Energy efficiency, the Nerd

By Elisa Wood
April 13, 2011

The renewable energy business has done a remarkable job at positioning itself in the public psyche as the ‘it girl’ of our era. Just about everyone – politicians, celebrities, major industries – likes to be seen as pro-renewable.

But if renewable energy is the girl that everyone wants to be photographed near, energy efficiency is her nerdy tag-along little brother. Ever notice how when politicians say they support renewable energy they quickly throw in the words “and energy efficiency” as if it were a babysitting obligation?

Or consider the excitement with which homeowners talk about their recently installed rooftop solar panels. Does anyone wax on like that about new wall insulation? Let’s be honest, renewable energy is colorful, green to be exact. Energy efficiency, well, it’s “smart” energy.

What’s it going to take for energy efficiency to shed its big glasses and pencil pocket protector?

“Let’s face it; we’re selling to the lunatic fringe of green, the lunatic fringe of efficiency. The market is this small strata right now. And of course we want to grow the market outside of the small strata,” said Paul Holland of Foundation Capital, when he spoke recently at the ACI Home Energy Summit in San Francisco, Calif. “We need less kumbaya in this industry and less expectation. We preach to each other, when we really need to become better marketers.”

Speaking at the same conference, Sheeraz Hiji, CEO of Cleantech Group, pointed out that part of the problem is dollars and cents. The solar industry wisely has figured out how to make it very easy for homeowners to finance solar panels on homes. The energy efficiency industry has not been as successful.

“The key of unlocking the industry is in the financing. Consumers don’t care that much. You have to lower the transaction cost. Some of the companies in the solar side have done this very well. They’ve made it very easy. If anyone is doing that in the home energy retrofit industry, they need to stand up on the table and scream about it,” Hiji said. (Please feel free to do your screaming in the comments section of this blog.)

It’s not that energy efficiency doesn’t have its bragging rights; it’s just not so good – yet – about getting them out. But at the conference, attended by 2,000 people, speakers offered some good makeover material.

For example, Gavin Newsom, California’s Lieutenant Governor, provided the following about investing in various energy resources.

• $1 billion in coal = 870 jobs.
• $1 billion in a nuclear plant = 1,500 jobs
• $1 billion in solar energy= 1,900 jobs
• $1 billion in wind energy= 3,300 jobs
• $1 billion in energy efficiency retrofits =7,000 jobs.

“Energy efficiency is a no brainer,” Newsom said. “We need to start talking about it more.”

Steve Cowell, chairman and CEO of Conservation Services Group, noted that in 2003 to 2005, energy costs accounted for 3.5% of US median household income in the United States and by 2007 to 2008 it had risen to 8.5%. What does that mean to the average household? A 12% drop in pre-tax income and 15% post tax. You took a pay cut without knowing it. By using less energy you can get some of your paycheck back.

More details about this and other discussions at the ACI Home Energy Summit are available here.

Are we thinking about energy all wrong?

By Elisa Wood

April 29, 2010

The energy world operates under the premise that more is better. If we build more power plants, we’ll have ample supply, and electricity prices will drop. Even better, if those plants are clean and green, we’ll displace older, dirtier plants and reduce emissions. That will help our economy by producing jobs.

But is that the right way to think about power?

Truth be told, new energy sources are likely to play a smaller role in economic recovery than advances in energy efficiency, according to speakers at a recent symposium held by the American Council for an Energy Efficient Economy, as part of its 30^th anniversary celebration.

“Cost-effective investment that can reduce the amount of energy necessary to support a dollar of economic activity is the single most important driver of economic productivity within the United States and around the world,” said John A. “Skip” Laitner, director of economic and social analysis, American Council for an Energy-Efficient Economy.

But too often policymakers view energy efficiency not as an economic driver, but as a means to control demand until we can deploy conventional resources, such as nuclear and oil, he said.

Consider the following data that emerged from the symposium:

• America’s economy has tripled in size since 1970 and three-quarters of the energy needed to fuel that growth came from efficiency advances, not by adding more energy.
• Still, the U.S. economy remains only about 13 percent energy efficient, meaning 87% of the energy we use is wasted. We are behind Japan and several European countries, which have a 20% efficiency level.
• Energy efficiency investments can provide up to one-half of the greenhouses gas emissions reductions most scientists say are needed between now and 2050 – while lowering energy bills.

“The greatest barrier of all to more energy efficiency is the mentality of the growth imperative: the deep seated conviction that growth assures survival in the competitive global race. The focus is on growth, with profits secondary. But we have to ask: The race is to where?” said Robert Ayres, an emeritus professor at the European Institute of Business Administration and author of “Crossing the Energy Divide: Moving from Fossil Fuel Dependence to a Clean-Energy Future.”

“Growth that consumes limited resources is itself unsustainable,” he added. “A new paradigm is urgently needed. The new paradigm must focus on the cost-effective re-use, renovation, remanufacturing and recycling. The energy firms of the future will need to sell efficiency, and energy security, not fuel.”

To hear Laitner and Ayres summarize their findings and answer media questions go to: http://www.aceee.org/.

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

Wanted: GOLD for smart grid

By Elisa Wood

April 8, 2010

As John McDonald tells it, smart grid needs GOLD. And he’s not talking money.

GOLD stands for Graduates of the Last Decade, the technology savvy, risk-taking engineers and technicians who may be among the greatest benefactors of the new smart grid movement. While most recent college graduates face dismal employment prospects, for the GOLD kids, the job market is, well, golden.

“I’ve never seen electric utilities and suppliers outbidding each other for a bachelor’s degree,” said McDonald, who has had 35 years in the energy business and now serves as an IEEE Fellow and general manager of marketing for GE Energy T&D.

GOLDs benefit from two converging trends. The first is the sizeable technical task that utilities face in integrating smart grid technologies. The second is the wave of retirements expected to hit the utility industry in the next five to seven years.

These young recruits will invigorate the utility industry, which is notorious for being risk adverse, a trait that has kept the lights on but also hinders adoption of new and more effective technologies.

Two utility cultures tend to dominate today, according to McDonald. One approaches smart grid with an “over my dead body” attitude. The second is about three retirements away from embracing smart grid.

“The older folks say we’ve been doing this for 20 years. I’ve got three years to retirement, and I’m not going to do anything new that might cause a problem,” he said. “That will go away with the GOLD folks. These are folks who went to Block Buster and rented a game and learned how to use it in a matter of minutes.”

Not only will GOLD engineers find it easy to get jobs in the electric power industry, but they also are likely to advance quickly in the ranks, McDonald said. Utilities have done little hiring in the last 15 years. Thus, the middle group – those in between upper management and new recruits – tends to be thin. So the way is clear for GOLDs to enter management early in their careers.

Demand for GOLDS is already strong, but it is likely to get even more intense. Smart grid is still new, only in the design/engineering phase, still to take on manufacturing and field deployment. More jobs will open as these stages occur.

What can engineering students do to position themselves for the plum jobs? McDonald advises that they pursue internships in the power and energy industry with electric utilities, testing labs and suppliers or snag research positions with professors. IEEE also has set up a website where job seekers can post resumes: http://www.ieee-pes.org/workforce/pes-careers.

“It is exciting for me because my son is in that [GOLD] space. The potential for him is much greater than it is for me,” McDonald said. “I’m 58. Most of us who have been in the industry for a long time will be more than willing to give decision-making to this group.”

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