Category Archives: Renewable Energy

World Economic Forum: Catalyzing Retrofit Finance and Investing in Commercial Real Estate

CitySkyline

 This report  is the product of the Retrofit Finance & Investing Project, a cross-industry, multi-stakeholder initiative of the World Economic Forum launched in 2010.

The report equips policy-makers and industry leaders with the information and tools needed to build and scale retrofit markets around the world. It highlights the business potential waiting to be tapped by multiple industries and underscores the acute importance for government leaders to take action now: to ensure a resource-secure, low-carbon future and to benefit from the economic and job creation potential that retrofitting promises. It calls to action the range of existing and potential stakeholders to fully and jointly participate in growing a healthy retrofit market, including government, financial service institutions, investors, property owners, utilities, equipment manufacturers, energy service companies and other related industries. Finally, it provides industry-specific recommendations to enable their participation.

The U.S. potential is reported by C40 Cities…

$400 billion market potential in building retrofit market

A new study from the World Economic Forum (WEF) has found that retrofitting commercial buildings could represent a $400 billion market in the U.S. alone. Citing C40’s own study with the Carbon Disclosure Project, WEF says:

“Any successful approach to combating climate change must include commercial buildings, which are responsible for approximately 30% of greenhouse gas emissions worldwide and, in some countries, 70% of electrical consumption. Nearly one-half of all energy consumed by buildings could be avoided with new energy-efficient systems and equipment, and the energy savings would exceed the cost of upgrades, generally within five years or less.”

The report also found that governments are “the single greatest catalyst” for a thriving retrofit market, a conclusion supported both by C40’s research with Arup showing that mayors from C40 Cities have strong powers in this sector – and by action on the ground across the C40 network.

Earlier this month, C40, CCI and Los Angeles announced the city’s launch of a major effort to spur commercial retrofits through a new program offering both technical and financing support; the program is a participant in the U.S. Department of Energy’s Better Buildings Challenge. A similarprogram has also been created by Melbourne. Chicago is serving to catalyze the city’s retrofit market by targeting an iconic government building; while in Mumbai, it is a commercial real estate giant who is a first mover. In June, Houston Mayor Annise Parker made C40 proud by winning  the 2011 Mayors’ Climate Protection Award for the city’s green building leadership in the public and private sectors.

READ MORE…

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CEC Report: Renewable Power in California: Status and Issues

RenewablePowerPie

The PIER Program has provided roughly $179 million in R&D funding for a wide variety of activities in support of California’s renewable energy goals. These investments are not limited to basic research – more than half of PIER renewable funding awarded between 2004 and 2010 was for technology demonstrations.

The California Energy Commission (CEC) has announced release of the Lead Commissioner Report on “Renewable Power in California: Status and Issues” (CEC-150-2011-002-LCF-REV1). The report is accessible from the Docket #11-IEP-1 web page, which lists documents for the 2011 integrated Energy Policy Report (IEPR) Proceeding.

The report provides a thorough summary and comparison of the various types and applications of renewable energy in the state and offers projections regarding both the potential increase for each type and the relationship to California’s renewable energy goals. For example: Biomass electrical generation capacity in place is reported as 1,553 megawatts electric (MWe), less than one half of the 3,820 MWe estimated as technically available.

The report first analyzes a broad sweep of critical issues surrounding and barriers to increased renewable energy development, then provides a set of five key recommendations to meet the challenges:

  1. Identify and prioritize areas for both utility-scale and distributed energy;
  2. Evaluate current project burdens beyond technical costs;
  3. Minimize interconnection costs and requirements;
  4. Promote and incentivize in-state technology and project development,
  5. Promote and coordinate existing state and federal financing and incentive programs for critical stages including research, development, and demonstration; pre-commercialization and deployment.

The report is seen as the first step in strategic plan development in 2012 and complements the upcoming 2011 Integrated Energy Policy Report Update, which the CEC will consider for adoption at its January 12, 2012 meeting.

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CA PUC: Customer-side Distributed Generation Policies & Programs

KilowattHoursMeter

The CPUC oversees two incentive programs for customer-side of the meter distributed generation, also called “onsite generation” or “self generation”, for customers in the territories of Pacific Gas & Electric, San Diego Gas & Electric, and Southern California Edison.  The California Energy Commission oversees related incentive programs.

The CPUC Distributed Generation Programs
  1. California Solar Initiative (CSI) – California’s electric utility customers receive upfront incentives when they install solar electric systems on homes, businesses and public sites under the California Solar Initiative.  California’s electric and gas customers receive incentives when they install solar thermal, also known as solar hot water, systems under the California Solar Initiative’s CSI-Thermal Program.

  2. Self-Generation Incentive Program (SGIP) – California’s electric utility customers receive incentives when they install wind turbines, fuel cell cells, or storage system in conjunction with wind turbines or fuel cells under the Self Generation Incentive Program.

California Energy Commission’s Distributed Generation Programs
  1. New Solar Homes Programs – Solar incentives for new residential construction are offered through the Energy Commission’s New Solar Homes Program, a sister program to the CPUC’s California Solar Initiative.

  2. Emerging Renewables Program – Incentives for small (<30 MW) wind and fuel cell systems are offered under the Energy Commission’s Emerging Renewables Program.

The CPUC regulates distributed generation policies and programs on both the customer and utility (wholesale) side of the electric meter.  Customer-side of the meter distributed generation incentive programs include the California Solar Initiative and the Self-Generation Incentive Program. These programs are supported by the CPUC’s oversight of Net Energy Meteringand Interconnection policies. 

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USGBC: Paid-From-Savings Guide to Green Existing Buidlings

Paid from Savings Guide

The best candidates for the paid-from-savings approach are buildings with inefficient or outdated building systems in which upgrades will generate significant cost savings. To achieve LEED for Existing Buildings: O&M certification, these systems must also meet energy-efficiency and performance-period requirements designated in the rating system. LEED for Existing Buildings: O&M certified buildings also implement O&M best practices and sustainable policies.

Executive Summary PDF

The paid-from-savings approach is a financing strategy to green existing buildings. It leverages the savings generated from building system upgrades to pay for a comprehensive greening project within a defined pay-back period. Paid-from-savings projects can use a variety of financing methods including:

• Self-financing,

• tax-exempt lease-purchase agreements for qualifying entities,

• power purchase agreements for renewable energy projects,

• performance contracts for larger projects,

• equipment finance agreements, and

commercial loans or bond financing for qualifying entities.

In many cases, successful projects employ a combination of these options, along with supplemental funding, such as revolving loan funds, utility rebates, and renewable energy grants, as well as funds from the organization’s capital and operating budgets.

They include such items as:

• replacing the boiler,

• replacing the chiller,

• upgrading lighting systems,

• installing a building automation system (BAS), and

• replacing water fixtures.

Owners can achieve their desired return on investment (ROI) and lessen the overall project pay-back period by “bundling” the longer pay-back measures with the quicker pay-back measures to create a project with a shorter overall pay-back period and a higher ROI.

Under a performance contract, an energy services company (ESCO) acts as the project developer and assumes the technical and performance risk associated with the project, including guaranteeing the cost savings generated from the system upgrades for a specified period of time. If the savings guarantee is not met, the ESCO pays the owner the difference. The guarantee is unique to performance contracting and not typical of other paid-from-savings approaches.

To determine the savings that can be guaranteed, the ESCO will conduct an investment-grade energy audit, which provides the basis for calculating the guarantee and creating the project development plan. The audit also serves as the foundation for developing the measurement and verification (M&V) plan, which outlines the specific methods and calculations to ensure the expected savings are realized.

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Top Ten Green Building Megatrends for 2012

BldgMegatrendsCountries with Established Green Building Rating Systems

Yudelson Associates’ Top Ten Green Building MegaTrends include:

  1. Green building in North America will rebound in 2012, using new LEED project registrations as a proxy for this growth. The reduction in commercial real estate construction has not been offset by other sectors such as government construction, which continued to falter, and so the growth rate of new green building projects fell dramatically in 2010 and 2011. Even so, in 2011, LEED in new construction accounted for about 20% of all put-in-place space, with domestic LEED project registrations up almost 40% vs. depressed 2010 levels. However, Yudelson Associates sees faster growth in green retrofits, and notices that ongoing college and university projects and NGO activity are serving to backstop the fall in commercial and governmental construction. In addition, LEED growth has been and will be rapid in China and other fast-growing economies.
  2. Green building will continue to benefit from the Obama Administration’s strengthened focus on greening the executive branch, with its commitment to a minimum of LEED Gold for all federal projects and focus on major energy-efficiency renovations.
  3. The focus of the green building industry will continue its switch from new building design and construction to greening existing buildings. One fast-growing LEED rating system the past two years has been LEED for Existing Buildings Operations and Maintenance (LEED-EBOM), with cumulative floor area in certified projects now greater than in new construction, and I expect this trend to pick up in 2012. Yudelson says, “My book, “Greening Existing Buildings” documents the strategic and tactical components of this trend.” One driver of this MegaTrend is that “‘green’ buildings have rents and asset prices that are significantly higher than those documented for conventional office space,” according to a recent major academic research study on commercial buildings in the U.S. and Europe.
  4. Awareness of the coming global crisis in fresh water supply will increase, leading building designers, owners and managers to take further steps to reduce water consumption in buildings by using more conserving fixtures, rainwater recovery systems and innovative new onsite water technologies. Yudelson says, “My recent book, “Dry Run: Preventing the Next Urban Water Crisis”  shows how this is being done in green buildings all over the world.
  5. The global green building movement will continue to accelerate, as more countries begin to create their own green building incentives and developing their own Green Building Councils. More than 90 countries with incipient or established green building organizations, on all continents, will drive considerable green building growth in 2012. Yudelson comments, “We’re seeing strong growth in China, other places in Asia (e.g., Singapore), Brazil, Eastern Europe, South Africa and the Arabian Peninsula countries. In 2011, for the first time, nearly as many LEED-registered projects were in progress outside the U.S. as in the U.S., up more than 50% compared to 2010 levels and representing 44% of all new LEED project certifications.” In fact, as one expert noted in a recent report, LEED has registered or certified projects in 131 of the world’s 196 countries, with a total floor area of almost 3-billion sq.ft. When combined with the nearly 1.5-billion sq.ft. registered under LEED India and LEED Canada, it is clear that LEED is the dominant global green building certification brand. See the GreenBiz.com “Green Building Market and Impact Report 2011.”
  6. Zero-net-energy buildings will become increasingly commonplace, in both residential and commercial sectors, as LEED and ENERGY STAR certifications and labels have become too commonplace to confer competitive advantage among building owners. Developers of speculative commercial buildings will also begin to showcase Zero Net Energy designs.
  7. Performance Disclosure will be the fastest emerging trend, highlighted by new requirements in California, Seattle and other locations. Commercial building owners will have to disclose actual building performance to all new tenants and buyers and in some places, to the public at large. This trend is already established in Australia, for example, and will spread rapidly as the easiest way to monitor reductions in carbon emissions from commercial and governmental buildings.
  8. Green Buildings will increasingly be managed in the “Cloud”, as witnessed by the large number of new entrants and new products in fields of building automation, facility management, wireless controls and information management in 2011.
  9. Local and state governments will step up their mandates for green buildings for both themselves and the private sector. We’ll see at least 20 new cities with commercial sector green building mandates, mostly in the “Blue” states. The desire to reduce carbon emissions by going green will lead more government agencies, universities, hospitals and corporate owners to require green buildings from design and construction teams.
  10. Solar power use in buildings will continue to grow with the prospect of increasing utility focus on aggressive state-level renewable power standards (RPS) for 2020. As before, third-party financing partnerships will continue to grow and provide capital for large rooftop systems such as on warehouses and big box retail stores. However, we will see fewer very large solar and wind systems, as federal grant and loan guarantee support begins to be phased out.
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