Momentum builds for energy efficiency...but is the wolf at the door?

It says something that Ernest Moniz chose to deliver his first public talk as US energy secretary to an energy efficiency crowd.

His appearance last week at EE Global in Washington, D.C. was a surprise of sorts. And the timing was significant. Moniz had only been confirmed as energy secretary three hours before taking the podium at the Alliance to Save Energy’s annual conference.

Why did he make the stop?

Probably not because of the size of the crowd. About 550 people attended the two-day gathering. For the energy efficiency industry, these are impressive figures, but by energy conference standards in general, not so much. Ten thousand people attended the American Wind Energy Association’s most recent annual gathering and Solar Power International drew 15,000.

Nor was it likely because of the crowd’s influence.  The big money in energy lies elsewhere, with the utilities and the oil and gas industries, which have contributed the bulk of the $91 million spent lobbying Congress on energy issues so far this year, according to the Center for Responsive Politics.  Energy efficiency companies represented only a smattering.

Instead, Moniz’ presence signaled not what the energy efficiency industry is today, but where it’s going – quickly – and the Obama administration’s willingness to help it get there.

In fact, Moniz called the timing of the efficiency conference and his nomination “fortuitous” because of the aligned agendas. “Efficiency is going to be a big focus as we go forward,” he said.

Energy efficiency is poised to be the next big thing in clean energy, ready to take the steps two at a time, as the wind and solar industries have in recent years. (The US wind industry grew 500 percent from 2006-2012; solar has grown almost 300 percent based on megawatts installed)

Energy efficiency’s growth is being fueled by several factors, not the least of which is economic. The market is working in its favor.  Energy prices are up and efficiency offers a way to get them down.

The US Energy Information Administration projects that electricity prices will grow 2.6 percent in 2013, almost double the 1.4 percent increase in 2012. This follows a $720 million rise in energy costs from 2002 to 2011, almost as great as the US’ jump in healthcare costs during that time frame, according to a report released at the conference by United Technologies Corp.

“Energy prices have risen to the level where avoiding the cost becomes the investment opportunity. I think that opportunity will only grow,” said John Mandyck, chief sustainability officer for United Technologies Climate, Control & Security, in an interview.

In fact, UTC found in a report that a 30 percent increase in building efficiency would not only pay for itself, but also generate a net positive cash flow of $65 million per year. This beats the rate of return for corporate bonds, according to Mandyck.

That’s the good news.

The bad news is that as energy efficiency grows in stature, it is likely to attract some of the same enemies as the wind and solar industries. For a look at one of these confrontations – a 12-year confrontation – see this story about Cape Wind’s battle with oil billionaire Bill Koch.

The wolf has already shown up at the door in the Northeast, according to  Susan Coakley, executive director of the Northeast Energy Efficiency Partnerships. The Northeast, in particular Massachusetts, is one of the most active energy efficiency markets in the US.

For example, Americans for Prosperity has pushed for repeal of the Regional Greenhouse Gas Initiative in several Northeast states.  RGGI is a large source of funding for energy efficiency in the region.

“When you are number one in the country, and you are making that kind of progress, you sometimes have a bulls-eye on your back,” said Coakley, during a panel discussion at EE Global. “And indeed, we are beginning to have some well-funded pushback. This is not internally driven. This is externally driven. I’ll tell you right now, it is the fossil fuel industry that is setting up institutes to push back on our policies.”

But the energy efficiency industry comes to the fight with strong advantages. It can build on the lessons learned by the wind and solar sectors in fending off their opponents. And it clearly has some good friends in high places.

 

Elisa Wood is a long-time energy writer whose work has been picked up by CNN, the New York Times, Reuters and the Wall Street Journal Online. See her articles here: http://www.realenergywriters.com/elisa-wood/

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Tags: Moniz, Obama, efficiency, energy

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Comment by Danny S. Parker on June 11, 2013 at 9:11pm

Certainly if everyone's economic time horizon is 3-4 years, the wrong decisions are being made. For me, this strongly argues for very progressive appliance and equipment efficiency standards. If the market can't act in a logical manner, require that manufacturers produce products that are more sensible. If buildings are being remodeled, require that they be brought up to code etc.

And it must be said: if we are moving every 4 years, from the standpoint being discussed below, the home we are moving into is one that someone just left without making the right energy investment decisions. A neighborly tragedy of the commons-- we are all living in each others' homes. If the market is failing, let's make energy hog refrigerators, air conditioners etc. unavailable that are not in our mutual best interest to own as a society. And let's end the production of systems that are totally energy-profligate: resistance electric water heaters, resistance electric heating etc.

I also believe that the last year of utility costs should be required for disclosure for all homes being sold when the properties are being LISTED-- so that prospective homeowners can consider what utility costs are for potential purchases when shopping for a home. This, I believe, would go a long way towards internalizing the costs and investments in energy improvements for increased valuation.

By the way, although I think there are limitations in using utility records, I think that the previous utility history is much more valuable than energy ratings which do not consider absolute costs (e.g. McMansions will cost you more even if they are efficient). It would also reflect the very real costs associated with typically un-rated energy-gulping features such as spas or swimming pools.

Comment by Elisa Wood on June 11, 2013 at 8:33pm

David/Dennis, what you're saying is both fascinating and disturbing. I can't help but wonder if the real estate crash led to the prevalent renter's mentality. It likely left some scars that make people wary of both financial and emotional (pride of ownership) investment in their homes. With luck, a real estate turnaround will somewhat mute

the trend.

Comment by Dennis Heidner on June 11, 2013 at 5:04pm

The EIA quick note does a good job covering the topic -- including that for many of the refrigerator models it can take nearly 19 years to recover the costs.  So if you are not expecting to stay in the house for more than 15 years, the payback is unlikely.   That was also part of your comments about townhouses and the current owner mentality.

So on the owner mentality -- the young upperwardly (mobile) person (YUMP) - is likely to change jobs about every three or four years.  The job changes may require working in different areas of a city or state.  If they do not a family - it is often easy just to move to a new apartment, condo, or townhome.  

On the other end of the scale are the old Family Aged Retired Traveling Seniors (FARTS) -- The old FARTS no longer want to spend their time mowing the lawn - there are much better things to do with their time - cruise ships, all the world travel they dreamed of, etc.  So the FARTS also find the apartments, condo and townhomes a better choice.

At some point between YUMP and FARTS you get urps -- thats the young family with babies going "urp"  :-)

Demographics are such that the largest block of population currently are the YUMP and FARTS..

And yes this was intended to get a grin out of some of us....  but the demographic observations also explain what David is seeing.

Comment by David Eakin on June 11, 2013 at 10:32am

Dennis,

I well understand the difference in operating costs, but I was referring to the general perception (sometimes rightly, sometimes wrongly) of total cost of ownership, which includes initial purchase price, running costs, anticipated repairs over the expected lifetime of the device.  It is all well and good to say that the operating costs decrease with a particular unit (refrigerator in this case, but applies to any device), but if it only lasts 1/4 the time of the unit it replaces or if the initial purchase price rises 10%/year it might make much more economic sense to just hold on to the old unit and pay the higher utility costs. This reality is not lost on the general buying public and (I believe) is a strong proponent in the resolve to do nothing (until any device breaks beyond economic repair) regardless of the energy savings of new models.

Comment by Dennis Heidner on June 11, 2013 at 12:41am

David,  since you mentioned replacing refrigerators and the trade offs, here is an article on the EIA's website.

http://www.eia.gov/todayinenergy/detail.cfm?id=11451

And all those energy improvements do make a difference over time...

 http://www.eia.gov/todayinenergy/detail.cfm?id=10891

Comment by David Eakin on June 10, 2013 at 8:13pm

Elisa,

I am seeing a radical shift in viewpoint among many Americans in general - that from an "owner" mentality to a "renter" mentality. An owner thinks about maintaining their physical possessions in good working order; in making investments in time and funding to improve comfort and quality of life that involve those physical posessions. A renter (also applies to a "leaser") thinks about minimizing costs; of using discretionary time/funding to other more important efforts (like electronic devices for social networking, fashionable clothing, lavish vacations, etc.) because the item that is rented/leased does not belong to them (or is viewed to be so inexpensive so as to be consumable) and will be replaced in the near future. I see (in my immediate vicinity) many more new townhomes being built than single-family homes.  I see many people who own single-family homes only investing the absolute minimum in appearance or functionality, even when such an "opportunity" to upgrade to an energy savings route would provide a better payback (e.g., ICAT recessed lighting when re-modeling a kitchen or bath, high-efficiency HVAC equipment when a unit fails, shade trees on Southern exposures).  I see it in how people take care of their automobiles, their landscaping, and other physical items that used to take a higher priority.  It seems that energy efficiency is only highlighted whenever an egregious comfort issue is observed.  Couple this with a "the government should do something about this (for me)" sentiment and you have the ingredients for disaster.

I also see where inertia plays a role: yes, replacing that old refrigerator in the garage (that used to be in the kitchen before the remodel) with an Energy Star unit will save electricity, but there are so many stories about new refrigerator failures that the general consensus is that it costs the consumer far less to operate an older, less efficient appliance than replace it more frequently.  It is easier to just wait to see what the cost-of-living increases are compared to utility hikes (or see what equipment truly breaks beyond economic repair), than to invest discretionary funds proactively.

BTW I recently received a notice from my natural gas supplier (in a huge Marcellus Shale state) that they are petitioning for a 5.9% residential increase this year.

Comment by tedkidd on June 10, 2013 at 3:32pm

I find conversations of "Payback" uncompelling and prefer re-orienting the conversation to cost.  "Payback" is hard for people to sink their teeth into, ends up being esoteric justification to buy things they want, and to not buy things they don't.  

Cost is something everyone understands.  People want to know what things cost.  Solar PV is nice because it can now have an instant NEGATIVE net cost.  Because it is tracked it is verifiable, monitored, no nonsense, no exaggeration or lies type of product.  

Can EE be more powerful than Solar?  Absolutely!  It can provide similar financial returns PLUS health, comfort, and durability benefits.  But consumers are correct to dismiss the financial claims, at least here in NY: http://bit.ly/2007NYSERDAhpwesresults -The first report I found has program realization at .38 (see appendix page 13)

"Lying about energy savings seems to work just fine" ..."early adopters generally are doing HP for all sorts of other non energy benefits, and don't seem to really check if we are telling to truth or not about savings..." (so) "delivering what we promise does not matter."

"I know Lying is a strong word. But given that the data I have seen says we are VERY unlikely to deliver the results we are claiming even on average, let (alone) on individual assets..."

"I saw a study ...that said most people basically only believe they will see 25% of what they are told they will save." "...perhaps a big part of why savings does not sell is that people (rightfully) discount the value." Matt Golden, Efficiency.org

If we tracked results of EE to promise there would be incentive and accountability for accuracy of saving claims.  Then I think people would be excited to invest in EE because it solves so many problems.  But until there is I don't see consumers really buying into conversations of net cost, all they look at is gross cost and completely disregard the "energy savings that helps pay for these improvements!"

Comment by John Pitek on June 10, 2013 at 12:32pm

These are TED talks titled "The Psychology of Energy Savings". The answer isn't what you'd think and results these guys are getting are pretty impressive. We'll worth a few minutes of your time to watch the videos (great visuals): http://blog.ted.com/2013/06/04/the-psychology-of-energy-savings-tal...

Johnny on Energy

Comment by Dennis Heidner on June 9, 2013 at 10:22am

While the fossil fuel industries may attempt to push back against energy efficiency programs.  It is simply too late for them. Virtually ALL of the major appliance makers now recognize and have active programs to reduce the electrical loads from their appliances.  

http://www.appliancemagazine.com/news.php?article=1678114&zone=...

Last year Bosch essentially said the same thing -- they've seen nearly an 80% reduction in energy use in ten years.   GE has similar results.  The appliance makers are continuing to improve efficiency for refrigerators, freezers and HVAC.   UTC announced major improvements to roof top units (RTU) for commercial buildings.

Our MEL's (miscellaneous electrical loads) are shrinking by device... even the newer large flat screen LCD that you bought last year or this year -- are far more energy efficient than the prior 24" TV.  Wall warts are beginning to be more efficient.  The list goes on as the desginers and manufacturers are being made more aware and as the consumer are being told the costs.

The new IECC2012 code is being adopted,   Architects, building designers, and the building material industries are all VERY aware - and in many cases the more efficient choices are nearly the same cost.  As word continues to get out that building tight homes with better insulation isn't a budget killer - the techniques and materials will continued to be adopted.

Energy efficiency is not the  same as energy self sufficiency.  Energy self sufficiency depends on generation of energy by solar, wind, geothermal,  or biomass.

Danny Parker is correct - you need to address (or understand) the energy efficiency issues if you want to become energy self sufficient;  however they do not necessarily need to be done sequentially.  In fact energy efficiency improvements are likely possible for years after any energy production capacity is added to a home or business..  Examples of this are of course, better refrigerators,  TV, computers, wall warts,  that all would reduce the needed  on site electrical production, and these MEL type loads will continue to improve for many years.

American Progress,  Edison Electric Institute and others are all running scared - and for good reasons - the business models that the companies that they represent depend on increasing sales of their energy products in order to meet their projected growth they promise to investors.   But energy efficiency and self sufficient energy production means a FLAT or decrease market.  That market shift has already begun,  The EIA reports show energy consumption slowing.   The fossil fuel/traditional energy companies will need to look at their business models and make changes.  Those that don't will change from investor owned utility companies to municipally owned utility companies.

Comment by Curt Kinder on June 6, 2013 at 6:38pm

I have a couple solar guys that feed me audits / home energy performance work.

Two conflicts of interest often emerge

1) They sometimes oversell solar thermal - now that heat pump water heaters are mainstream products, and given the a Florida garage is just about ideal for a HPWH, it rarely makes sense for a family of fewer than 6-8 people to invest $4-7k in solar thermal when a HPWH can be deployed for half that cost or less. I've heard solar thermal guys claim a family of 4 uses $80 per month in electricity to run an electric resistance water heater, when in fact the usage is closer to $30. Yet I routinely encounter older couples, empty nesters, being sold a pricey solar thermal system that wouldn't pay back even if they lived to 100.

2) Essentially repeating Danny's points, conservation opportunities revealed by a competent home energy audit often offer higher ROI than solar photovoltaic systems. Insulation improvements, heat pump water heaters, even spray foam and HVAC retrofits compare well against the PV dollars, especially if the existing HVAC is 10+ years old. A constant speed pool pump coupled with a restrictive sand filter and skinny plumbing calls for a retrofit with paybacks in the 2-5 year range.

Lighting, refrigeration, and even laundry upgrades also often pay back quicker than PV

It is my experience that a PV system rarely can meet 70% of the electricity load unless substantial conservation improvements are undertaken. In the rare case where a homeowner has the wallet for a huge PV system able to meet a typical home's load, there typically isn't near enough roof area to hold all the panels.

It is my premise that a moderately deep retrofit (sprayfoam, HVAC, HPWH, lighting, refrigerator, maybe solar film and pool pump where found) can knock 50% off a typical Florida single family home's energy usage, and then there is a good chance solar PV can offset the rest, but it is a rare client able an willing to undertake both projects.

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