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.

How efficiency makes solar affordable

By Reid Smith

October 27, 2010

When solar energy companies think about how to reduce the cost of their product, typically a lot of time and money goes toward increasing the efficiency of solar panels and their manufacturing process. Reducing the production cost decreases the final cost the consumer will have to pay.

However, few solar companies start by making the building more energy-efficient, even though this effort can significantly drop consumer costs. Energy efficiency lowers the demand for energy in a building. If a building needs less energy, it requires fewer solar panels, which drives down the cost of the installation for the building owner.

But you may be wondering, how significant are the energy savings in a building after energy efficiency upgrades?

Buildings are large energy consumers, accounting for 40 percent of US energy consumption, according to the US Department of Energy. Homes make up 22 percent.

Not only are buildings big energy users, but they are also big energy wasters. In fact, 40% of the energy we use in buildings is wasted due to poor insulation and air leaks.

So the first thing to do is improve the building envelope. After that, it’s important to consider how solar energy will be used in the building and what kind of installation is most efficient. People tend toward solar photovoltaic panels because PV has become the image of solar energy, said Rick Reed, president of Solaray Corporation, at the Solar Power International conference in Los Angeles earlier this month.

But solar PV is typically only about 20 percent efficient, whereas solar thermal is about 90 percent efficient. “Many people are heating their water from solar PV instead of using solar hot water systems,” he said. “This doesn’t make any sense.”

Solar thermal systems use much simpler, reliable technology and are much cheaper to install than PV systems. Still, they are largely an after-thought in the US.

For consumers, the cost of solar thermal and energy efficiency upgrades are typically much less than solar PV installations. However, most consumers interested in upgrading their homes to solar do not realize how much energy their houses could save before installing solar PV. And historically their solar installers have not told them either. Why would a solar PV installer want to promote energy efficiency if it would translate to selling fewer panels?

Thankfully, that’s changing, partly because new financing options focus on reducing the overall cost of solar for the consumer, rather than on simply selling them solar panels. As a result, more solar companies are beginning to move into the energy efficiency business. SolarCity is one example of a company that now combines energy efficiency services with solar installation.

This has huge implications. Retrofitting 40 percent of the residential and commercial building stock in the US would create over 625,000 full-time jobs over a decade, spark $500 billion in new investments, and generate as much as $64 billion a year in cost savings for ratepayers, according to a September report by The Center for American Progress.

So if you have been scared away by daunting up-front costs of solar, now may be the perfect time to get a home energy audit and begin discussing solar financing options available in your area. You may be surprised what you find.

To read the full report by The Center for American Progress, Efficiency Works:Creating Good Jobs and New Markets Through Energy Efficiency, go to http://www.americanprogress.org/issues/2010/08/pdf/good_jobs_new_markets.pdf

Reid Smith is the editor of Energy Efficiency Markets.

What political party do your electrons support?

By Elisa Wood

October 20, 2010

Lucky for Americans, information technology doesn’t appear to be owned by any one political party. If it were, Congress would still be squabbling over whether or not to support the Internet and you’d be reading this on paper rather than online.

Not so for energy. Generally speaking, Republicans tend to be pro-fossil fuel, while Democrats typically come down on the side of green energy. This feud – which is a key reason Congress cannot pass an energy bill — confuses me. Does a coal-fired plant represent some conservative ideal not found in wind power? What’s liberal about the squiggly light bulb illuminating my desk?

How can electrons be partisan?

Okay, I know I’m over-generalizing and bound to attract admonishments from readers who will point out where liberals are sometimes pro-brown and conservatives pro-green. But I think we’ve seen the debate come down along party lines enough in the United States that my assumption is fair.

That’s why it was intriguing to see the recent report “Pro-Partisan Power,” a combined effort of think tanks on both sides of the political spectrum: the Brookings Institution, Breakthrough Institute and the American Enterprise Institute.

In the words of the report authors:

Today, few issues in American political life are as polarized as energy policy, with both left and right entrenched in old worldviews that no longer make sense. For the better part of two decades, much of the right has speculated darkly about global warming as a United Nations-inspired conspiracy to destroy American sovereignty, all while passing off chants of “drill, baby, drill” as real energy policy. During the same period much of the left has oscillated incoherently between exhortations that avoiding the end of the world demands shared sacrifice, and contradictory assertions that today’s renewable energy and efficiency technologies can eliminate fossil fuels at no significant cost. All the while, America’s dependence on fossil fuels continues unabated and political gridlock deepens, preventing real progress towards a safer, cleaner, more secure energy system. The extremes have so dominated mainstream thinking on energy that it is easy to forget how much reasonable liberals and conservatives can actually agree on…”

The report goes on two make four key recommendations: 1) Invest in energy science and education; 2) Overhaul the energy innovation system; 3) Reform energy subsidies and use military procurement and competitive deployment incentives to drive price declines; 4) Internalize the cost of energy modernization and ensure investments do not add to the [federal] deficit.

The authors say this can be done at a cost of $25 billion, which can be recovered through small fees on imported oil, electric utility surcharges, a very low price on carbon or other means that will not cause great pain to any one group.

You may or may not agree with the recommendations. But it is hard not to be impressed with how the authors suggest we portray energy – not as a battle between left or right, but as a technology play, as innovation. I suspect this is what Rhone Resch, president and CEO of the Solar Energy Industries Association, meant when he said that solar energy is an industry, not an issue, as reported recently inRenewable Energy World North America Magazine.

Americans left or right can’t argue with innovation. It has brought us things we all like, our cell phones, our downloadable music, air conditioning, meals we can heat in minutes, and voices that tell us which way to drive our cars so that we don’t get lost — which all somehow have managed to remain free of any partisan taint.

The full report is available here:http://thebreakthrough.org/blog/2010/10/postpartisan_power.shtml

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

Are your electric rates high? Here’s the good news

By Elisa Wood

October 13, 2010

If your electric rates are high, there is a silver lining. Chances are you live in a state that offers some of the greatest innovations and incentives for energy efficiency – or soon will. By taking advantage of these programs, you can reduce your bill.

Take a look at the chart below that I put together after reading the American Council for an Energy-Efficient Economy’s “2010 State Energy Efficiency Scorecard.” I list the ten most expensive states for household electricity and note where each stands in ACEEE’s scorecard, a report that ranks states from best to worst for their energy efficiency efforts.

Not surprising, seven of the most expensive states also are launching the most ambitious energy efficiency efforts. Several of these states are in the pricey Northeast, now one of the best markets for the energy efficiency industry.

It would be nice if these states would just reduce their electric rates, but for a variety of reasons that is unlikely to occur, at least in any dramatic way. The pricey states are often plagued by old energy infrastructure, transmission line congestion, and lack of indigenous fossil fuels, all factors that drive up energy costs.

As a result, policymakers in these states now talk not so much about reducing electric rates, but about reducing electric bills. If you’re a New Yorker, your electric rate may stay at 19 cents/kWh, but your monthly bill will drop if your home is better insulated or your refrigerator new and efficient. This is why the pricey states are so motivated to achieve energy savings.

The high-cost energy states may be among the most aggressive when it comes to energy efficiency, but they are not alone in their pursuit. The latest ACEEE scorecard comes at a time when states in general – not the federal government – are leading the way in bringing unprecedented energy efficiency incentives to consumers. Congress has contemplated some policy innovations over the last two years to spur energy savings, but has been unable to pass an energy bill. Steven Nadel, ACEEE executive director, says that “the overall story here is one of states getting done what Congress has so far failed to do.”

ACEEE points out that the US – thanks to the states – has never experienced an energy efficiency boom as large as this one. During the last efficiency boom (a boomlet really) in 1993, ratepayer-funded efficiency programs amounted to $1.8 billion, before slacking off to about $900 million in 1998. By 2009, the number was $4.3 billion. ACEEE expects the state programs to keep growing, possibly reaching $12.4 billion by 2020. And this does not include the one-time injection of $30 billion in federal stimulus money, the largest single investment in energy efficiency in US history.

ACEEE’s full report is available for free download here:http://www.aceee.org/research-report/e107

Comparison of electric rates and ACEEE state ranking

	Ten states with the highest residential electric rates *	ACEEE ranking for energy efficiency
	Connecticut	8
	New York	4
	New Jersey	12
	Rhode Island	7
	New Hampshire	22
	Vermont	5
	California	1
	Maine	10
	Maryland	16
10.	Massachusetts	2

*Source: Energy Information Administration, June 2010

Note: The chart above ranks only the lower 48 states. Because of their remote locations, Hawaii and Alaska face unusual energy challenges.

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

Energy efficiency: Cure for mortgage meltdown?

By Elisa Wood

October 7, 2010

My first reaction was that the Alliance to Save Energy was stretching a bit by titling its October 6 talk: “Is energy efficiency the key to recovery from the recession?”

But after hearing David Goldstein’s presentation, I must admit I’m thinking about energy efficiency in a whole different way. Goldstein, author of the book, “Invisible Energy: Strategies to Rescue the Economy and Save the Planet” crunched the numbers to show the enormous economic relief efficiency could bring to both the average homeowner and the US government.

He went as far as to suggest we may have averted the mortgage meltdown had we instituted more efficiency over the last few decades. Sound extreme? Consider this.

The average suburban home now costs $175,000. When banks evaluate a homeowner’s ability to pay a mortgage, they look only at that figure. They do not consider the cost to pay utilities, which adds another $75,000 over the life of the mortgage. Nor do they consider the cost to drive back and forth from work to the house, another $300,000.

These energy costs have gone up over the years, while worker income has stagnated since 1973. When energy costs are added to mortgage costs, suddenly homeowners are paying as much as 62% of their gross income to live in their homes. It is not surprising that the lending system went wrong, he said, given that banks looked only at the $175,000 commitment and not the accompanying $375,000.

“Would you invest in a mortgage like that? That is what we are doing every day,” Goldstein added.

How much of a difference can energy efficiency make? Goldstein calculated that green building and transportation costs could chop that $375,000 by half.

Because efficiency reduces utility and transportation costs, it frees up consumer spending power. As a result it could ease several of the nation’s other financial woes, among them our low savings rate, weak consumer spending, trade deficit, inflation risk and joblessness. Efficiency also could take a big chunk out of the federal deficit, given that government is the largest energy user in the nation, he said.

“This recession did not just occur randomly. It is largely a predicted result of fundamental problems,” he said. “Weak energy efficiency policy is at the heart of many of them and is related to all of them.”

How much energy can we save through efficiency measures? More than we think, Goldstein said. Conventional studies indicate the US economy can wring out about 30% savings, but these are cautious estimates, biased toward the low end since no one ever loses their job for underestimating energy efficiency potential. But they might if they over-estimate and as a result the lights go out somewhere because we built too few power plants, he said.

Goldstein suggested that instead of relying on forecasts of energy efficiency potential, we set goals: “We best discover the size of the resource by going out and acquiring it.”

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