Last week, I mentioned that having a diversified fleet of power generating plants is a smart strategy for any utility; specifically, diversity by fuel source. The recent natural gas bonanza cut loose with the perfection of hydraulic fracturing and mind-blowing drilling capability (vertical a few thousand feet, then horizontal a few thousand feet) has unleashed a fury of kneejerk policy and utility strategy changes.
As is common with the Energy Rant, Jeff says, not so fast. It isn’t that easy. There are consequences and major challenges with racing down this road without thinking.
First we have the federal government (the EPA) – a political beast pouncing on the bandwagon. Part of their proposed solution for the June 2 declaration, which I am sure was made with little consideration of physical barriers, is for utilities to “re-dispatch” to natural gas combined-cycle power plants to the tune of 70% capacity factor. The definition of capacity factor is shown in the following equation.
I’m not even sure this is mathematically correct, but I thought this may be the only chance I have to include an integral in a post. What it is supposed to mean is that capacity factor is the actual electrical energy generated over a given period, divided by what that resource could generate over the same period. What it could generate, of course, is 100% of its capacity in output over the given period. In this case, the period would be 1 year.
The problem with “re-dispatching” natural gas plants once again comes down to physical constraints. This is something we preach to our engineers who do detailed energy studies. When a project is conceived, then developed, the engineer must think of the physical constraints under which the project must be implemented. This can greatly impact cost and/or feasibility (i.e., is the thing going to work without tearing down the building and building a new one).
For example, component (e.g. chiller) efficiency may not matter that much. What matters is how well the system meets the load required (demand). It may be advisable to install a small chiller to cover a few loads in the winter, or a boiler to meet some minor loads in the summer. Huge equipment operating at 10% capacity is typically very inefficient, despite nameplate ratings.
Question: this new thing needs to go somewhere. Where? Do we need to knock out a wall and remove an existing boiler and re-pipe a whole bunch of stuff? Or, is there already all kinds of room, a pad just waiting for a new chiller, an access door to the room with plenty of space to just wheel it in and plop it down? Hint: the latter is never the case. I believe however, that the EPA considers it to be the case for the natural gas plant “re-dispatching”.
Translation: the capacity of natural gas wells has exploded in recent years. The capacity to transport natural gas from the wells to the point of use has not. Ironically, there seems to be juvenile barriers to building pipelines these days – like all of a sudden we’ve lost our capability do build a safe pipeline.
The upshot: some areas of the country are in for a rude awakening, and they are already pressing the absolute maximum capacity of the system with very little margin to spare. For example, at 3,200 billion cubic feet, natural gas consumption last January exceeded the previous peak by more than 10%. What’s that I hear about energy use flattening out or even declining? Ten percent growth is enormous, even for healthcare costs.
According to Fortnightly, starting in 2009, EPA regulations (obviously prior to this year’s Clean Power Plan) triggered the “largest retirement of [coal] generation capacity in history”, and it is leaving the grid near you by next April. Eighty-seven thousand megawatts, 10% of the total, will be shutting down and disconnecting from the grid.
Like it or not, coal is incredibly easy to extract, safely transport, and store. Storage for a large generating station requires a few acres, some conveyors, bulldozers, and maybe a chain link fence.
Power generation was already careening toward natural gas, with limited capacity to deliver (pipelines) even before implementing EPA’s Clean Power Plan, which includes vastly increased capacity factors. Pipes and plants are already maxed out and this is occurring in the winter months. Power prices in regions with deregulated supply (e.g. Texas) are hitting their caps. In Texas, that is $5 per kWh – the unit of electrical energy for which the average customer pays 11 cents.
Compounding the trend is that much of the generating capacity is being sold by utilities, with obligations to serve to merchant generating companies (gencos) who have no obligation to serve. Remember deregulation? This is deregulation.
With no obligation to serve – that is, no requirement to produce power regardless of cost – gencos have interruptible natural gas contracts. Interruptible contracts allow the supplier, the owner of the pipes, to shut off supply, essentially when it is needed most. And the gencos have no requirement for backup fuel, like propane. Fortnightly states that only 20% of natural gas generating capacity in New England has “some amount of firm natural gas supply”. Whoa!
Meanwhile, coal plants typically have one or two months fuel supply on hand. Nuclear: 4-5 years’ worth.
By the way, isn’t it ironic that some utilities (e.g. First Energy) have used the natural gas glut as being the game changer that no longer makes energy efficiency programs worthwhile or cost effective? It seems the opposite may be true.
 Clean Power Plan: 30% less CO2 emissions from power plants by 2030, base year = 2005
 Public Utilities Fortnightly
 About 175 power plants
Continuing on from the surface scratch delivered in Refrigerator Sitcoms and Lethal Toaster Ovens, this post provides more fact, fiction, and maybe some things you’ve never considered for saving energy.
First, I came across some interesting data while reviewing evaluation reports for a major Midwest utility last week. Recall in Bait and Switch, and again backed by ACEEE as explained just last week, regulatory agencies need to stop stopping fuel switching from dumb uses of electricity to smart uses of natural gas. The specific item is the electricity guzzling clothes dryer. As it turns out, the saturation of electric clothes dryers in this utility’s service territory was 84%. The average number of loads per household is about 6.6 – call it 7. Doing a little ballpark math; with 117 million households in the country, guesstimating about 85% have their own laundry equipment, we have available 106 billion kWh to dry clothes. That is equal to 24 typical 500 MW power plants running full tilt every hour of the year, or what China adds to their power supply in about four days.
A few more interesting tidbits on wash machines: savings from wash machines are due to the wash machine itself, (hot) water savings, and dryer savings as these washers spin more water out of clothes before being tossed into the dryer. Considering a residence that has electric everything (water heater and dryer), savings are roughly 210 kWh per year for an efficient wash machine. About 10% is from the washer itself; 50% from reduced water heating, and 40% for the dryer. To calculate savings for natural gas, find a consultant. Furthermore, about half the customers have electric water heaters (OMG!), but only about half the loads are washed with warm/hot water. This is figured into the mix above.
And BTW, swapping out all the electric water heaters would take down another 18 large power plants.
Speaking of China, here is another tip you won’t see anywhere: buy good stuff and keep it for a long time! As you know, since you are reading this, about 27 months ago, Michaels Energy was hatched out of Michaels Engineering. Last month, we dropped Michaels Engineering completely and rebranded with a new logo. The molt is complete. However, I still have clothing with the Michaels Engineering and the former Michaels Energy logos, and to me this stuff is as fresh as the cheese in the grocery store. Once you’re old enough to not be charged extra for car rentals and married or in some other committed relationship, no one cares or pays attention to others’ attire. So, now I have a bunch of date stamped clothes I would otherwise use for another 15 years. Energy saving tips: buy good stuff and don’t rebrand. You’ll save money and energy and reduce the trade deficit, but unfortunately may put someone making 78 cents per hour out of work.
Then there is this classic: use the dishwasher and not the sink to clean dishes. Question: does this factor in washing the dishes with the tap before putting them in the dishwasher? Does it also include not blasting water full throttle out of the tap when washing them by hand?
Energy saving tip: don’t buy so much crap. The street I live on is pretty typical of every neighborhood I’ve been familiarized with. Whether it’s one, two, or now typically three-car garages, peoples’ cars are parked outside because their garage is full of crap: toys, bikes, exercise equipment that was used for 11 days, various recreational vehicles, four or five half-completed projects. It’s especially hilarious when the vehicle is a behemoth SUV parked outside. These owners then start their cars 15-20 minutes in the morning before heading off to work to defrost the windows and warm the interior a little. In the summer, they are sizzling hot already in many cases. Save your upholstery, leather, vinyl, and paint job by clearing out the garage and parking the car where it should be. Buy good stuff and maintain it.
Energy saving tip: close the garage door already! Many homes with attached garages have substantial insulation such that they can lessen the heat loss through the connecting wall. Closing the garage door also keeps the cars warmer in winter to reduce the temptation for warming them up in the morning. It also helps thaw snow and ice off the car. A non-energy benefit is keeping varmints out of the garage. It doesn’t get any easier for mice to walk in through an open garage door. We also had a robin one spring that insisted on building a nest on our garage door opener. Wouldn’t be pretty.
Energy saving tip: eat venison. That’s right. This would save enormous quantities of energy. These 150 pound rodents are a bane to farmers, motorists, gardeners, and arborists. The DNR should eliminate bag limits altogether. Savings include no artificial resource consumption, unlike cattle that produce one pound of meat per ten pounds of food, generally corn, and an ocean of water. It’s locally grown. It’s practically organic. It reduces garden damage, increasing home-grown food production and all the savings with that. It would save millions of dollars in car damage and reduce injury, and even death, due to crashes. Do you realize how much energy an auto body repair shop uses? And finally, it allows my beloved trees to grow above waist height. Speaking of waists, it’s much leaner and healthier, packed with iron and protein, and just might keep some people off the defibrillator.
 Enlarged to show texture (i.e., a mild exaggeration)
 Provided pork or beef fat isn’t mixed in 1:1 to make sausage.
Taking a suggestion from an anonymous rant reader [doesn’t want to get fired], I purchased and have been reading a book called Predictably Irrational. Figuring out peoples’ decision-making process is my job – to win proposals, design programs that people want, and how to attract and keep the best workforce. Process evaluation of EE programs contributes a great deal to this as well.
Now, I ask you to find a calm state of mind, such as lying in bed on Saturday morning. Relax. Hang with me till I explain this. For worse and better, engineers are more rational than non-engineers. Why? Because they like to calculate stuff and put numbers on everything. This can make a lot of sense when putting a major league baseball team together, or determining whether “icing the kicker” with a timeout works – just look at the numbers and statistics and do the math, but numbers don’t do anything for emotional or socially acceptable decisions. There are always discrete exceptions to this. There are always socially clueless people in every crowd.
One of many examples the book explains is selling stuff at any price, even a very low price versus giving it away. Selling stuff involves market forces – supply and demand. Giving stuff away involves social forces – a sense of thinking kindly about your fellow homo sapiens.
Good cookies go for roughly a dollar from a grocer’s bakery (I think – maybe?). Prices are set by market forces, and I suppose they make decent profit selling them at this price. If you purchase these, or make equivalent cookies, and sell them in the lobby of your workplace for some dirt cheap price, but not unbelievably low, say a quarter, some guy may have no compunction and snap them all up to take home to his ravenous kids. “Dude, they’re a buck in the store! What a deal! I bought em fair and square.”
In the second scenario, the cookies are free. Again, there are always discrete social zeros (persons) in the world, but chances are the first person to take a cookie is not going to pull out a grocery bag and swipe them all and walk away. Presumably, he will consider his fellow office dwellers and the fact that they may want a cookie gift as well. There is also the pressure to control oneself to not feel like a cheap stingy ____ in the case of taking them all. Again, there are always exceptions, but people generally weigh these social issues to control their actions. Which reminds me, people who drain the coffee decanter at 9:00 in the morning and don’t set it to brew another pot are kind of socially deficient, wouldn’t you say?
These issues intersect with energy efficiency in interesting ways. One example is the energy audit. Lore says end users must have some skin in the game for an energy audit or they will do nothing – implement nothing. Anything for an investment by the customer – say “$50 is much better than nothing” is the fable.
My conclusion: the only thing $50 does is stops 90% of audits from happening. This isn’t like shelling out a quarter for a cookie, which is easy for an individual. Fifty dollars is a huge barrier because the money has to be approved by bean counters. Consider this: in a big company, everything has a cost associated with it. They know what it costs to process a payment and cut a check, and that is in the $40 range. Really. Suddenly spending $40 to pay a $50 fee while consuming several hundred, if not several, thousand dollars of peoples’ time starts to look ridiculous – even if the fee were $500 rather than $50. But by god, they’ll sure as hell do something since they invested the $50. Not.
The ignorant person may think the customers’ perspective is, “Wow, what a deal. My utility is selling audits at 90% off. I love my utility.” No. The vast majority of cases would sound more like this – “I pay those guys $50,000 a year and they want ME to shell out $50 for an audit. Drop dead.” This is the social consequence, a customer relationship issue, ON TOP of huge time and expense to process payment for a paltry amount of money.
On the flip side, the customer, once the audit is complete, is likely to take action based on market forces and return on investment. They are not likely to think, “My utility paid for this audit so I’d better throw them a bone and implement this thing with the return of a 10 year federal treasury note” – that would be about 1.5% nowadays.
We have found that an excellent approach to “skin in the game” goes like this: We will provide ___ services for free if you, the customer, agree to implement identified measures meeting ___ criteria. Here you have a serious offer; a generous offer; a partnering and low risk offer. I believe the generous and partner aspects add a social commitment, as well as a market commitment to energy efficiency for customers; and that even in this scenario, sticking the customer with even a small portion of the service cost wipes out the social aspects of the contract that push it over the top.
I’m at the word limit but I just want to add a couple more optional takes from this.
First, some customers, huge customers, want everything for free from the utility, and I mean everything, including the entire cost of measure implementation. These customers unfortunately are not worth approaching, other than for show. That’s just the way it is. Don’t shoot the messenger.
Second, if the audits aren’t worth a damn, the program won’t be successful regardless of zero cost. Actually, in some markets for some utilities, paying the 20% has become the accepted market and social norm because of the reputation for the deliverables.
 This can get quite graphic when nerds go on vacation or when they need to determine the best approach for acquiring a power tool. Symptom: spreadsheets. Look out.
This is not about the excellent 80s band, unfortunately.
Companies that provide necessities of life serve as punching bags to the public, media, and politicians. I’ve said this before. This week, we have more examples of beating up electricity and other utility providers.
First, as I was explaining in my “Energy Efficiency 101” course Friday for new and recent hires at Michaels Energy, power companies are expected to provide power 24/7, every minute of the day, hell or high water, with no emissions, no nukes, out of sight, and with negligible cost. It would be easier and less controversial to add Bill Clinton’s melon to Mount Rushmore than it would be to build a base-load coal or nuclear plant, but get this; in Wisconsin, Dominion Resources is being lambasted for shutting down the Kewaunee nuclear plant near Green Bay.
The fact is, we have abundant generating capacity in the Midwest and in Wisconsin in particular. I always love it when people on the outside ascribe motives to a company’s business decisions, which are essentially based on making money. Apparently, Dominion made a mistake in buying this plant, unless it paid fire sale prices. Nevertheless, Dominion says it cannot turn a profit to operate this plant with the abundance of electricity in the state. And who wants to buy a money loser? Dominion is likely acting as my neighbor down the street. Their house has been for sale for at least 2 years, but apparently they don’t need to move that badly and therefore, they wait for a buyer with deep pockets. My guess is Dominion would rather shut down and hold the plant rather than sell at a deep discount and lose money. Maybe they are guessing the cost of carbon will skyrocket. Who knows? But by all means, vilify them for trying to turn a profit.
For more ignorant commentary, just turn on the television or browse the internet for press coverage of hurricane Sandy devastation. “We have an antiquated, fragile electrical and communication system from the 1950s.” “Why didn’t the President invest the $800 billion in hardening the New York electrical grid?” “Why isn’t the power grid buried so we don’t have these massive outages.” In response to these, one by one:
Let me first say that interestingly the most sophisticated personal communication device in the world, the Apple iPhone (and all other cellular phones, not to pick on Apple) was rendered absolutely worthless, while the pay phone – you know the ones at the outskirts of parking lots that millenials have never used before, the ones from the 1950s, are the only ones that worked after Sandy passed through New Jersey and New York. People actually waited in line to get a chance to use one of these things after the storm.
In response to the antiquation, I have an answer for every question that begins with “Is it possible…”. The answer is always yes, but how much money, time, and resources do you want to throw atit? I’m sure we could build a military grade, shock (as in bomb) proof, electromagnetic pulse proof, wind proof, flood proof, fire proof, rodent proof, shenanigan proof system, but at what cost? On Long Island, thousands of lineman from all over the country converged to restore power as quickly as possible. They are not doing it with extension cords. They are rebuilding substations and distribution systems, and I suppose there is a band-aid here or there that they cobbled together with spare parts and will come back to fix later, but for the most part, I’m sure they are restoring the systems to long term functionality. This alone costs a mint and takes “too long”. Would Long Islanders prefer a buried system that costs billions while they sit in the dark till next September? I doubt it. Remember – reliable, free power. In this case that means restoring to the old way of doing things as quickly as possible.
Regarding the stimulus not going to grid hardening: I’m not going to get into the thousands of stories of waste, fraud and abuse from that, but I would just say that $800 billion would do whatever Bill O’Reilly thinks it should do, from Times Square to Battery Park – what is that – a quarter of Manhattan – maybe?
And speaking of burying things, vital arteries of the NYC transportation system, both mass transit and road traffic, are underground, and from what I’ve seen, most of it was flooded with salt water.
In other news, I read an interesting piece from Holmen Jenkins in The Wall Street Journal this week: “Hug a Price Gouger.” Apparently there are price gouging laws in effect in some, if not most or all states, so retailers don’t take advantage of market forces when selling essentials, like batteries, gasoline, or generators. But what do we get whenever people pay below the supply/demand curve? Shortages and hoarding. Rather than paying a high price and considering “do I really need a shopping cart full of bottled water”, consumers pay the normal charge, and they simply “stock up” at precisely the time everyone else needs some. Or would customers buy just five gallons of gasoline at $12 per gallon rather than standing in line for three hours to fill-er-up at $4.65. Rather than being thrown in jail for charging what the market will bear, maybe we should just let merchants weigh the costs, benefits, and risks of lost future business and charge what they want, when they want.
In many states that are relatively new to energy efficiency, legislators often cave to large energy users and allow them to opt out of programs because hey, they use a ton of energy and therefore, OBVIOUSLY to any moron, they control and manage these costs as well as any dunce could. Why should they throw money at a program that won’t help them?
Come to think of it, programs available to these large users in many places are dysfunctional, poorly conceived, and not thought through from the perspective of the customer, so I can see their point to some extent. I already have a type of colossal program failure that has been proven to produce nothing in many jurisdictions and I’ll talk about that next week or some other time.
The only real reason for large users opting out is that they think they can better spend the relatively tiny bit of money they would contribute to the program or more likely, they’d rather not pay anything and continue with business as usual. Both are foolish.
Let’s just use an example of a large user with $10 million in energy costs, paying 1% to the EE fund, which is $100,000. This sounds like a lot of money. It is not for a company of this size.
Allow me to demonstrate how foolish opting out is, using a rule of thumb that program incentives typically equal one year’s energy savings at minimum (I have seen incentives as high as FOUR year’s savings, in which case a psychiatric evaluation should be ordered up for opt-outs). Companies that opt out generally have to meet the savings goals the utility needs to meet in return for opting out, and this too, is generally in the region of 1% of sales, or in the case of the customer, 1% of consumption.
Take an opt-out and opt-in comparison for the above $10 million customer for a $200,000 project with $100,000 savings. ASSUMING no difference in customer time (time is money) and expense, the ROI is exactly the same. The opt-in customer pays $100k to the EE pot and gets it all back as an incentive for doing the project. However, the reporting for the opt-out customer will take at least $10k, I would guess, if they do a decent job.
Now suppose the investment is doubled to $400,000. The opt-in customer still only pays $100k into the program but gets $200k back in incentives. The customer starts to take other peoples’ money as he implements larger projects. Suddenly, the ROI starts quickly rising above the opt-out scenario.
The only way the opt-out customer comes out ahead is if they plan to do nothing, in which case, rather than paying $100k into the EE pot, they pay nothing, all else equal. So, the scenarios become:
The “opt-out do nothing” scenario cannot stand, because customers agree to meet their goals, and this too, is where the BS continues. The typical opt-out customer includes manufacturers. Efficiency to manufacturers many times means high output and no shutdowns – not low energy use per unit of production – aka, ENERGY efficiency. Due to the lack of EE expertise beyond lighting, we see many doozers when evaluating projects from customers that opt out.
To use one example I used before (company name and project totally made up to protect the guilty), a baseball bat manufacturer switches from manufacturing wooden bats to aluminum bats. Wood requires the operation of a large kiln for drying, lathes, lacquer and all this sort of stuff. Making aluminum bats allows them to shut down the kiln, turn off the lathes, lay off half the workers, close half the facility, and increase production. The energy consumption per bat decreases. Problem: this is a totally different manufacturing process. The baseline is not the manufacture of wooden bats. The baseline is standard practice for making aluminum bats. What is that? At the point of evaluation, they don’t know. No alternatives were explored when they switched. There are no savings here. What a mess.
Another one includes a “behavioral” change where instead of running shifts every day of the week, the customer switches to running around the clock fewer days, primarily due to long wait times to start up and shut down every day, wasting energy and labor. Programs are not meant to incentivize avoidance of obvious absurdities. We probably don’t have the whole story, which may include going from 24/7 operation to 24/4 operation. No, reducing production is not energy efficiency.
Smart large users opt in and leverage the program for all it’s worth. Even the hugest, most goal-driven companies saving dozens of megawatts (no kidding) leverage programs to the max. Somebody has to save energy and demand and it may as well be me, large user. I take money paid from my less intelligent competitors and other citizens; my utility loves me because I am making giant steps toward their mandated goals; my colleagues in other parts of the country are envious; my CEO loves me because I’m substantially adding to the bottom line and reducing risk; and I take a huge administrative/management burden off my plate and give it to the program/utility.
If this is not a competitive advantage, I don’t know what is.
 Opt-out customers must file their own plans and reports just like the larger utility program and that takes substantial time to do any sort of reasonably acceptable job.
 A rider is an added fee, usually per unit energy used for energy efficiency, fuel cost adjustments and other things.
The best thing about working in our industry is the potential for continuous learning, unlike nearly any other field. There are enough things to learn about buildings, manufacturing, systems, how they are built, as in design, construction and commissioning to fill a 45 year engineering career. One always finds something “new” even in old buildings – bizarre design concepts for example. Have you ever seen how Fig Newtons are made? It isn’t easy.
Engineers might think, what else is there to programs besides determining energy savings, simple payback and possibly ROI? About 75%, if not, more. There are market assessments, energy-savings potential studies, program development and implementation, and evaluation. Skills needed to support the industry include marketing, economics, statistics, sociology, psychology, political science, and criminal justice. Well, maybe not so much of the latter just yet.
The topic of this rant is energy savings potential studies; in other words, the potential for energy savings in a market, which is typically defined as a state or a utility’s service territory. There are four levels of potential:
- Technical potential: this is how much energy could be saved regardless of cost-effectiveness. When the federal government talks about potential, this is it because they never care about cost effectiveness. We, on the other hand, live in the real world with constraints.
- Economic potential: That’s right – the subset of the technical potential that is cost-effective by some definition like “total resource cost”, “ratepayer impact test”, and “utility cost test”. Some of these have squishy benefits included in them like societal benefits and you can assign to that whatever you want – like the value of not looking at a transmission line makes society 0.0001% more productive due to the avoided bad mood of workers and its impact on productivity. Or electromagnetic fields that cause cows to produce less nutritious milk and calves with three eyes. Or lower criminal justice costs because less infrastructure provides less opportunity for copper thieves. They will have to steal something else and maybe that something else will be less dangerous resulting in lower healthcare costs paid by the lowly taxpayer.
- Market potential: This is how many of the economically justified measures can get implemented. This is tricky as consumers are irrational so I used to say market potential is a subset of economic potential, but not really. For example, back in “Replacing the Burger” I talked about how people would rather get 500 points toward a free Starbucks than buy a CFL with a payback of one month and a life cycle savings of $4,000.
- Achievable potential: I’m not positive on this one but I believe this is a subset of market potential and differs by limited funds of any program. While you could convince 1,000 customers that doing something is smart, you only have money to reach three of them, in addition to your mother and one coworker.
Results from potential studies contribute to a lot of important things, like determining how many millions of dollars to spend on programs, what customer sectors, technologies and services have the greatest potential for return on ratepayer investment.
I think it’s a pretty good guess that just about everyone reading this has shot baskets with a basketball. Most likely not everyone who has shot baskets has done so with their eyes closed – just tried it before – something stupid to do in a game of h-o-r-s-e. Or, have you turned off the headlights while driving down a dirt road at 60 mph in the pitch black of night? Just for fun? I actually feel I have a little more control in the latter situation.
What do you want to achieve when you shoot a free throw with your eyes closed? Not to look like a fool right? You want to at least hit the rim; not throw an air ball or something over the backboard clanging around in the iron back there. Even a brick would be satisfactory and give you a feeling of achievement.
Some potential study requests for proposals ask for the blindfolded free throw, probably expecting the results of Larry Bird and Danny Ainge at the free throw line with their eyes open. (I’m an old timer and I don’t know any of the thugs in the current NBA– back then, they only had cartoon thugs, like Dennis Rodman).
The blindfolded potential study consists of do it fast with no or very little primary research, which means no talking with customers or investigating their facilities.
Our role in these things is typically data collection and measure ID. My expertise does not include crunching the data and puking out numbers that serve as targets for program portfolios. But common sense tells me you’re going to get much, much more reliable information with a decent set of primary data. We just bid a project with in-depth site surveys of 950 homes. Now THAT is primary data and it will produce the best estimates possible I have to believe.
How does one handle a study with no primary data? I’m not sure but I think it includes a heavy dose of looking out the rearview mirror, applying new codes and standards going forward, extrapolating the curve for new codes and standards, and copying what the neighbors are doing. A blindfolded study cannot uncover new potential that programs are totally or mostly missing. One could also apply some economic analysis due to market acceptance of technologies and its impact on cost – and how that cascades down to market and achievable potential. This method I say is to pick and answer and reverse engineer the arithmetic to make it so.
As an example, the following chart demonstrates the results of a potential study I saw a few years back. The data have been removed and the years were different (I just pulled energy numbers and years out of the air but the graphic looks almost exactly like the one it mimics). Look at the results of the study – it’s purely an extrapolation of what has been happening. Congratulations. The result is the goals actually caught up to what was happening anyway.
I plead guilty as well if I can’t get my hands on SOME sort of real data. But how much do you suppose was paid to produce the results above? No idea here but it’s pretty safe to say the answers were destined before the data were collected.
I came across this interesting study performed by engineers from Columbia University. It shows energy intensity per square meter (don’t ask) of building footprint. As I said, it’s interesting but not very useful. It does not include building square footage so obviously the Chrysler building is going to consume more per square meter than some brownstones on the upper west side.
I also doubt the crude end-use analysis showing only 5-10% of electricity consumption from cooling. These buildings probably require mechanical cooling half the year on average, some probably all year. A bleeding edge cooling system will require 1.3 Watts per square foot at full load. The actual average efficiency is probably half as good, doubling the power/energy required for cooling. Throw on poor control of typical systems and it’s probably closer to 3 W per square foot on average and roughly 3 kWh per square foot for a good system and 4-5 kWh per square foot to middlin to poor one. Now you’re in the neighborhood of lighting consumption. End-use data from various sources confirm, cooling’s share of energy consumption is about 30% in the NYC climate.
In Stalin Lives, I mentioned our plan for securing an ENERGY STAR® clothes washer and dryer for our house. What I did not mention was that the local appliance stores do not even stock gas-heated dryers.
Think about how stupid it is to generate electricity with maybe 35% thermal efficiency, lose 10% of it to line losses, as discussed last week, in it’s transport to the home and then use this high-value energy as a toaster coil to dry clothes. We, as well as I am sure millions of households, use “gas”, natural gas in our case and propane in others, for space heating while at the same time we have a electricity guzzling clothes dryer. Why? Because as I said, we bought the thing for an apartment that had only an electric energy supply for the dryer. In other cases per the local appliance retailers, they don’t even stock gas dryers.
This is a huge opportunity for energy efficiency programs struggling to find cost effective savings in residential sectors because of appliance efficiency standards and the phasing out of the Edison incandescent light bulb. There is one major problem, however – it doesn’t fit the current regulatory model because of fuel switching. Measures that include fuel switching are not eligible for programs and incentives in just about every jurisdiction I know of. This is one of the buggy whip holdovers that regulatory agencies are going to have to get over – among a bunch of other ones I’ll discuss in future posts.
The fuel switching argument goes something like this: electric consumers should not be cross-subsidizing gas consumers. And, electric utilities should not be giving money away to shed load, reduce their revenue and turn it over to the gas company, which may or may not be the same utility. Many if not most times, gas is provided by a different utility than the electric provider.
This is akin to the argument that utilities should not make money from energy efficiency programs, which can be done if regulators would allow it. This also makes no sense. Electric utilities are throwing money at customers to use less of their product all the time but typically it just results in less electricity consumption and not more of some other fuel consumption.
According to the Energy Information Administration, 61 million American households have electric dryers and they consume 1,080 kWh per year apiece. That’s probably a little more than a load per day. I’ll buy it.
I could spend the entire weekend digging for numbers and put this all together but instead, I’ll make some educated guesses. Using 11 cents per kWh, the electric bill for an electric dryer runs about $120 per year. A gas-fired clothes dryer would require a measly 38 therms to do the same drying. Using a conservatively high natural gas cost of 80 cents, this is $30 per year. Consumer savings is about $90 per year. This is probably an 8-9 year payback. Throw in $100 incentive and this brings it down to maybe 6-7 year payback. I am not a program benefit/cost or total resource cost expert but, this has to be a passing score for a cost effective program.
New residences should also get incentives for natural gas hookups and even supply if the residence is in a town with natural gas running through its neighborhoods. Before we moved into our house, ur apartment for instance was all electric but surrounded by natural gas distribution – stupid!!! What gawdawful waste of resources.
What sort of impacts then are we talking about? Sixty-six billion kWh, which would require about fifteen 500 MW power plants running 8,760 – that is if everyone took their turn such that there would be exactly 1.5 million dryers running at any one time – about 7,500 MW from the 15 power plants. I would guess that at least half of these dryers could be replaced, meaning homes with these dryers have gaseous fuel to the residence already.
The above guesstimates are reasonable considering there are 40 million households with electric water heaters (everyone has a water heater and there are 40 million electric units and not everyone has a dryer and there are 60 million electric units – get it?). Generally speaking, if people have natural gas or propane for their home they have a gas water heater, but not always; again, apartment buildings being the stupid cheapskates. Electric water heaters in this country require about twenty-five 500 MW power plants running 24/7/365. Surely a quarter of these could be lopped off, cost effectively as well.
There is an old saying I scoff at every time I hear it: “Work smarter, not harder.” Whoever says that probably has never done either. Necessity is the mother of invention. The more work that gets piled on a person, the more they innovate so they can go home at a decent time and not have to work all weekend. Although in some sectors, piling on more work means hiring more people out of “necessity” or just not getting certain things done out of “necessity” because the day starts at 8:00 and ends at 5:00 with an hour for lunch, period.
For energy efficiency, we’ve been working on the “harder” part. We promote efficient equipment and systems but I think we need to wise up and consider promoting avoidance of the absurd.
You have probably seen the ad for the all-electric Nissan Leaf. The opposite for some things like dryers, water heaters, and residential ovens/ranges, it isn’t quite as amusing, however.
At the Midwest Energy Solutions Conference I mentioned last week, three utility executives from major utilities including ComEd, Ameren, and AEP discussed the need for changing the utility business model because it doesn’t work with a non-growing and in some cases shrinking sales environment. This will probably be the subject of a future post but it just occurs to me, speaking of the Leaf, that they obviously are not counting on electric transportation taking off because this would create huge demand and increase in sales. When will the automakers come to the same conclusion?
Meanwhile another $115 million “winner” of favored Washington businesses, Ener1, a maker of lithium-ion batteries for automobiles quietly filed for chapter 11 bankruptcy last week. Speaking of absurd, the death of the electric car is coming faster than I imagined. The article mentions that not only are customers put off by limited range and luxury car prices, they fear lack of service and parts because only a few thousand exist and all the parts suppliers will be out of business. On top of everything else, there is a vicious circle of doubt in buyers’ minds.
The article goes on to say, “The company said it reached an agreement with its main investors and lenders on a restructuring plan it says will ‘significantly reduce its debt and provide up to $81 million to recapitalize the Company to support its long-term business objectives and strategic plan.’” Uh, sorry. The only investor stupid enough to recapitalize a company with virtually zero demand for its products is the US government on behalf of the US taxpayer, but the political tables have turned. Although the failure had little press, government recapitalizing failure will rightfully be lambasted.
Speaking of absurd, this winter has been absurdly warm from the plains to the east coast. My recent electric bill said it was 10 degrees warmer than the same period a year ago when it was about average. Alaska generally has the opposite extreme we have here in the upper Midwest. Yesterday (Saturday) the low was minus 52 and the high? (get a load of this): minus 37. WoW! Normal things don’t like to work when it gets cold, say minus 20. I can’t imagine the things that don’t work when it’s minus 52. A condensing furnace for example may not work as the condensate may freeze or the exhaust may ice up blocking the flow of combustion air/gases. Amazing. What do they use for antifreeze in their vehicles? Everclear?
Recently, the American Council for an Energy Efficient Economy issued a report, “The State of the Utility Bill” and I thought, “now there is a topic for plenty of discussion.” No, that was no joke, although there was an interesting finding that I found to be very hilarious: All of the ~100 bills analyzed in the study (100%) included the amount due to the utility from the customer. I would say not having the amount due would have its disadvantages. (that WAS a joke)
I’ve witnessed and studied many issues regarding end user understanding of energy, energy consumption, and end uses – e.g., lighting. Our industry reminds me a bit of the political talking heads on TV. They hyper analyze things for which only they or a political news addict, and not the common voter is going to notice or care about. An example might be a response to a question on a hypothetical crisis in the Middle East. The pundits will quibble over the order of responses or their indicated aggressiveness as suggested by the candidate or even the question. Meanwhile, the average viewer is looking only for whether the recommendation would include blowing the enemy to kingdom come, finger-wagging sanctions, nothing, or withdrawing from the region altogether.
Likewise, there is a disconnect between what we think end users think or know and how they actually think and what they know. The utility bill is damn complicated to the average end user and even more so than the average energy professional realizes. The bill might include different seasonal rates, tiers, time of use, demand charges, ratchet clauses, and even more complex algorithms.
I learned long ago that when we need energy records for a customer, the best form is to get copies of actual bills and a close second is the utility’s CIS (customer information system) data. When the customer says, “Oh, I have all that in a spreadsheet. I can just give that to you.” I cringe because they won’t have what we need or it will be wrong because they can’t pick the right numbers off the bill – like finding Waldo. I don’t want it. It’s virtually guaranteed to be wrong.
The ACEEE report indicates just over 90% of the bills include comparison to the previous month’s consumption. I can’t find that Waldo on my bill. I do have comparison to year-ago consumption, the next most common element found in the study.
Average daily usage. Now what does that tell anyone? Anyone? It doesn’t even tell me anything, except that’s the form in which I am provided for the comparison to last year. I did buy a $9 retractable clothesline from Menards a few months back and it looks like our bills are very roughly 4 kWh lower per day versus the same year-ago period. Of course air conditioning is mixed in and that’s a monkey wrench. However, they provide average temperature, which is reported to be provided on only 38% of bills per ACEEE. I could do a weather calibration for that. However, I know that is a waste of time because there are other substantial factors – weather independent end uses – that will result in any weather adjustments being far down in the grass of normal usage variation. How about that? There is enough information to do a weather adjustment, which only 1% of customers MAX, could mathematically do, and of that 1% probably only 10% know weather normalization is a waste of time for a single energy bill. (single, not aggregate for a representative sample of a bunch of customers)
What would be useful is a monthly bar chart including the trailing 24 months with overlapping years for monthly comparison. Neither my gas or electric bill has this but my water bill does! Good grief, I buy electricity from a huge utility, natural gas from a dinky regional supplier and I get water from my village – population of the metro area is about 800 (this includes all the zeros – no typos or omissions).
Benchmarking provides incredibly useful information. Yeah. Let’s do that. The state of Iowa is wanting to do this for (I’m not sure exactly) government facilities including schools. There was an RFP and one (1) proposal was received. Why exactly, I’m not sure but I would say this – I would guess the buyer does not understand how difficult it is to do benchmarking right. It’s like recent rants where I said even measuring ambient outdoor temperature is difficult and the person doing it has to know what they are doing and literally understand heat transfer, including primarily radiation from surrounding objects and convection off the same objects.
Benchmarking requires knowing the type of heating and cooling systems and more specifically, the heating and cooling fuels, square footage, and of course utility consumption. The guy doing the benchmarking has to know whether the results look reasonable. The following are my unscientific estimates for how many benchmarking analyses would be correct for the following methods and skills of the benchmarking guy.
- Blindly collecting square footage data and energy consumption with no ability to do even a laugh test: 35% correct
- Number 1 but throwing out anything that looks really weird, like 50 kWh per square foot for a school or 0.15 therm per square foot for a hospital: 45% correct, not to mention a great many will be discarded
- Number 2 plus contacting the utility to make sure you have all the data for the facility. Many times benchmarking is wrong because there are data missing because not all meters serving the building are included: 55% correct
- Number 3 plus calling the customer to ask them about their heating and cooling systems and fuels used for these systems: 75% correct
- Number 4 but rather than doing a phone call, going on site and looking for meters and systems yourself ensuring you have all the meters serving the building and only the meters serving the building: 92% correct
There you have it. If an experienced expert can do everything in his/her power, there are still things that may not be able to be benchmarked with confidence due to:
- “Campus” meters – here campus being any meter serving multiple buildings (k-12, college/university, health care, military, and even corporate) without submetering on each building.
- Storable fuels like propane, fuel oil, and chicken manure. Tank levels and piles vary from month to month and so determining consumption requires accurate levels plus deliveries.
- No meters – what are you talking about, Jeff? Steam coming from a campus plant with no submetering. You can know how much natural gas the central plant uses or you can guesstimate the consumption eying the pile of chicken manure (or coal) and tracking deliveries. Old central steam plants for example can have rather enormous heat losses to pipe tunnels, making for melted snow and green grass in winter. A good bit of analysis is required to weed this out.
I avoid requests for proposals where I don’t think the buyer understands how difficult it is to do a job I can live with and for those RFPs there is always an ignorant bidder who doesn’t know the difference. Unfortunately, there is no money in telling the buyer what they are asking for is very difficult and that they are going to get crap for results from Cliff Clavin and Associates.
One more thing on benchmarking, total Btu per square foot, mixing all fuels together is a little better than nothing. Electric should always be separated from fossil fuel consumption.
- The incandescent ban advocates are proposing a switch to using lumens as the metric for selecting light bulbs for purchase at your favorite home improvement store. Uh huh. Around 1980 the US was going to be the last country on the globe to convert to metric units. You know base 10 everything with common sense conversions like a milliliter equals a cubic centimeter. Fuggeddboutit! Not gonna happen. There is plenty of fodder for a stand alone rant on this one.
- ACEEE in their Utility Bill study noted above calls utilities “regulated monopolies”. Cool. This is what I’ve called them for years and didn’t know whether this was offensive to them.
- Lastly – another mind blower – the US is set to become a net exporter of refined petrol products. This is good news if you ask me –a strong manufacturing sector. To clarify just in case – yes, this is refined petroleum products and not crude oil. Many readers were ranting this is misleading – only to a dolt. Plot and data courtesy, The Wall Street Journal.
Have you had your fill of Occupy Wall Street, (OWS) which has spilled over into dinky, surrounding, wannabe towns including one nearby with a population of a whopping 4,000? Apparently, these in-duh-viduals are protesting rich people and the fact that the rich keep getting richer and the poor, well, are the poor. My response: that’s life. Life isn’t fair. I don’t like the word “fair”. Rather, I like “not cheating”. “Fair” is too often used by whiners. Some of these OWSers are self described anarchists and communists. Oh yeah, there you go. That’s what we need is communism. There’s a model of equal outcomes. How is that Venezuela model working?
I have not a covetous cell in my body. Steve Jobs, or at least his widow, is a multi-gazillionaire having lead his company from the brink of collapse in the 1990s to the world’s most highly valued company, ahead of Wal-Mart, Exxon Mobil, and Microsoft. Speaking of Microsoft, as Steve Jobs once said, Bill Gates has never developed any innovative products in his life, but yet he is a billionaire because he was good at steeling ideas within the law, I guess, and developing a monopoly. Good for him!
The real problem and reason the OWS whiners are misguided is crony capitalism. The DOE and administrations dish out billions of dollars to crony campaign donors who in turn send a big chunk back for reelection campaigns, before or after their ill-conceived company fails and the executives walk away with millions. Or it’s egg before the chicken. The cronies donate a bunch of money and get their investment in government back 10 fold once their guy gets into power.
Let’s see… in the underground economy, there is a name for this: money laundering. So all OWSers should be marching on and petitioning Washington, the root of their grievances. You have to understand the problem to solve it. This is clearly a bipartisan activity and nothing new. However, I would say the recent fanning of the flames, pitting citizens against one another is a bit unprecedented and shameless. Watch the hand! You guys get in a food fight while we (Washington) continue to rip you off.
While I have not a covetous cell in my body, I have billions and billions of cells of rage against crony capitalism, money laundering, cheating, dishonesty, malfeasance, and vast wastes of money and resources.
As mentioned before, Washington should, like utilities have done in recent years, get back to their core business of protecting and defending its citizens against enemies, foreign and domestic. This is the only thing they do remarkably well, although I’m sure there are gobs of waste, but how many plots have been busted and bad guys destroyed in the past decade or so?
Washington is a horrible venture capitalist because (1) they make decisions based on politics and not favorable or acceptable risk/reward, which follows with (2) they are using other peoples’ money so they obviously do not care. It seems there are failed green energy, green jobs companies and/or scandals in the paper each day. Or take my favorite, ethanol. Many are concerned about our ability to feed ourselves as the planet takes on its 7 billionth human, this month or thereabouts. Meanwhile, over 4 billion bushels of high energy corn go to make a tiny dent in our fuel needs and negligible impact on our petroleum imports. That’s roughly 30 pounds of corn for every human on the planet, or maybe 50,000 calories – enough to keep an offensive (as in the team with the ball) lineman going for a couple hours. No. Really it’s enough human fuel for 20-30 days for a mortal human being.
Similar to OWSers, there are end users of energy that whine about high energy costs and hate their utility as a result. Isn’t it ironic that nobody seems to care about energy costs, as in the total cost of running a business, except when prices rise? And end users should consider what is driving prices upward: I would guess the vast majority of price increases is due to emission regulation and construction of wind farms. These things are legislated at state and federal levels. I, unlike the prima donnas (think JFK junior, hypocrite in chief) living in population centers and telling everyone else how to live, do not mind the sight of these behemoths on the landscape.
On a side note, other hypocrites for renewable energy and lower energy cost protest construction of transmission lines from where the wind blows to where people live and wind doesn’t blow. In addition to transporting renewable energy to population centers, it adds reliability and more supply options to the grid. More options mean lower prices. The solution is simple if you ask me. See I-90 in southern Minnesota. Just run the transmission lines down the damn ugly interstate highways where there is already immanent domain and land! It’s flat. It’s open. What? Would it mess up the beauty of billboards for Wisconsin Dells, gentlemen’s clubs, and truck stops? This is a no brainer. What for the love of Pete is all the hassle about? And there aren’t even any dairy cattle near the interstate to pick up the electromagnetic waves causing birth defects like four headed two legged calves.
Whining end users share a loser trait with the OWSers – they would be far better off taking control of their own well being rather than itching and moaning about something they have little control over. And by the way, the control they do have is mainly with their corrupt finaglers in Washington. Very few are accountable. These people represent the very few competitive congressional districts, states, or the entire country, while most are not accountable. The unaccountable include political appointees like Lisa Jackson running the EPA, or Bonnie Fwank and Charlie Rangel, each of whom would have to be caught live on national TV steeling an armored car and maybe running over a few pedestrians to not get reelected. I don’t think felons can be elected from their jail cell but who knows. Felons, dead people, pets and alternate personalities can and do all vote.
For-profit end users that howl about their energy costs are very likely to have more energy cost reduction opportunity than those who don’t. This is Jeff Ihnen’s untested hypothesis. Why? Because the howlers don’t like, and in some cases, detest their energy provider and do not trust them. Detestment (a new word) does not foster cooperation, which is extremely helpful, bordering on essential to control energy consumption and cost.
I have also yet to come across a for-profit, with a strong efficiency track record at the corporate level, howl about their evil energy providers. Well known EE champions with track records that fit this profile include 3M, Pepsico, General Mills, and Simplot.
The message to end users of all shapes and sizes is first control what you can best control – yourself and your organization, and second, pay attention to what’s going on in state and federal governments – each of which are big drivers of energy supply, regulation, and generation sources – the primary drivers of energy price.
I thought this was a great headline for an opinion piece in Saturday’s Wall Street Journal, by Holman Jenkins: “Hooray, A Financial Firm Fails”, describing of John Corzine’s MF Global collapse. What’s even more impressive is that Corzine, formerly of Goldman Sachs, formerly U.S. Senator, formerly New Jersey Governor, is in the admiral’s club of crony capitalists. Failure is progress. Eat your heart out.
The barrier to having a decent energy policy is very similar to the barriers of solving illegal immigration. Both the left and the right have their own vested interests in not fixing the problem. I see the political spectrum as a circle, not a line from far left to far right. It is a circle because when views get so extreme, they are supported by both the far left (e.g. Dennis Kucinich) and far right (e.g. Ron Paul). Personally, I respect both of these guys and I have no doubt they are sincere in their beliefs and want the best for the country. An example on which they agree is pulling out of Afghanistan, yesterday. Very few on the right agree and few on the left, including the President, agree.
The same dynamic is at work blocking decent energy policy. The left wants to stop the use of any fuel with a “C” in the molecular makeup but they also object to all realistic alternatives, including nukes and hydro. The right opposes any sort of standards whatsoever on the demand side – mileage standards, CFLs for a couple examples. The good folks in western Minnesota and Iowa are fine with building massive wind farms but neither left nor right want a transmission line from the La Crosse area to Madison to improve reliability by having more access to generation AND getting the renewable energy to where it can be used.
The Afghanistan equivalent in EE: smart meters. The far left doesn’t want them because they cause cancer. But then again, this is coming from California where organic vegan mother’s breast milk causes cancer. Everything causes cancer in CA. On the far right are the Glen Becks who think the government is going to spy to find out when you leave for work and commandoes will swoop in and secretly log the contents of your underwear drawer for blackmail material.
Last week I attended the Association of Energy Service Professionals (AESP) conference in Dallas that featured an overarching theme of consumer behavior and smart grid. First off, what is smart grid? If I polled 1,000 people I’d get 997 different answers. It is entirely nebulous. The other three wouldn’t have any idea.
I took a pre-conference class on evaluating programs that include elements of smart grid and behavior and my definition of a smart grid is two way communication with customers via the electric meter. That is the bare bones definition I think – but there is also grid design for reliability, so like if the Christmas, er I mean holiday light burns out they don’t all go out. But I know little about the grid reliability stuff.
As I was sitting there in the class, I developed my own framework for the energy future.
WHEREAS, consumers want reliable power at negligible cost.
WHEREAS, the hard left abhors any form of reasonable energy supply.
WHEREAS, the hard right abhors any form of restraint on consumption.
NOW, THEREFORE, A SOLUTION is offered by Jeff Ihnen that delivers the framework for the genius grid that everyone must agree with.
Electricity prices can skyrocket during peak periods as shown in the chart in this article, which is actual quasi-deregulated Texas pricing. Prices rise sharply the minute supply starts eating into the required spinning reserves, but it is capped at $3 per kWh right now – thus quasi deregulated in my book. They are talking about raising that to maybe $6 per kWh.
Genius grid solutions should be developed on both demand and supply for power. On the demand side, the genius grid would include a home area network with amperage meters and relays (cutout switches) on major appliances – central air conditioning, clothes dryer, maybe refrigerators and freezers, and water heaters. Over a year’s time the genius grid logs and builds a model for energy consumption based on time of day, weather conditions and day of the week for each meter. Now the utility has something to work with because they know exactly how much power the AC unit is pulling on Tuesday afternoon at 2:00 PM just before July 4 when it’s 96 degrees outside.
The genius grid, rather than giving price signals to consumers, e.g., it is going to cost you $26,000 to keep your house at 68 degrees the rest of the day, it would instead BUY your agreement to shut down your AC. This would come on your i-Phone/Android/Blackberry. “Shut down your AC for $20 this afternoon?” Accept? Decline? Hit accept and you get $20 credited to your bank account instantly. And so on. Homes become a source for increasing power available on the grid.
BTW, I see residential end users as the best applications for genius grid. Homes have many unneeded loads that can be shed during the day and loads that can easily be shifted to eight from six o’clock. I don’t mind my house at 80F but I couldn’t stand working with full garb in the office at 80F.
On the supply side, customers can put power on the grid for some of these high peak costs from renewable and other sources. Take photo-voltaic panels installed on houses. The panels are generating peak electricity while powering a number of things in the home and maybe selling the excess back to the grid at some ridiculously low price. (But I really don’t know how the current pricing works.) Why not have the utility send a buy message to your iPhone to shut down all major appliances for the afternoon and buy the 2kW from the PV for four hours at $3 per kWh? That’s $24 in the bank account for doing practically nothing. And you could do this while you are daydreaming in a sensitivity training session.
Readers of this blog know I’ve bashed all-electric vehicles numerous times because it is a plain stupendously idiotic idea. However – hybrids and plug-in hybrids even are great ideas. You drive to work and park your plug-in hybrid in the preferred spots next to the handicapped section and plug it into the charging station installed by General Electric with the assistance of obscene federal subsidies. Now the iPhone buzzes while you are nodding off in the sensitivity session and says, “Hey Bozo. We will buy from your car’s generator for $2 per kWh for three hours.” Let’s see… say 50 hp motor can generate 25 kW for three hours, that’s a $150! – enough for five fills of gasoline, or better yet, 20 fills of natural gas. It can start remotely. It can automatically shut down so you don’t go to leave work with a dead battery and empty tank.
Making money, I believe, is sexier and more attractive to consumers (versus saving) and everyone likes to mess with their phones 200 times a day. Just watch people when their hands aren’t on a computer keyboard. They are fiddling with their phones.
Everyone has a bad story or 20 about air travel but there are some things that are really bizarre to me. Have you ever seen passengers sit in an airplane after most everyone else has deplaned? I haven’t either. Yet it is a “privilege” to board first, as in first class. If I had my druthers, I’d like to sit in a recliner sipping a martini in the skyhigh club until the last second before entering the aluminum tube. The only reason I want to get in the tube as soon as I can is so I can fit my carry-on in the overhead compartment in cattle class – and get the hell out of the airport as fast as I can when it lands. If I were in first class, there’d be all kinds of space for my carry on, so what’s the rush?
Can first class customers not swill enough booze in three hours? Are they trying to get their money’s worth of “free stuff” in exchange for the $1,000 extra they paid? I almost forgot, first class customers get to board on the left aisle in the terminal past the ticket counter. They get a special blue rug to walk on – like the red carpet at the Oscars I guess. Oooooh. (I stepped on it once myself) A fellow passenger was snickering and throwing barbs at the blue carpet and staff as we boarded.
It seems my flights are served by smaller and smaller planes. On three hour rides I always had at least a six-across Airbus A-320 or a Boeing 757. Then it was crappy little MD-80s and DC-9s, and more recently four-across jets made by companies with names I forget or cannot pronounce. On these little planes, those in cattle class get to stumble over the first class passengers who had the privilege of sitting in the plane as long as possible. I don’t know about you, but I’d rather not have 80 people running over my toes, spilling my drink and watching what I’m doing, thinking, “What does that guy do? He must be the CEO’s nephew. He doesn’t look smart enough to manage a hotdog cart.” First class passengers never look at second class passengers (at all for that matter) and wonder, “What does that serf do for a living? That may have been the guy trying to wash my windshield when I was trapped by the red light. That one looks like a day-laborer. That one looks like a cab driver and that one probably washes dishes at a diner.”
In 1984 was not like 1984, I talked about greeting change with gusto to win the future but with few specifics. This post will cover one such “innovative” way for all stakeholders to benefit from energy efficiency.
The typical utility-sponsored energy efficiency portfolio works like this:
- A small percentage of billed energy consumption, aka a rider is paid by customers to fund EE programs.
- Programs provide incentives for energy efficient equipment and in some cases services such as studies.
- Evaluators determine impacts attributable to programs and make recommendations for improvement.
- Regulators oversee it all to help ensure consumers aren’t being ripped off – a primary role of government.
- Consumer advocacy groups, some of which are in business solely to bash utilities and add no constructive value whatsoever, object to everything. Other advocacy groups can be great as they understand the utility business and that it is not a charity like The Salvation Army.
Many utilities have, at some point, added financing to their portfolios with dismal results and no wonder. Customers can typically get lower interest rates on the market or with banks and other lending institutions. Why waste time with the utility or program?
The chair of New Jersey’s Board of Public Utilities wants to “look into cutting the subsidized rebates, saving the average residential customer more than $2 a month”. (don’t spend that all on one place) He wants to look at creating a revolving loan program over time, rather than collecting money from everyone on their energy bills and paying it out to some customers in the form of rebates or other services described above.
Of course, as described in the 1984 post, this was met with angst and resistance by a variety of stakeholders. A chump from the Sierra Club says residential customers won’t use the program for purchasing an efficient furnace, for example. And this is based on???? It would probably take care of some free riders for people like me who would buy the efficient thing anyway and why not take the $100 rebate from the program I have been paying into? I wouldn’t do the financing because I hate monthly payments and it’s more hassle than the 39 cents saved. Other people, it seems, will finance a new 16 oz claw hammer from The Home Depot if given a chance. They are probably the same people who write a check at the convenience store for a soda and two hot dogs.
The American Council for an Energy Efficient Economy declares finance programs are used by only 1% of consumers and that for one program, when given the choice between financing and incentives, 90% of respondents choose incentives. This is grapes and cantaloupes. The time-strapped reader like me would read 1% of respondents like financing and 90% like incentives. Nice try.
What’s the problem with financing programs and lousy participation? They suck. They generally offer nothing a person can’t get from the bank or selling bonds for large end users. They provide no other services, such as cost/benefit analysis for customers. How to make financing attractive: lose the rigidness, forget the no-benefit program that ran for five years with three participants, and break with the status quo that most utilities cling to at all cost.
Stakeholders need to change their mindset and actually consider EE as a resource – a replacement for power plants and infrastructure. From the customer perspective it is a replacement for paying for therms and kWh. Combine this with the usual demand side management funds and utilities could create a vibrant and active financing program. It could be marketed by something jazzy like TGTBT – to good to be true. Looks like a bridge doesn’t it? I can see it now.
Gimmicks aside, the first thing that would help a ton is adding the payments to the monthly bill. Energy efficiency is a resource delivered to customers so why not pay for it rather than paying for kWh and therms? I have heard from more than one utility that their software, SAP or similar, cannot handle on-bill financing. You have got to be kidding me. That’s like saying a smart phone can’t make phone calls. The answer to any question involving ability for computation on a computer is, yes it can.
On-bill financing makes it easier for customers to make projects happen. Depending on the corporate bean counter, this may allow for treating the project as a lease rather than a capital purchase that requires approval from God. Once the credit risk has been cleared, customers with more than one facility can implement projects in multiple facilities.
From a utility perspective, why not earn the same return on capital as is used for power plants and infrastructure? This is blasphemous to some regulators but especially consumer advocacy groups because this means utilities would make profit on EE projects. Egad. Well heeyaah!
Having watched utilities for years, I have to wonder whether some really want to reduce their customers’ energy consumption through EE programs. Many, for sure those running programs, do but it seems some are given instructions from the board room to just make it look good. Thoughtful executives and boards know what is good for their customers is good for the utility because prosperity results in expansion and … more consumption! And vibrant programs are good for public relations making it easier get what is wanted through rate cases, and they surely are good for the Eco Devo department for luring new big customers.
Returning from that digression, wouldn’t it be a good thing to grant the same profit on selling EE as utilities make selling energy? This should make the executives and the board much happier than collecting money from their customers and distributing it to others driving down consumption, presumably. Regulatory and consumer advocacy agencies need to get on board with profit driven EE programs. As long as the program is as cost effective for the customer, what’s wrong with making money on it?
Another pillar in TGTBT is a savings or cash flow guarantee. This typically triggers a stampede for the exits among utility folks. I have not seen a study on this but guarantees are definitely a critical piece of doing an EE project for some customers. Transparency is something desirable for these contracts as well. Customers see how much the project actually costs and what the finance charges and fees are. They could even competitively bid the project to help ensure good pricing. This all allows for a much more desirable proposition than the typical performance contract which essentially is a contract that says, “trust us, we are not ripping you off.”
Putting all these elements together isn’t absent challenges, including credit ratings of customers. Such a program may not work well for residential customers, particularly those who don’t own their residence. The administrative costs may be prohibitive. Default rates would be higher among residential customers because people move from residence to residence, and out of utility territory, much more easily than businesses, schools, factories, and institutional buildings can. Indeed, for C&I customers such programs have been very successful with negligible savings challenges and puny default rates.
Recapping, key elements include: granting normal return on capital for utilities, very low finance rates for customers, and guaranteed performance. On-bill financing makes things easier for customers but isn’t absolutely essential. The other three pieces are.
I read more hype regarding the Fukushima nuclear plants last week in The Wall Street Journal. It was a bit like the ACEEE statement above. Paraphrasing, “trace amounts of dangerous plutonium was found within a 30 mile radius of the plant.” I’m sure I have trace amounts of some fried cheese balls I ate in high school – plated out on an artery somewhere too. They also detect strontium, iodine, cesium, this, that and the other – some with half lives of 30 to 90 years. OMG! We’re all going to die.
I would say that 99% of the population has no idea what a half life even is. It is the point at which half a particular isotope has decayed to a lower energy state – I.e. half the gammas, alphas, neutrons have been puked out. So all else equal, the longer the half life, the less intense the radiation, but 99% probably think it will be lethal for that long.
How many people have died from the reactor accidents? I haven’t heard of any yet. Zero.
Earlier this year I was partaking in an interview for a large project and we were asked a formal list of specific questions, the last of which was, why should we hire your team? While one possible response would be to ramble on for a few minutes about how great we were as demonstrated by this, that and the other, I thought of a different direction.
We are passionate about energy efficiency. We are passionate about getting it right. We are passionate about making a difference and improving things.
If you do not want these things, we are not your firm; and I’m serious because I do not believe some clients really want these things.
Passion to get it right simply means savings are going to be as accurate as we can reasonably get them as the budget and client allow – not only are the calculations sound, feasible and the answer relatively accurate, but is the project eligible per the rules of the program? Is the baseline, or less expensive, less efficient alternative reasonable? Is the less efficient alternative less expensive?
Making a difference and improving programs covers both the project level and the program level. We’re not here to beat people up and go home. If savings are fake or not eligible, we want to help clients identify and develop other substantial projects that are actually having an impact compared to the status quo.
As I am quoted on our website, I will tell people what they need to know, not necessarily what they want to hear, and this is consistent with the entire company. On rare occasion we stray off the ranch by trying to engineer a less expensive half-baked solution to a problem that needs a larger more comprehensive overhaul to fix correctly and sufficiently – such as trying to use too much of the currently-installed crap rather than ripping it out, spending 50% more and doing it right. But this isn’t really what I’m talking about in this post.
Good clients want their consultants, vendors, and contractors to report what is happening and offer solutions to improve their programs or systems. In a recent post, Don’t Ask, Don’t Look, Don’t Tell, I explain how some program folks by all indications aren’t so much interested in what the real impacts of their programs are. They filter information, they limit the scope in their requests for proposals to neuter impact evaluation, and/or they provide too little budget to do a decent impact (program-attributable savings) evaluation.
In another recent post, Rogue Choir Boy, I explain that many people in our industry, for pretty much other bizarre reasoning, agree that impact evaluation is a waste of time because it can’t be accurately assessed anyway. If we as industry are skimming 1-2% off all energy bills that customers are paying and not using it cost effectively, as indicated by a number of cost effectiveness tests, especially ratepayer impact measure (RIM), where benefits should be greater than cost, I’m out of here. Is the program a parasite on society like a tapeworm, or is it a benefit to society like a honeybee, pollinating foodstuffs and making honey on the side – i.e., everyone wins. Without rigorous impact evaluation, prepare for the march of the tapeworm.
The American Council for an Energy Efficient Economy says energy efficiency is by far the least cost resource – i.e., doing things to not use energy and capacity (demand) is cheaper than building more capacity and producing more energy. In fact, ACEEE has an entire conference devoted to this later this month. Portfolio managers should have to prove programs are cost effective with third party evaluation. While not all programs may be cost effective, the portfolio has to be. Some non-cost-effective programs are needed for equity purposes. For example, small business pays a large percentage of EE funds but “giving it back” by boosting cost effective measures is very difficult to do because there is no economy of scale with small business projects – impacts for the needed marketing/promotion required to get these customers to act.
Portfolios should provide wins for all stakeholders – utilities, consultants, vendors, contractors, customer participants and non-participants. I get the strong sense that for some portfolios the utility/implementers and the participants get wins but the non-participants get the shaft because the participants may be getting too much incentive for the impacts they are accomplishing. Actually, the participants may be getting the shaft too because they may not be getting the savings they should be getting. If utility/implementers can “fake” their way through with no one looking under the hood, they likely aren’t saving what they should be, the regulators don’t know it, and the customers don’t know it.
I go back to my conversation with the guy at the ACEEE summer study for industry a couple years ago. He said all evaluations should be on behalf of the regulators. I agree and not because working for the utility would bias outcomes, but utilities don’t think they have problems with impacts in some programs and some of these programs are very large. We know from experience time and again that program verification and in some cases measurement and verification helps, but in many cases does not come close to ensuring reasonably accurate results. Regulators I would hope would want more than a wink and a nod for impact evaluation
There are consultants all too happy to tell clients what they want to hear. How smooth can that be? There are consultants on the implementation side who will challenge and defend indefensible evaluation findings – projects that are not eligible, bad applications of engineering principles in determining impacts, or facts like large volumes of logged data showing assumptions / stipulated values are clearly wrong. Then it’s a sampling problem, the time of year, the economy or the dog ate the hard drive.
On the flip side to all this of course are clients, utilities, program implementers that strive for accuracy and reality, and continual improvement. They want to learn how to do things better and avoid problems and improve poor realization rates (“actual” savings divided by initial estimated savings).
As consultants we also greatly appreciate partnerships with our clients, whether they are other consultants, utilities, or prime contractors. Partnerships include shared sacrifice and shared benefit. Shared sacrifice includes project or program development time and expense in return for substantial work, revenue, and profit. Tip offs include not wanting to pay for program development but asking, what would that look like? Good grief. For great long-term clients we do many things for free, including “what it would look like”, preliminary analysis and development, spending time and attending functions with their customers and not charging for it, rounding up some data. Bargaining tooth and nail for a blanket in Juarez may be novel, but it isn’t how we like to do business for real.
Finally, it’s always nice to get paid. The worst clients not only recoil when told replacing their early 20th-century HVAC system won’t save more energy than they currently use, and then they refuse to pay because they should have been told the answer ahead of time.
Imagine this, Johnson Controls Inc. wants congress to pass the President’s jobs bill, whatever it’s called this time. I’m sure they have a billion or two (billion) with their name on it in the bill.
Outrage of the Week
Meanwhile, a bunch of other companies are pressing for another energy bill that would “help companies make their supply chains more efficient; as provisions to update national model building codes to increase energy efficiency of new buildings”. Good grief! This better go down in flames. If anyone thinks the role of government is to fix company supply chains, their name would be Vladimir, Hugo, Raul, or Kim.
written by Jeffrey L. Ihnen, P.E., LEED AP← Older posts