Category Archives: Reports

Economics, Energy Efficiency, Policy, Reports

Energy Efficiency Keeps Electricity Affordable

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Fingering Coins

 

In a story written by Steven Nadel, Executive Director, ACEEE announced two studies that show energy efficiency not only keeps electricity affordable but it reduces environmental compliances costs. On March 18th, they released:

  • “How Much Does Energy Efficiency Cost?” includes results from studies by Lawrence Berkeley National Laboratory, ACEEE, and the US Environmental Protection Agency (EPA).  Finds that energy efficiency is consistently a lowest cost option for meeting electric demand. One of the studies finds that the costs of energy efficiency have been level in recent years.
  • “Energy Efficiency Lowers the Cost of Clean Power Plan Compliance” looks at the results of three studies, all finding that including energy efficiency as part of state compliance plans will lower costs to utility customers. One study finds that an energy efficiency scenario reduced electric bills by 17%. Another study shows that in most states using energy efficiency for compliance with the CPP will reduce bills by more than $10 per month.

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Conservation, Energy Efficiency, Policy, Renewable Energy, Reports, USGBC LEED

pLAn – Transforming Los Angeles: Environment | Economy | Equity

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Local Government sustainability_bannerMayor Eric Garcetti – 4/8/2015: Our city is flourishing. We expect at least 500,000 more people to call Los Angeles home by 2035. So the question before us, like it was to those Angelenos of the past, is how can we improve our city today, and ensure future generations enjoy a place that is environmentally healthy, economically prosperous, and equitable in opportunity for all?

Soon after taking office as Mayor of Los Angeles, Eric Garcetti defined the Mayor’s Office of Sustainability and appointed the city’s first-ever Chief Sustainability Officer (CSO), Matt Petersen. This is not simply an “environment department” with a separate box on the organization chart – rather the office oversees the implementation of sustainability throughout the city’s 35 departments and bureaus.

“This pLAn sets the course for a cleaner environment and a stronger economy, with a commitment to equity as its foundation. These are the keys to a city that Angelenos have said they want our children to inherit — one that can continue to thrive and provide good health andopportunity for its residents. This is the way I view sustainability.” – Mayor Eric Garcetti

Within the framework of three sections – Environment, Economy, and Equity – there are 14 topic chapters. Each chapter includes a preceding Introduction, Vision, and Long-Term Outcomes summary. Then the pLAn provides details on Baseline/Source, Near-term Outcomes, Strategies, and Priority Initiatives.

The full plan can be downloaded from the L.A. Mayor’s website at plan.lamayor.org.

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Economics, Financing, Policy, Reports

PACE Now: Lender Support Study

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TreePeopleCenterPACENow is pleased to release the Lender Support Study, which surveyed national, regional and local mortgage lenders whose interests in buildings could be affected by PACE financings. PACE programs in Washington, D.C., Los Angeles, and San Francisco retained PACENow to develop and implement the survey, with grant support provided by the Urban Sustainability Directors Network.

There is apprehension that lenders will be hesitant to support permitting PACE financing to current mortgages.

The Lender Support Study’s goals included gauging lenders’ awareness and understanding of PACE, educating them, addressing their concerns, and developing insights that will enhance efforts to gain their support for individual PACE projects. Click here to download the study that summarizes the findings of interviews conducted with 35 individuals representing 25 different lending institutions.

Key findings and recommendations:

  1. Surveyed lenders generally expressed no blanket opposition to PACE. Their right to consent to projects is of paramount importance to them, but they appear open to approving projects that benefit their customers and improve the value of their collateral. Lender partnership and education from the start is the key in improving probability of lender consent.

  2. Lenders support energy efficiency and renewable energy projects in concept, but have little firsthand experience financing them and are wary of underwriting the resulting projected savings and benefits. Education based on standard industry data and results from comparable projects is necessary to increase ease of approvals and create streamlined the processes.

  3. Lenders understand property taxes and assessments and factor them into underwriting models decisions. There was broad acceptance of PACE as an assessment, which limits lien exposure only to unpaid assessments, distinguishing it from a loan.

  4. Complexity in applications contributes to increased costs and may make some projects economically unfeasible. The size and scope of a PACE assessment should determine the degree of supporting documentation. A simple, streamlined approval process for small projects (representing less than 3% of building value) should be developed with the lender community.

  5. Consistency of programs across states and the nation, standardization of data sources, and creation of project related insurance policies will improve the consent process as lenders (and PACE finance providers/investors) can create national approval platforms and review projects with fewer resources.

  6. Existing commercial mortgage lenders have only an indirect revenue benefit from providing consent. As such, applicants have the onus of making the approval process easier for lenders until revenue streams across banks are properly aligned or existing mortgage lenders begin to provide PACE financing.

DOWNLOAD THE STUDY…

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Economics, Energy Efficiency, Financing, Policy, Reports

Overcoming Market Barriers to Advance Energy Efficiency

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EEMarketBarriersU.S. energy use is approximately half of what it would have been if we had not improved our efficiency over the past 40 years. Still, there are large, cost-effective opportunities to increase energy efficiency much further, thereby helping us to cut energy bills, reduce pollution, and encourage economic growth.

While there is disagreement among politicians about the role of government spending and government regulations to spur cost-effective energy efficiency investments, politicians of all political stripes agree that knocking down market barriers that keep Americans from saving money is a worthy task.

Within this context, the American Council for an Energy-Efficient Economy (ACEEE) released a new report on Monday highlighting 16 policies that would use market forces to spur additional cost-effective investments in energy efficiency while helping to surmount market barriers that hinder these investments. In total, these policies could save consumers and businesses nearly $1 trillion over the 2014-2030 period, considering both the energy bill savings and the cost of the energy efficiency investments.

The new ACEEE report, Overcoming Market Barriers and Using Market Forces to Advance Energy Efficiency, discusses several targeted policies that leverage market mechanisms in order to address specific market failures, without requiring substantial spending or government mandates. For example, the development of a comprehensive building labeling and benchmarking program would allow purchasers and tenants to identify efficient homes and commercial buildings and could save consumers and businesses approximately $60 billion between 2014 and 2030. Even more impressive are the benefits gained from adjusting corporate tax legislation to remove hidden barriers in the tax code. These adjustments would encourage the replacement of inefficient equipment and remove regulatory barriers to combined heat and power projects. These two policies alone could save the economy close to $300 billion.

Recommendations fall into 7 categories:

  1. Improving information to aid decision making

  2. Removing exiting regulator and legal barriers

  3. Addressing externalities

  4. Increasing the salience of energy use at point of purchase

  5. Reducing energy waste in government

  6. Investing in precommercial R&D

  7. Enhancing energy efficiency finance

READ ABOUT 16 POLICIES THAT COULD SAVE THE U.S. ECONOMY ALMOST $1 TRILLION…

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Economics, Energy Efficiency, Reports

GSA Challenges ESCOs to Retrofit to Net Zero

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BuildingEEPerformanceEnergy service companies (ESCOs) have provided billions of dollars worth of energy savings through building retrofits — and inspired even the most reluctant clients to seek out energy efficiency. Yet certain building owners can achieve far greater energy and cost savings through the adoption of deep energy retrofits. – Illustration by Lisa Haney

Roy Torbert  Rocky Mountain Institute Analyst (Buildings)

ESCOs have often maintained that they would deliver deeper energy savings — if only clients would demand them. Well guess what? The General Services Administration (GSA), the largest owner of commercial real estate in the U.S., is poised to use energy savings performance contracts (ESPCs) for deep savings in selected buildings. These ESPCs require little to no up-front capital from the government, as the energy savings will cover costs of the efficiency improvements. Federal projects typically save 15-25 percent of baseline energy use. GSA, like many other federal clients, is now required to meet dramatic energy savings goals specified by the Energy and Security Act of 2007 and President Obama’s Executive Order 13514. According to GSA Administrator Martha Johnson, “The president challenged government to lead by example in environmental, energy and economic performance. Now GSA is challenging the private sector to partner with us to go above and beyond what has been done before in federal building renovations.”

The new GSA Net Zero Renovation Challenge calls upon the 16 ESCOs pre-qualified for federal buildings to develop innovative, broadly applicable and aggressively energy-saving retrofit plans. Each project will not only aim for deeper savings, but also create a plan to reach net zero energy in the building, to assist GSA in developing long-term solutions for its entire portfolio.

The recently released report from the GSA Net Zero Renovation Challenge Charrette, hosted by Rocky Mountain Institute, details how GSA will work with ESCOs to improve the process of attaining deep savings using 30-35 GSA-owned office buildings. Check out the report to learn how both federal agencies and the major ESCOs will modify their approach to catalyze profitable retrofits with unprecedented savings in federal buildings.

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Economics, Energy Efficiency, Financing, Policy, Renewable Energy, Reports

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

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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.

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Economics, Energy Efficiency, Financing, PACE, Reports

PACE Financing in Los Angeles County

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 PACEinLA As part of Energy Upgrade California, owners of non-residential commercial properties in Los Angeles County have access to an innovative financing mechanism to fund up to 100% of the cost of building performance upgrades—Property Assessed Clean Energy (or PACE) financing. 

Investment in energy and water efficiency is an intelligent business decision. Building performance upgrades bring multiple benefits:

  1. Lower operating costs

  2. Improve occupants’ comfort

  3. Hedge against utility price increases

  4. Reduce negative exposure to possible regulation

  5. Help the environment

  6. Boost property values

Why PACE?

  1. Funding for up to 100% of installed project costs

  2. Lower financing rates than other products in the market

  3. Longer financing terms than would otherwise be possible

  4. Enables projects to be cash flow positive in Year 1

  5. May allow for favorable accounting treatment

  6. Allows for equitable sharing of costs and savings with current tenants, and future owners

What is PACE Financing?

For more information visit http://www.cleanfund.com/

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Economics, Energy Efficiency, Reports, Technology

McKinsey & Co.: Unlocking Energy Efficiency in the U.S. Economy

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ElectricBulbHandsIn this report, McKinsey offers a detailed analysis of the magnitude of the efficiency potential in non-transportation uses of energy, a thorough assessment of the barriers that impede the capture of greater efficiency, and an outline of the practical solutions available to unlock the potential.

The research shows that the US economy has the potential to reduce annual non-transportation energy consumption by roughly 23 percent by 2020, eliminating more than $1.2 trillion in waste—well beyond the $520 billion upfront investment (not including program costs) that would be required. The reduction in energy use would also result in the abatement of 1.1 gigatons of greenhouse-gas emissions annually—the equivalent of taking the entire US fleet of passenger vehicles and light trucks off the roads.

Such energy savings will be possible, however, only if the United States can overcome significant sets of barriers. These barriers are widespread and persistent, and will require an integrated set of solutions to overcome them—including information and education, incentives and financing, codes and standards, and deployment resources well beyond current levels.

In addition to the above central conclusion, five observations will be relevant to a national debate about how best to pursue energy efficiency opportunities of the magnitude identified and within the timeframe considered in this report. Specifically, an overarching strategy would need to:

  1. Recognize energy efficiency as an important energy resource that can help meet future energy needs while the nation concurrently develops new no- and low-carbon energy sources

  2. Formulate and launch at both national and regional levels an integrated portfolio of proven, piloted, and emerging approaches to unlock the full potential of energy efficiency

  3. Identify methods to provide the significant upfront funding required by any plan to capture energy efficiency

  4. Forge greater alignment between utilities, regulators, government agencies, manufacturers, and energy consumers

  5. Foster innovation in the development and deployment of next-generation energy-efficiency technologies to ensure ongoing productivity gains

Read executive summary (PDF–1.52 MB)
Read full report (PDF–6.37 MB)
Launch interactive
EPRI and McKinsey reports on energy efficiency: A comparison (PDF–120 KB)

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Economics, Renewable Energy, Reports, Technology

CEC Report: Renewable Power in California: Status and Issues

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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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Conservation, Economics, Energy Efficiency, Financing, Renewable Energy, Reports, USGBC LEED

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

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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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