Energy Efficiency Market Study for Greater Cincinnati Stakeholder - - PowerPoint PPT Presentation

Energy Efficiency Market Study for Greater Cincinnati

Stakeholder Release Meeting

November 17, 2011

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Agenda

• Energy Alliance Overview
• The Market Study
• Where Are We Now?
• Call to Action

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ENERGY ALLIANCE OVERVIEW

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About Us

Non-profit 501c3 organization Private Public partnership Energy Efficiency/Renewable Energy

Services

 Education/Outreach  Project Management  Financing

Market Focus

 Residential  Non-profit Commercial

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Mission Statement

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The Energy Alliance’s mission is to facilitate investment in energy efficiency for homeowners, non-profit

• rganizations, and commercial buildings owners through
• utreach and education, project management, and

financing solutions.

Why Energy Efficiency?

• The “First Fuel”
• Job creation/retention
• Cost savings
• Self-financing/ROI
• Reduce dependence on foreign oil
• Increased comfort
• Preservation of building stock
• Greenhouse gas emission reduction
• Improved air quality

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Public/Private Partnership

• Greater Cincinnati Foundation
• Energy Efficiency & Conservation Block Grant

– Hamilton County, OH – City of Cincinnati, OH – Kenton County, KY – Boone County, KY – Campbell County, KY – City of Covington, KY – City of Florence, KY

• Department of Energy Better Buildings

Neighborhood Program

– 1 of 41 recipients nationwide – $17m, 3-yr grant

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DOE Better Buildings Neighborhood Program

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Residential Program Design

Home Performance with Energy Star Program

• Customer Engagement

– Energy Alliance marketing – Contractor marketing

• Request assessment through web portal

– $50 energy assessment ($400 value)

• Audit delivered, entered into Compass
• Customer invests in home energy upgrade

– 35% retrofit cash incentive – 6.99% unsecured, 10-year loan, up to $20,000

(3.99% in N. KY)

• Quality assurance
• Payment to contractor & customer

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Residential Case Study

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Job Cost $5,005 Energy Alliance Incentives 1751.75 Total $3,253 Energy Reduction 30% Annual Savings $651 Total Savings 20 year life $13,000 Estimated Payback 5 years Type of Improvements Air Sealing, Duct Sealing, Floor Above Unconditioned Space With a 10 year loan, customer would pay $38/month totaling $453 for the year vs. projected annual utility savings of $651 = $198 cash positive each year!

Residential Production

• Energy Assessments: over 1,000
• Retrofits: 325
• Average retrofit cost: $8,100
• Project financing: over $100,000

funded, $50K approved Let’s work together to get there!

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Customer, Heather Curless Cincinnati Resident and Owner of Greener Stock

The audit was very educational (and eye

• pening). My primary interest in doing the

upgrades were for comfort and energy/cost

• savings. Also as a green business owner, I

felt it necessary to "walk the walk.“ ~ Heather Curless

Commercial Program Design

• Market Focus

– Smaller non-profits – Private schools/churches – Public schools – Municipal buildings

• Program Design

– 50% cost match for energy assessments – 15% cash incentives for retrofits – Design-build & performance contracting – Low-interest extended term loan (Jan. 2012)

• $673K projects completed, $7m pipeline

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St Antoninus, Cincinnati

Case Study: Mt. Washington United Methodist Church Project

Mount Washington Methodist Church was the first

• rganization that benefitted from the Energy

Alliance’s building assessment expertise and received funding to support their $40,200 total improvement project. Replaced:

• 125 light fixtures with more T-8 fluorescent bulbs
• 12 year old boiler with 96% efficient new boiler
• Exchanged outdated air conditioner equipment

Reduced:

• Annual lighting electricity usage by 35%
• Annual heating use by 25%
• Annual cooling use by 25%

Mount Washington UMC will save an average of $8,000 per year over the life of the installed equipment.

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Children playing at Mount Washington Methodist Church, December 15, 2010

THE MARKET STUDY

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Efficiency is the Cheapest Energy Resource

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2 4 6 8 10 12 14 16 18 20 Energy Efficiency Wind Biomass Natural Gas Combined Cycle Pulverized Coal* Nuclear Coal IGCC Solar PV Range of Levelized Costs (cents per kWh)

All data from Lazard (2009)

Efficiency is Low Risk & High Return

• Because efficiency is cheap, a switch to it from

generation sources produces a high return

• Building sciences and technologies are

advanced, as a result energy savings can be predicted reliably

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Source: Ehrhardt-Martinez and Laitner 2008

Four-County Market Characterization

• Residential market = 140,000 households

– Single-family detached, owner-occupied, income > 200% of poverty, in four-county area – 20% or greater energy savings from weatherization alone

• Non-profit market = 470 buildings

– Over 25,000 square feet, Occupied or owned by non-profits

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Loan terms analyzed

• 6.99% unsecured loan, 7 year term

– $400 in incentives from Duke Energy for residential participants

• For 2012 and 2013 only –

– Direct measure incentive payment of 15% from Energy Alliance & 10% from federal tax credits (res. only) – Incentive of $150 for residential and 50% for non-profit toward energy assessment costs

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Residential Program

Average Household

• $4,350 in energy

improvements

• Annual payments $500-

$800 (depending on incentive level)

• Positive cash flow in first

year of loan

• Average annual positive

cash flow of $500 over 18 years.

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• 100

100 200 300 400 500 600 700 800 900 1,000 2009 Dollars Year 2012 Participant 2015 Participant 2020 Participant

Average Annual Net Change in Cash Flow

Nonprofit Program

Average Building

• $29,000 in energy

improvements

• ~$1,000 positive cash

flow in first year

• Average annual positive

cash flow of $3,000 or more over 17 years.

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Average Annual Net Change in Cash Flow

2,000 4,000 6,000 8,000 10,000 12,000 14,000 2009 Dollars Year 2012 Participant 2015 Participant 2020 Participant

Impacts Over 20 Years

• Participants

– 69,000 households – 460 non-profit buildings

• In 2030 alone: $59.6 million in bill savings, $37.2

million in net consumer savings

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Investments (thousands 2009$) 2010 2015 2020 2025 2030 New efficiency investments 529 $ 14,270 $ 16,724 $ 19,716 $ 23,053 $ Energy Savings Electricity (MWh) 179 49,667 117,591 195,078 267,913 As % of forecasted sales 0.00% 0.49% 1.19% 2.00% 2.77% Natural Gas (MMBtu) 835 253,482 597,559 1,013,009 1,426,814 As % of forecasted sales 0.00% 1.33% 3.04% 5.02% 6.89% Cost Savings (thousands 2009$) Electricity 16 $ 5,566 $ 14,291 $ 25,241 $ 37,181 $ Natural Gas 173 $ 3,317 $ 7,896 $ 14,702 $ 22,423 $ Total 189 $ 8,882 $ 22,187 $ 39,944 $ 59,604 $ Payments (thousands 2009$) Loan Payments

• $

5,081 $ 15,091 $ 18,612 $ 22,375 $

Employment Impacts

• Four-county impacts in

2030

– ~315 net additional job person-years – $13 million in additional wages

• Includes direct, indirect

and induced

• Construction/

manufacturing: 100+ net additional jobs for 20 years.

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2 4 6 8 10 12 14 16 50 100 150 200 250 300 350 400 2010 2015 2020 2025 2030

Income ($MM) Employment

Jobs Income

Sector Categories 2012 2015 2020 2025 2030 Extractive and Energy Sectors

• 3
• 14
• 30
• 46
• 59

Construction and Manufacturing 122 105 111 119 126 Trade and Services 33 36 85 166 251 Net Total Jobs 151 127 166 238 317

Source: DEEPER modeling system

Net Increases in Jobs and Wages Job Impacts by Sector

Other Impacts

• Environmental

– In 2030 alone, pollution reduction equivalent to energy use of 21,700 homes or 49,000 cars.

• Property values

– Residential: although poorly considered in appraisals, homes with efficiency improvements can have higher property values and improve value of neighboring homes – Nonprofit commercial: correlation well established, lower

• perating costs can result in better financing, lower premiums,

higher occupancy rates, and lower turnover

23 Annual avoided emissions (metric tons) 2010 2015 2020 2025 2030 Carbon Dioxide 172 46,660 110,473 183,270 249,817 Nitrogen Oxides 0.100 64 151 250 341 Sulfur Dioxide 0.002 306 725 1,203 1,640

Investment Returns for Energy Alliance Funds

• 75% of interest payments paid to investors annually
• Loan loss reserve of 5% of loan principal
• Annualized rate of return for fully capitalized funds over

25 years:

– $37 million fund for residential = 5.29% – $2.4 million fund for nonprofit = 4.60%

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0% 2% 4% 6% 8% 10% 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 Annual Return on investment Annual Returns ($) 0% 2% 4% 6% 8% 10% 50,000 100,000 150,000 200,000 250,000 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 Annual Return on investment Annual Returns ($)

Implementation Strategies

• Scenario depends on high but achievable

market participation rates

– Residential: 2.45% average annual – Nonprofit: 5% average annual

• Financing alone will not be enough
• Necessary to drive demand:

– Effective targeted marketing – Strong contractor/workforce partnerships

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Targeted Marketing

Energy Savings Potential Participation Potential

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Contractor Partnerships

• “Reactive” space

conditioning and water heating replacement is large market

• Skilled contracting firms

may help to convert these transactions into investments in more comprehensive energy improvements

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Appliance Average lifetime (years)1 Regional Appliance saturation2 Estimated annual purchases3 Gas Furnaces 23.68 70% 14,731 Central air conditioners 19.01 75% 19,661 Heat pumps 16.24 10% 3,069 Hot water heater - electric 13 38% 14,567 Hot water heater - gas 13 59% 22,617

• 1. Based on DOE 2010 and DOE 2011a.
• 2. Based on Duke Energy Ohio 2009 and Duke Energy Kentucky 2009
• 3. Based on estimate of 498,342 households for the four-county region from

SimplyMap and the 2005-9 American Community Survey

Four-county Appliance Replacement Rates

Related Policy Opportunities

• Local – energy use disclosure requirements

– In place in Austin, TX and other cities

• State – savings targets & expanded utility

investment

– OH – EE standard: 22% by 2025, utility programs – KY – some utility programs in place, considering additional EE policy options

• Federal – proposed SAVE Act

– Energy efficiency considered in property value assessment

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WHERE ARE WE NOW?

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What does it take to transform this market?

• Access to capital
• Market, educate, and demonstrate
• Skilled workforce
• Technological innovation
• Grow & develop local business
• Supportive regulatory & policy

infrastructure

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What is our market doing now?

• New financing programs with

private sector investment

• Multi-pronged branding &

marketing strategy

• Cincinnati St. partnership
• Investment in web-based tools
• Equipment financing,

business loans

• Data collection & reporting

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Call to Action

• Openness to rethinking this industry
• Attract more private capital
• Expand business model to engage more

contractors

• Collaborate for stronger policy
• Increased statewide market activity
• Tell your neighbors, friends, and colleagues

to sign-up!

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Contacts

Andy Holzhauser Executive Director Greater Cincinnati Energy Alliance aholzhauser@greatercea.org 513-621-4232 Eric Mackres Senior Policy Analyst American Council for an Energy Efficient Economy emackres@aceee.org 202-507-4038 Jeff Rexhausen Associate Director of Research UC Economics Center jeff.rexhausen@uc.edu 513-556-3047

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