Obama, poker and what 2010 holds for energy efficiency

By Elisa Wood

December 10, 2009

Jon Stewart said it best: Obama is a lousy poker payer. Lucky thing, too, for the energy efficiency industry as it heads into 2010.

Stewart’s December 8 “The Daily Show” aired a clip of Obama recently telling business leaders: “I don’t want to tip our hand too much, but one of the things I would be surprised if we don’t end up moving forward on is an aggressive agenda for energy efficiency and weatherization.”

Tip his hand? In fact, as Stewart pointed out, Obama has shown that hand broadly to the world for the last year. Starting with his January 2009 inaugural speech, Obama buoyed the clean energy industry by advancing renewable energy, a first for a US president in that forum. But that turned out to be just the start. In talk after talk this year, he pushed efficiency. If US voters didn’t know the term ‘weatherization’ before, they know it now. What could be better publicity for a product than having it endorsed by the leader of the free world?

To say 2009 was a banner year for the energy efficiency industry is an understatement. Under Obama’s watch, the federal government has channeled $20 billion in stimulus dollars to energy efficiency and now promises more from bailout funds returned by banks.

While the money – and Obama’s support – was the big story for 2009 and continues to be going into 2010, it is important to remember that electric energy is ultimately a local industry in the United States. What happens before state public utility commissions and regional regulatory bodies often has greatest influence.

To that end here a few local trends of 2009 that may grow in 2010.

*Efficiency as a first fuel. Environment Northeast has been successful in convincing several New England states to consider efficiency to be the first fuel in portfolio planning. That means when utilities plan resources, they must secure all cost effective energy efficiency before pursuing power plant development or power purchases. http://www.env-ne.org/

*Decoupling. Utilities have little incentive to encourage energy savings if they earn their profits from selling power. Decoupling changes utility accounting and cost recovery by delinking profits from sales. California and Massachusetts are examples of states with full decoupling and their utilities have among the most aggressive efficiency programs in the country. Several other states partially use the approach; others are considering adopting it.

*Energy efficiency portfolio standards. Similar to renewable portfolio standards, EEPS require that utilities, and in some cases competitive retail suppliers, achieve certain energy savings goals. Federal proposals are under consideration for a national EEPS. That may or may not happen. But 19 states now have the standards; look for more to pursue the approach.

What else does the EE industry have to look forward to in 2010? Please post what you see in your crystal ball.

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

How many negawatts do I need before I retire?

By Elisa Wood

December 3, 2009

A candy shop owner on Cape Cod offers a new approach to build a retirement portfolio: put solar panels on your roof.

“We looked at the stock market last year and it didn’t look too good so we decided to invest in electricity,” said Ray Hebert, owner of Stage Stop Candy in Dennisport, in an article on wickedlocal.com by Nicole Muller. http://www.wickedlocal.com/dennis/news/business/x1792920283/PHOTO-GALLERY-Solar-energy-to-power-chocolate-production-at-Dennisport-shop

Thanks to today’s generous state and federal subsidies, Hebert expects to recover costs in five years and then begin collecting a return on investment of 13.8%. “What investment can guarantee that?” he asks. “And since electricity costs are expected to climb, my profit will go up, up, up over time.” He plans to channel the savings into his retirement account.

I’m not a financial planner, so won’t pretend to know if Hebert’s numbers are correct. But his reasoning points out a new and growing way consumers and businesses have begun to think about electricity. Efficiency allows them to not only save money, but also to earn it.

In Hebert’s case, he is saving money by using a generation source that has no fuel costs – sunshine is free – and by taking advantage of Massachusetts net metering laws, which allow consumers to sell back to the local utility any excess power generated by their solar panels.

But there are other ways, as well, that consumers can earn a return on electricity savings. Neighboring Connecticut, for example, has become the king of monetizing energy savings through its innovative energy efficiency certificates. The certificates represent energy savings (negawatts) businesses achieve when they install efficient technologies. Each megawatt-hour of savings equates to one certificate. The businesses then sell the certificates to utilities or retail electricity suppliers who use them to prove to regulators that they’ve achieved state-mandated levels of energy savings.

So far, the Connecticut program is largely confined to businesses, although homeowners are eligible. Private companies have been trying to come up with ways the householder can easily participate, but are having trouble convincing state regulators that their programs can work. One company proposed a green stamps approach, where customers could buy lights, appliances and other efficiency equipment through certificate savings. (See the CPower case before the Connecticut Department of Public Utility Control: http://www.dpuc.state.ct.us/DOCKCURR.NSF/4ad307989ca5ed2a85257523004e0191/d122623c2e5eab5c8525767400500afc?OpenDocument&scrollTop=545)

Programs that monetize electricity savings are likely to grow as more utilities install smart meters in homes and businesses. Smart meters let consumers see when and how they use electricity, so that they can better control costs. Connecticut Light & Power found that consumers who participated in a smart meter pilot program liked using the devices, although those who did so for environmental reasons were more satisfied than those who participated to save money. This isn’t surprising since residential customers only saved $24.69 on average from June 1 to August 31, 2009. http://nuwnotes1.nu.com/apps/mediarelease/clp-pr.nsf/0/0E66EBF11810786085257673004EA13B?OpenDocument

Would the savings be more meaningful if packaged into an investment that increases the value of the money — the Cape Cod candy shop owner’s approach? The possibilities are many: Pairing energy efficiency companies with financial firms to offer energy savings retirement accounts or college funds, or perhaps channeling the money into tax deductible donations. Whatever the case, translating kilowatt-hour savings into concrete financial products for consumers offers intriguing market possibilities for the electricity industry.

http://www.wickedlocal.com/dennis/news/business/x1792920283/PHOTO-GALLERY-Solar-energy-to-power-chocolate-production-at-Dennisport-shop

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

What does the US/China agreement mean for efficiency?

By Elisa Wood

November 19, 2009

The energy efficiency market has a gawky quality. It is not exactly one market but a conglomeration of various industries as diverse as appliance manufacturers, energy auditors, smart meter software designers and cogeneration developers. They are unified only in their ability to save energy.

All arms and legs as it may appear, the efficiency market seems ready to shoot to a new level of maturity. If that wasn’t apparent before, it became so this week with an announcement out of Obama’s visit to Beijing that the US and China will collaborate to curb their combined $1.5 trillion annual energy appetite.

How will this change the efficiency industry?

Given that the two nations consume 40% of the world’s energy, the collaboration could bring new economies of scale to efficiency. The agreement calls for:

• Greening buildings with better building codes and labels, advanced energy rating systems, and more emphasis on training building inspectors.

• Reducing energy waste in industry through benchmarking, on-site energy audits and tools and training programs to support these activities.

• Improving energy efficient consumer products by harmonizing test procedures and performance metrics. The two countries will exchange best practices for labeling systems and promote awareness of the benefits of energy efficient products.

• Working together to demonstrate energy efficient technologies and design practices, building on the research and development of the new U.S.-China Clean Energy Research Center.

• Engaging the private sector in promoting energy efficiency and expanding bilateral trade and investment.

With this new scale, energy services companies (ESCos) may follow a growth pattern similar to that of US solar firms. Just a few years ago, solar installation companies tended to of the two-guys-and-a-truck variety. The operations were small and local, just as many ESCos are now. Then companies like SunEdison came along and began acquiring the smaller ventures. Soon solar had a national footprint, and not long after, an international footprint as European and Chinese companies began buying American firms.

Solar seemed to mature into an international market overnight. Efficiency may now have the same opportunity.

See details on the US/Chinese collaboration here: http://www.energy.gov/news2009/documents2009/US-China_Fact_Sheet_Efficiency_Action_Plan.pdf

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

No place like home for energy savings

By Elisa Wood

November 12, 2009

Apparently there is no place like home, even when it comes to fulfilling lofty wishes like fixing our energy supply.

A recent White House task force on the middle class finds that our homes generate more than 20% of the nation’s carbon dioxide emissions. If we make our houses more efficient, we can significantly cut emissions and reduce energy use by 40%, a move that could lower our bills by $21 billion annually.

But who has the extra cash in this economy for better windows and an updated heating system?

The report recommends leveraging some of the $80 billion in energy and environment stimulus funds to set up financing mechanisms that let homeowners pay over time and avoid the upfront hit.

Already, to that end, several states have created low-interest revolving loan funds. Nebraska has set aside $11 million. Florida is offering $10 million, particularly for solar hot water installations. And yes, Dorothy, you can go home again. Kansas has gotten into the act with $34 million in efficiency loans.

In addition, the task force encourages federally funded pilot programs using ‘Property Assessed Clean Energy’ financing. Now available in a handful of cities, these programs finance clean energy efforts on property tax bills. Ideally, the efficiency retrofits will reduce energy bills at least as much as property payments rise, so that the homeowner faces no net increase in expenses. Particularly interesting, the loan stays with the property – not the owner. So if the homeowner decides to sell, the new owner, who reaps the benefits of the efficient home, also pays any remaining costs of the retrofit.

Similarly, the report calls for making energy efficiency mortgages more available. The US Dept. of Housing and Urban Development needs to work with Fannie Mae and Freddie Mac to establish uniform procedures for such mortgage products, the report says. In addition, the home appraisal industry must develop methods to evaluate a home’s energy efficiency.

And finally, the report says the housing industry deserves the same opportunity given to the appliance industry with Energy Star labels. Americans saved $19 billion on their utility bills last year with Energy Star appliances, according to the report. A similar label for homes would help buyers in their shopping and provide a benchmark for auditors, retrofitters, lenders and realtors.

To realize these recommendations, the report calls for creation of an interagency ‘Energy Retrofit Working Group,’ chaired by the Department of Energy, HUD, the Department of Agriculture, the Department of Labor, and the Environmental Protection Agency.

Is the White House doing more than tapping its shoes together to bring the initiative home? Monitor these two sites for progress:http://www.whitehouse.gov/strongmiddleclass/blog

http://www.whitehouse.gov/strongmiddleclass

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

Energy research and the cobbler’s children

By Elisa Wood

November 5, 2009

Scientific research has brought us products that offer greater energy efficiency. But is research, itself, energy efficient?

Evan Mills, staff scientist with the Lawrence Berkeley National Laboratory, raises this question and points out what may be a largely untapped market for energy efficiency companies: research labs. (See Environmental Science & Technology, http://eetd.lbl.gov/emills/pubs/pdf/sustainable-scientists.pdf.)

US researchers “unwittingly” spend about $10 billion annually on energy, he says in the article, and could cut the bill by half through sustainable practices.

It’s important to take a look at research efficiency because labs are often energy intensive. Researchers may work in hyper clean environments with sophisticated air ventilation, or they may need data centers with vast air-conditioning. Thus, a lab’s utility bills can be “staggering,” he says. Consider CERN, the European Organization for Nuclear Research, whose 230-MW capacity needs costs $80 million per year; or the US Department of Energy’s data centers, which pay $100 million per year for energy.

Money saved through efficiency could be channeled into more research. Yet only 1 to 3% of research labs operate in “green” facilities. LBNL has created a model energy efficient lab setting at its Molecular Foundry, a nanotechnology lab in Berkeley, California. With LEED gold certification, the facility has achieved energy savings 28% beyond California’s already aggressive building standard. http://www.kawneer.com/kawneer/north_america/en/news/releases/LBNL_Release_FINAL.pdf

Typically, laboratory’s can find energy savings by using premium-efficiency fume hoods and laboratory equipment, avoiding over-ventilation, limiting pressure drop in the ventilation system, engaging in energy recovery, minimizing simultaneous heating and cooling, and properly sizing space conditioning equipment to match energy needs, according to Mills.

He recommends that we reduce energy costs by including efficiency requirements in research solicitations. Labs could then calculate the cost of efficient equipment or building improvements into a proposal’s capital expenditures.

“Doing the right thing isn’t the only reason to strive for improved sustainability,” Mills says in the article. “The scientific enterprise depends on availability of ample energy and can be fettered by its cost. In the 1980s, LBNL’s particle accelerators were responsible for the vast majority of site-wide energy use. Indeed, the Bevatron’s [a particle accelerator] energy budget only allowed for ten months of experiments each year. At the time, raising the energy efficiency of the process (e.g., through improved magnets and power supplies) trimmed consumption and costs sufficiently to enable a full year of experiments to be conducted.”

Today, it appears energy research has succumbed to the syndrome of the cobbler’s children who have no shoes. Science discovers efficiencies, but doesn’t necessarily put them to use for its own purposes. Given our growing mastery of common efficiency practices in homes and businesses, research labs represent a new frontier for the energy efficiency industry.

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

What’s geothermal again?

October 29, 2009

By Elisa Wood

Some green energy sources seem to have charisma; others struggle for public attention with little success.

Solar energy is an “it” technology, as evidenced once again by the tremendous participation in the annual Solar Power International conference in Anaheim, California this week (Oct. 27-29). Twice as many companies (945) are displaying their wares in the Expo Hall this year, despite the still lagging economy. And overall attendance is expected to break last year’s record, itself a record breaker.

Even on Main Street, ask pretty much anyone and they know solar, probably like it, and see it as an economy builder.

Ask the same people about geothermal heat pumps and there is a good chance they won’t know what you’re talking about. Or they may give an answer that confuses the appliances with geothermal geyser power plants. For whatever reason, the concept of extracting heat from the ground has yet to capture the public or political imagination as much as extracting it from the sun.

Yet, geothermal heat pumps could have a significant impact on our energy supply. They can be installed pretty much anywhere there is a building. And if we used them to maximum potential in the United States, we could avoid building 91-105 gigawatts of generation, nearly half of the new power we will need in 2030, according to the US Department of Energy.

Homeowners who consider then discard the idea often cite the high upfront installation costs. Yet the same argument could easily be made about solar photovoltaic panels. So why is geothermal an also ran technology?

One problem, according to the DOE, is that the heat pump industry needs to collect and disseminate more solid data on heat pumps. Work underway by the Chewonki Foundation, an educational institute in Maine, moves in this direction. With a grant from the Maine Public Utilities Commission, Chewonki is monitoring and measuring the performance of a newly installed heat pump system at its 11,000 square-foot meeting hall. The state is looking for an alternative to heating buildings with oil, a relatively common fuel in Maine. Geothermal heat pumps may prove to be that alternative. http://www.onsetcomp.com/resources/white_papers

This is not to imply that the geothermal heat pump industry is not growing. To the contrary, US shipments of geothermal heat pumps grew 40 percent last year, according to a report released this month by the Energy Information Administration.http://www.eia.doe.gov/cneaf/solar.renewables/page/ghpsurvey/geothermalrpt.pdf. The industry is very much a domestic jobs builder. Most of the systems shipped in the US last year where manufactured here — 416,019 tons – with the remaining 86 tons from China. Sixteen percent of US product was exported.

Still, the geothermal heat pump industry is a small one, representing $319 million last year. Compare this to a domestic solar PV cell and module market of $1.72 billion in 2007 (2008 figures are not yet available from EIA).

Of course, it was just a few years ago that solar conferences were drawing hundreds, not tens of thousands of people, as Solar Power International does now. So who knows? Perhaps it’s not far-fetched to imagine the term” geothermal” rolling off the tongue of the average consumer, as easily as “solar” does today.

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

It’s the environment, stupid

By Elisa Wood

October 22, 2009

If Harry Truman were running for president today, he’d probably ‘Give ‘em Green,’ rather than ‘Give ‘em Hell.’ Bill Clinton’s campaign slogan would be, ‘It’s the environment, stupid.’ And Herbert Hoover might be promising a solar panel on every roof, rather than a chicken in every pot – and the pot would sit on a smart-metered stove, powered by a plug-in hybrid, eligible for renewable energy certificates.

Today, green credentials count. Hardly a day goes by without a mayor, governor or legislator claiming some sort of first, best or highest green energy goal.

That’s why the state energy efficiency scorecard, released this week by the American Council for an Energy Efficient Economy, is significant. It carries political currency.

Bragging rights go to California, Massachusetts, Connecticut, Oregon and New York,* the top five states (in that order) doing good by energy efficiency. Some red faces, however, might be found in Nebraska, Alabama, Mississippi, North Dakota, and Wyoming, the group that ACEEE says “most needs to improve.”

States are expected to continue their pursuit of energy efficiency into the next decade. The ACEEE reports that utility ratepayer-funds for efficiency will likely grow from $3.1 billion in 2008 to $5.4-$12 billion in 2020.

What’s most interesting is that so much money and effort is being put into energy efficiency now – during the Great Recession – when states face deficits. This defies conventional behavior: Historically, Americans worry about the environment only when the economy is sound. It appears that green energy advocates have successfully imprinted in the American psyche a link between renewable energy and efficiency and economic prosperity.

“This growing and deepening commitment to energy efficiency is so strong that the current recession has not put a dent in the vast majority of state programs,” says Steven Nadel, ACEEE executive director. “And that is for good reason: Energy efficiency is the only resource that can actually reduce energy consumption while growing the economy — making efficiency the ‘first fuel’ states can use to balance their energy portfolios.”

So we find ourselves in a kinder, greener nation, one with no electric meter left behind, where we walk softly and carry a big wind tower…

*At about the same time the ACEEE released the report, New York announced plans to shift Regional Greenhouse Gas Initiative money, slated for clean energy programs, toward reducing its deficit. This may have reduced New York’s ranking in the eyes of the environmental community.

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