ICOSA Driving Force Radio: Improving the Bottom-Line Through Energy Efficiency Technologies and Creating Unique Finance Mechanisms to Facilitate Investment

The least expensive power is the power that we don’t have to create.  Not only that, but not having to create that power can be an economic engine.  “In Colorado alone, the energy efficiency industry provides over 14,000 jobs and creates more than $1 Billion in local economic development, according to the State of the State, a report produced by the Energy Efficient Business Coalition (http://energyefficiencybusinesses.org). 

To introduce this concept from the perspective of a business owner, ICOSA invited Tim Heaton, Vice President and co-founder of Coolerado, Inc. (www.coolerado.com) to talk about his experience with energy efficiency, both the successes and the challenges.  Energy is the single largest controllable business expense.  “The commercial real estate industry spends approximately $24 billion annually on energy -- typically a third of variable expenses,” according to statistics.  Of that, lighting and cooling account for 80% of that cost. 

The biggest impact is in the retrofit market because new construction accounts for only 1% of market activity. In fact, 73% of our commercial buildings are 20 years or older.  The benefits of reducing energy costs are huge and represent big opportunity, according to Heaton.  A 10% decrease in energy use could lead to a 1.5% increase in net operating income (NOI).   This is money that goes directly to the business’ bottom line, emphasizes Heaton.

As we take a deeper dive on the show, however, we see that the benefits exceed those that are directed towards a business’ bottom line.  Studies have shown that conserving 1 megawatt of energy:  creates 22 new jobs; generates an increase of $2,230,572 in annual economic output for the region; provides $684,536 in new wage income; produces $125,000 in new business income for local businesses.  This is yet another time on the show that we see the impact of market failures.  In this case, if numbers show that energy efficiency is an economic engine, why isn’t the energy efficiency industry growing in-line with its potential?   

One market challenge is the upfront cost associated with energy efficiency retrofits.  To understand the challenges and some solutions in this area we talk to Sharon Procopio, P.E. Commercial Energy Program Administrator, City and County of Denver Department of Environmental Health.  Sharon manages the Denver Energy Challenge for Businesses, which provides education, free support services, and financial assistance to businesses in the City and County of Denver.  (http://www.denverenergy.org/)  The Denver Energy Challenge was created to expand energy efficiency services to residents and businesses in the City of County of Denver and its funding was derived under the American Recovery and Reinvestment Act. 

Because energy is a business cost and not necessarily associated with a business’ core objective, decisions on energy efficiency and investment are time consuming and can be confusing.  To address this, Elevations Credit Union (elevationscu.com/energyloans) has teamed up with Energy Smart and the Denver Energy Challenge to bring Elevations Energy Loans to eligible homes and businesses in Denver City and County and Boulder County.  This team of experts provides access to energy advisors to help assess the business needs and make retrofit recommendations, qualified contractors to make the improvements and loan specialists to provide low interest loans (2.75% for homes and 3.75% for businesses). 

Under this program, Elevations Credit Union is committing $35M in financing for energy efficient and renewable energy upgrades for eligible homes and businesses in Denver and Boulder Counties.  Boulder and Denver Counties have set aside $8M of grant funds to create a finance program to improve energy efficiency of existing buildings and stimulate local economic growth.  Businesses and residences can find more information by looking at this video http://youtu.be/xzkW_wpstJk or going to the Denver Energy Challenge website http://denverenergy.org/content/energy-loans.

Join us for a more detailed discussion on ICOSA’s Driving Force radio with Jan Mazotti (http://www.talkzone.com/shows/199/icosa.html) and co-host for Energy 101, Kelly de la Torre.   

 

 

 

 

 

Jon Powers, Federal Environmental Executive in the White House council on Environmental Quality: Leading by Example

“Example isn’t another way to teach, it is the only way to teach.”  - Albert Einstein

Jon Powers, the Obama Administration’s Federal Environmental Executive within the White House Council on Environmental Quality recently addressed a packed room at the Alliance for Sustainable Colorado (http://sustainablecolorado.org/).  As Federal Environmental Executive, Jon is responsible for promoting environmental and energy sustainability across federal government operations. During this meeting Powers emphasized the Obama Administration’s commitment to lead by example as directed by Executive Order 13514 that sets sustainability goals for Federal agencies.  These goals are closely tied to environmental and economic performance as well as to our energy security.  While the scope of the Order is daunting - the Federal government occupies nearly 500,000 buildings, operates more than 600,000 vehicles, employs more than 1.8 million civilians, and purchases more than $500 billion per year in goods and services – the results that can emerge and are emerging by this lead by example strategy are staggering. 

A movement and culture shift of this size needs leadership, passion and determination.  Fortunately, these are skills that Jon Powers brings to the table. Powers told a story about his first days in the Army when his Platoon Sargent took him aside and said there are two types of leaders: those that lead by rank and those that lead by example.  Powers took leading by example on as a value and draws upon his intimate understanding of the impact of energy and sustainability on our security to focus on the initiatives under Executive Order 13514.

More than leadership, Powers demonstrates a commitment to learning about what is working and it is a goal of the Council to use that knowledge to replicate success stories.  For example, on his tour of Denver, Powers also visited with leaders at the U.S. General Services Administration (GSA) to discuss a joint federal/local government leadership team that created a sustainability challenge to increase conservation awareness, save natural resources and reduce greenhouse gas emissions.  The team consists of the Department of Energy (DOE), the National Renewable Energy Laboratory (NREL) and the U.S. Environmental Protection Agency (EPA) Region 8 and the City of Lakewood.  The sustainability challenge engaged employees with the goal of reducing carbon dioxide and educating local communities.  Some of their successes include a 1 MW Denver Federal Center Grid (DFC)-Tied Photovoltaic Solar Park.  The 6,192 panel site generates about 1,600,000 kWh per year – approximately 10 percent of the DFC's entire electrical demand.  Retrofits for interior lighting have reduced electrical demand by 3,765 kWh per year.  It is these types of strategies and partnerships that the Council on Environmental Quality is seeking to replicate, according to Powers. 

For the federal government to meet mandates for reductions in energy use, water use and GHG emissions, however, mechanisms are needed.  The government can leverage its buying power but there still need to be functional mechanisms to finance improvements and funding available for research and development and according to Powers, there are barriers. 

Federal funding supports research and development.  As one example, the Internet and GPS came out of R&D projects under the Defense Advanced Research Projects Agency (DARPA), an agency created to develop technology beyond immediate requirements of the military.  Recognizing the need for transformational energy research “where success would drive dramatic benefits to the nation,” ARPA-E was funded in 2009 with funds from the American Recovery and Reinvestment Act.  These funding opportunities can also leverage partnerships with the Department of Defense and enable investment in high risk/high reward energy research.  A current challenge however, is that the House Republican Budget currently proposes a 19% cut to funds for clean energy.  These budget cuts would undermine the findings in the 2007 report, “Rising Above the Gathering Storm: Energizing and Employing America for a Brighter Economic Future,” the same report that recommended creation of ARPA-E.  The report found, in part: 

The United States takes deserved pride in the vitality of its economy, which forms the foundation of our high quality of life, our national security, and our hope that our children and grandchildren will inherit ever-greater opportunities. That vitality is derived in large part from the productivity of well-trained people and the steady stream of scientific and technical innovations they produce. Without high-quality, knowledge-intensive jobs and the innovative enterprises that lead to discovery and new technology, our economy will suffer and our people will face a lower standard of living. Economic studies conducted even before the information-technology revolution have shown that as much as 85% of measured growth in US income per capita was due to technological change.

Another challenge is lack of data necessary to design appropriate funding mechanisms.  Powers noted Green Button as an innovative program directed towards data collection.  According to www.greenbuttondata.org, “Green Button is an industry-led effort that responds to a White House call-to-action: provide electricity customers with easy access to their energy usage data in a consumer-friendly and computer-friendly format via a "Green Button" on electric utilities' website.”  Accurate energy information can not only empower consumers to make educated choices around managing their energy use but also provide data that innovators can use to produce new consumer applications that address energy management needs. 

In short, one important take away message was that the federal government is leading by example and at the same time, this work is creating data that we can use to innovate and educate from the ground up.  Having access to critical data is key in removing barriers to innovation.  Innovation is closely tied to our energy security – and thereby our national security, and to me, nothing is more compelling.