Energy Efficiency Market Study for Greater Cincinnati Stakeholder Release Meeting November 17, 2011 1
Agenda • Energy Alliance Overview • The Market Study • Where Are We Now? • Call to Action 2
ENERGY ALLIANCE OVERVIEW 3
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 4
Mission Statement The Energy Alliance’s mission is to facilitate investment in energy efficiency for homeowners, non-profit organizations, and commercial buildings owners through outreach and education, project management, and financing solutions. 5
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 6
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 7
DOE Better Buildings Neighborhood Program 8
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 9
Residential Case Study Type of Improvements Air Sealing, Duct Sealing, Floor Above Unconditioned Space 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 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! 10
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! The audit was very educational (and eye opening). My primary interest in doing the Customer, Heather Curless upgrades were for comfort and energy/cost Cincinnati Resident and savings. Also as a green business owner, I Owner of Greener Stock felt it necessary to "walk the walk.“ ~ Heather Curless 11
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 St Antoninus, Cincinnati 12
Case Study: Mt. Washington United Methodist Church Project Mount Washington Methodist Church was the first organization 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% Children playing at Mount Washington Methodist Church, Mount Washington UMC will save an average of December 15, 2010 $8,000 per year over the life of the installed equipment. 13
THE MARKET STUDY 14
Efficiency is the Cheapest Energy Resource 20 18 16 Range of Levelized Costs (cents per kWh) 14 12 10 8 6 4 2 0 Energy Wind Biomass Natural Gas Pulverized Nuclear Coal IGCC Solar PV Efficiency Combined Coal* Cycle All data from Lazard (2009) 15
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 Source: Ehrhardt-Martinez and Laitner 2008 16
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 17
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 18
Residential Program Average Household Average Annual Net Change in Cash Flow • $4,350 in energy 1,000 improvements 900 800 • Annual payments $500- 700 600 2009 Dollars $800 (depending on 500 2012 Participant 400 incentive level) 2015 Participant 300 2020 Participant 200 • Positive cash flow in first 100 year of loan 0 -100 • Average annual positive Year cash flow of $500 over 18 years. 19
Nonprofit Program Average Building Average Annual Net Change in Cash Flow • $29,000 in energy 14,000 improvements 12,000 10,000 • ~$1,000 positive cash 2009 Dollars 8,000 2012 Participant flow in first year 6,000 2015 Participant 4,000 • Average annual positive 2020 Participant 2,000 cash flow of $3,000 or 0 more over 17 years. Year 20
Impacts Over 20 Years • Participants – 69,000 households – 460 non-profit buildings • In 2030 alone: $59.6 million in bill savings, $37.2 million in net consumer savings Investments (thousands 2009$) 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 21
Employment Impacts Net Increases in Jobs and Wages • Four-county impacts in 400 16 2030 350 14 300 12 – ~315 net additional job Income ($MM) Employment 250 10 person-years 200 8 – $13 million in additional 150 6 100 4 wages 50 2 • Includes direct, indirect 0 0 2010 2015 2020 2025 2030 and induced Jobs Income • Construction/ Job Impacts by Sector manufacturing: 100+ Sector Categories 2012 2015 2020 2025 2030 Extractive and Energy Sectors -3 -14 -30 -46 -59 net additional jobs for Construction and Manufacturing 122 105 111 119 126 Trade and Services 33 36 85 166 251 20 years. Net Total Jobs 151 127 166 238 317 Source: DEEPER modeling system 22
Other Impacts • Environmental 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 – 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 operating costs can result in better financing, lower premiums, higher occupancy rates, and lower turnover 23
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% – $2.4 million fund for nonprofit = 4.60% 250,000 4,000,000 10% 10% 3,500,000 Annual Return on investment Annual Return on investment 200,000 8% 3,000,000 8% Annual Returns ($) Annual Returns ($) 2,500,000 150,000 6% 6% 2,000,000 100,000 4% 1,500,000 4% 1,000,000 50,000 2% 2% 500,000 0 0% 0 0% 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 24
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