June 01, 2010
The Many Benefits of Investing in Energy Efficiency - and Tracking and Reporting the Results
By Chad Gottesman
The most valuable form of energy today is actually the energy not used, the so-called "negawatt." Why? Energy efficiency is the least expensive, fastest, and cleanest way for the U.S. to meet its growing demand for energy and wean itself of dependence on foreign oil.
According to the American Council for an Energy Efficient Economy (ACEEE), investing in energy efficiency costs about 2.5 cents/kWh, equivalent to approximately one-third of the cost of power from any new power plant, whether it uses renewable energy, fossil fuels, or nuclear power. Energy efficiency also has a positive effect on our economy. As a result of investments in energy efficiency since 1970, it now takes half the energy to achieve each dollar of our nation's economic output, according to the American Council for an Energy-Efficient Economy (ACEEE).
However, the U.S. has a long way to go. The nation is home to many buildings and operations that are not nearly as efficient as they could be. Efficiency measures could cut our energy use 23% by 2020, a move that would reduce energy costs by $1.2 trillion.
The macroeconomic benefits of energy efficiency are clear and simple. Energy efficiency efforts reduce the need to build new power plants. As a society, we save money because it is less expensive to install technologies and measures that cut energy use than to build those that make energy. As a result, our electricity rates drop. Additionally, and very importantly, our production of carbon dioxide from fossil-fuel plants declines. The fewer fossil-fuel plants built, the less carbon dioxide produced. In a carbon-constrained economy, this basic fact is paramount for many stakeholders including existing utilities.
May 17, 2010
The Next Frontier: Voluntary Trading of Energy Efficiency Credits?
By Lisa Cohn
Businesses such as Intel Corp., Kohl's Department Stores and Whole Foods Market are among the many companies and organizations that purchase voluntary renewable energy credits and renewable energy, according to the U.S. Environmental Protection Agency. They are among the top 50 purchasers that buy the equivalent of about 11.6 billion kWh of green power annually.
Those that buy the voluntary credits are purchasing the environmental benefits of investments in renewable energy. Rather than investing directly in a plant or buying power, companies buy the "credits" associated with these investments.
Why do these business giants and smaller companies do this when they're not required to? Some companies, anxious to boost their environmental image and reduce their carbon footprint, want to do more than what they're required to do by state and federal laws. Their voluntary purchases benefit consumers as a whole by ensuring that more renewable energy is developed than required by law, the EPA says.
Now, a recent development is expected to lead to the voluntary trading of energy efficiency certificates, as well. These represent the environmental attributes of investments in energy efficiency. APX Inc., the leading infrastructure provider for environmental and energy markets, said in March that it has begun offering its registry service for energy efficiency certificates.
Here's how it works: A company, organization or government entity invests in energy efficiency in the form of lighting retrofits, insulation, smart meters or other measures. It then hires an independent entity to verify that the savings were actually realized, and earns an "energy efficiency" certificate.
The first company to do this was IBM Inc. The firm hired Neuwing Energy Ventures to audit its efficiency work and track the savings, then issue a certificate. IBM then "retired" in the registry one energy efficiency certificate for each megawatt-hour of energy reduced, according to a Neuwing Energy news release.
In the future, it is possible IBM will be able to sell these credits to companies or organizations eager to show they reduced their carbon footprint and met their sustainability goals. The buyers will do this voluntarily, even if they're not required to do it.
April 21, 2010
Market Sensitive to ARRA Grants
By Bill Opalka
Large projects and the big dollars associated with them get lots of attention when it comes to the cash grants in the economic stimulus program. But it turns out that smaller companies also can be affected by the American Recovery and Reinvestment Act (ARRA) and are adjusting their business models accordingly.
For example, two companies that have complementary operations in the solar industry, but not enough oomph to bring projects to market quickly, responded by combining operations. I recently spoke to Chad Gottesman, president and CEO of Neuwing Energy Ventures, who merged his solar development unit with project developer Renewable Power Partners (RPP).
Neuwing, based in Delaware, and Pennsylvania-based RPP have a project portfolio of 200 megawatts, but saw the cash grant closing at the end of the year before they could fully take advantage.
"We did feel some sense of urgency, to get these projects going, to be on the safe side before the ARRA cash grants expire," Gottesman said. "We have a desire to get bigger quickly."
The business model is to get projects of up to 5 megawatts for the wholesale power market into the PJM system. Its first commissioning will be in about three months. The companies recently combined operations and now have a development portfolio of 200 megawatts of projects in the Mid-Atlantic states, concentrated mostly in New Jersey, with some in Pennsylvania and Delaware.
For projects not completed this year, the Treasury Department is requiring developers to demonstrate 5 percent of project costs have been incurred in 2009.
New Jersey is an attractive place for solar, especially with its state carve-out in its renewable portfolio standard and the robust solar renewable credit (SREC) markets. But that reliance on one state -- 90 percent of the portfolio is in New Jersey -- so Gottesman said the companies need to diversify their geographic footprint as well. One thing that concerns him is the budget move in New Jersey to divert money from the state's Clean Energy Fund, which could impact future solar development.
"I guess if there's one thing that keeps me awake at night it's what you might call the political risk," he said.
But in the meantime, there are projects to move forward in 2010, to meet and beat the ARRA rules and deadlines.
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