What does the US/China agreement mean for efficiency?

By Elisa Wood

November 19, 2009

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

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

How will this change the efficiency industry?

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

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

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

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

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

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

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

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

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

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

Efficiency left out of cap and trade

By Elisa Wood

October 15, 2009

Waxman/Markey’s climate change bill is about 1,400 pages.  Its length and complexity, alone, provides fuel for its opponents.  Would it stand a better chance of enactment if it encompassed less?

For example, would it have been wiser if Congress pursued cap and trade one year and a renewable energy standard another? I’ve asked this question a lot during interviews the past few weeks, and received a range of responses. But what I found most enlightening, at least from an energy efficiency perspective, was a webinar offered by Bill Prindle, vice president at ICF International. http://www.icfi.com/markets/energy/webinar/webinar-archive.asp.

Here’s what I took away: Energy efficiency helps the carbon reduction cause. But the carbon reduction cause doesn’t do much for efficiency.

Most versions of cap and trade programs now on the table do not recognize the value of demand-side resources in reducing emissions.  Credit goes to emissions reductions at the power plant level, not at the retail customer level. So while my new, efficient heat pump will cut my energy use and therefore carbon emissions, this action is not acknowledged anywhere in a cap and trade system. Cap and trade offers no financial reward to the consumer or business that invests in energy efficiency measures.

In a perfect world, lawmakers would rethink cap and trade to encompass demand-side efficiency. But it appears that political and technical obstructions make that difficult. This is bad news – and downright odd – given that energy efficiency is widely acknowledged to be the cheapest way to cut carbon dioxide emissions.

So what’s to be done?

Prindle describes the need to enact polices that complement cap and trade. This is where a national renewable energy standard comes into play. Within Waxman/Markey, the standard requires not only a certain percentage of renewables in a state’s energy mix, but also certain amount of efficiency – a so-called energy efficiency portfolio standard. With a standard in place, efficiency increases, energy use declines, and fewer greenhouse gases are emitted – without any cap and trade influence. As is often the case, the states have already jumped out in front of federal policy:  19 now have such energy efficiency portfolio standards.

A bill with just a cap and trade scheme, one without a portfolio standard, eliminates a powerful way to reduce carbon emissions. So perhaps the 1,400 pages of Waxman/Market are justified. The verdict, of course, is out on whether or not Congress will pass an energy bill this year. Much has been made of the complexity and length of health care reform legislation. Expect the same when, and if, the energy bill comes under public scrutiny. We’ll see what pages make it beyond the cutting room floor.

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

Now where did I put that energy efficiency?

By Elisa Wood

September 17, 2009

Sort of like my car keys, “the forgotten memory doesn’t disappear – we just can’t remember where we put it.” So says Jonah Lehrer, one of my favorite bloggers and contributing editor at Wired.

What’s memory got to do with electric power? It appears we keep misplacing energy efficiency. When critics – even sometimes supporters – talk about reducing greenhouse gases, they forget to calculate whether or not energy efficiency can lower the price tag.

Could it be, then, that carbon dioxide reductions will cost society less than we forecast?

The American Council for an Energy Efficient Economy contends that is the case. “Much of the debate on federal cap and trade legislation is focusing on the cost of compliance.  Prior studies either do not account for energy efficiency provisions in the legislation, or due to a shortage of time and other resources, address only a few of the energy efficiency provisions,” says ACEEE in a new report, “Energy Efficiency in the American Clean Energy and Security Act of 2009: Impacts of Current Provisions and Opportunities to Enhance the Legislation.”

The findings run contrary to conventional thinking about climate change costs.  The climate bill passed by the US House in June won’t cost us money; it will save us money, according to ACEEE.

The legislation would require that 20% of our energy supply come from green energy — 8% of the 20% can come specifically from energy efficiency. It also ramps up buildings codes and appliance standards, and takes other action to decrease energy use.

These efficiency measures would save the average household $220 by 2020 and $486 by 2030 – more than cap and trade costs.

Even more savings are to be had – as much as $832 per household by 2030 — if the Senate makes some changes in the bill, according to ACEEE. Specifically, the organization says Congress should:

• Mandate that 10% of our energy come from efficiency
• Direct one-third of electric utility allowances to energy efficiency
• Extend to 2030 the 9.5% allowance revenue allotted to state energy and environmental development funds.

Exactly how much energy would we save?  If the Senate makes these changes to the bill, we’ll save as much energy by 2030 as US households now consume in a year, says ACEEE. The energy savings are equivalent to what 512 power plants produce at their peak production. A big number, a kind of elephant in the room, one would think. But we’ll see if it gets lost as Congress works on climate change in the coming months.

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

Where is energy’s cell phone?

By Elisa Wood

June 4, 2009

Electric industry restructuring often gets criticized for failing to deliver the goods. It was supposed to not only drive down rates, but also spark innovative new technologies.  After all, deregulation of the telecommunications industry gave us the cell phone. Where is energy’s nifty gadget?

Initiated more than a decade ago, electric deregulation has produced no such consumer hit. But it has led to innovation, albeit more complex and less tangible than the cell phone. For an example, listen to Lisa Cohn’s podcast: “How states can best use energy efficiency stimulus money” with Mark Sinclair of the Clean Energy States Alliance (CESA) http://www.realwriters.net/rew/rtlnkmr.htm.

Sinclair describes how a dozen or more states have served as laboratories over the last decade, laying the groundwork for today’s federal push to advance clean energy as a jobs builder. What got these states started? It turns out it was restructuring. CESA’s founder, Lew Milford, was an early advocate of restructuring and instrumental in the creation of rules in key states. He saw restructuring as an opportunity to open the door for development of clean energy, then largely a fringe resource. Milford pushed for a special utility rate structure, a systems benefit charge, that would channel funds into laboratory-like exploration at the state level.

Much of clean energy’s progress in the marketplace is due to these state programs:  “People tend to think somehow that these projects have appeared magically and that’s not the case… states have spent a significant amount of money putting dollars on the ground and then leveraging private capital to make those projects,” Milford says in an interview with E&E TV http://www.cleanenergystates.org/press/Milford_OnPoint-1.14.09_text.pdf.

Those states now offer specific templates for building clean energy economies that others can follow as they receive federal stimulus dollars. The clean energy states have tested rebates, grants and loans to stimulate markets. They’ve seen where poor regulation slows installations. They know what attracts clean energy companies and what drives them away.

By studying the work of experienced states, those new to clean energy can bypass years of experimentation.  So there lies an example of innovation from electric industry restructuring. Restructuring provided a mechanism for states to experiment with clean energy. Now, these pioneering efforts will save a lot of time and money for the states that are new to clean energy and find themselves with little time to ramp up the industry and attract jobs. True, electric restructuring did not produce a gadget that you can hold in your hand; instead it produced a clean energy roadmap, one that by many accounts could help create a lot of economic activity at time when it is most needed.

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

Businesses like efficiency, but hold back

By Elisa Wood

May 7, 2009

“It’s the economy, stupid,” the famous line of political strategist James Carville, seems even more relevant now than when he uttered it during Clinton’s 1992 campaign. A recent survey on executives’ attitudes shows that energy efficiency hasn’t escaped the shadow of recession, despite strong support for the resource.

Johnson Controls and the International Facility Management Association asked 1,400 business executives in April what they think of energy efficiency. They like it. A lot.

Seventy one percent said they pay more attention to energy efficiency than they did a year ago; 51 percent see energy management as extremely or very important; 45 percent plan to use efficiency as their top strategy to reduce carbon dioxide emissions.

Yet, the survey also found businesses holding back on making investments. The problem?  “Economic and regulatory uncertainty,” says C. David Myers, president of Johnson Controls Building Efficiency division, in a May 6 news release.

Energy prices have dropped significantly over the last year. But businesses apparently do not feel confident enough about the future to prepare to take the savings and invest it in energy efficiency — in preparation for the next jump in energy prices. In fact, the survey revealed a likely 10 percent decrease from last year in the use of facility capital budgets to fund energy efficiency projects. It also showed a six percent drop in the number of businesses planning to use their operation budgets to invest in efficiency.

Not surprising, nearly half of those interviewed cited lack of capital as a barrier to pursuing efficiency. However, if Washington plays it right, efficiency investment should rebound once the economy does. Business leaders believe incentives from utilities or government will drive the investment, according to the survey.  Eighty-five percent expect either legislation mandating energy efficiency or carbon reduction within two years.

Businesses are understandably hesitant to risk capital until they know the specifics about an energy efficiency portfolio standard and carbon requirements now under debate in Congress. Perhaps the slogan for this point in history should be: “It’s about the economy, stupid…and Washington.”

More information on the survey is available at: http://www.johnsoncontrols.com/.

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

Even rebels like efficiency

By Elisa Wood

April 23, 2009

Clean energy advocates favor a federal requirement that a certain amount of our electricity come from green sources, a concept known as a portfolio standard. No year in history has offered more promise for the policy. President Obama is pushing for at least 10% of our electricity to come from renewable sources by 2012, and 25% by 2025. Congressional Democrats have obliged by putting several proposals on the table.

But one corner of the nation has never liked the idea of national renewable energy requirements: the Southeast. Cheap nuclear and coal-fired generation dominates the region’s power supply, and its officials fear that renewable energy will drive up electricity prices and drive away manufacturers. (See my upcoming article in the May/June issue of Renewable Energy World magazine.)

Enter energy efficiency, an idea that seems palatable to the Southeast, and could serve as a negotiating point to bring southern utilities and lawmakers around to the idea of a national standard. If enough of the standard can be met through efficiency, the Southeast is more likely to accept it, since efficiency is seen as a way to cut energy costs, rather than raise them.

Indeed, the leading portfolio standard on the table contains an efficiency component. Authored by Rep. Henry Waxman, a California Democrat, and Ed Markey, a Massachusetts Democrat, the bill calls for utilities to reduce electricity demand 15% and natural gas demand 10% by 2020. The proposal creates tremendous energy savings — more than the entire current energy use of the state of California — according to the American Council for an Energy-Efficient Economy. http://www.aceee.org/press/0904analysis.htm

The push for such legislation comes as electricity prices fall, not typically a good time to convince the American public of efficiency’s merits. But watch out. Prices may not stay low for long, according to Calvert Investments. In a briefing last week, the investment firm said it sees an economic recovery beginning in 2010 that brings with it higher prices and an improved position for clean energy technologies. Greater use of efficiency may look like a better and better option for those–like the southeastern states–struggling to keep electricity prices low.

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

Federal energy stimulus: The check is in the mail

By Elisa Wood

March 26, 2009

Energy efficiency companies waiting for federal stimulus money probably feel like they are being told, “The check is in the mail.” It is supposed to arrive, but when?

The federal government will channel a large pot of the money through state agencies, so it is wise to keep an eye on announcements by governors and state energy offices. States must apply by May 12 for $3.1 billion in what is known as the State Energy Plan funds under the American Recovery and Reinvestment Act. The money will go toward rebates to consumers for home energy audits or other energy saving improvements; development of renewable energy projects; promotion of Energy Star products; efficiency upgrades for state and local government buildings; and other efforts initiated by the states.

To secure this money, state governors must write letters to the US Department of Energy explaining spending plans and providing assurance that they will meet federal stipulations. In many cases, the states will pass along money to utilities, which will then hire energy efficiency installers, auditors and others to do the actual work. To see how much money your state will receive and your governor’s letter when it is sent, go to http://www.energy.gov/recovery. Scroll down and click on the map at the bottom of the page.

The DOE recovery site also links to information on funds for weatherization, advanced battery manufacturing, environmental management, research and development, smart grid and other energy programs.

Some states are moving ahead more quickly than others in making public their plans for use of federal money.

In Pennsylvania, Governor Edward Rendell announced this week the names of five companies that will receive $3.8 million for energy conservation improvements. In all, the state expects to receive $366 million through the State Energy Plan program.

The Massachusetts Division of Energy Resources let businesses and public agencies know that funds may be available soon to help them purchase green vehicles. The state expects to receive $5 to $15 million of a $300 million pot for alternative vehicles. To qualify, businesses and public agencies must submit letters of commitment to the state by May 18. The state will apply for the federal money by May 29.

In Connecticut, Governor Jodi Rell sent a letter to DOE explaining the state’s plans to focus on growing its existing fuel cell industry and responding to consumer demand for solar thermal and geothermal products with part of the $38.5 million Connecticut expects through the State Energy Plan program.

Two national efficiency organizations also are working to smooth the flow of stimulus money into the industry. The Alliance to Save Energy has launched an initiative to help publicly-owned utilities expand conservation programs. ASE is undertaking the effort with the American Public Power Association and the Large Public Power Council. Meanwhile, The American Council for an Energy-Efficient Economy continues to frequently update www.energytaxincentives.org, which has details on recovery act and other incentives available for consumers and businesses.

In addition, K&L Gates is tracking energy stimulus funding and recently reported several grant solicitations, including one to accelerate the market introduction and penetration of advanced electric drive vehicles. Details are available through the DOE’s Vehicle Technologies Program.

So, while the stimulus check for energy efficiency may still be “in the mail,” many hands appear to be ferrying it toward delivery.

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

Federal stimulus: Pork or real energy policy?

By Elisa Wood

February 5, 2009

Two recent gestures by President Obama indicate that he is serious about clean energy and will pursue it differently than any of his predecessors.

First, he made history in using his inaugural speech to promote renewable energy – something never done before by a US President, according to Department of Energy’s EERE News Network. http://www.eere.energy.gov/

Second, on February 5 Obama drilled down to the nitty-gritty of energy efficiency policy. In a presidential memorandum, he called for the DOE to establish higher standards for common household appliances.

“We’ll save through these simple steps over the next thirty years the amount of energy produced over a two-year period by all the coal-fired power plants in America,” he said in remarks at the DOE.

The American Council for an Energy-Efficient Economy says the memorandum marks the first time Obama has made efficiency standards a top priority in his domestic energy policy. Obama seeks legal deadlines to set standards, “an important break from his predecessors who fell behind on updates for some 22 standards,” according to ACEEE. http://www.aceee.org/

Both of these gestures were important, and indicate he will fulfill – or at least try – his energy campaign promises. But the true test of his ability to revamp US energy policy comes as he tries to sell the $50 billion for energy in the federal stimulus package. Critics are slamming some of the provisions, such as plans to upgrade federal buildings and improve the federal transportation fleet.

“They call it pork,” Obama said. “You know the truth. It will not only save the government significant money over time, it will not only create jobs manufacturing those vehicles, it will set a standard for private industry to match. And so when you hear these attacks deriding something of such obvious importance as this, you have to ask yourself – is it any wonder we haven’t had a real energy policy in this country?”

Obama – and the clean energy industry – clearly have an education effort ahead in a world where pork and fuel efficient vehicles are seen as one in the same.

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

Energy Efficiency Markets chooses its favorites of 2008

By Reid Smith
January 8, 2009

We appreciate the entries submitted for Energy Efficiency Markets’ first annual ‘best of’ contest. It is difficult to select winners in an industry that is burgeoning with innovation. We hope you find our selections as intriguing as we did. Please continue to email us (realenergywriters@comcast.net) about interesting projects – we’d like to highlight them periodically in our weekly newsletter:

1. Best appliance: Energy orb

Remember the mood rings we wore as kids? The stone changed color depending on how we felt. Here is a variation on the theme: an orb that signals the energy mood of a building, glowing angry red when energy use is high and green when consumption is low. A kind of smart meter, this crystal ball helped Oberlin College students cut back by 56% on energy use in their dorms. What’s interesting is that the kids don’t pay energy bills – still they responded to the magic ball. http://features.csmonitor.com/innovation/2008/12/18/power-meters-help-homeowners-track-and-cut-their-energy-use/

2. Most innovative public policy: Connecticut

Connecticut tends toward gutsy moves when it comes to energy policy. The state is embracing innovation to reduce its electric rates, which hover around the second or third highest in the nation. We like Connecticut’s energy efficiency certificate or “white tag” trading program, which takes a page from the successful renewable energy certificate market now in several states. Companies, colleges, hospitals, factories and others earn the tags or credits for their energy reductions. They then sell credits to utilities or others who need them to meet state energy efficiency mandates. http://www.incisivemedia.com/energyrisk/Environmental_Risk/PDFs/Spring2008/7_EnvRisk_EnergyEfficiency.pdf

3. ESCO: CMC Energy Services

The health of any industry depends on truth in advertising. If the efficiency industry overstates what it can achieve, consumers will quickly lose faith. That is why we like the honesty in CMC Energy Services’ Home Energy Tune-uP®. The company calls it a pay-as-you-save residential energy audit program; it identifies the group of improvements in the home that will truly pay for themselves when financed. The whole house audit takes into account how various improvements interact and change your payback. If you install insulation, and you also get a new heat pump, less scrupulous auditors will calculate insulation savings based on your old, inefficient heat pump. That overstates your savings. CMC adjusts its audit to take into account the new heat pump. Consumers get a realistic picture. CMC also uses home inspectors to do the audits, rather than contractors who may have a natural conflict of interest. http://www.hometuneup.com/

4. Demand-response: Energy Curtailment Specialists

The DR market has several emerging players that deserve credit for growing use of the resource. We had a hard time deciding who to choose. We finally selected Energy Curtailment Specialists because of its intelligently packaged “Power Pay.” See http://www.ecsgrid.com for the company’s plain-talk pitch, one that avoids most of the jargon peculiar to demand response programs. FAO Schwarz and the Hyatt Regency are among recent converts to the program.

5. Transportation: Google

Google made a product that is so popular its name has become a commonly used verb. Now the company turns its attention to greening the world. Among other things, Google has a fleet of plug-in hybrid electric vehicles (PHEV) at its Mountain View headquarters for employee use. Following a seven-week experiment, Google announced some impressive performance from its fleet. The PHEVs averaged as much as 93 MPG average across all trips, and 115 MPG on city trips. http://www.google.org/recharge/. Will we eventually “PHEV” instead of drive?

6. Green building and construction: Pairing of green energy and efficiency

Here we honor not so much a company but a concept: the efforts by renewable energy companies to get customers to pursue all cost-effective efficiency before buying green energy. For example, California-based3Degrees, which markets renewable energy certificates (RECs) and carbon offsets, starts by analyzing a building’s carbon footprint. If it finds strong efficiency potential, 3Degress contracts with a third party to take on the project. http://www.3degreesinc.com. Chevron Energy Services offers a good example of successfully pairing solar and efficiency at three campuses of Contra Costa Community College. The $35.2 million Northern California project includes a 3.2-MW solar power generation system, efficient lighting and energy management systems, efficient heating, ventilation and air-conditioning, and high-voltage electrical system replacements. http://www.chevron.com/News/Press/release/?id=2008-01-31

Visit Reid Smith at www.realenergywriters.com and pick up his free Energy Efficiency Markets podcast and newsletter.

Will support for efficiency hold in 2009?

By Elisa Wood
December 18, 2008

The stars are aligned to make 2009 a good year for energy efficiency — or at least, most of the stars.

President-Elect Barack Obama has assembled an energy team that supports clean technologies. Most notably, Obama named Steven Chu as energy secretary on December 15. Chu is a Nobel Prize winner and director of the Lawrence Berkeley National Laboratory, a leader in bringing energy efficiency technologies to market, such as the compact fluorescent light bulb. http://www.lbl.gov/

Obama also is in the process of putting together an economic recovery package that places high priority on energy, including investment in efficiency. The goal is to quickly create jobs by giving ‘shovel-ready’ projects a boost in the sluggish economy. Efficiency projects more easily qualify as ‘shovel-ready’ — set for quick development – than most energy undertakings. Efficiency measures rarely require the kind of time-consuming permitting, engineering and financing of power plant or transmission construction.

So what star is out of place in the sky? The star that governs oil prices. It costs far less to fill up the gas tank now than it did last summer. That is a good thing. The problem is that the US consumer tends to be short-sighted. If gasoline is cheap today, who cares about tomorrow? Energy efficiency falls out of favor.

Joe Loper, senior vice president for the Alliance to Save Energy, warned about this “cycle of complacency” in testimony before the Senate Committee on Energy and Natural Resources December 10. Loper recommended $15 billion in economic stimulus money for energy efficiency to keep the nation’s energy goals on track. Investing in efficiency will not only create jobs, but also will foster continued use of technologies that have already proven their worth. “A silent partner” in meeting the nation’s energy needs, efficiency has reduced America’s energy bill and related carbon emissions by 50% since 1973, he said.

Obama, himself, is worried that declining gas prices may erode support for his aggressive energy agenda. He told Time magazine that lower oil prices make “the politics of it tougher than it might have been six months ago.” http://change.gov/newsroom/entry/the_president-elect_on_his_goals_and_agenda_in_a_time_of_crisis/

We’ll see in the next several weeks if support continues for an overhaul of the nation’s energy portfolio, or if the public follows the wrong star in the sky.

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