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Posts Tagged ‘Midwest Energy Efficiency Alliance’
Tuesday, February 9th, 2010
Energy finance is clearly a hot topic if a panel on the subject at the Midwest Energy Efficiency Alliance annual conference has an overflow crowd. In years past, the topic might have garnered a couple of dozen of attendees and not the capacity crowd seen last month.
Panelists who were representing a wide array of energy efficiency financing models – from Property Assessed Clean Energy programs (PACE), to on-bill financing options, to governmentally supported private and public financing efforts – illuminated similarities among the programs. These similarities offer the following important lessons for financing programs targeting the residential sector:
1. No model fits all areas. Because no one financing option is perfectly suited for all geographies, incomes, and housing types, a variety models is needed. For instance, although the PACE model is likely to prove quite helpful for many localities, this model may not be feasible for a municipality with elevated levels of foreclosure or a very low tax base, or for one teetering on bankruptcy. Likewise, an on-bill financing program that relies solely upon a utility’s coffers to fund the loans may have too small a capital base to cover a meaningful portion of the units in the utility’s territory. This problem is particularly acute for dense urban areas, such as Chicago, where the capital need is conservatively estimated to be in the billions.
2. Tie the financing to the property or meter. If utility savings are the source of repayment of the loan, the financing should be tied to the property or meter. Otherwise, depending upon the timing of the sale or move, the savings could fall well short of what is needed for repayment, leaving the homeowner or renter to fund the difference. However, equally important, if the financing remains in place after the initial owner or tenant leaves, the improvements should be limited to ones that are not easily removed, such as air-sealing, insulation, HVAC systems, and windows, which will continue to generate savings well after the original owner departs.
3. New sources of liquidity are entering the field. Development Finance Organizations (DFOs), in particular, could represent an important new source of liquidity for energy finance programs. DFOs are public finance entities capable of issuing bonds to support public purpose projects. A development finance entity, for instance, could potentially issue bonds to provide the capital for an on-bill financing program, thereby lessening the need for the utility to find the funds internally or to have to borrow them directly.
As the number of energy finance pilots grows and diversity of program types multiplies, there is an acute need for dialogue among the practitioners about lessons learned, limitations for other locales, and opportunities for collaboration. I applaud the Midwest Energy Efficiency Alliance for beginning this critical conversation.
Tags: energy finance, green banking, Midwest Energy Efficiency Alliance, on-bill financing, ShoreBank, triple bottom line
Posted in Green Collar | No Comments »
Tuesday, October 13th, 2009
The explosive growth in funding for utility-led efficiency programs is one of the most hopeful signs for bolstering energy efficiency efforts in the Midwest and across the country. Thanks to a growing number of states instituting energy efficiency portfolio standards, funding levels are expected to multiply in the coming years. Indeed, according to the Midwest Energy Efficiency Alliance, utilities are expected to spend nearly $900 million annually on energy efficiency in the region by 2012. In Illinois, annual funding will top $250 million by then, up from under $10 million just a few years ago. This level of sustained spending could be transformational on many levels.
However, one detail that gets too little attention is the degree to which important policy decisions regarding priorities, goals, and acceptable uses of these funds have fallen to the regulatory bodies overseeing utilities. While extremely competent and professional, these commissions were established to set utility rates, adjudicate grievances, and ensure continuity of services – not administer programs, promote economic development, nor be the driving force behind the enormous task of transitioning the economy to a low carbon future. In essence, we have transformed the judiciary into a unit of the executive branch without any discussion of the benefits, consequences, or merits of doing so. More alarming, we have done so for one of the most pressing and important challenges we face as a nation (and species).
One consequence of managing these funds through the commission process is that decisions are made according to a very narrow set of criteria. Particularly important is the amount of energy saved compared to resources expended – with no consideration given to the overall economic output produced, jobs created or maintained, markets transformed, or dollars leveraged. Nor does the process evaluate the equanimity of how funds are spent, with assurances of equal distribution to all geographies, incomes, and sectors. Accountability is thought of primarily in terms of seeing that the money produces tangible energy savings, not any of the other elements we all expect and demand from government, such as open access, transparency, helping disadvantaged communities and businesses, incenting innovation, etc.
Given the importance of the decisions being made and the coming scarcity of public dollars, we need a healthy debate about which investments should be made, which outcomes and evaluation metrics are most pertinent, and what process should be used for measuring success and impact. Some states, such as Connecticut and Massachusetts, have created new bodies to ensure that investment decisions better reflect a broad array of policy goals. In Massachusetts, for instance, alternative energy investments are directed by the Massachusetts Technology Collaborative, which seeks to increase installed capacity, as well as foster other important priorities, such as driving innovation, improving global competitiveness, and fomenting job creation. Hopefully, the establishment of these new agencies and wider set of priorities portends the start of the necessary and critical discussion about our best way forward.
Tags: Blog Action Day, Climate Change, community development, green banking, Midwest Energy Efficiency Alliance, ShoreBank, triple bottom line
Posted in Green Collar | 1 Comment »
Tuesday, July 7th, 2009
One of the more intriguing questions surrounding the stimulus package is the extent to which the dramatic increase in funding for weatherization ($5 billion) will lead to a sharp rise in number of contractors skilled in energy efficiency retrofits. For states such as Illinois, which have not invested heavily in energy efficiency programs historically, and consequently have a very limited base of contractors knowledgeable in energy efficiency basics, the outcome matters a great deal.
Without question, the contractor issue has been one of the thorniest challenges we have faced in our attempts to catalyze the market for energy efficiency. Our programs have demonstrated that banks and other financial intermediaries can stimulate homeowner interest in energy efficiency by coupling information and capital together. However, these efforts may have minimal impact on energy usage without a corresponding effort to organize, train, and certify the contractor community. We simply have no way to guarantee that the work will be done correctly or produce the projected energy savings.
Indeed, anecdotal evidence suggests that the likelihood of achieving the savings may be quite small without substantial training and quality control measures being put in place. One example comes from the Executive Director of the Midwest Energy Efficiency Alliance, who recently installed a high efficiency furnace in her home. Despite the 94% efficiency rating on the furnace, it took the contractor several attempts and lots of re-working to push the performance up from the low level initially seen. Only because this particular contractor tested the system’s performance and understood how to rectify the situation, the furnace performs at its rated level.
There does appear to be some reason for optimism, however. ComEd, our local electrical utility company, has had notable success in its efforts to engage the contractor community around commercial lighting retrofits. We believe that with a determined focus and the necessary resources behind it, a similar program could prove equally effective for the residential marketplace.
Tags: community development, energy efficiency, green banking, green jobs, Midwest Energy Efficiency Alliance, ShoreBank, triple bottom line, weatherization
Posted in Green Collar | No Comments »
Monday, February 2nd, 2009
Better keep those energy drinks close by, ‘cause we’re going to need ‘em
With record amounts of funding for energy efficiency and alternative energy likely to be included in the federal stimulus package, the practical implications of all of this money are beginning to set in. Indeed, at the recent Midwest Energy Solutions conference, sponsored by the Midwest Energy Efficiency Alliance, discussion of the impending federal funding appeared to spark both euphoria and panic among industry professionals.
Clearly, the volume of spending will lead to a lot of new green collar jobs – the requisite number of knowledgeable contractors, program administrators, architects, and financiers simply doesn’t exist. The amount of spending under discussion is many times (some say upwards of 30 times) the level currently deployed annually. To put this in perspective, according to Sheree Dallas Branch, program manager with Wisconsin’s Department of Administration, approximately 100,000 homes are weatherized annually under existing DOE programs – and 10% of those are in Wisconsin alone. The President’s plan calls for 2,000,000 homes to be weatherized. For the mathematically challenged, that’s a very large increase.
I believe the funding offers an even more compelling opportunity. Because most energy efficiency programs are tied to utility sponsored initiatives, evaluation centers almost exclusively on “cost effectiveness.” This analysis looks at the costs to save the kWh or therm as compared to the cost to produce or procure them. The analysis completely ignores other benefits, such as employment, social equity, carbon savings, or reductions in other harmful emissions. The analysis also is completely detached from metrics the public cares most about – ones focusing on how individual households or communities are better off. It is no wonder we have such trouble engaging public support for energy efficiency programs.
In contrast, the stimulus package, as the name implies, is focused on stimulus – economic output and job creation. These are metrics that the public cares deeply about. It is my sincere hope that the federal funding not only catalyzes the industry and marketplace, but even more fundamentally, alters the way we evaluate energy efficiency programs and how we communicate their benefits to the wider world.
Tags: community development, energy conservation loans, green banking, green jobs, Midwest Energy Efficiency Alliance, ShoreBank, triple bottom line
Posted in Green Collar | 1 Comment »
