Energy efficiency: The unsung hero of our times

Guest blog

By Steve Cowell

January 5, 2010

As our economy continues to sputter, one little-noticed industry has been booming for a while now: energy efficiency. The sector is hiring like crazy — a fact that speaks volumes about the close relationship between clean energy and the economic recovery that we’re all waiting for. Energy efficiency could save us all.

My firm works with utilities, government agencies, housing authorities, and other groups to help increase energy efficiency. We started in 1984 with three employees and one office. Today, we have nearly two dozen offices nationwide and employ 700 staffers from coast to coast. Most strikingly, we’ve added more than 250 people and 12 offices in just the last two years. The reason is crystal clear: Energy-efficiency services are in great demand. We are continuing to expand rapidly as more groups turn to us for help.

But energy-services firms are not the only ones that can benefit from the demand for energy-efficiency services. With the right programs in place, reducing power consumption can improve the bottom line for many other types of companies. Case in point: The building infrastructure in this country is old and inefficient. Retrofitting these buildings requires an army of workers. These include heating/air conditioning installers, insulators, and building inspectors. Many of these trades people are out of work and these retrofitting jobs can get them back on their feet. Products like insulation, caulk, triple-paned windows and doors, and high-efficiency heating and cooling systems will also get a boost. And that’s not all. The goods need to be made, inspected, shipped, and sold, widening the circle of employment opportunities for manufacturers, retailers, and distributors. This expanded workforce means people will have more money to spend.

Now that’s what I call a “trickle down economy”!

Most importantly, jobs created to support energy efficiency are America’s jobs. More than 90 percent of products and 100 percent of the labor used in residential energy work are American. If Home Star becomes law, weatherization products and equipment will fly off store shelves faster than you can say “retrofit.” Most of these supplies are made domestically, so our factories will need to step up production. Home Star is expected to increase demand for retrofitting by a factor of 15, benefiting those hardest hit by this recession — manufacturing and construction workers. An estimated 168,000 jobs would be generated to carry out the program. Consumers who take advantage of Home Star would save our country an estimated $10 billion in energy costs by 2020. The program would jolt our economy by pumping in $6 billion over two years and cut down on carbon emissions. Supported by Republicans and Democrats, environmentalists and businesses, the bill was introduced exactly one year ago. Home Star has been stalled in the U.S. Senate for months after having passed the House last May. We hope the new Congress will put Home Star on the front burner.

New economic analysis shows that clean energy legislation will create up to 1.9 million new jobs, increase annual household income by up to $1,175, and boost the GDP by up to $111 billion. Over the years, study after study, from groups like the Center for American Progress and the American Council for an Energy-Efficient Economy, have supported the direct correlation between green industry growth and jobs. Eighteen months ago, findings from a study by the Pew Charitable Trust found that green jobs are growing at a national rate of 9.1 percent, while traditional jobs are growing by only 3.7 percent.

As someone who’s been working in the industry for more than 30 years, I’m not surprised at all. Clean energy is job creation, hands down. Our time has come!

So what are we waiting for?

Stephen L. Cowell is chairman and chief executive officer of Conservation Services Group, based in Westborough, Mass. Mr. Cowell also co-founded Efficiency First, the Home Star Coalition and serves as president of the Northeast Energy Efficiency Council.

Energy heads home in 2011

By Elisa Wood

December 15, 2010

I have three predictions for 2011.

1. When it comes to energy policy, austerity will be in.
2. Therefore, energy efficiency will become a favored choice among mayors, governors, state lawmakers and Congress, as government becomes increasingly edgy about the cost of renewable energy.
3. The infamous leaky home will finally get some plugging.

My first two predictions are no-brainers. Governments are broke. They will look askance at anything that costs money, no matter how valuable, meaning that some renewable energy technologies will face tough going. Energy efficiency, on the other hand, offers a way to go green while lowering bills, a very appealing proposition at time of heightened economic and environmental concern.

Maybe not so obvious is why 2011 will be the year of the home. Here is my thinking.

Because of smart grid, the home is the new frontier in an energy revolution that shifts attention from the energy producer to the energy consumer. As Phil Harris, CEO of Tres Amigas, pointed out in a recent presentation, the electric grid is a huge machine, half of it devoted to making power and half to consuming it. While we’ve focused heavily over the years on improving production, we’ve barely considered energy use. http://www.youtube.com/watch?v=vyLuXgo4c74.

“Think about that. It’s a single machine, but for 100 years we’ve devoted all of our attention to generation, production and distribution. And how much science have we produced on the other half of the machine, the things that actually use electricity? That is what we have created on planet Earth. Very large systems with a lot of tension on half of the equation and almost none on the other,’ he said.

Smart grid – the integration of information technology into the grid — will shift the balance, giving consumers greater control over the flow of electrons into their homes much the way the Internet has given them control over information flow. This elevates the household from a passive to an active player on the grid. “I truly believe we are going from a utility-controlled environment to a customer-controlled environment,” Harris said.

Attention to household energy use is big ticket item. For example, retrofitting US homes could cut annual energy bills by $21 billion annually, according to the December 2010 report from the National Home Performance Council, “Residential Energy Efficiency Retrofit Programs in the US.” http://www.nhpci.org/

This isn’t lost on energy policymakers, and they are looking at far more than just caulking windows to achieve these savings. The movement is toward the “whole house retrofit,” which looks at a home as a total system.

“It looks not only at many different elements within the home that result in excessive consumption or waste of energy, but also considers the ways that these elements interact,” the NHPC report said. “Whole home retrofit approaches also review at health and safety issues within a home as a crucial feature of a retrofit job, with a commitment to do no harm.”

The report identifies 126 such programs now underway nationwide, many of which offer rebates to homeowners. The New York State Energy Research & Development Authority, for example, recently announced $5,125 incentives for single family homes and higher amounts for multi-family homes when they add “technologies that lower energy costs, reduce waste and water use, and improve indoor air quality.”

Home builders are paying attention. America’s 10 largest publicly traded homebuilders have started to improve their policies and practices relating to the environment and resources, according to a new study by Calvert Asset Management Company. “Green Recovery for America’s Homebuilders? A Survey of Sustainable Practices by the Homebuilding Industry,” evaluates how well major builders are doing when it comes to sustainable practices. The green building market, estimated at $36-49 billion, is expected to increase twofold between 2009 and 2013, according the report. Calvert found that among green initiatives, energy efficiency is the first choice among builders.

“Our survey of the 10 largest publicly traded U.S. homebuilders finds an evolving landscape. Whereas two years ago the industry had not yet begun to embrace sustainability as a core part of building design and construction, companies today have taken many meaningful steps toward developing greener and cleaner homes,” said Rebecca Henson, sustainability analyst at Calvert Asset Management Co. and co-author of the report.

Making predictions about energy is tricky. It’s an industry that can shift direction quickly because of unexpected events – hurricanes, wars, gas and oil supply shifts. But right now it looks pretty clear that the direction energy’s heading is home.

Time to export energy efficiency?

By Elisa Wood

December 8, 2010

We keep hearing that China is going to become a really big deal in world energy markets. But it wasn’t until I read this statement by Jane Henley, CEO of the World Green Building Council, that I grasped the scope of its coming influence:

“China is projected to build the equivalent of 10 New York Cities over the next decade.”

For some, such rapid economic expansion by China is cause for fear. Others see opportunity. The US green energy markets were nudged toward the opportunity-seeker category this week with word from the Department of Energy of the nation’s first export strategy for renewable energy and energy efficiency.

It’s a funny place for us to be. We tend to be known on the international stage for our energy consumption. We are the world’s largest oil importer, and its third largest producer. And when it comes to green energy, the last few years have been marked by more imports than exports. A flock of international companies have established themselves in the US to build wind and solar energy, sometimes by buying out US companies.

Many US’ green energy companies simply do not export, according to the report “Renewable Energy & Energy Efficiency Export Initiative,” issued December 7 by the DOE and several other government agencies. The report pegs US export of renewable energy goods at about $2 billion last year. This isn’t a very big number when you consider that worldwide $162 billion in private capital went toward renewables and energy efficiency technologies and $183 billion in government stimulus funds.

While the report quantifies current US renewable energy exports, it has a tougher time defining the energy efficiency market, not an unusual problem for an industry that encompasses everything from home improvements to combined heat and power plants. However, the export market potential for energy efficiency technologies is “likely substantial,” the report said.

So if you want to export energy efficiency, what countries should you look to?

If you manufacture industrial energy efficiency equipment, clearly economically developed countries offer best opportunities Markets also are likely to be ripe for US imports if they consume more energy than they produce (Germany), or if they have high energy prices (Japan), according to the report.

Canada offers the best market for US building materials. Canada already imports more building materials from the United States than the next 20 export markets combined. Other top export markets for building materials include Australia, China, Germany, Japan, Mexico, and the United Kingdom.

If you plan to export electronics, appliances, and information and communication technologies, look to Canada, China, Japan, Mexico, and Singapore, with Canada and Mexico representing the major importers, according to the report.

The full report, which explains specific strategies and supports the US will offer green exporters, can be found at http://export.gov/reee/eg_main_023036.asp.

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

Smart Grid needs a Facebook

By Elisa Wood
We think we know how smart grid technology will change the utility industry. But do we really?

Take a look at this documentary made in 1969. It’s a view of how the world perceived the coming Internet (It’s also a pretty amusing look at how sexist our society still was at that point.) http://andrewsullivan.theatlantic.com/the_daily_dish/2010/04/before-the-internet.html.

While the film gets some concepts right, like online banking, it misses the Internet’s most world-changing benefit, the democratization of information — the production, distribution and consumption of data by everyday us, free from gatekeepers.

The film also misses the pizzazz and the fun of the coming Internet. There is no You Tube, no Google, no Wikipedia. And look at the kids. They are playing with physical toys. Why isn’t the Mom yelling at them for being on Facebook all day?

The Internet’s emergence – and our misunderstanding of what it would become – may provide hints about the future of smart grid. After all, many parallels exist between the two.
The Internet offered up democratization of information; smart grid promises democratization of electricity, giving consumers the ability to control at their fingertips power production, distribution and consumption. Indeed, if smart grid’s vision plays out to its fullest, you in essence become the power plant. Your in-home generators produce power that is stored by your plug-in electric vehicle, and your home computer controls the electricity distribution. The end game is energy savings and lower costs.

Some argue that the smart grid revolution will have a more profound impact on how we live than did the Internet. The megawatt, after all, is more powerful then the megabyte. Without the megawatt, the megabyte could not be.

Forty- years ago we had a pretty bland vision of the coming Internet. Had we been worried then about getting people to use the Internet – the way we now worry about getting them to use smart grid devices — we probably would have plumbed the depths of behavioral psychology for strategies. We would have asked: Can we get people to use the Internet if we show them that their neighbors do? How about if we demonstrate to them how much money the Internet will save them? Will they shop on the Internet if we explain to them it is better for the environment than driving to the store?

And, of course, all of that hand-wringing would have been a waste of time. What did it take to get people to use the Internet? Some really smart kids in dorm rooms with bright ideas: Bill Gates, Larry Page, Sergey Brin, Mark Zuckerberg and the like.

The electric power industry needs its own crop of dorm room geniuses that will find ways to make the smart grid irresistible to the consumer. If they emerge, maybe the next generation of parents will be lecturing their kids to get off the kilowatt zapper and go outside and play. After all, you can’t spend your whole day eking energy savings from the house.

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

Time to change habits, as well as light bulbs?

By Elisa Wood

November 16, 2010

We are bombarded daily by advertisements selling us soft drinks, pharmaceuticals, cars, insurance, junk food, teeth whitener, diet programs, and on and on. But when was the last time someone tried to sell you on using more electricity?

I cannot think of a single commercial that encourages us to plug-in, even though electricity is the chief product of 3,000 utilities in the United States.

This speaks to how easy it is to access and use electric energy; its relative cheapness, invisibility, and integral role in daily life. No need exists for utilities to market electricity; we devour electrons blindly.

So how do you convince people to conserve something that they use so much, yet hardly even notice they buy?

Behavioral science may hold the answers, as pointed out in a new report by the American Council for an Energy-Efficient Economy, “Visible and Concrete Savings: Case Studies of Effective Behavioral Approaches to Improving Customer Energy Efficiency.”

Getting consumers to save energy is as much a people problem as a technology problem. Or as the report puts it: “To achieve greater energy savings through energy efficiency, we need to design and build programs that change habits as well as light bulbs.”

The report highlights 10 energy efficiency programs that have done so. The programs include: building operator certification, in-home energy monitoring, media messaging, keeping up with the Jones emotional pressure, ATM-like energy purchasing, in-home energy displays, employer cheerleading, corporate energy management, green recognition, and feebates – fees or rebates for cars based on their energy efficiency.

What do these programs tell us about human behavior when it comes to energy efficiency? For one thing, we need to see how much energy we use, clearly displayed in our homes as we use it. And we need proof – true measurement and verification – that our efforts to conserve pay off. Such data also encourages political support for efficiency programs.

The report finds we worry about social norms – if we learn our neighbors save more energy than we do, we try harder. And believe it or not, money doesn’t really motivate us very much. Or at least we do not always make rational economic decisions. We are more apt to act based on values, curiosity, self-esteem, and other non-economic motivators. When money is used as an incentive, bonuses need to be large and immediate, not spread out over time.

The report is available here. http://www.aceee.org/research-report/e108

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

Every company needs a corporate energy manager

Guest blog

By Paul Baier

Vice President of Sustainability Consulting, Groom Energy

www.groomenergy.com

Why do so many companies fail to capitalize on the abundant opportunities to save money through improved energy purchasing and efficiency?

One reason may be the lack of high-level positions for energy management at many companies. This is a practically a “no brainer” because the position can often pay for itself in four to five months. Sustainability leaders should advocate for this role either within their own group or at the corporate level.

Opportunities to save money are everywhere. In our consulting work we consistently see opportunities to reduce overall energy spend by 5 percent to 15 percent through projects with a two to three year payback period. This is serious money for companies with energy budgets approaching $50 million, and starts to really add up for firms in the $500 million range.

A typical project may improve energy purchasing practices or increase energy efficiency. For example, one organization realized $4 million in savings with renegotiated contracts for electricity. Another saved $200,000 per year through implementation of a demand response program. Yet another found $350,000 through lighting upgrades and incentives. Finally, a wholesaler reduced its electricity use in its frozen warehouses by 80 percent after converting to LED lighting.

Generating savings need not require a capital investment. Zero capital projects exist as well. One retailer, for example, saves $60,000 per year at each of its distribution warehouses by adjusting the temperature set points for its frozen and refrigerated warehouse to be cooler at night and warmer during the day when electricity rates were 50 percent higher. This same retailer saves $15,000 annually by recharging its electrical forklifts at 6 p.m. instead of 3 p.m., as was previously the custom, in order to take advantage of reduced electricity rates.

Why aren’t other companies exploiting these kinds of opportunities? There are many reasons, such as:

1. There is often a prevailing attitude that “savings” projects are “deferred maintenance” with dubious returns and should only be done when absolutely necessary.
2. Incentives at the corporate and local levels are often misaligned (e.g. production targets vs. overall energy spend).
3. Getting capital requests “through the system” often requires strong internal selling skills and determination to get things done, which may be lacking for some energy project requests.
4. Operations engineers are often overwhelmed with keeping operations (production lines, warehouses, offices) running and do not have the time, inclination, expertise or the proper incentives to look for and implement energy savings initiatives.
5. Lack of knowledge in the CFO’s office about the opportunity

A lack of energy accountability, another contributing factor, is very common. Who owns the company’s energy budget? It’s surprising how often this question results in a “blank stare” when posed to companies we consult. They often have executives responsible for revenue, overall budgets and managing health care costs, for example, but not for corporate energy expenditures.

This lack of energy ownership can cost companies millions. In many cases, senior management does not realize how much they’re spending on energy across all sites, or that energy is often second only to health care in terms of overall cost growth.

At the local level, a lack of ownership leads to huge waste. For example, at one very large manufacturing facility, certain machines and operations were needlessly left running during the third shift, yet no one “owned” the responsibility for determining when the machines could be shut off, costing the company $40,000 in energy in one month.

Energy accountability, visibility, and corporate management are the first steps to pursuing these changes and realizing the potential savings. A corporate-level energy manager — typically a director-level, but can be vice president-level if energy spend is large enough — who works with senior management and a cross-functional corporate energy management team is essential. Corporations, especially outside of energy intensive industries, such as steel, are increasingly starting to establish these positions.

We recommend:

• Establish a corporate-level director of energy management with responsibilities for driving improved energy purchasing and consumption practices. For highly decentralized organizations, this role will be a corporate services function for the line.
• Increase CEO and CFO education about the total dollar amount of corporate-wide energy spend. The CFO should especially be pushing their organizations hard for projects that increase energy efficiency.
• Drive energy spend visibility by calculating energy spend for the overall corporation, its lines of business, and individual facilities and plants.
• Include energy spend in quarterly operations reviews
• Establish an energy management cross-functional team that meets at least quarterly.

Revenue growth for many companies in this current economic environment is very difficult. Enhanced margins can be achieved through energy reduction, which begins with corporate visibility and an empowered, corporate energy manager

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

Energy efficiency: Real estate’s next granite counter top?

By Elisa Wood

November 3, 2010

A lot of good economic reasons exist to pursue energy efficiency. Still the average person tends not to. This is no surprise. If I cannot see, touch, buy, sell, trade or save efficiency, if it’s invisible, how can I pay it any real attention?

Often on the vanguard, Boston-based Conservation Services Group is working on an idea to make home efficiency more tangible. It is a surprisingly simple idea. One that is likely to leave a lot of people saying, ‘Of course. Why didn’t I think of that?’

You might say CSG is making energy efficiency the next granite kitchen counter top of the real estate business.

Through a $348,000 grant from the Doris Duke Charitable Foundation, CSG is working on a metric to describe a home’s energy efficiency value. When a homeowner lists a house for sale, the metric would be included in the multiple listing service (MLS), right along with the home’s price, number of bedrooms, square-footage and location.

Suddenly, efficiency is tangible, something that can be quantified and can add or detract to home value.

It’s not yet clear what that metric will look like. It might be a numerical score or a certification like the Energy Star label. Figuring that out is part of CSG’s task, as it puts in place a program for New York over the next two years.

“You can imagine the pitfalls in establishing what this score would be,” said David Weitz, director of CSG’s Applied Building Science Division. “How do you present it in a way that is accessible to the greatest number of people. Unfortunately, there is no right answer.”

CSG plans to hold focus groups with homeowners to get a sense of what might work. The idea is to come up with a measurement that translates into a selling point, much like the granite counter top or hard wood floors. The hope is that sellers will install efficiency to increase their grade. Presumably, the higher grade will make the home more marketable.

Weitz also must convince MLS administrators to accept the metric and include it in the listings. Fortunately, CSG is not alone in this pursuit. Similar programs are in the works in other parts of the country. In addition, the US Department of Energy is working on creating a national an ‘e-scale’ label for homes. Weitz hopes the DOE effort and various local labeling initiatives will come together to create consistency in labeling nationwide.

In winning the award, the 26-year-old CSG edged out more than 350 proposals, submitted last April, from organizations in 44 states that offered scalable approaches for spurring energy efficiency retrofits in existing buildings. Grants totaling $2.7 million went to nine winners, which were evaluated by a panel of experts in real estate, finance, construction, government policy and energy efficiency technologies.

“In the past, people would buy a house without any real understanding of its ongoing energy costs. Establishing an energy efficiency category, within MLS listings, will help during the selection process by providing homebuyers with another essential piece of information,” Weitz said.

If it’s successful, who knows, maybe someday the real estate mantra will no longer be ‘location, location, location,’ but instead, ‘efficiency, efficiency, efficiency.’

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