Obama’s budget good for energy efficiency

By Elisa Wood

February 16, 2012

President Obama's 2013 budget caused a lot of smiles this week among energy efficiency advocates – even if it is more of a wish list than anything else. Obama calls for about $1.2 billion in spending for energy efficiency.

What’s this mean to the energy efficiency industry?

Kateri Callahan, president of the Alliance to Save Energy, says that Obama’s budget represents a dramatic increase from current efficiency spending. And while the sector won’t receive that kind of money in the final budget, it still should do well, given that the starting point is so high in a time when many budget items begin with cuts.

“The administration's vigorous support for energy efficiency at this stage of the game should help ensure that we get funding almost as robust as we have currently,” she said.

It’s not easy figuring exactly how much the federal government spends on efficiency now, since funding is spread out over several programs and sometimes infused into budgets for defense, science, agriculture, environment and commerce.

By ASE’s count Congress appropriated $811 million in 2012 for energy efficiency programs in DOE’s Office of Energy Efficiency and Renewable Energy (EERE), and $50 million for Energy Star at the Environmental Protection Agency.

In all, Obama increases the Department of Energy budget by 3.2%, bringing it to $27.2 billion for 2013. He allots $2.3 billion for both the efficiency and renewable energy programs in EERE, and maintains Energy Star spending at the same level. Funding for high-risk research increases 27% and for manufacturing advancement 150%. Obama offers an 80% increase in programs that cut energy use in buildings and factories. He also continues to press Congress to pass the HomeStar bill to reduce household energy use.

Raising spending might sound alarms, given the US deficit. However, spending on efficiency actually decreases society’s energy expenses. Energy efficiency cost about 1.6 to 3.3 cents/kWh for utilities in 14 states studied by the American Council for an Energy Efficient Economy. Had those utilities built power plants rather than conserved energy, they would have paid 6 to 14 cents/kWh.

“The President clearly recognizes that energy efficiency is a critical component of our economic future and is the fastest, cleanest and cheapest way to meet growing energy needs,” said Terry Singer, executive director of the National Association of Energy Service Companies.

Obama also cuts $4 billion in fossil fuel subsidies. This is significant because subsidies tend to depress fossil fuel prices and encouage more consumption. The International Energy Agency has been strongly pushing for the kind of fossil fuel subsidy cuts Obama proposed. Here are some of the reasons IEA gives in a report issued late last year.

· Fossil fuel subsidies worldwide totaled $409 billion in 2010, up $110 billion from the previous year

· Without reforms, the subsidies will reach $660 billion or 0.7% of world GDP by 2020

· Poor people don’t benefit from these subsidies. Only 8% of the $409 billion went to the poorest 20%.

· Phasing out fossil fuel subsidies by 2020 would decrease energy consumption by 4.1%

Obama’s tried before to make the fossil fuel cuts, and chances are they are more wish than real, much like the dramatic increases in energy efficiency spending. But the budget news is not all ‘if wishes were horses.’ It signals a general support for energy efficiency at the top of US government. Coupled with the aggressive energy efficiency policies in many states, Obama’s budget suggests a strong year ahead for the energy efficiency industry.

Elisa Wood is a long-time energy writer whose work can be found at RealEnergyWriters.com.

Opportunities for energy innovators

By Elisa Wood

February 8, 2012

For a long time ‘clean’ and ‘green’ marked the forward trend in the energy industry. Then came the quest for ‘smart’ energy. And now ‘innovation’ is the buzzword.

It’s easy to see why. As Americans, we believe our ability to innovate sets us apart in today’s international market. Sure China can manufacture computers and cell phones more quickly and cheaply, but we came up with Google and IPhones in the first place.

The energy industry offers a lot of opportunity for US innovators, given our aging grid, quest for alternatives to fossil fuels, and our glimpse into the possibilities of a virtual, democratized grid that gives consumers more control over their energy use and production.

But will energy innovation help the US job market? Or will the products be conceived here but be manufactured elsewhere?

Siemens U.S. CEO Eric Spiegel offers some interesting thinking in a recent piece: “Where the Jobs Are: Higher Technology Manufacturing.” He takes issue with the idea that US manufacturing is doomed.

Such thinking wrongly assumes that the manufactured products of the future, like those of today, will be commodities, “the kind that could be built of equal quality, with equal technology, anywhere in the world,” Spiegel wrote. Blue jeans are his example.

He said that if innovation delivers, tomorrow’s products will be more high-end and require “skilled workers, precision assembly, intensive research, and complex technology,” the kind of thing the US does well.

Many new energy products, like smart grid technologies and wind turbines, require skilled manufacturing. Another, he points out, is the high efficiency natural gas turbine that Siemens builds in North Carolina. If the US remains an innovation leader, more of these high-end manufacturing jobs will make their way here, according to Spiegel.

But he isn’t Pollyanna about the US’ economic future. Sure, high-end energy manufacturing is occurring in the US, but it’s happening elsewhere as well: Europe, Brazil and parts of Asia. They too are innovating.

So the US has no reason to be overly confident about its innovation economy. Well aware of the intense competition, the federal government, states, universities and others are trying to create a more favorable climate for innovators. Below are a few ways that’s happening. I welcome readers to add to the list in the comments section of this blog. With the exception of the NYSERDA program, all of these were announced this week.

• The US Department of Energy is offering $12 million to speed solar energy innovation from the lab to the marketplace through the federal SunShot Incubator program, with applications due April 9
• Connecticut Governor Dan Malloy said in his mid-term budget address that the state will make $250 million available for high tech innovators.
• The Massachusetts Clean Energy Center awarded $120,000 in clean energy research grants for early stage investigation into energy efficient fibers, microalgae for biofuels, and electrolytes for energy storage.
• A five-year $469 million program is underway at the New York State Energy Research and Development Authority (NYSERDA) to foster innovation in energy-related technology and market development.
• The American Chemistry Council has launched a campaign to foster a national energy strategy, and also is making known chemistry’s role in energy breakthroughs. Chemistry has helped bring about products that save 10.9 quadrillion Btus of energy annually, enough to power up to 56 million households or up to 135 million vehicles each year, cutting $85 billion in energy costs annually, according to an ACC study.
• Stay-tuned for a major energy innovation grant announcement from the University of Pittsburgh.

Elisa Wood is a long-time energy writer whose articles can be found at www.RealEnergyWriters.com.

Clean energy: How much hot air?

By Elisa Wood

February 1, 2012

NewScientist’s January 28 issue is likely to unsettle clean energy advocates – but it is worth the read.

The cover article, “Power paradox: Clean might not be green forever,” posits that even renewable energy can warm the planet, and eventually change climate, if we continue to ratchet up power production to serve our ever increasing demand for electricity.

It turns out that wind farms create heat, albeit a miniscule amount compared with fossil fuels or nuclear power, according to the article. Research from the University of Illinois in Urbana-Champaign indicates that wind turbines heat the ground nearby at night, apparently caused by the turbines sucking air downward from above.

Solar panels, too, create unintended heat. The article points to a study that indicates building a 1-TW solar power plant in California’s Mojave desert could raise temperatures in the air by 0.4 degrees Celsius. When dark solar panels cover light-colored sand, they warm the air and change temperature and wind patterns within a 300-kilometer radius, the article says.

Energy almost always creates some sort of waste heat, even in powering our cell phones and computers, says Eric Chaisson of the Harvard Smithsonian Center for Astrophysics, in the article. Electricity heats the circuits. We don’t use this heat; it dissipates into the air.

Of course, this is one of those glass half-full or half-empty issues. Heat by-products are not bad thing if we make use of them. Farmers already take advantage of the localized warming caused by wind turbines to fight frost, says the article. And while solar panels may generate heat when they cover light-colored surfaces, like sand, they cool when placed over dark surfaces, like a black roof.

More importantly, we can sometimes use recycled heat instead of fossil fuels. Residential solar panels are now available that convert waste heat from the panels into useful energy for cooling a house. And for many years we’ve captured and used waste heat in buildings and factories through combined heat and power (CHP) and recycled industrial waste heat systems.

Plenty of need exists to channel heat energy for useful purposes, including air conditioning in the US, as our aging population continues to shift southward. Globally, about 47% of the energy we consume goes toward heating/cooling, with industry as the largest single user, consuming about 43%. Homes follow at 41%, then commercial and public buildings, 9% and agriculture 6%, according to the International Energy Agency.

Should we worry that renewables generate heat? Perhaps. But the impact is small. Heat from renewables poses no immediate threat. Long term, however, waste heat from all sources could become a serious contributor to climate warming, if we continue to increase our consumption of electricity at the current rate of about two percent annually, the article says.

So clearly, it would be hard to take any argument against renewable energy seriously based on its heat output – particularly since renewables can displace fossil fuels that create far more warming. But the findings do underscore the value of exploring energy efficiency measures that make use of waste heat. We hear a lot about smart power; but stay tuned as smart heat rises up as a new priority.

Elisa Wood is a long-time energy writer whose articles can be found at www.RealEnergyWriters.com.

Much light, little heat efficiency

By Elisa Wood

January 26, 2012

Energy efficiency in the US is much light and little heat – literally. Government policy pays a great deal of attention to saving electricity, but focuses little on the thermal energy we waste.

“Policy is electricity-centric in the US. Unless you are making kilowatts, the most efficient investments are off the radar,” said Rob Thornton, president of the International District Energy Association (IDEA), who I recently interviewed while writing this year’s edition of Pennwell’s US Guide to Combined Heat and Power Companies.

We throw away a lot of the heat. Power plants, for example, create heat as a byproduct of generation. Rather than reusing this thermal energy, we often let it dissipate into the air. As a result, we waste more energy than Japan uses for everything, according to Armory Lovins, author of “Reinventing Fire: Bold Business Solutions for the New Energy Era.”

There is good news, however. Thornton and others I interviewed see a growing change in Washington’s attitude about combined heat and power (CHP), district energy, and other efficient methods of using thermal energy. Movers and shakers are becoming more aware of these energy alternatives. In addition, states are increasingly incorporating heat efficiency into clean energy portfolio standards.

“Finally, after all of these years, combined heat and power has become a hot topic in the political community,” said R. Neal Elliott, associate director for research at the American Council for an Energy-Efficient Economy.

In fact, Congress is looking to improve heat efficiency in its own backyard. The Capitol Building, which already has a district energy system, plans to incorporate an 18-MW CHP system (also called cogeneration). The system is part of long-term energy plan that attempts to reduce costs and improve the efficiency and the environmental footprint of the Capitol. The CHP system will provide 200,000 lb/hour of steam to heat Congressional buildings. The steam comes from heat produced while generating the electricity, so the plant gets a twofer from the fuel. The CHP system will reduce building energy use 7.1%, according to the first quarter 2012 issue of IDEA’s District Energy magazine.

Barry Sanders, president and chief operating officer of American DG Energy, says that the smart energy movement needs to embrace heat, not just electricity, if the US is to achieve its energy independence goals.

“A gaping hole exists in the nation’s discussion about smart energy. Most of the talk focuses on electric power, and neglects thermal applications. Yet, we use a great deal of energy to heat and cool buildings, heat and chill water, and undertake thermal-driven industrial processes,” he wrote in a recent white paper, “Smart Heat: The Next Step in Clean Energy.”

In some parts of the country, we still use a good deal of imported fuel to make heat, at a time when we are trying to shift to domestic supply, Sanders wrote. He points out that oil continues to be the primary residential heating fuel in some of our most highly populated regions, such as the Northeast, the biggest single heating oil market in the US, according to the US Department of energy. And in New York, 10,000 of the city’s largest buildings use residual oil, considered a dirty fuel – 86% of the city’s soot comes from the burning of residual oil, according to New York City’s office of Long-Term Planning and Sustainability.

“By neglecting heat in our smart energy pursuit, we continue to forfeit domestic, efficient and inexpensive fuels in favor of polluting and pricey foreign imports,” Sanders wrote.

Elisa Wood is a long-time energy writer whose free newsletter, Energy Efficiency Markets, is available at www.RealEnergyWriters.com

Three jokers in the energy deck

By Elisa Wood

January 18, 2012

This is the era of Big Oil. Could the next be the era of Big Efficiency?

A new report by the American Council for an Energy-Efficient Economy suggests the possibility. Re-invented with today’s smart energy technologies, energy efficiency could displace 40 to 60 percent of our total energy needs by the year 2050, according to The Long-Term Energy Efficiency Potential: What the Evidence Suggests.

Sound far-fetched? ACEEE says history backs its assertion. Over the last 40 years we tripled the US economy, “and three-quarters of the energy needed to fuel that growth came from an amazing variety of efficiency advances—not new energy supplies,” said the report. Energy forecasters at the time predicted we would be using far more energy than we do now. The advent of the computer, the Internet, energy savings appliances and other efficiencies saved us a lot of money and a lot of oil. In 1970, our economy required 15,900 British Thermal Units of energy to support $1 of economic activity; by 2010 we needed only 7,300 Btus.

But there is a problem in repeating this feat. Today’s energy policy begins with the premise that we need to build more power plants, more refineries and more delivery systems. We do not try to first achieve greater efficiency. In other words, we build more energy infrastructure before we try to wring more work out of each unit of energy we produce. If we instead pushed efficiency first, the US could save $400 billion per year in energy costs, amounting to about $2,600 per household, according to ACEEE.

“The U.S. would prosper more if investments in new energy were not crowding out needed investments in energy efficiency,” said John A. “Skip” Laitner, ACEEE director of economic and social analysis.

In short, we are thinking small about efficiency, when we should be thinking big.

ACEEE further warns that the deck contains at least three jokers, or unwelcome wild cards, that could threaten our hand if we fail to pursue energy efficiency. These include 1) diminishing supplies of cheap and available energy; 2) a slowing rate of energy productivity and 3) climate change.

How do we keep the jokers buried? The report says it requires “a different recipe of technology investments” than we are now making.

“The question is will we choose to make those more productive investments?” says ACEEE.

ACEEE’s full report is available here.

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

Figuring out how to go green without going crazy

By Elisa Wood
January 11, 2012

Utilities worry about a lot of things, such as keeping the lights on, earning a return for investors, and making regulators and customers happy with their service.

Now there is a new worry: How can they protect customers from what one utility refers to as “mental fatigue?”

In this particular case, the utility raises the issue as it prepares to invite homeowners and small businesses to select from among new and possibly complicated rate options made available because of smart meters. The new rates should lead to greater energy efficiency. But that won’t happen if customers become overwhelmed by their complexity, throw the bill insert into the trash, and turn to the next thing demanding their attention.

Mental fatigue is a big problem not only when it comes to homeowners, but also businesses and organizations faced with technical decisions required to green their facilities. Start with the basics. Do you pursue energy efficiency or renewable energy or both? And then, do you choose to make actual physical changes, such as installing combined heat and power systems or solar panels, or do you buy from among the more virtual products such as energy efficiency certificates or renewable energy credits (RECs). And to make it even more difficult there are now a growing number of RECs to choose from: solar RECs, zero emissions RECs, low emissions RECs and more. (See my article on US RECs in the December issue of Platts Energy Economist.)

Analysts Patrick Costello and Roshni Rathi recently prepared a report for RealEnergyWriters.com that sorts through the many options presented to companies trying to go green. The detailed analysis attempts to give direction to organizations by using examples drawn, interestingly, from information technology and telecommunication companies. These industries are known for their progressive, game-changing strategies and many have led the way in reducing energy usage and emissions in their data centers, according to Costello.

The report, “Data Center Energy Efficiency, Renewable Energy, and Carbon Offset Investment Best Practices,” points out that seven of the top ten organizations inNewsweek’s Green Rankings were IT or telecom companies with IBM, HP and Sprint Nextel in the lead. IBM won further kudos this week from the European Union, which bestowed its code of conduct recognition on 27 IBM data centers for their energy efficiency. IBM met a 2007 goal to double the IT capacity of its data centers within three years without increasing its electricity usage.

But not all data centers are run by firms the size of IBM. Many are small and don’t have the kind of resources of a large IT firm, so don’t even know where to begin when installing or purchasing energy efficiency or renewable energy. REC purchases, in particular, can confound the uninitiated. Two markets exist for RECs, one voluntary and the other regulated by states, and each state has its own way of defining what constitutes a legitimate REC. “It is really important to be careful about what you purchase and where you purchase it. People often don’t have an understanding of what they are buying,” Costello said.

They don’t understand and sometimes they wish they didn’t have to. Mental fatigue may be a new occupational hazard for the energy-consuming public.

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

US beats expectations saving energy

By Elisa Wood

January 4, 2012

Americans tend to beat themselves up over their imperfections. We eat too much, watch too much TV and owe China too much money. Despite all of our sloth, we can feel good about one area: our progress saving energy.

A report issued this week by the Institute for Electric Efficiency found that we saved enough electricity to power almost 10 million homes in 2010 (about 112 MWh). That’s 21 percent better than we did the previous year. And it looks like when 2011 data comes out, we’ll have done even better.

You’re saying, “Who me? Not possible. I forget to shut off the lights, my computer stays on all the time and my kids won’t get off the Xbox.”

Therein lies the beauty of energy efficiency today; it requires no huge effort on our part. New appliances, light bulbs, thermostats, heating and cooling systems and electric gadgets are increasingly designed with energy efficiency in mind. Those with an energy conscience don’t have to fumble in the dark and cold.

The report studied programs offered by utilities, which spent $4.8 billion in 2010 on energy efficiency, about 28 percent more than the previous year, and $6.8 billion in 2011, a 25 percent increase. Utilities are expanding their energy efficiency efforts so quickly that IEE expects them to surpass optimistic forecasts that they will dedicate $12 billion annually to efficiency by 2020.

“This steady increase in electricity savings is really impressive. And the growth in electric utility expenditures for energy efficiency is the major reason behind it,” said Lisa Wood, IEE Executive director. (No relationship to me.)

Efficiency is considered a good investment because it’s cheaper to save energy then make energy. The report pegs the cost of saving energy at 3.5 to 4.3 cents/kWh. Check your utility bill – chances are buying electricity costs you a great deal more.

Our success stems from energy efficiency resource standards, which are savings requirements set by state governments. Typically, the requirements mandate that utilities save a set percentage of energy annually. About half of the states, representing two-thirds of the US’ population, now have these standards, according to IEE.

Some states and regions are doing better than others when it comes to energy efficiency. California continues to be the top state when it comes to spending on energy efficiency, with a budget of $1.5 billion, well above second place state, New York, with $1 billion. The Pacific Northwest follows with about $559 million, and then comes Massachusetts, Florida, New Jersey, Pennsylvania, Maryland, Ohio and Arizona.

California’s effort is particularly impressive in light of its demographics. While its electric efficiency budget represents 22.6% of total U.S. utility electric efficiency budgets, it uses only 6.9 percent of US electricity and its share of the population is only 12.1 percent, according to IEE.

Several states that did not make the top 10 are quickly improving their programs. The IEE report found that five states have doubled their energy efficiency budgets for 2011. These states are Indiana, North Dakota, South Dakota, Virginia, and West Virginia. Washington, DC also doubled its budget.

For the full report, see http://www.edisonfoundation.net/iee/issueBriefs/IEE_CEE2011_FINAL.pdf

Elisa Wood is a long-time energy writer. Follow her on Facebook at Energy Efficiency Insights.