Home

Blog: Energy Efficiency

January 28, 2014
Energy Efficiency - building energy audits, cash flow analysis, Class B office buildings, financial report, performance risk

A widespread interest of commercial energy efficiency lending from financial institutions is limited by undefined risks associated with energy efficiency projects. The lack of data and information on predictable performance remains as one of the biggest challenges with loan underwriting. Hence, improvements in presenting data that captures the level of uncertainty in energy performance is a critical step towards stimulating greater deal flows in the commercial energy efficiency financing field.

In fact, Class B office buildings projects present good investment opportunities for lenders due to project size, attractive project ROI, and that Class B office building owners tend to have constrains in capital and liquidity.  Aiming to help building owners and investors understand performance risks of energy efficiency retrofit projects, the California Sustainability Alliance conducted a case study on a Class B office building in SoCalGas® region. The whitepaper entitled “Energy Efficiency Financing Risk Assessment Case Study” demonstrates a streamlined standardized protocol for data collection, analysis, and reporting. In addition, the whitepaper discusses financing options available to Class B office building owners.

Key study conclusions include:

  • Industry standards are available to help guide the data collection and analysis process to ensure the validity of the energy savings projections.
  • Once project data is collected and analyzed, the range of expected savings should be estimated through building simulation modeling to capture performance uncertainty.
  • Cash flow analysis should be performed on the high, expected, and low energy savings scenarios to capture financial risk associated with the retrofit project.

As part of the study, the Alliance developed a cash flow analysis calculator customized for Class B building owners to structure their loan proposals after they have completed a building audit. Download the full report for more details.

September 21, 2012
Energy Efficiency - city of riverside, energy efficiency, film, video

The California Sustainability Alliance and the City of Riverside have released a video showcasing the City’s award winning sustainability efforts. “The City of Riverside: Leadership in Sustainability” video highlights the unique local government leadership qualities that led the City of Riverside to win the Grand Prize of the Alliance’s 2011 Sustainability Showcase Awards. The video features some of the City’s best practices in sustainability and includes interviews with Mayor Ronald O. Loveridge, Public Utilities Commissioner Dr. Justin Scott-Coe, and Sustainability Officer Michael Bacich.
 
This video showcases several sustainability initiatives within the following areas: energy, water efficiency, waste reduction and recycling, and alternative fuels and transportation. These initiatives include Riverside’s Free Sprinkler Nozzle Program, which provides efficient sprinkler nozzles to residents, and the City’s Grease-to-Gas program, which generates 1.6 MW electricity per day and saves Riverside more than $1 million annually in operating costs.
 
While the nuances of sustainability efforts are often complex, the video is presented in simple terms and is designed to appeal to a wide audience by featuring interviews with local residents and employees who are making sustainable choices in Riverside. The video provides examples, such as waterwise landscaping and edible gardens, that will inspire viewers to make smart sustainable choices in their everyday lives.

February 16, 2012
Energy Efficiency - energy efficiency
Models include Energy Service Agreements and Energy Savings Performance Contracting.

In October 2011, Capital E for the Energy Foundation released the “Energy Efficiency Financing – Models and Strategies” report.  This report summarizes energy efficiency financing models and strategies that are applicable to industrial, commercial and residential sectors.   In preparing this report, Capital E ran a meeting with leaders from banks, industry organizations, project developers, and regulatory agencies.  The collaboration led to the design of new mechanisms for energy efficiency financing.

As stated in the report, the most cost-effective energy efficiency investments in the United States would be around $150 billion a year.  With this amount, within a decade, American residents and businesses would save $200 billion annually and create over a million full time jobs.  Current financing, however, totals only $20 billion, leaving approximately $130 billion of cost-effective potential investments unfunded. To close this gap, energy efficiency financing must become more mainstream and there must be some sort of standardization, such as green appraisal standards and performance data, for banks and financial institutions to compare.  Capital E has included multiple models and strategies in their report that will help create pathways to scaling energy efficiency financing from $20 billion to $150 billion annually. 

Models:

The models described in this report are analyzed according to funding sources, program structures, limits to scale, repayment vehicles, and project risks.  The models considered include:

Many advantages of these models include facilitated collaboration across numerous governmental departments, job creations, reduction of project risks, and removing of split incentives.  Disadvantages of a few models include state-level authorizations, funding limitations, higher transaction costs, and longer processes and negotiations.

Strategies:

The strategies in this report consider applicable building sectors, applicable models, level of establishments, growth potential, advantages, and disadvantages.   The report includes analysis of the following financing strategies:

  • Intermediary Aggregated Scale Purchasing
  • Revolving Loan Fund
  • Preferential Loans
  • Risk Reallocation
  • E-Loan
  • Point of Purchase Interest Rate Buy-Down
  • Re-Align Incentive Structures.

Certain strategies, such as unsecured consumer loans, have advantages like easier access to capital but have disadvantages such as higher interest rates.

The full report provides an overview of energy efficiency financing models and strategies.  It is important to understand and spread this knowledge because increasing energy efficiency financing will help businesses and residents reduce their energy costs, create more jobs, and improve air quality.

View the full report here to look more closely at the models and strategies included. 

August 30, 2011
Energy Efficiency - energy efficiency
Starting July 2012, most T12 lamps will be phased out of production.

Are T8s the new T12s?  According to the U.S. Department of Energy’s fluorescent lighting mandate they should be.  Starting last year on July 1, 2010, the magnetic ballasts that operate T12 lamps were no longer produced for commercial or industrial applications.  Since then, there have been progressively fewer T12 ballasts available for purchase and production has focused on the T8 and T5 systems. 

Starting July 14, 2012, most T12 lamps will also be phased out of production, including the following[1]:

  • Most F40 and F34T12 lamps and almost all FB40 and FB34T12 U-lamps
  • All 75W F96T12 lamps
  • All 60W F96T12/ES lamps, with the exception of a few 700/SP and 800/SPX lamps
  • All conventional 110W F96T12 HO lamps that deliver fewer than 10,120 lumens
  • All 95W F96T12/ES/HO, unless they can provide at least 8,740 lumens

It’s definitely a good time to get on board with the more efficient T8 and T5s. These lamps have lower mercury levels, longer lives, contribute to LEED points and are at least 30% more efficient. Compared to the T12 system, switching to a T8 system can save $7.20 a year and a T5 can save up to $13.60.[2]  If commercial and industrial owners make the switch there will be significant energy and money savings.

Speaking of savings, the Energy Independence Act of 2007 (EISA) has extended the tax deduction for qualifying projects that will be completed before January 1, 2014.  By recognizing the availability of incentives and rebates currently offered, commercial customers can save on retrofits if they act fast. Once all the DOE mandates are in effect, removing less efficient T12 systems will become a regular practice and the only option for customers with the inefficient lighting system. Rebate and incentive programs will likely disappear when this happens, so retrofitting sooner may have its added benefits.

What do you think about the T12 phase out?

August 25, 2011
Energy Efficiency - energy efficiency
Efficiency standards for light bulbs will go into effect next year.

Next year, under the Energy Independence and Security Act of 2007 (EISA), increased energy efficiency standards for light bulbs will go into effect. This mandate will gradually increase the required efficiency of bulbs over the next few years. Starting in January 2012, the 100 watt bulb will be required to drop 30% so that it emits the same amount of light while utilizing only 72 watts.  The increased bulb efficiency requirements will continue in 2013 with the 75 watt bulb and in 2014 with the 60 and 40 watt bulbs. 

These EISA standards will produce huge energy cost savings while eliminating wasteful products from the market.  The U.S. Department of Energy estimated that this new standard could save nearly $6 billion in 2015 alone. By significantly reducing the amount of electricity required to light America’s homes and businesses, mostly generated from coal-fired power plants, the standards will also reduce harmful emissions from those coal  plants including emissions of mercury, arsenic and greenhouse gases.[1]

New labels for light bulb packaging, designed by the Federal Trade Commission, will also take effect in January and will highlight bulb measurements in lumens.  While watts tell us how much energy the light bulb uses, lumens measure the brightness.  These labels, similar to nutrition labels found on grocery items, will also include the bulbs’ energy costs, life expectancy, mercury levels (if any) and the lights’ appearance ranging from warm to cool.[2]

So what do these bulb changes mean for the commercial consumer?  Simply put, customers will be able to save energy and money without losing the amount of light displayed. Since light bulb purchases will focus on brightness, ambiance and life length, the new labels will allow consumers to purchase the most efficient bulbs for their specific office, business and industry needs.  With the new label it will also be easy to estimate the yearly cost of specific bulbs, letting commercial customers manage their budgets and make practical choices about which bulbs are the most cost-effective.

Despite the energy and cost saving benefits, many people are still skeptical about the changes. Will the market of incandescent bulbs be overtaken by compact fluorescent lamps (CFLs) and light emitting diodes (LEDs)? Certainly some incandescent bulbs currently on the market won’t make the cut, but they will not be banned, they will only need to be reinvented.  By utilizing a halogen technology with the incandescent bulb, lighting companies can reach the new standards, which are currently available in the standard bulb shape.[3] Since this efficient technology is already accessible, and means savings for most customers, bulbs will most likely transition to these new standards even if the mandate wasn’t set to take effect.      

Let us know what you think about the new bulb standards.