green bank academy - objective function

The Objective Function Tracking Program Performance and Aligning Outcomes with Strategic Goals

Objective function measures program performance, aligns programs, goals

• Purpose of objective function is to clarify what you are trying to accomplish

• Must be a formula that enables you to focus on maximizing a particular outcome

• Objective function aligns program with strategic goal

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Objective Function

A quantitative metric that captures

the desired program outcome,

which a Green Bank seeks to maximize.

Objective function is maximize clean energy per dollar

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X kWh produced

$1 at Risk

or

Clean Energy Produced or Energy Saved

Dollars Spent, Held, Financed

Y MMBtu’s or $Y saved

$1 at Risk

• Generate/save more energy, objective function goes up • Spend fewer public dollars, objective function goes up

CEFIA residential solar objective function increasing over time

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Total CEFIA solar incentive dollars and annual kwh per dollar

Quantitative tracking enables green bank management

• Design programs aligned with green bank goals

– Provides guideposts that help program managers ensure all elements are oriented toward a unifying goal

• Measure program outcomes, effectiveness

– Serves as a measurement tool to track program success over time and compare effectiveness between programs

• Make informed decisions about dollar allocations

– Shows how dollars should be used within a product structure or between products to maximize the desired goal

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Compare programs across organizations

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• CEFIA can demonstrate that its program was far more efficient than the utility-run REC program

Objective function tracks progress and compares program effectiveness

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• Only by tracking program performance can a green bank know if it is meeting strategic goals

• Objective function is easily-understood ratio that shows how much clean energy you get per dollar

• Can be used to compare performance of programs and guide decisions for allocating dollars

Green Bank Academy

Washington, DC February 6-7, 2014

www.greenbankacademy.com