Thursday, December 18, 2008

Will support for efficiency hold in 2009?

By Elisa Wood
December 18, 2008

The stars are aligned to make 2009 a good year for energy efficiency — or at least, most of the stars.

President-Elect Barack Obama has assembled an energy team that supports clean technologies. Most notably, Obama named Steven Chu as energy secretary on December 15. Chu is a Nobel Prize winner and director of the Lawrence Berkeley National Laboratory, a leader in bringing energy efficiency technologies to market, such as the compact fluorescent light bulb. http://www.lbl.gov/

Obama also is in the process of putting together an economic recovery package that places high priority on energy, including investment in efficiency. The goal is to quickly create jobs by giving ‘shovel-ready’ projects a boost in the sluggish economy. Efficiency projects more easily qualify as ‘shovel-ready’ — set for quick development – than most energy undertakings. Efficiency measures rarely require the kind of time-consuming permitting, engineering and financing of power plant or transmission construction.

So what star is out of place in the sky? The star that governs oil prices. It costs far less to fill up the gas tank now than it did last summer. That is a good thing. The problem is that the US consumer tends to be short-sighted. If gasoline is cheap today, who cares about tomorrow? Energy efficiency falls out of favor.

Joe Loper, senior vice president for the Alliance to Save Energy, warned about this “cycle of complacency” in testimony before the Senate Committee on Energy and Natural Resources December 10. Loper recommended $15 billion in economic stimulus money for energy efficiency to keep the nation’s energy goals on track. Investing in efficiency will not only create jobs, but also will foster continued use of technologies that have already proven their worth. “A silent partner” in meeting the nation’s energy needs, efficiency has reduced America’s energy bill and related carbon emissions by 50% since 1973, he said.

Obama, himself, is worried that declining gas prices may erode support for his aggressive energy agenda. He told Time magazine that lower oil prices make “the politics of it tougher than it might have been six months ago.” http://change.gov/newsroom/entry/the_president-elect_on_his_goals_and_agenda_in_a_time_of_crisis/

We’ll see in the next several weeks if support continues for an overhaul of the nation’s energy portfolio, or if the public follows the wrong star in the sky.

Visit Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets podcast and newsletter.

Thursday, December 11, 2008

Front-load washers: Leaky solar panels revisited?

By Elisa Wood

December 11, 2008

Some days I’d like to throw my front-load clothes washer out the back door. But that probably won’t be necessary because it may walk out on its own.

The LG product shakes and rattles so much in the spin cycle that it ‘walks’ several inches across the floor each day. One guest to my kitchen thought we were experiencing an earthquake. Sears repairmen have visited twice, but tell me nothing is wrong with the machine: front loaders just do that. In fact, one repairman confessed that he’s called out to homes “all the time” because of these over-agitated beasts.

I spent several hundred dollars more on this machine than I would a conventional washer that loads clothes from the top. I was willing to do this because front loaders are more energy efficient. They use about one-third as much water as top-loading machines. That translates into less energy needed to warm the water. Front-loaders also spin faster, removing more moisture from clothes so that they require less time in the dryer.

The machine includes sophisticated electronics and can perform all sorts of tricks — from automatically measuring the size of laundry load to singing me a sweet song when the cycle is over. But I eye its friendly R2D2-like exterior warily. How soon before all of the rattling and rolling breaks the delicate electronics, and I have a hefty repair bill?

Several months after I bought the machine, Sears advised that the machine might stop shaking if I shored up the laundry room floor from below and replaced the linoleum with tile. Sears sales folks did not tell me before I bought the machine that its successful use required home remodeling.

Supposedly, a next generation front loader will be released shortly that does not try to escape its owners. I’m not sure what good that does me – and so many others – who already put down our hard-earned cash on today’s poor design.

I write this not to whine about my purchasing misstep, but to point out the dangers that faulty products cause the green energy movement. We’ve been down this road before. In the 1980s, when high oil prices piqued consumer interest in renewable energy, the industry rushed solar panels to market without properly training installers. Many roofs leaked. Renewable energy became associated with poor quality. Today, the solar industry wisely puts a great deal of effort into proper training of installers and product warranties. Solar panels, in fact, are now associated with quality custom construction. But it took years to restore consumer confidence.

Energy efficient appliances risk the same backlash if they take advantage of our desire to do the right thing. Consumers are willing to pay more for greater efficiency; their willingness will falter if energy efficiency becomes associated with inferior workmanship.

The stakes are high. In the not-too-distant future the auto industry is likely to offer the plug-in hybrid vehicle. A source I interviewed recently pointed out the enormous damage to public confidence that will occur if the plug-in hybrid is introduced before its battery is perfected. Not long ago several million laptop computers were recalled because their batteries overheated and sometimes caught fire. Imagine the consumer dismay if several million plug-ins cars – far more expensive than laptops — were recalled ? I am as eager as anyone to fuel my car by plugging it into an electric socket. But I do hope the auto industry takes its time overcoming the difficulties of perfecting the battery and gets it right before marketing the cars.

The public supports green products now more than any other time in our history. We may think that this support is rock solid. I’m not so sure. My front-load washer could rattle anything.

Visit Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets podcast and newsletter.

Thursday, December 4, 2008

Brad Pitt, Angelina Jolie and combined heat & power

By Elisa Wood

Dec. 4, 2008

The universe contains many mysteries. A big one for me is: Why doesn’t the United States use more combined heat and power (CHP)?

It requires an energy geek, of course, to even ask that question. Most of the world knows nothing about CHP, even when referenced by its other name: cogeneration. So it was heartening to see the Department of Energy’s recent effort to educate the public in a Dec. 1 report: “Combined Heat and Power: Effective Energy Solutions for a Sustainable Future.” http://www1.eere.energy.gov/industry/distributedenergy/

What’s the problem with CHP? People are unaware of it – even though it’s been around for 100 years. It could benefit from a marketing makeover, especially a name change. Combined heat and power does not roll off the tongue easily like solar and wind, nor does it evoke an image of efficiency and greenness.

Here is a quick definition: CHP systems are a form of distributed energy (like solar) built close to where they are used. They generate electricity and use the excess heat that is produced to cool or warm the building. So a CHP system uses one fuel to create two resources – power and usable heat. As a result, CHP plants are about 35% more efficient than typical generators.

“CHP may not be widely recognized outside industrial, commercial, institutional, and utility circles, but it has quietly been providing highly efficient electricity and process heat to some of the most vital industries, largest employers, urban centers, and campuses in the United States,” says the report.

It appears the United States may finally embrace the resource. The DOE report proposes that 20% of US generation capacity come from CHP, up from today’s 8.6%. Because CHP is so efficient, its greater use would mean far less greenhouse gas emissions. In fact, the report finds that under the 20% scenario, the US could avoid over 60% of its projected increase in carbon dixoide emissions between now and 2030.

Several states are putting policies in place to help advance CHP, particularly energy efficiency portfolio standards. These standards require that energy efficiency make up a certain percentage of the state’s mix of electric resources. Fourteen states allow use of CHP to meet the standard.

CHP also should get a boost from a new 10% federal tax incentive signed into law as part of the financial recovery package in early October. The credit applies to small and medium-sized CHP projects.

That still leaves the problem of the brand name. Suggestions welcome! Preferably something that could make combined heat and power the “Brangelina” of the energy world.

Visit Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets podcast and newsletter.

Thursday, November 20, 2008

Clean energy, jobs and the real estate market

By Elisa Wood

November 20, 2008

President-elect Barack Obama wants to create five million new green jobs over the next decade. This is a big goal, but in line with what clean energy industry advocates see as possible.

An upcoming international report provides some solid perspective on why green initiatives make for good job building opportunities.

Scheduled for release next summer, “Greening Buildings and Communities: Costs and Benefits,” finds that green buildings create roughly $1/square foot of value in increased employment. A typical green office creates roughly one-third of a permanent job per year. This is done by shifting spending from fossil fuel-based energy to more labor intensive domestic jobs in energy efficiency, renewable construction and new green industries.

A preview of the study, released this week by Good Energies www.goodenergies.com, also finds that green buildings are not as pricey as often believed. They add, on average, about two percent to the cost of a building. Moreover, green buildings reduce energy use by an average 33%. The extra cost of building green usually pays back within five years.

Based on an analysis of 150 green buildings in the United States and 10 other countries, the study is billed as the largest international review of its kind to date.

What good is it to bet on jobs from new construction in this economy? It turns out that green buildings are not falling victim to today’s real estate downturn. Buildings in green neighborhoods are holding value better than conventional homes. On average, sales prices tend to be $20/square foot higher.

“The deep downturn in real estate has not reduced the rapid growth in demand for and construction of green buildings,” said Greg Kats, the study’s lead author and a Managing Director of Good Energies. “This suggests a flight to quality as buyers express a market preference for buildings that are more energy efficient, more comfortable and healthier.”

The report’s findings underscore a growing sentiment that the green energy and efficiency industries are key to economic recovery. What we’ve lost – jobs and real estate values – these industries offer to give back.

Visit Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets podcast and newsletter.

Thursday, November 13, 2008

Lower energy prices: Now you see them, now you don’t

By Elisa Wood

November 13, 2008

When combined with efficiency, solar homes can achieve ‘net zero’ – they consume no more energy than they produce. It is likely we will see a growing number of net zero homes built as more states reach what is called ‘grid parity’ – the cost of solar energy becomes no higher than the power we buy from our utility. Industry insiders say that about a dozen states already have reached this goal.

This is all good news. But at some point – maybe soon – the laws of supply and demand kick in, creating an odd dilemma for the clean energy industry. Net zero homes and other efficiency measures reduce the amount of power we need from utilities. And as demand drops, so do utility prices. Suddenly, solar energy is once again more expensive than utility power. Clean energy, in effect, becomes undercut by its own good work.

Bob Reedy, solar energy research director for the Florida Solar Energy Center http://www.fsec.ucf.edu/en/, sees “an uncomfortable zone” occurring in the next five to ten years when energy regulators will need to rethink utility rates. Utilities will still need to cover their fixed costs and may find it difficult to do so as efficiency reduces their energy sales. So regulators may raise utility rates, making solar power cheaper once again.

This oscillating price position for power in some ways mirrors what is happening in the transportation fuel market now. Gasoline prices are falling. How will consumers and policymakers respond? Will we expect them to stay low and get lazy about diversifying toward cleaner fuels?

Given the political climate – Obama is pushing for more renewable energy – it may seem unlikely. But history suggests that the clean energy industry should be wary. The post-Carter years offer a cautionary tale. Solar and efficiency advocates may want to start now educating consumers and policymakers that low energy prices can vanish quickly.

Visit Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets podcast and newsletter.

Thursday, November 6, 2008

A new EE resource: Distributed people

By Elisa Wood

Novermber 6, 2008

Energy efficiency is often described as the invisible resource. It improves our energy supply without any of the usual industry trappings: smokestacks, wind turbines, transmission lines and poles. This is one of its virtues.

But efficiency’s invisibility also causes problems. Because it operates out of sight – inside walls, underneath lampshades, and in factory motors — efficiency tends to attract fewer cheerleaders than more obvious forms of clean power.

Peter Love, Ontario’s Chief Energy Conservation Officer, has proposed a solution: Distributed people.

“Many of you have heard of the concept of distributed generation,” he told reporters this week during a news conference. “This is distributed leadership. This is having many, many people across the province become champions for conservation.”

Love kicked off his distributed people campaign last year by calling on each city to designate municipal energy conservation champions or MECOs. Fifteen cities in Ontario responded. Now Love is pushing businesses, health care institutions and schools to do the same.

No job description exists for Love’s MECOs (or BECOs, HECOs and SECOs). There is no pay scale or training. “The main thing I want these people to do is be noisy,” he said. “Conservation is invisible. We need to have markers for it — we need to let people know progress is being made.”

What message should these advocates promote? Love tells them to talk about efficiency’s “Three E’s,” which are its economic, employment and environmental benefits.

Love’s distributed leadership program may not be a game change on par with New York’s effort to reduce electricity use 15% by 2015; Connecticut’s program to develop a white tag market; or California’s zero net energy goal for new construction.

But, in a time when governments are running large deficits and banks are reticent to loan money, it may make sense to pursue a low-cost strategy of ‘small, loud and many.’

Following his own advice, Love issued a “noisy” report on Ontario’s progress. Peak demand was down 5 percent by the end of 2007, and now the province is on target to achieve a 6,300 MW reduction by 2025, he said. The report, including a description of Love’s distributed leadership program, is available at http://www.powerauthority.on.ca/Page.asp?PageID=1115&BL_WebsiteID=1

Visit Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets podcast and newsletter.

Thursday, October 30, 2008

Electricity use falls because of efficiency

By Elisa Wood

October 30, 2008

Electricity sales can gauge the national economic health. An ailing economy uses less electricity because is produces fewer goods and services. Sometimes, however, electricity sales fall for a good reason – efficiency.

Such is the case in the United States, according to a recent statistics released by the North American Electric Reliability Corporation (NERC). The organization annually assesses how well the grid is likely to perform over the next several years.

The 300-page report has a lot to say, but this headline jumped out at us: Demand Response Projected to Offset Nearly 80% of U.S. Peak Demand Growth in 2016; Significant Growth in Energy Efficiency Projected.

NERC forecasts that North America will offset 34,000 MW through demand response – a kind of efficiency program where customers are paid to reduce energy use when the grid is under strain. In addition, conventional energy efficiency programs are expected to cut electricity use by 11,000 MW. As a result, total electric demand will drop 3.3%, NERC said.

Demand response will become “a critical resource” to help us keep the lights on over the next ten years, according to the report. Our economy is becoming increasingly electrified, but we are unwilling to build more energy infrastructure. “Many coal plants have been deferred or cancelled, nuclear plants are becoming more and more expensive, and transmission lines increasingly difficult to site,” NERC said. Demand response will help bridge the gap between our electricity needs and our power resources.

Further, demand response is a good “dance partner” for wind energy, a resource that NERC forecasts will grow 750% by 2017. Wind farms offer a clean source of energy. But they only create electricity when the wind blows. Demand response can serve as wind’s partner during these times, reducing energy use to make up for the loss and averting a greater ramp-up of fossil fuel generators.

Our demand for electricity will still grow over the next several years, as our use of computers, cell phones and other electronic devices increases — but not as much as we had thought. Last year, NERC forecasted a 17.7% growth in summer peak demand; this year it puts the figure at 16.6%. The organization attributes much of the change to efficiency. We’ve figured out how to do more with less, a good economic move.

Visit Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets podcast and newsletter.

Thursday, October 23, 2008

Toasting Pop-Tarts cheap: How electricity may solve our energy woes

By Elisa Wood

October 23, 2008

We tend to talk about electricity in terms of its problems — it degrades the environment, costs too much and messes up scenic views. But the Manhattan Institute’s Peter Huber takes a different stand in his new report “The Million-Volt Answer to Oil.”

Huber says electric power may be the cheap, efficient resource we seek to give America energy independence. He divides energy into two camps: electric power and transportation fuel. Our energy woes stem from our dependence on oil for transportation. To get over $4 per gallon gas, he says, we need to connect our transportation fleet and home heating systems to cheap 4 cents/kWh electricity.

“We spend roughly half as much on electricity—about $350 billion a year—as we’re currently spending on $100-a-barrel oil, and electrically powered systems do more, faster and better, than oil-fired alternatives,” he says in the report.

Huber’s theory opens the door wide for use of plug-in hybrid cars and electric heat pumps. “If we could deliver electricity straight to electric motors connected to our wheels, it would deliver miles at a price that most current car engines could match only on gasoline priced under a dollar a gallon. Delivered to our homes at off-peak prices, electrical heat would cost homeowners a lot less than $4-a-gallon heating oil,” he says.

Of course, electricity doesn’t cost 4/kWh cents everywhere. Some places it is 19 cents/kWh. And no matter where you live, the price goes up and down dramatically all day, depending on how many customers use power at any given time. When the East Coast is winding down its work day and its electricity prices fall, the West Coast is still going full tilt and its electricity prices rise. The trick is to transmit the cheap power quickly from place to place, and keep it rolling over four time zones by building a new and sophisticated high-voltage transmission backbone that can handle such movement.

“A kilowatt-hour of electricity toasts as many Pop-Tarts in Palo Alto as it does in Poughkeepsie; an efficient, integrated market with cheap, long-distance transmission available would charge everyone the same price for toasting them,” he says.

The technology exists, and it is not terribly pricey, to create such a transmission system. Huber estimates that building a 21,000-mile grid to network all major sources electricity, and push wind power from the Midwest to the coasts, would add roughly 0.3 cents/kWh to the current 9-cent/kWh average retail price of electricity.

He points out that a single 765-kV transmission line can move “almost 1 percent (4 GW) of the total average power generation of the entire United States, or 0.5 percent of the power that Americans collectively consume during the most power-hungry minute of the year.”

With such a transmission system in place, developers could build power plants and wind farms in rural expanses, rather than the crowded coasts where people object to the intrusion on their space.

Last, he points out that very few US power plants now use imported oil as a fuel, and instead use domestic sources, increasingly renewable. “With electricity, America controls its own destiny,” he says.

As Huber tells it, electricity is not part of the energy problem, but is the overlooked solution.

See the report at http://www.manhattan-institute.org/html/eper_03.htm.

Visit Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets podcast and newsletter.

Friday, October 17, 2008

Clean Energy Prospers: Toto, We’re Not on Wall Street Anymore

By Elisa Wood

October 17, 2008

Wall Street is in the middle of an earthquake. Main Street is shaking from the tremors. Easy Street has been wiped off the map. Is there a safe haven from this economic meltdown? Green Street looks pretty appealing.

Green Street is a term used increasingly to describe businesses that offer energy efficiency, solar, wind and other forms of clean power. While the global economy braces for cost cuts and job loss, Green Street is forecasting profit and massive job creation.

Green Street has been prosperous for while, but its fortunes rose considerably October 3 when President Bush signed into law the $700 billion financial rescue bill.

By way of a series of odd events, the recovery bill included tax credits for clean energy. The credits have nothing to do with the financial rescue, but were attached to the bill at the last minute. Clean energy advocates had been trying to convince Congress to pass the tax incentives for 18 months. Some of the credits had expired; others were about to end; and still others were new to the bill. Before the credits were attached to the recovery bill, clean energy lobbyists in Washington had all but given up on any chance of their passage this year.

What does the bill offer the efficiency industry? Homeowners once again receive tax credits for making a range of efficiency upgrades to their houses. The new law also gives a boost to green commercial buildings, efficient appliances, smart grid technologies and plug-in hybrids. Equally important, it recognizes the efficiency of combined heat and power by offering a new 10% tax credit for small projects. For specifics about the credits see http://www.ase.org/content/article/detail/2654.

A solar conference held this week in San Diego underscored the financial health of Green Street. More than 20,000 people attended. Solar companies described plans for a dramatic increase in rooftop installations, mega solar concentrated power in the southwestern deserts, and manufacturing facilities to equip all of the projects. In all, the solar industry, alone, expects to create nearly a half million jobs as a result of the clean energy tax credits.

This is more good news for energy efficiency, since it is closely aligned with the solar industry. A mantra throughout the solar industry is that efficiency is the first fuel; that is, it is important to first find all cost-effective efficiency in a building, then add solar. In fact, some solar installers help customers finance solar installations with the money they save by cutting back on energy use.

Several factors conspired to cause today’s financial crisis. High oil prices certainly contributed. Energy, the dirty kind, helped get us into this, and energy, the clean kind, will help get us out.

Visit Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets podcast and newsletter.

Thursday, October 9, 2008

The Ghost of High Energy Prices Past

By Elisa Wood

Oct. 9, 2008

Halloween is still a few weeks away, but a ghost is already making an appearance, this one floating over the presidential campaigns. His name is Conservation.

I first heard the specter of sacrifice evoked by Sen. Barack Obama in the Oct. 7 debate. The next day Gov. Sarah Palin repeated the term several times in a television interview. Conservation, she said, is part of Senator John McCain’s “all-of-the-above” energy policy.

Wait a minute. Isn’t this the Jimmy Carter approach – the turn-down-the thermostat and put on the sweater – that proved fruitless?

I’m not saying conservation is a bad idea; I am saying it is ineffective over the long term. Americans will conserve only as long as money is tight. Once energy prices drop or personal income rises, the house heats up again.

For that reason, today’s energy efficiency movement has distanced itself from the idea of self sacrifice. Instead, advocates define energy efficiency as doing more with less, not doing less. While conservation is a 1970s notion, efficiency is a child of the Internet age, a series of advanced technologies that allow our factories, data centers, homes and appliances to function better while using less energy (with some good old-fashioned insulation thrown in.)

I can only guess that the candidates are using the term “conservation” freely again because polls indicate the American consumer is ready for a period of self-sacrifice – not surprising given all of the bad economic news that seems to stem from a certain amount of financial hubris. But what the polls giveth the polls taketh away. Energy policy based on conservation offers us a fleeting green alternative.

Better that we stay with the efficiency theme.

To that end, it was encouraging this week to see the American Council for an Energy-Efficient Economy announced state progress in pursuing efficiency policies. (See ACEEE’s “2008 State Energy Efficiency Scorecard” http://aceee.org/pubs/e086.pdf?CFID=17536&CFTOKEN=51038700.) State policy is important because states invest two to three times more money than the federal government in efficiency.

Moreover, efficiency frees up money for investment in other clean energy projects. As ACEEE points out, “Energy efficiency is the only resource that can help states actually reduce energy consumption to combat rising energy demand and create a hedge against skyrocketing energy prices – making efficiency the ‘first fuel’ states can use to balance their energy portfolios.”

Thus, states, utilities and businesses can use money saved through efficiency to build renewable generation and a smart grid. These are solid things that keep saving energy even after the ghosts of Halloween (and election seasons) vanish.

Visit Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets podcast and newsletter.

Thursday, October 2, 2008

Energy Tax Credits and the Devil in Congress

By Elisa Wood

October 2, 2008

It is difficult to get beyond the hyperbole of the election season to uncover a candidate’s true position. The non-partisan Pew Center on Global Climate Change performed a service with a recently released just-the-facts guide on the energy platforms of the presidential contenders http://www.pewclimate.org/voter-guide.

What is remarkable about this year’s election, Pew says, is that “both major party candidates for the presidency are deeply concerned about global climate change and publicly support a mandatory, economy-wide cap-and-trade system for reducing the U.S. greenhouse gas (GHG) emissions.”

What does this mean in a practical sense for energy efficiency markets? “Both candidates recognize that improving energy efficiency across the economy can be a powerful tool for reducing GHG emissions,” Pew says.

Sen. John McCain says he would create higher efficiency standards for new or retrofitted buildings leased or purchased by the federal government, the largest energy consumer in the world. McCain also promotes investments to upgrade and smarten the national electricity grid.

Sen. Barrack Obama would set national standards to reduce demand by 15%; make new buildings carbon-neutral or zero-emission by 2030; improve new building efficiency by 50% and existing building efficiency by 25%; improve efficiency in all new federal buildings by 40%; and make federal buildings zero-emitting by 2025.

The policies of both candidates sound positive. Of course, the devil is always in the details.

The devil also appears to be in Congress. One wonders if these policies would make it through Congress, given lawmakers’ treatment this year of the all-important tax incentives for efficiency and clean energy. Most lawmakers claim to support the tax credits, many of which expire at the end of this year or already have expired. Yet Congress wrangled all year over the incentives without extending them, mostly for reasons that had little to do with the credits and their merits. Now, at the 11th hour, just before recessing, the Senate has approved the ‘tax-extenders bill’ as part of the credit-crisis bail-out package. The House reportedly will take up the bill Friday, Oct. 3.

Long-time energy lobbyist Scott Sklar has watched Congress’ shenanigans from a front row seat and explains why he is “hopping mad” about treatment of the tax incentives in an insightful Renewable Energy Weekly column, “Fuming in D.C.” http://www.renewableenergyworld.com/rea/news/recolumnists/story?id=53711

Why is the tax-extender bill important to energy efficiency markets? The Senate bill includes tax incentives for consumers and building owners who install energy-efficient products, builders of energy-efficient new homes and commercial buildings, and manufacturers of certain energy-efficient appliances, according to the Alliance to Save Energy. The bill also includes incentives for combined heat and power.

“Congress is preparing to pass one of the largest pieces of legislation in a century to bail out Wall Street and, with that in mind, it is unthinkable that Congress would adjourn before providing critical tax incentives to ‘Main Street’ to help consumers facing a lagging economy and growing energy costs and the nascent clean energy industry, so that it can create new jobs and help to build a new ‘green’ economy,” said Kateri Callahan, ASE president.

Unthinkable, yes. Improbable? We’ll know after Friday.

Visit energy writer Lisa Wood and pick up her free Energy Efficiency Markets newsletter and podcast by clicking on www.realenergywriters.com.

Thursday, September 25, 2008

Efficiency and the Jobs Argument

By Elisa Wood

September 25, 2008

How will the recent bad economic news affect energy efficiency efforts? Will state lawmakers retreat from the many financial commitments made over the last year?

It is too soon to know the answer. But one thing is for sure, the industry may have to shift its marketing message. Consumers and politicians typically are keener on protecting the environment in good times than they are in bad.

The fact that efficiency programs create jobs seems to strike a cord. If you are looking for facts and figures to bolster arguments about efficiency’s job-creation ability, check out the 300-plus page report, “Green Jobs: Towards decent work in a sustainable world.”

Released this month by the Worldwatch Institute, the report says that the global market for environmental products and services is likely double from $1,370 billion per year to $2,740 billion by 2020. Half of this market is in energy efficiency.

US clean technologies are already the third largest sector for venture capital – bested only by information and biotechnology.

Further, the report cites data from the Apollo Alliance New Energy for America that says 827,260 jobs could be created in the United States through investment in high-performance buildings alone — both retrofitting and new green construction.

The numbers are big and striking. However, policymakers should be warned that not everyone will share in the bounty. There will be winners and losers. The losers will include companies that are slow to clean up their technologies, heavily polluting industries, and regions where livelihoods depend on those older industries, according to the report.

“The policy challenge is not to let these distinctions become permanent features. The transition to sustainability and greener employment needs to be well planned,” says the report.

Energy efficiency offers a unique job building advantage for communities. Many of the jobs the efficiency industry creates are local. Thus, it will be city and state policymakers that need to do the planning to ensure job-creation in their communities. This may be a good report to pass along to city councilors and state legislators as they vie to keep their local economies upright.

To view the report go to: http://www.ilo.org/integration/greenjobs/index.htm.

Visit energy writer Elisa Wood at www.realenergywriters.com and subscribe to his free EE Markets newsletter and podcast.

Thursday, September 18, 2008

Profile of a White Tag Project

By Lisa Cohn

September 18, 2008

Few topics we write about here draw as much attention as energy efficiency certificates. After we mention the certificates, we inevitably receive inquiries from data centers or other large energy users, who want more information.

The certificates also are called “white tags,” a term trademarked by marketer Sterling Planet. Interest in the certificates likely stems from the increasing use nationwide of a more established sister product, renewable energy certificates or green tags. Green tags come from renewable energy projects, while the newer white tags are generated by efficiency measures, like lighting retrofits, combined heat and power, and demand response.

Both white and green tags can be bought and sold. Utilities and other electricity retailers need them to meet mandates in certain states that they provide a set amount of their supply from clean or efficiency energy sources. Voluntary markets also exist for the tags throughout the country. In this case, companies or institutions buy the tags not to meet a law, but as an environmental gesture.

Connecticut has led the way in creating a white tag market. The state requires that utilities and electric retailers make efficiency 2% of their power portfolios this year. The requirement grows to 4% by 2010.

Here we provide a profile of a recent white tag project we unearthed in the files of the Connecticut Department of Public Utility Control. An IBM data center in the town of Southbury created the white tags and won approval September 12 of their validity under Connecticut rules.

IBM created the tags by installing 1,200 efficient lighting fixtures in October 2007 in its 846,000 square foot, three story building. The facility operates 8,760 hours per year. Specifically, IBM retrofitted 3-lamp, T-12 lamps and magnetic ballasts with more efficient T-8 lamps (two per fixture) and electronic ballasts. The fixtures will save the facility 829 megawatthours. IBM determined the savings by subtracting the energy it consumed after installing the new lighting from the energy it consumed before the installation.

The certificates are viable through March 31, 2018. The ending date is based on a state determination that the life of such efficiency projects is typically up to ten years. The facility must measure and verify savings each quarter and submit the results to the state.

Each MWh equals one certificate. The state does not set the price for the certificates – what IBM receives will depend on the market.

The company that helped IBM convert the efficiency savings into certificates was Neuwing Energy Ventures, 6 Evergreen Lane, East Haddam, Connecticut 06423.

For detailed information on the state’s conversion rules we suggest reviewing the Connecticut DPUC’s order setting up the program, DOCKET NO. 05-07-19. This can be found at the ‘in-active dockets database’ http://www.ct.gov/dpuc/cwp/view.asp?a=3364&q=413272.

Visit energy writer Lisa Cohn at www.realenergywriters.com and subscribe to his free EE Markets newsletter and podcast.

Thursday, September 11, 2008

Next, the Air Car?

By Reid Smith

September 11, 008

Vehicles account for 26% of the nation's carbon dioxide emissions, and 51% of the average household's daily CO2 output (http://www.fueleconomy.gov/feg/climate.shtml), according to the U.S. Environmental Protection Agency. So, clearly fuel economy is critical to reduce greenhouse gas emissions.

Big car manufacturers, like GM, Ford and Toyota, have seen a dramatic drop in recent sales. In response, they are beginning to make smaller, more fuel-efficient, vehicles, as well as step up research on new fuels. GM announced development of the battery-powered Chevy Volt, set to be released in 2010. This is a much needed move in the right direction.

However, we need more revolutionary change. The solution, it seems, will come from companies that are reaching far outside traditional lines of thought and coming up with truly innovative ways to fuel our cars. One such company, Motor Development International (MDI) (www.mdi.lu) of France, has developed a vehicle that can run almost exclusively on compressed air, and therefore only emits air. MDI, which is headed by Guy Negre, founded the company in the 1990s in pursuit of a new environmentally friendly engine that was also cost competitive.

The car runs on compressed air at speeds up to 35 mph. Then conventional fuels kick in – fossil fuels or biofuels. These cars could be particularly effective in reducing city pollution, since we tend to drive slower on urban roads.

One tank of compressed air lasts up to 93 miles before it needs to be filled. The tank can be plugged into a standard electrical outlet and filled in about four hours. It is also possible to refill the tank much more quickly – in as little as three minutes using a high-pressured air pump.

How does the car work? The air tank is made of ultra-light carbon fiber and holds 52 gallons of air. From the tank, air is forced through an injector to the engine, where it expands and pushes down on pistons that turn the crank shaft, which propels the car.

Although the air car needs to be as light as possible for maximum efficiency, these cars are not necessarily small, and several models are already under development. A two-seater, the OneCat is one option. A three-seater, the MiniCat is another option. A six-seat sedan, the CityCat; and a compact truck. The company plans to introduce a six-seat, four-door family-size version to the U.S. market in 2010 according to Popular Mechanics http://www.popularmechanics.com/automotive/new_cars/4251491.html?series=19. This model is expected to achieve over 100 mpg and over 90 mph, emit little or no CO2, offer plenty of space for luggage, meet all safety requirements, and cost no more than an average economy to mid-size vehicle.

Tata motors (www.tatamotors.com), India's largest car manufacturer and leading company for automotive R&D has already signed a contract with MDI, and cars hit the streets there at the end of August. The deal provides MDI with a significant capital infusion to further the technology and get it ready for the mainstream public.

The air car is just one example of innovative, affordable, and environmentally clean cars being developed all around the world. The next decade will bring monumental changes to the auto industry as priorities in car design shift and consumers demand change. Cars ten years from now will be very different from those we drive today. What remains to be seen is whether the US cornerstone car companies will adapt to these changing technologies or if foreign innovators will drive off with the market.

Visit energy writer Reid Smith at www.realenergywriters.com and subscribe to his free EE Markets newsletter and podcast.

Thursday, September 4, 2008

Getting Ready for the Next US Industrial Boom

By Elisa Wood

September 4, 2008

Selling large manufacturers on energy efficiency isn’t easy, even though they stand to achieve great bang for the buck. Manufacturers are apt to only consider efficiency improvements as part of a major plant expansion or improvement. Such capital expenditures tend to occur in a cyclical fashion, and manufacturers give little thought between cycles to new efficiency measures.

The good news is that the United States appears to be readying for a new cycle of industrial capital investment, creating a window of opportunity for energy efficiency companies, according to a report by the American Council for an Energy-Efficient Economy.

“Trends in Industrial Investment Decision Making” points to several clues that factories are preparing to refit and expand after years of avoiding the risk of such investments.

•Plant capacity, or level of output in producing goods, is rising to historic levels. High capacity rates encourage factory owners to expand and new competitors to enter the market and build plants.

•Product output per employee is up, a frequent precursor to new capital investment by manufacturers.

•The cost to ship goods to the United States has escalated dramatically because of a shortage of ships and high fuel prices. Thus, it is increasingly cost-effective to produce goods within the country rather than overseas.

These pressures are likely to result in new, long-term investment in factory capacity, the likes of which the United States has not seen in 30 years.

What should energy efficiency companies do to prepare? Start forming relationships with manufacturers now, so that you can learn about their particular investment cycles, as well as the greater market forces that influence their decisions, the report says.

The full report, by R. Neal Elliott, Anna Monis Shipley and Vanessa McKinney, is available free of charge at: http://www.aceee.org.

Visit energy writer Elisa Wood at www.realenergywriters.com and subscribe to her free EE Markets newsletter and podcast.

Thursday, August 28, 2008

Efficiency’s Role in Carbon Cap-and-Trade

By Elisa Wood

August 28, 2008

We hear a lot about how efficiency will play an increasingly important role as the United States undertakes efforts to reduce carbon dioxide emissions. But how does that play out in a practical sense under cap-and-trade programs?

The Offset Quality Initiative provides insight in a new white paper on greenhouse gas offsets:

http://www.pewclimate.org/docUploads/OQI-Ensuring-Offset-Quality-white-paper.pdf

A cap-and-trade program, like the Regional Greenhouse Gas Initiative (RGGI), caps emissions at a certain level in a geographic location, and then lets players use various trading mechanisms to operate within the cap. See Lisa Cohn’s blog in August 21 issue of Energy Efficiency Markets: http://energyefficiencymarkets.wordpress.com/2008/08/21/eastern-states-ready-for-big-ee-boost/

One of those mechanisms is an offset, which acts as a counterbalance to reduce overall greenhouse gases. More specifically, an offset represents emissions reduced at one site to make up for emissions produced elsewhere.

Offsets can be bought and sold in the form of credits. A commercial building owner might install efficiency improvements that reduce the amount of carbon dioxide the building produces. The owner then translates the emissions reductions into offsets under standards set by the cap-and-trade program. A power plant might buy the offsets to ‘reduce’ its emissions. The plant does not actually cut back on what it emits, but instead piggybacks on the building’s reductions. Overall emissions fall, so the cap-and-trade program achieves its goal.

RGGI, the nation’s first cap-and-trade program set to take effect next year in ten states, allows certain efficiency measures to qualify as offsets.

The program accepts offsets from efficiency measures that reduce or avoid carbon dioxide emissions created by natural gas, oil or propane in commercial or residential buildings. The building owner might improve equipment and systems for heat and hot water, install energy management systems, improve the building envelope or engage in certain other activities. (See RGGI’s model rule, page 132-145, http://www.rggi.org/modelrule.htm.)

Of course, offsets are just one way efficiency markets benefit from today’s focus on reducing carbon dioxide emissions. Even where no cap-and-trade programs exist, policymakers see energy efficiency as a key way to address climate change. The fewer electrons we use, the less power plants run; the less they run, the lower our emissions are. Thus, many cities and states are increasingly focused on larger policies and incentives that encourage businesses and homeowners to undertake efficiency measures.

Programs like RGGI help spur such thinking. Expect growing talk nationally about energy efficiency and its importance in the coming weeks as RGGI makes the news with its first market auction September 25.

Visit energy writer Elisa Wood at www.realenergywriters.com and subscribe to her free EE Markets newsletter and podcast.

Thursday, August 21, 2008

Eastern States Ready for Big EE Boost

By Lisa Cohn

August 21, 2008

Several eastern states will see a large injection of cash for energy efficiency after the nation’s first mandatory auction of carbon dioxide allowances September 25.

The auction marks the United States entry into the world of capping and trading carbon dioxide emissions. Ten states are participating in the program, known as the Regional Greenhouse Gas Initiative (RGGI), or more commonly called “Reggie.”

To comply with RGGI, power generators must purchase carbon allowances, or permits. The September auction marks the first open sale of the allowances.

Why is this good for energy efficiency? Because the states will earn significant revenue from the sale of allowances, and many plan to put the money into efficiency programs.

By some estimates the first auction could earn the states as much as $63 million. That is with only six states participating: Connecticut, Maine, Maryland, Massachusetts, Rhode Island and Vermont. The other four states, Delaware, New Hampshire, New Jersey and New York did not have time to finalize their auction rules. However, those states have an opportunity to participate in a second auction in December.

How does it all work? Together, the states must cap carbon dioxide emissions at 188 million tons/year from 2009 to 2014. The cap drops by 2.5% for each of the next four years.

Power plants must secure one allowance for each ton of carbon dioxide they emit. The September 25 auction will offer 12,565,387 allowances.

State policymakers spent a lot of time hashing over RGGI details, and they came up with a program that makes a lot of sense. By spending auction revenue on efficiency, the states reduce power use, which further cuts back on carbon dioxide emissions.

A good source for more information on RGGI and state policy is Environment Northeast http://www.env-ne.org/. Auction details are available at http://www.rggi.org/

Visit energy writer Lisa Cohn at www.realenergywriters.com and subscribe to her free EE Markets newsletter and podcast.

Saturday, August 9, 2008

Reducing Hospital Costs through Efficiency

By Elisa Wood

August 7, 2008

The energy and healthcare industries share a mutual woe. Both are experiencing meteoric price increases.

The Alliance to Save Energy projects a household’s energy costs will be about $6,300 this year, representing about 13% of median pre-tax earnings. Meanwhile, the National Coalition on Health Care reports that medical costs rose 6.9%— two times the rate of inflation last year with total spending of $2.3 trillion or $7,600 per person. http://www.nchc.org/facts/cost.shtml

Fortunately, the U.S. Department of Energy has launched a program that brings energy efficiency to hospitals to drive down energy costs and reduce some of the financial pressure on the healthcare industry. http://www1.eere.energy.gov/buildings/energysmarthospitals/

The program is important because hospitals are significant energy consumers. A hospital’s energy intensity is 2.5 times that of a commercial building. U.S. hospitals spend more than $5 billion annually on energy, which is 1-3% of their budgets and equivalent to at least 15% of profits.

The program’s goal is to improve efficiency 20% in existing buildings and 30% in new construction. Cost savings are expected to be large — every $1 a non-profit hospital saves on energy is equivalent to generating $20 in new revenue, according to the DOE.

Hospitals are particularly good candidates for combined heat & power, which is 70-95% more efficient than conventional power production. CHP, as it is known, achieves this efficiency because it uses the heat produced in the generation process, rather than wasting it, as large grid-connected power plants do. Thus, it is able to use less fuel to electrify, heat and cool a building. http://files.harc.edu/Sites/GulfCoastCHP/Presentations/CHPForHospitals.pdf

CHP also offers hospitals back-up power if the electric grid goes down. During Hurricane Katrina, when almost everything was out of service, the 642-bed Baptist Medical Center in Jackson, Mississippi continued to care for patients without disruption because of its 3.2 MW CHP plant.

The DOE offers a free screening for hospitals so that they can see if they are good candidates for CHP http://www.bchp.org/prof-assessment.html#form

Pairing energy efficiency with other societal needs, such as bringing down healthcare costs, makes for good public policy. It offers the proverbial killing of two birds with one stone, or in this case with one coin reducing a double-burden on the average American’s pocketbook.

Visit energy writer Elisa Wood at www.realenergywriters.com and subscribe to her free EE Markets newsletter and podcast.

Friday, August 1, 2008

Congress Feels No Pain

By Elisa Wood

July 31, 2008

A big question often asked by energy analysts is: How high must energy prices be to motivate customers to change their behavior? We are beginning to think that the more perplexing matter is just how much do we pay before Congress reforms its behavior.


Prices are plenty high enough to encourage customers to conserve. Driving is down and pursuit of efficiency is up. Federal lawmakers, however, can’t seem to get beyond partisan maneuvering to extend efficiency incentives.


Wednesday they again came up short on votes for efficiency, solar and wind tax credits. Since existing credits expire at the end of the year, time is running out, and these industries are left with business-killing uncertainty. http://www.washingtonpost.com/wp-dyn/content/article/2008/07/30/AR2008073003020.html


The Jobs, Energy, Families & Disaster Relief Act of 2008, S. 3335, offers a range of measures aimed at encouraging several key efficiency policies. The bill extends tax credits for energy-efficient homes and appliances, and deductions for efficient commercial buildings. It creates incentives for plug-in electric cars and smart electric meters and grids.


Congress has been attempting to pass clean energy measures for months, but they keep getting leveraged against approval of other measures, this time oil drilling. Meanwhile, American households find themselves now paying 13% of pre-tax earnings on energy, according to the Alliance to Save Energy. http://www.ase.org/content/article/detail/4866


Meanwhile, states continue to move forward with new initiatives. Many are looking at utility rate decoupling to do away with financial disincentives that keep utilities from offering efficiency programs. Several states are pursuing some form of energy efficiency portfolio standard. The Northeast continues to refine “first fuel” initiatives that require utilities to secure all cost-effective efficiency as their first source of energy. And California last week adopted what it describes as the first statewide green building code, aimed at reducing energy use in new buildings by 15%.


This piecemeal state-by-state approach to US energy policy often confuses European observers. It is cumbersome. But it moves us forward nonetheless. Perhaps states are more pragmatic because consumer electricity rates are set at the state level, creating a buck-stops-here fear. As a result, governors and state legislators hear consumers say “ouch” more quickly as energy prices rise. Whatever the case, look to the states for innovations in energy efficiency policy, as federal lawmakers remain stuck in argument. http://www.dsireusa.org/NewUpdated/index.cfm?&CurrentPageID=3&EE=1&RE=0


Visit energy writer Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency markets Newsletter and podcast.

Thursday, July 24, 2008

What's Cool about Air Conditioning

By Elisa Wood

July 24, 2008

Conservationists often mock Americans for their love affair with the car. But the air conditioner appears to be a growing rival for our affection.

Twenty years ago only about one-quarter of US residences had central air conditioning; by 2005 it was up to 62%, according to the United States Census Bureau. http://www.ahrinet.org/ARI/util/showdoc.aspx?doc=703.

As a result, for a handful of hot days, we use enormous amounts of electricity. We must build expensive power plants to ensure that we have enough electricity to run the air conditioners, even though the power plants aren’t needed for the rest of the year. Our grid operators usually use the least expensive power first. But with demand so high, even the dirty and high priced plants are called upon. With everything running full tilt in the heat, the system is vulnerable to outages.

The problem reveals itself again and again each summer, most recently last weekend in New York City, where Consolidated Edison found itself delivering dry ice to keep Brooklyn customers cool after they lost power. A heat wave sent demand for electricity soaring to the second highest level on record.

I live in the southeast, so I am as enamored with the air conditioner as anyone. The good news is that the energy efficiency marketplace is spurring innovation to help avert grid problems brought on by our use of central air conditioning.

One rapidly growing innovation is demand response, which offers businesses payment to limit electricity use when the grid is under strain, reducing the likelihood of power outages. Companies might dim lights, delay expensive manufacturing processes until a time of day electric demand is lower, or engage in other energy reduction strategies. The approach is becoming so popular, hardly a week goes by without word of new major demand response deal. For example, EnergyConnect, an Oregon-based demand-response provider recently signed up Yahoo! As a result, when demand peaked July 10 on the PG&E system, Yahoo! reduced power its electricity use at its corporate headquarters and data centers in northern California by 1 MW, enough power to serve 750 homes. http://energyconnectinc.com/news/press-releases/2008/07/microfields-energy-connect-launches-relationship-with-yahoo/

On the other side of the country, in New England, demand response is also becoming increasing important. In fact, ISO New England reports that demand response makes up 10% of its resources (the majority of other resources are power plants) and the number could grow to 13% by 2011. http://www.iso-ne.com/nwsiss/nwltrs/outlook/2008/outlook_july_2008.pdf

In addition, central air conditioners are being built to better and better efficiency standards. Their efficiency has increased a minimum of 30% over the last two years, according to the Air-Conditioning, Heating, and Refrigeration Institute. This efficiency, however, can be lost if the air conditioners are not installed and maintained properly and used conservatively. To help solve this problem AHRI, utilities, energy efficiency groups and others recently created the 2 Degree Pledge http://www.2degreepledge.org/. The campaign encourages consumers to reduce thermostat temperatures two degrees in the winter and increase them by 2 degrees in the summer. The site also offers customers a zip code search of certified air conditioning technicians.

It looks like our love affair with the air conditioner isn’t going away any time soon. Eighty-nine percent of new houses completed in 2006 had central air, according to the U.S. Census Bureau. Air conditioners, like computers, cell phones and other electric gadgets are bringing about a new round of electrification in our society. They make life easier and more productive. Let’s make more of them – and more ways to use them efficiently.

Visit energy writer Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency markets Newsletter and podcast.

Thursday, July 17, 2008

Mr. Pickens, What About Plug-In Hybrids?

By Elisa Wood

July 17, 2008

T. Boone Pickens deserves kudos for his attention-grabbing television campaign aimed at helping America kick the oil habit. The billionaire energy fund manager can stop the most dedicated channel surfer mid-click when he proclaims that our spending on foreign oil could soon become the largest transfer of wealth in human history.

Pickens’ plan has two parts www.pickensplan.com. The first calls for more use of wind power. No surprise there. Few forward-thinking energy plans do not put wind generation front and center.

But we’re stumped by the second part of his plan, which is that we use the wind power to replace natural gas-fired power plants and then use the left over natural gas for cars. On the surface the equation seems to make sense: it cuts back on our use of gasoline. But scratch a little, and Pickens’ idea doesn’t seem to add up.

Consider what has happened to the power generation industry this decade. We have seen a proliferation of new natural gas-fired plants because gas is a relatively clean fuel, and the plants can be built quickly and easily. As the nation moves toward regulating carbon dioxide emissions, public policy (intentionally or not) encourages even more of their construction. This is because gas-fired plants do not emit as much carbon dioxide as the coal-fired plants that provide about half of our electric power.

Unfortunately, as we’ve built more gas-fired plants, demand for natural gas has increased and its costs have skyrocketed. Gas prices are largely blamed for the tripling of electricity rates over the last eight years in places like New England.

The Pickens plan wants to replace one expensive fuel with another to power our cars.

Given this reality, wouldn’t the Pickens plan make more sense if it pushed plug-in hybrid electric cars? www.pluginpartners.org Plug-in cars appear to be a natural companion to wind power. Presumably car owners would plug their vehicles in at night to recharge. Evening is typically a windy time, so turbines would whir, pushing power into the grid to feed the cars. We won’t run out of wind as we could natural gas, and it is essentially a free fuel. On top of that, plug-ins are nearing commercial operation and do not require massive building of fueling stations, as natural gas-fired vehicles do.

Obviously, our electric grid will never be powered only by wind. But it seems we could avoid much of the massive transfer of wealth Mr. Pickens warns about by trying to push the wind/plug-in car relationship. So, Mr. Pickens, what about the plug-in hybrid?

Visit energy writer Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets newsletter and podcast

Thursday, July 10, 2008

And Now for Some Good Economic News: EE Workers Needed

By Elisa Wood

July 10, 2008

With energy demand high and supply tight, the only thing in abundance these days is uncertainty. So says a recent Standard & Poor’s report: “The Credit Impact of Rising Energy Costs on Industry Sectors.”

“Whether energy production can keep up with demand growth is a major question,” says the credit rating agency. “Where the energy will go is easy to estimate. The harder question is where will it come from?” Even if oil prices dip in the short-term, S&P says they are “cycling around a rising trend.”

High energy prices and uncertainty cripple business growth. The auto industry is expected to end 2008 with the lowest sales in 15 years, says the report. The airline industry is squeezed between consumers demanding cut-rate fares and fuel prices that now gobble up as much as 40% of operating expenses. Meanwhile, stores and other retail businesses find customers lack discretionary cash for merchandise.

But buried deeper in the report is some good news, and it is about capital goods aimed at improving efficiency. Specifically, S&P tells the tale of Sweden-based Alfa Laval www.alfalaval.com, a leading global supplier of heat exchanges, pumps, valves and other equipment aimed at improving efficiency in industrial processes. Company sales are up 50% since 2005. The company’s credit rating has improved because of the demand for energy efficiency products — Alfa Laval saw a one-notch upgrade in April. S&P says prospects are good for the company because it is stepping up product development and increasing capacity to capitalize on the strong market in the efficiency sector.

For companies like Alfa Laval, the challenge is to “maintain and improve market share, while at the same time keeping control of costs and avoiding over-expansion,” S&P says. The credit-rating agency doesn’t say this, but inherent in this strategy is attracting workers to support expansion.

We’ve heard from industry insiders who say a shortage of workers is becoming a very real problem in the energy efficiency arena. We suspect we’ll hear more talk about this need in the near future as states and utilities ramp up spending on efficiency programs.

Compared with much of today’s bad economic news, worker demand is a good problem to have. But it is a problem nonetheless, and one that requires immediate attention if the industry is to fulfill its mandate as the near-term solution to our energy supply and demand woes.

The solar industry has made clear its need for installers, and policymakers have responded with training programs at community colleges. What does the efficiency industry need to do to attract the same attention? And will policymakers listen? We welcome your thoughts.

Visit energy writer Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets newsletter and podcast.

Thursday, July 3, 2008

How Power Hungry Is Home Entertainment?

By Patrick Costello

Plasma televisions, video game consoles, and cable set-top boxes find their way into more and more American homes thanks to lower prices and aggressive marketing. While this trend makes for better home entertainment, it strikes a blow to energy conservation efforts.

For example, even when just in standby mode, a plasma television consumes nearly $160 of energy/year and a game console over $25/year, says an article in Good magazine. A study by Australian consumer group Choice found that plasma televisions use four times more energy than older cathode ray tube televisions. An Xbox 360 game console could cost $200/year to operate, and its competitor Playstation 3 as much as $250/year. (Meanwhile, Nintendo Wii fans can take heart that their box costs only $25/year.)

The two studies make various assumptions about usage, some more credible than others. No one, for example, would leave a game console on 24/7/365. And energy costs were on the high side in the Choice study at 15 cents/kWh. Still the studies make it very clear that both plasma televisions and game consoles are power hungry.

The energy consumption of another common home entertainment device, the cable set-top box also often goes unnoticed. A 2007 Natural Resources Defense Council (NRDC) study found that even the most basic box consumes more energy annually than a washing machine. And more and more households are likely to install such cable boxes very soon. Analog broadcasting will be cut off in 2009, rendering obsolete any television without a built-in digital tuner. Thus, millions of Americans will soon need to buy or rent digital-to-analog converter boxes. This is expected to spur the purchase of nearly 22 million cable set-top boxes. Many households are likely to upgrade to models offering integrated digital video recorders and high definition capabilities. The study found that advanced models offering both options consume more than 25% more energy than desktop computers and cost more than $30/year to operate. Interestingly, the study also said that the set-top boxes consume pretty much the same amount of energy whether they are on or off.

It is important to acknowledge the energy consumption of these home entertainment electronics and identify how they will affect household efforts to become more efficient. The set-top box is the least energy intensive of the three types of electronics addressed here, and the EPA estimates that these devices alone will consume more than 3 billion kWh/year and add $270 million/year to American electric bills.

While entertainment systems may not be as energy intensive as heating and cooling, we cannot ignore their impact as more and more of these devices make their way into our homes.

Visit www.realenergywriters.com to pick up the free Energy Efficiency Markets newsletter and podcast.

Thursday, June 26, 2008

CHP Gains Stature as Efficiency Measure


By Elisa Wood

June 19, 2008

Combined heat and power is a form of alternative energy that has been available for many decades. Yet it’s remained below the radar screen in policy discussion about our energy future.

However, it appears to be gaining new stature as lawmakers and regulators seek ways to make energy use more efficient.

Also called cogeneration, the technology creates both electricity and heat in one unit. Most power plants throw away two-thirds of the energy consumed in production. But CHP plants use the excess energy to heat, cool or humidify the building. As a result CHP reclaims one-third of the energy that would otherwise be lost.

In addition, CHP plants are usually built very close the factory, hospital, college or office building they serve. So electricity is not lost as it travels long distances over transmission lines, as is often the case with large, central power plants that serve many consumers and businesses.

Taking notice of CHP’s virtues, some states have created portfolio standards that encourage its development. The standards require that utilities use a certain amount of alternative energy to meet efficient or clean energy targets. This approach has been highly successful over the last several years in spurring development of wind, solar and other green energy sources in the US.

Now eight states allow part of the requirement to be met through installation of CHP. In Connecticut, for example, a factory, school other large energy user can install CHP to meet its heat and power needs and receive a kind of tradable credit for doing so. The energy user then can sell the credit to a utility that needs to meet state requirements.

In addition to Connecticut, the eight states are Colorado, Hawaii, Nevada, North Carolina, North Dakota, Pennsylvania, and Washington. These states should serve as interesting testing ground to see if portfolio standards accelerate use of CHP as they have wind and solar energy. We encourage those interested in CHP to check out the Environmental Protection Agency’s CHP partnership, an agency that is playing a strong role in encouraging use of the resource. See http://www.epa.gov/chp/

How Long Will Efficiency Be the Favored Choice?


By Elisa Wood

June 26, 2008

Energy efficiency creates an odd sort of market. Nothing (lack of energy use) competes for customers against something (energy generation).

There is no free lunch and even nothing, energy efficiency, costs something. But for now it is cheaper than its main competitor, the power plant.

In fact, it is often three times less costly to install efficient light bulbs, better insulate buildings or pursue other forms of efficiency than to buy power. Specifically, energy efficiency costs about 3 cents/kWh compared with the 9 cents/kWh it takes just to cover fuel costs from a baseload gas-fired generator, according to a June 19 presentation on power prices by the staff of the Federal Energy Regulatory Commission http://www.ferc.gov/legal/staff-reports/06-19-08-cost-electric.pdf.

Given its cost competitiveness, efficiency is increasingly called upon as a “first fuel.” A growing number of states require that utilities use as much efficiency as possible – reduce consumption as much as possible — before building new plants or signing power deals.

As a result, the energy efficiency business is booming. And it is beating power plants as the favored alternative not just because it is cheaper; it also is cleaner, and consumers like it better. As Suedeen Kelly, FERC commissioner, said: “There is decreasing enthusiasm for building and an increased enthusiasm for demand-side resources.”

Indeed, since January 2007, 50 coal plants have been canceled or postponed; only 26 remain under construction. Meanwhile, state after state revamps energy policy to make efficiency a priority. The potential exists for the US to have an economy by 2030 that is 70% larger than today’s, but uses no more energy than it did in the mid-1990s, according to the American Council for an Energy-Efficient Economy http://www.aceee.org/tstimony/Laitner%20Senate%20Testimony%20June%2025%202008.pdf.

Of course, at some point the nation must build new power plants to meet growing demand. Nothing cannot replace something forever. A growing economy needs energy.

So, how long will the efficiency industry boom? How long will efficiency hold this favored position in the marketplace? That’s not easy to answer. But one thing seems apparent. Energy prices are not going down any time soon. The FERC report warned that we appear to be at “the beginning of significantly higher power prices that will last for years.” If this proves true, energy efficiency’s run as the favored fuel has just begun.

Thursday, June 12, 2008

Overcoming the dirty secret of clean energy

By Elisa Wood

June 12, 2008

A dirty secret of clean energy is that being green can be an expensive pursuit. The cost of solar panels and hybrid cars is declining, but they remain too expensive for many people. As a result, the green energy movement is often viewed as an upper-income trend in the United States.

But a recent survey indicates energy efficiency may be a more egalitarian product.

The intent of “The 2008 Energy Costs Survey,” released this week by the Energy Programs Consortium and the National Energy Assistance Directors’ Association, is to show the sacrifices made by low, moderate, and middle-income households because of rising energy costs. Households are cutting back on food, medicine, clothing, heating and cooling, education and eating out. And they are paying their bills later, according to survey of more than 500 households in May. http://www.neada.org/

But, the data also reveals an interesting phenomenon about energy efficiency. Even low-income earners invest in appliances and home improvements that reduce energy costs.

In fact, those in the lowest income bracket were most likely to purchase an efficient air conditioner. Eighteen percent of the lowest income households made such purchases compared to 13-14% of those with middle and moderate incomes. Poor households edged close to wealthier ones when it came to installing efficient heating (11% compared with 15% of those richer). In purchasing efficiency appliances, 15% of low-income households reported doing so.

Having 11% to 18% of low-income households invest in EE may not sound like a lot. But compare it to how much solar energy we consume. Only 1% of the electric power used last year in the United States came from solar energy, according to the federal Energy Information Administration -- and that includes business use http://www.eia.doe.gov/fuelrenewable.html.

If 11% of households installed solar panels, renewable energy advocates would be ecstatic and many of our energy woes would ease. Clean energy advocates often lament how hard it is to bring renewable energy to the mass market. This is a problem efficiency products do not appear to face. It is easy and not overly expensive to become an EE consumer. This is one reason why EE advocates may be right when they say the efficiency explosion ramping up in the US will easily dwarf any other energy trend.

Visit energy writer Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets newsletter and podcast.

Thursday, June 5, 2008

Are the Number Crunchers Forgetting About Energy Efficiency?

By Elisa Wood

What is good news for the environment is often bad news for the economy. Or least that’s the conventional wisdom.

The thinking is bolstered by government findings that industrial activity and Gross Domestic Product will drop if the nation adopts a leading proposal before Congress to reduce greenhouse gases. http://www.eia.doe.gov/oiaf/servicerpt/s2191/index.html

But the number crunchers may be forgetting an important input: Energy efficiency. So says a report released this week by the American Council for an Energy-Efficient Economy.

Many states are aggressively pushing energy efficiency as a way to reduce consumption of fossil fuels, which in return leads to greenhouse gas reductions. Energy efficiency also can cut back energy costs, create jobs and grow the GDP, says the ACEEE report. http://www.aceee.org/press/e084pr.htm.

So far national policymakers are failing to recognize the role energy efficiency plays, as they discuss rising energy costs and climate change.

“As it becomes more apparent that climate change legislation must be enacted, it is critically important for policymakers to be informed about energy efficiency's contribution to the solution," says Vanessa McKinney, co-author of the report with John A. “Skip” Laitner. "It is very clear that policymakers are not getting the full picture when energy efficiency's potential is omitted from policy assessments."

The report looks at what will happen if the nation reduces energy consumption 20% to 30% through more efficient products and practices. The energy efficiency industry will likely add 500,000 to 1.5 million jobs by 2030. The GDP would grow, not decline, by 0.1%.

If energy efficiency is so good, why not add even more? Interestingly, the report also warns, by way of footnote, that there can be too much of a good thing. “Presumably one can push the savings too hard and too fast so that negative impacts will, indeed, begin to emerge.” Hence the report authors offer a “cautionary note about appropriate choice of the timing, technologies and policy instruments.”

It’s unclear at what point efficiency becomes a cost burden, says the report, but a 20% to 30% goal seems to still produce economic benefit.

So the challenge for state policymakers is to find the proper pacing. Adding efficiency incentives can increase electricity rates. That’s why in many states, like New York, regulators are undertaking careful study before offering new subsidies. Too much too fast will create ratepayer backlash. But carefully planned efficiency programs offer benefits that are hard to dispute, an alignment of the unlikely bedfellows, economy and environment.

Visit energy writer Elisa Wood at www.realenergywriters.com and subscribe to her free Energy Efficiency Markets newsletter and podcast.

Thursday, May 29, 2008

What price motivates customers to save energy?

By Elisa Wood

May 29, 2008

“Are we there yet?” We’ve heard that refrain often over the last couple of years. No, not from our kids in the backseat of the car, but from energy observers wondering exactly how much price pain the consumer will take before cutting back significantly on use.

Two reports circulating this week indicate that we have arrived – or at least we are close.

Americans drove their cars 4.3% fewer miles in March 2008 than they did a year earlier, according to the Federal Highway Administration. This is the first time since 1979 that we took to the road less in March. While a 4.3% drop may not sound like much, it amounts to 11 billion miles, and represents the largest decline since the FHWA began reporting monthly statistics in 1942. http://www.fhwa.dot.gov/pressroom/fhwa0811.htm

It appears the specter of $4/gallon keeps the key out of the ignition. AAA reports that average unleaded gasoline prices hit $3.952/gallon on May 29, up from $3.197 a year ago. Prices already have topped $4 in several states, among them California, Connecticut, District of Columbia, Hawaii, Illinois, Michigan, Rhode Island, Washington, Wisconsin and West Virginia. http://www.fuelgaugereport.com/sbsavg.asp

Meanwhile, on the electricity front, a recent study by Carnegie Mellon University researchers found that charging power generators even a modest price for carbon dioxide emissions would motivate changes in consumer behavior and power plant operations. The study comes as several states in the Mid-Atlantic and Northeast prepare for a carbon cap-and-trade program set to begin next year. Congress is eying similar national rules.

The report, published by Environmental Science & Technology, says that consumers would likely reduce consumption of electricity at a price as low as $35 per metric ton for CO2. This is lower than prices posted by Point Carbon for European trading May 28, which was €26.20 per metric ton or about $40. http://int.pointcarbon.com/Home/Market%20prices/Methodology/category745.html).

In addition, at $35 per ton for carbon, we may see changes in the way that grid operators dispatch power plants. They may start giving preference to lower emissions generators. While power prices would rise, “consumers would pay more attention to their energy consumption or switch to more energy efficient appliances,” said M. Granger Morgan, Lord Chair Professor in Engineering in the Department of Engineering and Public Policy at Carnegie Mellon. http://www.tepper.cmu.edu/news-multimedia/tepper-multimedia/tepper-stories/co2-pricing-study-reveals-consumption-efficiencies/index.aspx

No one wants to see high energy prices – the economic ramifications are enormous. But the good news is consumers appear to finally be saying “Ouch,” opening more doors for plug-in hybrids, energy efficient appliances, green construction and other energy savings approaches.

Visit energy writer Elisa Wood at www.realenergywriters.com and subscribe to her free Energy Efficiency Markets Newsletter and podcast.