Energy Efficiency Markets: 2012

We know that what a political candidate says during a campaign often differs from what the eventual office-holder does. We also know that candidates choose their words carefully to give themselves wiggle room for modifications in course.

So we listen for innuendo and subtleties when candidates talk about our special interests. What kind of qualifying language do they use? Are they truly against X, Y and Z, or only under special circumstances?

Below are some quotes on energy efficiency from President Barack Obama and Republican front-runner Mitt Romney. I’ll start with Romney since his stand is less clear, at least to me. Romney pushed a green agenda while Governor of Massachusetts, but recently attacked renewable energy as “imaginary.” He doesn’t, however, appear to direct the same criticism at energy efficiency.

Romney on energy efficiency

“I also want to see us become more energy efficient. I’m told that we use almost twice as much energy per person as does a European, and more like three times as much as does a Japanese citizen. We could do a lot better. I’d like to see our vehicles, and our homes, and our systems of insulation and so forth become far more efficient. I believe that we have a role in trying to encourage that to happen.” – Think Progress, June 6, 2011 (See video here)

When he was governor of Massachusetts, Romney proposed a four step energy plan, which began with increasing energy efficiency for homes, businesses, state buildings, and vehicles.

In contrast, Romney pushes an agenda of energy production, not savings, on his campaign website. He criticizes Obama’s green energy programs, and calls for alternative energy funding to be used on basic research. The energy issues page does not mention energy efficiency or conservation.

Obama on energy efficiency

“The easiest way to save money is to waste less energy,” – Obama, January 24, 2012, State of the Union Address

Obama has been unabashedly pro-energy efficiency. As I reported in February, Obama’s 2013 budget won accolades from energy efficiency advocates because it called for about $1.2 billion in spending for energy efficiency.

In addition, Obama’s Blueprint for a Secure Energy Future pushes energy efficiency across all sectors: buildings, homes, factories, vehicles, and calls for export of US energy efficiency technologies.

Still, in the “Energy and Environment” section of his campaign website, energy production takes up most of the ink – wind, solar, oil and clean coal – as part of his “all of the above strategy.” The site does include a section on the fuel economy standards Obama negotiated with car manufacturers.

In Congress, Republicans and Democrats have both pushed energy efficiency legislation. It remains to be seen if the resource can remain free of the political fray in this election, where candidates seem determined to disagree on everything. If you have found other quotes by the candidates on energy efficiency, please post them in the comments here. Let’s keep watching what’s said.

Elisa Wood is a long-time energy writer. Subscribe to her free Energy Efficiency Markets newsletter at RealEnergyWriters.com

Friday, August 10, 2012

Energy efficiency & the rebound effect: Neither big nor bad

By Elisa Wood

August 8, 2012

Now that you’ve installed efficient light bulbs in your house, do you think: “Guess I’ll leave my lights on all night. What the heck – it won’t cost me any extra.”

Probably not. But some extreme critics of energy efficiency would have us believe this is the end result of appliance standards and energy savings technology – that we simply consume more energy when it becomes cheaper, negating the benefits.

This is called the ‘rebound effect’ and while it is a real phenomenon, it is quite small, according to a new white paper by the American Council for an Energy-Efficient Economy.

Claims that we use as much as we save – known as backfire – do not hold up to scrutiny; but there does appear to be about a 20 percent rebound, according to the paper.

How bad is this? Should you still bother with those more expensive LED light bulbs?

“Overall, even if total rebound is about 20 percent then 80 percent of the savings from energy efficiency programs and policies register in terms of reduced energy use. And the 20 percent rebound contributes to increased consumer amenities and a larger economy. These savings are not ‘lost’ but are put to other generally beneficial uses,” says the paper “The Rebound Effect: Large or Small?” by Steve Nadel, ACEEE executive director.

Nadel describes two types of rebound effect: direct and indirect.

Direct rebound occurs when a consumer buys a car with better gas mileage and then drives more, or a homeowner installs tighter windows and reduces the home’s heating bill, but then cranks up the thermostat because of the lower cost.

Indirect rebound occurs when we take the money saved through energy efficiency and use it to purchase new energy consuming devices or pursuits. For example, the consumer might spend money saved on heating to buy a flat screen television. Or a widget manufacturer might drop the price of the widget to reflect the lower energy cost, and as result sell more widgets. That leads to a decision to produce even more widgets and thus use more energy.

The direct rebound effect amounts to about 10 percent of energy savings and indirect rebound around 11 percent (based on best estimates), according to the paper. To put these numbers in perspective, if a program reduces energy use by 10 percent and there is an 11 percent rebound, that means actual energy savings is only 8.9 percent, not 10 percent.

So the rebound effect is not all that big. It’s not all that bad either. The energy savings are not lost; the money saved on energy generally goes back into the economy or it serves to make the home more comfortable (warmer or cooler).

It’s important to note that rising energy use does not indicate rebound – although some wrongly cite it as such. The US Energy Information Administration expects worldwide energy consumption to grow 53 percent from 2008 to 2035. This is certainly not because energy is becoming cheaper thanks to efficiency measures, but because advanced economies are adding more and more electric gadgets and air conditioning (not to mention electric cars), and India and China are wiring up their remaining off-the-grid regions and also adding more electric devices. In short, life is getting better for a lot of people. This isn’t a sign of an energy efficiency failure, but of economic success. Deprivation is not the goal of energy efficiency; the goal is consumption done more wisely.

Elisa Wood is a long-time energy writer. Subscribe to her free Energy Efficiency Markets newsletter here.

Wednesday, August 1, 2012

Video reveals the truth about smart grid

By Elisa Wood

August 1, 2012

We don’t think about energy until something goes wrong, and this week things went wrong on an historic level. As a result, the public and pundits are again focusing on the fragility of big electric grids.

Ten percent of the world’s population – more than 600 million people – lost their power in India on July 31, marking the largest blackout in history. India’s grid collapse follows the storm-related outages that left Washington, D.C. sweltering for days when a freak super derecho hit in June.

So the timing couldn’t be better to accelerate consumer education about smart grid, and the non-profit Smart Grid Consumer Collaborative (SGCC) is on the job.

Smart grid uses high tech devices to make the electric system more sophisticated and less likely to fail. It also opens the way for a future of decentralized power, where the home, the car, and office building, each become power plants in their own right.

But smart grid requires a degree of customer energy self-management, something foreign to most of us. So the energy industry has been working hard to figure out how to interest consumers in the various energy displays, time-of-use rates, smart meters and other tools of smart grid.

To do this, utilities must get inside the head of the consumer, something Proctor & Gamble or Apple Computer do routinely, but monopoly-based utilities have never before found necessary.

In an effort to help, SGCC recently not only asked consumers what they think about smart grid, but also video-taped their responses. After all, sometimes what we say only half reveals what we mean. How we say something means a lot.

“It’s one thing to read a one dimensional set of quotes. But it is another thing entirely to watch consumers and hear them saying in their own words what they think and what they know,” said Patty Durand, SGCC executive director, in a recent interview.

The group interviewed 24 consumers in Atlanta, Los Angeles and Chicago. What did the interviews reveal, and how can the information help utilities?

It turns out consumers do want data about their energy use, but also want help understanding what it means and how to use it. They worry about reliability and price and in some cases the environment. Most important, says Durand, they don’t all think alike, so shouldn’t all be approached by utilities in the same way.

Consumers generally fall into five categories, she said.

· Traditionals – Often senior citizens who oppose change

· Do-it-yourselfers – They want to save money and mange their spending

· Easy Streets – Highly educated consumers or those making a good income who want to save time and avoid waste

· Young Americans – Those just starting out who don’t know much about smart grid but want to learn

· Concerned Greens – Environmentally motivated individuals who are highly likely to embrace smart grid

Each of these groups responds differently to smart grid pitches. Utilities will be best able to capture consumer interest if they tailor messages to each, she said.

For example, information about renewable energy will resonate with Concerned Greens and Easy Streets, while it will irritate the Traditionals. They might respond better to a message that emphasizes US competitiveness. “There are so many opinions and passions around energy and the environment that the targeted message is better,” Durand said.

The bottom line is that utilities for years have treated customers as “monoliths,” she said. Watching consumers in action, on video, makes clear the differences in consumer concerns and interests. “Education is key, but it needs to be carefully deployed.”

See the ten things consumer want most from smart grid, and a short clip of the interviews, here.

Elisa Wood is a long-time energy writer whose articles are available at RealEnergyWriters.com

Wednesday, July 18, 2012

Would Gordon Gekko go green?

By Elisa Wood

July 17, 2012

Energy books tend to be either jargon-filled tomes or hand-wringing, end-of-the-world, please-just-shoot-me-now reprimands. So it was a relief to see that Brian Keane avoids both of these worn-out roads in his new book, “Green is Good: Save Money, Make Money, and Help Your Community Profit from Clean Energy.”

Keane expertly tells the clean energy story with humor and anecdotes likely to capture readers who want to learn more about energy efficiency and renewables, but have found few credible, consumer-friendly vehicles that teach them. I’ve never before seen solar power compared to Tony Bennett: not a rock star, like say, micro-hydropower, but “older, more reliable and almost certain to give a top notch performance every time.”

For those who know Keane, this engaging writing comes as little surprise. As president of SmartPower, a non-profit marketing firm, he’s the guy at energy conferences who can hold people’s attention – even during the low-blood sugar late-afternoon sessions – with his insight into how we think and behave as energy consumers.

Keane’s been in the thick of it for several years, working to sell the idea of green to sometimes skeptical politicians and an often snoring public. He takes us inside some of his intrepid efforts. The book provides an account, for example, of how he convinced two very different Connecticut mayors (think blue blood versus blue collar) to engage in a competition to see which city could get the most people to sign up for renewable energy. The mayors agreed to participate in the duel even under the terms that the loser would wear a t-shirt saying, “I wish I were the mayor of [name of losing city.]”

We get a clear picture of where we are today as energy consumers versus where we were 40 years ago in Keane’s comparison of his drafty 12-member childhood home in Massachusetts to his present energy efficient six-member Virginia house. You would think the smaller family, alone, would mean less energy use (“fewer bodies mean fewer eyeballs staring into the open refrigerator”). But no. Even with better insulation and Energy Star appliances, our homes now consume a lot more juice. Or here is another factoid from the book that puts our electricity appetite in perspective: College dorm rooms have more plug-in potential than the entire White House during Woodrow Wilson’s World War I presidency.

The book does not preach environmental religion; quite the contrary. Keane focuses on the relationship between green energy and capitalism. He advocates bringing “basic marketing principles to what often seems a holy cause.” In fact, Keane says “true believers” actually deter acceptance of clean energy by perpetuating the notion that going green requires adopting an alternative lifestyle (“wear hemp, eat only organic…”)

The title plays to the infamous line “Greed is Good” made by Gordon Gekko, the Michael Douglas character in the movie Wall Street. Keane portrays green as the flip side of Gekko’s destructive manipulation of capitalism; he takes us to a place where economic advantage and public good align. Rather than destroying the planet, here is where energy improves the environment using the good old-fashion profit motive. “Green is Good” offers an economic message that even Gekko might buy.

Published by Lyons Press, “Green is Good” is set for release in early October, and is now available for pre-purchase.

Elisa Wood is a long-time energy writer whose work is available at RealEnergyWriters.com

Wednesday, July 11, 2012

On-bill repayment: Great promise, but challenges remain

By Kat Friedrich

Guest blogger, Energy Efficiency Markets

July 11, 2012

On-bill repayment has received a great deal of attention during the last few years as a potential approach to expanding the reach of energy efficiency financing in the residential and commercial sectors. With on-bill repayment, utilities or third-party lenders cover the upfront cost of energy efficiency retrofits and customers pay back the loans through their utility bills.

Although on-bill repayment programs have many advantages, these programs are still in their infancy and many barriers to widespread deployment remain. One of the programs’ advantages is that they build on utilities’ preexisting customer relationships. Another advantage is that the programs tend to be reliable investments if customers have a track record of paying their utility bills consistently.

However, some barriers still exist. As is the case with most energy efficiency financing mechanisms, lenders and utilities lack market experience with on-bill repayment. Therefore, many different perspectives exist about what is needed for on-bill repayment programs to succeed.

To get a sense of some of the current issues, Clean Energy Finance Center staff talked with individuals who are trying to make on-bill repayment programs work across the United States.

On-bill repayment can expand the reach of energy programs

On-bill repayment makes energy efficiency available to almost all utility customers, including those who may not qualify for existing loan programs using standard underwriting criteria.

“If you ever want energy efficiency and renewables to compete head-to-head with buying energy, you have to buy them as a service,” said Dave Carey, Principal of Harcourt Brown & Carey, a consulting firm specializing in clean energy finance. On-bill repayment can be viewed as a service because it can be packaged with utilities’ other services.

Carey said that while 50 to 60 percent of residential customers are approved for energy efficiency loans currently, on-bill repayment could increase that figure to 95 percent or more. While it is important to increase loan approvals to expand customer access to energy efficiency finance, programs also need to consider the risk that higher numbers of approvals could lead to greater loan default rates.

According to Carey, there are four main components of on-bill repayment, all of which depend on the choices of program developers; programs rarely have all four of them. These components are: a payment which is on the utility bill, a shutoff option for non-paying customers, a requirement that the cash flow resulting from the investment stay positive, and an option to transfer the cost to new property owners. While these components are intended to strengthen on-bill repayment programs, some of them can be controversial and difficult to implement.

Adam Zimmerman, Executive Vice President of Craft3, a community development financial institution which has been the primary lender for the Clean Energy Works Oregon program, said residential customers in Oregon and Washington have been very responsible in repaying their energy loans. Previous utility bill payments are a reliable indicator of future behavior, Zimmerman said. Because of the positive results Craft3’s residential lending program has achieved, using utility payment history as a qualification, Craft3 dropped its required credit score to 590 and does not have income requirements. Using these criteria, Zimmerman estimated, a large state like California could increase program enrollment levels by 25 percent.

“A lot of energy efficiency programs haven’t generated as much demand as those of us in the environmental community have wanted them to,” said Brad Copithorne, Energy and Financial Policy Specialist at Environmental Defense Fund. He believes on-bill repayment programs can increase demand for energy efficiency and drive private sector investment in both the residential and commercial sectors.

Bill Codner, Program Manager at National Grid, said he is excited about bringing lenders on board to support energy efficiency programs. He has a goal of expanding National Grid’s commercial and industrial on-bill repayment program by a factor of two or three this year – if he can get sufficient funding from lenders to do so.

Progress varies across state lines

“We are seeing strong uptake on the two coasts,” Carey said. He has observed that regulators on the east and west coasts tend to be more supportive of innovations in financing, including on-bill repayment, although all programs are still in their infancy. While National Grid has strong support from regulators in Massachusetts, that is not always the case for utilities in other states. In Oregon, legislation paved the way for the Clean Energy Works Oregon program.

Driven by requirements from the state's Public Utilities Commission, California is developing on-bill repayment programs for both the residential and commercial sectors. Copithorne played a large role in developing the blueprint for the state's on-bill repayment program. He said he hopes other states will copy California’s program and “have it go viral as soon as possible.”

Environmental Defense Fund is also collaborating with stakeholders in Ohio and Texas; the initial results have been positive despite the political differences between the states. Copithorne said on-bill repayment has broad political appeal because it is both business-friendly and environmentally positive.

Utilities and regulators are cautious

“In the end, this all boils down to a dialogue between regulators and utilities,” Carey said. He said regulators in many states seem reluctant to allow utilities to begin on-bill repayment programs. “There’s always trepidation about risks and unknowns. In the end, there has to be an economic reward,” Carey said.

Utilities are also cautious about starting on-bill repayment programs, which require changes to their IT and billing systems. Copithorne is working with stakeholders to build support for a statewide program in California; he said he considers it essential to make the on-bill repayment process easy for both utilities and their customers. He also said utilities want to protect their reputations and customer relationships.

Copithorne emphasized that utilities can focus on their core competencies and play the role of middlemen rather than becoming deeply involved in financing. He uses the analogy of a Visa card, since Visa is the middleman for transactions between lenders and customers. Similarly, utilities can partner with lenders so they don’t need to become financial experts to offer on-bill repayment programs.

While many utilities are concerned that they may find the cost of making changes to their IT and billing systems to be costly, others have been able to make the changes at a relatively low cost. For example, according to Zimmerman, the Oregon and Washington utilities which collaborate with Craft3 found the cost of altering their billing systems to accommodate on-bill repayment to be very reasonable.

Craft3’s programs are designed to minimize the risk to utilities’ reputations. Zimmerman is skeptical of programs which promise customers a net neutral or net positive return (also known as bill neutrality). He said the utilities he works with are cautious about promising bill neutrality due to the many uncertainties inherent in energy efficiency retrofit projects.

Customer-friendly programs are essential

Customers hesitate to participate in programs for many reasons, including the cost of upfront capital investment. For example, Codner is interested in starting the first on-bill repayment program for natural gas in the United States. However, according to Codner, natural gas poses a financing challenge because the payback period for the customer investment is longer than it is for electricity. In the current economic climate, National Grid’s commercial and industrial customers are reluctant to initiate programs unless the payback period is short-term.

Making the loan application process user-friendly is essential. Copithorne said he would like to see the private sector make it as easy as possible for utility customers to apply for loans. Ideally, the process might become as easy as applying for an auto loan. When a customer goes in to purchase a car, an employee takes down his or her information and provides loan options before he or she leaves the building. Auto dealerships offer same-day service.

Energy services agreements – where an intermediate company sells energy services to a customer and shoulders the burden of the risk – can reduce commercial building owners’ reluctance to participate in programs, said Copithorne. A building owner may lack the upfront cash for upgrades, the lease may require the owner not to borrow, the owner may not be able to pass on costs to the tenants, or the owner may simply be skeptical of salespeople. Copithorne believes that energy services agreements can solve some of these problems and should be part of commercial on-bill repayment programs.

National Grid targets its loans selectively to reach commercial customers who might otherwise not participate in programs. Codner said, “Our goal is not to provide zero-interest loans for everybody. Our goal is to get those companies that would not move forward with a project to do something. A lot of companies have capital constraints.”

Zimmerman said cash rebates may be more effective, from a residential sales perspective, than buying down interest rates. “Free money brings people to the table as customers,” he said.

Kat Friedrich is a staff writer for the Clean Energy Finance Center, which works with stakeholders to develop policies and programs that drive investment in energy efficiency and small-scale renewable energy. This blog is a repost courtesy of the center.

Thursday, July 5, 2012

Too good to fail: What’s wrong with the electric grid?

By Elisa WoodJuly 5, 2012

The temperature is 100 degrees and we have no air conditioning, no running water, no telephone and no Internet. It’s been 60 hours since our household lost electricity because of the super derecho, a rare surprise storm that swept ten US states and the nation’s capital on June 29.

About 5 million of us suddenly are living in conditions of a century earlier. And as we fumble in the dark, it’s easy to see how vulnerable our profound reliance on electricity makes us.

The notion of grid reliability is embedded deeply in the American psyche. We are so accustomed to electricity flowing, we can barely comprehend its absence. By habit, we still flip on the light switch when entering a room, even after the power has been out for hours.

We have good reason to trust. After all, behind the switch is the world’s largest machine, the North American power grid. With 211,000 miles of high-voltage transmission lines and 5,800 power plants feeding electricity to our homes and businesses, the grid is an engineering wonder.

A wonder – until a storm, or a heat wave, or even a squirrel chewing the right wire in the right place knocks out power to large swaths of customers.

It is the grid’s size and interconnectivity that makes it remarkable and efficient, but also susceptible to widespread mishap. We saw that most clearly in the Northeast Blackout of 2003, when a cascading event caused failures that tumbled quickly from neighborhood to neighborhood, state to state, finally leaving 50 million without power.

But the American consumer generally does not view a blackout as a sign of an inherent problem with our electric grid. Following the June 9 derecho, about 30,000 workers, some borrowed from utilities as far away as Texas and Oklahoma, went to work restoring power in the Mid-Atlantic and nearby states. Still, consumers will be angry at the length of time it takes. And if the acrimony is as great as it was in New England last year following the freakHalloween nor’easter, politicians will take up the cause, regulators will investigate and some utility executives may find their jobs threatened.

If our lights fail and aren’t fixed quickly, we believe someone must be to blame. The problem can’t possibly be the nature of the interconnected grid itself. In the consumer’s mind, electricity is like air; it’s just there for us. If it’s not, someone messed up.

The energy industry refers to this as electricity’s invisibility. In many ways it speaks to the product’s success. Who in America ponders whether or not to buy electricity? It’s a given that we will connect our homes to the grid, pay the monthly bill and the power will flow.

But, this invisibility, this success, is a failing too.

Power companies throughout much of the nation are striving to make the grid less vulnerable by smartening it, and some of this smartening relies on consumer interaction, taking control over our electricity consumption through new digital technologies. It includes installing smart meters and energy displays, building microgrids and developing more solar energy and other forms of distributed generation, which decentralize the grid, and therefore takeaway at least some of the exposure that comes with size. (Think the Death Star in the movie Star Wars.).

Suddenly we need to pay attention to electricity, and we’d rather let it stay invisible.

So to make smart grid work, the energy industry needs to figure out what makes the consumer work. A great deal of study is now underway on human behavior and energy. The goal is to encourage us to embrace smart energy technologies, so that we will use electricity more efficiently. It’s been tough going. Most consumers see no underlying problem with the electric grid. If it’s not broke, why fix it?

I can’t say I like being without air conditioning and water. But maybe the occasional loss of comfort is a good thing, an eye opener, a reminder that we need to contemplate our electric system’s inherent weakness and work to strengthen it. The grid can break. It is not too good to fail.

Elisa Wood is a long-time energy writer whose work is available at RealEnergyWriters.com

Thursday, June 28, 2012

Energy efficiency without trying (and with)

By Elisa Wood

July 27, 2012

John Lennon wrote that life is what happens to you while you’re busy making other plans. Apparently, the same is true of energy efficiency. Energy savings happen when we’re busy doing other things – Internet-based things specifically.

We use email, bank online and download music not to save energy, but to make life easier and more interesting. Energy efficiency is a happy byproduct.

What online pursuits serve up the most energy savings in day-to-day life?

The Global e-Sustainability Initiative, or GeSI, recently commissioned the American Council for an Energy-Efficient Economy (ACEEE) and the Yankee Group to answer this question. The study, “Measuring the Energy Reduction Impact of Selected Broadband-Enabled Activities within Households.” looked at eight broadband-related activities in the US, UK, Spain, Italy, Germany and France: telecommuting, Internet news, online banking, e-commerce, music and video downloads or streaming, e-education, digital photography, and e-mail.

Telecommuting provides the greatest energy savings among the activities (83 to 86 percent). From an energy efficiency perspective, it’s better to log-on to the office than drive there. Reading the news online and participating in e-education offered the least energy savings. Consumers tend to undertake these activities to complement, not replace, the old-fashion way of doing things. They still read the newspaper and travel to classes, so offset the savings gained by the online activity.

As telecommuting expands, and more of our daily routine takes place online, these eight activities could cut energy use by about two percent or the equivalent of 500 million barrels of oil annually. Not bad, but still small compared with the savings offered by a series of ‘scale’ activities: smart grid, manufacturing and building upgrades, electric cars, combined heat and power.

So while it’s nice that we inadvertently save energy, say by banking online, it won’t revolutionize our energy picture. But another recent report by the ACEEE shows what might: Intelligent efficiency.

Think systems or cities instead of light bulbs or refrigerators. That’s intelligent efficiency. The US could reduce its energy use by as much as 22 percent by focusing more on system rather than gadget efficiency, says the report “A Defining Framework for Intelligent Efficiency.”

“This is not your father’s device-driven approach to energy efficiency,” said R. Neal Elliott, ACEEE associate director for research. “A large portion of our past efficiency gains came from improvements in individual products, appliances, and equipment, such as light bulbs, electric motors, or cars and trucks. And while device-level technology improvements will continue to play an important role, looking ahead we must take a systems-based approach to dramatically scale up energy efficiency to meet our future energy challenges. Through intelligent efficiency, utility systems, interconnected cities, transportation systems, and communications networks can become the new normal across the United States and will undergird national and regional economies that, even in the face of increasingly scarce resources, grow and thrive.”

ACEEE cites several examples of intelligent efficiency already in the works. Among them is Envision Charlotte, an attempt to reduce energy use in city buildings through a partnership of Duke Energy, Cisco, and Verizon. Interactive video monitors in the lobbies of downtown office buildings display the collective energy used, in near real time, by buildings in the core of the North Carolina city. People pass by the monitors and see the easily readable data, learn energy efficiency ideas, and hear about success stories. They become more conscious of energy through this repeated exposure and their behavior changes – that’s the theory. Duke Energy expects the project to reduce electricity usage 20 percent by 2016 in uptown Charlotte’s business community.

One important point here. None of this – our online household activities or intelligent efficiency – excludes a tried-and-true approach to save energy: utility sponsored programs. A third recent study by ACEEE (Yes, this is a productive organization.) finds that utilities increased energy efficiency budgets four fold in a decade, from $1.1 billion in 2000 to $4.6 billion in 2010. Often when utilities save energy rather than buy it, it turns out to be the cheapest approach.

“The concept of energy efficiency as a utility resource is really very simple,” said Marty Kushler, ACEEE senior fellow and co-author of the report, ‘Three Decades and Counting: A Historical Review and Current Assessment of Electric Utility Energy Efficiency Activity in the States.’ “To keep an electric system in balance, you can either add supply resources or reduce customer demand. Utilities, regulators, and policymakers have increasingly come to realize that it is far cheaper to reduce demand through energy efficiency programs than it is to construct, fuel, and operate additional electric generating plants.”

The report found that energy efficiency remains the lowest cost energy resource available to utilities by a wide margin. Saving electricity through efficiency is about one-third the cost of generating it from a power plant.

It’s not surprising, therefore, that states have set aggressive energy efficiency goals; no states are scaling back. Instead, “the momentum is toward growth across the map,” says the utility report.

Sometimes we save energy inadvertently, and sometimes by design. Whichever, it is clear that our digital economy, combined with our increasing understanding of the programs and behaviors that lead to energy savings, create a clear path for growth in energy efficiency.

Read more articles by Elisa Wood at RealEnergyWriters.com.

Wednesday, June 20, 2012

How to grow a solar energy garden

By Elisa Wood

June 21, 2012

Getting energy from the sun is a great idea. However, installing solar panels house-by-house is slow, costly and cumbersome, and downright inefficient if the goal is to bring solar to the masses.

This problem troubled Paul Spencer after he built his own uber-efficient, custom solar home near Aspen, Colorado in 2004. The engineer and serial entrepreneur wondered how he could replicate his home many times over across the United States.

Out of this problem came the community-owned solar garden – or at least a version pioneered by the Clean Energy Collective, a Colorado company founded by Spencer in 2009. What is a solar garden? Think community vegetable garden, where everyone in the neighborhood tends a common plot and then shares the harvest. Except here the crop is solar energy, often produced by ground-mounted photovoltaic panels on an open piece of land or large rooftop.

Variations on the solar garden idea are catching on in California, Colorado, Massachusetts, New Mexico and other states.

Some models rely on virtual net metering – where utility customers receive retail power credits as though their solar panels were on their home or business. However, only a small number of states allow virtual net metering.

In another variation, the utility owns the solar panels and customers who decide to join the garden pay a premium on their bill in return for membership.

Neither of these models offer a good way to grow residential solar quickly across the country, says Spencer. Convincing lawmakers to adopt virtual net metering takes too much time and is often controversial. And under the utility-ownership model, customers don’t receive direct financial benefits from the solar panels.

His company has developed solar gardens in New Mexico and Colorado that avoid these problems. CEC’s approach foregoes virtual net metering, but allows customers to own solar panels with a good payback.

It works like this. CEC develops the solar facility and invites community members to join in the ownership, which starts at about $500-$800 per panel.

CEC sells the power from the facility to the local utility under a solar power purchase agreement, a model that attracts third-party investors because it creates certain tax benefits. A management entity, akin to a homeowners association, maintains the garden with set aside escrow monies, which is expected to produce power for 40-50 years, Spencer says.

The community garden approach gives members a chance to lower their electricity costs – they receive monthly bill credits for the energy produced by the panels. When members move, or just no longer want to participate, they can sell their panels.

This approach makes solar available to households who would otherwise be ineligible – and there are many. About 80 percent of metered utility customers in the United States cannot install rooftop solar for various reasons, according to Spencer. Their roofs are too shady or they live in apartments.

CEC’s model also helps remove utility resistance toward solar gardens, according to Spencer. A proprietary remote meter system, developed by the company, tracks the solar garden’s energy production and directly credits members’ utility bills. This removes a headache for utilities that sometimes resist the idea of solar gardens because of the tracking and crediting burden placed upon them. CEC also partners with utilities to establish fair solar power pricing for both the utility and its customers.

Will this model work? So far the company has seven facilities built or in development, with a typical capacity of one-half to one MW each. Now in talks with several utilities nationwide, CEC expects to build 5 to 10 MW of capacity this year, and six to seven times that amount in 2013.

“It is easily conceivable that community solar can contribute hundreds of megawatts of new capacity to the grid per year,” Spencer says.

Hundreds of megawatts may not sound like a lot in a country where one nuclear plant in California produces nearly 4,000 MW. But, all of the photovoltaic solar in America amounts to only about 4,400 MW. Most of that comes from large utility-scale plants. The US solar residential market added only 94 MW in the first quarter of 2012, according to the Solar Energy Industries Association.

Is the solar garden the secret to bringing efficiency and scale to residential solar? The idea has been planted. Let’s see if it takes.

Elisa Wood is a long-time energy writer and co-publisher of Energy Efficiency Markets newsletter.

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