Generating Energy Through Efficiency


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Brian Castelli, Executive VP of Programs and Development at the Alliance to Save Energy presented at the Commonwealth of Virginia’s Energy and Sustainability Conference. In his presentation Generating Energy Through Efficiency, he discussed the many ways in which the Commonwealth of Virginia can harness the economic and environmental benefits of energy efficiency – for example, through utility programs, public benefit funds and state-administered appliance standards, to name a few areas. Looking at the big picture, Virginia’s actions today could help strengthen tomorrow’s national plan for energy efficiency.

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  • Generating Energy Through Efficiency

    1. 1. Generating Energy through Efficiency Commonwealth of Virginia Energy & Sustainability Conference September 18, 2007 Brian T. Castelli Executive Vice President & Chief Operating Officer
    2. 2. What is the Alliance to Save Energy? <ul><li>An NGO whose mission is: To promote energy efficiency worldwide to achieve a healthier economy, a cleaner environment, and greater energy security </li></ul><ul><li>Guided by a 37-Member, Elected Board of Directors </li></ul><ul><ul><li>Led by Sen. Mark Pryor (D-AR) & Jim Rogers, CEO of Duke Energy </li></ul></ul><ul><ul><li>9 Members of Congress – Bi-Cameral; Bi-Partisan </li></ul></ul><ul><ul><li>Environmental, consumer, and trade associations heads, state and local policy makers, corporate executives </li></ul></ul>
    3. 3. Forging Alliances: Business, Govt. & Public Interest <ul><li>Alliance enjoys sponsorship by more than 150 businesses and </li></ul><ul><li>organizations across a broad spectrum of economic sectors. </li></ul><ul><li>Unique structure with expertise in research, policy advocacy, </li></ul><ul><li>education, technology deployment, and communications </li></ul>
    4. 4. <ul><li>What: The Alliance to Save Energy’s Energy Efficiency Global Forum & Exposition, better known as “EE Global” </li></ul><ul><li>When: April 27-29, 2008 </li></ul><ul><li>Where: Palais des Congres de Paris, Paris, France </li></ul><ul><ul><ul><li>About: EE Global will serve as the premier gathering and showcase for the energy-efficiency industry, attracting industry professionals, academics and policy makers from around the world, not only to exchange the latest technical, commercial and policy information, but to forge partnerships and develop “best practices” policies and strategies for global implementation. The conference will feature plenary sessions and in-depth executive dialogue sessions with high-level speakers representing all end-use sectors and regions of the world as well as an exposition hall where attendees can see the latest technological advances in energy efficiency. </li></ul></ul></ul><ul><li>Web: </li></ul>EE Global Forum
    5. 5. <ul><li>Energy Efficiency: an Abundant & Affordable National Resource </li></ul><ul><li>CHEAPER </li></ul><ul><ul><ul><li>Each $1 invested in Energy Star program = $75 in energy cost savings and $15 of investment in new efficiency technologies </li></ul></ul></ul><ul><ul><ul><li>Average cost of utility DSM programs = $0.02 -0.04/kWh </li></ul></ul></ul><ul><li>QUICKER </li></ul><ul><ul><ul><li>In 2001, California cut peak electricity use by 10% in less than a year </li></ul></ul></ul><ul><li>CLEANER </li></ul><ul><ul><ul><li>“ Negawatts” produce NO ENVIRONMENTAL FOOTPRINT </li></ul></ul></ul><ul><li>IMPROVE THE ECONOMY and ENERGY SECURITY </li></ul><ul><ul><ul><li>Minimize Needs for Imported Energy </li></ul></ul></ul><ul><ul><ul><li>Create New Jobs </li></ul></ul></ul><ul><ul><ul><li>Help Keep Energy Prices Lower by Reducing Demand </li></ul></ul></ul>Why Energy Efficiency?
    6. 6. Energy Efficiency: America’s Greatest Resource
    7. 7. America’s Largest Energy Savers to Date* <ul><li>Appliance and Equipment Standards </li></ul><ul><li>Energy Star Labeling Program </li></ul><ul><li>Building Energy Codes </li></ul><ul><li>Electric and Gas Utility Demand-Side </li></ul><ul><li>Management (DSM) Programs </li></ul><ul><li>[Also:] </li></ul><ul><li>Tax incentives </li></ul><ul><li>Public sector energy efficiency leadership </li></ul>* Excluding auto efficiency standards
    8. 8. The Action Is in the States <ul><li>45 Quads savings since 1973 </li></ul><ul><ul><li>~ 20% resulting from intentional policy </li></ul></ul><ul><ul><li>80% from technology advances & market forces </li></ul></ul><ul><ul><li>So the best policies encourage technology & complement markets </li></ul></ul><ul><li>Energy efficiency supports many policy objectives </li></ul><ul><ul><li>Reduce GHG emissions </li></ul></ul><ul><ul><li>Lower criterion air pollutants (SIPs) </li></ul></ul><ul><ul><li>Slow demand growth – reduce need to build power plants & transmission lines </li></ul></ul><ul><ul><li>Reduce energy price increases & price volatility </li></ul></ul><ul><ul><li>Economic development goals </li></ul></ul><ul><ul><li>Energy costs for government operations </li></ul></ul>
    9. 9. Opportunities for States (& State-led Federal Policy) <ul><li>Building energy codes & “beyond-code” programs </li></ul><ul><li>Appliance & equipment standards </li></ul><ul><li>Utility programs and policies; Public Benefit Funds </li></ul><ul><li>Tax incentives and project finance </li></ul><ul><li>Public sector leadership </li></ul><ul><li>“ Smart Growth” & Transportation System Management </li></ul><ul><li>Climate policies and utility resource planning </li></ul><ul><li>Public information campaigns </li></ul><ul><li>EE workforce development </li></ul><ul><li>Community-based initiatives </li></ul>
    10. 10. National Benefits of Building Energy Codes <ul><li>41 US states have adopted model energy codes (BCAP website) </li></ul><ul><li>$7.4 billion savings (cumulative) since 1991 </li></ul><ul><li>Future potential if all states update energy codes </li></ul><ul><ul><li>CO 2 reductions over 50 million metric tons </li></ul></ul><ul><ul><li>$7 billion in energy cost savings to consumers </li></ul></ul><ul><ul><li>Avoid 32 new 400-MW power plants </li></ul></ul><ul><li>Cost-effectiveness of building codes </li></ul><ul><ul><li>DOE national program: $1 cost = $105 benefit </li></ul></ul><ul><ul><li>Energy-saving measures: 2.5 - 6 years payback </li></ul></ul><ul><li>Opportunities for Virginia: </li></ul><ul><ul><li>Enforce the 2006 IECC model codes </li></ul></ul><ul><ul><li>Advance the code (30% by 2010; TOU; commissioning) </li></ul></ul><ul><ul><li>Compliance: training, dedicated fees, utility condition-of-service </li></ul></ul>
    11. 11. Code Adoption Uneven in US
    12. 12. Beyond Code: ENERGY STAR Homes <ul><li>Opportunities for Virginia : </li></ul><ul><ul><li>Design assistance </li></ul></ul><ul><ul><li>Accelerate permits </li></ul></ul><ul><ul><li>Tax incentives </li></ul></ul><ul><ul><li>Public buildings 30% beyond code </li></ul></ul>
    13. 13. Delivering Energy Efficiency Through Appliance and Equipment Standards <ul><li>Sets minimum energy performance </li></ul><ul><li>Refrigerators sold today use three-fourths less energy than in 1973 </li></ul><ul><li>Demand reduction = 18 Nuclear Plants </li></ul><ul><li>Refrigerator Price 72-03 </li></ul><ul><ul><li>Decrease = 64 % </li></ul></ul><ul><ul><ul><li>In 1983 $ </li></ul></ul></ul><ul><li>Refrigerator Size 72-03 </li></ul><ul><ul><li>17.5 ft 3 to 22.5 ft 3 </li></ul></ul><ul><ul><li>Increase = 29 % </li></ul></ul><ul><li>Energy Use 72-03 </li></ul><ul><ul><li>Decrease = 74 % </li></ul></ul>Source: Graphic -- Collaborative Labeling and Appliance Standards Program Statistics – Art Rosenfeld (CEC) and David Goldstein (NRDC)
    14. 14. Future Opportunities for State Appliance Standards <ul><li>Federal standards generally preempt states, but… </li></ul><ul><li>12 States have standards in place </li></ul><ul><li>Priorities for actions in Virginia (according to ASAP) </li></ul><ul><ul><li>General Service and reflector light bulbs* </li></ul></ul><ul><ul><li>Metal halide fixtures* </li></ul></ul><ul><ul><li>Residential gas furnaces* </li></ul></ul><ul><ul><li>Walk-in refrigerators/freezers </li></ul></ul><ul><ul><li>Bottle-type water dispensers </li></ul></ul><ul><ul><li>Hot food holding cabinets </li></ul></ul><ul><ul><li>Audio products; DVD players/recorders </li></ul></ul><ul><ul><li>External power supplies* </li></ul></ul><ul><ul><li>Spas (hot tubs) and pool pumps </li></ul></ul><ul><li>Added annual savings by 2020 : (if all states adopted) </li></ul><ul><ul><li>52 TWh (2% of buildings electricity) </li></ul></ul><ul><ul><li>100 Bcf natural gas </li></ul></ul><ul><ul><li>12 MMT carbon (= 8 million cars) </li></ul></ul><ul><ul><li>Benefit/cost ratio 4.5:1 </li></ul></ul>
    15. 15. Energy Star Voluntary Labeling Program <ul><li>Environmental Protection Agency (EPA) and Department of Energy (DOE) with private sector partners </li></ul><ul><li>Labels for energy efficient products: </li></ul><ul><ul><li>Appliances </li></ul></ul><ul><ul><li>Lighting </li></ul></ul><ul><ul><li>Furnaces and Air-Conditioners </li></ul></ul><ul><ul><li>Computers and electronics </li></ul></ul><ul><li>Energy Star Homes </li></ul><ul><li>Commercial Building Rating </li></ul><ul><li>High levels of public awareness </li></ul><ul><li>Actions for Virginia : information campaigns; incentives; codes & standards (?) </li></ul>
    16. 16. Utility Energy Efficiency Programs & Policies <ul><li>Many kinds of DSM program (electricity, gas, peak load) </li></ul><ul><ul><li>Appliance rebates </li></ul></ul><ul><ul><li>Technical assistance, training, energy audits </li></ul></ul><ul><ul><li>Financing </li></ul></ul><ul><ul><li>Consumer education; metering/billing feedback </li></ul></ul><ul><li>Current utility & PBF spending as percent of revenues </li></ul><ul><ul><li>US average 0.5% </li></ul></ul><ul><ul><li>10+ states above 1%; VT 3% </li></ul></ul><ul><li>EE portfolio standards (EERs); “clean energy loading order” </li></ul>
    17. 17. National Action Plan for Energy Efficiency <ul><li>Goal One: Establishing Cost-Effective Energy Efficiency as a High Priority Resource </li></ul><ul><li>Utilities and applicable state agencies are encouraged to: </li></ul><ul><li>Create a process to explore the energy efficiency potential in the state and commit to its full development </li></ul><ul><li>Regularly identify cost-effective energy efficiency potential in conjunction with state ratemaking bodies. </li></ul><ul><li>Set energy savings goals consistent with the cost-effective potential </li></ul><ul><li>Integrate energy efficiency into energy resource plans at the utility, state and regional levels </li></ul>
    18. 18. National Action Plan for Energy Efficiency <ul><li>Goal Two: Developing Processes To Align Utilities Incentives Equally for Efficiency and Supply Resources </li></ul><ul><li>Applicable state agencies are encouraged to: </li></ul><ul><li>Work with utilities to implement revenue mechanisms to promote utility and shareholder indifference to supplying energy savings, as compared to energy generation options </li></ul><ul><li>Remove utility disincentives to energy efficiency such as the utility throughput disincentive and other ratemaking ideas </li></ul><ul><li>Ensure timely cost recovery in place for party(ies) that administer energy efficiency programs </li></ul>
    19. 19. Utility Regulatory Actions <ul><li>Regulatory incentives for utilities </li></ul><ul><ul><li>Direct cost recovery </li></ul></ul><ul><ul><ul><li>Rate case – 14 states </li></ul></ul></ul><ul><ul><ul><li>SBC/surcharge – 13 states </li></ul></ul></ul><ul><ul><li>Fixed cost recovery </li></ul></ul><ul><ul><ul><li>Decoupling or rate adjustments – 15 states, additional states pending </li></ul></ul></ul><ul><ul><li>Performance Incentives – 11 states </li></ul></ul><ul><ul><li>Return-on-investment: NV proposal; Duke “Save-a-Watt,” etc. </li></ul></ul><ul><li>Virginia – A State Corporation Commission proceeding developed a report to meet a 10% reduction in electricity consumption – Also filed a report with recommendations – Waiting for further guidance from the General Assembly </li></ul><ul><ul><li>(per the 4/4/2007 SB 1416) </li></ul></ul>
    20. 20. Funding: Public Benefits Charge <ul><li>Dedicated funding for energy efficiency, low-income assistance, renewable energy, and/or R&D </li></ul><ul><ul><li>Usually 0.01-0.3 cent/kWh surcharge on electric bills </li></ul></ul><ul><li>Virginia Opportunity </li></ul><ul><ul><li>Create a Public Benefit Fund for efficient and clean energy </li></ul></ul><ul><ul><li>Key: Red & Gold states have Public Benefit Funds </li></ul></ul>
    21. 21. Federal Tax Incentives – Buildings (2006-07) - Extension? <ul><li>New Homes </li></ul><ul><ul><li>Builder tax credit - up to $2,000 if 50% more efficient compared to 2004 IECCC code; $1,000 for an Energy Star manufactured home. </li></ul></ul><ul><li>Existing Homes </li></ul><ul><ul><li>Homeowner tax credit – 10% of cost of installing building envelope components consistent with IECC 2000; capped at $500; $200 can apply to windows. </li></ul></ul><ul><li>Commercial Buildings </li></ul><ul><ul><li>Deduction up to $1.80/sq.ft. for buildings designed to use 50% less energy than ASHRAE-90.1 (2001) </li></ul></ul><ul><li>Public Buildings: Assignable deduction! </li></ul>
    22. 22. State Tax Incentives Opportunities for Virginia <ul><li>13 states have incentives </li></ul><ul><ul><li>New homes </li></ul></ul><ul><ul><ul><li>Homeowner - AZ, DC, MT, NM </li></ul></ul></ul><ul><ul><ul><li>Builder - OK, OR </li></ul></ul></ul><ul><ul><li>Existing homes – CA, DC, ID, OR </li></ul></ul><ul><ul><li>Commercial buildings – NM, NY, OR </li></ul></ul><ul><ul><li>Property tax exemptions – MD local option, NV </li></ul></ul><ul><ul><li>ENERGY STAR sales tax holidays – GA,CT, VA </li></ul></ul><ul><li>States using a Green Building Rating (LEED) </li></ul><ul><ul><li>MD, NV, NM, OR </li></ul></ul>
    23. 23. Energy Efficiency Financing <ul><li>Virginia Opportunities – all of the below </li></ul><ul><ul><li>ESCO projects </li></ul></ul><ul><ul><li>Revolving loan funds </li></ul></ul><ul><ul><ul><li>20 states (e.g., Texas Loan Star, Iowa, CA…) </li></ul></ul></ul><ul><ul><ul><li>Mostly government facilities, schools </li></ul></ul></ul><ul><ul><li>Energy development districts; municipal bond authority </li></ul></ul><ul><ul><li>“ Cambridge Model” </li></ul></ul><ul><ul><ul><li>Goals, public leadership, $100 M partnership with lenders & ESCOs </li></ul></ul></ul><ul><ul><ul><li>EE Partnership of Greater Washington – VA Tech, Pepco, Hannon-Armstrong – (H-A commits $500 million) </li></ul></ul></ul><ul><ul><li>Energy-efficient mortgages (?) </li></ul></ul>
    24. 24. Climate policies <ul><li>19 states have GHG reduction goals </li></ul><ul><li>Western Climate Initiative </li></ul><ul><ul><li>GHG, multiple sectors </li></ul></ul><ul><ul><li>15% below 2005 by 2020 (one third below BAU) </li></ul></ul><ul><li>California vehicle CO 2 emissions standards </li></ul><ul><ul><li>18% savings by 2020, 27% by 2030 </li></ul></ul><ul><li>Regional Greenhouse Gas Initiative </li></ul><ul><ul><li>CO 2 from power plants down 10% (2005 to 2019) </li></ul></ul><ul><li>Virginia Opportunity </li></ul><ul><ul><li>Join RGGI </li></ul></ul><ul><ul><li>At a minimum, become an official RGGI “Observer” </li></ul></ul><ul><ul><li>Adopt relevant SABAP Climate Recommendations in report being completed now </li></ul></ul>
    25. 25. Regional Collaboration <ul><li>Sharing information & experience </li></ul><ul><li>Regional trading of Green certificates and White certificates </li></ul><ul><ul><li>Link DSM to utility resource planning & grid reliability </li></ul></ul><ul><li>Pollution prevention, by airshed </li></ul><ul><li>Market transformation </li></ul><ul><ul><li>Regional media markets </li></ul></ul><ul><ul><li>Coordinated tax holidays </li></ul></ul><ul><ul><li>Bulk procurement </li></ul></ul><ul><ul><li>Harmonized appliance standards & code requirements </li></ul></ul>
    26. 26. State Action Makes a Difference! Per Capita Electricity Use 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 California United States
    27. 27. Brian T. Castelli ( 1850 M Street, NW, Suite 600 Washington, D.C. 20036 Phone: 202.857.0666 Website: Thank You! Alliance to Save Energy