by Ken Rosenfeld, Executive Director
There’s been growing momentum in the past few years for energy efficiency, along with a mounting wave of evidence related to its benefits and its potential. Perhaps that’s why it’s headline-inducing when a piece of news goes in the other direction. That was the case earlier this summer when an economics research paper was released by the University of Chicago. It asked in its title, “Do Energy Efficiency Investments Deliver?” and the report responded with a conclusion that the costs outweigh the benefits.
I hesitate to even mention this paper and bring any additional attention to it, as the research has been quickly, thoroughly and appropriately debunked. But at the same time, it serves as a worthwhile reminder that, despite all of the evidence in support of efficiency programs, we still need to continue making the argument that EE benefits are real.
The paper has clear shortcomings, with a number of questionable assumptions including how to measure costs, what should be included as benefits, and which populations are targeted. The primary danger is that this analysis of one program (the Weatherization Assistance Program) in one state (Michigan) could lead to far-reaching, negative conclusions on EE more broadly.
A number of highly-regarded organizations responded, representing a variety of perspectives, and these blog posts are worth a read:
We’re on the cusp of an energy efficiency moment in the U.S., and that’s particularly the case in Virginia where in just the last year we’ve seen:
- Governor McAuliffe’s formation of a committee to address the state‘s longstanding goal of reducing energy use by 10%;
- The appointment of the country’s first state-level chief energy efficiency officer;
- Bipartisan passage of Property Assessed Clean Energy (PACE) financing legislation; and
- Continued growth of the VAEEC’s membership and the energy efficiency industry – the latest VAEEC census reveals a $2.2 billion EE industry in Virginia supporting more than 13,000 jobs.
However, we haven’t reached the point where we can assume that everyone recognizes the value of energy efficiency, and we have to continue to build this consensus in order to turn the promise of EE into reality. This one research paper may have its faults – and it does — but it has served as a useful call to action.
Monday, August 3, 2015
This afternoon, the U.S. Environmental Protection Agency released its long-anticipated final rule on the Clean Power Plan (CPP), a federal initiative for curbing greenhouse gas emissions from power plants. The CPP calls for a significant reduction in carbon emission from the nation’s power sector – a 32 percent reduction below 2005 levels by 2030. The CPP sets state-by-state targets for emission reductions and allows states to develop their own compliance plans. Details can be found here.
Statement by Ken Rosenfeld, executive director of the Virginia Energy Efficiency Council:
“After much anticipation, the Clean Power Plan is here and the Virginia Energy Efficiency Council (VAEEC) recognizes this as an opportunity to plan for the future and make sensible energy decisions.
While the Clean Power Plan has generated plenty of debate, it’s time now for Virginia to prepare a comprehensive strategy to address the plan’s goals. To that end, the VAEEC strongly encourages Virginia to include a robust role for energy efficiency in its compliance plan. Energy efficiency can help meet the federal guidelines while concurrently generating significant economic and environmental benefits for Virginians.
There are a few specific items in the final rule that deserve particular mention:
- Energy efficiency is no longer specified as a “building block” – a category used by the EPA to calculate the emissions reduction targets. This is a technical change that was reportedly made to address legal concerns, but it’s important to note that it does not affect the significance of energy efficiency as one of the primary compliance tools available to states to meet their targets.
- It specifically creates a Clean Energy Incentive Program, which offers credits to states that implement energy efficiency programs in low-income communities.
- It allows states to request extensions for submitting their implementation plans, and extends the deadline to begin the compliance period from 2020 to 2022; this development provides the time needed to develop thoughtful and comprehensive plans, and allows for careful consideration of how energy efficiency will be incorporated.
We know that an increased emphasis on energy efficiency needs to be part of any comprehensive approach. Energy efficiency is a rare “win-win” in energy policy, a common sense, nonpartisan, and cost-effective solution:
- It’s the lowest-cost resource option to meet Virginia’s energy supply needs,
- It’s the cleanest option as it represents energy that’s not consumed,
- Through demand reduction it improves our energy system by reducing risk and increasing reliability, and
- It promotes local economic development and job creation – an industry census performed by the VAEEC reveals a $2.2 billion energy efficiency industry in Virginia supporting at least 13,000 jobs at more than 500 firms.
The VAEEC represents a wide range of perspectives, and we look forward to working with the McAuliffe Administration, state agencies, policymakers and our many partners as Virginia devises the best path forward to meeting the Clean Power Plan goals.”
The Virginia Energy Efficiency Council (VAEEC) is a broad coalition working to assess and support innovative programs, policies and best practices that encourage energy efficiency in the Commonwealth and to provide a forum for stakeholder interaction. The VAEEC is a 501(c)(3) nonprofit organization whose membership includes businesses of all sizes, utilities, nonprofit and advocacy organizations, local governments and state agencies. For more information, visit www.vaeec.org.
LEAP is a nonprofit energy services organization with a mission to lead the effort in local communities to 
implement energy efficient technologies in buildings to promote cost savings for families and businesses, job creation, energy self-reliance, local economic development, and the mitigation of climate change. LEAP’s alliance model is a community-based, public-private partnership.
A guest blog post by Abby Johnson and Josh Doyon, Abacus Property Solutions
You may have heard by now about legislation passed in the 2015 Virginia General Assembly session (and
signed into law by Governor McAuliffe) enabling an energy efficiency financing mechanism known as PACE, an acronym for Property Assessed Clean Energy. PACE is an innovative way for commercial property owners to finance energy efficiency and renewable energy improvements in their buildings. In a nutshell, where localities set-up PACE programs, loans provide 100% funding of total project costs by placing a special assessment lien on the property that the owner repays over time as part of his/her tax bill. These PACE loans are typically financed by capital providers who receive the PACE assessment payment via the local taxing authority.
PACE is unique to other kinds of equipment financing in a number of ways including:
- Longer loan terms of up to 20 years that are based on the equipment life (not lender preferences);
- Projects are cash flow positive – often from Year 1 – as the savings from the energy efficiency upgrades are greater than the annual PACE assessment;
- Loans are non-recourse, as they are property – not borrower – based; and
- As a form of “property tax,” the annual assessment does not become due at the time of sale but instead transfers automatically to the new owner.
From a macroeconomic standpoint, benefits include:
- Stimulation of jobs via increased construction activity, supporting a range of stakeholders such as contractors, product manufacturers, lending institutions, and energy engineers;
- Creation of significant numbers of high performance assets in markets, which attract better quality tenants, thereby raising real estate tax revenue while reducing functional obsolescence of the existing building stock.
PACE legislation is in some stage of development or adoption in more than thirty states and the District of Columbia, and is already thriving in California, Connecticut, Florida and Ohio. Success stories include the landmark Universal Studios Hilton hotel, which used PACE to finance the energy efficiency portion of a larger upgrade project totaling $12 million. The PACE loan – approximately $7 million – was used to replace aging chillers, install water efficient fixtures, install LED lighting and other measures for an estimated first year savings of $800,000. Another example is a project financed through the Toledo-Lucas Port Authority in Ohio to upgrade the One Maritime Plaza property. The Authority used $1.4 million in PACE financing to upgrade the cooling tower, interior lighting, and hot water pumps, reducing annual electricity usage by 48%.
Although it can be a powerful financing tool for larger, well capitalized assets, PACE provides probably the most value for the less comprehensive projects – too small to obtain competitive financing from larger banks or ESCOs and often unable to self-fund the upfront costs. Projects under $250k and even under $100k are coming online all the time for measures such as solar plus LED that provide a great return on investment.
PACE is soon to be implemented in Virginia, as the legislation will go into effect on July 1. Stakeholders in both the public and private sector will begin developing underwriting criteria catered to Virginia. A cohesive “PACE in a box” system that would provide the essential tools for localities to adopt PACE will soon be under development. The coming months will prove to be a busy time in the world of energy efficiency and renewable energy as Virginians will be able to realize the significant benefits that PACE can have on their buildings, portfolios, and communities.
At Old Dominion Electric Cooperative, we are always exploring and evaluating new ways to operate in harmony with the environment. ODEC’s energy innovation initiatives are promoted under the slogan “We Put All of Our Energy into Energy” to outline our commitment to conserving energy.
Highlights Include Briefings on New Legislation, Federal Clean Power Plan
The Spring Meeting of the Virginia Energy Efficiency Council attracted an overflow audience on May 11, filling the meeting room at the Science Museum of Virginia in Richmond. Efficiency advocates gathered for the biannual meeting representing a wide variety of perspectives, including business of all sizes, utilities, nonprofits, national associations, local governments and state agencies.
The agenda featured several particularly timely topics, and speakers’ presentations can be found on the VAEEC website on our Resources page. A few highlights from the 2015 Spring Meeting:
- A pair of legislative successes at the General Assembly were prominently featured, starting with a top VAEEC priority: Property Assessed Clean Energy (PACE) financing. VAEEC Board Member Bill Greenleaf of Virginia Community Capital, and Abby Johnson of Abacus Property Solutions, orchestrated the successful campaign and now teamed up again to share the story of how PACE passed in Virginia and how it’s working in other states.
- Another successful piece of legislation, a clarification to the CARE Act that governs natural gas utilities, promises to increase program offerings from the utilities. Gina Slaunwhite of Columbia Gas of Virginia provided background on why the change was needed and what it could mean going forward.
- Mary Shoemaker (pictured at right) of the American Council for an Energy-Efficient Economy (ACEEE) presented the
latest details on the proposed federal Clean Power Plan and how it could be addressed in Virginia, with a specific focus on the potential of EE as a cost-effective solution.
- VAEEC Board Member Tom Jewell of Dominion Virginia Power moderated our regular meeting feature in which attendees from utilities provide updates on their EE programs; a high number of utilities (electric and gas, investor-owned and coops) were in the room and participated.
- Bob Adams of Housing Virginia shared details of a recent report examining how EE benefits low income and rental housing and highlighted a new coalition under development to promote EE in multifamily housing in Virginia.
The meeting was peppered with many additional updates and announcements, including; a sneak preview of the VAEEC’s latest industry census results; Borna Kazerooni offering updates from Virginia DMME; and Matthew Cooper sharing the exciting news that his Virginia-based firm, PEG, was honored by ENERGYSTAR as a national Partner of the Year.
As always, we greatly appreciate the many individuals who attended the Spring Meeting, traveling to Richmond from across the Commonwealth and beyond. A special thank you to Dominion Virginia Power for sponsoring this year’s Spring Meeting. We look forward to seeing everyone at the Fall Meeting for another opportunity to share information and insights, catch up with friends and colleagues and make new connections.
Four Members Also Serve on VAEEC Governance Board
The Virginia Energy Efficiency Council (VAEEC) is pleased to share the news that today Gov. McAuliffe appointed the members of the new Governor’s Executive Committee on Energy Efficiency. The Committee was created by the governor as part of the Virginia Energy Plan published in October, and it will be chaired by the state’s Chief Energy Efficiency Officer, Hayes Framme. The Committee is tasked with developing strategies to meet the state’s longstanding voluntary goal of reducing energy consumption in Virginia by 10% over 2006 levels by 2022 – a deadline that the governor has indicated should be moved up to 2020.
Statement by Ken Rosenfeld, VAEEC Executive Director:
“The creaton of the Governor’s Executive Committee on Energy Efficiency reflects the administration’s commitment to making energy efficiency a pillar of the Commonwealth’s energy future. The VAEEC applauds Governor McAuliffe for appointing this impressive group to accomplish its important work. The state’s 10% energy efficiency goal has been on the books for years, but without any plan to achieve it. This Committee has enormous potential to move energy efficiency forward in the Commonwealth, and to meet our efficiency goal in a way that generates significant benefits in terms of energy savings, financial savings, and job creation. The roster includes four VAEEC Governance Board members — Cynthia Adams, Bill Greenleaf, David Koogler and Saifur Rahman – and many other VAEEC member organization are represented as well; in total this is a remarkable collection of individuals who understand these issues in great detail. We look forward to working with the Committee to help ensure that every perspective is considered and to support its work in any way possible.”
Read the governor’s announcement.
The full list of appointees to the Governor’s Executive Committee on Energy Efficiency:
- Cynthia Adams of Charlottesville, Executive Director, Local Energy Alliance Program (LEAP)*
- Ken Barker of Richmond, Vice President, Customer Solutions & Energy Conservation, Dominion Virginia Power
- Carol Davis of Blacksburg, Sustainability Manager, Town of Blacksburg
- Jim Fawcett of Charleston, West Virginia, Manager, Energy Efficiency & Alternative Energy Initiatives, Appalachian Power Company
- Bill Greenleaf of Richmond, Loan Officer, Virginia Community Capital, Inc.*
- David Koogler of Hanover, Vice President, Customer Services, Rappahannock Electric Cooperative*
- Angela Navarro of Charlottesville, Staff Attorney, Southern Environmental Law Center
- Michele Peterson of Richmond, Senior Energy Business Consultant, Honeywell
- Bill Prindle of Charlottesville, Vice President, ICF International
- Saifur Rahman of McLean, Joseph Loring Professor and Director, Advanced Research Institute, Virginia Tech*
- William Reisinger of Richmond, Assistant Attorney General, Office of the Attorney General of Virginia
- Dana Wiggins of Richmond, Responsible Lending Coordinator, Virginia Poverty Law Center
*VAEEC Governance Board Member
Governor McAuliffe chose Earth Day 2015 as the fitting time to sign several pieces of clean energy legislation into law, including a pair of bills promoting energy efficiency. The VAEEC was well-represented at the event with a number of member representatives joining the celebration. The new clean energy laws include two VAEEC priorities: Property Assessed Clean Energy (PACE) financing, and a clarification to the Conservation and Ratemaking Efficiency (CARE) Act which regulates the state’s natural gas utilities.
The PACE legislation is the culmination of many years of work to have Virginia join the majority of states that have successfully implemented the program. PACE is a loan program that can be implemented by localities, allowing commercial property owners to finance energy efficiency and renewable energy measures for their properties and repay the loans as special assessments. VAEEC Board Member Bill Greenleaf of Virginia Community Capital spearheaded the successful campaign.
Read the final language.The update to the CARE Act clarifies how efficiency programs proposed by the gas utilities are evaluated by the State Corporation Commission. The change, supported by the utilities and the SCC, promises to result in more robust efficiency program offerings for Virginia customers.
Read the final language.
“The VAEEC thanks the Governor, his Administration, the bill sponsors, and the General Assembly for the great support of PACE financing and the CARE Act fix,” said Ken Rosenfeld, Executive Director of the VAEEC. “Both bills were overwhelmingly passed, reflecting the bipartisan support for energy efficiency in Virginia.”
“PACE financing provides a substantial new option to expand opportunities for commercial property owners. The CARE Act clarification, by providing a better measure of the true cost effectiveness of utility efficiency programs, promises to bring new opportunities to Virginia consumers. These two laws are a significant step forward for energy efficiency in the Commonwealth, and that means lower energy bills, cleaner air and local jobs. We have much more to do to reach the state’s energy goals, but this year’s General Assembly session was a home run for energy efficiency.”
The two new laws will be featured topics of discussion at the VAEEC Spring Meeting, Monday, May 11, 2:00-5:00pm, at the Science Museum of Virginia in Richmond. Register now.
PEG’s “Tactical Technical” mission is to provide world class engineering and environmental consulting for the THINKING ENVIRONMENT.
Learn more about PEG.
Join us for the Spring 2015 VAEEC Meeting, your twice-yearly opportunity to network with other leaders in the energy efficiency industry, hear from speakers about the state of the industry in the Commonwealth, and help chart the course for the VAEEC.
Topics and speakers on the agenda:
- PACE Financing Legislation (Bill Greenleaf, Virginia Community Capital, and Abby Johnson, Abacus Property Solutions)
- Gas Utility Legislation (Gina Slaunwhite, Columbia Gas of Virginia)
- Clean Power Plan (Mary Shoemaker, ACEEE)
- Utilities Update (Tom Jewell, Dominion Virginia Power)
- VAEEC Update / Census Results (Ken Rosenfeld, VAEEC)
- EnergyStar Partner of the Year (Matthew Cooper, PEG)
- EE and Affordable Rental Housing (Bob Adams, Housing Virginia)
Register now.
The meeting is free and open to all. Non-VAEEC members are asked to make a small donation. We encourage you to invite friends and colleagues. Parking is free. Thank you to Dominion Virginia Power for sponsoring the meeting.
