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2.4.22 - Committed Pay As You Save® Investments and Addressable Market

This week, we present the picture of expected and likely growth in both PAYS investments and its addressable market based on the committed funds in statutes and utility commission dockets and orders:

MO and IL Committed $170M in Pay As You Save® Utility Investments for 2022-2024 Commission orders approving multi-party settlement stipulation agreements relating to full scale and pilot PAYS programs in Missouri and the recent Equitable Energy Upgrade Program statute passed as part of the 2021 Climate and Equitable Jobs Act in Illinois, which mandates utilities with over 500k meters offer programs consistent with the Essential Elements and Minimum Program Requirements of the Pay As You Save system, will increase total utility PAYS investment to over three times the historical total of $50M. See figure below for the annual breakdown of the $170M committed funds. Special thanks to PAYS Pal James Owen and his team at Renew Missouri who validated the Missouri budget and provided the complete dockets and page numbers!

The Projected Addressable Market for Pay As You Save® through 2026: 25M Homes! The number of residential properties in utility service territories offering a Pay As You Save program is projected to grow dramatically over the next five years, driven almost exclusively by Investor Owned Utilities (IOU) programs.

In 2022, all of the Missouri IOU programs will drive much of this growth, Virginia will tag in with a pilot by Rappahannock Electric Cooperative, and CenterPoint Gas may launch a pilot in Minnesota. We also expect 2023 to be a banner year with new permanent programs launched by Evergy Kansas, roll-outs under the Equitable Energy Upgrades Program by ComEd and Ameren Illinois, a pilot by Duke Energy in North Carolina prompted by a stipulation agreement, and a slim possibility of Georgia Power converting its Income Qualified Tariff Based Energy Efficiency Pilot program into a full scale PAYS program. Committed funds also show that 2024 will see the entrance of the California IOU tariffed based investment programs, although whether they will be true PAYS programs or something else remains an open question. Finally, we are predicting Duke Energy North Carolina and CenterPoint Gas Minnesota both expand from pilot to full scale program in 2026.

All told, the projected addressable market for PAYS, i.e. the number of households for which a PAYS® programs will be an offer on the table, is at least 19M homes through 2026 and possibly 25M homes if an additional 6M homes can be added through the Georgia Power, CenterPoint Energy, and Duke Energy programs. We’re also rooting for Colorado to be added to the board, but that will require passage of their own Equitable Energy Upgrade Program Accelerator. See the Figure below for the addressable market projection in each year through 2026.

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