Energy and home value: The missing link

In Pennsylvania, having solar or energy efficiency measures installed in your home doesn't always mean a higher sale price for your home.

Before the home energy contractors and solar installers call for my head, let's look at the issue. Homes with solar and energy efficient upgrades should be worth more, if for no other reason than the operating costs of that home are lowered. And while studies show that homes with these upgrades sell faster, in many markets they may not sell for a higher price. So what's the problem?

The problem is the home valuation system has not caught up with solar and home energy efficiency markets. Most home buyers need to get a mortgage and that requires an appraisal of the property. Appraisers have to show that an "improvement" to a property adds to the resale value. The proof comes from "comparable" sales, properties in the same market with similar upgrades that have recently sold. The perception, by many in the real estate industry, is if there is no "comparable," then there is no way to account for the added value.      

Although many Pennsylvania real estate markets haven't had enough homes sold with solar to illustrate an increase in value, there are tools available that can assist. The solar valuation spreadsheet from Sandia National Laboratories or The Residential Green Addendum from the Appraisal Institute are two tools that solar contractors can use to empower their colleagues in the real estate business.

For home energy efficiency, valuation is further complicated by the variety and volume of upgrades available and the different financial savings attributed to those upgrades. Greening your local Multiple Listing Service (MLS) is one of the most important things that can be done to improve the situation.

The Multiple Listing Service (MLS) is the information clearing house for all the information on a property, including those features that influence value. "Greening" the list refers to the process of including energy efficient measures in the listing. If your local real estate community isn't already working on greening their local list, consider starting a conversation on the importance of this action. Provide these  tools, solutions, and your assistance.

Finally, contractors need to understand the issues associated with energy upgrades and home valuation. Painting an accurate picture for homeowners and enlisting them to pressure the industry is in everyone's best interest.
 

Pay now, or pay more later

The Government Accountability Office (GAO) is an independent, non-partisan agency that works for the U.S. Congress. The GAO investigates how the federal government spends money and ensures federal government accountability.

Lately, GAO has been sounding the alarm bells on climate change. On February 13, the GAO released its updated High Risk report, identifying 30 areas of high risk due to greater vulnerability to fraud, waste, abuse and mismanagement or the need for transformation to address economy, efficiency or effectiveness challenges. GAO added two new high risk areas to address: 1) limiting the federal government's fiscal exposure by better managing climate change risks, especially the climate impacts to federally-owned infrastructure, and 2) mitigating gaps in weather satellite data that will negatively impact the ability to provide extreme weather warnings in an accurate and timely manner.

In May, the GAO released a report, Future Federal Adaptation Efforts Could better Support Local Infrastructure Decision Makers, asserting that local decision makers need to consider climate change into their infrastructure planning and need better data and resources from the federal government to help inform their work. The report identified the numerous and specific ways that climate change is impacting infrastructure and how these impacts can result in economic disruption. For example, NOAA estimates that within 15 years a segment of Route 1 on the Louisiana State Highway that provides the only access to a port responsible for importing 18 percent of the nation's oil supply will be inundated by tides and unusable, on average, roughly 30 times per year.

For years, the GAO has been talking about how climate change increases the federal government's financial risk exposure and, by extension the exposure of all federal taxpayers. The GAO states that although climate adaptation "...may be costly, there is a growing recognition that the cost of inaction could be greater."

The best car EVER is our favorite color: Green.

The Tesla Model S is the best car ever! But don't take our word for it, Consumer Reports magazine proclaimed last week that the Tesla Model S, the company's second plug-in electric car, was the best car they have ever tested.

Not the best electric car, the best car. Ever.

With speed and performance like this, 0 to 60 in 5.6 sec and a 300 mile range, Tool Time's Tim Allen is *grunting* his approval.

The Car Talk brothers have developed a passionate longing for the Model S.

And even Wall Street loves Tesla Motors!

Tesla reported Wednesday they would repay their $465 million dollar loan to the federal government nine years early. While other electric car companies have struggled to survive in this tough marketplace, Tesla says they have already taken 20,000 orders! And their stock, now trading at twice the price it was at the beginning of the year, reflects this success.

All this and the Tesla uses no gas, produces no emissions* and can be recharged for FREE anywhere there is a supercharging station! 

If you combine what Tesla Motors has engineered with the solar PV charging station that Phoenix Contact USA and a group of Pa. college students designed, you could truly have carbon neutral automobile travel.

Bravo Tesla!

*Assuming it is recharged by a clean renewable energy source like wind or solar.

The climate bad, good and ugly

The Natural Resources Defense Council (NRDC) estimated that taxpayers paid nearly $100 billion, or about $1,100 per taxpayer, as a result of the extreme weather events associated with climate change in 2012. NRDC found that taxpayers, mostly through federal government spending, outpaid private insurers by a ratio of 3:1. The environmental group further claims that the $100 billion spent on climate clean up in 2012 is more than the federal government spent on education or transportation. 

The cost of climate change impacts seem to be increasing. However, new data shows that we are coming off of a decade of slightly decreasing emissions.

The U.S. Energy Information Administration (EIA), which (among other things) tracks fossil fuel emissions associated with energy use, found that between 2000 and 2010 CO2 emissions fell in 32 states and rose in 18 states. However, from 2009 to 2010 only 14 states saw a decrease in emissions as the economy started to recover from the recession and energy consumption increased in most states. Overall, U.S. energy-related CO2 emissions in the decade studied dropped by 4.2 percent.

Pennsylvania continues to be the third largest emitter of energy related CO2 emissions, with Texas and California in the first and second spot, respectively.  However, the Keystone State saw a 7.1 percent decrease in CO2 emissions over the decade studied, amounting to an absolute reduction of 19.7 million metric tons of CO2. Some of this decrease is due to an overall reduction of energy use during the studied time period. However, the CO2 intensity of Pa.'s energy supply has also been reduced by 5.7 percent, or about 3.5 kg of energy related CO2 per million BTU.

In 2010, 48.2 percent of Pa.'s energy-related CO2 emissions came from coal, with 33.4 percent from oil and 18.4 percent from natural gas. In 2000, 52 percent of Pa.'s energy-related CO2 emissions came from coal, with 35 percent from oil and 14 percent from natural gas.

So, what is going on? First, climate change is a global problem that requires all emitters to make reductions. The U.S. needs to make deeper emissions reductions and take a leadership role in getting other nations to do the same. Second, CO2 accumulates in the atmosphere, so once we reach a tipping point of concentration, we are locked into a certain amount of disruption. Therefore, every day we wait to take action, we increase the probability of climate disruptions that result in catastrophic economic losses and harm to public health.

Last week, CO2 monitors indicated that global concentrations of CO2 reached 400 parts per million for the first time in human history. What concentration will we reach before real action is taken?
 

Simple math: Zero-cost wind = lower electricity prices

It’s a well-known fact that wind energy doesn’t require any fuel to produce electricity – wind is free! A lesser-known fact is that this zero-cost fuel can actually help drive down electricity prices for all consumers.

In order to meet electricity demand in the region, our electric grid operator, PJM, chooses the lowest-cost generating units first, until supply is met. Generators within PJM bid into the market, and the highest-priced resource needed to meet demand sets the price for all sellers, often referred to as the “single market clearing price”.

Under the “single market clearing price” model, the addition of renewable energy can help lower electricity costs. Since renewable energy sources such as wind have no fuel costs, once they are constructed they have little to no operating costs. Therefore, wind can bid into the market at a price close to zero, helping to push out more expensive generators including gas peaking plants that rely on expensive and variable fossil fuels. This means less expensive resources like more efficient gas-fired units set the marginal price, lowering the cost of power for everyone.

A new report by Synapse Energy Economics and Americans for a Clean Energy Grid details just how beneficial wind energy can be for consumers. The report finds that doubling the wind generation already planned in the PJM region to 65 gigawatts (GW) would lower fuel costs and drive down prices by $1.74 per megawatt hour (MWh). Additionally, these savings would more than offset the cost of new transmission needed to support additional wind projects, with consumers receiving $6.9 billion in net-savings in 2026. The environment also benefits with the resulting 14 percent reduction in CO2 emissions – the equivalent of taking a million cars off the road.

The Synapse report joins a growing number of studies that have quantified wind’s price suppression effects in New York, Texas, New England, and the Midwest Independent Transmission System Operator (MISO) region. These studies continue to highlight why it is so important that wind remains an important part of our energy portfolio.

Boston follows Philly's lead in energy benchmarking

With Wednesday's 9-4 vote in City Council, Boston became the eighth U.S. city to pass energy benchmarking and disclosure legislation, following cities across the country including Philadelphia, Washington, D.C., and Seattle. The law will require large commercial and residential buildings to annually report whole-building energy and water use to the city of Boston. "What gets measured gets managed," explained Brian Swett, chief of Boston's Environment and Energy Department. Benchmarking encourages buildings to measure and understand their utility usage, thus closing the critical information gap and providing cost savings through more efficient buildings.

Under the new ordinance, more than 1,600 buildings will be affected by the reporting standards. The law requires all commercial buildings over 35,000 sq. ft., and all residential buildings over 35 units, to annually report energy consumption data using the E.P.A.'s Portfolio Manager. The U.S. Department of Energy estimates that a 30 percent reduction in energy use in a 50,000 sq. ft. building can lower yearly operating costs by $25,000. Even small reductions in energy consumption can mean enormous savings to businesses and residents. In addition to saving money, benchmarking aims to reduce carbon pollution and is part of Boston's comprehensive Climate Action Plan. The city's buildings account for 70 percent of the city's greenhouse gas emissions, more than double that of the transportation sector.

Boston's law goes a step further than some other ordinances by requiring poorly performing buildings to conduct energy audits every five years to identify opportunities for energy efficiency investments. Buildings in the top tier of energy performance, and those that are already taking significant efficiency steps, will be exempt from the required assessments.

Last year, PennFuture and the Coalition for an Energy Efficient Philadelphia spearheaded a successful effort to bring benchmarking legislation in the City of Brotherly Love. Councilwoman Blondell Reynolds-Brown's benchmarking bill was signed into law by Mayor Michael Nutter in October 2012 and its reporting requirements are set to go into effect next winter. Dozens of cities across the country are now considering benchmarking laws, and we'll be fighting to bring similar legislation to the Steel City in the next year! Stay tuned.

Wind energy booster reports from Windpower 2013 Expo

Fred Kraybill, a wind power advocate and PennFuture member, is our "eye in the sky" at this week's Windpower 2013 Expo in Chicago, Illinois. 

Fred Kraybill has been a wind energy guru since before Pennsylvania's first windmills made their appearance in Somerset County. He phoned in from Windpower 2013, his fourth time attending this expo.

Evan: What's the theme at this year's Windpower Expo?
Fred: The message for me this year is that if we're going to make it to 300,000 MW of wind power by 2030 [the goal proposed by U.S. Department of Energy], then we have to get moving. The forecast for the future is looking a bit bland.

Evan: So the theme for this year is that the wind market is bearish?
Fred: There was a panel that included speakers from Bloomberg Energy, IHS and other market forecasters. Right now, given the market signals, we are only on track to install 3.7 GW - 8 GW in 2013.  The industry is experiencing uncertainty as a result of having only a one-year extension of the PTC [Production Tax Credit]. There are also issues caused by the continued low prices of natural gas, and overall uncertainty of electricity prices. These two issues are whiplashing the industry. The bright side is that the one-year PTC extension provided for facilities that start construction before the end of the year to be grandfathered in, so there's a sense of urgency to start construction. We should see an acceleration in new wind farm construction over the next few months.

Evan: What was the message from the speakers and industry leaders who addressed the conference?
Fred: I was surprised to hear more talk of climate change and the need to accelerate wind development as a solution. This is something I heard less of at prior conferences. Speakers included newly-appointed Secretary of the Interior Sally Jewell and AWEA's [American Wind Energy Association] new CEO, Tom Kiernan.  Iowa Governor Terry Brandstad [R] was the keynote speaker and spoke a great deal about the economic benefit to his state. Iowa was the first state to pass a RPS (Renewable Portfolio Standard).
I also attended a  panel that included Susan Hedman, EPA Administrator for Region 5, and Susan Rielly of RES America. The theme of that discussion was climate change and the  economic losses caused by climate and weather events compared to the marginal cost of accelerating wind energy deployment. The conclusion was that there's really no comparison since we're spending money on disasters instead of clean wind energy.

Evan: What's the good news?
Fred: Voluntary wind energy purchases are making a dent. Google, Microsoft, Walmart, and scores of other business giants are entering into agreements to purchase substantial amounts of wind power, and this is helping to drive the market. The other good news is that it's likely that construction of America's first offshore wind farm, Cape Wind in Massachusetts, will finally begin by the end of the year.



    

The buzz about Master Limited Partnerships

We're back with more on financing for our clean energy future. Today we're going to cover Master Limited Partnerships (MLPs): what they are, how they work, and what it might mean for financing renewable energy and energy efficiency projects across the U.S. in the years ahead. 

Master Limited Partnerships came into being in the early 1980s. MLPs are a publicly-traded entity, listed on major U.S. stock exchanges, and covered by the same regulations as any publicly-traded corporation. MLPs relate specifically to the energy conversation because they are predominantly made up of energy infrastructure assets, or "natural resource activities." They are a relatively stable investment, with less exposure to commodity price risks. BUT, as the MLP structure is currently defined, the eligible energy assets do not include renewable or energy efficiency projects. 

At the time of writing, over $350 billion has been invested in MLPs. So, why not give renewables a little piece of the action? That's exactly what Senator Chris Coons (D-Delaware) and other U.S. Congressmen have in mind. 

Federal legislation has recently been resuscitated by a bipartisan group in Congress, and it has a lot of people talking and cheering. The Master Limited Partnerships Parity Act would allow renewable energy projects and energy efficiency projects, formally excluded from benefiting from this financing mechanism, to now be eligible for MLP inclusion. MLPs offer the benefit of spreading more risk among investors, making investments in renewables and efficiency more attractive to the financial community.

While one could fall quickly into the depths of financial-speak when discussing MLPs, the two most important aspects of MLPs are that they can raise money when publicly traded, and they don't pay a corporate income tax, rather, money flows directly to the shareholder (who then pays a personal income tax). This proven financing structure has considerable potential for deploying more renewable and energy efficiency projects at scale, furthering efforts toward leveling the playing field for these clean energy investments. 

The Master Limited Partnerships Parity Act will need to go through the Senate Finance Committee and the House Ways and Means Committee. There appears to be support from both Republicans and Democrats, as well as a sizable contingent of industry groups. 

It's really a win-win -- mobilizing businesses and lowering the cost of clean energy. That's something we can get behind.