04 May Peer Power
USGBC’s Performance Excellence in Electricity Renewal (PEER) program takes LEED-like strides toward transforming power systems.
By Kiley Jacques
“PEER came out of an effort led by Bob Galvin who used to run Motorola,” explains PEER Program lead John F. Kelly. “The 2003 Northeast blackout made people aware of how important electricity is to the economy, to the whole country.” The bottom line: The power industry was in need of major transformation, much like the building industry of the late 1990s. Hence development of the Performance Excellence in Electricity Renewal program—the nation’s first comprehensive, consumer-centric, data-driven system designed to measure performance and improve the regulation, design, and operation of sustainable power.
Galvin assembled a team of industry leaders who initially thought policy reform was the ticket. Ultimately, however, they realized it was beyond difficult, given integral changes would need to be made on a state-by-state basis. At that point, they looked to LEED as an example of industry
John F. Kelly, PEER Program lead. Photo: Marc PoKempner
transformation; they viewed it as an advanced learning system.
“LEED was the best model we could find of systemic transformation,” notes Kelly. “We think the reason is that LEED focused on transforming the professionals, the people, instead of the policies, standards, or codes.”
Thus, in 2010, Kelly met with LEED’s chief of engineering, Brendan Owens, to develop a similar approach for the electricity system. The team learned from Owens that he wished initial LEED efforts had started with a more measure-driven and outcome-focused premise. “That was one of [PEER’s] fundamental principles,” says Kelly, “—to focus on capabilities that are measurable and that matter to the customer.”
After five years of research spent looking at LEED’s six levels of performance, the PEER team established their own comprehensive set of principles, which drove how they would select criteria for measuring performance. “Just about everyone we talked to in the industry—from mayors to public service commission leadership and staff to owners of industrial facilities and commercial buildings to microgrid owners—they all thought about four areas of concern unanimously,” notes Kelly.
The result of all that legwork is a system that measures: reliability and resiliency, energy efficiency and environment, operational effectiveness, and customer engagement. This last category was put in place to address the fact that, currently, there isn’t a supply-demand correlation—even when demand goes up, the price doesn’t change; there’s no curve, which means it is very inefficient. In other words, customers do not receive a price signal so “they just use what they want whenever they want.” Kelly speculates this lack of correlation costs “probably double” what it should.
To address the issue, PEER developers came up with the idea for customer contribution, which looks at how the consumer can contribute services back to the grid; when demand is high, a price signal is sent out. Subsequently, customers reduce their load. (The idea came out of the way LEED buildings lower their demand when the grid is stressed). This type of incentive system has started to emerge in PEER.
With the mission of measurability in mind, each of the four categories includes criteria for which customers receive points. Points are also given for actual performance and capability. For example, with respect to environmental responsibility, PEER assesses the impact of electricity generation and transmission and encourages the adoption of clean energy. The criteria in this category address energy efficiency, air emissions, resource use, renewable energy credits, and power delivery impacts. “Right now most states use metric percent renewable system as a metric for how green their system is,” explains Kelly. “But percent renewable is a technology—it doesn’t tell you anything about the carbon footprint or the energy efficiency performance.” With PEER, points are given for actual efficiency in terms of carbon pollution, water consumption, and solid waste. “The percent renewable may affect those performance outcomes, but points are given for actual outcome, not the technology used,” notes Kelly.
Beyond environmental impact, of course, consumers expect high-quality service from their electricity provider at competitive rates. The intent of the operational effectiveness category is to assist in the identification and elimination of wasteful spending through performance benchmarks. Electricity costs, microgrid contribution, general operating expenses, capital spending or investment, and indirect costs are all analyzed. Customers who demonstrate operational effectiveness have a competitive advantage, in that eliminated waste means lower distribution charges. Kelly notes, that contrary to popular belief, higher reliability doesn’t necessarily mean higher rates. “PEER helps customers get to the point of being able to offer levels of performance not before thought possible while also lowering operating costs.”
As LEED did for the building industry, PEER offers new ways of thinking about energy systems. Now, for the first time, LEED and PEER give professionals a comprehensive understanding, “almost like a whole language,” of what sustainability is. “People are seeing how taking one action can result in addressing a handful of environmental concerns,” says Kelly. PEER adherents are beginning to design and operate much more efficiently and effectively, using a set of tools and strategies that achieve unprecedented levels of performance.
As industry professionals adopt PEER systems, better policies and standards follow. “It’s like having an army out there that’s really trained on a much more effective way of designing operating systems,” enthuses Kelly. To date, there are two levels of professional PEER training: Fundamentals are designed for everyone, and provide basic understanding of all the performance criteria. “It gives them a new way to think about electricity delivery,” says Kelly. Advanced course graduates get a certificate of completion for a much more technical program during which they apply PEER to a project—they implement and score it, and “really use it in their professional lives.” The aim is to develop PEER users, who can go apply it for others. Last year’s advance program served 15 trainees. Kelly predicts 30 to 40 this year, and 100 the next. “We’re hoping to really grow that army of the PEER advanced.”
Kelly’s vision for PEER includes thermal distribution in addition to electrical, and that it follows a trajectory similar to LEED’s. As Version II and Version III come out, he anticipates it will continue to improve. In 10 years, he foresees 50,000 PEER professionals using it for a range of projects, even if those projects are not PEER certified. “That’s how the transformation starts to happen,” says the forward-thinking Kelly.
“The University of Texas in Austin is an outstanding performer in terms of all of the PEER criteria,” notes Kelly. “Their leadership was dedicated to sustainable energy delivery, and had been working on it for 15 years.” Interested parties hadn’t seen anything in the marketplace that they wanted to model until they saw PEER. “They immediately understood how important it was to have a system like this,” notes Kelly. “They wanted to be one of the first PEER-certified projects so that they could be a shining example of [an institution] that applied all the criteria, and how they could drive such good performance.” Today, their operating budget has been cut in half—from $40 million to $20 million—and their reliability is the best in the country.
Southern California Edison has been working on the demand-response credit—they helped LEED get it into the marketplace. “It’s been a very successful part of the credit,” notes Kelly of the school’s PEER-related efforts. In fact, their environmental policy precisely demonstrates PEER’s own mission, as they “assure accountability for environmental compliance while fulfilling our mandate to safely provide reliable and affordable electric service in environmentally responsible ways.”
Finally, there is the policy initiative enacted by the City of Chicago, which applied PEER to energy procurement. (The city can buy power for all residential customers.) They used the energy efficiency and environmental category in their specification when they went out to bid and evaluate suppliers—they negotiated by demonstrating improved performance at the same cost. “They were not willing to pay more for their power, but they offered the contract to the supplier with the best PEER score,” says Kelly. Ultimately, they even eliminated coal from their system.