Nicht Tee Kugel, Dos

8 03 2011

This week I am testing an additional medium for the The Energy Rant; the cartoon.  Click here to try it out.  Send email comments with your thoughts regarding this mechanism to me at jli@michaelsenergy.com.

Major barriers to EE for large commercial and industrial end users include;

  • Lack of time
  • Lack of expertise
  • Lack of capital
  • Risk aversion

If you don’t think end users are short on availability, just ask them.  Most end users don’t have time to commit to energy efficiency projects and most of the rest think they don’t have time.  The ones who really don’t have time get seven paid holidays and two-three weeks vacation while the latter group gets eleven paid holidays and six weeks vacation, if you know what I mean.

Most commercial building owner/occupants think of lighting retrofit, adding roof insulation and replacing windows or maybe replacing a boiler they think is 60% efficient.  Lighting may be ok but the rest of this stuff is almost always going to have a negligible impact on energy consumption.  Efficiency to most industrial end users means, just keep it rolling – widgets per shift, less maintenance.  Many times increasing widgets per shift and reducing maintenance is accompanied by energy efficiency, especially when EE is the primary reason to do project.  However, there are bails of cash on fire in many places that are invisible to folks who focus solely on keeping things going.  In other cases, we’ve seen industrial end users think they’re going to meet their 10% reduction goals by turning lights off.  Pssst.  Your lights only consume 4% of your energy bills.

Not enough money.  I’ve investigated commercial real estate from both an owner’s and leaser’s perspective.  The owner makes the tenant pay the utility bills in many/most cases, so there is little incentive for the owner to do anything.  The tenant’s perspective is “I have a three-year lease, this isn’t my building, and I don’t even know if I’ll be here after three years.”  For industrial end-users, capital is very precious and can take force majeure to get.

Then there is a real risk that savings won’t transpire as indicated.  Lighting is about the only measure customer’s can count on with high probability.  This is unfortunate because it doesn’t need to be that way.  It’s just that there are a lot of schlocks who make assumptions like an old boiler is 60% efficient.  As my boss says, if a boiler is really 60% efficient, turn and run as fast as you can because it may be about to blow.  We’ve seen schlock estimates indicating over one therm per square foot savings by adding insulation.  You might achieve these savings if one of the walls on your facility was missing prior to implementation.

Now we arrive at the subject of this week’s rant: efficiency bid programs.  We see a lot of efficiency bid programs, some of which are delivered by clients of ours.  They are typically an alternative to conventional custom efficiency incentive programs provided side by side.  They work like this: develop a project with cost and savings estimates and submit a proposal to the utility for an incentive.  The incentive is always greater than the standard custom efficiency incentive or why bother with the development and bid?  The program is purportedly competitive – i.e., a “free market” for incentives to maximize bang for the program buck.  If it’s competitive, somebody must lose.  This isn’t tee ball.

I cannot see how these programs don’t get slaughtered in a net to gross analysis.  Net savings are actual savings attributable to the program.  Gross savings are actual savings, period.  What’s the difference?  Net includes the effects of the program.  Did the program influence the customer’s decision to move forward with an EE project?

Let’s get back to the barriers now.  Time.  It takes just as much time for a customer and a contractor and/or consultant to develop the project for bid as it does to develop the project for a standard incentive.  And it takes more time to shepherd the thing trough the bid process.  Efficiency bid takes MORE time.  Which leads me to…

Risk.  As mentioned, there is risk the project won’t generate savings because the energy analyst is a schlock.  But for efficiency bid, there is risk, presumably, that there won’t even be an incentive after thousands of dollars are spent developing the project.  Remember, if this program is competitive, somebody loses.  Who is going to spend gobs of time not knowing whether they will get an incentive?  If the standard custom efficiency incentive is the consolation prize and it’s enough for a “go”, then why would the program waste money on a premium efficiency-bid incentive?

True story, last week we considered pursuing one of these bids for an industrial customer for which we had done a study.  We decided against it because (1) we only had a month to get it submitted and in that month you need to get the customer on board and a month is a nanosecond for a capital intensive corporation to allocate (2) extremely scarce capital, and therefore, (3) it was too big a risk for even us, the consultant, to get the whole thing pulled together in a month, at the mercy of the corporate bean counters.  There is far too little upside for our risk of getting something we have almost no control over to happen.

Somebody has to lose if this is competitive.  Most likely only the biggest customers are going to pursue these projects.  A major customer spends a bunch of time to put a bid together and then is told, sorry, you lose.  Now the utility is faced with a colossal PR disaster with a major customer that will raise Cain all the way to PSC’s office.  OR, the customer takes the standard custom incentive as a consolation prize, in which case the whole bid thing was a ruse to get extra program money – a free rider.

These efficiency bid programs probably look great on the surface but if one really understands market barriers and how large end-users allocate and budget capital, it seems like a big free rider program to me.  They take more time, not less.  They add risk rather than decrease risk.  They potentially provide more capital assistance, but at what I see is a disproportional addition of risk.

Tidbits

  • Ameren Missouri says they will pare back EE programs because they are costing shareholders return on investment.   Wow – although I consider it unfortunate, it’s understandable and refreshing to some degree to get straight talk from a utility that actually believes this.  I think a good portion of utilities really think this way but lead on as though they are saving the universe.   Do what it takes to look good to the regulators but with minimal real impact.  Come to think of it, these utilities may be like The Firm.  Once a partner in the EE programs and made aware of the scam, you’re stuck unless you want your car to accidently explode when you leave for home.  BTW, programs can be developed for utilities to make money on EE.  Just call 608.785.1900.
  • Don’t look now, the Chevy Volt has even less than the advertised 40 mile battery range – like about 40% less during cold weather as batteries don’t work well in cold weather.   Not only that, as mentioned in “A Frivolous Novelty” it takes about 5 kW to heat the cabin of the vehicle.  I “mistakenly” thought this was a big deal.  Not really.  At about 0.5 mile/kWh, the battery juice is consumed in less than a half hour.  That’s 50 kWh for 25 miles of driving but only 2.5 kWh for heating.  Who is going to pay $40,000 to be limited to 25 miles between charging?  Raise your hand.  Not all at once, it may make the planet wobble.
  • In one last bit of refreshing honesty, this guy provides a good assessment of plusses and minuses of the ban on the standard incandescent lamp:   Good assessment – far above average for that matter.

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

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The Delectable Light Bulb

13 10 2010

The Wall Street Journal this week weighed in on the ban on incandescent from the energy bill of 2007 signed by Bush to phase out the incandescent light bulb by 2014. Naturally, their opinion is that banning products that are essentially harmless and in demand from citizens is bad policy.  As usual, I have multiple points of view on this issue as well.

First, I agree with the WSJ that ramming things like this down peoples’ throats is never a good idea.  It appears that next month we are going to see the political fallout of such lawmaking processes.  In the energy efficiency business we have to remember who we are ultimately working for – energy consumers.  There are already plenty of foes of energy efficiency programs.  The last thing we need is a public uprising against EE.  Ultimately regulators are appointed by governors.  I don’t really want to see a candidate ride a wave of uproar into the governor’s mansion on a platform with planks to dismantle EE programs.

If governments want to impose EE and other green standards for their facilities, that is fine by me as long as they are not completely stupid with my tax money. Wait a minute – Snap out of it Jeff… I must have nodded off to the land of gumdrops and lollipops – I was talking about Washington using money wisely and miserly.  That will happen as soon as San Francisco makes its way to Juneau by movement of tectonic plates.

As I recall reading an article in one of the greenie publications I get, an author also thought it is bad policy to ram LEED requirements onto the private sector.  I agree.  It is our job to sell the public on energy efficiency by reward not by training up and deploying an army of the green police.

Secondly, keep the feds out of this kind of stuff because they have a habit of writing bills and passing them without any knowledge of what is in the foot-thick stack of paper they are voting on and/or they are ignorant of the costs and benefits and certainly the consequences the bills they fight over.  Do any of them even use CFLs?  Do they have any concept that they take a minute or two to reach full brightness from a pretty darn dim start?  Do they have any clue that CFLs are even worse at starting in cold conditions and never do come up to rated brightness in many of these cases?  Have the Vikings won the Super Bowl in the past 45 years?

Compact fluorescent light bulbs have their place for sure.  I use them wherever there are significant burn hours.  But there are many poor household applications such as closets, pantries, refrigerator, outdoor lighting, and bathroom lighting (at least for men – ooooh!).  Sure, I could get LED lighting for these applications and those would pay back in… see the San Francisco / Juneau connection above.  Somebody needs to figure out how to get CFLs to come up to brightness in a few seconds and work in cold weather.

So as usual, congress passed something that is undoable.  No.  I’m not going to bother to read the law because I’ll be locked up in a seizure after reading (or trying to) just a few pages because it is so painful to read and understand.  Come to think of it, how can a ban on incandescent bulbs take more than one page of typed text?  Actually, the repeal is two pages.  Give that man a bubble gum cigar for brevity anyway.  Incandescent lights will still be manufactured or there will be a major rebellion.

Compact fluorescent bulbs have dropped in price by 80-90% in the short 15 years I’ve been in the business.  While they still only make up 10% of installed residential bulbs as stated in the Journal, they are flying off the shelf at three times that rate.  The market is clearly swinging in the CFL direction.  My mother, as one example, has installed them in most of her fixtures and while I hate to admit it, I had no influence on that.

Tidbits

Last week I made up a story explaining how energy efficiency results in more energy consumption as consumers have more money to spend on things.  The story started with steel manufactured in China, shipped to Ontario, tires coming and going and so forth.  That was a lame attempt at the insanity.

I popped this open on Sunday night and it tracks a series of manufacturing events I should have dreamed up.  Rio Tinto, a huge international mining company, mines and ships iron ore from Australia to a steel plant in China.  There it is processed into plate steel that is shipped to Caterpillar’s Decatur, IL plant that builds the behemoth dump trucks – the ones that look like Tonka trucks but their tires are 12 feet tall.  From IL, the truck is shipped in pieces to – you guessed it, the Rio Tinto mine in Australia.  You gotta love it!

Sorry I couldn’t make that up.

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





Upside Down Consequence of EE?

5 10 2010

Many posts ago, I wrote “The More You Spend, The More You Save” explaining how poor system control wastes energy but results in even greater energy savings for efficient equipment.  For example, consider an air handling system that wastes heating energy provided by an efficient boiler.  The boiler saves x% versus a conventional model, so x% multiplied by greater use (wasted energy) results in “more” savings.

Recently I picked up on buzz that argues greater efficiency results in greater energy consumption.  At one point I recall reading in the Wall Street Journal an editorial that argued more efficient vehicles just result in people driving more.  They live further from work.  They go on joy rides.  They visit the in-laws more.  I scoffed at this argument, at least at current gasoline costs and anything near them.  If I buy a hybrid that gets 50 mpg versus a “sports car” like an Infiniti G35 coupe that goes half as far on a gallon of gasoline, I will drive more.  No.  Way.

I will drive more (barely) if (1) I have a car that is fun to drive and (2) I am in an area where it is fun to drive.  While I haven’t driven a hybrid, I don’t think it would meet my criteria for #1.  As for #2, western Wisconsin is a driver’s and biker’s paradise because (1) it is scenic (2) there are lots of smooth, paved, and curvy roads on which to drive and (3) there is minimal traffic.  Quite frankly, I’m much more concerned about striking a deer, coon or coyote than another vehicle.  I used to live in the DC metro area.  Forget it.  You might as well drive a tin can because you are going nowhere fast.  I grew up in Southwest Minnesota.  Forget it.  You can drive for miles without moving the steering wheel.  But even so, living here in driver’s paradise, I have limited time so I never, ever think, “ooh boy, a 45 minute drive is only going to cost me $2.79 in gasoline – let’s drive!”

That’s one argument that doesn’t hold water in my opinion.  On the other hand, some people do run efficient stuff like lighting for longer hours because it’s efficient.

The other argument made in these articles is that the money freed up by spending less on energy results in redirection of that extra money toward other goods and services – and those goods and services result in more energy consumption to extract, process, manufacture, transport and operate.  I do buy into the merits of this argument whether the end-user is a homeowner, service provider, or manufacturer.  I never really bought into the notion that energy efficiency programs result in lower revenues for utilities.  Maybe they understand this and hence the rah-rah from utilities for energy efficiency programs.  I don’t blame them.  By far the main driver of EE is saving money and increasing profits.  See “This is Not Tee-Ball“.

Just think how this turns the energy efficiency business and policies on their heads.  In “Paying to Lose,” I discussed how utilities have to make their savings goals or they may get hammered by regulators.  This, in turn, improves the bottom lines of their customers allowing them to expand.  What a racket.  Rather than utilities spending money for their customers to use less of their product, they are actually using their CUSTOMERS’ money to sell MORE of their product.  And how about “Decoupling Stupid,” that allows utilities to recover revenue “lost” to energy efficiency?  They spend their customers’ money to increase sales and meanwhile essentially get reimbursed for the “savings”.  Cool!

We have also discussed the underperformance of LEED facilities.  In “LEED and the NOT Happenin’ Savings,” I described how LEED buildings weren’t meeting energy performance targets because of lousy commissioning.  Well hail to the lousy commissioning agents!  They are actually reducing global energy demand and greenhouse gas emissions.  Now that end user won’t be able to afford a new vehicle manufactured in Ontario with steel from soot belching plants in China shipped across the Pacific, through the Panama Canal to the Gulf of Mexico and transported by rail to Toronto or someplace – and tires from tariff protected Ohio that are shipped to Canada and back to the California border once installed on the automobile.  They also won’t be driving their phantom car.  (California won’t allow the car cross state lines because of the embedded energy, so Los Angeleans have to drive to Reno to pick up their car – I just made that up but it is probably true or at least accurate or emblematic, but certainly driving a new car across state lines into the golden state causes cancer and birth defects like everything else in CA does)

And I consider Michaels Energy.  Our facility uses practically no energy but in recent years our air travel has gone from virtually zero to hundreds of thousands of passenger miles per year.  And from the destination airport, we drive all over the place.  Soon for example, we will have about five people zigzagging all over California verifying energy efficiency measures that probably save less than the gasoline burned to prove it.  Somebody has to do it!

So go ahead and turn that thermostat up, open the window for some fresh air and click on that 70 inch plasma TV, have a beer and save the planet, Homer.

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





Paying to Lose

9 02 2010

Jenny Craig customers do it all the time – pay money to consume less.  This may make perfect sense to people who understand customers’ needs, but to others it seems really stupid to pay somebody to help use less of something.  This is a bit like utility programs that spend money for customers to use less of their product.

The vast majority of our energy work comes from referrals and repeat clients.  On numerous occasions, we seemed to have customers at the tipping point, only to have them bail out at the last minute.  Why?  The utility introduced us to the client, and knowing that we are more or less paid by the utility to provide energy efficiency services to the end user, they believe this is a conflict of interest and/or they don’t trust the utility to lead the end user to use less of the utility’s product – power or gas.

Memo to end-users:  Utilities have to generate energy savings.  They have no choice.

Investor owned utilities are in most states fully regulated monopolies.  The only way a consumer can buy from another utility in regulated states is to move to a different service territory.  This isn’t very practical for a school, hospital, or pretty much anybody.  In exchange for a virtually guaranteed consumer base, utilities’ profits and prices are essentially determined by regulators and consumer advocacy groups.

Saving energy, or using energy efficiency as a resource, is less expensive than building power plants, transmission, and distribution systems, Willie Nillie.  Therefore, regulators and consumer advocacy groups require the utilities to run energy efficiency programs.  As a result, utilities that run energy efficiency programs can either exceed goals or come up short.  Guess which outcome the regulators want to see.  Get it?  If they come up short, raising prices and building required infrastructure becomes really difficult politically – it’s difficult enough anyway.

“Yes, but they’ll just cheat or make up savings”, some people may think.  Wouldn’t be prudent.  Programs have third party evaluations to determine program cost effectiveness and actual savings compared to utility-claimed savings.  Lousy energy-saving estimates will come back to bite the utility hard.  This is detrimental to their next rate case, which is a request to raise prices and therefore, profit.

Smart utilities will genuinely encourage and achieve greater savings for their customers, first because they have no other choice, but second because reducing their customers’ costs improves their bottom line.  Like paying taxes, it is better to have a customer that pays a little less than none at all after they flee the service territory or go broke.  Moreover, if the customer is more profitable, eventually they will expand their business and use more energy, but efficiently.

To sum things up, utilities have to save energy or making return on investment for their shareholders gets really difficult.  Saving energy for customers also improves the bottom line resulting in long-term customers that will hopefully expand business in the utility’s service territory.

When the utility wants to help you save energy, believe it.

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





Policy to Curb Carbon

8 12 2009

Any carbon-reduction policy that includes paying Washington for permits to emit carbon is the wrong way to go.  Why?  Two words.  Social Security.

Washington has no spending restraint.  Earmark nation is alive and thriving.  Everyone has heard of the Social Security Trust Fund; Al Gore’s “lock box”.  Social Security has been running surpluses in the hundreds of billions of dollars per year for a long time.  If you think your payroll taxes are piling up for your retirement in a bunker under Washington somewhere, you are sorely mistaken.  Our profligate government has been taking the surplus and spending it on everything else, leaving behind “IOUs”.  Those IOUs are worth less than the lint behind my dryer because they will never be paid off.

What’s the point?  Permit revenue (tax) is supposed to be used for R&D for new fuel and fuel efficiency technologies, energy efficiency and so forth, per these bills.  Like social security and the state of Wisconsin’s disaster (see Energy Efficiency Oversight rant), this revenue will be pilfered for any number of other things including, for example, a congressman’s airport, a senator’s library, a study of mating habits of insects, why hog farms smell and so forth.

Instead, the drive to reduce utility-related carbon should come from utility and regulatory administered state programs, where consumers’ money spent to fund the reduction is plowed directly back into energy efficiency and low carbon production of energy.  Regulators and consumer advocacy groups ensure consumers get their moneys worth through independent program evaluations.

Yes.  I think that is the role of government.  To help ensure people don’t get ripped off.  If the feds get the money, who is going to watch them?  They have a dismal record of self-policing.  In fact, they practice bookkeeping methods that would land corporate accountants in jail.  Imagine if a corporation took employees’ contributions to their 401ks, replaced it with corporate bonds and called it revenue (ala the Social Security raid).  Without this switcheroo (watch the hand), those surpluses from the 1990’s were actually deficits.

Thanks to Wisconsin, we have a case study in failed government takeover of energy programs.  Let’s demand to avoid this scenario by ensuring Washington only gets the lint behind the dryer to control carbon.

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





The More You Spend, The More You Save

3 11 2009

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

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

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

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

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

Conclusions:

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

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

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