The California Experiment

November 4, 2009

The California Experiment Lays the Path to Creating an Energy Efficient Economy
by Executive Director Daniel T. Colbert at the Institute for Energy Efficiency, UCSB

Thirty five years ago, before anyone else got it, Art Rosenfeld got it. He understood that energy efficiency was going to be the most important cog in reinvented energy machinery not only for his own State of California, but for the world. Head of California’s Energy Commission since its creation in 1974, Rosenfeld’s work in reducing energy consumption has been so effective that while per capita energy usage in the United States has increased by 50%, California per capita usage has stayed flat. This data, dubbed the “Rosenfeld Curve” in his honor, has inspired other states and the federal government to achieve similar savings by imitating California’s programs. California’s energy efficiency programs have saved taxpayers a total of $56 billion since the Commission’s inception.

America’s founders understood the value in letting states experiment with their own ideas and programs. However, this value is only realized if successful programs are replicated elsewhere and failures abandoned. California’s experiments in energy efficiency, while not always rewarding, have been successful in aggregate and should be adopted more broadly throughout the country. Meanwhile, three groups in California – the Institute for Energy Efficiency at UC Santa Barbara, the Center for Energy Efficiency at UC Davis and the Precourt Energy Efficiency Center at Stanford University – are leading the next charge on the energy efficiency front. Stay tuned for more California successes leading the nation.

Click here to read “The California Experiment“, an article by Ronald Brownstein in the Atlantic which inspired this commentary.


Pass the Buck – the biggest challenge to commercial building energy efficiency is in the lease

November 3, 2009

“What’s the ROI?” I was asked this question recently by the CFO of a large REIT. I was in their office selling the benefits of a web-basd enterprise energy and environmental management solution for their nationwide properties. I’ve been asked this question a lot lately. And the fact is that the ROI is a two to three year payback and a 5 to 15% annuity. A very respectable ROI for any investment.

However, the challenge to creating meaningful energy efficiency for most commercial buildings is the fact that only a small population own and occupy their own buildings. Most commercial buildings are owned by a REIT or landlord and then lease the property to occupants. The REIT can’t justify the investment in energy efficiency because they get to pass the buck — its the occupants that pay the utility bills and common area charges. The occupants can’t justify the investment in energy efficiency because they don’t lease the building long enough to see the ROI on capital improvements. It’s only building owner-occupants who can justify the investment. If we’re going to make a dent in the 70% plus electricity use and 45% carbon emissions generated by commercial buildings, we’re going to need to resolve this issue.

What do you think the right solution is?


Does LEED need to measure up to survive?

October 14, 2009

In business, there’s the plan and then there’s the execution of the plan. In buildings, there’s the design and then the efficient operation of the building. In business we monitor our performance to plan via real-time measurements such as P&L and cash flows. We can only manage what we measure. In buildings, we need to take the same step and actively measure our operating performance and control our costs using web based enterprise energy and environmental solutions. Otherwise, the LEED design is like a business plan without a P&L statement. What do you think?

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Very Smart Cities

September 6, 2009

South Korea’s Songdo and China’s Meixi Lake are spending billions on intelligent networks with an eco-vibe. Songdo is slated for completion in 2014. The cost: $35 billion, making it perhaps the world’s largest private real estate venture in history. Cisco (CSCO) building networks are key to both projects. Cisco plans to deploy video networking technology and energy management software tools such as the Cisco Network Building Mediator city-wide and meld municipal systems, such as education, health care, transportation and hospitality into a common network. Wim Elfrink, Cisco’s chief globalization officer, says Cisco has identified 20 services that could be linked, but will start with six or seven. The company declined to specify its investment in Songdo, but says it has committed $2 billion to South Korean projects over the next three to five years.

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Some Buildings Not Living Up to Green Label

August 31, 2009

The LEED council’s own research suggests that a quarter of the new buildings that have been certified do not save as much energy as their designs predicted and that most do not track energy consumption once in use! This is crazy. If you don’t measure it, you can’t manage it.

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Huge benefit seen in raising energy efficiency

August 6, 2009

The International Herald Tribune, July 31, 2009 Friday – The biggest opportunity to improve the U.S. energy situation would be a major investment program to make homes and businesses more efficient, according to a study by the consulting firm McKinsey & Co.

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Oh, Those Sexy Building Codes

July 23, 2009

From Architecture2030

Buried deep within the 1,428-page Waxman-Markey climate bill (H.R. 2454: American Clean Energy and Security Act of 2009) passed by the House and now on the Senate floor, is Section 201, pages 320-348. It is this section that makes H.R. 2454 worth passing.

No matter what else is compromised or changed in the climate bill working its way through the Senate, Section 201 must not be changed or weakened. Why? Because all other energy and emissions reduction approaches pale in comparison to what Section 201 will accomplish. Without it, we simply cannot meet the greenhouse gas (GHG) emissions reduction targets called for in the bill. We won’t even come close.

Section 201 covers building energy codes – that’s right, building energy codes – that will transform the entire built environment in the U.S. by 2050. That’s because Section 201 affects all new building and major renovations and by 2050, more than three-quarters of the built environment in the U.S. will be either new or renovated.

Section 201 requires updating national building energy codes to meet the following energy reduction targets:

* in 2010, 30% below the baseline energy code (IECC 2006 and ASHRAE 90.1-2004),
* in 2014-2015, 50% below the baseline energy code, and
* every three years after, out to 2029-2030, an additional 5% reduction.

The targets outlined in Section 201 are simply more effective than any other energy and emissions reduction approach. Compare Section 201 with the call by some in Congress for a massive U.S. effort to build 100 new nuclear power plants in an attempt to move the country toward energy independence and significant GHG emissions reductions (click either image to enlarge):

The proof is in the data. There’s simply no comparison. Whereas the 100 nuclear power plants only act as a replacement energy source, the updated building energy codes of Section 201 actually reduce energy consumption, eliminating the need for more plants. The codes also achieve more than six times the emissions reductions as 100 nuclear power plants. The codes accomplish all of this at a fraction of the cost. Here are the facts:

* Since June 2006, over 60,000 new homes have been designed, built, and certified to meet a minimum 50% energy reduction below the baseline energy code for heating and cooling.
* Studies by the Department of Energy’s National Renewable Energy Laboratory (NREL) illustrate that meeting a 30% residential energy consumption reduction target below code will save households in every region of the U.S. between $403 and $612 per year after the cost of efficiency measures is factored in.
* At current energy prices and mortgage interest rates, NREL estimates that the average cost-neutral point for home efficiency upgrades is a 45% energy reduction below code.

The targets in Section 201 are set at a reasonable and beneficial pace for change that will achieve the reductions necessary within the timeline called for by the scientific community. Implementing these targets will reduce building sector energy consumption by:

* 18.35 Quadrillion Btus from projected 2030 levels (the equivalent of approximately two hundred and forty 1000 MW power plants), saving consumers an estimated $218 billion in annual energy bills (2007 dollars),
* 18.7% below 2005 levels by 2030, and
* 40.4% below 2005 levels by 2050.

Implementing the targets in Sec. 201 would also reduce building sector CO2 emissions by:

* 20.3% below 2005 levels by 2030 and
* 48.8% below 2005 levels by 2050, leaving only 34% of President Obama’s 83% Building Sector reduction target to be accomplished with other clean energy sources.

It is clear that the building energy code targets set in Section 201 are not only essential for achieving the energy consumption and GHG emissions reductions needed, but that they also are the most cost effective approach for doing so.


NetApp Enterprise Energy Management Case Study

July 3, 2009

Cisco officially announced the release of its energy management gateway device this week, called the Cisco Mediator. We’ve been working with this device for the past year. The trend towards a converged TCP/IP building architecture is going to create new applications that save money and reduce carbon emissions. Exciting times.


IBM Global Survey Shows Information Gap in ‘Green,’ Sustainability Strategies:

June 1, 2009

This paragraph says it all: “Companies aren’t collecting and analyzing all the right information
about CSR or aggregating it often enough. That means they can’t
implement real changes that would fundamentally increase efficiency,
lower costs, reduce environmental impact and improve reputation with key
stakeholders;”

You can only manage what you measure and now is the time to start measuring energy use and building operations in the same way we measure sales, production, finance, and accounting. A web-based enterprise energy management solution is the equivalent to energy use and building operations as Sales Force is to customer relationship management. Imagine a company that only tracked a portion of its sales, or only reported on some of its clients! It wouldn’t happen and innovative companies who embrace accurate measurements of energy use and facilities will begin to reap a competitive advantage.

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Building Owners and Operators Place Efficiency on the Front Burner

May 29, 2009

Richard Gollis, co-founder and principal of The Concord Group, reported on Concord’s new survey of real estate decision-makers. The consensus is that short-term cost savings, generated by faster local permitting and least-cost operations, are giving sustainability its sizzle these days. At the moment, owners are just trying to hold their own, waiting for economy to pick up and the capital markets to unfreeze. At the same time, real estate owners are bullish on green for the long term and are expecting green buildings to deliver premium sales prices over time.

Jones Lang LaSalle’s Dan Probst also focused on near-term cost cutting, noting that owners’ 2009 focus is on expense reductions and remaining competitive. How do green practices fit in? The emphasis is falling on certification under LEED Existing Buildings- Operations and Maintenance (LEED-EBOM) and ensuring that operating costs are cut to the bone by undertaking energy efficiency initiatives, including lighting retrofits and performance contracting with energy services companies (ESCOs).

The same theme was underscored by Bob Ratliffe of Kennedy Associates, the advisory firm that serves as the real estate manager for the Multi-Employer Property Trust commingled fund. (Disclosure: I worked for the MEPT fund prior to Ratliffe’s tenure.) Ratliffe’s investors are looking for fuel and water savings in 2009. As for Energy Star, “It has traction,” Ratliffe says.

Jim Boyle, CEO of the Sustainability Roundtable, agrees. Boyle’s members, drawn from a broad roster of organizations, are “focused on cost savings and best management practices” in operating their real estate portfolios.

Hot topics from Developing Green are also steeped in pragmatism. Technology advances for building efficiency, including Web-based applications, are on Ratliffe’s radar. Metrics are becoming increasingly important in tracking carbon emissions reductions. Wells Fargo’s James Finlay is watching closely for the risks and benefits of distributed generation (the production of renewable energy at the building level). On the upside, distributed generation will likely generate property revenues through the sales of renewable energy credits, but could also create risks to value, including difficulties with system design, operation and maintenance.

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