Technical Report

NREL/TP-7A2-48267

June 2010

Identifying Cost-Effective 

Residential Energy Efficiency 

Opportunities for the Kauai 

Island Utility Cooperative

S. Busche and S. Hockett
National Renewable Energy Laboratory

1617 Cole Boulevard, Golden, Colorado 80401-3393

303-275-3000 • www.nrel.gov

NREL is a national laboratory of the U.S. Department of Energy

Office of Energy Efficiency and Renewable Energy

Operated by the Alliance for Sustainable Energy, LLC

Contract No. DE-AC36-08-GO28308

Technical Report

NREL/TP-7A2-48267

June 2010

Identifying Cost-Effective 

Residential Energy Efficiency 

Opportunities for the Kauai 

Island Utility Cooperative

S. Busche and S. Hockett

Prepared under Task No. IDHW9170
NOTICE

This report was prepared as an account of work sponsored by an agency of the United States government. 

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iii

Acknowledgments

This report was produced with funding from, and in coordination with, the U.S. Department of 

Energy (DOE). The authors would like to acknowledge the guidance provided by Elizabeth 

Doris, without which this project could not have been completed. The authors would also like to 

thank Ray Mierta, Kauai Island Utility Cooperative (KIUC), for sharing a significant amount of 

information on KIUC’s existing programs and energy use patterns on Kaua‘i and providing 

contextual background to ensure that this analysis was appropriate to the situation on Kaua‘i.

During the review process, the authors benefitted from the input provided by Elizabeth Doris and 

Kari Burman. In addition to these reviewers, we appreciate the assistance of Karen Petersen in 

NREL’s Communications Office for her editing support. Of course, any remaining errors are the 

responsibility of the authors.
iv

List of Acronyms

AC air-conditioning

CEC California Energy Commission

CFL compact fluorescent lamp

DBEDT Department of Business, Economic Development & 

Tourism

DHW domestic hot water

DOE Department of Energy

DSM demand-side management

EB electronic ballast

EEPS energy efficiency portfolio standard

HB House Bill

HE high-efficiency

HCEI Hawai‘i Clean Energy Initiative

HECO Hawaiian Electric Company

HVAC heating, ventilation, and air-conditioning

KIUC Kauai Island Utility Cooperative

kWh kilowatt-hour

LCOE levelized cost of energy

M&V measurement and verification

NPV net present value

NTG net-to-gross ratio

NREL National Renewable Energy Laboratory

PUC Public Utilities Commission

RAC room air-conditioning

RPS renewable portfolio standard

SB Senate Bill

T&D transmission and distribution

TRC Total Resource Cost test
v

Executive Summary

This analysis is an update to the Energy Efficiency Potential report completed by KEMA for the 

Kauai Island Utility Cooperative (KIUC) and identifies potential energy efficiency opportunities 

in the residential sector on Kaua‘i (KEMA 2005). The Total Resource Cost (TRC) test is used to 

determine which of the energy efficiency measures analyzed in the KEMA report are cost

effective for KIUC to include in a residential energy efficiency program. As much as possible

and appropriate, the data used in the KEMA study was updated to reflect the current context on 

Kaua‘i, including measure cost, energy prices, and market saturation.

Cost-effective energy efficiency opportunities remain in the residential sector for utility-funded 

energy efficiency programs. The following energy efficiency measures, separated by end use,

receive a passing TRC score:

• Water heating

o Low-flow showerhead

o Pipe wrap

o Domestic hot water (DHW) temperature reduction

o ENERGY STAR clothes washer1

• Lighting

o Compact fluorescent lamps (CFLs)

o Halogen lamps

o T8 with electric ballast (2 lamp, 4-foot T8, replaced on burnout)

• Appliances

o High-efficiency refrigerator

o High-efficiency dishwasher

• High-efficiency pool pump and motor

There is a high awareness among Kaua‘i residents of the residential energy efficiency programs 

that KIUC currently offers, which currently focus on end uses similar to those listed above. 

However, the participation rate in these programs is lower than would be expected based on the 

opportunity for savings identified herein. Additional research into optimizing the marketing, 

incentives, and delivery mechanism may aid KIUC in garnering greater participation in either 

existing or new residential energy efficiency programs. Increasing the participation rate relative 

to program costs will increase the cost-effectiveness of utility-funded residential energy 

efficiency programs and may result in additional measures receiving passing TRC scores.

 1 Energy savings from this measure result from a reduced need to heat water. However, when grouping measures

into potential programs, this measure is included in an appliance program and not a water-heating-specific program 

because the marketing and delivery mechanism are more likely to align with a program incentivizing other highefficiency appliances.
vi

Table of Contents

List of Acronyms........................................................................................................................................ iv

Executive Summary.................................................................................................................................... v

Table of Contents....................................................................................................................................... vi

List of Figures ........................................................................................................................................... vii

List of Tables ............................................................................................................................................. vii

Introduction ................................................................................................................................................. 1

Background ................................................................................................................................................. 1

Methodology................................................................................................................................................ 3

TRC Scores.................................................................................................................................................. 6

Program Options & Maximum Potential Savings .................................................................................. 10

Water Heating ..........................................................................................................................11

Lighting....................................................................................................................................12

Appliances................................................................................................................................13

Pool Pump and Motors.............................................................................................................14

Program Development & Delivery ........................................................................................................... 15

Best Practices...........................................................................................................................16

Low-Income Programs.......................................................................................................22

Program Administration...........................................................................................................23

Partnerships..............................................................................................................................24

Marketing Strategies................................................................................................................25

Challenges................................................................................................................................26

Conclusion................................................................................................................................................. 27

References................................................................................................................................................. 29

Appendix A: Energy Efficiency Measures.............................................................................................. 32

Appendix B: Avoided Cost Adjustments................................................................................................ 35
vii

List of Figures

Figure 1. Annual Average Residential Energy Use by Island, 2008....................................................... 2

Figure 2. Average Annual Residential Energy Use, Kauai and Statewide, 2000-2008......................... 2

List of Tables

Table 1. Evaluation Perspective for Cost-Benefit Analysis Tests.......................................................... 4

Table 2. TRC Scores for Potential Residential Energy Efficiency Measures........................................ 6

Table 3. Comparison of Measures that Passed the KEMA Methodology and the TRC in this 

Update.................................................................................................................................................... 7

Table 4. Energy Efficiency Measures Ordered by LCOE ........................................................................ 9

Table 5. Potential Energy Efficiency Measures & Estimated Savings - Water Heating Program ..... 12

Table 6. Potential Energy Efficiency Measures & Estimated Savings – Lighting Program .............. 13

Table 7. Potential Energy Efficiency Measures & Estimated Savings – Appliance Program ........... 13

Table 8. Program Theory: Identifying Key Stakeholders, Program Barriers and Identifying 

Program Strategies ............................................................................................................................ 16

Table 9. Key Impacts of Energy Efficiency Program Types ................................................................. 18

Table 10. Typical Incentive Types by Residential Market Sector......................................................... 19

Table 11. Residential Program Best Practices....................................................................................... 20

Table 12. Exemplary Residential Energy Efficiency Program Best Practices.................................... 21

Table 13. Marketing Strategies for Energy Efficiency Programs, Lessons Learned ......................... 25

Table 14. Advertising Best Practices...................................................................................................... 26

Table 15. Direct Install Program 2009 Measure Installation Rates ...................................................... 27

Table 16. Avoided Costs from the 2005 KEMA Report.......................................................................... 35

Table 17. Avoided Costs, Adjustment #1 - Medium Costs.................................................................... 36

Table 18. Avoided Costs, Adjustment #2 - High Costs ......................................................................... 36
1

Introduction

In partnership with the U.S. Department of Energy (DOE), in 2008 the State of Hawai‘i

established the Hawai‘i Clean Energy Initiative (HCEI) to facilitate the state’s transition to 70% 

clean energy by 2030. To successfully achieve these long-term goals, stakeholders throughout 

the islands are working together to reduce energy use, promote the development of renewable 

energy, and support the transition to a more self-reliant Hawai‘i. Interested in better 

understanding the energy efficiency potential on Kaua‘i, the Kauai Island Utility Cooperative 

(KIUC) requested that the National Renewable Energy Laboratory (NREL) analyze potential 

residential energy efficiency measures.

This report builds on existing efficiency reports, providing an economic analysis of potential 

residential energy efficiency measures suitable for Kaua‘i and information on developing 

residential energy efficiency programs. NREL identified opportunities for KIUC to costeffectively reduce peak demand and aid residential customers in reducing their energy use 

through utility-supported energy efficiency programs. The measures were analyzed based on 

KIUC’s current program costs and delivery mechanisms. As such, those measures found to be 

cost effective in this analysis are cost effective at the program level if the program costs are 

similar to the existing program costs on a per-measure basis. Although beyond the scope of this 

analysis, further investigation into optimizing KIUC’s marketing and advertising strategies for 

residential energy efficiency programs may identify strategies to increase program participation 

per dollar invested, improving the cost-effectiveness of all measures.

2

The first section provides background on energy use and efficiency programs on Kaua‘i. The 

second section details the methodology of the economic analysis, the results of which are 

presented in the third section. The fourth section describes the residential energy efficiency 

program options based on the results of the analysis, as well as the maximum potential savings 

from each end use. The fifth section discusses best practices in program development and 

implementation based on leading energy efficiency programs throughout the country and the 

challenges in determining potential program impacts. The final section summarizes the 

conclusions of this analysis.

This is not to say that the 

existing delivery and marketing methods are inefficient, but simply that further research by 

marketing and advertising specialists would aid KIUC in determining the most cost-effective 

strategies for driving program participation.

Background

Average residential energy use in Hawai‘i is much lower than in most states. In 2008, Hawai‘i

ranked 8th lowest in the nation in annual residential electricity use (EIA 2010). Considering that 

residential customers in several states utilize other sources of energy (such as heating oil or 

natural gas for heating and/or cooking) in addition to electricity, if total residential energy use 

were combined, Hawai‘i would likely rank even better. In 2008 Hawai‘i’s average residential 

 2 If it’s possible for KIUC to increase program participation per dollar spent on marketing and administration, the 

cost-effectiveness of each measure would increase. As discussed later in this report, although there is high 

awareness among Kaua‘i residents of the efficiency programs KIUC offers, the participation rates are lower than 

would be expected based on the efficiency opportunities that exist.
2

electricity rates, at $0.32/kilowatt-hour (kWh), were higher than those in any other state—2.8 

times higher than the average and more than 4.5 times higher than those in Idaho, which had the 

lowest electricity rates in the country (EIA 2010).

Average residential energy use on Kaua‘i is 5,849 kWh/year, lower than the Hawai‘i average, 

and, when compared with the other islands, higher only than on Lana‘i and Moloka‘i (Figure 1) 

(DBEDT 2009a). Even though KIUC has offered residential energy efficiency programs, the 

average energy use per home has increased since 2000. From 2000 through 2008, average 

residential electricity use on Kaua‘i increased by about 0.5%; during this same period, the 

statewide average increased by 0.8% and the average annual increase was 0.09% for Kaua‘i and 

0.13% across the state (Figure 2) (DBEDT 2009b). Although residential electricity use is 

relatively low, with such a high cost of electricity3 on Kaua‘i, energy efficiency improvements 

remain an important tool for mitigating increases in residential electricity costs.

Figure 1. Annual average residential energy use by island, 2008

Figure 2. Average annual residential energy use, Kaua‘i and statewide, 2000–2008

From 1998 through 2003, Kauai Electric, which became KIUC in 2002, implemented a 

residential demand-side management (DSM) program to promote efficiency improvements to 

reduce energy demand and minimize the need for future capacity installations. The residential 

DSM program was discontinued because KIUC’s business model changed when the utility 

transitioned to a cooperative, and KIUC wanted to offer residents energy efficiency programs 

without the constraints of ensuring that they were cost effective (Mierta 2010). Also, based on 

the level of market penetration achieved, the program was approaching a point where it would no 

 3 KIUC residential rates were $0.346/kWh in December 2009 (KIUC 2009).
3

longer be cost effective to reach the remaining market. However, KIUC continued to offer nonDSM residential programs (as defined by the Hawai‘i Public Utilities Commission [PUC]), such 

as solar rebates and loans, appliance replacement incentives, and home visits.

4

Recognizing that Hawai‘i’s goal of 70% clean energy by 2030, codified in the renewable 

portfolio standard (RPS) and the energy efficiency portfolio standard (EEPS), will require 

significant effort to reduce energy demand as well as increase generation from renewable 

sources, KIUC requested that NREL provide an update to the 2005 Energy Efficiency Potential

study completed by KEMA in order to identify market opportunities for potential residential 

DSM programs. The following sections describe the methodology NREL used, the results of this 

update, program design considerations, and best practices of energy efficiency programs around 

the country.

Beyond achieving 

energy and demand savings, another benefit of utility DSM programs is that they can lead to 

market transformation by overcoming barriers that prevent the widespread adoption of certain 

energy efficiency measures (Levine and Sonnenbrick 1994).

Methodology

A variety of cost-benefit analysis methodologies exist for estimating the cost-effectiveness of 

utility energy efficiency programs. The Total Resource Cost (TRC) test has become one of the 

main methodologies utilized, as it incorporates the costs and benefits to both the utility and the 

ratepayers within the utility’s service area. The California Standard Practice Manual was 

originally published by the California PUC and the California Energy Commission (CEC) in 

1983 and is updated periodically. It was developed to provide guidance and consistent 

methodology for the utilities in California to evaluate the cost-effectiveness of their utilitysponsored demand-side management programs (Vine, Rhee, and Lee 2006). The California 

Standard Practice Manual has become a main reference for cost-benefit analysis for determining 

the cost-effectiveness of utility DSM programs throughout the country, as it documents several 

methodologies utilized for these types of evaluations (Table 1). All methodologies require 

calculating the net present value (NPV) of the impacts of the DSM program, allowing for an 

equal comparison of future benefits and costs with present benefits and costs.

 4 Official DSM programs require more extensive monitoring and verification (M&V) by the Hawaii PUC. As the 

current residential programs are not classified as DSM programs, there has been no funding dedicated to 

measurement and verification.
4

Table 1. Evaluation Perspective for Cost-Benefit Analysis Tests

Methodology Scope

Participant Cost test Evaluates costs and benefits from the perspective 

of participants of the DSM program

Ratepayer Impact Measure test Evaluates costs and benefits from the perspective 

of all utility ratepayers

Program Administrator Cost test Evaluates costs and benefits from the utility’s 

perspective

Total Resource Cost test Evaluates costs and benefits from both the utility 

and ratepayer perspectives for the utility’s service 

area

Societal Cost test Evaluates costs and benefits from both the utility 

and ratepayer perspectives for the utility’s service 

area and beyond, and incorporates the impacts of 

nonenergy benefits

Source: CPUC 2001

The TRC methodology is used in this report to evaluate the cost-effectiveness of a variety of 

residential energy efficiency measures (Appendix A) that were included in the 2005 KEMA 

study. The TRC methodology incorporates the impacts on both the utility and the ratepayers, 

providing a system-wide perspective of the cost-effectiveness of potential energy efficiency 

measures. The TRC is used by all Hawai‘i utilities when developing their Integrated Resource 

Plans. It is important to note that in this methodology, payments between parties are considered 

transfer payments and result in zero net impact. For example, an incentive offered by the utility 

to the ratepayers is considered a transfer payment because, although it is a cost to the utility, it is 

an equal benefit to the ratepayers; the parties combined experience no positive or negative 

impact. Similarly, lost revenue to a utility resulting from reduced electricity use is considered a 

transfer payment because the ratepayers benefit directly from lower energy bills; there is no net 

gain or loss among the parties.

Unlike the Societal Cost Test, the TRC does not incorporate nonenergy benefits into the 

calculation. These types of benefits are difficult to quantify and often require significant 

assumptions be made about valuing those externalities. Also, as DSM programs are designed to 

drive market transformation, many of the benefits associated with free drivers (e.g., people that 

implement an efficiency measure without utilizing the incentives offered through the DSM 

program) and the positive externalities resulting from the program that lead to participants 

implementing other energy efficiency measures not incentivized through the program (spillover 

effect) are not incorporated into the TRC methodology (Levine and Sonnenbrick 1994). While 

these positive externalities are not incorporated into the TRC calculations, it is important for 

utilities to consider them when developing a DSM program.

Avoided cost numbers have not been updated since the KEMA study in 2005, leading to the 

possibility that the offset energy impacts could be undervalued. The data used in the KEMA 

report project electricity rates to be much lower in 2010 than they actually are.5

 5 Updating the utility’s avoided cost requires significant resources. If updated in the future and deemed necessary, 

the TRC test can be rerun for each measure.

To address this
5

discrepancy, TRC scores were run for each measure using the 2005 avoided costs (the “low” 

scenario), a medium scenario, and a high scenario (see Appendix B for further explanation).

This sensitivity analysis demonstrated that the TRC scores changed very little between the three 

avoided costs scenarios. In fact, between the high and medium scenarios, only one measure 

changed from a passing TRC score to a failing score.

To adjust for changes in the market over the last five years, the cost and energy savings data 

points for each measure were updated or verified by researching the cost to purchase the various 

products on Kaua‘i and the energy savings for each measure. For the majority of the measures, 

this was completed by contacting either the Home Depot or Sears on Kaua‘i, the two main 

suppliers of appliances and other home improvement goods. For specialty items, such as the pool 

pump and motor, local distributors were contacted. The load profiles for each end use, end use 

peak percentage, base case equipment, equipment life, and technology saturation remain the 

same as in the KEMA report.6 The total number of houses was updated based on the number of 

residential meters (Mierta 2010). The ratio of single family houses and multifamily units was 

determined by utilizing the ratio established in previous HCEI work (BAH 2010). The 

percentage of homes to which the measure is applicable, the percentage of homes that have not 

yet implemented the measure,

7

Average program costs were estimated based on the historical costs of KIUC’s residential energy 

efficiency programs between 2007 and 2009 ($68/participant on average) (Mierta 2010).

Although the program costs will vary for each measure, when various measures are rolled 

together into a program, the historical average program cost provides a realistic estimate of the 

potential costs to KIUC to implement the measures. Program costs are highly dependent on the 

number of participants and the program design, as discussed in the Program Development & 

Delivery section.

and the percentage of homes in which it would be feasible to 

implement the efficiency measure remain the same as in the KEMA report.

A 9% discount rate was used in the model, based on the discount rate used by KIUC in the 2008 

Integrated Resource Plan (B&V 2008). A net-to-gross (NTG) ratio of 85% was used, as it is the 

NTG used by KIUC in its Annual Program Accomplishments and Surcharge Reports (Mierta 

2010). The NTG ratio represents the number of participants that are driven by the program to 

implement the measure that would not have otherwise done so, while excluding free riders.

Unlike incentives provided by the utility, state, and federal incentives are considered a positive 

payment to ratepayers in a typical TRC methodology. However, state and federal incentives are 

not included in this analysis due to uncertainty surrounding funding longevity and when the 

program would be implemented by KIUC. As such, the TRC score for any measure for which a 

ratepayer could utilize a state or federal incentive would increase accordingly.

 6 While the base case equipment may be more efficient than it was five years ago, until a residential appliance 

survey can be completed, no assumption is made as to how the market has changed on Kaua‘i. 7 Ibid.
6

TRC Scores

The method used in the 2005 KEMA study for determining the threshold for passing the TRC is 

applied to the analysis herein; all energy efficiency measures receiving a TRC score of 0.8 or 

higher are considered to pass. Although a 1.0 is the typical passing score for the TRC, this 

threshold was chosen by KEMA to reflect the nonenergy benefits of reducing energy use and 

future capacity growth that are not included in the TRC. On Kaua‘i , nonenergy benefits can 

include reduced air pollution, reduced dependency on imported oil, and reduced social conflicts 

over determining where to construct additional generation units when it is necessary to increase 

capacity. This analysis sets 0.8 as the threshold for a passing TRC score to maintain consistency

with the KEMA report. Table 2 lists the energy efficiency measures that were evaluated and 

their TRC score; those with a passing TRC are highlighted in blue.

Table 2. TRC Scores for Potential Residential Energy Efficiency Measures

Energy Efficiency Measure TRC Score*

ENERGY STAR Room Air-Conditioner 1.66

Ceiling Fans – Room Air-Conditioning (RAC) 0.37

Whole House Fans – RAC 0.33

Attic Venting – RAC 0.59

Window Film – RAC 0.03

High Performance Windows – RAC 0.02

Ceiling Insulation R-0 to R-19 – RAC 0.00

Wall Insulation R-0 to R-13 – RAC 0.00

Infiltration Reduction – RAC 0.34

Heat Pump Water Heater 0.68

HE Water Heater 0.19

Solar Water Heater 0.59

Tankless Water Heater -2.67

Low-Flow Showerhead 2.67

Faucet Aerators 0.38

Pipe Wrap 0.97

Water Heater Blanket 3.09

Domestic Hot Water (DHW) Temperature Reduction 3.11

ENERGY STAR Clothes Washer 2.53

Low-Flow Showerhead – Solar 0.85

Faucet Aerators – Solar 0.38

ENERGY STAR Clothes Washer – Solar 0.79

Compact Fluorescent Lamp (CFL), 0.5 hr/day 0.93

CFL, 0.5 hr/day, hardwired 0.70

Halogen, 0.5 hr/day 0.32

CFL, 2.5 hr/day 3.14

CFL, 2.5 hr/day, hardwired 2.41
7

Halogen, 2.5 hr/day 0.50

CFL, 6.0 hr/day 2.47

CFL, 6.0 hr/day, hardwired 1.94

Halogen, 6.0 hr/day 1.25

ROB 2L4'T8, 1 electronic ballast (EB) 1.06

High-Efficiency (HE) Clothes Dryer (EF=.52) 0.17

HE Pool Pump and Motor 9.95

HE Refrigerator – ENERGY STAR 1.43

HE Freezer 0.66

ENERGY STAR Dishwasher 4.83

* The high avoided cost scenario was used to calculate the TRC scores as they best 

reflect the cost of electricity on Kaua‘i at the time the analysis was completed.

The scores from this update cannot be directly compared to the TRC scores in the 2005 study for 

multiple reasons. First, KEMA utilized a weighting system to determine final scores for each 

measure (the final scores incorporated more components than just the TRC). This type of 

weighting system can introduce bias into the cost-benefit model and was therefore avoided in 

this analysis. Secondly, the KEMA report did not incorporate program costs into the TRC scores 

for individual measures but instead incorporated the program costs at a program level.

Furthermore, this report uses publicly available methodologies, increasing replicability, but this 

may be the reason for additional discrepancies, since KEMA utilized a proprietary model.

Although the TRC scores of the 2005 report and this update cannot be directly compared, the 

measures that received a passing score in this update are similar to those that passed in the 2005 

report. Table 3 lists which measures passed based on the KEMA methodology and which passed 

based on the TRC methodology used in this update. The measures that passed in one case but not 

the other are highlighted in blue.

Table 3. Comparison of Measures That Passed Using the KEMA Methodology and Those That 

Passed Using the TRC Methodology Used in This Update

Energy Efficiency Measure KEMA Measure 

Recommendation

Passing TRC score in 

this Analysis

ENERGY STAR RAC N Y

Ceiling Fans N N

Whole-House Fans N N

Attic Venting N N

Window Film N N

High-Performance Windows N N

Ceiling Insulation R-0 to R-19 N N

Wall Insulation R-0 to R-13 N N

Infiltration Reduction N N

Heat Pump Water Heater N N

HE Water Heater Y N
8

Solar Water Heater Y N

Tankless Water Heater N N

Low-Flow Showerhead Y Y

Faucet Aerators Y N

Pipe Wrap Y Y

Water Heater Blanket Y Y

Demand Hot Water Temperature Reduction Y Y

ENERGY STAR Clothes Washer Y Y

Low-Flow Showerhead – Solar Y Y

Faucet Aerators – Solar Y N

ENERGY STAR Clothes Washer – Solar Y N

CFL, screw-in Y Y*

CFL, hardwired N N/Y*

Halogen N N/Y*

Replace-on-Burnout 2L4'T8 w/ 1 EB Y Y

HE Clothes Dryer No Score N

HE Pool Pump and Motor Y Y

HE Refrigerator – ENERGY STAR Y Y

HE Freezer Y N

ENERGY STAR Dishwasher Y Y

* Separate TRC tests were run for CFLs and halogens based on hours used during the day 

(0.5 hours/day, 2.5 hours/day and 6.0 hours/day). At all three levels of use, a screw-in CFL 

earned a passing TRC score in this model. Hardwired CFLs receive a passing score when 

used for 2.5 hours/day or more, and halogens received a passing score only when used for 6.0 

hours/day or more.

There are various reasons that some of the measures passed in one report and not the other. Most 

notably, the Solar Water Heater did not pass in this update. In 2005, the cost of a solar water 

heating unit averaged around $4,000 (KEMA 2005). As of 2009, this cost has increased to about 

$7,000. The costs for CFLs and Halogens have decreased since the original report, and the 

savings generated have increased since the cost of electricity is higher, increasing the costeffectiveness of these two measures. Also, while the KEMA report recommended the HighEfficiency Freezer for inclusion in a residential DSM program, it did not pass using the KEMA 

scoring methodology. Rather, KEMA recommended the measure based on a “judgmental 

reassignment because of similarities to other measures and the ability to bundle” into a program 

with other measures that received a passing score (KEMA 2005, p. 3–7).

Regardless of the TRC score received, other contextual factors should be considered when 

determining whether a measure is appropriate for a residential DSM program. For example, 

although the ENERGY STAR Room Air-Conditioner received a passing TRC, it may not be an 

appropriate measure to include in a residential DSM program as, based on local knowledge, there 

are not many homes that use air-conditioning (AC) units. In that case, providing an incentive for 

an energy efficient AC unit may incentivize those without a unit to purchase a new one, resulting 

in a load increase. One way to avoid this issue is to design an incentive program so that anyone 
9

who chooses to participate must trade in an old AC unit in order to receive any incentive for a 

new ENERGY STAR AC unit. This holds true for all appliance replacement programs; if the 

program does not require that the old appliance be turned in, then there is no way to ensure that 

the program is not simply subsidizing the purchase of a new appliance in a home that does not 

currently have that appliance. Furthermore, the household may continue to use the old appliance 

and may then have two of the appliances operating.8

Although some of these efficiency measures do not pass the TRC test and are not cost-effective 

measures for the utility to support through a residential DSM program, they may still be cost

effective for individuals to implement on their own. For example, while a utility program to 

incentivize installation of solar water heating systems is not cost effective according to the TRC 

test (i.e., the costs to the utility and residents combined are considered to outweigh the energy 

savings benefits), it may be cost effective for individual homeowners to install solar water 

heating systems on their own. Based on a simple payback model, at current energy rates, it will 

take about eight to nine years for an individual to recoup the up-front investment on a solar water 

heating system. According to life cycle analysis, solar water heaters are cost effective at any 

location in Hawai‘i for a homeowner (Walker 2008).

In both cases, the utility will have increased 

instead of decreased the load for that household. Requiring participants to exchange or recycle 

their old appliances before receiving the rebate does add a burden of action on the participants,

which, if the incentive is not sufficiently high, may reduce the number of participants.

The energy efficiency measures analyzed in this report are ranked in Table 4 by levelized cost of 

energy (LCOE). The LCOE rank is based on the incremental cost to implement these efficiency 

measures and provides an idea of which measures would achieve the greatest energy savings for 

the least cost. The third column lists the maximum potential cumulative savings if each energy 

efficiency measure is adopted by LCOE rank, and the last column lists the maximum potential 

cumulative savings as a percentage of total annual residential energy use on Kaua‘i.

Table 4. Energy Efficiency Measures Ordered by LCOE

Energy Efficiency Measure LCOE 

($/kWh)

Max Potential 

Cumulative 

Savings (GWh)

Cumulative Savings 

(% of Total 

Residential Energy 

Use)

DHW Temperature Reduction 0.00 1.46 0.91%

ENERGY STAR Dishwasher 0.00 3.16 1.97%

Pipe Wrap 0.00 3.43 2.14%

CFL, 2.5 hr/day 0.00 5.08 3.17%

CFL, 0.5 hr/day 0.00 5.37 3.36%

CFL, 6.0 hr/day 0.00 7.65 4.78%

HE Pool Pump and Motor 0.00 7.91 4.95%

Faucet Aerators 0.00 8.21 5.13%

Low-Flow Showerhead 0.01 8.97 5.61%

 8 This is commonly the case with refrigerators where the new one will be used to replace an efficient one in the 

kitchen and the old refrigerator will be moved to the garage or somewhere else as secondary refrigeration.
10

Water Heater Blanket 0.01 10.31 6.44%

Halogen, 6.0 hr/day 0.01 10.67 6.67%

Faucet Aerators – Solar 0.01 10.68 6.67%

ROB 2L4'T8, 1 EB 0.01 11.40 7.12%

ENERGY STAR RAC 0.02 11.70 7.31%

CFL, 2.5 hr/day, hardwired 0.02 12.29 7.68%

Low-Flow Showerhead – Solar 0.02 12.31 7.69%

CFL, 0.5 hr/day, hardwired 0.02 12.43 7.77%

CFL, 6.0 hr/day, hardwired 0.02 13.20 8.25%

ENERGY STAR Clothes Washer 0.03 18.83 11.77%

Halogen, 2.5 hr/day 0.04 19.11 11.94%

Halogen, 0.5 hr/day 0.05 19.17 11.98%

HE Refrigerator – ENERGY STAR 0.06 24.73 15.46%

Attic Venting – RAC 0.06 24.90 15.56%

Tankless Water Heater 0.07 29.52 18.45%

HE Freezer 0.07 29.83 18.64%

Window Film – RAC 0.09 29.84 18.65%

ENERGY STAR Clothes Washer –

Solar 0.10 30.01 18.76%

Ceiling Fans – RAC 0.12 30.10 18.82%

Wall Insulation R-0 to R-13 – RAC 0.16 30.10 18.82%

Heat Pump Water Heater 0.19 40.89 25.56%

Solar Water Heater 0.20 59.10 36.94%

Whole House Fans – RAC 0.21 59.24 37.03%

Ceiling Insulation R-0 to R-19 – RAC 0.23 59.24 37.03%

Infiltration Reduction – RAC 0.31 59.38 37.11%

High-Performance Windows – RAC 0.38 59.38 37.11%

HE Clothes Dryer (EF=.52) 0.44 59.53 37.21%

HE Water Heater 0.64 62.28 38.93%

Program Options & Maximum Potential Savings

Based on the TRC scores above, the following four end-use areas are likely the best candidates 

for KIUC to include in a residential DSM program. With the exception of the Pool Pump and 

Motor program, these are areas that KIUC is currently focusing on in their existing residential 

programs.

• Water Heating

• Lighting

• Appliances

• Pool Pump and Motor
11

Program design is integral in determining the success of any DSM program and often very 

specific to the locale in which the DSM program is being offered. Not only do incentives need to 

be set at a level sufficient to drive additional adoption of energy efficiency measures but when 

designing the program the utility must also consider the most effective way to market to the 

target sectors among its ratepayers. For example, direct mailing may be effective at reaching 

multiple people, but if the energy efficiency measure doesn’t apply to most customers or the 

mailing is not read by most recipients, a more targeted approach may be more appropriate and 

cost effective, even if more costly.

Program costs are highly dependent on the program design, including the implementation 

method, marketing strategy, and measurement and verification (M&V) requirements. For 

example, any type of direct install or home visit program that requires a home visit will result in 

significantly higher costs to the utility than financial incentive programs such as rebates. The 

program cost estimates used in this report reflect the average program costs for KIUC’s 

residential programs between 2007 and 2009, which include a mix of implementation types such 

as rebates, loans, appliance replacement, and home visits (Mierta 2010).9

Water Heating

As such, if the utility 

chooses to implement all residential programs through a direct install/home visit method, the 

actual program costs will exceed those used in this model, and some measures may no longer 

receive a passing TRC score.

Reducing energy use for heating water is a priority throughout Hawai‘i for two main reasons.

First, as approximately 40%–50% of the residential electricity load on Kaua‘i is a result of water 

heating demand, reducing the energy used for this end use can substantially reduce residential 

customers’ energy bills (Mierta 2010).10

Table 5

Second, a proportionately high amount of the energy 

demand for heating water occurs simultaneously with KIUC’s peak demand. As presented in 

, substantial energy savings can be derived from reducing the energy needed to heat

water. While the Water Heater Blanket measure passes the TRC with a 3.09, it is not included in 

the proposed measures because, based on local experience, this is not an appropriate measure for 

most homes. Under KIUC’s residential direct install program, between 2007 and 2009, adding a 

water heater blanket to a home’s water heater applied to less than 2% of the homes visited 

(Mierta 2010).

 9 This average cost is used because it represents the actual costs of KIUC’s historical efforts based on a variety of 

different program implementation types. It is assumed that any future residential DSM programs will also have a 

similar mix of program implementation types. 10 In terms of the percentage of energy use from water heating, there is a discrepancy between the KEMA report and 

the data that KIUC finds when it completes bill analyses. KEMA reported that 30% of residential energy use was a 

result of water heating, but when KIUC analyzes bills it continues to find that the actual usage for heating water is 

closer to 40%–50% (KEMA 2005; Mierta 2010).
12

Table 5. Potential Energy Efficiency Measures & Estimated Savings—Water Heating Program

Energy Efficiency 

Measure Annual Savings Participant Bill Savings per Year

Total Annual Potential 

Energy Savings*

Total Annual Potential 

Demand Savings*

Low-Flow 

Showerhead 218 kWh/unit $75 900 MWh 0.2 MW

Pipe Wrap 58 kWh/linear foot $200 2,700 MWh 0.4 MW

DHW Temperature 

Reduction 435 kWh/unit $151 1,500 MWh 0.2 MW

* Total Annual Potential Savings if all homes to which the measure is applicable adopt the measure. Therefore, since any 

program will reach only a portion of the total potential participants, these savings represent the maximum annual savings 

potential.

Lighting

On Kaua‘i , about 13% of residential energy use is associated with lighting, and about 9% of 

energy use associated with residential lighting coincides with KIUC’s peak demand (KEMA 

2005). As a result, potential savings from any program directed toward reducing lighting energy 

use can be substantial. Based on KIUC’s residential programs incentivizing CFL installations 

since 2005 and the price reduction in CFLs during this same time period, market saturation may 

be much higher than in the 2005 report, and therefore the total potential savings listed in Table 6

likely overstate the potential savings from this type of program. However, in the absence of a 

targeted appliance survey, the current technology saturation has been adjusted based on national 

experience.

Currently, KIUC provides CFLs to new utility customers, reaching an average of 970 customers 

per year over the past three years, but does not incentivize the adoption of CFLs or other more 

efficient lighting options for existing customers (Mierta 2010). KIUC previously offered CFLs 

during home visits, with each home qualifying for an average of three lamps. Based on this, 

KIUC mailed three CFLs to every household that had not requested a home visit as well as to 

households which did not qualify for the home visit program because they had gas water heating.

Since then, KIUC provides CFLs to new customers only because all other households had 

effectively received three CFLs. At the time of the home visit program, KIUC had determined 

that lights had to be used at least three hours per day for it to be cost effective to replace the 

existing lamp with a CFL. However, as the cost of CFLs has decreased and other factors have 

changed since then, this analysis determines that it is cost effective to replace an incandescent 

lamp used for an average of just a half hour a day with a CFL (Table 6).

While there is no data on CFL adoption on Kaua‘i , at the national level CFL sales have declined 

25% since peaking in 2007 and only 1 in 4 lamps currently used are estimated to be CFLs

(Karney 2009). Despite the dramatic growth in the CFL market in the mid-2000s, this decline in 

CFL adoption rates demonstrates that lighting remains an area in which it can be cost effective 

for utilities to promote the adoption of these technologies.
13

Table 6. Potential Energy Efficiency Measures & Estimated Savings—Lighting Program

Energy Efficiency 

Measure Annual Savings Participant Bill Savings per Year

Total Annual Potential 

Energy Savings**

Total Annual Potential 

Demand Savings**

CFL* 36–420 kWh/unit $12–$145 13,000 MWh 2.6 MW

CFL, hardwired* 36–420 kWh/unit $12–$145 4,496 MWh 1.5 MW

Halogen* 17–198 kWh/unit $6–$69 2,100 MWh 0.3 MW

Replace-on-Burnout 

2L4'T8 w/ 1 EB 56 kWh/unit $19 1,200 MWh 0.4 MW

* Annual savings and costs vary based on the hours used per day and represent a low use of 0.5 hours per day and a high use 

of 6.0 hours per day. The hardwired CFL and halogen measures are only cost effective if the lamp is used for an average of 

more than 2.5 and 6.0 hours respectively.

**Total Annual Potential Demand Savings if all homes to which the measure is applicable adopt the measure. Therefore, since 

any program will reach only a portion of the total potential participants, these savings represent the maximum annual savings

potential.

Appliances

On Kaua‘i, appliances such as refrigerators, dryers, freezers, and dishwashers are responsible for 

approximately 29% of residential energy use (KEMA 2005). Incentivizing the replacement of 

old and inefficient appliances presents an opportunity for significant efficiency savings.

According to the Kaua‘i County recycling Web site, every effort should be made to repair old 

appliances so that they can be donated to those in need rather than recycled (Kauai 2010). As old 

appliances use substantially greater amounts of energy than efficient models, this message is 

inconsistent with the message that KIUC sends with its appliance upgrade program. Based on the 

TRC scores, this type of program should focus on refrigerator, dishwasher, and clothes washer 

appliance replacement (Table 7).

Table 7. Potential Energy Efficiency Measures & Estimated Savings—Appliance Program

Energy Efficiency 

Measure

Annual

Savings

Participant Bill 

Savings per Year

Total Annual Potential 

Energy Savings**

Total Annual Potential 

Demand Savings**

HE Refrigerator 238 kWh/unit $82 7,200 MWh 0.8 MW

HE Dishwasher 234 kWh/unit $81 1,700 MWh 0.6 MW

ENERGY STAR Clothes 

Washer** 400 kWh/unit $138 5,600 MWh 0.9 MW

*Total Annual Potential Demand Savings if all homes to which the measure is applicable adopt the measure. Therefore, since 

any program will reach only a portion of the total potential participants, these savings represent the maximum annual 

savings potential.

**While most of the energy savings from an ENERGY STAR clothes washer reduces energy use associated with water 

heating, it is included with the appliance replacement program because marketing and implementation strategies would be 

similar for all appliances.

There are various options for effective program implementation for appliance replacement 

programs, and a key concern is ensuring that 1) an appliance is being replaced and the program is 

not incentivizing new purchases, and 2) the appliance being replaced is inefficient. One way to 

do this is to have an auditor complete a home visit for any customer interested in the incentive 

and meter the actual energy use of the appliance. If the energy use exceeds a certain threshold as 

defined by the utility, then the appliance qualifies for replacement. This requires significant 

resources from the utility in terms of staff time for home visits but ensures that only inefficient 
14

appliances are replaced. The utility could instead determine an age after which an appliance 

automatically qualifies for replacement, with the age being determined by the year in which 

industry standards exceeded a certain efficiency level. This reduces the burden on the utility but 

could result in some efficient although older models being unnecessarily replaced. To ensure that 

the replaced appliances do not remain in use, the utility could require that the appliance be 

dropped off at an appropriate disposal location and possibly partner with the disposal facility to 

provide a certificate of disposal that can then be sent by the participant to the utility as a step 

required in qualifying for the incentive. The program could also be set up so that the recycling 

facility alerts the utility directly about whom to send the rebate to once an appliance is discarded. 

As mentioned in an earlier section, while these types of requirements ensure that the utility is 

reducing the load through these incentives, they require that additional effort be taken by the 

participant and may reduce the number of participants.

Pool Pumps and Motors

Although a program targeting pool pump and motor efficiencies would be directed toward a very 

specific market sector (those with residential pools), it has the potential to save significant 

amounts of energy in that sector. A benefit of having a limited market such as this is that the 

program could be run in partnership with local pool supply distributors, allowing for direct 

contact with the target audience and therefore reducing the cost to the utility to implement and 

market the program. Although only a small percentage (<1%) of energy use from pool pumps is 

estimated to coincide with peak demand, replacing a standard pump and motor with its highefficiency equivalent is expected to generate about 50% annual savings, totaling an estimated 

1,300 kWh/year saved per unit replaced (based on a survey of pool pumps available on the 

market and data from the KEMA 2005 report).

There is currently no updated data available on the number of residential pools on Kaua‘i; 

however, local pool supply distributors have been contacted and, if this data becomes available, 

better estimates on the total energy savings potential can be determined. Based on the estimates 

for 2005, 1% of single family homes used pool pumps and motors and 99% of those had not 

installed a high-efficiency pump and motor (KEMA 2005). Although there has been no utility 

program incentivizing this type of efficiency measure on Kaua‘i between 2005 and the present, 

assuming that a small portion of these homes (10%) have installed a high-efficiency motor over 

the past five years, that leaves about 177 homes for which this measure would likely apply. If 

high-efficiency pumps and motors replaced the existing pumps and motors in each of these

homes, the maximum potential energy savings would be 234 MWh per year, and the maximum 

potential demand savings would be about 0.01 MW.
15

Program Development and Delivery

The “incentive design process should not be an abstract analytical effort,” it 

should involve the program implementer working with customers and trade allies 

to determine the appropriate level of incentive to achieve the desired level of 

program participation (NAPEE 2010, p. 16).

Energy efficiency program development and delivery are unique to each location in which they 

are implemented because each locale has unique market characteristics. As such, it is impossible 

to simply duplicate a program that is effective in one locale elsewhere. However, new programs 

can benefit from the valuable lessons learned in other programs. This section presents best 

practices for energy efficiency programs as identified in reviews of leading energy efficiency 

programs throughout the country.

Energy efficiency program best practices indicate that the process for developing an effective 

program is to:

1. Identify sectors where efficiency improvements can be achieved

2. Identify the barriers to efficiency measure adoption in each sector

3. Identify mechanisms for addressing these barriers

4. Develop the program (includes the incentive type and level; marketing strategy; and 

M&V methods) to best meet the local circumstances identified in the first three steps 

(NAPEE 2010).

A market analysis is necessary to determine where opportunities for efficiency improvements 

exist. Without a market analysis, it is difficult to identify the available market and how to best 

advertise efficiency improvements to target sectors. It is more cost effective to develop targeted 

marketing strategies. The analysis presented in the first sections of this report used market data 

from the 2005 KEMA report. While this data reflects the market conditions that existed more 

than five years ago, this is the most current data available on market penetration of energy 

efficient measures on Kaua‘i.

Once the sectors where energy efficiency improvement potential exists have been identified, the 

next step is to identify the key stakeholders, program barriers, and program strategies. Table 8

provides a general summary of these three components based on energy efficiency program 

experience throughout the country. It is also important to determine the mix of renters and 

owners in the target sectors because different barriers exist for these different demographics 

(NAPEE 2010). If the target sector consists of buildings where the tenants rent, the programs 

should target building owners and address the split incentive that occurs when tenants reap the 

benefits of energy savings from efficiency measures but the owner paid to implement the 

measure. In 2006, the most recent year with data, approximately 34% of residents rented 

(DBEDT 2009a).
16

Table 8. Program Theory: Identifying Key Stakeholders, Program Barriers, and Program Strategies

Key Stakeholders Key Program Barriers Key Program Strategies

Single Family

• Distributors: appliances; heating, 

ventilation, and air-conditioning 

(HVAC); lighting

• Retailers: appliance, lighting, windows

• Contractors: HVAC, insulation, 

remodeling

• Homeowners

• Higher initial cost

• Lack of info

• Competing priorities

• Inexperience/prior negative 

experience with technology

• Emergency replacements

• Financial incentives

• Partnership with ENERGY STAR

• Info on utility Web sites, bill 

inserts, and at retailers

• Coordination with retailers and 

contractors

Low Income

• Service providers: WAP, LIHEAP

• Social service providers: state and local 

agencies

• NGOs and advocacy groups

• Credit counseling organizations

• Tenants

• Program funding

• Program awareness

• Bureaucratic challenges

• Consistent eligibility requirements 

with existing programs

• Direct installation11

• Leveraging existing customer 

channels for promotion and 

delivery

• Fuel-blind approach

Sources: NAPEE 2010

Completion of a full market analysis, including economic analysis to determine customers’

willingness to pay, would provide information to help KIUC determine the appropriate incentive 

type and level for each measure that the utility wishes to promote. Such a study is outside the 

scope of this current work, but lacking an extensive market analysis, the following information 

based on experience elsewhere can be used to inform program development on Kaua‘i. 

Best Practices

There are a variety of different program types that can be utilized for DSM programs (listed 

below), and choosing the appropriate program type depends on the local context (as identified in 

a market analysis and through local knowledge and experience) and program goals. Combining 

complementary DSM program strategies results in greater program participation and greater 

energy savings (Nadel and Gellar 1996). DSM programs can be especially useful to utilities 

when targeted at customers in areas with transmission and distribution (T&D) capacity 

constraints (Nadel and Gellar 1996). Once a utility determines areas that will face T&D issues in 

the next few years, the utility can develop programs that target those areas, therefore mitigating 

or at least delaying future T&D capacity constraints.

 11 Based on experience on Kaua‘i, KIUC has determined that the market for low-income residents is too small to 

support a cost-effective direct installation program directed only at this demographic (Mierta 2010). 
17

There are a variety of program types, and each has its strengths and weaknesses in driving 

energy efficiency measure adoption. The most common program types are (Nadel and Gellar 

1996):

• Information programs

• Loans and leasing programs

• Rebate programs

• Performance contracting12

• Comprehensive/direct install programs

• Market transformation programs.

Informational programs typically include educational brochures, training programs, home visits,

and labeling. Although the savings from information programs are difficult to measure, most 

estimate that savings are low (Nadel and Gellar 1996). However, a program in Ireland achieved 

7% energy savings, and although short-term savings were minimal, the long-term impact of the 

program was considered to be substantial (Dulleck and Kaufmann 2004). In this case, the utility 

had a direct mandate to reduce demand. Information programs that provide training for energy 

auditors and people in the trades and buildings operations sectors can create lasting change and 

allow for the utility to offer more diverse and successful programs (Wilson et al. 2008).

Informational programs are a good complement to other programs (Nadel and Gellar 1996). Data 

shows that 38% of people read bill inserts, potentially limiting their usefulness (Sovacool 2009).

In general, generic distribution and marketing strategies should be avoided in favor of targeted 

and strategic marketing mechanisms.

Loan programs are typically more difficult to administer and market than rebate programs (Nadel 

and Geller 1996). Energy reductions are typically realized more quickly with rebate programs 

than with loan or market transformation programs. However, although customers generally 

prefer rebate programs to loan programs, rebate programs may not provide sufficient incentives 

to entice the majority of eligible customers to participate. Dealer cooperation and coordination 

are critical to successful rebate programs. Rebate programs are also less effective for low-income 

customers because they often cannot afford to replace existing technology with newer, more 

efficient technology until it burns out, even with a rebate (Wilson et al. 2008). Loan programs, 

on the other hand, provide all customers with access to up-front capital.

 12 Typically only used for commercial customers.
18

Comprehensive/direct install programs have low participation rates due to the high cost and time 

commitment required per participant. However, direct install programs do achieve higher energy 

savings per participant than other programs (Nadel and Geller 1996). These programs usually 

include an initial home visit, completed either by a utility employee or an approved contractor, 

followed by arrangements for measure installation and often financial assistance. This type of 

program is particularly effective at reaching low-income and other hard-to-reach customer 

groups.

Many utilities have moved toward market transformation programs to reach more people with 

their programs and change energy use behavior for a larger percentage of customers (Nadel and 

Geller 1996). Market transformation programs require significant up-front investment, but the 

long-term cost-to-savings ratio is low because they achieve nearly 100% participation over time 

since the energy behavior norms change across the entire population, not just among those who 

participate directly in a rebate, loan, or other limited program. Measurement and verification of 

savings can be challenging, however, and these types of programs require significant 

coordination among multiple stakeholders, sometimes even those operating outside of the 

utility’s service area. Although savings can be high, it can take a long time for savings to be 

realized.

Each program type will have a different impact on various stakeholders (Table 9). Once the 

stakeholders and barriers are identified and the program goals defined, the following chart can 

aid in determining which programs will be most appropriate for KIUC. The best approach to 

achieve high energy savings per customer is to bundle financial incentives and technical services 

(NAPEE 2010). Typical incentive measures by sector are detailed in Table 10.

Table 9. Key Impacts of Energy Efficiency Program Types

Key Impacts

(Impact on...)

Direct 

Financial 

Incentives

Upstream/ 

Midstream 

Incentives

Information 

Services

Technical 

Services

Bundled 

Incentives/ 

Services

Capital Investment H M L M H

Behavior Change L L H M M

Customer Decisions H M M M H

Third-Party Decisions L H M L M

Participation H H L M H

Energy Savings M L L M H

M&V Complexity/Cost L M H M M

Regulatory Approval L M L M M

H = highly likely to be effective for the incentive and its role; M = moderately likely to be 

effective; L = low likelihood of being effective

Source: NAPEE 2010
19

Table 10. Typical Incentive Types by Residential Market Sector

Sector

Incentive Type

Direct Indirect Technical Services Bundled 

Incentives/Services

Lighting/low-cost retrofit

Typical ranges:

• Fixtures: $10–$20

• CFLs: $0–$25

• Ceiling fans: $15–$20

Manufacturer and/or 

retailer buy-downs 

on specified 

products; some 

sponsors use a 

request for 

proposals process

Technical support can 

include:

• Education and outreach 

efforts

• Developing standards of 

practice for participating 

contractors

• Enhancing displays and 

increasing qualified 

product inventory

Programs may also offer 

direct install programs 

focused on no- and low-cost 

upgrades, such as:

• CFLs

• Low-flow shower heads

• Faucet aerators

• Programmable 

thermostats

• Cooperative marketing 

and advertising, special 

promotions and events

Equipment 

replacement

Typical ranges:

• Clothes washers: $50–

$75

• Dishwashers: $25–$50

• Refrigerators: $25–$35

• HVAC equipment: 

$100–$1,200

Not applicable Technical support can 

include:

• Contractor training on 

quality installation, 

sizing, etc.

• Developing standards for 

participating contractors

• Field visits and training

Not applicable

Source: NAPEE 2010

In general, the leading energy efficiency programs across the country are successful because they 

advertise not only the energy savings associated with efficient measures, but also the increased 

comfort, enhanced home value, convenience, superior performance, and consumer cost savings 

(York & Kushler 2003). Although this may be difficult on Kaua‘i because many of the efficiency 

measures found to be cost effective in this analysis do not directly increase comfort or enhance 

home value, residents may be more apt to participate in efficiency programs if benefits beyond 

cost savings can be effectively advertised (e.g., energy independence for Kaua‘i, reduced 

emissions from greenhouse gases, and other criteria air pollutants). Furthermore, they utilize 

leading marketing strategies and provide exceptional technical training and assistance. Program 

evaluation is critical for success and requires using feedback from participants and stakeholders 

as well as market observations to inform program revisions (NAPEE 2010). 

Table 11 identifies best practices for energy efficiency programs by program type based on an 

extensive survey of programs throughout the country in 2004. Table 12 provides information on 

the best practices of leading energy efficiency programs from 2003.
20

Table 11. Residential Program Best Practices

Program Type

Home Visit (Audit) Program Lighting 1

Program 

Theory 

& Design

2

• Clearly identify program targets and strategic approach

• Adopt a multiyear planning approach

• Complete sufficient market research to understand market penetration and 

demand

• Develop clear program theory and goals

Program Management

Project 

Management

• Utilize electronic project management tools

• Include customer follow-up as a part of the measure 

implementer’s role

• Have a single point of contact

• Track market conditions to inform program managers

• Define program management responsibilities

• Maintain program flexibility to allow for adaption to changes in the 

market

Reporting 

& 

Tracking

• Track home visit recommendations and measure 

implementation

• Track participation and energy savings

• Track measure volume and vendor activity

• Clearly identify data requirements for evaluation

• Develop methodology for estimating savings

• Establish data collection standards and a tracking system

• Assess the program regularly

Quality 

Control 

&

Verification

• Conduct on-site postinstallation inspections for a portion of 

participants

• Conduct follow-up calls where appropriate to gauge measure 

installation rates

• Ensure that only quality lamps qualify for the incentive

• Assess customer satisfaction with products

Program Implementation

Participation Process

• Provide a variety of home visit options

• Integrate the home visit with other routine transactions (e.g.,

point of sale, remodel)

• Integrate measure adoption with the home visit process

• Keep the participation process simple

• Allow participation strategies to evolve over time

Marketing 

& 

Outreach

• Have a single point of contact

• Display links prominently on Web site

• Use targeted marketing for hard-to-reach populations

• Provide sufficient training to participating auditors

• Coordinate with other marketing efforts

• Coordinate with national or regional efforts

• Provide necessary support to retailers to ensure that the product is 

sufficiently stocked and advertised effectively

Program

Evaluation

• Regularly assess program performance • Value program review and assessment lessons learned

• Utilize clear and succinct program evaluation documents

Source: Adapted from the following:

1) Quantum Consulting 2004b; 2) Quantum Consulting 2004c
21

Table 12. Exemplary Residential Energy Efficiency Program Best Practices

Sector Implementing Agency Program Name Best Practices/Findings Low Income

Efficiency Vermont Multifamily/Low-Income • Coordinated with the Weatherization Assistance Program to leverage additional funds

Indiana Community Action 

Programs in partnership with 

Cinergy/PSI Energy

Low-Income Weatherization 

and Refrigerator 

Replacement Program

• Coordinated state and utility funds to cover appliance replacement

• Set a minimum annual savings for appliances to qualify (400 kWh) 

• Established a minimum of two hours testing to determine energy baseline of appliance

Air 

Conditioning

New Jersey Clean Energy 

Collaborative Cool Advantage • Provided rebates tied to efficient equipment

• Required participants to provide documentation of proper sizing and installation to qualify

NYSERDA Keep Cool, New York

• Required participants to turn in the old AC unit to NYSERDA to be eligible for a rebate for a new unit

• As the program was quite large, they found it more efficient to have separate subcontracts for marketing, 

recycling, and program implementation

• Learned that establishing relationships with retailers is critical

Appliances

Northeast Energy Efficiency 

Partnerships, Inc.

Residential ENERGY STAR

Appliances Initiative

• After initiation, reduced rebates and increased the education and marketing components to transform the 

market

• Established good partnership with the appliance industry and other stakeholders in the community

Northwest Energy Efficiency 

Alliance

ENERGY STAR Home 

Products Program

• Built awareness and acceptance of ENERGY STAR label through public relations and media outreach 

directed at target audiences

• Leveraged retailer product promotion

• Provided training for sales reps on the benefits of energy efficiency products and how to sell them

Appliance Recycling

Sacramento Municipal Utility 

District

Old Refrigerator Pickup & 

Recycling Program

• The recycling company administered the program, including distributing incentives, and operated a toll-free 

hotline for customers to schedule pickups

• To encourage early participation, the rebate amount was reduced after the first nine months

• Advertised through local newspapers

• Designated age and size limits and required that they be working units

Southern California Edison Appliance Recycling

• Established toll-free number and Web site for scheduling pickup

• Mailed incentives within 10 days

• Maintained a database of the number recycled and expected energy savings and made it accessible to both the 

utility and the recycling company

Lighting 

Program

s

Northwest Energy Efficiency 

Alliance

ENERGY STAR Residential 

Lighting

• Utilized cooperative marketing with both small and large retailers

Southern California Edison Upstream Residential 

Lighting Program

• Reached out to stores that hadn’t participated before to get hard-to-reach populations

Other Residential

Wisconsin Energy 

Conservation Corporation

ENERGY STAR Suite of 

Residential Programs

• Used an integrated, whole-home approach that allowed for maximizing complementary marketing strategies

• Provided info to consumers and training and education for market providers

• Provided low-interest financing options or rebates

• Worked closely with market providers

• Provided training to retail staff

• Attended builder association meetings to spread the word

NYSERDA Home Performance with 

ENERGY STAR

• Provided contractor training

Source: Adapted from York & Kushler 2003
22

When designing a customer incentive program, the program implementer may want to consider

the following questions (NAPEE 2010): 

• Are the program strategies designed to address the identified barriers in the target 

market?

• Was a detailed market assessment completed to examine market actors and decisionmaking processes?

• Is the program designed to leverage other available incentives?

• Was input from customers and trade allies incorporated into the program design process?

• Have potential unintended consequences of the program and strategies to mitigate them 

been identified? 

• Is the proposed program cost effective?

Low-Income Programs

Low-income residents spend a disproportionate amount of their income on energy. Across the 

country, low-income families typically spend 14% of their income on energy, whereas others

spend an average of only 3.5% (EERE/DOE 2001). Utilities benefit from low-income targeted 

programs in multiple ways, including reduced costs associated with a reduced need for credit and 

collection, service shut-offs, and uncollectible account write-offs (Kushler et al. 2005). Utilities 

offering these programs also typically benefit from improved customer relations.

Many utilities provide greater incentives to low-income residents through their residential DSM 

programs, such as free components like showerheads and free appliance replacement. To identify 

which customers to target for incentives designated for low-income residents, utilities typically 

partner with the local community action agency that already has an established relationship with 

the sector. In some cases, utilities train community action agency staff members to conduct home 

visits to provide education on energy use as well as identify whether the resident qualifies for 

any of the utility’s residential DSM programs. Providing additional incentives to low-income 

residents allows the utility to target a sector that can least afford energy efficiency improvements 

and can least afford to adjust their energy budget should the cost of energy rise rapidly.
23

In a survey of utility sector low-income energy efficiency programs, Kushler et al. (2005) found 

that exemplary programs had the following traits:

• Partnerships are established with a wide variety of stakeholders (including community 

action agencies, social service agencies, private market providers, and others) to leverage 

available funding from multiple sources.

• Direct customer services for many programs are provided through community action 

agencies because they have strong relationships with the low-income community.

• Programs commonly use whole-house approaches when assessing the energy efficiency 

of a house.

• Most programs incorporate customer education along with other services offered.

• Program evaluation is valued and is routinely undertaken.

• The cost-effectiveness of the program is less important than with non-low-income 

programs but still an objective of the program.

Program Administration

There is no administrative structure that has emerged as the best structure for energy efficiency 

program administration (Blumstein et al. 2005). Various administrative entities can successfully 

run energy efficiency programs. For example, a utility can successfully administer a program if it 

has a trusted position in a community, especially if it has historical experience with 

administering energy efficiency programs. Administering all programs through a utility can also 

be beneficial, as there are opportunities for economies of scale to be achieved rather than having 

multiple entities administer various programs. However, there is also the possibility that a 

utility’s incentive to increase sales can result in a conflict of interest and insufficient support

from the utility’s stakeholders for energy efficiency programs.

Creating a nonprofit entity that focuses solely on energy efficiency can present many challenges.

Doing so requires establishing a board of directors, creating a governance mechanism, and 

building trust within the community from scratch. The benefit of a third-party administrator is 

that the organization can focus all of its efforts on implementing energy efficiency programs.

Campaigns that last for only a short time and require significant staff resources may be best 

administered by a third party under a short-term contract, as it is difficult for a utility to ramp up 

staffing for a short-term program (Summit Blue 2007).
24

When choosing a program administrator, it is important to consider the following (Blumstein et 

al. 2005):

• Does it have sufficient support to be recognized by the community, utility, and other 

stakeholders as a legitimate entity with the right to act?

• Are appropriate mechanisms established to ensure accountability?

• Does the entity employ and have the ability to maintain and attract qualified employees? 

Does the entity have the capability and desire to work with others beyond the utility’s 

service area to coordinate on market transformation efforts?

• Should the program administrator “be an institutional home for human capital” (i.e.,

skilled employees), or should it be a “funding mechanism” and shop out the technical 

support to local private sector and/or nonprofit firms?

Partnerships

A consistent component of successful energy efficiency programs is well-developed partnerships 

between the administrator and various community stakeholders. To leverage local resources and 

existing relationships with the target sectors, it is critical for the administrator to form 

partnerships with local businesses and retailers, community action agencies, and trade 

organizations (Wilson et al. 2008). Working with retailers to promote the program’s energy 

efficiency products ensures greater participation and greater energy savings. Further, in rural 

areas, it is particularly critical for the program administrator to partner with local retailers as well 

as chain stores to make sure that sufficient product is stocked and that the salespeople have the 

necessary information about the product and programs to inform customers. Working in 

cooperation with trade allies, including installers and contractors, ensures proper equipment 

installation and familiarity with energy efficient equipment, which allows them to better promote 

the installation of energy efficient equipment to customers. Identifying potential partners that 

already have established relationships with the target sectors allows for coordinated and strategic 

marketing (Wilson et al. 2008). For example, programs targeted to the low-income sector have 

traditionally benefitted from being offered through local community action programs because 

these groups have a well-established relationship and trust with the low-income community.

KIUC already partners with various stakeholders on the island, including ACE Hardware, the 

Kauai Economic Development Board, and the local food bank. Other potential partners may

include local faith-based groups contractors, schools and those involved in related trades (e.g., 

electricians and plumbers).
25

Marketing Strategies

Successful DSM programs typically use multiple marketing approaches (including person-toperson contact with postinstallation follow-ups), target specific sectors, provide technical 

assistance, recommend contractors, and are simple so customers can participate easily (Sovacool 

2009). Although there is a high awareness rate of KIUC’s energy efficiency programs among 

Kaua‘i residents, participation rates are lower than would be expected based on the opportunities 

for energy efficiency improvements identified in this analysis. According to KIUC’s consumer 

survey in 2008, of those surveyed, 58% were aware of KIUC’s home visit program, 75% were 

aware of KIUC’s solar rebate/loan program and the appliance replacement rebate, and 83% were 

aware of the solar water heater rebate incentives (Mierta 2010). However, interest and 

participation in these programs remains lower than expected. Revising the current marketing 

strategies and incentives may result in higher participation rates. Table 13 details lessons learned 

for a variety of marketing strategies, and Table 14 outlines marketing best practices based on a 

survey of leading energy efficiency programs around the country.

Table 13. Marketing Strategies for Energy Efficiency Programs, Lessons Learned

Participation 

Tactic Lessons Learned

Retailer 

Agreements

• Make them short and clear, ideally not more than one page

• Ensure correct use of logo

Retailer 

Outreach/Support

• It takes time to develop the personal contacts and relationships required

• Can be expensive, but may be critical to ensure appropriate use of materials and 

consistency

Coupon 

Redemption

• Bar codes greatly simplify redemption for retailers

• Watch fulfillment costs and price point (e.g., as the price for CFLs decreases, the 

proportional cost of coupon redemption may become burdensome)

• Avoid devaluing the product by giving it away

Retailer 

Reimbursement

• Due diligence requirements from regulators can put undue burden on retailers 

regarding risk of ineligible customers

• Establish a quick turnaround time

Marketing • Avoid “overmarketing” a limited supply

• Marketing can be very expensive; leverage dollars where possible

Invitation to 

Participate or 

Industry-Sponsored 

Initiatives

• Can reduce the risk and administrative burden associated with coupon redemption

• Engages manufacturers to create a market for their own products

• Market transformation strategy—may require some agreement from regulators 

regarding the acceptable level of uncertainty

Upstream Buydowns

• Can exacerbate due diligence issues with regulators—reporting requirements will 

dictate how simple a buy-down strategy can be

• Investment can reduce the price point and have a profound impact in the marketplace

• Can be a high-leverage strategy in budget scarcity situations

Source: Quantum Consulting 2004c, p. R1-5
26

Table 14. Advertising Best Practices

Program 

Component Best Practices

Program Theory & 

Design

• Conduct sufficient up-front market research to identify target sectors and measures

• Develop a program theory and end goal to inform message design

• Utilize a market feedback system and pretest advertising methods for effectiveness

Program 

Management

Project 

Management

• Have advertising specialists, social marketing experts, and energy-efficiency experts 

work together to develop the advertising

• Begin early

Reporting & 

Tracking

• Utilize standard advertising industry measurements to evaluate the market strategy

Quality 

Control & 

Verification

• Use market feedback methods

• Evaluate post-buy reports

Program 

Implementation: 

Marketing & 

Outreach

• Use a variety of marketing strategies

• Utilize best practices from the marketing industry for ad development

• Use market segmentation to ensure that appropriate target markets are identified and the 

messages are designed appropriately

Program 

Evaluation

• Assemble an evaluation team that includes both energy efficiency program evaluators 

and advertising specialists

• Use standard advertising evaluation methods

Source: Adapted from Quantum Consulting 2004a

Challenges

Estimating program energy and demand savings is challenging because it is highly dependent on 

the resources dedicated to each program, the level of the incentives, the delivery mechanism and 

the effectiveness of the chosen marketing strategies. As mentioned in Table 14 above, 

conducting up-front market research and contracting advertising specialists to aid in developing 

an advertising campaign helps ensure the greatest impact for the least cost. Advertising experts 

understand how to best reach the desired customers using a variety of mechanisms. As 

advertising costs will vary based on the type of advertising and delivery mechanism determined 

to be the most appropriate, it is not possible to estimate the associated costs without better 

understanding the advertising and delivery mechanisms that would be most cost effective for 

KIUC.

For example, many of the measures that passed the TRC test are currently being implemented 

under KIUC’s residential direct install program. A high percentage of homes visited in 2009 

qualified for many of the efficiency measures offered (Table 15). Direct install programs, while

effective in achieving high savings per household, are a costly mechanism for promoting 

efficiency improvements because they require a utility staff member or contractor to visit the 

home. The high percentage of homes visited that qualify for these efficiency measures and 

KEMA’s market potential data from 2005 suggest that there are a substantial number of homes 

for which these measures would be applicable. However, due to the high cost of direct install 

programs and the staff resources needed to implement them, it would likely be difficult for KIUC 

to reach a much higher number of customers through a direct install program. A different 
27

delivery mechanism, however, may allow for the utility to reach more customers if marketed 

appropriately. Determining which marketing strategies and delivery mechanisms are most 

appropriate on Kaua‘i requires supplementing local knowledge and experience with advertising 

expertise and on-the-ground economic analysis beyond the scope of this project.

Table 15. Direct Install Program 2009 Measure Installation Rates 

Measure Number of 

Installations

Percentage of Homes Visited in Which 

the Measure Was Installed

Faucet Aerator (Bath) 90 51.1%

Faucet Aerator (Kitchen) 58 45.1%

Low-Flow Showerhead 40 27.0%

Source: Mierta 2010

Conclusion

This report finds that there remains potential energy efficiency savings that could be costeffectively incentivized through a utility residential DSM program on Kaua‘i if implemented in 

such a way that the program costs per measure are consistent with the current residential 

program costs. That is to say, if the measures that pass the TRC in this analysis can be 

implemented in a program with average costs of $68 per measure or less, then it is cost effective

for KIUC to implement them. Compared to the analysis completed by KEMA in 2005, similar 

end uses are identified in each report as target markets for KIUC to focus on: water heating, 

lighting, and appliances. In addition, this report identifies Pool Pump and Motor as a potential 

program area that could be implemented separately because, as the market is so small, targeted 

marketing through local pool supply and maintenance companies may provide a greater rate of 

participation and be more cost effective than using general marketing practices such as those 

used for the appliance replacement initiatives. The KEMA study proposes including this with a 

lighting and appliance program concept.

Effective program development specific to the market on Kaua‘i is necessary for successful 

program implementation and will be dependent on the resources that the utility is able to 

dedicate to a residential DSM program. Consulting with marketing and advertising experts to 

determine the most effective methods for promoting the specific energy efficiency measures on 

Kaua‘i would allow KIUC to determine the most cost-effective program delivery and marketing 

strategies. This type of analysis, which extends beyond the expertise of the authors, may identify 

strategies that are more cost effective at driving program participation than the current 

implementation methods used by KIUC. If more cost-effective strategies are identified, 

additional energy efficiency measures may receive a passing TRC score because the program 

cost per measure would be reduced while the gains in efficiency would increase as a result of 

greater participation.

Furthermore, under the residential programs currently offered, KIUC does not invest in M&V, as 

it is not required because the programs are not designated DSM programs. Furthermore, the goal 

of the current programs is not to be cost effective, but to offer customers services to reduce their 

energy use because KIUC sees this as a benefit to the entire cooperative. If these programs are 

adopted as official DSM programs, resources will be required by the PUC to be dedicated to 
28

M&V to ensure that the programs implemented are achieving the appropriate levels of energy 

efficiency improvements. According to efficiency program best practices, regardless of whether 

or not a utility-supported efficiency program is required to measure and verify savings, doing so 

is considered to be extremely valuable. For example, M&V is a critical tool for informing

program revision as well as for demonstrating to stockholders or, in the case of KIUC, members 

that the utility’s resources are being used cost effectively.

As mentioned throughout this report, the cost, benefit, and market penetration data has been 

updated where possible. However, due to the limited scope of this update, some data, particularly 

market penetration data, cannot be updated without further on-the-ground surveys of technology 

saturation in homes on Kaua‘i. Future work in this area would provide an enhanced 

understanding of the existing market for specific technologies and allow KIUC to refine 

marketing strategies and program design to better target specific customers and programs.
29

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32

Appendix A: Energy Efficiency Measures

Measure Name Description

ENERGY STAR RAC ENERGY STAR air-conditioner, to replace an inefficient airconditioner

Ceiling Fans – RAC The addition of ceiling fans to reduce the need to use an 

existing air-conditioner

Whole-House Fans – RAC Used instead of an existing air-conditioning unit; whole-house 

fans pull cool air in from the outside, move air through the 

house, and/or remove hot air through the attic

Attic Venting – RAC A motor-driven, thermostat-regulated fan that reduces heat 

gain

Window Film – RAC A dark film that is applied to existing windows to reduce the 

amount of solar heat gain

High-Performance Windows – RAC High-performance windows used to replace existing 

inefficient windows, reducing solar heat gain and air leakage

Ceiling Insulation R-0 to R-19 – RAC Reduces building heat gain and loss (assumes adding R-19 

insulation to an uninsulated ceiling)

Wall Insulation R-0 to R-13 – RAC Reduces building heat gain and loss (assumes adding R-13 

insulation to uninsulated walls)

Infiltration Reduction – RAC Includes weather stripping, caulking, and other similar 

measures to improve the tightness of the building shell, 

reducing heat gain and loss (reflects hiring a professional to 

assess the house and implement appropriate measures)

Heat Pump Water Heater An air-to-water heat pump water heater, replacing a base 

electric water heater with the same tank capacity

HE Water Heater Replacing a standard water heater (EF 0.88) with a highefficiency electric water heater (EF 0.93).

Solar Water Heater Adding a solar water heater to preheat the water supplied to a 

conventional water heater (savings are based on analysis 

completed by Hawaiian Electric Company [HECO])

Tankless Water Heater Replacing an existing water heater with a tankless or ondemand water heater that heats water only when there is 

demand for hot water

Low-Flow Showerhead Flow rate of 1.0–2.5 gallons per minute, compared to typical 

showerheads at 3.5–6.0 gallons per minute, reduces water 

usage, thereby reducing the energy required to heat water

Faucet Aerators Can reduce the flow rate by 1–2 gallons per minute, reducing 

the energy use needed to heat water

Pipe Wrap Assumes the installation of pipe insulating wrap on 5 feet of 

both the hot and cold water pipes connected to the water 

heater, reducing the energy needed to maintain water 

temperature
33

Water Heater Blanket The addition of a water heater blanket to an inefficient tank 

reduces the heat loss and the energy needed to maintain hot 

water temperatures

DHW Temperature Reduction Reducing the set point on existing DHW heaters

ENERGY STAR Clothes Washer Replacing an inefficient clothes washer with an ENERGY 

STAR clothes washer, resulting in reduced energy demand 

because less warm/hot water is needed

Low-Flow Showerhead – Solar Replacing an existing showerhead with a low-flow 

showerhead on a home that has a solar water heater

Faucet Aerators – Solar Replacing an existing faucet aerator with a low-flow aerator 

on a home that has a solar water heater

ENERGY STAR Clothes Washer – Solar Replacing an inefficient clothes washer with an ENERGY 

STAR clothes washer on a home that has a solar hot water 

heater 

CFL, 0.5 hr/day Replacing an incandescent lamp with a CFL on a lamp that is 

used for an average of 0.5 hours/day

CFL, 0.5 hr/day, hardwired Replacing an incandescent lamp with a hardwired CFL on a 

lamp that is used for an average of 0.5 hours/day

Halogen, 0.5 hr/day Replacing an incandescent lamp with a more efficient halogen 

lamp for a lamp that is used for an average of 0.5 hours/day

CFL, 2.5 hr/day Replacing an incandescent lamp with a CFL on a lamp that is 

used for an average of 2.5 hours/day

CFL, 2.5 hr/day, hardwired Replacing an incandescent lamp with a hardwired CFL on a 

lamp that is used for an average of 2.5 hours/day

Halogen, 2.5 hr/day Replacing an incandescent lamp with a more efficient halogen 

lamp for a lamp that is used for an average of 2.5 hours/day

CFL, 6.0 hr/day Replacing an incandescent lamp with a CFL on a lamp that is 

used for an average of 6.0 hours/day

CFL, 6.0 hr/day, hardwired Replacing an incandescent lamp with a hardwired CFL on a 

lamp that is used for an average of 6.0 hours/day

Halogen, 6.0 hr/day Replacing an incandescent lamp with a more efficient halogen 

lamp for a lamp that is used for an average of 6.0 hours/day

ROB 2L4'T8, 1EB On burnout, replacing a standard two-lamp four-foot T-12 

fluorescent fixture utilizing a magnetic ballast with a similarsized fixture that uses two T-8 lamps and an electronic ballast

(mainly affects kitchen lighting)

HE Clothes Dryer (EF=.52) Replacing an inefficient clothes dryer with a similarly sized 

high-efficiency model

High-Efficiency Pool Pump and Motor Replacing an existing standard 1 horsepower (HP) pool pump 

and motor with an energy efficient 1 HP pool pump and 

motor

HE Refrigerator – ENERGY STAR Replacing an inefficient refrigerator with an ENERGY STAR

model of similar size

HE Freezer Replacing an inefficient freezer with an ENERGY STAR

model of similar size
34

ENERGY STAR Dishwasher Replacing an inefficient dishwasher with an ENERGY STAR

dishwasher 
35

Appendix B: Avoided Cost Adjustments

The following tables list the avoided costs utilized to run the TRC test for each measure.

Recognizing that the avoided costs from the 2005 KEMA report are outdated, two separate 

adjustments were made in an attempt to better reflect the higher energy costs on Kaua‘i. Table 

16 lists the avoided costs used by KEMA. Table 17 lists the avoided costs adjusted by shifting 

the avoided energy costs (columns 2–5 in Table 16) to match the residential electricity rates with 

the current residential electricity rates of $0.34/kWh), essentially shifting the data so that the 

original avoided costs in 2011 are now in 2009. Similarly, for the high scenario, the data in

Table 18 was shifted so that the commercial rates reflect the current commercial rates of 

$0.36/kWh, essentially shifting the data so that the original avoided costs in 2015 are now 

displayed in 2009. For both adjusted scenarios, the avoided energy cost was then extrapolated 

through to 2025 using the average annual change for the years in which data existed.

The avoided demand cost increases remain the same as in Table 16 as additional capacity 

installation costs are not as easily adjusted and based on the assumption that additional capacity 

is projected to be added on the same timeline as in 2005.

Table 16. Avoided Costs from the 2005 KEMA Report

Avoided Energy Costs by Time Period Avoided 

Demand Costs Electricity Rates

Year

Peak 

$/kWh

W-Day 

$/kWh

WNight 

$/kWh

S-Day 

$/kWh

S-Night 

$/kWh Peak $/kW Residential $/kWh

Commercial 

$/kWh

2005 0.095 0.095 0.095 0.095 0.095 0 0.26 0.234

2006 0.101 0.101 0.101 0.101 0.101 0 0.272 0.245

2007 0.108 0.108 0.108 0.108 0.108 0 0.283 0.256

2008 0.116 0.116 0.116 0.116 0.116 0 0.297 0.268

2009 0.124 0.124 0.124 0.124 0.124 0 0.311 0.281

2010 0.125 0.125 0.125 0.125 0.125 0 0.327 0.297

2011 0.146 0.146 0.146 0.146 0.146 0 0.343 0.312

2012 0.148 0.148 0.148 0.148 0.148 0 0.352 0.32

2013 0.155 0.155 0.155 0.155 0.155 0 0.365 0.332

2014 0.163 0.163 0.163 0.163 0.163 236.87 0.379 0.345

2015 0.172 0.172 0.172 0.172 0.172 239.32 0.395 0.36

2016 0.177 0.177 0.177 0.177 0.177 236.59 0.406 0.37

2017 0.173 0.173 0.173 0.173 0.173 283.75 0.408 0.372

2018 0.183 0.183 0.183 0.183 0.183 284.82 0.426 0.388

2019 0.187 0.187 0.187 0.187 0.187 284.15 0.437 0.398

2020 0.185 0.185 0.185 0.185 0.185 270.55 0.443 0.403

2021 0.181 0.181 0.181 0.181 0.181 300.98 0.447 0.405

2022 0.188 0.188 0.188 0.188 0.188 295.62 0.461 0.418

2023 0.177 0.177 0.177 0.177 0.177 290.02 0.459 0.415

2024 0.183 0.183 0.183 0.183 0.183 317.44 0.473 0.427

2025 0.185 0.185 0.185 0.185 0.185 298.45 0.484 0.437
36

Table 17. Avoided Costs, Adjustment #1 - Medium Costs

Avoided Energy Costs by Time Period

Avoided 

Demand 

Costs

Electricity Rates

Year Peak 

$/kWh

WDay 

$/kWh

WNight 

$/kWh

S-Day 

$/kWh

S-Night 

$/kWh Peak $/kW Residential $/kWh

Commercial 

$/kWh

KEMA

2009 0.146 0.146 0.146 0.146 0.146 0.000 0.343 0.312

2010 0.148 0.148 0.148 0.148 0.148 0.000 0.352 0.320

2011 0.155 0.155 0.155 0.155 0.155 0.000 0.365 0.332

2012 0.163 0.163 0.163 0.163 0.163 0.000 0.379 0.345

2013 0.172 0.172 0.172 0.172 0.172 0.000 0.395 0.360

2014 0.177 0.177 0.177 0.177 0.177 236.870 0.406 0.370

2015 0.173 0.173 0.173 0.173 0.173 239.320 0.408 0.372

2016 0.183 0.183 0.183 0.183 0.183 236.590 0.426 0.388

2017 0.187 0.187 0.187 0.187 0.187 283.750 0.437 0.398

2018 0.185 0.185 0.185 0.185 0.185 284.820 0.443 0.403

2019 0.181 0.181 0.181 0.181 0.181 284.150 0.447 0.405

2020 0.188 0.188 0.188 0.188 0.188 270.550 0.461 0.418

2021 0.177 0.177 0.177 0.177 0.177 300.980 0.459 0.415

2022 0.183 0.183 0.183 0.183 0.183 295.620 0.473 0.427

2023 0.185 0.185 0.185 0.185 0.185 290.020 0.484 0.437

2024 0.188 0.188 0.188 0.188 0.188 317.440 0.496 0.448

2025 0.192 0.192 0.192 0.192 0.192 298.450 0.508 0.459

Table 18. Avoided Costs, Adjustment #2 - High Costs

Avoided Energy Costs by Time Period

Avoided 

Demand 

Costs

Electricity Rates

Year Peak 

$/kWh

W-Day 

$/kWh

WNight 

$/kWh

S-Day 

$/kWh

S-Night 

$/kWh

Peak 

$/kW

Residential 

$/kWh

Commercial 

$/kWh

KEMA

2009 0.172 0.172 0.172 0.172 0.172 0 0.395 0.36

2010 0.177 0.177 0.177 0.177 0.177 0 0.406 0.37

2011 0.173 0.173 0.173 0.173 0.173 0 0.408 0.372

2012 0.183 0.183 0.183 0.183 0.183 0 0.426 0.388

2013 0.187 0.187 0.187 0.187 0.187 0 0.437 0.398

2014 0.185 0.185 0.185 0.185 0.185 236.87 0.443 0.403

2015 0.181 0.181 0.181 0.181 0.181 239.32 0.447 0.405

2016 0.188 0.188 0.188 0.188 0.188 236.59 0.461 0.418

2017 0.177 0.177 0.177 0.177 0.177 283.75 0.459 0.415

2018 0.183 0.183 0.183 0.183 0.183 284.82 0.473 0.427

2019 0.185 0.185 0.185 0.185 0.185 284.15 0.484 0.437

2020 0.186 0.186 0.186 0.186 0.186 270.55 0.494 0.446

2021 0.188 0.188 0.188 0.188 0.188 300.98 0.504 0.454

2022 0.189 0.189 0.189 0.189 0.189 295.62 0.515 0.463

2023 0.191 0.191 0.191 0.191 0.191 290.02 0.525 0.472

2024 0.192 0.192 0.192 0.192 0.192 317.44 0.536 0.482

2025 0.194 0.194 0.194 0.194 0.194 298.45 0.547 0.491
F1146-E(10/2008)

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June 2010

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Technical Report

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4. TITLE AND SUBTITLE

Identifying Cost-Effective Residential Energy Efficiency 

Opportunities for the Kauai Island Utility Cooperative

5a. CONTRACT NUMBER

DE-AC36-08-GO28308

5b. GRANT NUMBER

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6. AUTHOR(S)

S. Busche and S. Hockett

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NREL/TP-7A2-48267

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IDHW.9170

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14. ABSTRACT (Maximum 200 Words)

This analysis is an update to the 2005 Energy Efficiency Potential Study completed by KEMA for the Kauai Island 

Utility Cooperative (KIUC) and identifies potential energy efficiency opportunities in the residential sector on Kauai 

(KEMA 2005). The Total Resource Cost (TRC) test is used to determine which of the energy efficiency measures 

analyzed in the KEMA report are cost effective for KIUC to include in a residential energy efficiency program. This 

report finds that there remains potential energy efficiency savings that could be cost-effectively incentivized through a 

utility residential demand-side management program on Kauai if implemented in such a way that the program costs 

per measure are consistent with the current residential program costs.

15. SUBJECT TERMS

Kauai; energy efficiency; residential energy efficiency; Kauai Island Utility Cooperative; Hawaii; Hawaii Clean Energy 

Initiative; HCEI

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