Congress Feels No Pain

By Elisa Wood

July 31, 2008

A big question often asked by energy analysts is: How high must energy prices be to motivate customers to change their behavior? We are beginning to think that the more perplexing matter is just how much do we pay before Congress reforms its behavior.

Prices are plenty high enough to encourage customers to conserve. Driving is down and pursuit of efficiency is up. Federal lawmakers, however, can’t seem to get beyond partisan maneuvering to extend efficiency incentives.

Wednesday they again came up short on votes for efficiency, solar and wind tax credits. Since existing credits expire at the end of the year, time is running out, and these industries are left with business-killing uncertainty. http://www.washingtonpost.com/wp-dyn/content/article/2008/07/30/AR2008073003020.html

The Jobs, Energy, Families & Disaster Relief Act of 2008, S. 3335, offers a range of measures aimed at encouraging several key efficiency policies. The bill extends tax credits for energy-efficient homes and appliances, and deductions for efficient commercial buildings. It creates incentives for plug-in electric cars and smart electric meters and grids.

Congress has been attempting to pass clean energy measures for months, but they keep getting leveraged against approval of other measures, this time oil drilling. Meanwhile, American households find themselves now paying 13% of pre-tax earnings on energy, according to the Alliance to Save Energy. http://www.ase.org/content/article/detail/4866

Meanwhile, states continue to move forward with new initiatives. Many are looking at utility rate decoupling to do away with financial disincentives that keep utilities from offering efficiency programs. Several states are pursuing some form of energy efficiency portfolio standard. The Northeast continues to refine “first fuel” initiatives that require utilities to secure all cost-effective efficiency as their first source of energy. And California last week adopted what it describes as the first statewide green building code, aimed at reducing energy use in new buildings by 15%.

This piecemeal state-by-state approach to US energy policy often confuses European observers. It is cumbersome. But it moves us forward nonetheless. Perhaps states are more pragmatic because consumer electricity rates are set at the state level, creating a buck-stops-here fear. As a result, governors and state legislators hear consumers say “ouch” more quickly as energy prices rise. Whatever the case, look to the states for innovations in energy efficiency policy, as federal lawmakers remain stuck in argument. http://www.dsireusa.org/NewUpdated/index.cfm?&CurrentPageID=3&EE=1&RE=0

Visit energy writer Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency markets Newsletter and podcast.

What’s Cool about Air Conditioning

By Elisa Wood

July 24, 2008

Conservationists often mock Americans for their love affair with the car. But the air conditioner appears to be a growing rival for our affection.

Twenty years ago only about one-quarter of US residences had central air conditioning; by 2005 it was up to 62%, according to the United States Census Bureau. http://www.ahrinet.org/ARI/util/showdoc.aspx?doc=703.

As a result, for a handful of hot days, we use enormous amounts of electricity. We must build expensive power plants to ensure that we have enough electricity to run the air conditioners, even though the power plants aren’t needed for the rest of the year. Our grid operators usually use the least expensive power first. But with demand so high, even the dirty and high priced plants are called upon. With everything running full tilt in the heat, the system is vulnerable to outages.

The problem reveals itself again and again each summer, most recently last weekend in New York City, where Consolidated Edison found itself delivering dry ice to keep Brooklyn customers cool after they lost power. A heat wave sent demand for electricity soaring to the second highest level on record.

I live in the southeast, so I am as enamored with the air conditioner as anyone. The good news is that the energy efficiency marketplace is spurring innovation to help avert grid problems brought on by our use of central air conditioning.

One rapidly growing innovation is demand response, which offers businesses payment to limit electricity use when the grid is under strain, reducing the likelihood of power outages. Companies might dim lights, delay expensive manufacturing processes until a time of day electric demand is lower, or engage in other energy reduction strategies. The approach is becoming so popular, hardly a week goes by without word of new major demand response deal. For example, EnergyConnect, an Oregon-based demand-response provider recently signed up Yahoo! As a result, when demand peaked July 10 on the PG&E system, Yahoo! reduced power its electricity use at its corporate headquarters and data centers in northern California by 1 MW, enough power to serve 750 homes. http://energyconnectinc.com/news/press-releases/2008/07/microfields-energy-connect-launches-relationship-with-yahoo/

On the other side of the country, in New England, demand response is also becoming increasing important. In fact, ISO New England reports that demand response makes up 10% of its resources (the majority of other resources are power plants) and the number could grow to 13% by 2011. http://www.iso-ne.com/nwsiss/nwltrs/outlook/2008/outlook_july_2008.pdf

In addition, central air conditioners are being built to better and better efficiency standards. Their efficiency has increased a minimum of 30% over the last two years, according to the Air-Conditioning, Heating, and Refrigeration Institute. This efficiency, however, can be lost if the air conditioners are not installed and maintained properly and used conservatively. To help solve this problem AHRI, utilities, energy efficiency groups and others recently created the 2 Degree Pledge http://www.2degreepledge.org/. The campaign encourages consumers to reduce thermostat temperatures two degrees in the winter and increase them by 2 degrees in the summer. The site also offers customers a zip code search of certified air conditioning technicians.

It looks like our love affair with the air conditioner isn’t going away any time soon. Eighty-nine percent of new houses completed in 2006 had central air, according to the U.S. Census Bureau. Air conditioners, like computers, cell phones and other electric gadgets are bringing about a new round of electrification in our society. They make life easier and more productive. Let’s make more of them – and more ways to use them efficiently.

Visit energy writer Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency markets Newsletter and podcast.

Mr. Pickens, What About Plug-In Hybrids?

By Elisa Wood

July 17, 2008

T. Boone Pickens deserves kudos for his attention-grabbing television campaign aimed at helping America kick the oil habit. The billionaire energy fund manager can stop the most dedicated channel surfer mid-click when he proclaims that our spending on foreign oil could soon become the largest transfer of wealth in human history.

Pickens’ plan has two parts www.pickensplan.com. The first calls for more use of wind power. No surprise there. Few forward-thinking energy plans do not put wind generation front and center.

But we’re stumped by the second part of his plan, which is that we use the wind power to replace natural gas-fired power plants and then use the left over natural gas for cars. On the surface the equation seems to make sense: it cuts back on our use of gasoline. But scratch a little, and Pickens’ idea doesn’t seem to add up.

Consider what has happened to the power generation industry this decade. We have seen a proliferation of new natural gas-fired plants because gas is a relatively clean fuel, and the plants can be built quickly and easily. As the nation moves toward regulating carbon dioxide emissions, public policy (intentionally or not) encourages even more of their construction. This is because gas-fired plants do not emit as much carbon dioxide as the coal-fired plants that provide about half of our electric power.

Unfortunately, as we’ve built more gas-fired plants, demand for natural gas has increased and its costs have skyrocketed. Gas prices are largely blamed for the tripling of electricity rates over the last eight years in places like New England.

The Pickens plan wants to replace one expensive fuel with another to power our cars.

Given this reality, wouldn’t the Pickens plan make more sense if it pushed plug-in hybrid electric cars? www.pluginpartners.org Plug-in cars appear to be a natural companion to wind power. Presumably car owners would plug their vehicles in at night to recharge. Evening is typically a windy time, so turbines would whir, pushing power into the grid to feed the cars. We won’t run out of wind as we could natural gas, and it is essentially a free fuel. On top of that, plug-ins are nearing commercial operation and do not require massive building of fueling stations, as natural gas-fired vehicles do.

Obviously, our electric grid will never be powered only by wind. But it seems we could avoid much of the massive transfer of wealth Mr. Pickens warns about by trying to push the wind/plug-in car relationship. So, Mr. Pickens, what about the plug-in hybrid?

Visit energy writer Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency markets Newsletter and podcast

And Now for Some Good Economic News: EE Workers Needed

By Elisa Wood
July 10, 2008

With energy demand high and supply tight, the only thing in abundance these days is uncertainty. So says a recent Standard & Poor’s report: “The Credit Impact of Rising Energy Costs on Industry Sectors.”

“Whether energy production can keep up with demand growth is a major question,” says the credit rating agency. “Where the energy will go is easy to estimate. The harder question is where will it come from?” Even if oil prices dip in the short-term, S&P says they are “cycling around a rising trend.”

High energy prices and uncertainty cripple business growth. The auto industry is expected to end 2008 with the lowest sales in 15 years, says the report. The airline industry is squeezed between consumers demanding cut-rate fares and fuel prices that now gobble up as much as 40% of operating expenses. Meanwhile, stores and other retail businesses find customers lack discretionary cash for merchandise.

But buried deeper in the report is some good news, and it is about capital goods aimed at improving efficiency. Specifically, S&P tells the tale of Sweden-based Alfa Laval www.alfalaval.com, a leading global supplier of heat exchanges, pumps, valves and other equipment aimed at improving efficiency in industrial processes.  Company sales are up 50% since 2005. The company’s credit rating has improved because of the demand for energy efficiency products — Alfa Laval saw a one-notch upgrade in April.  S&P says prospects are good for the company because it is stepping up product development and increasing capacity to capitalize on the strong market in the efficiency sector.

For companies like Alfa Laval, the challenge is to “maintain and improve market share, while at the same time keeping control of costs and avoiding over-expansion,” S&P says. The credit-rating agency doesn’t say this, but inherent in this strategy is attracting workers to support expansion.

We’ve heard from industry insiders who say a shortage of workers is becoming a very real problem in the energy efficiency arena. We suspect we’ll hear more talk about this need in the near future as states and utilities ramp up spending on efficiency programs.

Compared with much of today’s bad economic news, worker demand is a good problem to have. But it is a problem nonetheless, and one that requires immediate attention if the industry is to fulfill its mandate as the near-term solution to our energy supply and demand woes.

The solar industry has made clear its need for installers, and policymakers have responded with training programs at community colleges.  What does the efficiency industry need to do to attract the same attention? And will policymakers listen? We welcome your thoughts.

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

How Power Hungry Is Home Entertainment?

By Patrick Costello

Plasma televisions, video game consoles, and cable set-top boxes find their way into more and more American homes thanks to lower prices and aggressive marketing. While this trend makes for better home entertainment, it strikes a blow to energy conservation efforts.

For example, even when just in standby mode, a plasma television consumes nearly $160 of energy/year and a game console over $25/year, says an article in Good magazine. A study by Australian consumer group Choice found that plasma televisions use four times more energy than older cathode ray tube televisions. An Xbox 360 game console could cost $200/year to operate, and its competitor Playstation 3 as much as $250/year. (Meanwhile, Nintendo Wii fans can take heart that their box costs only $25/year.)

The two studies make various assumptions about usage, some more credible than others. No one, for example, would leave a game console on 24/7/365. And energy costs were on the high side in the Choice study at 15 cents/kWh. Still the studies make it very clear that both plasma televisions and game consoles are power hungry.

The energy consumption of another common home entertainment device, the cable set-top box also often goes unnoticed. A 2007 Natural Resources Defense Council (NRDC) study found that even the most basic box consumes more energy annually than a washing machine. And more and more households are likely to install such cable boxes very soon. Analog broadcasting will be cut off in 2009, rendering obsolete any television without a built-in digital tuner. Thus, millions of Americans will soon need to buy or rent digital-to-analog converter boxes. This is expected to spur the purchase of nearly 22 million cable set-top boxes. Many households are likely to upgrade to models offering integrated digital video recorders and high definition capabilities. The study found that advanced models offering both options consume more than 25% more energy than desktop computers and cost more than $30/year to operate. Interestingly, the study also said that the set-top boxes consume pretty much the same amount of energy whether they are on or off.

It is important to acknowledge the energy consumption of these home entertainment electronics and identify how they will affect household efforts to become more efficient. The set-top box is the least energy intensive of the three types of electronics addressed here, and the EPA estimates that these devices alone will consume more than 3 billion kWh/year and add $270 million/year to American electric bills.

While entertainment systems may not be as energy intensive as heating and cooling, we cannot ignore their impact as more and more of these devices make their way into our homes.

Visit www.realenergywriters.com to pick up the free Energy Efficiency Markets newsletter and podcast.