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Preparing For A Clean Energy Future


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Article in FEI Magazine's March 2010 issue written by Mike Tobin and George Boyadjis of CresaPartners

Published in: Business, Technology
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Preparing For A Clean Energy Future

  1. 1. Though talked about for years, it’s a long, slow road to become truly resource-efficient. Legislation may ultimately drive the process, but in the meantime, forward-looking companies are getting a head start by understanding the energy they use and making responsible usage decisions. Preparing For A Clean-Energy Future G Given recent developments in both technology capabilities and govern- ment incentive programs, it’s an ex- citing time to build an organization’s sustainability strategy by exploring alternative energy solutions. There are many things that can be done within a company to prepare for a sustainable clean en- ergy future and the in- Energy Costs of the Future Many companies track energy costs closely. In light of recent energy rate fluctuations as well as current legis- lation, this becomes an even more important aspect to consider in busi- ness operations. The price of energy will undoubtedly continue By Mike Tobin to rise due to increased and global demand, regulation creased influence of alter- George Boyadjis of greenhouse gas (GHG) native energy. emissions and the imple- By understanding the energy cur- mentation of Renewable Energy rently used and new technologies, as Standard (RES) requirements. The © JUPITER UNLIMITED well as the myriad of local, state and cost to clean up dirty fuels in order ENERGY federal incentives, initiatives and to meet regulations related to GHG regulations, a business can create a emissions will increase business and successful strategic plan to capitalize consumer costs. on the available opportunities. Renewable energy requirements march 2010 | financial executive 47
  2. 2. Glossary of Alternative Energy may also increase the short-term cost started, the more options and oppor- Terms of energy in some locations and not tunities exist for the company to con- significantly affect the cost in other sider, particularly if relocation is the Alternative Energy areas. Over the long-term, however, preferred action. An umbrella term that refers to any it is expected that renewable sources source of usable energy intended will provide energy at lower costs Maximize Exposure to to replace fuel sources without the undesired consequences of the with less variability. Renewable Energy replaced fuels. In general, alterna- Translating these changes into Another issue to investigate is the tive energy is that which is pro- strategic business opportunities re- feasibility of sustainable alternative duced without the undesired conse- quires discussion and analysis around energy sources in a geographic area. quences of the burning of fossil minimizing energy rate risk. The dis- Certain areas of the country are sim- fuels, such as high carbon dioxide cussion may include hedging and en- ply better suited than others to emissions. ergy purchasing strategies that are be- implement renewable energy sys- coming more common. The discussion tems. In essence, there are some areas Biomass should also include more in-depth that will get more return out of an Organic non-fossil material of bio- considerations about strategic facility investment in renewable energy than logical origin constituting a renew- location and its relation to energy others. Thus, the cost in some areas able energy source. sources. will be less to produce the same ener- Cogeneration gy from renewable energy systems. The production of electrical energy Know Thy Energy For example, areas with more and another form of useful energy To better understand the true cost of intense sunlight are better suited for (such as heat or steam) through the energy, a company must begin to optimizing solar energy systems and sequential use of energy. question the source of its energy as certain areas of the country (or off- well as its associated future issues. shore) have greater prevailing wind Emissions Trading For example, coal is a relatively levels. With an emissions-trading system, a abundant fuel source in the United In analyzing the fuel source regulatory agency specifies an over- States, but is considered rather options in a given location, one all level of pollution that will be “dirty” compared with other fuel should also question the feasibility of tolerated (a cap) and then uses allowances to develop a market to sources. In addition, coal from one renewable energy in the area. Those allocate the pollution among area can be “dirtier” than coal from areas with greater capacity for sources of pollution under the cap. another area. renewable energy could arguably Emissions permits or allowances Thus, as local coal plants adjust to have a lower and more predictable become the currency of the market, proposed regulations, those plants in energy rate in the future. as pollution sources are free to buy, the area with the dirtier coal may For a company’s existing facilities, sell or otherwise trade permits incur higher costs to meet emission this information can be used to help based on their own marginal costs standards, which, in turn, will result assess opportunities to encourage the of control and the price of the per- in higher costs to energy consumers. development of a different mix of mits. In no case can total emissions Extrapolate from this simple example fuel sources for its energy needs. exceed the cap. the impact the anticipated regulations For instance, if a facility is accessi- Geothermal Energy could have on the cost of our nation’s ble by multiple utilities, the company As used at electric utilities, hot different fuel sources. may choose to purchase power from water or steam extracted from Questioning the cleanliness of the the one with a higher renewable geothermal reservoirs in the Earth’s local fuel source and the utilities’ cost energy mix. For areas without a crust that is supplied to steam tur- to comply with anticipated emission renewable energy alternative, a com- bines at electric utilities that drive regulation will provide invaluable in- pany can become part of the early generators to produce electricity. sight into the future of a company’s conversations surrounding the devel- energy costs. opment of appropriate solutions. Geothermal Heat Pump It’s important to start asking these There also might be times when a A central heating and/or cooling questions now so that a comprehen- company may desire to use renew- system that pumps heat to or from the ground. It uses the earth as a sive plan can be developed to identify able energy and yet have no option heat source (in the winter) or a issues and opportunities before rate to directly connect with renewable heat sink (in the summer). This changes catch companies off guard. energy sources. design takes advantage of the The result may be that a company ne- In these instances, a company can moderate temperatures in the gotiates a long-term energy rate, de- evaluate the purchase of green power ground to boost efficiency and cides to purchase from a different en- offsets through Renewable Energy ergy source or decides to relocate. Credits (RECs) that allow a company The earlier such conversations are to ostensibly use renewable energy 48 financial executive | march 2010
  3. 3. sources from elsewhere on the with the earth and reduce energy national grid. These offsets allow a costs for heating and cooling. Waste- reduce the operational costs of company to confidently advertise to-energy systems, like Biomass heating and cooling systems, and support of renewable energy sources Combustion, also make more sense may be combined with solar heat- in order to meet its sustainability in certain locations over others, ing to form a geosolar system with objectives. depending on access to biomass even greater efficiency. Geother- For those companies that are look- inputs and local regulations. mal heat pumps are known by oth- ing for a new facility location, energy In some circumstances, the best er names, including ground source cost and supply source information alternative energy solution is to sim- heat pump, geoexchange, earth- should be considered in the strategic ply use less energy or capture wasted coupled, earth energy or water- source heat pumps. facility planning process. The compa- energy. Some technologies that do ny’s location search can include alter- this include new ways to better har- Greenhouse Gas (GHG) native energy criteria that will help ness sunlight and push it deeper into That portion of the total change in identify geographic areas with the the building space to offset electric the mean global surface tempera- best potential for optimal renewable lighting loads — solar tubes and light ture of the Earth that is caused by energy sources. benders, for example. gases in the atmosphere (including There are also options to better carbon dioxide, methane, nitrous Harnessing Opportunities harness the thermal properties of the oxide, ozone and chlorofluorocar- Discussions of renewable energy fea- sun to reduce heating, cooling and bons). The GHG effect allows solar sibility in a geographic area can also ventilation costs, such as a solar wall radiation to penetrate the Earth’s impact decisions to incorporate facili- or white roof. Additionally, cogenera- atmosphere but absorbs the infrared radiation returning to ty-specific renewable energy systems tion systems, such as fuel cells or space. as part of a company’s overall sus- microturbines, can be added to exist- tainability strategy. ing mechanical systems to enhance Groundwater These are systems that are either their efficiency in a clean manner. Water occurring in the subsurface owned by the facility or structured As facility-based capital expendi- zone where all spaces are filled through a mechanism that allows the tures associated with retrofits or with water under pressure greater system to be located in or under the upgrades are considered, these tech- than that of the atmosphere. facility in order to provide renewable nologies can provide measurable energy to the facility, as well as to sell returns. An energy audit or a build- Passive Solar excess energy to the local grid. ing commissioning study are valu- A system in which solar energy There have been major technologi- able services to identify and priori- alone is used for the transfer of thermal energy. Pumps, blowers or cal advances to accommodate small- tize opportunities to incorporate other heat transfer devices that use er-scale renewable energy systems these technologies. energy other than solar are not with aesthetic design options to fit used. within the physical parameters of a Initiatives, Programs, Incentives facility. These technologies include A discussion of available alternative Photovoltaic Cell solar electric photovoltaic (PV) sys- energy sources would not be com- An electronic device consisting of tems of varying costs and efficiencies plete if it did not address the initia- layers of semiconductor materials that fit on rooftops. tives, programs and incentives asso- fabricated to form a junction (adja- There are also building-integrated ciated with a company’s sustainabili- cent layers of materials with differ- photovoltaics (BIPV) that are actually ty strategy. Currently, there are many ent electronic characteristics) and electrical contacts and being capa- incorporated into building materials — incentive programs to encourage the ble of converting incident light windows, skylights or solar canopies. adoption of alternative energy solu- directly into electricity (direct cur- Wind turbines also range from large- tions. rent). scale, pole-mounted versions to small- These exist on local, state and fed- Renewable Energy Resource er building-integrated options that eral levels as well as from private An energy resource that is regener- mount on the rooftop ledges. entities. They take the form of tax ative or virtually inexhaustible. Other renewable technologies incentives, rebates, grants and low- Typical examples are wind, solar, gaining appeal in the market that interest loans. geothermal and water power. depend upon site characteristics for There are also a host of initiatives optimal performance are geoex- and programs to assist and encourage Solar Energy change and waste-to-energy systems. the adoption of alternative and clean The radiant energy of the sun, Geoexchange technology, or geot- energy solutions. These initiatives and which can be converted into other hermal heat pumps, can be optimally programs give the participant benefits forms of energy, such as heat or employed given the right site condi- that are not easily measured, including electricity. tions so that heat can be exchanged advertising and marketing opportuni- march 2010 | financial executive 49
  4. 4. ties, brand value and the retention of hermal, hydropower, landfill gas, ma- tenants or employees. rine renewable and trash combustion. The sheer number of these initia- In addition, Qualified Energy Con- tives, programs and incentives is servation Bonds can provide up to daunting. At the same time, there are $2.3 billion for qualifying conserva- Renewable energy opportunities to find the right mix tai- tion purposes. This program focuses lored to any given situation. Sustain- on reducing energy consumption in initiatives may be ability consultants can be helpful in public buildings, rural development identifying and prioritizing them to involving renewable energy and other among the greatest determine if they fit a company’s spe- initiatives. cific facts and circumstances. beneficiaries of recent Renewable energy initiatives may What Should You Do Now? be among the greatest beneficiaries of Leading-edge companies have federal stimulus recent federal stimulus programs. already begun to address these sus- Government policies behind certain tainability issues in more depth as programs. provisions of the American Recovery they consider the intricate effect of and Reinvestment Act (ARRA) and alternative energy on their overall Government other legislation include new goals, business strategy and more specifical- such as doubling the amount of ly on their real estate portfolio. All programs offer renewable energy produced over the companies could benefit substantially next few years, creating incentives for from developing an alternative ener- significant resources, job creation in clean energy economic gy strategy as part of their sustain- including new categories development and incentives to bring ability planning. about an 80-percent reduction in With the myriad of options and of advanced-energy GHG emissions by 2050. complexity associated with the choic- The stimulus programs offer sig- es, however, the first step is to ask the project credits, nificant resources, including new cat- right questions to get the right egories of advanced-energy project answers. The clean energy future is on expansion of existing credits, expansion of existing produc- the horizon and those who start tak- tion tax credits and investment tax ing steps toward strategically address- production tax credits credits, as well as new direct grant ing alternative energy now will be the programs. In addition, ARRA author- first to develop a sustainable competi- and investment tax izes loan guarantees for select renew- tive advantage in this area. able energy projects if construction credits, as well as new begins before Sept. 30, 2011. MIKE TOBIN, LEED AP, is national director Two new bonding programs are also for Sustainability Services and G EORGE direct grant programs. authorized under ARRA. The first is the BOYADJIS, MBA, CPA, is executive director. Clean Renewable Energy Bond program, Both are with CresaPartners, a corporate which offers up to $1.6 billion in funding real estate advisory firm. Boyadjis is also a to finance the construction of a wide va- member of the Twin Cities Chapter of FEI riety of qualifying renewable energy fa- and vice president at large and a member of cilities, including wind, bio-mass, geot- FEI’s Office of the Chair. In one year since launching its “Living Green” program, KPMG has reduced its overall carbon footprint by 7%, electricity consumption by 3% and recycling activity increased 13%, as non-recycled waste dropped 54% — meaning that KPMG now recycles more than it sends to landfills. march 2010 | financial executive 51