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Pam Mendelson: Good afternoon. This is Pam Mendelson, with the US Department of Energy. And I wanted to welcome you to the RACEE Energy Efficiency Peer Network Webinar. And we will get started in just a moment.
Okay, folks. I think now would be a great time to get started. I wanted to welcome you to the first webinar for the Remote Alaska Communities Energy Efficiency Peer Network. This is Pam Mendelson at the Department of Energy, and I'm joined by colleagues at the Alaska Energy Authority, with help from our National Renewable Energy Lab in Golden, Colorado.
We are very pleased to launch the Peer Network, because we spent a long time working on phases two and three for technical assistance and implementation grants, and really wanted to give something to all the communities who originally pledged to reduce their energy usage through the RACEE phase one pledge. Now is our chance to do that.
Just a quick note on how we'll operate the webinar today. All the participants have been automatically muted upon signing in. if you have a question during the presentation, please type it into the question panel on the right side of your computer screen, so we can read it out loud at the end, and get you an answer if possible. Then if you're interested in a recording and transcription of this webinar, you can check the RACEE website sometime after November 28 for a link to the recording and a transcription of the webinar.
Additionally, DOE plans to collect information to announce on the next Peer Network call, which will be in January. We're looking for information you'd like other communities to know about. Could be on funding project ideas, or other opportunities useful for energy efficiency in Alaska. Please email your input to Fletcher Souba on the email address provided on this slide for that any time. You don't have to wait. And we'll take your suggestions right up through to the next webinar.
So we formally want to welcome everyone. And make sure to remind folks that this network is intended to provide a fundamental benefit to 65 communities that pledged to reduce per capita energy usage by 15 percent by 2020.The network will consist of our website, our monthly technical webinars, and in-person meetings that we will arrange alongside of existing meetings. For example, there'll be a competition summit at the end of RACEE Phase 3. We hope to put meetings together for future Alaska energy meetings as well.
The goal of the Peer Network is to empower Alaskan communities and native Alaskan villages to develop effective tools to advance the use of reliable, affordable, and energy efficient solutions that are replicable throughout Alaska and other Arctic regions. The Department will leverage the existing convening power of the Alaska Energy Authority and other regional energy efficiency organizations to form the Peer Exchange Network, and to build a community of energy efficiency information sharing and action by peer exchange through webinars, events, and share information.
We wanted to give you a sense of what we have in store. So we've planned out webinar topics throughout the year and next year, 2017. Today's webinar will be the first one on the cost of delay and project financing. Our speaker will be Cady Lister. I'm going to transfer the webinar controls to Cady, and as I do, I just wanted to make sure to let you know how lucky we are to hear from Cady today. Cady is the lead economist at the Alaska Energy Authority. She is responsible for providing economic analysis of projects and programs administered by AEA.
She also manages data collection, verification, management, and storage, to ensure that data used for decision making and analysis is reliable and well documented. She has worked as an economist and analyst focused on energy in Alaska for more than 15 years. And with that I want to thank you for being with us today, Cady, and pass the baton to you.
Cady Lister: Thanks, Pam. So I'm looking at who signed in. I'm glad to see – I think I saw Anne THC and Dave PM, some folks from Noorvik, Klawock, and Ouzinkie, so just to – trying to get a sense of who I'm talking to. Some of you will have seen some of this information in past presentations. So I'll breeze through the beginning just as a reminder. So the first thing is efficiency is an investment. It's important to think about it as an investment, especially as we start talking about different energy project funding options that are out there. Energy efficiency, if it's done properly, has an almost unbeatable return on investment, returning about 30 percent over the sort of project life.
There's a slight delay in the advancing there. So this slide shows – hopefully folks are online, not just on the phone, and are seeing the slides I'm talking about – otherwise I'm not sure this will make any sense. But there's a slide up that shows a very rough breakdown of state building energy use and savings potential. There are two different bar charts. One is residential, and one is commercial, and we always show this one, because it's important to remind folks that homes and commercial properties use energy really differently.
Electricity is a much larger share of the total energy consumption in a non-residential building than a residential building, where 80 percent of the energy use is usually in the form of heat. So this is just a statewide picture. So it doesn't necessarily reflect the reality of specific individual buildings, but it's a good place to start, and it's a good reminder that we're not always talking about heat savings. On non-residential buildings there are a lot of opportunities for electric savings, which can sometimes be pretty cost effective.
There are a number of barriers to implementation of energy efficiency projects. The State of Alaska and federal government have funded a fairly large number of energy audits throughout Alaska that haven't actually resulted in energy efficiency projects, which is frustrating, because energy audits provide a lot of really good information, but they don't actually provide any energy savings. The energy savings don't come until you actually do the implementation work.
We've done surveys of private commercial building owners, and public building owners, that have had energy audits, to see kind of if they did anything, and if so what it was, and if they didn't, what the barriers were, and not surprisingly the largest barrier is just access to upfront – access to money. People don't have the money, or don't perceive they have the money to do it, and they are risk averse, and not wanting to take out a loan. So one of the points we definitely want to make is that waiting costs you money.
While thinking about the different funding options available, and deciding which ones to go for, it's important to keep in mind that there is a high cost to delay. While waiting to decide what to do next, or in hopes of someday receiving a grant, you're spending more money than you need to, because of inefficiencies in your building. Acting now, with a loan, if you need to, you could be better off than if you were to receive a grant in five years, because you'll be saving money that entire time.
And that's – this slide has a sort of note on it that says AHFC Cash Flow Calculator. That's a link I'll send out to this group. There are a lot of cash flow calculators online, too. If you Google energy efficiency cash flow calculator, you'll probably come up with one. AHFC's is a little more nuanced. It requires a few more data inputs, but it also has a lot more information about the different weather zones in Alaska, so it might be a little more accurate. And it has information about Alaska building energy use. But it gives you a good sense of the cost of delaying action.
There are three basic mechanisms for investing in energy efficiency. Grants, cash on hand, or loans. When we're talking about cost saving energy projects, the time it takes to secure free or semi-free money can cost you in the end, especially in the current fiscal climate, one in which grant funding is becoming harder and harder to come by, and at the very least, it's difficult to anticipate. Loans can be the fastest, cheapest way to save money through the implementation of efficiency or other cost saving measures.
And I would add to that that I think it's important just to consider your sources. There's a plethora of different potential funding opportunities, both for public buildings, private buildings, grants, and loans. And that different types of applicants might be eligible for. So I know there are folks on the line probably associated with a tribal organization – so there are funding sources specific to tribal. There are rural specific sources. There are city specific funding sources. Just making sure it's sort of sorting through that somewhat complex landscape of funding opportunities to figure out what the most cost effective thing for you to do is important. And that's something AEA can help with if you want some more sort of personalized assistance.
So from audit to action – tailored funding solutions for every project. And the next two slides have a lot of information on them. I mostly put this on there because it's going to be posted on the website, and I wanted everybody to have the list. So this first – there's two slides with funding options. The first slide has funding options that are primarily loans, although there are two USDA programs that have both grants and loans.
The second slide has more grant options. And I just wanted to point out that some of these are just supply side options. So there's end user efficiency funding opportunities and then there are supply side, which is the power house or the distribution. So the High Cost Energy Grant and the Power Project Fund Loan Program are both programs that can finance or grant money to do that supply side efficiency.
The next slide has a picture of this kind of handout that we update periodically. It has a whole bunch of information about different funding sources by eligible borrower. And that is another link I'll send out and make sure is available to everyone on this webinar, and is posted on the Energy Efficiency Partnership Webpage, AKA energyefficiency.org. But I'll send that out afterwards. And that is just a good resource.
Project development is something that folks have been talking about in Alaska for a long time because it's where we see things – it's kind of where we see things breaking down between audit and implementation. It's all of the kind of work that happens in between. From the point of feasibility, which is the audit, to actually getting the work done.
There are six basic steps in an energy efficiency project – data collection, getting the audit, determining your funding strategy, construction and implementation of the measures, savings generated, and then reassessing performance – and that has a lot. That's making sure that you actually – that the measures that you implemented are actually performing in the way they're supposed to perform, and commissioning. And then the sixth one was just ongoing operations and maintenance, to make sure that you get the full value for the full life of the project.
I'm going to breeze through these pretty quickly, but we are available to follow up for anyone who wants more detailed information about any of them. The first step is data collection. This has a picture of the Alaska Retrofit Information System, which is a database that the Alaska Housing Finance Corporation houses, and is also used by AEA and several other state entities to track building energy use. And it's just a place where you can enter your building information and keep track of how much energy you're using on a monthly basis.
And if you have – if you own a whole bunch of buildings, you can put all of those buildings in there, and then it can kind of – it will give you reports that make it easy to look at the energy use in your portfolio of buildings over however long, whatever period of time you're tracking the energy use. It's important to start keeping – to benchmark your energy use so that you have a measure from which to know if you're achieving your savings. And if you do have a portfolio of buildings, it's often really important to look at how they are performing compared to one another, so that you can start with the building that's using the most energy, for example.
So the second step is the energy audit. And we've talked a little bit about this. The main point that I would want to make to this group is that you want to make sure you're getting an audit that's appropriate for your building. There are a number of non-residential buildings in rural communities that are pretty small and behave a lot like houses. They may not be used like houses or residential facilities, but their energy consumption patterns are similar, and construction – the building construction is similar, and they probably don't need a level three audit. That might be a cost that could hurt the economics of a project.
What's good to do – sort of what we recommend is making sure that you hire a qualified auditor, and start with a level one audit. And then your auditor will be able to tell you from that level one audit whether or not they think a level two audit is called for. Because there are cost associated – I mean a level one is the least expensive, and there are costs associated with each of those. So you want to make sure you're getting an audit that's appropriate for the building, that the level of effort is sort of matched with the level of potential return you might get.
There are certain audit requirements for different types of financing. The Alaska Energy Efficiency Revolving Loan Program has a requirement for a level two audit, for example. But so there are certain things like that, that just be aware of.
The next step is sort of starting on the funding strategy. And I'm not going to beat this horse too much, but just a reminder that there are a variety of funding options that fall under the three broad categories of cash on hand, grants, or in a direct appropriation, if you are an entity that can get an appropriation from the state, or a loan. And just to evaluate which one is appropriate for your situation, and for your building, these are – Tim Leash from AHFC was supposed to be presenting with me this morning. So these are his slides. So I'm just going to go ahead and read through the case study that sort of is an example that is supposed to demonstrate the cost of the potential cost associated with doing nothing.
If there's an Alaska school with $460,000.00 in annual utility expenditure, which is not uncommon, even for small schools, a 2012 audit estimated $143,000.00 annual utility cost savings. That's 31 percent, which is pretty typical for savings associated with economic efficiency measures. If you show then – the comparison is if you take a loan immediately, versus wait for – sit on the capital improvement project list, and wait for an appropriation, and then get that appropriation five years later, the cash flow comparison is almost identical. But if the school doesn't take action, the cost of delay is greater than $1.3 million over the 15 year life of the efficiency measures that would be implemented. So $1.3 million in a school budget is not insignificant.
So step four is construction. All contractors play a critical role in building efficiency. I think the main point of this slide is just to try and drive home the fact that building an efficient building is a process that requires teamwork from all of these different sort of contractors and professionals who will be in your building. The engineers, the electricians, the HVAC stuff, it's got glass building, then the glazing people, the people involved with the dirt work and the sheet rock and the plumbing. I mean any one of these contractors can lessen the efficiency or enhance the efficiency of the building.
So it's important when you are going out to bid on a major retrofit, or going out to bid on new construction, that you develop an RFP – a request for a proposal, or a request for bids, that establishes a good structure and good parameters for having the outcome that you're looking for, in terms of energy efficiency. And that's not always easy. It's sometimes pretty complicated. I know that AHFC and AEA are both kind of available to help review RFPs, and make sure that sort of critical pieces are in there. I think other regional entities do offer similar work. I'm not 100 percent, so I'm not going to name them right now, in case that's not true.
So then step five is to reassess, and that's building commissioning, and measurement, and verification. By this point in the project, you're saving energy, and you're saving money, but it's important to ensure that you're getting what you asked for, by taking the step of commissioning and measurement and verification, which is in Alaska very often a step that is not taken. But by taking this, you can find even more savings in your building. The process of commissioning a facility after a retrofit, or a new construction, is intended to ensure the owner is getting what was specified in the contract, and that the building is performing as it was designed to perform.
If you have a non-residential building that hasn't been commissioned in a number of years, it's a good first step, too, if you're not at a point where you have available funds to invest, and you're maybe going to delay that for a couple years, commissioning is relatively inexpensive and can option lead to low cost – low or no cost efficiency improvements, just through making sure your system is operating correctly.
A sound operation and maintenance program for a facility not only includes maintenance plans and activities, but also emphasizes operating equipment in the most energy efficient manner possible. This is an example that gets used pretty regularly, pretty often, but just because it is just a good example of the impact that operations and maintenance can happen, can have. In Southeast Alaska, there were two prototype schools that are in the same climate zone, have very similar student populations, were built around the same time, so they're the same age. One school spends $304,000.00 less per year for energy than the other school.
The primary difference – both of those schools received an energy audit, and the primary difference was the way in which the building was being operated. The school with the lower cost had optimized and automated their system schedules, and the school with the higher cost would be operated manually. Systems in larger facilities are often pretty complex. And underutilized or bypassed control systems are commonly found in these sort of more complex non-residential buildings, particularly schools in smaller communities.
Knowledgeable personnel are essential to operating an energy efficient building, and it can make a difference, as in this example, of hundreds of thousands of dollars a year. $300,000.00 a year in the budget of a school in a small town in Alaska is significant. I mean that's more than a full time position.
So these are a bunch of happy office folks celebrating energy efficiency. So just sort of to drive home a couple points. Energy efficiency protects against fuel price volatility. We don't have any control over what the price of fuel is going to be a year from now. But the thing we can control is how much of that fuel we're going to be using, so we can mitigate some of the impacts if the price goes up. Efficiency supports self-sufficiency and community sustainability. Improves comfort, convenience, and health. And actually productivity. And generates savings for other things. So like in the example of the school, it generates savings that could be turned around and used to fund different programs or hire an additional staff person to do direct education.
So the last slide just has a couple of other great resources. One is a guide to managing energy use in public and commercial facilities. And that's just a couple years old. The other one is a whitepaper developed from about a little less than 300 energy audits that were done in the last five years – the sort of outcomes of that. So those are both available online. And folks at AEA are available to answer any questions, or help folks who are kind of trying to figure out where they are in the process move to the next step. And that is all I got.
Pam Mendelson: Cady, thank you so much for that presentation. I want to remind you that really we hope that when we put this up on DOE's website, that it will also be interesting for other states that have remove rural communities working on energy efficiency. And certainly we'll be happy to send them all to the Alaska Energy Authority and the Alaska Housing Finance Corporation's website for materials. There's no end to the cross training that can occur between what's going on in Alaska and other places as well.
We did let everybody know at the outset that if you have a question, you should find on your control panel on the right for the webinar a question box, and type any question you might have for Cady, or for anybody else on here. And I do want to ask Monica at NREL to just take a look in the question box, let us know if you see anything at this time.
I don't hear anything. I'm not sure that means there are no questions. We'll just take another minute while we're waiting.
Monica: There are no questions right now.
Pam Mendelson: Okay, fine. Well, I'm sure that means, Cady, that you explained everything perfectly. And it's now all up to people to go take a look at the websites listed on the web addresses that you provided. We'll be making this presentation available on the RACEE website if you want to take another look at those links after the webinar. Check back in two weeks. But for now, I'd like to thank everybody for joining us. This is the inaugural webinar for the RACEE Peer Network. We look forward to joining you again in January with the next webinar in our series. It will be part one of a two part webinar series on level two building audits and benchmarking. Very good way to start the new year. So thank you very much, and we'll be in touch. The webinar is concluding now. Thank you.
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