Prenova's Kristen Murphy discusses Senate Bill 695, which reopens the direct access market to commercial and industrial customers in the state of California. The bill will enable some local businesses to work with a third-party energy supplier, rather than being tied to the local utility. This brings greater flexibility to the California market by giving consumers more options to choose from.
Photo by Caveman
Shareholder Climate Resolutions Up 40%
U.S. investor groups have filed 95 global warming shareholder resolutions with public corporations, a 40 percent increase over last year, according to a press release from the Investor Network on Climate Risk.
Making Energy Efficiency Easy to Finance
CalCEF and Metrus Energy show how to institute energy efficiency in buildings with zero upfront cost.
China Has "No intention" of Capping Emissions
The country's top climate change negotiators says China has no intention of capping its greenhouse gas emissions, even as authorities are committed to realizing the nation's target to reduce carbon intensity through new policies and measures.
Home Depot Shoots for 20% Reduction in Supply Chain Emissions Over 5 Years
Home Depot has set a goal to reduce its greenhouse gas emissions related to the domestic supply chain by 20 percent over the next five years. The retailer expects its supply chain to benefit from a move to a centralized distribution network.
U.S. Wind Energy Potential Larger than Previously Estimated
A new study by DOE's National Renewable Energy Laboratory (NREL) finds that U.S. wind resources could generate nearly 37 million gigawatt-hours annually. The study represents the maximum amount of wind power that could be reasonably developed in the contiguous United States.
Energy Efficiency vs. Energy Conservation
Energy Efficiency and Energy Conservation are sometimes used interchangeably, but shouldn't be. In reality, they represent radically different approaches to controlling energy costs.
Texans Question the Benefits of Deregulation
Eight years after state legislators deregulated the electric industry Texans continue to question the wisdom of the ruling and whether it has helped or hurt consumers.
Push Begins for ‘Building Star' Incentives for Commercial Properties
First there was Energy Star, the long-established energy ratings system. Then came Home Star, an incentive program supported by President Obama. Now, the Senate has introduced a bill that would establish a Building Star program to provide incentives to commercial buildings related to their energy efficiency.
Photo by Katrina.Tuliao
Michael Roberts updates his outlook on natural gas and electricity prices for 2010.
Vermont Says "No" to Nuclear Power
The Vermont legislature has decided that it's done with nuclear power. Last week, state senators voted overwhelmingly in favor of shutting down Vermont's only nuclear plant, which currently provides about 75% of the state's electricity.
How Risky Are Energy Efficiency Investments?
Last week's announcement of $8.3 billion - and possibly as much as $54.5 billion - in US federal loan guarantees for nuclear power plants sparked debate about risk of default on loans. What are the chances the plants will be built?
U.S. Utilities Spent $5.3 Billion on Energy Efficiency Programs in 2009
U.S. utilities increased their spending on energy efficiency programs by 43% in 2009, reaching $5.3 billion, according to a new report from the Consortium for Energy Efficiency. Spending increased the most in the Southeast and South Central states, most notably in Kentucky, Maryland, and Tennessee.
New Reports Suggests Smart Grid Attack Likely
The Project Grey Goose Report on Critical Infrastructure says attacks against the power grid are expected to increase over the next year.
All New Office Depots to be Built to Energy Efficient, LEED Standards
Office Depot is adopting an energy efficient and green building model for the interiors of all new stores. Office Depot recently unveiled a prototype energy efficient store in Austin, Texas, that was LEED certified.
Is Bloom Energy Beginning to Fade?
Bloom Energy finally had its big day, showing off its "energy source of the future" to crowds of admiring politicians and press. The company hyped its gas-burning fuel cell on 60 Minutes, generating a wave of news reports and public enthusiasm, but the real story is less impressive.
Photo by Christopher Peterson
Michael Roberts reviews natural gas storage and production data recently reported by the Energy Information Administration and discusses how this data will likely affect energy prices in the coming months.
Cold January Temperatures Affected U.S. Use of Power and Natural Gas
January 2010 was a cold month for many people in the United States, particularly in the Southeast. The need for extra power and natural gas for heating caused natural gas spot prices to soar in early January, but prices are expected to be lower for the majority of the coming year.
Nike, Starbucks Lead Push in Oregon for Clean Energy Economy
Kicking off a race to jumpstart American jobs in a clean economy, Nike, Starbucks, and other businesses, unions and youth groups in Oregon are urging Congress to approve a comprehensive climate change legislation this year, reports The Oregonian.
Feds Moving Forward on Smart Grid Security and Privacy
The latest draft from NIST prescribes responses to growing unease about access to data.
Biodiesel as an Alternate Fuel
Biodiesel refers to a vegetable oil or animal fat based diesel fuel consisting of long chain alkyl is typically made by chemically these oils with an alcohol. Biodiesel is meant to be used in standard diesel engines and is thus distinct from the vegetable and waste oils used to fuel converted diesel engines.
Is the Smart Grid too Expensive?
The cost of upgrading the entire electric infrastructure in the United States will top $165 billion over the next 20 years. Regional projects are carrying big price tags as well. Some consumer advocates are questioning how it will all be paid for.
Saudi Arabia Fears a Peak in Oil Demand
Saudi Arabia's concerns that demand for oil will peak in the next decade is pushing the world's largest producer of crude to embrace clean energy in an effort to diversify its economy.
Whole Foods, Bed Bath & Beyond to Cut Suppliers Sourcing Fuel from Oil Sands
To cut their carbon footprints, retailers Whole Foods Market and Bed Bath & Beyond are dropping suppliers that source fuel from Canada's oil sands (also known as the Alberta Tar Sands), reports the Financial Times.
Photo by guy schmidt
The approaches to financing energy-efficiency projects are as varied as the need. Energy services performance contracts guarantee savings will meet or exceed annual payments to cover the project costs. Lease-purchase agreements are also popular. Some states offer tax credits and other incentives to companies that implement more efficient energy systems.
Using an Energy Performance Contract
Energy services companies (ESCOs) will design, install, finance, and manage energy-efficient systems in a customer's facility using energy savings they produce from new efficiencies to pay for the cost of the project. They enter into a performance contract with a company that states that the ESCO will guarantee the amount of savings the facility will achieve. These contracts typically run from four to ten years. The length of time is dependent on the project's complexity, the project type, and the savings payback period.
A baseline consumption profile is determined using past energy bills, and then savings are calculated using the actual energy bills received throughout the contract period. Usually both parties agree to monitor the savings on a regular basis-that way midcourse adjustments can be made and performance improved.
Performance contract projects must be of sufficient size, so that the savings generated by the project cover its costs over the length of time specified in the contract. Aggregating smaller projects into a single contract is a way to create the critical mass necessary to make performance contracting a viable option.
Lease-Purchase
Commercial leasing corporations, banks, investment brokers, financing companies or even the equipment manufacturers themselves will offer lease-purchase agreements as a means of reducing the costs of energy-efficient equipment. These leases are designed so that the energy savings actually pay the financing charges. Leases in which the lessee assumes ownership typically range from 5 to 10 years.
Capital leases have many of the same characteristics as asset ownership. Capital leases are long-term, no-cancel agreements in which the lessee assumes responsibility for maintenance, insurance, and taxes.
An operating lease, on the other hand, allows the lessee to use the asset, but does not include the rights and responsibilities of ownership. Operating leases are attractive to companies that regularly replace or upgrade equipment.
State Tax Incentives
Not all states have incentives, but some do. One way to learn if your state has special tax or other incentives for commercial energy-efficiency projects is to visit the Database of State Incentives for Renewable Energy (DSIRE).
Federal Incentives
The Energy Policy Act of 2005 Commercial Building Tax Deduction (§179D IRS Code) has been extended to 2013. You can receive a tax credit up to $1.80 per square foot in three different end use applications:
- Building envelope ($0.60/ft2)
- Heating, cooling, ventilation ($0.60/ft2)
- Interior lighting ($0.60/ft2)
The tax credit is available to owners or tenants (or designers, in the case of government-owned buildings) of new or existing commercial buildings. In order to qualify, you must save at least 50% of the energy cost of a building that meets ASHRAE Standard 90.1-2001. There are verification requirements involving software and certification requirements from a third-party.
Like this article?
For more just like it, subscribe to Prenova Energy Insider , our monthly newsletter
Article used with permission of Questline, Inc. Photo by Photos8.com
OPEC: Give Us Certainty to Invest
Crude oil prices are in the range OPEC wants. But uncertainty about the demand outlook remains a worry. The group's secretary-general, Abdalla El-Badri, suggests greater certainty over long-term oil demand is essential if member states are to justify upstream investments.
Rooftop Solar Gains Traction at Commercial Properties
As more governments push their renewable energy agendas, more businesses are starting to see the benefits of solar energy from both financial and environmental perspectives.
SEC: Businesses Should Disclose Climate Change Impacts
The Securities and Exchange Commission (SEC) has issued new "interpretive guidance" to companies to indicate how they should handle the impacts of climate change in their financial disclosures. The move may cause businesses to focus more on the issue of climate change.
Walmart Canada Adding Energy Efficient DC, Solar, Wind
In a flurry of announcements, Wal-Mart Canada plans to build an energy efficient distribution center, as well as add wind and solar to its operations.
Hydrogen is Not the Miracle Fuel of the Future
Despite miracle claims on the Internet, the notion of a "hydrogen economy" is really a myth. One thing is abundantly clear - hydrogen is not a viable energy resource.
Photo by frostedburn
Clean Skies News talks to Michael Roberts, lead energy analyst of energy management firm Prenova, about the Energy Information Administration's reports out today on oil and natural gas inventories. Reports were delayed until Friday, Feb. 12 due to the severe weather in the Mid-Atlantic and Northeastern United States.
Real time pricing (RTP) tariffs enable electricity consumers to be charged prices that vary over short time intervals, typically hourly, and are usually quoted one day or less in advance to reflect contemporaneous marginal supply costs.
This contrasts with conventional electricity pricing tariffs that are based on prices that are fixed for months or years at a time to reflect average, embedded supply costs.
RTP has been investigated by the utility industry for the past 20 years, with programs offered at more than 70 utilities across the country in this time frame. The intended purpose of RTP was to allow energy users to reduce their usage when wholesale prices rise, thereby dampening price volatility. A second intended consequence has been to shift some of the control over pricing to the electricity end user.
According to a Lawrence Berkeley National Laboratory report, the primary motivation to offer RTP was "to build customer satisfaction and loyalty, by providing an opportunity for customers to realize bill savings. The second and third most common responses, respectively, were to reduce peak demand or encourage load shifting and to encourage load growth. The fourth most common response was to comply with a statutory or regulatory mandate."
The first RTP programs, implemented in California in the mid 1980s, charged customers an hourly varying price, quoted a day in advance, for all energy consumed. These initial RTP programs were introduced as a novel strategy for meeting demand side management (DSM) objectives and testing critical assumptions about customer acceptance and price response. Beginning in the early 1990s, a number of utilities, primarily in the Southeast and Midwest, introduced pilot and permanent RTP tariffs. During this period, electric utilities faced heightened competition for new and existing load (from other electric or gas utilities). In a way, RTP tariffs encouraged load growth by offering a rate structure that allowed customers to add new load without incurring additional demand charges.
The proliferation of new RTP programs began to subside in the latter half of the 1990s, as utilities focused their attention more directly on restructuring-related issues. However, there has been a recent resurgence in interest in RTP, since one of the potential outcomes is to reduce peak demand. According to the Berkeley report, "policymakers engaged in electric utility resource planning have also recognized that, by reducing peak demand, RTP could play an important role in a portfolio of strategies for cost-effectively meeting utility load obligations."
Despite these findings, the majority of electricity energy users are not aware of RTP and have not participated in these programs, even though a few programs across the country have achieved a significant level of participation. In 2003, a total of 2,700 non-residential customers, representing more than 11,000 MW of peak demand, were enrolled in the RTP programs in the Berkeley study that involved a survey of forty-three voluntary RTP tariffs offered in 2003.
Some of the findings of the Berkeley report include the following:
- Participation in most RTP programs is dominated by large industrial customers, with modest participation by large institutional customers.
- Most program managers report that some RTP program participants respond to prices less than $0.20/kWh. Two-thirds of the program managers that provided information on this metric indicated that at least some customers begin to respond at prices below $0.20/kWh. Often, these low-price responders are customers with on-site generation. About one-third of program managers reported that no participants appear to respond unless prices are at least $0.30 to $0.80/kWh.
- RTP programs reportedly achieved load reductions equal to 12% to 33% of participants' aggregate peak demand, across a wide range of prices. Among 8 programs with more than 20 participants, 6 have reportedly generated load reductions in the range of 12% to 22% of participants' combined non-coincident peak demand, while the other 2 have generated load reductions of approximately 33%.
- Most RTP programs have not been broadly and pro-actively marketed. Because of this, participation in most programs has declined in recent years.
- About half of the programs offered participants Internet-based access to their hourly consumption data on a real-time or day-after basis.
Experience to date suggests that customers are not likely to gravitate in large numbers toward RTP on their own accord. To extend participation beyond a few large industrial customers, aggressive marketing and education campaigns must be undertaken to reach medium-sized customers and to successfully identify price responsive customers other than just those that have participated in interruptible rates or that have on-site generation.
Source: Berkley National Lab, 2003. A Survey of Utility Experience with Real Time Pricing
Photo by Peter Kaminski