$3.1 billion for state energy efficiency programs - Just one catch

By Patrick Costello, guest contributor

March 19, 2009

The American Recovery and Reinvestment Act promises to advance the U.S. energy efficiency movement with an unprecedented $26 billion infusion of funds. Of that, $3.1 billion goes to state energy efficiency programs through the Department of Energy’s State Energy Program.

Great news, right? Maybe not, says the Electricity Consumers Resource Council (ELCON) and the National Association of Regulatory Utility Commissioners (NARUC).

To receive the federal stimulus money, states must agree to set up financial incentives that encourage utilities to pursue energy efficiency programs. ELCON and NARUC fear that this promotes a “one-size-fits-all” approach to the administration of energy efficiency programs. In particular, they are concerned that these stimulus funds will sway states to implement revenue decoupling at the expense of developing a more unbiased energy efficiency program plan.

Revenue decoupling is a ratemaking mechanism that breaks the link between a utility’s revenues and energy sales. Since utilities normally profit from selling energy, it’s not in their best interest to push efficiency. Doing so reduces demand for their product. Revenue decoupling counters this problem by allowing utilities to earn a fair rate of return, and sometimes additional financial incentives, on energy efficiency programs. Decoupling has become a common way to align utility financial interests with state efforts to achieve greater energy efficiency.

The debate over revenue decoupling is central to discussion over what makes an energy efficiency program effective. Ratepayers measure success based on how much money they save. And how much money they save may depend on who runs the program.

Utilities, state agencies, third party non-profit organizations, or some combination of the three typically administer efficiency initiatives. Each state shapes its own approach. No one program design seems to be the most effective. Many highly regarded programs differ greatly from one another. But the best programs share one commonality: They are tailored to the unique policies and economic profile of the state and are based on input from a variety of stakeholders.

Critics of the stimulus bill argue that ‘the catch’ – the condition placed upon states before they can receive stimulus money – may stifle such tailoring, hinder development of a state’s full energy efficiency potential, and diminish cost savings. Decoupling creates the foundation for utilities to serve as the primary administrators of efficiency programs. By pushing for revenue decoupling, a state is arguably saying it wants utilities, not a third party non-profit or state agency, to take the lead in developing and administering energy efficiency programs. Therefore, the stimulus bill walks a fine line between encouraging states to implement only utility-administered programs and encouraging them to reform their ratemaking policy so that utilities can, on some level, contribute to the development of a sound energy efficiency program.

Decoupling is somewhat arcane, but ratepayers should be aware of how it may influence their rates as energy efficiency programs evolve.

This is the House Energy and Commerce Committee’s report where the controversial provision can be found on page 26:

http://www.rules.house.gov/111/CommJurRpt/111_hr1_encrpt.pdf

To see a breakdown of the stimulus package’s energy efficiency measures, visit:

http://ase.org/content/article/detail/5388

To learn about and obtain forms for stimulus package energy efficiency tax incentives, visit:

http://www.energytaxincentives.org/

To see how your state’s energy efficiency efforts rank nationally, visit:

http://www.aceee.org/pubs/e086.htm

Visit us at www.realenergywriters.com and pick up our free Energy Efficiency Markets podcast and newsletter.

How US businesses can access federal stimulus money

By Elisa Wood

March 11, 2009

I thought that “federal stimulus” would be high on Google’s hit list. But alas, when I checked its analysis of hot trends yesterday, I discovered that “Rockin’ Robin” is number one.

Thanks to American Idol this 1950s song dominates the search engine. Bringing more music to the ears of business owners, however, is the $20 billion made available for energy efficiency through the American Recovery and Reinvestment Act of 2009. While it is easy to find information about homeowner opportunities (www.energystar.gov), it is difficult to ferret out how Joe-business USA can take advantage of the act’s benefits.

I did, however, find a few valuable sources. Linked-in brought me to a paper by law firm K&L Gates that advises companies with early stage projects on how to apply for money. The paper focuses on renewable energy, but also touches on efficiency, and includes guidance on how to approach government fund managers. Applicants need to make the case that their projects are “game changing” to win priority. They also must be “shovel-ready” – able to begin in 90 days. The paper is available by contacting fred.greguras@klgates.com.

Energytaxincentives.org, a coalition of public interest groups, offers detailed information on existing incentives for commercial buildings, appliance manufacturers and combined heat and power. But the site appears to be still updating to include the ARRA, not surprising considering how many funding details are yet to be worked out, particularly at the state level.

The old standby, Dsireusa.org, is quickly updating information to include ARRA offerings. Those who manufacture certain energy saving and renewable energy products will find details about the 30% tax credit at the site. The program offers $2.3 billion in credits for projects certified by the US Treasury. Preference will go to those projects that are commercially viable, and are best at producing jobs, reducing air pollution, deploying commercial technology and getting off the ground quickly. The Treasury also will look at the applicant’s costs for generating energy, saving energy or reducing greenhouse gases. Additional guidelines will be available in August.

Please post here, or email lisawood@aol.com, with other sites, papers or reports that offer details about how businesses can access incentives through the ARRA 2009.

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

How well is clean energy weathering the recession?

By Elisa Wood

March 5, 2009

The clean energy industry may not be popping the champagne cork, but it is at least holding the bottle in hand. While not unscathed by the recession, the industry sees growth in several sectors, according to recent reports.

For example, use of smart meters—a key technology for better energy management and efficiency – is increasing at a rapid clip. A study by ABI Research, “Advanced Metering Infrastructure (AMM and AMI),” forecasts that the number of smart meters installed worldwide will reach 76 million this year, up from 49 million in 2007. Smart meters will benefit from an estimated $4.5 billion that the US plans to spend on smart grid initiatives as part of the federal stimulus package.

“We don’t think that the economic crisis is having a significant effect,” says Sam Lucero, senior analyst for ABI Research. “Utilities’ smart metering deployments are typically multi-year plans developed in the context of regulated market environments, and not terribly susceptible to short-term economic fluctuations.”

Press reports indicate that two other energy-cutting products are poised for significant growth this year. Moneynews.com quotes analysts who say demand response companies are likely to see recovery in 2009 following a dramatic fall in stocks of some leading companies. Meanwhile, industry insiders say they expect continued expansion for combined heat and power, a resource that has won new federal tax incentives and state support. See my article in the January/February issue of Cogeneration and Onsite Power Production magazine for more details.

Not all the news is good though. Greentech Media and the Prometheus Institute for Sustainable Development project that the global market for photovoltaics will shrink 15% this year to $12 billion. This is solar energy’s poorest performance since 1994, according to the report. At the same time, Lux Research says this year’s solar shakeout – caused by oversupply of cell and module capacity – will push solar prices closer to grid parity and precipitate expansion.

Meanwhile, expect to read a lot more about the clean energy sector in the coming year. William Brent’s Search for Cleantech reports that members of the media foresee heightened coverage of the cleantech sector in 2009 (and it certainly wasn’t light coverage last year.) Seventy-five percent of bloggers, mainstream newspapers, magazines and broadcasters surveyed say readers and editors will demand more coverage of the sector. So while the champagne may not be flowing yet, the information certainly is.

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

Where to find a green job?

By Elisa Wood

February 26, 2009

William Carlos Williams began one of his most famous poems: “So much depends upon a red wheel barrow.” Maybe if he were writing today he’d switch ‘red wheelbarrow’ to ‘green job.’

The US is relying on green jobs to push forward economic recovery. Our political leaders promise they are on their way, spurred by $80 billion in stimulus money for efficiency and renewable energy.

But what are green jobs? Who offers them? What training do they require?

Most green jobs are not exotic. In fact, the green job of tomorrow is likely the job you have today (or had before the recession). The product you deliver may be different, but the work is much the same, according to a report issued by the Political Economy Research Institute (PERI).

“The vast majority of green jobs are in the same areas of employment that people already work in today, in every region and state of the country. For example, constructing wind farms creates jobs for sheet metal workers, machinists and truck drivers, among many others. Increasing the energy efficiency of buildings through retrofitting relies, among others, on roofers, insulators and building inspectors,” says Job Opportunities for the Green Economy: A state-by-state picture of occupations that gain from green investments.

Many of the green efficiency jobs are in the building and auto sectors, areas particularly hard hit by this recession. Building retrofits require electricians, heating/air conditioning installers, carpenters, construction equipment operators, roofers, insulation workers, carpenter’s helpers, industrial truck drivers, construction managers, and building inspectors. Manufacturing plug-in electric vehicles and other efficient cars take the work of computer software engineers, electrical engineers, engineering technicians, welders, transportation equipment painters, metal fabricators, computer-controlled machine operators, engine assemblers, production helpers and operations managers.

Many of these jobs are the old blue collar variety. What sets a green job apart is that it supports energy efficiency, renewable energy or some other environmentally beneficial product.

High-tech workers also are likely to benefit from the green boom, especially as the nation begins to create a smart grid, most often characterized as a system that allows your refrigerator and utility to ‘talk’ and save you energy and money. By some estimates the smart grid may create as many as 280,000 jobs in the next five years. As a result, many of the old names in technology are moving into energy, among them Cisco, IBM, Google and Hewlett Packard.

So if you want a green job, you may not have to look too far beyond where you’d find your wheelbarrow. Right in your back yard.

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

Who gets the EE stimulus money?

By Elisa Wood

February 19, 2009

The ink is dry on President Obama’s signature to the federal stimulus bill and word is out that energy efficiency receives more than $20 billion. How will homeowners and businesses benefit?

Two sources offer an excellent break-down on the incentives: the Alliance to Save Energy and the Office of Energy Efficiency and Renewable Energy, a unit of the US Department of Energy. EERE goes so far as to give the page numbers in the bill that address certain incentives.

Here is a snap shot of where some of the energy efficiency funds will go.

Housing & Buildings

• $5 billion for low-income weatherization assistance, plus an expansion of people who are eligible. An increase in the funding level to $6,500 per home.
• About $4.75 billion to Housing and Urban Development for public, low-income and Native American housing
• Tax credit for existing homes extended and increased to 30 percent of cost, up to $1,500 for 2009 and 2010
• About $8.9 billion for federal buildings, including $4.5 billion for green buildings and $3.6 billion for Department of Defense energy efficiency initiatives

Appliances

• $300 million for the Energy Star Program and for matching grants to states that offer rebates to consumers for buying Energy Star appliances.

Technology

• $4.5 billion for smart grid projects
• Up to $2.3 billion allotted for a 30 percent investment tax credit given to those who manufacture renewable energy, energy storage, energy conservation, efficient transmission, and carbon capture and sequestration items.

Transportation

• $400 million to encourage the use of plug-in hybrids
• $17.7 billion for public transportation and rail
• $2 billion for the manufacture of advanced batteries

Other

• $3.1 billion for state energy programs and $3.2 billion in block grants for local governments
• $500 million to prepare workers for jobs in renewable energy and energy efficiency
• $9.75 billion for public safety and other government services, including renovation to “green” schools

Further details are available at http://ase.org/content/article/detail/5388 and http://apps1.eere.energy.gov/news/enn.cfm

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

Googlifying the electric grid

By Elisa Wood

February 12, 2009

If you showed Alexander Graham Bell cell phone towers, he’d be stumped. But if you let Thomas Edison tinker with our electricity grid, he’d know just what to do — not because of his genius, but because electric transmission has changed little since Edison’s day. Telephone technology advanced; electricity did not. So says the Department of Energy. http://www.oe.energy.gov/1165.htm

Thus, we are now playing catch-up and pursuing a new, smart grid. This means we will incorporate digital technology which, among other things, allows for two-way communication. The grid will speak to us and we will speak back through our actions. The average householder will know the price of power as it constantly changes throughout the day, and based on the information, choose when to buy it.

The implications to society are huge. Like the Internet, which democratized information retrieval, the smart grid opens doors for new control by the common folk, in this case over energy management, now the domain of remote utilities and grid operators. Collectively, we will determine what kind of energy the nation uses and when. In a sense, we all become energy policymakers through our purchasing choices.

So it’s no surprise that Google, whose goal is to “organize the world’s information and make it universally accessible and useful” announced this week that it will step in and help with the smartening. Google is not an energy company, but it understands how to make information retrieval user friendly – and this will be crucial to the success of the smart grid. http://googleblog.blogspot.com/2009/02/power-to-people.html

John Petersen, chairman of the environmental studies program at Oberlin College, understands this need for simplicity in communicating energy concepts, as he shows in his creation of the Energy Orb. In today’s Energy Efficiency Markets podcast (www.realenergywriters.com), Petersen discusses Oberlin’s trial and error in getting students interested in managing their energy use. Initially, the college set up a website that monitored dorm energy use with colorful charts and graphs. But Peterson quickly realized it was too “techno-geeky.”

So taking a page from Ambient’s Stock Orb, a ball that glows different colors to show stock market activity, Petersen developed the Energy Orb. The glowing balls are placed in dorms, so students can pass by and see the buildings power consumption in real time. Red means high consumption, green is low. There is no need to get online and analyze charts. The Orb reveals the immediate truth. Dorms compete against each other to maximize efficiency by watching what their orbs say.

The Energy Orb is just one way we can googlify energy information management. Many other pilot projects are in the works that simplify information retrieval and encourage people to conserve. We’d like to use this space – and our weekly podcast – to feature some of these smart grid experiments. We invite you to submit them for consideration to realenergywriters@comcast.net

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

Federal stimulus: Pork or real energy policy?

By Elisa Wood

February 5, 2009

Two recent gestures by President Obama indicate that he is serious about clean energy and will pursue it differently than any of his predecessors.

First, he made history in using his inaugural speech to promote renewable energy – something never done before by a US President, according to Department of Energy’s EERE News Network. http://www.eere.energy.gov/

Second, on February 5 Obama drilled down to the nitty-gritty of energy efficiency policy. In a presidential memorandum, he called for the DOE to establish higher standards for common household appliances.

“We’ll save through these simple steps over the next thirty years the amount of energy produced over a two-year period by all the coal-fired power plants in America,” he said in remarks at the DOE.

The American Council for an Energy-Efficient Economy says the memorandum marks the first time Obama has made efficiency standards a top priority in his domestic energy policy. Obama seeks legal deadlines to set standards, “an important break from his predecessors who fell behind on updates for some 22 standards,” according to ACEEE. http://www.aceee.org/

Both of these gestures were important, and indicate he will fulfill – or at least try – his energy campaign promises. But the true test of his ability to revamp US energy policy comes as he tries to sell the $50 billion for energy in the federal stimulus package. Critics are slamming some of the provisions, such as plans to upgrade federal buildings and improve the federal transportation fleet.

“They call it pork,” Obama said. “You know the truth. It will not only save the government significant money over time, it will not only create jobs manufacturing those vehicles, it will set a standard for private industry to match. And so when you hear these attacks deriding something of such obvious importance as this, you have to ask yourself – is it any wonder we haven’t had a real energy policy in this country?”

Obama – and the clean energy industry – clearly have an education effort ahead in a world where pork and fuel efficient vehicles are seen as one in the same.

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