Category: News

State of the Energy Efficiency Industry: The Utility Story

America’s electric and natural gas utilities are now investing more than $7.5 billion annually in programs to help customers use energy more efficiently, according to the latest comprehensive survey. The electricity savings, alone, from the latest year of U.S. utility investment, exceed the annual production of eight giant coal-fired power plants. The report also covers Canadian utility investments, which reached an all-time high in 2015 (the U.S./Canada total for the year topped $8.2 billion, counting only utility contributions, and $8.7 billion including supplementary sources like the Northeast’s Regional Greenhouse Gas Initiative).

The recently released Consortium for Energy Efficiency’s (CEE) 11th Annual Industry Report serves as a reminder of the importance of this vital source of clean energy investment. Independent research has affirmed repeatedly that the cost of programs to avoid energy use—such as weatherization and rebates for highly efficient appliances—typically cost less than half as much as alternative sources.

Read more (NRDC)

Perry extends freeze on energy efficiency rules into fall

The Energy Department on Monday said it would extend a freeze on former President Barack Obama’s energy efficiency rules, giving Energy Secretary Rick Perry until the fall to review and potentially change them.

Trump’s regulatory freeze went into effect the same day he was inaugurated, but because Perry wasn’t sworn in until March 3, the administration is giving him nearly triple the amount of time to review the regulations and decide whether or not to move ahead with them.

The regulatory freeze went into effect Jan. 20 and will extend until the end of September for some Energy Department efficiency standards that were part of Obama’s climate change agenda, according to documents to be published in the Federal Register Tuesday. The freeze originally was scheduled to end March 21.

Read more (Washington Examiner)

The low-down on PACE financing in Virginia

Property Assessed Clean Energy financing, or PACE, is starting to get more and more attention around the Commonwealth and the nation. In fact, Governor McAuliffe and his administration recognized PACE as a viable means to create more jobs, save energy, and lower electricity bills in a recent press release. As it’s popularity increases, many are still unaware of just exactly what PACE is and who it can benefit.

PACE financing is a loan program to help bring low-cost, long-term capital to fund the rehabilitation of existing and new privately owned commercial buildings through energy efficiency, renewable energy, and water conservation projects. The loan is repaid annually through the property’s real estate tax bill.

Thirty-three states and Washington, D.C. have passed legislation at the state level to enable PACE financing; nineteen of those states have already started a PACE program. In Virginia, a commercial PACE, or C-PACE, enabling law was originally enacted in 2009 and amended in 2015. Virginia’s PACE law requires a locality to develop a PACE program, and private lenders make the loan and negotiate directly with the property owner on rates and terms. Currently, Arlington County is the only Virginia jurisdiction actively developing a PACE program; however, several over localities are exploring the development of their own programs.

Practically all privately-owned commercial buildings, regardless of size, are eligible for PACE financing, including office, retail, hotel, and industrial space. Eligible PACE projects must either reduce energy consumption or generate energy, and they must be permanently affixed to the property. Eligible improvements include: insulation, solar panels, lighting, roofing, and HVAC systems. In Virginia, commercial, nonprofit, and multifamily buildings (except condos and dwellings with less than five units) are eligible regardless of their age.

PACE offers an array of benefits for each key stakeholder: property owner, contractor, lender, locality.

Property owners:

100% financing: PACE covers 100% of all hard and soft project costs, eliminating the need for upfront cash investment.

Long-term loan: With terms up to 20+ years, PACE loans result in lower annual payments and immediate positive cash flow.

Transferable: PACE loans do not have to be paid off at the time of sale; they transfer to the new owner.

Non-accelerating loan

 

Contractors:

Increase sales volume and improve profit margin: By covering 100% of project costs and eliminating the requirement for out-of-pocket expense, PACE brings financing to more customers. Since PACE is based on equity in the property and not personal credit, it is easier for more customers to obtain financing.

Fund deeper energy retrofits: Long-term financing enables customers to take advantage of projects with longer paybacks, which leads to more comprehensive projects with greater effect on energy usage. PACE can also fund efficiency improvements that are not allowable uses of Weatherization Assistance Program funds (i.e. replacement windows).

Gain support and resources: PACE programs can be developed to offer an array of contractor services to help grow business and streamline financing. Services include training, call center support, customizable marketing materials, tools to pre-qualify customers, project estimation calculators, and web portals for financial analysis and deal-tracking.

Spur demand for retrofits and energy auditors: As the number of people taking advantage of PACE increases, PACE could spur a surge of private demand for well-trained retrofitters. Additionally, as the program grows, so will the demand for energy audits. Energy audits are used to track a building’s energy usage before and after PACE improvements are installed.

 

Lenders:

Meet client’s needs of implementing upgrades

Increase value of collateral: upgrades and improvements increases the value of the property

– Enhances property owner’s ability to pay their debt: raises net operating income (NOI) through low annual payments and decreased operating costs

 

Localities:

– Creates employment opportunities for contractors, trades, engineers, vendors, etc.

– Serves as a redevelopment tool for “tired” buildings with obsolescent and inefficient systems

– Improvements make buildings more marketable, leading to better tenant retention and increases property values

Increased property taxes  and construction fees yields more revenues for jurisdictions

Reduces locality’s carbon footprint, enabling it to become a green leader

Minimal municipal burden: a third party administrator carries the cost of starting and running the program

 

The difference between traditional bank financing and PACE financing:

Traditional Bank Financing PACE Financing
Purpose: HVAC and Lighting Purpose: HVAC and Lighting
Project Cost: $100,000 Project Cost: $100,000
Loan: $75,000

25% upfront cash investment required

Loan: $100,000

$0 upfront cash investment required

Interest Rate: 5% Interest Rate: 6.25%
Term: 5 years, fully amortizing Term: 15 years, fully amortizing
Monthly Payment: $1,415 Monthly Payment: $857
Annual Payment: $16,984 Annual Payment: $10,290

 

PACE financing is a lucrative tool that can benefit all parties involved. We look forward to seeing Arlington get their program up and running later this year and are excited to continue working with other localities as they explore the feasibility of developing their own PACE programs.

If you would like additional information about PACE, please contact VAEEC Program Coordinator Jessica Greene.

In Virginia, the Trump effect on environment is beginning to come into focus

The Virginia Chamber of Commerce and the Virginia League of Conservation Voters often take opposite sides on environmental issues.

But the leaders of the chamber and the league agree on this: President Donald Trump’s environmental agenda so far is flawed.

Not beyond repair, suggests Barry DuVal, a former Newport News mayor who presides over the chamber. He indicated the group’s “mixed view” of Trump would be much more positive if the president dropped his proposal to eliminate federal funding for the Chesapeake Bay cleanup. Improving the bay’s health is good for business too, DuVal said.

Michael Town, the conservation league’s executive director, sees no chance for redemption, however, in Trump. He’s seen enough of the president’s budget proposals and executive orders to declare him “a tremendous disaster when it comes to the environment … not good for the health of our children and not good for the economy.”

Read more (The Virginian-Pilot)

Will energy efficiency be bigger than rooftop solar in the Southeast?

It’s easy to spot a solar home, but efficient homes are well camouflaged. So its no surprise that media and public opinion are focused on solar, particularly rooftop solar.

But for our electric companies – and the many people who pay attention to them – a good question to ask is what will be the biggest technologies driving electric demand? Will rooftop solar reshape electric demand? What about electric vehicles?

It won’t be a shocker to learn that the American Council for an Energy-Efficient Economy (ACEEE) found that the biggest potential driver in changing the electricity market is energy efficiency.

Read more (Clean Energy)

Trump aims deep cuts at energy agency that helped make solar power affordable

The Trump administration is aiming a half-billion-dollar cut at the main U.S. hub for renewable energy research — 25 percent of the agency’s budget, and that’s just for the final five months of this federal fiscal year.

Even deeper cuts are expected to be sought for 2018 — a possibility that has alarmed researchers in clean energy and even some Republicans in Congress.

The Office of Energy Efficiency and Renewable Energy, or EERE, is a $2 billion branch of the Department of Energy. It is credited with helping to drive the rapid expansion of rooftop solar panels, electric vehicle batteries, LED lighting and more.

The proposed $516 million cut for the remainder of fiscal year 2017 was reported earlier this week by E&E News.

Read More (The Washington Post)

CEE Annual Industry Report, 2016 State of the Efficiency Program Industry

The purpose of this report is to provide an annual time series analysis, a point in time report for the US and Canadian program industry on trends in energy efficiency and demand response budgets, expenditures, and savings. While this effort constitutes a large and comprehensive survey of program administrators, and while extensive ongoing attention is devoted to data standardization, CEE cautions against making representations and comparisons beyond those provided in this report.

The report documents annual electric and natural gas DSM program industry budget, expenditures, and impacts at the national level and, where appropriate, by Census region, across the United States and Canada based on data collected through a vast and comprehensive survey of DSM program administrators. CEE believes that using these data in conjunction with past survey efforts, portrays an accurate representation of energy efficiency program industry trends over time. The limitations of the data are disclosed below.

There are many limitations to budget, expenditures, and savings data in the DSM industry. First, this survey represents self-reported data by an individual or group of individuals within each responding organization. Although CEE and our collaborator, the American Gas Association, work closely with each responding organization to help respondents properly interpret survey questions and enter the correct information, the accuracy of the data is not verified outside of these efforts. Second, respondents provide data at different times during the data collection period from June to October, and not all program administrators report their information according to the calendar year. CEE and our collaborator have sought greater consistency in data collection from respondents over the years, however, the accuracy of the data are ultimately dependent upon each individual respondent’s interpretation of the survey questions, ability to retrieve the relevant information, and verification of the data provided. Furthermore, variation in state policies and reporting requirements along with what we suspect is inconsistent use of terminology likely adds to variation.

Read more (Consortium for Energy Efficiency)

Summers: Heads in the sand in Washington, climate action in Virginia

It’s hard to overstate exactly what’s at stake in moving forward to address the climate crisis, which is having real impacts on Virginians’ lives.

Increasingly erratic extreme weather, prolonged drought, elevated asthma rates and incidences of lung disease, and regular inundation from sea level rise along our coast are putting public health and Virginia’s economy at risk. This is the harsh reality we face from the Roanoke Valley all the way to the Eastern Shore.

Despite growing urgency to address the climate crisis, the Trump administration has shown no interest in protecting the environment or cutting U.S. greenhouse gas emissions. The Environmental Protection Agency budget’s been slashed and the department is now headed by a confirmed climate change skeptic. Other federal agencies that perform climate-related research or programmatic work have met similar fates.

Read more (The Roanoke Times)

Trump to Issue Far-Reaching Reversal of Obama Climate Push by Jennifer A Dlouhy

President Donald Trump is set to sign a sweeping executive order on Tuesday aimed at promoting domestic oil, coal and natural gas by reversing much of his predecessor’s efforts to address climate change — prompting warnings the action will undermine U.S. leadership on the issue.

The document lays out a broad blueprint for the Trump administration to dismantle the architecture that former President Barack Obama built to combat the phenomenon, according to details shared with Bloomberg News. Some of the changes would happen immediately, while others would take years to complete.

“He’s trying to undo more than a decade of progress in fighting climate change and protecting public health,” David Doniger, director of the climate and clean air program at the Natural Resources Defense Council, said in an email. “But nobody voted to abandon America’s leadership in climate action and the clean-energy revolution. This radical retreat will meet a great wall of opposition.”

Read more (The Bloomberg)

Why rate design matters for energy efficiency

Today, most American households pay for electric service via a two-part electric rate. This typically consists of a small, fixed customer charge ($ per month) and an energy rate applied per unit of electricity ($ per kilowatt hour). There are some variations on this model, including energy rates that vary based on time of day or total monthly consumption, but the basic structure of residential rates hasn’t changed much over time. In recent years, utilities have proposed significant departures to this format to address the changing dynamics of the electric utility industry.

Some of these changes have the potential to disrupt the economics of customer efficiency investments and may drive customers to use more electricity. In our new report, Rate Design Matters: The Intersection of Residential Rate Design and Energy Efficiency, we examine the relationship between the changes in residential electric rates and customer engagement in energy efficiency.

New Trends in Residential Rates
Under two-part rates, the first part is typically a monthly customer charge also known as a service fee or fixed charge. This charge collects costs associated with customer service, billing, and the meter and is typically less than $8 a month.

Read more (ACEEE)

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