Building a successful portfolio of energy efficiency programs and projects begins with consideration of the end result. Portfolio administrators who start by identifying clear portfolio goals, as well as clear project and program level metrics for measuring the progress toward these goals, are able to effectively drive the success of any aspect of portfolio development and management.

Because each program will be constructed to achieve different parts of the overall portfolio goals, it’s important to have clarity about the outcomes you want to see before beginning to plan any part of your individual programs. Just like a logic model should be developed at the program level, portfolio-level logic models outline the various outcomes anticipated from various activities. Identified outcomes like greenhouse gas emissions reduction, energy job creation, efficient infrastructure investments, etc., require useful metrics to be in place to define milestones, quantify progress and determine when it may be necessary to rethink a certain program design element. Without this clarity, portfolios run the risk of failure or, perhaps worse yet, run to conclusion without generating useful results.

Identifying portfolio goals 

While programs tend to target a single objective, portfolios may have a broad range of goals to meet. Portfolio goals may stem from regulatory, legislative, or system needs. While these broad guidelines can help in establishing a big picture objective, it’s important to further define goals in terms of the specific outcomes intended from activity across the portfolio. The more specific administrators can be about intended outcomes of projects and programs, the easier it becomes to build an integrated portfolio of programs that address all of these expectations. Defining these outcomes early will also enable the establishment of the right metrics to measure progress forward.

In addition to setting goals around portfolio results, administrators can set goals for how to achieve these results. For example, many utilities are focusing on diversity, equity and inclusion goals as a way to address deep systemic environmental and social justice gaps. This focus is being incorporated into regulatory requirements and, consequently, into utility portfolio goals. So as utilities work to meet specific energy efficiency goals, they may also consider setting goals to target savings for low-income households or disadvantaged communities, creating jobs for disadvantaged groups, prioritizing expenditures in areas with higher pollution levels to minimize air quality impacts, or hiring diverse business enterprises to implement and administer programs and portfolios.

In either case, clarity about the expected outcomes is critical. Murky portfolio goals can quickly derail any progress. As a case in point, a statewide goal to “install more solar panels” might result in more solar panels, but it could also have unexpected outcomes. Only a small part of electricity supply would be decarbonized and overall rates might increase. A better goal here might be to “decarbonize electricity supply” or “grow daytime solar generation in certain regions to a specific number.” This might allow companies to incorporate into their goals other equipment that could increase grid value, such as integrated energy efficiency during certain hours, load flexibility measures that shift demand, or even battery storage.

Focusing on all desired outcomes—and considering potential undesired outcomes—will be critical in ensuring customer buy-in during program implementation.

Establishing performance metrics 

Once portfolio goals are established, it’s time to define metrics, allowing administrators to measure progress and gauge the effectiveness of each program. Tracking progress toward defined milestones lets administrators know when it may be necessary to make changes to a program in order to meet the intended portfolio goals.

Of course, having clear goals in place makes it easier to develop the right metrics. As noted above, unclear goals can derail a program, but they can also muddy attempts to track progress. As a case in point, a utility seeking to measure the progress of an electric residential lighting program may consider gauging success based on annual kWh savings. However, this metric may be too broad to be useful to track progress toward overall portfolio goals. Achieving widespread kWh savings may provide little value to a utility trying to mitigate the risks of a freeze in Texas or a wildfire in California. For this scenario, a more effective way of measuring progress toward energy-efficiency goals may be to target energy usage at specific substations at certain times of the day over the course of the year. Quantifying the grid value of the energy efficiency measure as a function of when the savings occur on a 24/7 basis, rather than total annual energy savings, might be a better breakdown for tracking a program’s usefulness.

Countless metrics can be useful and, in many instances, organizations find they have to develop their own measurement systems. In a recent California Public Utilities Commission (CPUC) Decision, California defined a new metric called the Total System Benefits, which determines the financial value of energy efficiency measures based on load profiles, energy savings, grid impacts, and greenhouse gas reductions. This metric helps the CPUC and other stakeholders track progress toward portfolio goals that include developing high-quality energy-efficiency programs reducing greenhouse gas emissions in line with state climate and energy goals while responding to customer needs and market dynamics.

For its part, Google tracks a metric it calls the Carbon Free Energy (CFE) Score to gauge progress toward its goal of achieving 100% carbon-free energy. The CFE Score measures the degree to which each hour of electricity consumption on a given regional grid is matched with CFE on an hourly basis.

While there is no limit to how goals are measured, the key here is clarity. By beginning with the end in mind, portfolio administrators can develop a clear framework to ensure their success.

For help in reaching your portfolio goals, contact Lincus today.