Wednesday, October 27, 2010

How efficiency makes solar affordable

By Reid Smith

October 27, 2010

When solar energy companies think about how to reduce the cost of their product, typically a lot of time and money goes toward increasing the efficiency of solar panels and their manufacturing process. Reducing the production cost decreases the final cost the consumer will have to pay.

However, few solar companies start by making the building more energy-efficient, even though this effort can significantly drop consumer costs. Energy efficiency lowers the demand for energy in a building. If a building needs less energy, it requires fewer solar panels, which drives down the cost of the installation for the building owner.

But you may be wondering, how significant are the energy savings in a building after energy efficiency upgrades?

Buildings are large energy consumers, accounting for 40 percent of US energy consumption, according to the US Department of Energy. Homes make up 22 percent.

Not only are buildings big energy users, but they are also big energy wasters. In fact, 40% of the energy we use in buildings is wasted due to poor insulation and air leaks.

So the first thing to do is improve the building envelope. After that, it’s important to consider how solar energy will be used in the building and what kind of installation is most efficient. People tend toward solar photovoltaic panels because PV has become the image of solar energy, said Rick Reed, president of Solaray Corporation, at the Solar Power International conference in Los Angeles earlier this month.

But solar PV is typically only about 20 percent efficient, whereas solar thermal is about 90 percent efficient. “Many people are heating their water from solar PV instead of using solar hot water systems,” he said. “This doesn’t make any sense.”

Solar thermal systems use much simpler, reliable technology and are much cheaper to install than PV systems. Still, they are largely an after-thought in the US.

For consumers, the cost of solar thermal and energy efficiency upgrades are typically much less than solar PV installations. However, most consumers interested in upgrading their homes to solar do not realize how much energy their houses could save before installing solar PV. And historically their solar installers have not told them either. Why would a solar PV installer want to promote energy efficiency if it would translate to selling fewer panels?

Thankfully, that’s changing, partly because new financing options focus on reducing the overall cost of solar for the consumer, rather than on simply selling them solar panels. As a result, more solar companies are beginning to move into the energy efficiency business. SolarCity is one example of a company that now combines energy efficiency services with solar installation.

This has huge implications. Retrofitting 40 percent of the residential and commercial building stock in the US would create over 625,000 full-time jobs over a decade, spark $500 billion in new investments, and generate as much as $64 billion a year in cost savings for ratepayers, according to a September report by The Center for American Progress.

So if you have been scared away by daunting up-front costs of solar, now may be the perfect time to get a home energy audit and begin discussing solar financing options available in your area. You may be surprised what you find.

To read the full report by The Center for American Progress, Efficiency Works:Creating Good Jobs and New Markets Through Energy Efficiency, go to http://www.americanprogress.org/issues/2010/08/pdf/good_jobs_new_markets.pdf

Reid Smith is the editor of Energy Efficiency Markets.

Wednesday, October 20, 2010

What political party do your electrons support?

By Elisa Wood

October 20, 2010

Lucky for Americans, information technology doesn’t appear to be owned by any one political party. If it were, Congress would still be squabbling over whether or not to support the Internet and you’d be reading this on paper rather than online.

Not so for energy. Generally speaking, Republicans tend to be pro-fossil fuel, while Democrats typically come down on the side of green energy. This feud – which is a key reason Congress cannot pass an energy bill — confuses me. Does a coal-fired plant represent some conservative ideal not found in wind power? What’s liberal about the squiggly light bulb illuminating my desk?

How can electrons be partisan?

Okay, I know I’m over-generalizing and bound to attract admonishments from readers who will point out where liberals are sometimes pro-brown and conservatives pro-green. But I think we’ve seen the debate come down along party lines enough in the United States that my assumption is fair.

That’s why it was intriguing to see the recent report “Pro-Partisan Power,” a combined effort of think tanks on both sides of the political spectrum: the Brookings Institution, Breakthrough Institute and the American Enterprise Institute.

In the words of the report authors:

Today, few issues in American political life are as polarized as energy policy, with both left and right entrenched in old worldviews that no longer make sense. For the better part of two decades, much of the right has speculated darkly about global warming as a United Nations-inspired conspiracy to destroy American sovereignty, all while passing off chants of “drill, baby, drill” as real energy policy. During the same period much of the left has oscillated incoherently between exhortations that avoiding the end of the world demands shared sacrifice, and contradictory assertions that today’s renewable energy and efficiency technologies can eliminate fossil fuels at no significant cost. All the while, America’s dependence on fossil fuels continues unabated and political gridlock deepens, preventing real progress towards a safer, cleaner, more secure energy system. The extremes have so dominated mainstream thinking on energy that it is easy to forget how much reasonable liberals and conservatives can actually agree on…”

The report goes on two make four key recommendations: 1) Invest in energy science and education; 2) Overhaul the energy innovation system; 3) Reform energy subsidies and use military procurement and competitive deployment incentives to drive price declines; 4) Internalize the cost of energy modernization and ensure investments do not add to the [federal] deficit.

The authors say this can be done at a cost of $25 billion, which can be recovered through small fees on imported oil, electric utility surcharges, a very low price on carbon or other means that will not cause great pain to any one group.

You may or may not agree with the recommendations. But it is hard not to be impressed with how the authors suggest we portray energy – not as a battle between left or right, but as a technology play, as innovation. I suspect this is what Rhone Resch, president and CEO of the Solar Energy Industries Association, meant when he said that solar energy is an industry, not an issue, as reported recently inRenewable Energy World North America Magazine.

Americans left or right can’t argue with innovation. It has brought us things we all like, our cell phones, our downloadable music, air conditioning, meals we can heat in minutes, and voices that tell us which way to drive our cars so that we don’t get lost — which all somehow have managed to remain free of any partisan taint.

The full report is available here:http://thebreakthrough.org/blog/2010/10/postpartisan_power.shtml

Elisa Wood is co-author of “Energy Efficiency Incentives for Businesses 2010: Eastern States,” available at www.realenergywriters.com.

Wednesday, October 13, 2010

Are your electric rates high? Here’s the good news

By Elisa Wood

October 13, 2010

If your electric rates are high, there is a silver lining. Chances are you live in a state that offers some of the greatest innovations and incentives for energy efficiency – or soon will. By taking advantage of these programs, you can reduce your bill.

Take a look at the chart below that I put together after reading the American Council for an Energy-Efficient Economy’s “2010 State Energy Efficiency Scorecard.” I list the ten most expensive states for household electricity and note where each stands in ACEEE’s scorecard, a report that ranks states from best to worst for their energy efficiency efforts.

Not surprising, seven of the most expensive states also are launching the most ambitious energy efficiency efforts. Several of these states are in the pricey Northeast, now one of the best markets for the energy efficiency industry.

It would be nice if these states would just reduce their electric rates, but for a variety of reasons that is unlikely to occur, at least in any dramatic way. The pricey states are often plagued by old energy infrastructure, transmission line congestion, and lack of indigenous fossil fuels, all factors that drive up energy costs.

As a result, policymakers in these states now talk not so much about reducing electric rates, but about reducing electric bills. If you’re a New Yorker, your electric rate may stay at 19 cents/kWh, but your monthly bill will drop if your home is better insulated or your refrigerator new and efficient. This is why the pricey states are so motivated to achieve energy savings.

The high-cost energy states may be among the most aggressive when it comes to energy efficiency, but they are not alone in their pursuit. The latest ACEEE scorecard comes at a time when states in general – not the federal government – are leading the way in bringing unprecedented energy efficiency incentives to consumers. Congress has contemplated some policy innovations over the last two years to spur energy savings, but has been unable to pass an energy bill. Steven Nadel, ACEEE executive director, says that “the overall story here is one of states getting done what Congress has so far failed to do.”

ACEEE points out that the US – thanks to the states – has never experienced an energy efficiency boom as large as this one. During the last efficiency boom (a boomlet really) in 1993, ratepayer-funded efficiency programs amounted to $1.8 billion, before slacking off to about $900 million in 1998. By 2009, the number was $4.3 billion. ACEEE expects the state programs to keep growing, possibly reaching $12.4 billion by 2020. And this does not include the one-time injection of $30 billion in federal stimulus money, the largest single investment in energy efficiency in US history.

ACEEE’s full report is available for free download here:http://www.aceee.org/research-report/e107

Comparison of electric rates and ACEEE state ranking

Ten states with the highest residential electric rates *ACEEE ranking

for energy efficiency

Connecticut8
New York4
New Jersey12
Rhode Island7
New Hampshire22
Vermont5
California1
Maine10
Maryland16
10.Massachusetts2

*Source: Energy Information Administration, June 2010

Note: The chart above ranks only the lower 48 states. Because of their remote locations, Hawaii and Alaska face unusual energy challenges.

Elisa Wood is co-author of “Energy Efficiency Incentives for Businesses 2010: Eastern States,” available at www.realenergywriters.com.

Thursday, October 7, 2010

Energy efficiency: Cure for mortgage meltdown?

By Elisa Wood

October 7, 2010

My first reaction was that the Alliance to Save Energy was stretching a bit by titling its October 6 talk: “Is energy efficiency the key to recovery from the recession?”

But after hearing David Goldstein’s presentation, I must admit I’m thinking about energy efficiency in a whole different way. Goldstein, author of the book, “Invisible Energy: Strategies to Rescue the Economy and Save the Planet” crunched the numbers to show the enormous economic relief efficiency could bring to both the average homeowner and the US government.

He went as far as to suggest we may have averted the mortgage meltdown had we instituted more efficiency over the last few decades. Sound extreme? Consider this.

The average suburban home now costs $175,000. When banks evaluate a homeowner’s ability to pay a mortgage, they look only at that figure. They do not consider the cost to pay utilities, which adds another $75,000 over the life of the mortgage. Nor do they consider the cost to drive back and forth from work to the house, another $300,000.

These energy costs have gone up over the years, while worker income has stagnated since 1973. When energy costs are added to mortgage costs, suddenly homeowners are paying as much as 62% of their gross income to live in their homes. It is not surprising that the lending system went wrong, he said, given that banks looked only at the $175,000 commitment and not the accompanying $375,000.

“Would you invest in a mortgage like that? That is what we are doing every day,” Goldstein added.

How much of a difference can energy efficiency make? Goldstein calculated that green building and transportation costs could chop that $375,000 by half.

Because efficiency reduces utility and transportation costs, it frees up consumer spending power. As a result it could ease several of the nation’s other financial woes, among them our low savings rate, weak consumer spending, trade deficit, inflation risk and joblessness. Efficiency also could take a big chunk out of the federal deficit, given that government is the largest energy user in the nation, he said.

“This recession did not just occur randomly. It is largely a predicted result of fundamental problems,” he said. “Weak energy efficiency policy is at the heart of many of them and is related to all of them.”

How much energy can we save through efficiency measures? More than we think, Goldstein said. Conventional studies indicate the US economy can wring out about 30% savings, but these are cautious estimates, biased toward the low end since no one ever loses their job for underestimating energy efficiency potential. But they might if they over-estimate and as a result the lights go out somewhere because we built too few power plants, he said.

Goldstein suggested that instead of relying on forecasts of energy efficiency potential, we set goals: “We best discover the size of the resource by going out and acquiring it.”

Elisa Wood is co-author of “Energy Efficiency Incentives for Businesses 2010: Eastern States,” www.realenergywriters.com