Energy Exchange: Energy efficiency

By EDF Blogs

By: Audrey Hornick-Becker

From left to right: Bruce Schlein, Director, Alternative Energy Finance, Citi; Vic Rojas, EDF senior manager, financial policy; Bryan Garcia, President, Connecticut Green Bank; Alfred Griffin, President, NY Green Bank. Source: Maria Jiang.

Last week, EDF co-hosted a successful first-of-its-kind Resilience Finance Symposium in New Jersey, attended by about 120 participants from a wide spectrum of public and private entities in the state, region, and country.

Held on November 12 with Governor Christie’s Administration and the New Jersey Institute of Technology’s College of Architecture + Design, the all-day Resilience Finance Symposium: Building Resilient and Sustainable Energy Solutions for New Jersey’s Key Infrastructure featured a series of panels on solutions that help keep the lights and heat on during critical times, like microgrids and energy storage, as well as innovative ways of financing resilient energy systems.

A main topic of discussion was the impressive progress New Jersey has made toward making the state’s energy infrastructure more resilient in the two years since Superstorm Sandy caused a massive weeks-long power outage. Panelists pointed to Sandy success stories – those instances when power stayed on even when the grid went down – and discussed the need to make these kinds of successes the norm rather than the exception.

One shining example was Princeton University’s microgrid, which was able to ‘island’ itself from the main grid and provide much-needed power to 12,000 people. Princeton University Energy Plant Manager, Ted Borer, was on hand to explain how the microgrid, fueled by a gas-turbine generator and solar power, was an effective low-carbon solution that can be replicated across the state.

Eric Daleo, New Jersey Transit’s Director, Superstorm Sandy Recovery and Resilience Program, spoke about the newly-funded NJ Transitgrid, which was awarded $410 million in federal funds to develop a microgrid that will service the state’s transportation system. He noted that a microgrid, which can function independently from the main grid during an emergency, can allow service crews to carry out critical recovery efforts.

Energy efficiency was also discussed as a resiliency solution, with Elizabeth Ackerman, Acting Director of Economic Development and Energy Policy, New Jersey Board of Public Utilities, reminding us that including energy efficiency in resiliency projects is critical. One of the biggest barriers to energy efficiency projects is the lack of a standard method of measuring, evaluating, and verifying savings, which deters more investors from participating.

Sean Neill, a leading energy efficiency consultant, discussed how the Investor Confidence Project – a project he helped found with the Environmental Defense Fund – aims to address these barriers by standardizing how energy efficiency projects are developed and energy savings estimates are calculated. Ms. Ackerman announced that New Jersey is exploring the adoption of the Investor Confident Project protocols for use in the state’s commercial energy efficiency programs.

While panels in the morning focused on why resiliency solutions are important, speakers in the afternoon turned to the discussion of how to finance them. Mitch Carpen, the newly appointed Executive Director of the New Jersey Energy Resilience Bank, discussed the bank’s first product, which will fund critical facilities such as water and wastewater treatment plants.

At the final panel on the region’s green banks – moderated by EDF’s own, Vic A. Rojas, Senior Manager, Financial Policy – Bryan Garcia, President and CEO of the Connecticut Green Bank, spoke alongside Alfred Griffin, President of the NY Green Bank, about the need for green banks to help build a self-sustaining market in clean energy finance by leveraging limited public funds to catalyze private investment. Bruce Schlein, Director, Alternative Energy Finance at Citi, echoed this sentiment, saying state-sponsored entities and well-recognized non-profits should pave the way to more clean energy finance deals in the private sector with technical assistance and a vote of confidence.

Agreeing that we already have the technology to create a clean and resilient energy infrastructure in New Jersey, participants called for policies encouraging resilient solutions and new ways to finance them. With the expanded use of microgrids and other clean energy solutions, a focus on energy efficiency, and the newly established Energy Resilience Bank, New Jersey is certainly making a tremendous effort to make sure the state is prepared for future extreme storms. EDF would like to thank all speakers and attendees for an engaging and fruitful Resilience Finance Symposium.

By EDF Blogs

By: Jorge Madrid and Marilynn Marsh-Robinson

We’ve spent nearly 15 years collectively working on clean energy solutions for both rural and urban communities, often with under-resourced and underrepresented people at the front of our minds. One question, among many, that is consistently on the minds of elected officials and advocates alike is: How will clean energy policies affect low-income families and communities of color? This is a critical question to answer because low-income families, including a disproportionately large percentage of African Americans and Latinos, spend a greater portion of their income on utility bills. This means spikes in electricity costs can interrupt monthly finances, and even slight increases can take away from other basic needs like housing, education, and food.

Unfortunately, the concern about cost impacts on low-income families and communities of color is also frequently used as an argument against transitioning to a clean energy economy. Sometimes these arguments come from elected officials and advocates with genuine concerns, while other times, they come from industry groups who are trying to protect their own interests by pitting these communities against clean energy. In both cases, incomplete or outright misinformation muddies the water and impedes effective policy dialogue.

The most recent iteration of this “low income vs. clean energy” messaging comes from an industry group that has been shopping around a resolution with African American and Latino policymakers aimed at curbing support for “net metering” and other policies put in place to advance rooftop solar power. Net metering has been a successful policy that has resulted in growing adoption of rooftop solar and holds long-term benefits for all customers.

It seems peculiar to us that this industry group would take such an aggressive stance against net metering on behalf of low-income families. But, a look at the full story adds clarity to the group’s intentions. Analysis from a recent Lawrence Berkeley National Laboratory study shows that, even under the most aggressive expansion of solar power the researchers studied, shareholder (or utility) profits would be impacted more financially from net metering than customers’ electricity rates. It would appear these efforts to attack net-metering policies are more about disruptions to profits than negative impacts to low-income people or other customers.

At best, these arguments from industry are misguided, and – at worst – they are something far more egregious. In either case, they are distractions that impede a dialogue addressing real challenges and solutions. Furthermore, they ignore many of the proven benefits clean energy can offer everyone, including low-income families and communities of color. We’ve authored and contributed to several pieces of analysis that show how policies aimed at expanding energy efficiency and clean, distributed energy resources (like rooftop and community solar) create savings and minimize costs, drive local living-wage jobs, and improve environmental outcomes for low-income communities.

Overall air quality and public health benefits are also realized because clean energy resources produce zero or negligible emissions to generate electricity and can displace dirty power plants. This is particularly important given that approximately 68 percent of African Americans live within 30 miles of a coal-fired power plant (with similarly large numbers for Latinos) and a recent study claims that nearly 40 percent of communities of color breathe polluted air. A transition to clean energy could therefore help offset health costs by keeping more money in the wallets of hard-working Americans.

Instead of spending critical time and energy opposing successful solutions, shareholders should be working together with policymakers, advocates, and customers to design programs and support policies that allow everyone to benefit from a clean energy future.

By Kate Zerrenner

U.S. Army Major General Dana J.H. Pittard, Fort Bliss commander, gives a speech during the ribbon cutting for the solar panel project at Fort Bliss, Texas housing communities, Feb. 26, 2013. Source: defenseimagery.mil

In light of yesterday’s commendable day, the Defense Energy Summit (DES) is hosting its second annual forum in Austin, TX, and EDF is a proud sponsor once again. One of the goals for this conference is to build the foundation for a new Defense Energy Center of Excellence (DECE), which would enable Central Texas and military communities to create a test bed of clean energy technologies and policies. The DECE will help the Department of Defense (DoD) with its energy defense policy, organizational structure, education and training, manufacturing, logistics, personnel, and financing.

Texas’ capital is a logical spot to house the DECE, as Texas is home to 22 military installations – including five bases within 90 miles of Austin. Plus, the DECE could tap into the brain power at Texas universities, which are already charging forward with innovative clean energy solutions.

Leading the Charge

Although the DoD is the single largest consumer of fuel in the United States, the military has taken a significant interest in its energy footprint for one primary reason: energy security.

Transporting fuel is one of the riskiest operations when fighting on the front lines. Last year alone, the U.S. military consumed roughly 90 million barrels of oil. By powering military bases and equipment with solar energy, as well as reducing demand through energy efficiency, the military can help protect the brave men and women serving in our armed forces. The DoD can then use those avoided fuel costs for other projects, such as research and development, to meet the needs of its most critical missions.

Army partners with NREL

Most recently, the U.S. Army (Army) announced a partnership with the Energy Department's National Renewable Energy Laboratory (NREL) in an effort to increase the use of energy efficiency and renewable energy at nine installations – one of which is in Texas. These pilot sites strive to be Net Zero Energy Installations (NZEI) by 2020, meaning they will produce just as much energy as they consume. If the pilots are successful, the Army will upgrade eight percent of current installations with renewable energy.

The savings really do add up, even with small energy reductions. NREL estimates that if Army installations worldwide reduce energy consumption by 25 percent, the Army would save up to $300 million in annual energy costs. That’s a lot of money that could be spent on our troops’ safety.

The Texas project is going not one but two steps further by aiming for net zero energy, water, and waste. As the largest military base (in terms of size) in the U.S., Fort Bliss has proposed a host of innovative technologies including a 20 megawatt (MW) solar installation, low-flow showerheads, smart meters on almost every building, and behavioral techniques to influence and increase conservation. In the words of Col. Joseph A. Simonelli Jr., Fort Bliss Garrison Commander, “this concept will include sustainability factors that improve the quality of life for Soldiers and families. With the right approach, we can take care of our Soldiers and families and help sustain the Army for the future.”

The biggest winner behind all of the @DeptofDefense clean energy installations? America....
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Other branches are taking up the clean energy fight, too

Here’s a rundown on how the other military branches stack up:

As the military’s largest consumer of fuel, the U.S. Air Force is taking great strides to reduce its energy footprint across the board. Some of its commitments include:

• increasing the use of on-site renewable energy at facilities by 25 percent by 2025
• only buying flex-fuel or alternative-fuel light-duty vehicles by 2015
• constructing or renovating facilities to meet high-performance building standards in order to achieve net-zero energy use by 2030 and cut potable water consumption 26 percent by 2020

The U.S. Navy has added enough solar energy to power 440 homes at its Pearl Harbor installation. It also tripled its clean energy investment in Hawaii last year with a $30 million endowment to the Energy Excelerator, a funding agency for renewable energy start-ups in Hawaii.

The U.S. Marine Corps is building its own advanced microgrid at the Marine Corps Air Ground Combat Center in Twentynine Palms, CA. This installation includes a notable 7.2 MW combined heat and power plant (CHP), the largest in the Marine Corps, which supplies more than half of the base's electricity needs. And, not only is it about to flip the switch on another energy-efficient 9.2 MW CHP plant, the base also harnesses 6 MW of solar PV arrays. Thanks to some alternative financing mechanisms, that’s a lot of generation that all comes at zero cost to taxpayers.

The biggest winner behind all of these installations is America. Through its leadership and ingenuity, the U.S. military is proving clean energy technologies are here and working for us today. That’s an impressive message as more electric utilities and states look to innovative technologies to improve grid reliability, lower electricity bills, and cut pollution from power plants.

If you are in Austin, please join in on this important conversation at the Defense Energy Summit. My colleagues Stephanie Kline, Marine Corps veteran and climate fighter, and John Finnigan are on the agenda covering fossil fuel dependency and cybersecurity. It’s not to be missed.

This post originally appeared on our Texas Clean Air Matters blog.

By Greg Andeck

Business-friendly clean energy policies in North Carolina continue to support the success of clean energy companies – boosting job growth and economic development.

In the past 30 days alone, three corporate announcements illustrate the power of the state's Renewable Energy Portfolio Standard, which requires utilities to expand their use of renewable energy and energy efficiency, and North Carolina’s renewable energy tax credit, which rewards companies for investing in clean energy.

 Strata Solar

Strata Solar announced it has invested $1 billion in North Carolina solar energy, including 65 solar facilities in 40 counties, and employed 2,000 workers during the past five years.

The Chapel Hill-based company has the attention of Governor Pat McCrory, who praised its investment:

Solar energy is a big part of North Carolina’s all-of-the-above energy strategy, and we thank Strata Solar for its impressive investment in our state. North Carolina is a national leader in solar energy, and companies like Strata Solar have played a big role in our past and will continue to do so in the future.”

Cree

Cree unveiled another generation of light bulbs that are more affordable and provide superior performance to incandescent light bulbs. Continued decreases in the cost of Cree light bulbs will encourage widespread adoption of LED lighting technology. The Durham-based company has over 2,500 employees in North Carolina.

Alevo

Alevo, a Swiss company, announced it will convert a former Phillip Morris cigarette plant in Concord into a battery storage manufacturing facility that will create thousands of new jobs.

Alevo says its battery technology will allow utilities to store large amounts of renewable energy for times when it is needed, like during periods of peak energy demand or blackouts. Having this back-up energy available can help avoid the need to construct new fossil fuel plants.

Governor McCrory also praised this announcement:

It’s great to welcome this exciting and innovative company – along with the new jobs – to North Carolina. Not only will these batteries reduce waste and inefficiencies, but they will also help lower the cost of energy for consumers. The energy technology sector is a growing part of our economy that employs thousands in North Carolina."

Let's give credit to state decision makers and elected officials for creating the renewable energy portfolio standard and tax credit.

Although modest in scope, these policies send important signals to the marketplace and show that small policy investments can generate significant returns in jobs and economic development.

Let’s keep both policies on the books to continue to attract companies and jobs to North Carolina.

By EDF Blogs

By Panama Bartholomy, Director, ICP Europe, with contributions from Steven Fawkes, Senior Advisor, ICP Europe

EDF's Andy Darrell, Chief of Strategy, US Climate and Energy and New York Regional Director, at the ICP Europe launch in Brussels

Environmental Defence Fund’s signature energy efficiency initiative has gone international. EDF Europe/UK today rolled out the Investor Confidence Project Europe (ICP Europe), aimed at boosting private sector investment in European energy efficiency renovation projects in the building sector.

As Director of ICP Europe, I was thrilled to introduce the initiative with leaders from the financial, engineering, and government communities at an event in Brussels during a week when two of Europe’s largest energy efficiency events are being held: Renovate Europe Day and Building Performance Institute of Europe ‘s Efficiency Investors Day.

The potential for renovating existing buildings in Europe to reduce the impacts of climate change, generate financial savings, and create jobs is considerable – and largely untapped. Estimates say that large-scale energy efficiency efforts in Europe could reduce carbon emissions by 932 million metric tons, equivalent to taking nearly 200 million cars off the road, and create more than 1 million new jobs in the building industry by 2050.

Recognizing this, the European Commission has set a goal of reducing carbon emissions by 90 percent in the building sector by 2050. However, significant investment will be needed to achieve the 2050 goals, estimated at €3.5 trillion, or an annual €95 billion. Investment at this scale requires substantial financing from private sector investors who will need to view building renovation projects as safe and profitable investments.

The goal of ICP Europe, which is modeled after the U.S.-based Investor Confidence Project (ICP), is to help transform the energy efficiency market by standardizing how building renovation projects are developed and measured. This will streamline energy efficiency transactions and increase the reliability of projected energy savings.

Standardization reduces risks and transaction costs for investors, spurring financing that will lead to a building sector with lower operating costs, higher market value, and a significantly lower carbon footprint. Over the longer term, the initiative aims to make energy efficiency a recognized asset class that will enable capital markets to invest in energy efficiency projects.

In virtually all established markets, from car loans to timeshares, standardization and automation has helped to accelerate underwriting, reduce long-term liability, and spur investment. If the same could be done for energy efficiency finance, it could help raise the vast amounts of capital needed to meet Europe’s ambitious carbon goals.

ICP Europe has industry support

The Energy Efficiency Financial Institutions Group – convened by the European Commission and United Nations Environment Programme Finance Initiative – specifically highlighted ICP in its interim report, Energy Efficiency – the first fuel for the EU economy, as a model industry best practice. It also called for the “launch of an EU-wide initiative to develop a common set of procedures and standards for energy efficiency and buildings refurbishment underwriting for both debt and equity investments.”

The International Energy Agency also weighed in last month, saying in its Energy Efficiency Market Report 2014, “[ICP] will facilitate a global market for financings by institutional investors that look to rely on standardized products rather than project-specific structuring and due diligence."

Matt Golden, Senior Energy Finance Consultant, at the ICP Europe launch in Brussels

What the Investor Confidence Project Europe is not

It is important to understand what ICP Europe is not. It is not developing new technical standards; plenty of these exist. Rather, it is about using the available standards in a common way through the entire process of developing and documenting energy efficiency projects.

Furthermore, ICP Europe does not exist simply to enforce a U.S. model. The process of developing a project anywhere in the world will follow the same process but use different engineering standards. What will be common between the U.S. and Europe is an approach, not specific standards or protocols. This is essential because the world of finance is international and many of the large institutional investors who want to invest in energy efficiency, but are currently constrained from doing so, operate on both sides of the Atlantic and, indeed, around the world.

Powerful Pan-European support

We have built a powerful pan-European coalition of banks, development banks, investors, property owners, energy efficiency companies, and government agencies, among others, who support ICP Europe.

This includes a steering group from the top organizations and companies in their sectors: ING Bank, Green Investment Bank, eu.ESCO, Plus Ultra Asset Management, ARUP, EuroACE, RdA Climate Solutions, Siemens, E.ON, Building Performance Institute of Europe, Climate Strategy, and United Kingdom Department of Energy and Climate Change.

ING Commercial Banking’s Global Head of Energy and Carbon Efficiency, Stephen Hibbert, said the bank is “enthused to be a member of the steering group and look forward to sharing our experience and playing our part in building an effective market for energy efficiency finance.”

To participate in this exciting initiative, please join the ICP Europe Technical Forum to help us choose from among the leading energy efficiency standards, or support us by joining the no-cost ICP Europe Ally Network.

By EDF Blogs

By: Dan Upham, Editor

We no longer fret over taxes on tea, but there’s another American Revolution forming in our great nation today. Like the colonist uprising 241 years ago, it’s fueled by a need to stand up against an outdated system that threatens our way of life.

It’s a battle over the future of American energy and our antiquated electric grid. And it centers around the way consumers, utilities, and investors interact with this vast network of powerlines, substations, and plants.

As Cheryl Roberto, who leads Environmental Defense Fund’s Clean Energy program, notes, “The U.S. is poised to spend around $2 trillion over the next two decades replacing our outdated electric infrastructure.”

That’s a lot of coin and a tremendous opportunity.

We’ve detected five emerging trends that may forever change how we produce and consume electricity. It will be an American approach to energy that wastes less, pollutes less, and, as Cheryl likes to say, “puts customers in the driver’s seat.”

It’s made by, and for, you and me.

Trend #1: Utilities think quality, not quantity

Power companies, like people, respond to incentives. The current regulatory framework in the United States incentivizes utilities to invest more in power stations and infrastructure than in building value for consumers and the environment.

If they are to survive the Revolution, utilities need to re-think the model, and the regulatory framework needs to change to support utility investments in renewable energy and energy savings. It sounds daunting, but it’s already happening in New York State.

Trend #2: Clean energy finance takes hold

While rooftop solar panels are becoming more common, securing financing for these and other energy investments and retrofits can be tough. Clean energy is more than a way for homes and businesses to lower bills and protect the environment; these upgrades also represent a serious investment opportunity.

Today, states are beginning to connect investors with programs such as on-bill repayment for large and small residential projects. Commercial properties are getting in on energy efficiency, too, thanks to the Investor Confidence Project which brings standardization and quantifiable metrics to energy efficiency projects in the commercial building sector.

The result: lower operating costs, higher market value, and a significantly lower carbon footprint.

Trend #3: Everyone gets a stake in the grid

Going back to incentives, energy-savings programs like demand response help consumers adjust their power consumption during peak times by offering a financial reward for doing so. By empowering consumers (forgive the pun) we can use resources far more effectively and efficiently.

Distributed energy is a related concept, calling on smaller-scale clean energy resources such as energy efficiency, energy storage, and local, on-site generation to complement traditional sources. California is at the forefront in this area.

Trend #4: Vastly improved batteries open new doors

Rapid advancements in battery technology are making batteries a surprisingly disruptive – for the better – force in the modern American Revolution. EDF’s Midwest Clean Energy Director Dick Munson reports that improved batteries could put renewable energy sources in the lead.

“When the wind stops blowing or the sun goes behind a cloud, batteries are able to provide back-up power until those resources are back online,” he writes.

Until recently, battery cost was prohibitive, with systems costing as much as $1,500 per kilowatt hour. Today the average is between $500 and $700, and dropping. Bonus: Someone has to build these batteries, and that means jobs. Just ask North Carolina and Illinois.

Trend #5: Coming: Federal policies to support it all

All of these trends are independently worthwhile, but the Clean Power Plan may be the glue that binds them all together. In addition to putting the first-ever limits on power plant emissions, the plan offers states impressive freedom to choose how to meet their emissions goals, and the trends above will play out as states exercise that freedom.

Freedom is the hallmark of any true American Revolution, after all. As is our quest for a stronger, better, and more innovative nation.

To take a page from the classic 1980s cartoon He-Man: Americans can be masters of our energy universe. We…have…the power!

Photo source: Flickr/Todd Lapin

This post originally appeared on our EDF Voices blog.

By Marilynn Marsh-Robinson

A rural electric cooperative in North Carolina is one of the first in the country to receive funds from a new United States Department of Agriculture (USDA) on-bill finance program that will help customers improve energy efficiency, lower utility bills, and reduce carbon pollution. Roanoke Electric Membership Cooperative, which serves 14,ooo rural customers, is in my home state.

Roanoke Electric’s membership base is similar to other economically distressed rural areas, which have a growing elderly population and residents with homes that need energy-saving upgrades.

The cooperative diligently promotes energy efficiency, yet there are still customers with utility bills that are higher than their mortgage payments some months. Securing upfront capital to finance home improvements can be challenging.

Roanoke Electric's service territory is a good place for USDA to launch its program. The agency will provide Roanoke Electric up to $6 million in loans to finance upgrades to heating and air conditioning systems, appliances, and weatherization in customers’ homes. Funding will cover about 800 residential upgrades over four years.

Agriculture Secretary Tom Vilsack called the loans "a landmark in our efforts to promote rural economic growth, while reducing greenhouse gases."

Customers who qualify for Roanoke Electric’s Upgrade to $ave program do not incur any up-front costs or debt as a personal loan from a lending institution. Instead, improvements are paid for with a monthly service charge on utility bills. The obligation is offset by savings from energy efficiency.

This is not the first time Roanoke Electric has explored innovative financing options for its customers.

EDF recently partnered with the cooperative and a local credit union to design a pilot program that offered low-cost loans to homeowners interested in energy efficiency improvements. The program relied on a form of on-bill repayment that allowed customers to repay improvement loans on their utility bills. It was the first on-bill finance program in North Carolina to use private capital for energy efficiency retrofits.

The USDA program will allow more Roanoke Electric customers to participate.

"Now we can open access to low-cost capital for all cost-effective energy efficiency improvements sought by members with sound bill payment history, regardless of income, credit score, or status as renters or home owners," said Roanoke Electric CEO Curtis Wynn.

Hats off – once again – to Roanoke Electric for pursuing new financing options for energy efficiency that help customers save money and reduce carbon pollution.

Photo source: Flickr/Gerry Dincher

By Dick Munson

Several states have embraced net metering in order to encourage the adoption of solar energy and other distributed generation. Sometimes referred to as “running a meter backwards,” net metering allows people to generate their own electricity, export any excess electricity to the grid, and get paid for providing this excess energy to the utility who may use it to power nearby homes or manage overall electricity demand.

Net metering leads to lower – or in some cases negative – electricity bills without having to invest in expensive batteries to store excess energy, which can be cost-prohibitive. By generating energy on-site where it’s consumed, net metering also reduces the strain on distribution systems and cuts the amount of electricity lost to long-distance transmission and distribution (estimated at seven percent in the U.S.). Net metering, moreover, tends to reduce greenhouse gas emissions by incentivizing people to adopt renewable energy and become more aware of energy-saving opportunities.

A few states like Illinois are now talking about “virtual” net metering. The term “virtual” may be confusing, but it essentially means customers can receive net metering credits for projects even if they are not on their property. An example would be a group of neighbors receiving such credits for a community solar project.

Virtual net metering offers many advantages, even over its more common cousin, including:

1.     Optimized siting for solar and distributed energy projects

Rather than being limited to a single roof that might be tilted away from the sun or covered by trees, installers, investors, and customers can choose the most productive sites, making for a better investment with higher financial returns.

2.     Additional financing options, plus options for renters

A “virtual” project also enables creative project financing, perhaps through crowd funding or third-party ownership. It also allows renters and other non-homeowners to invest in energy projects. For example, California’s Multifamily Affordable Solar Housing (MASH) Program has led to 20.5 megawatts of solar capacity interconnected across 323 projects that serve 6,371 affordable housing tenant units.

3.     Economies of scale, which lower costs

Virtual net metering enables larger project developments, while also minimizing costs associated with house alterations and project maintenance. Larger projects allows for an economy of scale which lowers costs for everyone involved (i.e. the greater the quantity of a good produced, the lower the per-unit fixed cost because these costs are shared over a larger number of goods). The Lawrence Berkeley National Laboratory (LBNL) calculated that the installed cost of solar drops over 30 percent when moving from a 2 kilowatt system to a 10 kilowatt system. Economies of scale also may allow investors and developers to target construction on cheaper property areas, the value of which may vary widely within a utility service territory, further adding to a project’s financial incentive.

4.     Expedited project development

Virtual net metering can streamline the interconnection application and review process for both utilities and customers. Compared to applications from multiple residents with rooftop solar, a community project would require a single filing, saving both time and money.

5.     More profitable compensation rates

Virtual net metering, particularly for solar projects, allows more customers – not just those with solar panels on their roofs – to take advantage of a utility’s dynamic retail electricity rates that offer higher prices during peak periods in warm summer months, which coincide with maximum solar electricity production.

By adding “virtual” to a tried-and-true concept, we can expand the benefits of solar and other clean distributed-generation projects to more people. This expansion also offers “real” reductions in both costs and pollution.

Photo source: Flickr/Sterling College

By EDF Blogs

By: Tom Murray, VP Corporate Partnerships

This past year, we’ve seen some bold action by companies in what we’ve dubbed the business-policy nexus, and it’s taking several different forms. Some have been calling for state or federal action on environmental impacts, while others are taking far-reaching voluntary efforts that could help support policy advocacy in the future.

Whether you view engagement on public policy as risk mitigation, providing market certainty, supporting corporate sustainability goals, or securing competitive advantage, leading businesses are increasingly stepping up their efforts to support smart policy reform that will benefit the environment and economy.

Keeping toxic chemicals out of supply chains

Walmart and Target are moving to proactively get harmful chemicals out of their supply chains, even though the nation’s main chemical safety law, the Toxic Substances Control Act (TSCA), is outdated and hasn’t been reformed in nearly two decades.

Earlier this year, our long-term partner in this area, Walmart, took a big step forward by announcing a new sustainable chemicals policy focused on cutting 10 chemicals of concern from home and personal care products it sells. Chemicals of concern – for example, formaldehyde, a known carcinogen – have been found in about 40% of the formulated products on Walmart shelves, including things like household cleaners, lotions, and cosmetics.

That policy includes requiring Walmart’s suppliers to disclose the chemical ingredients of their products as well as phase out or declare on their packaging the ten high-priority chemicals of concern. Walmart is also moving to have its private label products meet the EPA’s Design for the Environment safety standards.

Building upon this, Walmart and Target convened a Beauty and Personal Care Products Sustainability Summit aimed at surfacing ways both companies and their suppliers can increase consumer safety, sustainability, and transparency through the entire supply chains of their products.

By engaging early—especially in areas where federal action is expected in the future, as with reform of TSCA—companies can reduce their risks, whether from legal action or public perception, and build greater trust with the public. These efforts also create a lens into companies’ operations that will shape the debate as changes to federal regulations take form.

Curbing methane leakage from the oil & gas sector

Another area where companies have been voicing support and helping guide policy is the push to reduce emissions of methane, a powerful greenhouse gas, from the oil and gas sector. Methane emissions are 84 times more potent than CO2 emissions over a 20-year timeline, and are increasingly seen as a major environmental and financial risk by both the energy and investment sectors.

That risk is driving companies in the oil and gas sector and elsewhere to encourage the federal government to regulate methane emissions. For example, in June Goldman Sachs CEO Lloyd Blankfein voiced his support of methane regulation on the Charlie Rose Show. Just two weeks ago, a group of investors managing $300 billion in assets (including the $160 billion NYC pension funds) sent an impassioned letter to EPA Administrator Gina McCarthy calling for federal regulation of methane emissions.

Your opportunity to lead in the transition to a clean energy future

Engagement starts with being informed. That’s why EDF is eager to help you understand the need and opportunity for leadership on the EPA’s proposed Clean Power Plan (aka the Carbon Pollution Standards or 111d).

This proposed rule is the biggest single action the federal government has taken on climate change, and will help curb carbon emissions from the largest source of carbon pollution in the United States. Proposed by the EPA earlier this year, the Clean Power Plan is projected to reduce greenhouse gas emissions from existing power plants by 30 percent below 2005 levels, with room for custom implementations on a state-by-state basis so that state and local leaders can decide what solutions best fit the needs of each state’s specific economic, corporate and energy sectors.

Any sustainability officer who has tried to competitively price green power or build the business case for an energy efficiency program has a stake in the outcome. The Clean Power Plan can help shift us towards a lower-carbon economy and expand the demand and market for renewable energy and energy efficiency. But this depends on how the plan is implemented, and getting that right depends on you.

This post originally appeared on our EDF+Business blog.

By Peter Sopher

Revolutionary paradigm shifts often require cohesive development of many moving parts, some of which advance more quickly than others in practice. Germany’s revolutionary Energiewende (or “energy transition”) is no exception. Set to achieve nearly 100 percent renewable energy by 2050, Germany’s Energiewende is one of the most aggressive clean energy declarations in the world. While growth of Germany’s installed renewables capacity has been explosive in recent years, optimization measures designed for Energiewende have manifested at a relatively slow pace.

Germany already has one of the most reliable electric grids in the world, but as implementation of Energiewende continues, optimization will be key to its future success. This will require better sources of backup generation to accommodate the intermittency of wind and solar, a dynamic energy market that ensures fair compensation for this backup, and a more flexible, resilient grid enabled by smart grid technologies to fully optimize demand side resources and a growing renewable energy portfolio.

Every plan needs a backup

One of the biggest arguments against building a world dependent on 100 percent renewable energy is the challenge of intermittency. To make up for this “weakness,” grid operators have traditionally relied on fossil-fueled “peaker” plants to fill the energy gap when the sun’s not shining or the wind’s not blowing. But more flexibility for dispatch that includes energy storage and demand-side resources is needed to backup increasing amounts of wind and solar.

According to the Hertie School Experts, “approximately 80 GW” of backup capacities will be needed for Germany. At present, lignite and gas are the country’s most abundant backup power source. Among renewable energy sources, pumped hydro and bioenergy are the most developed technologies providing storage capacity, but potential for these sources in Germany is very limited. Close to Germany, in Scandinavia, there is more potential for storage, but infrastructure for transporting electricity from Scandinavia to Germany is – at the moment – underdeveloped.  More robust grid linkages with other countries will enable renewables from across the continent to provide power for a larger number of people.

Demand response – an energy savings tool that pays people to shift their electricity use to times of day when there is less demand on the power grid – has also proven to be a successful backup resource in the U.S.; but in Germany, it is still a very nascent resource. However, EnerNOC president and co-founder David Brewster believes that “in the next two years, Germany is [EnerNOC’s] biggest opportunity in Europe.” Because demand response relies on people, not power plants, to accommodate rising electricity demand, better integration of this powerful tool could help Germany balance its growing renewables portfolio without having to build more peaker plants.

Germany has one of the most reliable electric grids in the world - optimization will be key to its...
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Backup power must receive appropriate compensation

The current energy market in Germany fails to fairly compensate backup power solutions. One potential solution to this challenge includes shifting from Germany’s current “energy only” market, in which utilities are only paid to produce and deliver energy, to a “capacity” or “capabilities” market.

In a capacity market, utilities are not only compensated for the energy they produce, but also for what they have on reserve for immediate use when faced with reliability challenges. But this model does not give preference to any particular energy source. A capabilities market is more flexible to changing market needs. As a result a capabilities market can use competitive forces to incentivize reduced CO2 emissions or water usage for example. Natural gas-fired plants, energy storage, demand response, and renewable energy resources are just a few examples of the reliability measures that might be prioritized over a coal-fired “peaker” plant when trying to meet the demands of a strained electric grid.

Smart infrastructure will optimize Germany’s electric grid

Today, much of Germany’s renewable energy generation occurs in the north while demand is in the south.  While transmission capacity, at least in the short term, is sufficient for serving Germany’s energy demand, high voltage transmission and distribution (T&D) infrastructure is needed to alleviate pressure on the increasingly congested lines transporting power from Germany’s north to its south.

Since the passage of the Grid Expansion Acceleration Act (NABEG) and the Energy Act (EnWG) in 2011, the Bundesnetzagentur (BNetzA), or Federal Network Agency, has been leading Germany’s grid expansion efforts. For example, through approving grid enhancement and expansion efforts from the 2013 Electricity Grid Development Plan (NEP 2013), BNetzA is leading the enhancement or optimization of 2,800 km of existing power lines and the construction of an additional 2,650 km of new lines.  Each year usually involves a new NEP, and longer term 2015/2025 grid expansion plans are under development.

Beyond added transmission and distribution, Germany must also improve investment in smart grid technology, such as intelligent sensors and smart meters. This technology allows for a two-way exchange of energy information between customer and utility that empowers people to save energy (and money), while helping utilities balance demand. While a goal of Energiewende, implementation of smart grid technology has only recently begun. A more robust adoption of smart grid technology could help Germany bring more renewables online, improve grid reliability, reduce electricity demand, lower or maintain energy costs, and reduce harmful CO2 from polluting power plants.

Conclusion

While accumulation of renewable electricity generation capacity is the most iconic feature of an energy transition, a host of additional measures are necessary for optimizing an electricity grid’s cleanliness, cost-efficiency, and reliability. With so many moving parts to an energy transition, it’s inevitable for some to advance more quickly than others. For Energiewende, renewables capacity has developed more quickly than grid optimization measures. Awareness of this implementation trajectory is useful for identifying future paths forward with the highest marginal returns for modernizing the grid.

This is the fourth blog post in a six-part series on Energiewende, which will describe best practices gleaned from the German experience and examine their U.S. applicability. Topics will include the Economics, Politics, Governance, Implementation, and Reliability of Energiewende.

By Dick Munson

For more than 100 years, the U.S. power system relied on fossil-fueled power plants to meet our growing energy demand. Now, clean energy resources like renewables are quickly changing our energy mix. But what happens when the sun isn’t shining or the wind isn’t blowing? What about when power demand momentarily outpaces supply? That’s where batteries and energy storage come in, offering a fundamental, even disruptive change to the U.S. electricity system as we know it.

Batteries are energy game-changers

Today’s electricity system not only overproduces to be prepared for unforeseen problems, it also deploys dirty “peaker” plants that fire up during those few times per year when electricity demand is high (like during a heat wave) and the electric grid is stressed. With batteries, there’s no need for either overproduction or inefficient backup reserves, ultimately saving both utilities and customers money.

Batteries can provide bursts of electricity incredibly fast, often in milliseconds, and with far quicker reaction times than traditional power plants. As a result, energy storage helps the electric grid absorb and regulate power fluctuations, providing electricity fast, when and where it’s needed. Since the supply and demand of power must be carefully balanced, this ability helps prevent the grid from experiencing brownouts or blackouts.

Batteries are also uniquely equipped to integrate the unpredictability of renewable energy by storing the unused energy produced by wind and solar. When the wind stops blowing or the sun goes behind a cloud, batteries are able to provide backup power until those resources are back online. This is good for the environment because batteries can displace the conventional generators typically used to regulate power flows, and good for customers’ electricity bills since it enables them to continue operating on self-generated power. Since intermittency is one of the strongest arguments against integrating more renewables onto our electric grid, affordable, reliable energy storage has been called the missing link to making this clean energy resource a staple in our electricity mix.

Prices are falling

Some research suggests batteries may already be competitive with conventional electricity generation. Only five years ago, they cost $1200 to $1500 per kilowatt-hour and now conventional systems sell for less than half that at $500 to $700 per kilowatt-hour. Furthermore, Navigant researcher Sam Jaffe said today’s high-quality lithium-ion batteries that can last ten years under frequent cycling are “pretty comparable” in cost to a natural-gas-fired peaker plant capable of providing four hours of energy duration.

None the less, battery prices continue to fall – and that’s a good thing if energy storage is to become truly competitive with traditional fossil fuels.

Tesla Motors, maker of electric vehicles and a huge proponent of energy storage, recently made headlines by paying Panasonic a mere $180 per kilowatt-hour. And, with the company’s recent announcement to build the world’s largest battery factory, this Gigafactory is expected to manufacture more lithium-ion batteries than the entire industry produces now, reducing the cost of batteries by almost one-third.

Even more auspicious news comes from Navigant Research, which predicts prices in the broader market will likely fall to $100 per kilowatt-hour within the next two to three years and global energy storage will rise from 538 megawatts to 20,800 megawatts – or nearly 40 times as much – in a decade.

While most analysts expect lithium ion to remain the market leader for the next decade, companies and researchers are currently exploring additional channels for energy storage, a sign that further innovation is sure to come. In a recent report on batteries, UBS noted that although the ideal battery technology is still not clear, “In the end, lower prices are coming.”

Glidepath’s ambitious battery project

Soon Northern Illinois will be home to North America’s largest battery project. Glidepath Power, a Chicago-based energy development firm, obtained financing and signed contracts for three $20-million battery facilities that will provide 60 megawatts of storage. Glidepath’s initial financing came from the Energy Foundry, an equity firm established by Illinois’ Energy Infrastructure Modernization Act, landmark 2011 legislation for which EDF advocated.

Each Glidepath facility – to be built in Joliet, McHenry, and West Chicago by spring 2015 – will consist of nine containers, which will house 80,000 lithium-based batteries. This battery development will increase the power grid’s efficiency and encourage the use of wind and solar energy.

As might be expected, the disruptive quality of batteries is causing some traditional power companies, to fight back. Commonwealth Edison, one of Illinois’ largest utilities, for instance, recently filed a tariff with the Federal Energy Regulatory Commission (FERC) that would impose a monthly fee on battery installations, possibly setting a precedent for hindering battery projects like Glidepath’s.

As our electric grid becomes smarter, batteries and energy storage will continue to play an increasingly disruptive role in our power supply system. Someday – perhaps not too far off – projects like Glidepath’s battery facilities will be commonplace and a grid powered entirely by a combination of renewable sources and batteries will be a reality.

By John Finnigan

New York opened its “Reforming the Energy Vision” (REV) proceeding earlier this year to re-examine the utility business model. As part of this proceeding, state regulators will also look into removing market barriers preventing greater deployment of distributed energy resources (DER), which are smaller-scale clean energy resources, such as energy efficiency, energy storage, and local, on-site generation.

In recent years, DERs have made great strides due to market reforms, advanced technologies, and declining costs. Despite these advances, DERs serve less than 1% of national electricity demand as the existing utility business model and regulatory policies still favor traditional electricity distribution from a centralized grid.

Though the REV proceeding is in its early stages, the Department of Public Service Staff (Staff) has provided guidance recommendations for eliminating these market barriers. Using the Staff’s filings, EDF has drafted a white paper that compiles a Top 20 list of the changes required before we will see greater use of DERs. If adopted, these recommendations would result in a sea change for incorporating DERs into New York’s electric system and would provide a template for other states to follow.

Among the Top 20 recommendations are a new regulatory paradigm that rewards utilities for the benefits they deliver rather than infrastructure investment, a new platform allowing DERs to compete on equal footing with traditional energy resources, and a market structure open to third-party energy service providers. Please read our white paper for more recommendations.

The REV proceeding has a long way to go before the policy recommendations are finalized, new laws are passed, and utility implementation plans are adopted. Yet it is already clear that REV will “REVolutionize” the use of DERs in the energy system.

By EDF Blogs

By: Tracy Phillips, ICP Technical Lead

There is a simple question that haunts building owners, energy services companies, and even utilities who invest in energy efficiency: “How do I know if I will really see the savings?”

To answer this question, EDF’s energy efficiency initiative, the Investor Confidence Project (ICP), is implementing a system that creates confidence in energy savings and cash flows.

Today, ICP is pleased to launch a new component of this initiative: the Project Development Specification. This product launch, along with the recently unveiled Software Provider Credential, is part of a larger effort by ICP to accelerate the development of a global energy efficiency market by standardizing how Investor Ready Energy Efficiency™ (IREE) projects are developed and verified leading to increased investor confidence in savings.

Representing years of significant participation and input from leading industry and engineering experts, ICP’s Project Development Specification is a first-of-its-kind, ‘soup-to-nuts’ guide for executing each step in the ICP Energy Performance Protocols. These protocols define a clear roadmap, from the initial stages of readying an energy efficiency project for investment, to a completed project operating with predictable returns for the investor.

This new Specification – based on current engineering best practices – provides a detailed set of instructions on how to develop consistent energy efficiency retrofit projects. It also provides evaluation criteria that can be used by third-party, quality-assurance providers to evaluate and credential projects based on clear specifications.

Projects that are validated as having met the ICP Project Development process will then be eligible to receive the ICP IREE project designation, assuring investors that a project has been engineered according to the ICP Protocols and will deliver predictable, verifiable returns.

The Project Development Specification brings the many necessary details of an energy efficiency project into focus, providing a clear direction to the team with regard to requirements, tools, expectations, and quality management.

This new resource can be found on the ICP website along with accompanying checklists that can help organize and facilitate the project development process.

By Gernot Wagner

By: Inês Azevedo, Kenneth Gillingham, David Rapson, and Gernot Wagner.

Lighting is critical to our livelihoods. Humans have used lighting technology since long before industrialization. For many centuries, this lighting was extremely inefficient, with over 95% of the energy consumed wasted as heat. Recently, the Nobel Prize in Physics was awarded to Isamu Akasaki, Hiroshi Amano and Shuji Nakamura for their remarkable contributions towards highly efficient light emitting diode (LED) technology. A day later, Michael Shellenberger and Ted Nordhaus reignited a long standing debate with an Op-Ed inThe New York Times claiming that these developments are not likely to save energy and instead may backfire. (TheTimes has since corrected a crucial point of the article, and it has published three letters to the editor, including one by a subset of co-authors here.)

As evidence for these claims, Shellenberger and Nordhaus cite research that observes the vast improvements in the efficiency of lighting over the past two centuries having resulted in “more and more of the planet [being] dotted with clusters of lights.” They take this as evidence of how newer and ever more efficient lighting technologies have led to demand increases and, thus, have “led to more overall energy consumption.” Further, they refer to “recent estimates and case studies” that suggest “energy-saving technologies may backfire, meaning that increased energy consumption associated with lower energy costs because of higher efficiency may in fact result in higher energy consumption than there would have been without those technologies.”

First off, yes, it is likely that many efficiency improvements are associated with some rebound effect. It’s been with us forever, and it’s been known for over a century. More efficient lighting leads to people using more light. Key here is “leads to.” Causality matters. More on that in a minute.

For now, a quick look at the actual technology in question. It turns out the technology developments for LED lighting are, in fact, much greater than previous advances in lighting. Figure 1 [see the pdf] shows the dramatic pace of technology change in LED efficacy. The Nobel Prize was well-deserved: LEDs provide a major energy-saving innovation.

But what about the claim that this efficiency improvement will only lead to more energy use? This claim is simply not justified. Noting that lighting dots the globe at night today when it did not in the 19th century may be confounding correlation with causation. The world is also much wealthier today and the service provided by light from electricity is very different than candlelight. Perhaps earlier lighting would have dotted the globe at night in 1850 too had we been as wealthy as today and had consistent lighting. We cannot say without looking at the evidence.

The evidence we have is quite clear. Shellenberger and Nordhaus say “The I.E.A. and I.P.C.C. estimate that the rebound could be over 50 percent globally,” and they then proceed to talk about “backfire,” a rebound effect of over 100 percent. That’s quite a jump from 50 to 100. What’s missing here is that most studies, including the IEA’s and their own(!), take 60% as an upper bound. The IPCC summarizes the evidence as thus:

“A comprehensive review of 500 studies suggests that direct rebounds are likely to be over 10% and could be considerably higher (i.e., 10% less savings than the projected saving from engineering principles). Other reviews have shown larger ranges with Thomas and Azevedo (Thomas and Azevedo, 2013) suggesting between 0 and 60%. For household‐efficiency measures, the majority of studies show rebounds in developed countries in the region of 20-45% (the sum of direct and indirect rebound effects), meaning that efficiency measures achieve 65-80% of their original purposes.”

We have each performed our own detailed surveys of the literature (Azevedo 2014; Thomas & Azevedo, 2013; Gillingham et al. 2013;Gillingham et al. 2014) and largely agree with these statements from the I.P.C.C. The bottom-line: the evidence for a “backfire” is weak. The rebound effect is clearly there, but first it’s generally relatively small—especially in developed countries. Perhaps most importantly, where it does exist—and it does—it’s good.

Energy inefficiency can’t be good. That doesn’t yet mean that efficiency alone is sufficient. Every economist worth his or her degree would conclude that we need a price on carbon or a similar instrument. Bonus fact: there’s no direct rebound effect with pricing mechanisms.

As the Nobel Committee notes in its press release: “The LED lamp holds great promise for increasing the quality of life for over 1.5 billion people around the world who lack access to electricity grids.” In short, and as two of us say in a shorter letter to the editor, LEDs alone clearly won’t solve global warming, nor will they solve global poverty. But they are a step in the right direction for both. Thank you, Isamu Akasaki, Hiroshi Amano, and Shuji Nakamura, and to the Nobel Committee for recognizing their work.

Published in full as part of a broader post on “Is There Room for Agreement on the Merits and Limits of Efficient Lighting” by Andrew Revkin on the DotEarth blog of The New York Times. For a shorter take, see our letter to the editor of The New York Times. For a longer take, see “The Rebound Effect and Energy Efficiency Policy.”

By Kate Zerrenner

Since EPA released its proposed Clean Power Plan (CPP) in June of this year, the plan has been a hot topic in every state. In Texas alone, the state has held a joint regulatory agency hearing and two days of legislative hearings. Unfortunately, in both cases, the general tone of testimony was that of Chicken Little. But I prefer to view the CPP as a fantastic opportunity and certainly don’t think the sky will fall because of it. In fact, our skies should be considerably brighter without all that carbon pollution clouding them up.

I’ve written before about the opportunity for Texas to amplify current trends and increase our energy efficiency and renewable energy to meet these goals. And there’s an added benefit to transitioning away from coal-fired power plants and toward cleaner energy choices, one that will be critical in a state like Texas that’s in the middle of a multi-year drought: water savings and relief for our parched state.

What if I told you that with the CPP, the Electric Reliability Council of Texas (ERCOT), which controls the power grid for roughly 80 percent of the state, could save more than 60,000 acre-feet (or nearly 21 billion gallons) of water per year by 2030?

To put this in perspective, ERCOT would save the equivalent of Lady Bird Lake in a little over a month; Lake Bastrop in three months; Lake Worth in six months; Lake Houston in three years; and the entire body of the San Antonio River in four years.

The Clean Power Plan is handing us the opportunity to take a more holistic look at our power resources and choose those that save Texas water.

Why does that matter?

It matters because:

• almost 90 percent of our electricity generation in Texas comes from fossil fuels or nuclear sources, and they are very thirsty energy resources;
•  over 70 percent of our state is still in drought and many areas are running out of water;
• recent studies by the National Oceanic and Atmospheric Administration and Columbia University determined that much of Texas is at risk for water shortfalls by the mid-21st century, including cities like Houston, San Antonio, and El Paso;
• climate change will continue to put pressure on water supplies in already water-stressed areas; and
• businesses and the people they employ won’t want to move to a state that can’t manage its basic resources.

The way to reach the low-carbon goals proposed in the Clean Power Plan is through greater energy efficiency and renewable energy, as well as switching from coal-fired power plants to cleaner, more efficient natural gas plants. Natural gas produces less carbon pollution when burned, although methane leakage must be addressed in order to ensure it is providing a climate benefit. Natural gas also uses less water than coal – in fact, coal consumes, on average, around three times more water than efficient natural gas plants. According to an analysis by the University of Texas, replacing Texas coal-fired power plants with cleaner natural gas plants could reduce annual freshwater consumption by 53 billion gallons per year, or 60 percent of Texas coal power’s entire water footprint.

But the real bang for the buck comes from deploying more energy efficiency and renewable energy. Wind and solar photovoltaic (PV) energy consume little to no water and generate negligible carbon emissions. Texas is already an international leader for wind power and has the greatest solar potential in the country – much of which is still untapped. To put it bluntly, when it comes to solar, Texas is falling behind other states like New Jersey and Delaware, places not usually thought of as big and sunny like the Lone Star State.

According to modeling by CNA Corporation’s Institute for Public Research, with a 40 percent carbon cap (the proposed Clean Power Plan puts Texas at 39 percent) and a speedy transition from coal to clean energy, we could see a 45 percent reduction in water consumption by 2040. You read that right, Texas could cut its water consumption almost in half.

By reaching the goals set forth in the proposed Clean Power Plan, Texas, and other parched states like California, could see significant water savings. Cleaning the air and preserving our scarce water resources at the same time? Sounds like pretty smart policy to me.

Photo source: Jason Tessman Flickr

This post originally appeared on our Texas Clean Air Matters blog.

By Elizabeth B. Stein

New York’s “Reforming the Energy Vision” (REV) proceeding aims to reform the state’s long-standing electricity system to lay the groundwork for a cleaner and more efficient grid that allows for more customer choice and competition from third-party energy services companies. Forming the centerpiece of this 21st-century vision is a platform that would smoothly integrate innovative energy services and solutions into the existing grid, allowing them to compete on equal footing with electricity from centralized power plants.

Currently, the electric industry comprises three functions: generation, transmission, and distribution. Generation refers to making electricity, traditionally from large, centralized power plants. Transmission refers to sending that electricity along high-voltage wires to substations closer to electricity customers. Distribution refers to delivering the power from the substations to homes and businesses. In its recent straw proposal, the Department of Public Service Staff (Staff) recommends splitting the distribution function into two parts, one performing the traditional delivery service and the other serving as the Distribution System Platform Provider (DSP), to grant equal priority to energy solutions that are not centralized, such as on-site, distributed generation and energy efficiency.

What is the DSP?

The Staff describes the role of the DSP as “an intelligent network platform that will provide safe, reliable and efficient electric services by integrating diverse resources to meet customers’ and society’s evolving needs. The DSP fosters broad market activity that monetizes system and social values, by enabling active customer and third party engagement that is aligned with the wholesale market and bulk power system.”

To be clear, the DSP is a set of technologies and business practices that would level the playing field by allowing alternative energy solutions to bypass the centralized grid to compete fairly with traditional resources. Although the DSP is focused on the same grid as a distribution utility, its perspective is fundamentally different. The distribution utility’s mission is to deliver electricity to customers, whereas the DSP’s mission is to design and operate a marketplace where the benefits and costs of each energy solution – including system values like offsetting the need for more wires and social values like environmental degradation – are embedded in electricity prices.

The creation of the DSP signals a fundamental break with current industry practice, which is to build new centralized infrastructure to meet growing energy demand. However, even though the DSP is described as a new function, the Staff proposes distribution utilities fulfill this role in their service territories, at least initially. For an early glimpse of how a DSP might address system needs in a different way than traditional distribution utilities, keep an eye on the Brooklyn Queens Demand Management project in Con Edison’s service territory.

Con Edison’s project anticipates role of DSP

Rapidly rising electricity demand along the Brooklyn/Queens border is straining the grid in that area, and – if it continues as anticipated – the strain is expected to become intolerable within a couple of years. The customary response would be to do a massive upgrade of the distribution infrastructure – specifically, in this case, a new substation – at a cost of over $1 billion. That cost would be borne by all Con Edison customers. This wasteful, business-as-usual approach generally results in a system that goes largely unused for most the year, since the highest periods of energy demand occur during only a few hours of the year – during a heat wave, for example.

Con Edison is breaking with tradition. Instead of immediately building another expensive substation, Con Edison will endeavor first to meet rising demand with local, distributed energy resources, such as energy efficiency, storage, on-site generation, and demand response, a solution that compensates customers for voluntary reductions in electricity use at particular times. Anticipating what a DSP might do in this situation, Con Edison plans to evaluate potential distributed energy resources based on cost and impact to the environment and community. This effort gives third-party distributed energy providers an opportunity to receive full compensation for the value they contribute to the grid, not just to particular customers. Similarly, it may also compensate customers for delivering benefits to the system, such as through demand response.

Who should take on the role of DSP?

The Staff’s proposal recommending incumbent distribution utilities take on the role of the DSP has given rise to a range of concerns. Some believe the promise of the DSP will be squandered from the start if incumbent distribution utilities are given the job, and that a single entity should perform the function statewide to avoid having to duplicate similar expensive systems in multiple service territories.

However, the Staff has concluded, for the time being, that certain practical realities – such as the fact distribution utilities have considerable resources and the expertise needed to serve as the DSP –– tip the scales in favor of embedding the new DSP function in the legacy utilities. The Staff’s straw proposal adds, as a caveat, that this initial assignment is subject to good behavior and the distribution utility will only be permitted to keep this job if it performs satisfactorily.

Leaving aside the question of who will ultimately take on the role of the DSP and on what terms, it’s clear that a modern platform integrating distributed energy resources is critical to New York’s efforts to usher in a 21st century electric system. As a party to this proceeding, EDF is closely watching how the role of the DSP will be defined in coming months and our recommendations for designing the DSP’s role will seek to optimize clean energy outcomes.

By EDF Blogs

By: Jeff Milum, ICP Director of Marketplace Development

In virtually all established markets, from car loans to timeshares, standardization and automation has helped to accelerate underwriting, reduce long-term liability, and spur investment. The potential energy efficiency market is estimated at $1 trillion, but in order to achieve a fraction of this, the energy efficiency industry will need to leverage standardization and automation in order to scale to this level.

EDF’s signature energy efficiency initiative, the Investor Confidence Project (ICP), is accelerating the development of a global energy efficiency market by standardizing how Investor Ready Energy Efficiency™ projects are developed and energy savings estimates are calculated.

As a part of this effort, ICP is pleased to announce the release of the ICP Software Provider Credential, which will standardize the process of developing and documenting energy efficiency projects.

Project developers using ICP-compliant software applications will be able to automatically produce standardized documentation required for energy efficiency retrofits, making Investor Ready Energy Efficiency™ projects available to a wide range of investors.

Industry standardization of documentation is a critical step in streamlining the complicated process of developing and underwriting energy efficiency projects. The introduction of this credential represents a huge step forward toward achieving this goal.

To receive the ICP Software Provider Credential, software providers must enable easy access to all of the required documentation as well as support the ICP workflow for creating Investor Ready Energy Efficiency™ projects.

Six firms have already become Credentialed Software Providers℠:

• Performance Systems Development
• Noesis Energy
• Sustainable Real Estate Solutions (SRS)
• Encentiv Energy
• HELiOS Building Efficiency
• The National Electrical Contractors Association's ECAP Platform

Building owners will have increased confidence in projected savings knowing that standard methods and documentation are in place and are easily validated by third parties. Investors, programs, and utilities can quickly evaluate and underwrite standardized projects that have been third-party verified by independent engineers. The use of credentialed applications will cut overhead costs and eliminate weeks spent chasing down data, all with the click of a mouse.

The ICP Software Provider Credential, the first in a series of credentials that will be rolled out over the next few months, is ICP’s latest effort enabling the transformation of the energy efficiency investment market through standardization.

If you would like to discuss becoming a Credentialed Software Provider please contact credentialing@EEperformance.org

By EDF Blogs

By: Panama Bartholomy, Director of ICP Europe

The Investor Confidence Project (ICP), was recognized by the International Energy Agency (IEA), a global organization for 29 member countries, in its annual energy efficiency report, released today.

The IEA’s Energy Efficiency Market Report 2014 highlighted ICP as a program that will accelerate the development of a global energy efficiency finance market, saying in its energy efficiency finance chapter that the EDF initiative will “facilitate a global market for financings by institutional investors that look to rely on standardized products.”

For investors, the IEA puts the financial market for energy efficiency in the range of $120bn, with the launch of new products, such as green bonds, corporate green bonds, energy performance contracts, and expanded sources of finance likely to expand that figure. Lending from multilateral development banks and bilateral banks alone amounted to more than $22bn in 2012.

[Investor Confidence Project will] facilitate a global market for financings by institutional investors that look to rely on standardized products rather than project-specific structuring and due diligence."

IEA executive director Maria van der Hoeven at the launch of the report described energy efficiency as "moving from a niche interest to an established market segment", drawing increasing interest from investors.

"To fully expand this market, initiatives to continue to reduce barriers will need to strengthen."

That's where the ICP comes in.

The Investor Confidence Project is enabling a market for Investor Ready Energy Efficiency™ projects by reducing transaction costs and engineering overhead while increasing the reliability and consistency of savings. ICP takes the variability out of the process by leveraging best practices for each phase of an energy retrofit and credentialing projects through third-party review. The result is a commercial building sector with lower operating costs, higher market value, and a significantly lower carbon footprint.

ICP has been gaining traction in the United States, where it has partnered with hundreds of private sector allies, including energy service providers, building owners, and finance companies, and is currently in use by Connecticut’s Green Bank and Texas’ Commercial property-assessed clean energy (PACE) programs. Next month, EDF will launch ICP in Europe, capitalizing on the size and maturity of the European energy efficiency sector.

This post originally appeared on our Investor Confidence Project blog.

By EDF Blogs

By: Victoria Mills, Man­ag­ing Di­rec­tor of EDF Cli­mate Corps

Energy efficiency is a goldmine, but not everyone has the time or resources to dig. That’s why for the past seven years, over three hundred organizations have turned to EDF Climate Corps for hands-on help to cut costs and carbon pollution through better energy management. And every year, the program delivers results: this year’s class of fellows found $130 million in potential energy savings across 102 organizations.

But this year we also saw something new. In addition to mining efficiencies in companies’ internal operations, the fellows were sent farther afield – to suppliers’ factories, distribution systems, and franchisee networks. What they discovered demonstrated there is plenty of gold to be found across entire value chains, if companies take the time to mine it.

Here are three places where EDF Climate Corps fellows struck gold:

1. China. Five multinational companies – Apple, Walmart, McDonald’s, Cummins, and Legrand – enlisted EDF Climate Corps to uncover efficiencies in their Chinese operations, with some focusing on suppliers’ factories. The fellows’ analysis highlighted how best practices in energy management could be scaled across hundreds of suppliers, saving tens of millions of dollars.
2. Distribution systems. When moving goods, costs and carbon are highly correlated metrics: improve one and you will improve the other. The fellow at Ocean Spray Cranberries identified a ten percent reduction in transportation emissions by shifting a portion of the company’s shipments from trucks to rail.
3. Franchise networks. Dunkin’ Brands brought on two fellows to reduce carbon emissions associated with franchise operations. One of them developed a green construction program for new restaurants; the other set emissions reduction targets for franchisee-owned baking facilities.

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Looking beyond the fence line for energy savings is critical to achieve cost savings and emission reductions at scale. It’s also evidence of an evolution in corporate social responsibility, from compliance to eco-efficiency to value chain optimization. Ultimately, where this continuum leads is to constructive engagement in public policy, as businesses help to shape the incentives and regulations needed to protect public health and the economy from the worst impacts of climate change.

The companies in EDF Climate Corps are at the forefront of this evolution. We look forward to continuing to help them dig for gold throughout their value chains, and reap the rewards in profits, innovation, and a healthier planet.

Interested in how an EDF Climate Corps fellow could provide hands-on help at your organization? 

This post originally appeared on our Climate Corps blog.

By EDF Blogs

By: Lana Zaman, graduate student at UC Berkeley

Companies today are increasingly investing in energy efficiency upgrades, both to conserve energy and to reduce operating costs. By lowering greenhouse gas emissions and fuel expenses, energy efficiency benefits the economy as well as the environment in the face of climate change. Being from Bangladesh, a country that is on a trajectory to become completely submerged as sea levels rise, climate change is an important issue to me and is largely the reason why I joined EDF Climate Corps.

Before I began my fellowship, I asked myself: When there exists a seemingly obvious solution to current energy challenges, why aren’t more companies investing in these solutions? What is holding the private sector back from pursuing initiatives that not only save the company money, but can also contribute to mitigating climate change?

I have since learned about many of the complex financial, social or structural barriers facing energy efficiency implementation – and, perhaps more importantly, ways to address them. Working with KKR, I have been exposed to a wealth of innovative solutions. From my summer fellowship, I have seen firsthand how private equity firms are uniquely positioned to affect change on this front. By leveraging relationships with portfolio companies across a broad spectrum of industries, private equity firms magnify the impact of an energy strategy implemented at a single company; they benefit from feedback and collaboration across companies to build stronger recommendations and support going forward. This is key to investing responsibly.

Responsible Investment

There are two major aspects of responsible investment:

1. Incorporating Environmental, Social, and Governance (ESG) issues into investment decisions during the diligence process
2. Creating sustainable value by offering customized programs, tools, and resources to portfolio companies during the management process

My work on energy efficiency opportunities has been primarily focused in the second category. Many companies see business value in making some preliminary efficiency upgrades; however, after the light bulbs have been switched to LEDs and the computers replaced with Energy Star machines, it can be difficult to find and capitalize on additional opportunities. Below are some recommendations to help companies that may have capitalized on the low-hanging fruit and need innovative ways to continue their efficiency efforts.

Energy Efficiency Beyond the Basics: Lessons from Companies

1. Financials: Many companies hesitate to support initiatives with long payback periods. This eliminates a lot of profitable opportunities. One innovative solution is to create an internal fund that serves as a “revolving loan” within the organization for energy efficiency projects. By financing new initiatives with the savings from previous initiatives, companies can open up the door to many opportunities that would otherwise be disregarded.

2. Principle-Agent Problem: Simply put, the principal-agent problem occurs when there is a conflict of interest between a person or entity (the principal) and an “agent” it hires to provide a product or service. In energy, this is a common problem between tenants who would benefit from lower utility bills and building owners who have low incentive to invest in energy efficient upgrades since they do not receive the savings. A lot of recent developments have led to solutions to this long-standing problem, especially in the space of green leasing. Of particular interest, the New York City Mayor’s Office of Long-term Planning and Sustainability has developed an Energy Aligned Clause for inclusion in lease agreements, which make energy efficiency opportunities profitable for both building owners and tenants. Additional resources are available on the Green Lease Library.

3. Innovation in Metrics: Although they are essential to tracking success, lack of metrics should not block action on sustainability. Where standard data such as annual energy usage or gas consumption are unavailable, companies should identify substitutes. For example, they can ask providers of office supplies, car services, or catering to retroactively sum the company’s annual spend on these products and use back-of-the-envelope calculations to track energy use or greenhouse gas emissions in these categories. Another idea is to track employee engagement levels based on participation in environmentally focused initiatives or events.

Ultimately, many of these solutions come down to management. The value of sustainability in business is quickly escalating, and the companies that recognize this trend are taking action. These companies build strong energy management teams, implement good energy practices before government policies enforce them, allocate funding specifically for greening initiatives or conduct research in entirely new fields of energy efficiency. The companies that are truly leaders do not wait to stumble upon opportunities, but instead actively seek them. The returns benefit the company’s bottom line, and ultimately the safety of the planet.

This post originally appeared on our Climate Corps blog.