retailers and distributors stock more
energy efficient equipment
 Two Programs: Prescriptive and Custom
 Smart $aver Prescriptive includes incentives for standard high efficiency
equipment (motors, pumps, HVAC, lighting, etc.)
 Smart $aver Custom provides incentives for high efficiency equipment not
addressed through the prescriptive program
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PRESCRIPTIVE PROGRAM
 Five groupings of equipment types
1.
2.
Lighting
HVAC (cooling)
■
3.
4.
5.
Includes thermal storage, chillers
Motors / pumps / variable frequency drives
Foodservices equipment
Processes
 Roll out portfolio of approximately125 measures
 Equipment eligibility can be found on each application
 Frequently Asked Questions and more details can be found at
www.duke-energy.com.
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SMART $AVER CUSTOM INCENTIVES
 What are Custom Incentives and why do we offer them?
 Smart $aver Custom Incentives offers incentives for energy efficiency measures
not addressed by the Prescriptive Incentives
 Proposed energy efficiency measures may be eligible for a Custom Incentive if
they reduce electrical demand (kW) and/or save electrical energy (kWh)
 Custom Incentives are offered to ensure all cost-effective efficiency measures
are addressed by our incentive program and give our customers more
opporutnities to implement these measures
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SMART $AVER CUSTOM INCENTIVES
 What are examples of Custom Incentive applications?
 Nonprescriptive lighting measures such as reflectors
 Thermal improvements to the building envelope: roof and wall insulations,
upgrades to windows and doors, etc.
 On-demand ventilation systems
 Energy management systems
 HVAC tune-up initiatives
 Energy recovery systems
 Energy-saving process upgrades
 Retro-commissioning of existing buildings
 Compressed Air Systems
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POWERSHARE®
PowerShare® is Duke Energy’s brand name for commercial and
industrial Demand Response programs.
 What exactly is Demand Response?
“Changes in electric usage by end-use customers from their normal consumption
patterns in response to changes in the price of electricity over time, or to incentive
payments designed to induce lower electricity use at times of high wholesale market
prices or when system reliability is jeopardized.”
Federal Energy Regulatory Commission
Demand Response offers customers an incentive to curtail energy load during periods
of high demand.
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Why do we offer Demand Response programs?
 Can be counted towards Reserve Margin requirements. Reduces need to build plants or
purchase capacity in the marketplace.
 Example 1:
 Projected System Load:
10,000 MW
 Reserve Margin requirement:
15 %
 Total Capacity Requirement:
11,500 MW
 Less: Available Generation:
10,000 MW
 Required Market Capacity Purchases:
1,500 MW
 Example 2:
 Projected System Load:
 Reserve Margin requirement:
 Total Capacity Requirement:
 Less: Available Generation:
 Less: PowerShare:
 Required Market Capacity Purchases:
10,000 MW
15 %
11,500 MW
10,000 MW
100 MW
1,400 MW
(Assuming market capacity price of $25/kW – savings to company from avoided capacity
purchases = $2,500,000!)
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Why do we offer Demand Response programs? (cont.)
 For the effect on system peak and improved reliability:
Duke Energy MW Load Profile
Powershare
Event Days
(8/8/07 & 8/9/07)
12,000
11,000
9,000
8,000
20:00
16:00
7,000
12:00
8:00
4:00
8/31/2007
0:00
8/29/2007
8/27/2007
8/25/2007
8/23/2007
8/21/2007
8/19/2007
8/17/2007
8/15/2007
8/13/2007
8/11/2007
8/9/2007
8/7/2007
8/5/2007
8/3/2007
6,000
8/1/2007
MW
10,000
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What options are available?
 PowerShare Mandatory
 PowerShare Voluntary
 30 minutes advance notice of event
 Hourly event prices are posted
the day of an event
 100 hours per year maximum interruption
 Customers have the right, but
 10 hours per day max
not the obligation to participate
 10 interruptions per year max
 There are no penalties for
 Capacity Credit - $3.50/kW-month ($42/kW-yr)
nonperformance
 Energy Credit - $0.10/kWh
 Customers get paid for results
 Non-Compliance Penalty - $2/kWh
as long as they provide at least
50% of what they nominate
 Can be combined with
 PowerShare Generator
PowerShare Mandatory
 30 minutes advance notice of event
 100 hours per year maximum interruption
 10 hours per day max
 10 interruptions per year max
 Capacity Credit - $3.50/kW-month ($42/kW-yr)
 Energy Credit - $0.10/kWh
 Non-Compliance Penalty - $2/kWh
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Why should I not opt out of energy efficiency?
 Simple example of energy efficiency impact to a 5 MW facility
Bill Assumptions
Average Peak kW
Average Load Factor
Annual kWh
Annual Bill
Average Rate
5,000
80%
34,560,000
$1,728,000
$0.05
 Potential Energy Efficiency Projects




Convert T-12 Lighting to T-8
Replace Standard Motors with Premium Efficiency Motors
Install Control System
Take advantage of new PowerShare offer
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ENERGY EFFICIENCY BILL IMPACT (cont.)
Smart $aver incentives and PowerShare demand response programs create significant
additional value (4%-22%) for very little cost.
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ENERGY EFFICIENCY BILL IMPACT
10 Year NPV Bill Savings ($1000s)
Total EE
$1,673
$1,800
$1,200
Smart $aver
$718
PowerShare
$955
$600
Do Nothing
$0
-$600
Equivalent
Generation
-$117
EE Rider
-$73
Participate
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Benefit to Duke Energy
 DETERMINATION OF ENERGY EFFICIENCY RIDER ADJUSTMENT
 Energy Efficiency Adjustments (EEA) will be applied to the energy (kilowatt hours)
billed of all rate schedules for each vintage as determined by the following formula:
 SAW Non-residential Adjustment = Non-residential Avoided Cost Revenue Requirement +
Non-residential Lost Revenues / Forecasted Non-residential kWh Sales (excluding opt out
sales) for the Rider billing period
 Where
 Non-residential Avoided Cost Revenue Requirement = (Non-residential Demand Side
Management Program Avoided Cost Revenue Requirement X 75%) + (Non-residential
Energy Efficiency Program Avoided Cost Revenue Requirement X 55%)
 Participation true-ups: After the first year, the Rider will include a true-up of previous Rider
amounts billed to reflect actual customer participation in the programs.
 Measurement and verification true-up: EM&V activities and results will be included in a midterm EM&V-based true-up process that will be reflected in Vintage Year 3 Rider EE
collections. A final EM&V true-up reflected in Vintage Year 6 Rider EE collections will
incorporate all EM&V studies completed since the mid-term EM&V true-up. EM&V results
will include measure-level savings adjustments and net-to-gross analysis. In addition, the
mid-term and final true-ups will incorporate the most recent EM&V results in the avoided
cost true-up, the lost revenue true-up, and the earnings cap true-up.
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Benefit to Duke Energy Shareholders
 Earnings cap true-up: In the sixth year a true up will be billed, if applicable,
to refund amounts collected through the Rider in excess of the earnings
cap, in accordance with the following levels of achievement and allowed
return on investment.
Percentage Actual
Return on Investment Cap
Target Achievement
on Program Costs Percentage
>=90%
80% to 89%
60% to 79%
< 60%
15%
12%
9%
5%
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Case Studies in Industrial EE
 Hickory Chair
 https://my.dukeenergy.com/portal/server.pt/gateway/PTARGS_0_0_853_827_1044_43/http%3B/Myd
ukecontent.duke-energy.com/duke/collateral/case-studies/110156-hickory-chair-caseFINAL.pdf
 IBM – Research Triangle
 https://my.dukeenergy.com/portal/server.pt/gateway/PTARGS_0_0_853_827_1044_43/http%3B/myd
ukecontent.duke-energy.com/duke/collateral/case-studies/100225-ibm-case-studydraft1.pdf
 Kimberly-Clark
 https://my.dukeenergy.com/portal/server.pt/gateway/PTARGS_0_0_853_827_1044_43/http%3B/myd
ukecontent.duke-energy.com/duke/collateral/case-studies/kimberly-clark.pdf
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Tactic
Description
Target Segments
Target Contact
Sales Strategy
E3 – Energy, Environment
and Economy (Lean) Triassessment program.
-2011 Goal:
SC – 5 to 10
NC – 15 to 17
OH/KY – 5 – 10
IN - TBD
Enterprise Solution:
-Federally supported and partially funded
simultaneous assessment for Energy
Efficiency, Waste Minimization and Lean
Manufacturing.
- Unique customer value proposition drives
prescriptive and custom energy measures
as a part of a holistic sustainability
approach
-Manufacturing
including supply chain
leveraging of large
OEMs into small and
medium sized
businesses.
-Energy/Engineering manager
-Sustainability/HSE Manager/Director
-Plant manager
-Supply Chain Manager/Director
- Government and community leaders
-Lead with State MEP organizations
targeting community wide launches.
-Provide Duke account management
support into potential client identification
and qualification.
Blueprint for Energy
Savings
2011 Goal:
25 - New Webinar
Participants
6 - Energy plans
developed.
Enterprise Solution:
Sustainable Energy Management Plan
development:
-Two 6 hour webinars and two follow-up
progress report-out sessions.
- 5 to 10 Targeted single client Energy Plan
Drafting Workshops
Manufacturing
-Energy/Engineering manager
-Sustainability/HSE Manager/Director
-Supply Chain Manager/Director
-Lead Web-based E-blasts and promotion
via account managers during customer
Business Planning sessions
Targeted High Yield
Energy Efficiency
-2011 Goal
Enterprise Solution:
-Through Customer Business Planning
Process collect and populate Salesforce
database with key data on high energy
demand industrial systems
- Mine Data to identify prospective high
value targets for Smart$aver incentives
including but not limited to Compressed Air
Systems, Lighting, VFD’s, Chillers & HVAC
Manufacturing
-Energy/Engineering manager
-Sustainability/HSE Manager/Director
-Supply Chain Manager/Director
-Lead with Web-based E-blasts and
promotion via account managers during
customer Business Planning sessions
-Offer Targeted Webinars and connection
with trade allays through trade associations
such as AEE, ASHRAE, SEEA etc.
Collect 100% of top 100
customer data and 50% of
all LB Manufacturing
Customer data
Conduct 6 webinars with
minimum of 15 participants
each
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