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Why Customers Don’t Trust Energy Efficiency – Versus Stupid Pet Tricks

Energy Efficiency3 comments

As I mentioned in a LinkedIn post last week, this week’s Energy Rant involves an interesting article Why Homeowners Don’t Trust Energy Efficiency.  The paper could also be tweaked a little and re-entitled, Why Customers Don’t Trust Energy Efficiency.  Period.  As usual, this brings to mind a cornucopia of spinoffs.

Let’s first begin with a core theme of a rant from about a month ago.  In that, I said savings from current portfolios across the country are dominated by:

  • Incentives for trinkets like CFLs and ENERGY STAR this, that, and the other (consumer goods) and
  • Incentives for contractors to upsell efficient larger trinkets to commercial and industrial customers

The source article noted above states customers don’t trust the savings estimates from a home energy audit.  Let me ask this question: Do customers trust the savings they will get by purchasing an ENERGY STAR appliance?  No.  They haven’t a clue what the savings will be.  Let’s face it.  For these consumer programs, people are treated like animals.  Sit.  Stay.  Good boy.  Here’s a biscuit.  Stupid pet tricks.  Speaking of stupid pet tricks, this has engineering nerd written all over it.

Anyway, I’ll need to write about attribution someday.  Is Pavlovian response a free rider?  If the customer has no clue what the savings are, isn’t that a free rider?  What is the name of Pavlov’s dog?  Just curious.

The second point I will make as a result of this article is that there is no such thing as a free rider for retrocommissioning or other comprehensive energy retrofit projects guided by sound energy measure identification, development, and analysis.  We wrote about this in a published paper for the Energy Solutions Center a couple years ago.

For the home audits, consumers are skeptical that the savings will develop per prediction, but yet they buy the ENERGY STAR appliance with no inkling whatsoever of savings or return on investment.  With retrocommissioning, end-users get nothing but savings; no shiny objects or things to play with.  With comprehensive energy retrofit, they spend big coin for behind-the-scenes invisible measures with the anticipation of return on investment.

Regarding retrocommissioning measures, you cannot tell me that because the measures are low/no cost the end user would have done any of them anyway.  If they would have done them anyway, why do they exist?  Answer: lack of time and/or lack of expertise – information, knowledge, awareness, and motivation all lead to action.  In some retrocommissioning projects we have been involved with, the mere activity of doing the facility investigation makes things happen as customers start to think and focus on a purpose.

The article also states that customers place higher value in confidence in savings compared to low implementation cost or incentives.  In other words, for these types of deep retrofit projects with no shiny objects involved – projects driven by dollars only – accurate information trumps everything else.  End users are doing these things to save energy and money and not for jollies in the form of checks from the utility / program.

Switching gears, Andy Frank, quoted in the article, states average savings resulting from home audits is about $1,000.  Whoa.  Customers should determine what they pay for energy on an annual basis and if savings estimates exceed 20-30% you might be skeptical, depending of course on the breadth and depth of measures.  If the structure is stripped to the framing and re-insulated, sheathed, insulated again, and space heating, water heating, and laundry equipment switched from electric to gas, then it could be well above 50% dollar savings.  My annual energy bills are just under $800 for electric and $300 for natural gas, all in – meter charges (fixed cost) and everything.  Texans and Floridians have some of the highest energy consumption at roughly 15,000 kWh annually at a cost of roughly 13 cents/kWh.  Doing the math, $1,000 of savings is a stretch in most cases.

How to evaluate reasonableness?  Benchmarking.  Where does the home/facility in question stack up against peers, and where would it be after projected impacts from recommended measures?  Is it reasonable?

Lastly, Mr. Frank states that investing in energy efficiency is like investing in a tech stock.  Hardly; that is if the analysis is any good.  The challenge becomes shepherding stuff from study to implementation – a story for another day.  Between study and implementation, easily half the savings can be squandered because “trade allies” are used to doing things the way they always do them – poorly, when it comes to saving energy.  An aggressive training and QA/QC regimen is needed.  There is absolutely no reason in the absence of substantial facility use patterns that savings should not materialize per estimates of a sound study with implementation and verification by people who know what they are doing.

The Rogue Choir Boy

Energy Efficiency, Government, Utility Stuff0 comments

I spent last week at the International Energy Program Evaluation Conference, IEPEC, as in, I-E-P-E-C to hard core evaluators or I-Peck for the rest of us.

Ninety-five percent of the conference including content and networking was great.  Of course with this being the Energy Rant, I will beat on the remaining 5%.

Recapping, there are generally two portions of program evaluation: impact and process.  Impact evaluation, which is what we at Michaels do, involves the assessment of savings (impacts) programs achieve, including what the measure actually saves (gross savings) and what impact the program had on the savings (net savings).  For example, my mother started buying LED Christmas lights and practically replaced her Las Vegas scale lighting system with LEDs in one year.  She then showed me forms she could submit to get cash back from the utility.  Mom loves the lights.  The cash was just a handout.  Gross savings may have been decent for a residential end user.  Net savings were zero because she already bought them without knowledge of the incentives or program.

Per the California Evaluation Framework, 2004, process evaluation is a systematic assessment of an energy efficiency program for the purposes of (1) documenting program operations at the time of the examination, and (2) identifying and recommending improvements that can be made to the program to increase the program’s efficiency or effectiveness for acquiring energy resources while maintaining high levels of participant satisfaction.  The term “program’s efficiency and effectiveness” refers to dollars spent on programs.  Are they achieving real impacts or just handing out money?

The conference is dominated by process evaluators and their counterparts on the utility and government (state and federal) side of things.  Many (10-30%?) of these people I think have orbited a little too far from earth and spun off to other galaxies.  They live in a galaxy far away and they argue about things like Zeno’s Paradox, except more obtuse, nebulous, and alien than our pal, Zeno.  From here on I’ll refer to life forms as ETs, as in extraterrestrials.

I’m sending out a call to program implementers – utilities and third party implementers – you need to get involved with these evaluation conferences because I think you might be surprised at what you hear.  For example, the keynote speaker Naomi Oreskes, a professor of history and science, talked; well let’s just say the title of her book is “Merchants of Doubt” (about global warming).  Her message involved the history of deniers going back to the end of the cold war, later risks of tobacco, and so on up to global warming.  It was interesting but as you know, I have doubts about significant human derived global warming and the conference itself perpetuates the basis of my doubts.  I believe the reason it isn’t getting traction is people do not perceive any climate changes or adverse effects.  Change is normal.  On the other hand in the tobacco fight, black rotten lungs and people dying a heinous cancerous death are clearly eye openers.

Like climate science, the conference is supposed to be based on engineering, science, social behavior, decision making processes and the like.  But in a large sense, to some it has turned into an advocacy group for policies to mitigate climate change and the philosophy of evaluation is starting to look like the philosophy of climate change as presented by the ETs.  Papers for the conference have the same “peer review” process that the climate scientists supposedly have.  In fact, as moderator, I peer reviewed three papers for my session and those papers focused on subjects relative to program evaluation, including how do customer perceptions of their lighting hours match reality as determined by logged data.  What are the market effects of high bay lighting in California relative to a control group of states with no programs?  This was interesting stuff and the papers were informative.  I learned a lot and even referenced some of the findings already in proposals.  To be sure, other sessions presented much pertinent useful information.

However, some latter sessions were really whacko fringe stuff that had nothing whatsoever to do with program evaluation.  I attended one session that I swear to my maker was a doomsday cult session.  People were pounding away on their smart phones during the session, possibly to book flights to Guyana??  In fact, I was thinking of shooting off an email to my loved ones saying that it’s been great knowing you and thank you for everything, Mom.  The presenter was talking about how megatons of methane locked up in silt from a Siberian river flowing into the arctic ocean was going to be released and temperatures would rise 20 degrees or so in 20 years and a billion people would die from drought and famine.  No kidding!  Sounds like the makings of a Superman IIX movie.  And this guy was absolutely convinced this is about to happen and absolutely sure what the precise effects would be.  He spoke factually and in reading his paper he speaks of certain things to come – i.e., he was not saying,” could”, “may”, or “worst case” – it was “will” for all claims.

The only “will” there is about the future is, I will die, and I will pay taxes.

At the same conference there were panels of ETs who would debate things for which I could not understand whatsoever.  When a guy (me) who’s been in the business for 16 years doesn’t understand the message, the message is miserably and hopelessly off course.  The ring leader would say, “so and so is a contrarian and the other three panelists are believers” [in something?].  I don’t know what.  They are so far out in left field you have to remember the seven time zones difference to ask them a question so you wake them up in the middle of the night.  Finally, one woman in the session – an implementer – stood up and commented that we need to start talking the language of ISOs (independent system operators that control the grid), power suppliers and utilities or we will lose relevance not only for EE and policy, but for evaluation as well.  I was about to give her a standing-O right there for COMMON SENSE.  The first words out of one of the panelists mouth was, “I disagree.”  Boooooooooo!  What is wrong with these ETs?

The day before this there was a panel of mostly ETs to discuss politics of evaluation, which turned into politics of global warming of course.  Note that probably most old timers still inhabit our planet and they are clear thinking people with their eye on the ball, which is improving programs.  They didn’t all arrive at Boston Harbor in the starship lollipop.  Moving on, each of the panelists gave their sermons and then it was turned over to ETs in the audience voice their proposed chapters to the holy book.  I actually had to leave before it was over.  The typical rant would start with, “I just have a couple quick comments.”  Five minutes later they were talking about chicken farming on a nickel a day in Kenya.  They would babble incoherently like someone who had been dropped on their head and doped up on maximum doses of morphine prescribed by their doctor.  Anyone home?  Is there a question in there somewhere?  Perhaps a comment regarding our industry?  Have you ever been introduced to concise?

Many ETs argue that we cannot quantify the true impacts of EE programs so just fuggedaboutit.  We cannot treat EE or demand response as a resource so fuggedaboutit.  What the?  Then why have these programs?  They know for sure that they need plane tickets to Guyana but we can’t even come close on program impacts?  See what I mean?  Does this make sense?  The juxtaposition with program evaluation and climate change seems to be, believe.  We can’t really measure it.  We know neither the day nor the hour.  It is going to kill us and these programs are cost effective.  Just keep the money coming.

As it turns out, I was not the only flat earther in attendance.  Numerous other heretics including one who had been away from these conferences for 10 years said the same thing, unsolicited.  “It has become a religion,” one elder statesperson said.  Well, heeeyah!

Let’s get rid of the underlying stealth agenda and crap papers and refill with good stuff and save the ET rants for the lollipop ride back to planet Koozebane.

written by Jeffrey L. Ihnen, P.E., LEED AP

Horse and Buggy EE Programs

Energy Efficiency, Government, Utility Stuff0 comments

In many states, energy efficiency programs are meeting annual savings goals and their incentive cash is depleted in a fraction of the year.  States where energy efficiency programs are a new offering are especially quick to meet goals.  These states include Ohio, Michigan and Illinois.  These states rely heavily on lighting, which accounts for somewhere in the range of 90% of the total savings.  Even mature states like Wisconsin and California still get well over half their savings from lighting and other prescriptive measures (rebates).  Wisconsin surpassed goals and ran out of incentives last program year.

There are many ways to solve the “excess savings problem” from reducing or eliminating incentives on some things or eliminating program offerings.  In Wisconsin, they are sort of cutting incentives across the board and getting rid of comprehensive energy retrofit in existing commercial and industrial (C&I) facilities, where everyone knows the greatest potential exists.  Comprehensive energy retrofit in WI is dead because they killed feasibility studies.

Wisconsin must know something Minnesota, Iowa, Illinois, Michigan, New York, California, Johnson Controls, Honeywell, Siemens, and dozens of energy service companies (ESCOs) around the country are oblivious to.  These states’ programs rely substantially on comprehensive energy retrofit and it’s actually the holy grail of energy efficiency.  But not in Wisconsin.

Wisconsin instead relies on the discount model.  See Incentive or Discount, January 12, 2010.  The powers that are believe this is the most cost effective (only) way to deliver savings and that feasibility studies once paid for by the program just rot on the customer’s shelf.  But there are numerous ways to avoid this.  You just have to develop an integrated program that holds customers accountable for implementing measures.

When Wisconsin (Focus on Energy, Focus for short) took over the energy efficiency programs from the investor-owned utilities about 10 years ago, one of the goals was market transformation.  Market transformation simply means making energy efficient products and services the normal way of doing business such that ratepayer-funded programs are no longer needed, or their need is greatly reduced.  Market transformation has long since been cast aside.

Instead, Focus has been transformed into something that seems to be directly at odds with its market transformation charter.  Service providers in the market, ones with expertise and no bias (don’t sell stuff) are locked out by an apparatus that cannot work for them.  Eliminating feasibility studies was the equivalent of adding a mote full of alligators around the fiefdom with razor wire atop the castle wall to keep the serfs out.

The idea that feasibility studies are a waste of money is just plainly incorrect.  Nearly all of our feasibility studies are acted on.  Last year we kicked off a retrocommissioning program with three pilot studies – no commitment from the owners whatsoever.  We just wanted to demonstrate potential.  Two of three have already been implemented.  One has almost a year’s savings accumulated with 25-30% electric and gas savings, on their bills.  The third project is close to implementation, which will probably be completed by year’s end.

In another study, we projected 30% savings for a high school. Actual results were 40% savings, indicated by energy bills.  One college campus: 20% gas and electric savings projected, 20% savings realized.  Another campus 15% and 22% electric and gas savings projected, respectively.  Actual savings from bills: 25% and 20%.  A medical clinic with about 25% savings projected:  actual savings in the first 3 months of post-implementation operation total a full half year of projected savings.  Every one of these projects needed measure identification, cost and savings estimates, and return on investment analysis.  We started with a blank slate.

We have a study underway for a huge food processor and are projecting 3.5 million kWh savings, from only a portion of their air handling systems (68 units).  We are looking forward to moving on to the ammonia refrigeration and compressed air systems. This customer has been very progressive with energy projects over the past 7-8 years and is willing to get everything that meets their financial criteria.  In fact, when we delivered the proposal they agreed to move forward with the study on the air handlers but said, “but I don’t think you’ll find anything”.

The bottom line is, a comprehensive program that includes front-end screening, study, Implementation design, implementation, functional performance testing of measures, and customer training will be acted on by customers.  Of the 10 or so projects, including dozens of campus buildings, where we have used this process, savings have been 20% or more in every case, up to 40%, and actual savings from pre and post implementation bill comparisons have always come in above study projections.  Projects include everything from retrocommissioning to major equipment/system retrofits to new controls systems.

Ironically, we completed a “no risk” study with Focus last year including controls, refrigeration and HVAC.  The customer went forward with all recommended measures.  Again, all we started with was a customer that wanted to cost-effectively save energy, a blank sheet of paper.  No “pre-packaged” projects.  I.e., no free rider.

From a program perspective, this is very cost effective because savings are huge and concentrated and studies do not get stranded.  The problem with some (as in, not all) program administrators whether they be third parties or utilities is they are steadfastly wedded to the status quo with a divorce rate Vatican City would cheer.  The typical disjointed process with reams of paperwork and delays at the outset, no assistance between study and implementation, no hook or commitment from customers to do anything with the study, and no functional testing at the conclusion of implementation is doomed to fail.

The solutions to the “waste of money” issue are simple and they work very well, but some administrators and in some cases regulators need to open their minds and ditch their horse and buggy program paradigms.

And by the way, the attribution rate, which is the savings that occur as a result of an integrated program including feasibility studies, is near 100%.  See the food processor guy’s quote above.  He didn’t think we would find anything.  Tell me.  Would these 3.5 million kWh savings have occurred in the absence of a thorough investigation?  How does a customer who buys an efficient boiler have any idea what the incremental cost and energy savings of his new equipment are?  Does that constitute decision making based on energy efficiency?  Perhaps some programs could improve their attribution rates on C&I programs if they would actually lead customers to implement energy efficiency measures rather than chasing contractors, like lawyers chasing ambulances, to capture savings that are going to happen in the marketplace anyway.

written by Jeffrey L. Ihnen, P.E., LEED AP

Fortune 100 Energy Efficiency

Uncategorized0 comments

One of the downsides of the surging awareness and growth in energy efficiency and renewable energy, in my opinion, are all the Johnny Come Lately energy services arms of giant corporations.  Companies include Lockheed Martin, United Technologies, Eaton, and Chevron.  These giants have revenues of $45 Billion, $53 Billion, $12 Billion and a meager $176 Billion, respectively.  Poor Chevron’s revenue dropped from $275 Billion from the year prior.  Maybe they should focus on their core business and leave the energy saving to the rest of us.  Among these, only measly Eaton isn’t in the Fortune 100 (Eaton comes in at 207 on the Fortune 500).

Why do these giants want to get into energy efficiency?  Revenue from their energy efficiency services wouldn’t show up on the first six significant digits of their total revenue, but yet this is huge business compared to peons like Michaels Engineering and dozens of other service providers.  Lockheed probably charges the government more for one tire on an F-35 joint strike fighter than we earn in a year with 40 people.

On the other hand, these behemoths have to get huge projects like those for large college campuses or military bases to be worth their while and to be cost effective to carry their crushing overhead.  This leaves plenty for us little guys to fight over.

On the third hand, they provide competition for the other titans of performance contracting, including Trane, Honeywell, Siemens, and Johnson Controls, and I’m all for that.

Having provided technical support and program evaluation for dozens of utilities, I don’t think we have yet seen any requests or applications for incentives from these giants, for their customers.  Why would they leave all this free money their customers could claim on the table?  Could it be they don’t want anyone looking at their underbelly?  Customers should demand this.  But then again, customers are typically state and federal government entities.  Even though these incentives are theirs to lose, it’s really ours.  So who cares?  What a racket.

Of course most of these huge companies, except Lockheed and Chevron I believe, use performance contracting to peddle their wares, whether customers need the stuff or not.  As mentioned last week, they’ll “give away” studies and other services, and sometimes even equipment to hook (or harpoon) these customers.

Within the past couple years, one of these performance contractors had seduced a local school district by offering them “free” equipment in exchange for maintaining their buildings’ heating, cooling, and control systems over 10-20 years.  What were they thinking?  Remember last week; nothing is free.  The whole spectacle can be most vividly portrayed in Warner Bros’ Hansel and Gretel episode on Bugs Bunny.   Guess who the characters represent.  As soon as reality set in and the invoices started coming for the maintenance services, the district wanted out yesterday.  Another happy customer.

On a couple unrelated notes:

A group of scientists wants to create a new unit for energy savings, the “Rosenfeld”.  He may have been a great guy, but I would vote no on that.  All the units and named thermodynamic cycles I can think of are named after one or two-syllable names, and Rosenfeld doesn’t just roll off the tongue.  Joule, Newton, Volt, Tesla, Kelvin, Rankine, Curie, Diesel, Otto, and Watt.  The only major oddball I can think of is Fahrenheit.  There should be a contest to replace that.  He deserves it because it’s such a stupid scale.

The Rosenfeld thing would replace kilowatt-hours, three billion of them to be exact.  What about Mr. Watt?  This is a diss to him.  What is special about three billion kWh: it’s supposed to be the annual output of a 500 MW power plant.  Per my calculations, it’s closer to 4 billion kWh.  And who is ever going to use this metric?  “The results of our study indicate that you can save 0.00016 Rosenfelds with a two year payback.”  I think they would eject us from their building and not pay us for such pathetic looking savings.

So there you have it, a “Rosenfeld” is too long, too much, incorrect, goofy, and it runs roughshod over Mr. Watt.

Then there’s this laugh out loud headline, suitable for an article in The Onion.   “Warning Biofuel Targets May Hit Oil Industry”.  Just think about that for a moment.

Black Monday Stampede

Energy Efficiency, Stimulus, Tax Stuff, Utility Stuff0 comments

July 1992: Tickets for U2’s ZooTV show at RFK stadium in Washington, DC go on sale by Ticketmaster.  The tickets are snapped up in a few hours, as fast as the phone lines could handle the traffic.  This was before anyone knew what the internet was (no Al Gore jokes).  Fortunately, a second date was announced and the roommate waited for the crack of 12:00:00 AM for a shot at the second batch, successfully.

March 1, 2010:  Federally funded rebates become available for efficient appliances in Iowa and Minnesota.  Phone lines jammed with 10 times expected volume and internet traffic at 100 times expected traffic took down the website of the contractor running Iowa’s program in the first hour, within minutes of opening.  Ultimately, Iowa’s share of the funds was gone within 8 hours.  Minnesota’s program dragged on until the next morning.  It was a Wal-Mart-style black Friday digital stampede.  Thank goodness for (don’t use Al Gore jokes) technology – I didn’t see any reported injuries or fatalities.

Some of these federally funded appliance incentives run two to ten times utility incentives.  What were they thinking?  Combined with utility incentives the total can exceed 50% of the purchase price for crying out loud.  See “Policy to Curb Carbon” (government doesn’t know how to do energy efficiency) and “Incentive or Discount” (people trained to wait for handouts to buy).  This is pretty much a giant transfer of wealth from people paying taxes to people taking the rebate checks, and I don’t begrudge the people taking the money.

Apparently the people who designed these state programs, which are actually handouts at these rates, don’t understand the market and/or supply versus demand.  Obviously they gave away too much money and taxpayers got far less than they should have for their “investment” in terms of reduced energy consumption, emissions, and sales and in some cases manufacturing here in the states.

And to top off the environmental benefits of the appliance programs, participants are to send their old appliance to the scrap heap, with self-policing enforcement.  Who’s going to do that?  They will either end up with a second refrigerator or freezer in the basement or the old stuff will show up on Craig’s list.

Recall cash for clunkers last summer.  The intent there was to offer a total of $1 billion incentives, up to $4,500 per vehicle and it was planned to run from late July through November.  Within a week or two the billion dollars was gone and congress quickly shoveled in another $2 billion.  THAT was all gone by Labor Day.

While attending the International Energy Program Evaluation Conference in Portland, OR, last fall I was engaged in a small group discussion – was cash for clunkers a free rider?  A free rider is somebody who takes an incentive for something they were going to do anyway.  This is considered to be a waste of incentive money.  That’s arguable in this clunker case because it more than likely moved the purchase date forward for buyers, but I also think it’s the wrong question to ask.  The more appropriate question is, was it cost effective?

Answering the free rider question, Edmunds estimates that of the 690,000 cars purchased through the cash for clunkers program only 125,000 were incremental.  That is, only 125,000 transactions took place that otherwise would not have.  The rest just displaced a sale that was going to happen soon anyway.  Figuring in free ridership, the taxpayer cost per vehicle was $24,000.  And then consider this: the average trade-in value of the clunkers was about $1,500, which may be worth $1,800 for sale to the next guy.  All these cars were destroyed.  That comes to $1.2 billion in destroyed working assets.  So the feds spent $3 billion to increase profits by car dealers by perhaps $125 million and destroyed $1.2 billion in assets.  Annual energy savings for these 125,000 vehicles would be roughly $120 million.  And maybe the domestic automakers lost a little less money as a result of the program.  Woohoo!

To be fair, the cash for clunkers program may have resulted in the purchase of more efficient vehicles than would otherwise be purchased.  Hardly.  The average fuel economy of cars sold through the program was 25.4 mpg.  The corporate average fuel economy for cars is 27.5 mpg and with light trucks included, it is 23.5 mpg.  In other words, these “efficient” cars were essentially average.

And the doozer of them all: free golf carts thanks to tax credits and sundry other incentives for electric / high mileage vehicles.

These aren’t incentives.  They are gifts from frugal people to people who probably don’t need this crap.  But good for them, I say.  You have to play the game that’s put in front of you.

Energy Efficiency Stimulus and Oversight

LEED, Stimulus0 comments

Most energy efficiency programs are required by regulators to be evaluated to ensure ratepayer money is being spent wisely and reported savings are being achieved.  If only such oversight were to happen for the millions/billions/gazillions being shelled out to state and local governments in the name of energy efficiency.

State and local governments have Amazon-wide budget gaps to fill, and I can assure you that earmarks (dirty word) for energy efficiency will find their way to plug budget holes to keep buildings open, replace roofs, buy new lawn mowers and pickup trucks, and avoid staff reductions.

We in Wisconsin have already experienced this during the last recession.  Starting in about 2000, most money collected by utilities for programs was turned over to Madison to be distributed from the ivory tower.  The recession of 2001 resulted in a major budget gap (major at that time – it probably looks like a hairline fracture compared to what we have now).  There, coming in from investor owned utilities, was a nice cash stream of $80 million per year.  The state government swiped half of it.  It pretty much eviscerated the energy efficiency programs and brought the industry to a slow crawl.  Incentives were pathetic.

Thankfully, the Public Service Commission has taken control of cash flow now to help ensure ratepayer money is used to save energy, reduce demand, and delay/avoid construction of power plants and transmission systems as intended, rather than filling in a tiny portion of a humongous budget hole.  Now energy efficiency incentives in the state are what I consider to be very attractive.

These federal funds should either be funneled through established credible program delivery channels such as utility programs or, in some cases, state governments (as long as it is out of reach of the legislative and executive branches), or there should be third party impact evaluation of projects emanating from block grants to local governments and other private sector grant writers.

If there is no oversight, vendors, consultants, engineers, architects, whoever can declare whatever savings they want. Or worse, as noted above, the funds will go toward new park benches and decorative street lights.

We welcome the oversight and technical review of our work because we are going to do things right regardless of whether others review our work.  In a competitive market, the more technically astute and persnickety the reviewers are, the better for us.  While LEED® takes its lumps for being too cumbersome, time consuming, and nit-picky, I think it would be a big mistake to slack off the review process.  It will weaken a strong brand.

The bottom line is, if you have no rigorous third party review, you can expect pennies on the dollar of proclaimed savings.

written by Jeffrey L. Ihnen, P.E., LEED AP

The More You Spend, The More You Save

LEED, Retrocommissioning (RCx)0 comments

Talk about an oxymoron.  Years ago this was a favorite saying of my roommate and I as we lambasted dopey ads on TV, on paper, or over the airwaves.

Fewer years ago, once I got into this energy efficiency profession, I was speaking with a utility energy-efficiency program guy who frequently interacts with regulators.  This was during a stakeholder meeting for quantifying energy saving potential by sector and by technology.  (technology = lighting, furnaces, chillers, etc.)  Knowing buildings systems rarely work as they are supposed to, I asked, “Have you considered retrocommissioning (RCx) as an energy efficiency program?”  His answer in effect was, that would be great, but it would be double dipping since customers have already been incentivized for energy efficiency.  I didn’t have a response for that.  I do now.

Incentives are based on building systems working as they should.  Unfortunately, this is rarely the case.  Buildings almost always use more energy than they do on paper (or computer).  See the recent Illinois LEED performance report, Figure 14.   Buildings underperform badly compared to design models.  I would venture to guess that the majority of this discrepancy is lousy controls.

Therefore, my response to the “buildings have already been incentivized and therefore, RCx is double dipping” is twofold:

  • Incentives for efficient equipment and systems are many times actually too low.  The building’s systems and controls are performing so poorly that the boiler actually has to make more hot water and the chiller has to make more chilled water than planned.  The lights are saving more because they are on longer than they should be.  If you’re going to waste energy, you may as well do it efficiently (oxymoron alert).  The more you spend, the more you save!  Other measures probably under-predict savings but these are typically control measures and control measures make up a small fraction of incentives and associated savings that programs take credit for – a thesis based on my experience – a thesis I am very confident with.
  • Savings from RCx IS NOT double dipping.  When I poll our own recent RCx projects, I find that 75% of the savings are derived from measures that either (1) fix control issues that wouldn’t even be eligible for incentives in the first place or (2) implement measures that are required by energy code.  Some buildings aren’t built to comply with prescriptive energy code requirements – imagine that! and (3) implementing new measures that exceed code requirements.


  • Incentives in many cases are too low because systems perform poorly (the more you spend, the more you save)
  • Incentives in other cases are too high because they are controls-based and the control sequences are wasting energy
  • Reducing over-use and fixing things that aren’t even incentive-eligible almost certainly outweigh fixing control issues on measures that were already incentivized.  Therefore, the net of RCx measures is all new unrealized savings.

By the way, the utility mentioned above has an RCx program now.

written by Jeffrey L. Ihnen, P.E., LEED AP

Tax Deduction Pennies

Tax Stuff0 comments

Recently, we received our umpteenth “request for proposal” (RFP) to provide the engineering required to capture the elusive $1.80 tax deduction on new or remodeled buildings.  We spend a lot of time, money and effort to drive business through our doors but I’m not sure I want to see another one of these.

Like the rest of the universally incomprehensible tax code, the engineering piece of this is relatively complex.  If we did this all the time, it wouldn’t be a problem.  But it seems we get the next RFP just as the rules are overwritten in my long-term memory banks.  What do we compare to?  Does this apply to both retrofit and new construction?  Does retrofit compare to new construction baselines or actual pre-project conditions?  How do these partial incentives for HVAC, envelope, and lighting work?  How do the two lighting approaches work?  What suffices for demonstration of percent savings?  Half day – gone.

To do the engineering right, which is the only way we do things, it takes a lot of energy modeling time and expense (with the exception of the isolated lighting calculation).  Also, consider:

  • It is impossible to save anywhere near 16.7%[1] with envelope measures , relative to energy code, so you’re left with 50% total building savings.  As a side note for COMMERCIAL buildings, in many if not most situations, it is not cost effective to save energy by adding insulation, and you can save some but not much with enhanced glazing.
  • We need to save 50% of the total building consumption with HVAC and lighting, but on average per benchmark data, HVAC and lighting only account for 67% of building operating energy cost.  See where I’m going with this?  Your combined HVAC and lighting savings need to be 75% more efficient than baseline!  There’s a reason LEED has about 50% set as the threshold to capture all possible energy points!  You have to use a genius designer, perhaps have deep pockets, plus all the stars have to align for a “lucky” baseline system to have a shot at 50% savings[2].


  • Only the lighting power density approach for a $0.60 per square foot deduction is worth pursuing.
  • The threshold for the rest needs to be reduced, to perhaps 30% savings, which is still impressive and also certainly not something one can achieve without trying.

[1]End users can get partial deductions for (1) envelope, (2) HVAC, and (3) lighting, by saving 16.7% of the total for any of the three.  This 16.7% is one third of 50%..

[2] We are actually shooting for all 10 LEED 2.2 points on one project, but “only” 42% savings are needed for that.

written by Jeffrey L. Ihnen, P.E., LEED AP