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.

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.

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.