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June 2, 2010

Mayor’s Task Force Report On Existing Commercial Buildings – Part 3

Posted by Steve Sacks under Building Operations, Energy, Finance, Finance / Mortgages, Government, Green Economy, Incentives and Rebates, Law, Legislation, and Policy, Solar, Sustainable Community, Wind | Tags: , , , , , , , , , , , , , , , |
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Parts One and Two of our analysis of the Final Report and Recommendations from the Mayor’s Task Force on Existing Commercial Buildings discussed mandatory energy audits, the risks associated with allowing unilateral submetering, and the welcome drive to increase transparency in energy use reporting under an expanded implementation of AB 1103.  In Part Three of this post, we look at the task force’s proposal to “attract game-changing capital.”

First, it should be noted that the task force’s interest in attracting game-changing capital comes from not only prudence, but also awareness of the acute financial restraints facing our society.  The task force offers low-cost solutions such as the Green Tenant Toolkit, and looks to engage the private sector in these and other initiatives.

There are two possibly expensive financial initiatives proposed by the task force that we will address at length.  The first is a Financial Optimization Tool (FOT) – a fantastic idea.  The proposed FOT is software that organizes and amalgamates all incentives and rebates available to building developers, managers, and tenants.  Currently, the best place to find such information is through the Database of State Incentives and Renewable Energy (www.dsireusa.org) (a website that is the anchor on our Tax Incentives and Rebates page).  The problem with DSIRE, and other resources such as the Flex Your Power website or the US Department of Energy Efficiency & Renewable Energy Newsletter, is the fluctuating information is difficult to organize.

DSIRE addresses this problem by simply listing every incentive available, and weekly (if not daily) updating that list.   This approach is thorough, however it creates a mountain of information to sift.   The FOT is a great alternative because it allows owners to use all incentives to design an energy efficiency program specifically tailored to their financial circumstances and their building’s design and condition.

To address the need for constant updates, the task force suggests a public-private partnership (P3).  The inclusion of a private partner could be effective.  But, as with so many other opportunities that are offered to private industry, this represents an early sale of future assets.  Further, including private industry may undermine the intent of the FOT

P3s have an essential place in our society, however, for this situation P3s are not an effective solution.  To have the greatest impact, all parties should have access to the FOT.  Use could eventually be required as a standard of care for the building management industry or as part of energy audits.  But, if a P3 private company is involved there needs to be a profit angle. Due to its niche market, the FOT will not produce sufficient advertising revenue.  And without advertising, the only profit angle is through subscriptions.

A subscription-based FOT will fail because it will deter a majority of potential users including other municipalities.  Further, if the FOT is privatized, anti-trust issues arise if use of the FOT is required

The best approach to implement the FOT is a “top down” approach that I will discuss in Part Four of our analysis.  The federal government, working with state and local agencies, must come up with this tool, so that it is accessible to all interested parties.  Perhaps federal leadership is too much for a locally convened task force to suggest, and perhaps this tool needs to start at the state level with contributions from our state universities.  What the FOT does not need is a private partner seeking profit.

There are areas where a P3 will work, and one surprising area the Task Force misses is an opportunity to suggest a partnership in finance.  The report suggests following the BerkeleyFirst distributed power program that utilizes AB 811.  As we previously discussed on the CGBB, the BerkeleyFirst program is not only innovative in attaching the debt obligations of a solar installation to property taxes, it is also innovative in allowing a private company to underwrite the financing for the installations.  This powerful P3 model epitomizes P3 success.  The private partner provides funding, and earns a fair return on investment.  The municipality reaps the reward of infrastructure development at a fraction of the cost.   Perhaps the task force was wary of opening the proverbial floodgates to private enterprise, or perhaps the task force did not want to single out Renewable Funding LLC, the underwriter in the BerkeleyFirst program.

Nonetheless, San Francisco launched GreenFinanceSF, and the city called on Renewable Funding LLC to finance the project.  BerkeleyFirst deserves a great amount of credit as the first program of this type in California, but GreenFinanceSF looks to be a broader initiative that has a longer list of eligible projects.  Unlike BerkeleyFirst which funds solar residential solar installations, GreenFinanceSF finances a long list of energy and water retrofit projects.  The California Green Building Blog will offer further analysis of the GreenFinanceSF program in the future.

The next and final installation of our analysis of the task force report will discuss a topic near and dear to my heart – the suggestion by the task force that government “lead by example.”  I am a firm believer in this approach.  This is not about government intervention, this is about leadership.  No matter where your political loyalties fall, you’ll want to read next week…

 

March 4, 2010

AB 510 Signed By Governor Schwarzenegger! (Part 2)

Posted by Steve Sacks under Building and Design, Building Operations, Energy, Finance, Government, Green Economy, Incentives and Rebates, Law, Legislation, and Policy, Make Money, Marketing Ideas, Photovoltaic, Solar, Wind | Tags: , , , , , , , , , , , , , , , |
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Governor Schwarzenegger signed AB 510 on February 26, 2010 (Click here for full text of AB 510) (Click here for press release and video). We covered the basic elements of the new law in Part 1 of our coverage last week (click here for that post). Now, we turn to some other elements of the law… some of the fine print, if you will…

The law balances the interests of utilities, customer-generators, and non-participating customers. (This balance, and the fact that there is no discernable impact to the General Fund, are likely the reasons the bill passed the Senate by a nearly unanimous vote.)    In addition to lowering the proposed cap from 10% to 5%, an example of concessions to utilities is found in Section (3)(l).  That section requires that customer-generators pay the Department of Water Resources for all charges that would otherwise be imposed on the customer had they not entered the net-metering arrangement.

Another significant concession is found in Section (5)(B).  Under that section, the utilities can use the energy provided through net-metering arrangements toward the Renewable Portfolio Requirements (outlined in Public Utilities Code Section 399.15 and 387).  Under previous net-metering law, utilities were not permitted to count net-metering toward these obligations.  Now, utilities have a chance to meet the aggressive target of generating 33% of their energy from renewables by 2020.  (The utilities are far from reaching the Renewable Portfolio Requirements of 20% of energy from renewables by 2010).  If California residents and businesses continue to install solar and wind power generation, the utilities have a chance to meet the portfolio requirements, but the current 5% cap will have to rise again.

On the consumer side, there are very reasonable concerns that net-metering raises the energy bill for non-metering customers.  To assuage those concerns, the bill establishes a rate-setting commission that will set net-metering compensation rates and provide a report detailing 1) the market effects of net-metering and co-energy metering, and 2) how the authority’s rate schedule ensures consumers who don’t enter net metering arrangements pay the same for power that customer-generators pay.

AB 510 reflects a state leading the way in establishing energy independence.  It is great legislation now because it doesn’t tap into the General Fund, and it encourages private businesses (e.g. Solar City or Renewable Funding, LLC).  The law is another step forward that keeps California as a leader in United States renewable energy generation.

 

February 23, 2010

AB 510 On The Way To Governor’s Signature! (Part 1)

Posted by Steve Sacks under Building and Design, Building Operations, Energy, Finance, Government, Green Economy, Incentives and Rebates, Law, Legislation, and Policy, Make Money, Marketing Ideas, Photovoltaic, Solar, Wind | Tags: , , , , , , , , , , , , |
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AB 510 (full text here) passed both the Senate and Assembly, and Governor Schwarzenegger says he will sign the bill into law.  The bill raises the cap set on the number of homes and businesses that can take advantage of net energy metering.  Yes, there’s a cap!  The utilities don’t want “customer-generators” producing power without limit, and the government appears concerned the customers will somehow tip the “balance of power” between customer-generators and utilities (yes, that’s an energy pun).

At its core, the bill states utilities are not required to issue permits and enter agreements with “customer-generators” (residential and commercial solar and wind power producers) beyond 5% of the utilities’ aggregate customer peak power demand.  The previous cap was 2.5%.

The legislation also addresses co-energy metering.  Co-energy metering is an arrangement between publicly owned utilities and customer-generators who produce between 10kw (50kw for wind) and 1MW.  These generators are compensated based on the time of energy use and generation.

On the other hand, standard net-metering arrangements are for customer-generators who produce 3 -10kw.  The rate at which net-metering customers are compensated is either a “time of use” model such as that with the co-energy metering producers, or a “baseline” model.

A ratemaking authority (also described in the bill) sets the rates for compensating customer-generators who have an energy surplus at the end of the year and follow the baseline model. The primary goal for the rate-making authority is to set a price that ensures non-participating customers pay the same for energy they would have otherwise paid had no net-metering been used.

To its credit, the bill allows the ratemaking authority to compensate net energy producers for the value of the electricity itself, AND the value of the renewable attributes of the electricity.  This little nod allows net energy producers to receive a bonus if the renewable attributes of the energy production add indefinite or unforeseen benefits (Cap and Trade anyone?)

Congratulations (I hope not premature) to AB 510 sponsor, Assembly Member Nancy Skinner (14th District).  The bill was proposed last year as AB 560 (click here for more of that story), but it died in committee.  We’re glad to see it is on its way to the finish line this time!

Editor’s Note: Stay tuned for Part 2 of this post that will discuss other requirements and considerations in the bill. UPDATE: Click Here For Part 2

 

October 20, 2009

Congratulations AB 920!

Posted by Steve Sacks under Energy, Government, Incentives and Rebates, Law, Legislation, and Policy, Photovoltaic, Wind | Tags: , , , , , , , , , , |
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AB 920 was signed into law last week.  The law requires that utilities pay for energy they receive through net metering.  We have followed AB 920 (previously AB 1920) here at the CGBB since we posted our first articles nearly a year ago.  AB 920 is the common-sense approach to net metering.  

Net metering is an arrangement whereby utilities purchase power from consumers who generate power from solar arrays or small wind turbines.   Previously, utilities would provide credits against a utility bill.  Starting in 2011, utilities will be forced to pay power-producers wholesale rates for the power (if a credit remains at the end of the calendar year).   Cash compensation to the original power producer makes sense because the utility makes money by selling that same power to end users.  

AB 920 is a great step, but California needs to travel light years before we realize the “million solar roofs” idea.  At the very least, California needs to abandon the limits on the sizes of residential power production.  Currently, to be eligible for net metering, residences must limit the size of their solar array or wind turbine.  PG&E and other utilities argue that larger arrays and turbines will result in higher electricity rates for those not participating in net metering.  This argument can not be summarily dismissed.  There are legitimate concerns about reliability from residential power producers.  However, utility concerns can be addressed in future legislation (such as infrastructure service fees or production guarantees for net meter users over a certain size).   I appreciate that ideas such as this were left out of AB 920 in order to get it passed, but by no means does this mean the work is done.

Also, the net metering program has an overall cap, and after the cap is met residential power producers are not compensated for their power produced.  AB 560, proposed by Assemblymember Nancy Skinner, representing the 14th District, would have raised the cap for net metering power available for purchase from 2.5% of peak power to 5% of peak power.  PG&E supported that bill, but it died in committee .  For an article on some of the issue with the bill, click here.

AB 920 represents a positive step for residential solar and wind power in California, but we have miles to go before we sleep.

 

October 15, 2009

Small Wind – The Million Solar Roofs’ Answer To Nighttime

Posted by Steve Sacks under Energy, Government, Green Economy, Law, Legislation, and Policy, Research, Wind | Tags: , , , |
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“Big wind” is just that.  Big.  With big wind comes big power generation.  Thing is, big wind also needs LOTS of STRONG wind.     That level of wind doesn’t blow in most areas, especially residential areas.  Understandably, most people do not want to live in consistently strong wind….including San Franciscans.  

“Small wind” also follows its name.  “Small wind” or small wind generators (SWGs) are defined as a wind turbine whose production capacity is 100kW or less, or 50kW or less (according to the American Wind Energy Association[AWEA] and Consumer Energy Center [CEC] respectively).

Big wind is not a good option for San Francisco.  According to a CEC PIER report in 2004, San Francisco only has a “moderate” wind resource for medium and large wind projects. For a city aiming to generate 50 MW of in-city renewable energy by 2012, that’s bad news.   But a new report issued by the San Francisco Urban Wind Power Task Force suggests small wind projects could yield results.  Placing such projects in an urban setting has generated the term “urban wind.”  

Some observations in the Urban Wind Report are thinly veiled attempts to provide a positive spin (pun intended) on wind (e.g. ”cats are far more dangerous to birds than wind turbines” ).  But overall the report reflects the diversity of the 44 member task force that composed it, and is a realistic and fair-minded attempt to find solutions. 

The report, offers information and recommendations on the following subjects:

  • Urban wind technologies, testing and certification
  • Data collection and analysis
  • Permitting
  • Costs and incentives
  • Potential impacts on flying animals
  • Workforce development
  • Public awareness and possible demonstration sites

The Urban Wind Report is well written and has lots of useful information, statistics and suggestions.  The report deserves a full read, and at 15 pages, it’s pretty quick. 

Among the 29 recommendations the report recommends:

  • The City should adopt the Small Wind Certification Council (SWCC) certification procedures
  • The City should encourage or require manufacturers to adopt information labels on small wind products
  • The City should lead by example and install wind turbines on city buildings – this is how green building in general got its start, and is a great idea
  • The Department of the Environment should develop an “SF Wind Map” (similar to the SF Solar Map) that provides wind data for consumers
  • The City should explore ways to offer permitting cost refunds
  • The City should consider revising city-wide height limits to allow for greater wind power generation.  This is essential – click here to read the CBBG Post From March 2009 on the subject of siting urban wind
  • Permit applications should require data capture to help build the SF Wind Map
  • The City should encourage the funding and use of federal and state incentives (local incentives are “premature”)
  • The City should implement an on-property-tax-bill financing program, (under development, and similar to the widely lauded Berkeley First program
  • The City should support efforts at the state level to exempt SWGs from property tax increases
  • The City should work closely with groups to minimize bird and bat mortality
  • The City should continue to make small wind companies eligible for the Clean Tech Payroll Tax Exclusion and other incentives
  • The City should consider additional services for small businesses and research
  • The City should encourage training in the small wind industry through schools and labor unions
  • The City departments comply with the Mayor’s Executive Directive 08-08 instructing departments to include wind turbine design in existing and new City facilities
  • The City should revise its Green Building standards to require all new residential and commercial construction and significant renovations to be built with the potential for installing renewable energy devices such as SWGs

San Francisco has lots of fog, and inconsistent wind, that reduces the application of the two frontrunners in alternative energy.  To their credit, Mayor Newsom and the City Council seem undaunted, and consistently press for answers.    Small wind…think of it as a million solar roofs, with a spin …

The full report can be found by clicking here, or by visiting our Case Studies and Reports page.

 

August 28, 2009

Inefficient, But Green…Is That Good?

Posted by Steve Sacks under Carbon, Energy, Finance, Government, Green Economy, Water, Wind | Tags: , , , , , , , , , |
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Some power generation facilities store energy during peak hours to later use during off peak hours (and vice versa).  The best example of this is battery storage of energy from wind and solar generators.  Wind and sun generate most of their power during the day, and in the case of solar, there is no energy generated in the evening.  An example of how this process works both ways is in the case of hydroelectric power generation when water is pumped to higher elevations during off-peak hours.  During peak hours the water pumped up is released, and extra power is available.  This method is called “pumped storage.”

These processes result in some energy loss, but proponents say the cost to generate the electricity is minimal, so why not?  For a small hit in efficiency, you get clean, carbon neutral power around the clock.  For the most part, I agree.  Wind, sun and water are in high abundance for power generation, and not an ounce of carbon is produced (though the added wear and tear on equipment eventually leads to shorter life spans, higher maintenance costs, etc…)  This leads to more manufacturing and likely more carbon emissions. Regardless, these methods are all far better than popping up a new coal plant.

Now, add a “new” tool to the tool box.  Compressed Air Energy Storage (“CAES”).  I guess it’s been around for a while in Germany and Alabama, so it’s not so “new.” But it is possibly new to California!   An article from the San Francisco Chronicle on August 27, 2009 details how PG&E is seeking a federal grant of $25 Million to design a facility in Kern County, CA using CAES.  Kern County is about half-way between LA and San Francisco.  The facility would use power generated by solar and wind to pump air into porous rock reservoirs.

Then, at night when the sun’s gone, or on a day when the wind won’t blow, the compressed air is released and generates electricity.  The plant PG&E would like to see would provide 300 MW for 10 hours…that’s enough to power 750 homes.

The total cost of the facility would be about $300 Million over five years.  That may seem like a lot, but when you realize that once it’s up and running there are no added costs for fuel, it starts to make sense.

By 2010, PG&E needs to generate 20% of it’s power from renewables.  They’re not going to make it, but with efforts like this and the recent deal with BrightSource Energy (full disclaimer, BrightSource is a client of Bell, Rosenberg & Hughes, the workplace for the authors of this blog), no one can say PG&E isn’t trying.  According to a recent article in the Sacramento Business Journal, Peter Darbee, CEO and Chairman of PG&E stated PG&E has contracts that will allow the utility to deliver up to 24 percent of its energy from renewable sources by 2013.

CAES doesn’t sound ideal, but creativity like this can only lead to better things.  Also, with a carbon credit market likely around the corner, facilities like this may generate unforeseen dividends.

For the San Francisco Chronicle article that includes a great illustration of CAES, click here

For the Sacramento Business Times Article, click here

 

March 22, 2009

Study Finds Siting Key For Residential And Commercial Wind Turbines

Posted by Steve Sacks under Building and Design, Building Operations, Energy, Wind | Tags: , , , , , |
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Recently I’ve found there is a lot of buzz about wind for homes.  In fact, on a trip recently I met a hotel owner who swears by it (stay tuned for a post on that – complete with pictures!).  Well, before everyone jumps on the wind bandwagon, a study commissioned by the Massachusetts Renewable Energy Trust and produced by the Cadmus Group  finds you better make sure you’ve got consistent wind in your location before you make an investment. 

The study also finds that the higher you place the turbine, the better.  That may make it tough for urban locations to utilize this technology.  My experience is that if you’re by a coastline, or in the mountains, you’re going to get a lot of wind, and that is often the perfect option for homes that can not use photovoltaics.

So, just like with photovoltaics, location is key. If you’re on the beach and get a cloudy marine layer half of the year, but get a steady wind, it’s a no-brainer to go with wind.  If you’re in a city and surrounded by buildings, think twice.  Likewise, municipalities need to consider these shortcomings when providing tax incentives for residential wind installations.  Let’s not spend precious municipal dollars on green technology that doesn’t work.  It may help the green economy, but it will undermine public support if tax dollars are spent on inefficient technology.

To see if your location is good for wind, click here to look at the Cadmus wind calculator commissioned by the Massachusetts Renewable Energy Trust

Read a full article on the study at CNET by clicking here

Find pdf slides summarizing the study commissioned by the Massachusetts Renewable Energy Trust and produced by the Cadmus Group  by clicking here

Find the Progress Report by clicking here

 

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