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ACEEE Blog

Our new analysis finds energy efficiency is the 3rd largest resource in the US electric power sector
August 19, 2016 - 10:00 am

By Maggie Molina, Utilities, State, and Local Policy Director


Have you ever described efficiency as an energy resource and gotten a quizzical look in return? We have, even though utility system planners have been using energy efficiency for decades to make sure that power for their customers is both reliable and affordable. For those of us who have been in the energy efficiency industry for years, or even decades, we sometimes take for granted that others will understand what we mean. But we must not. We must help educate a wider audience that energy savings from greater efficiency—whether we call them negawatts, an invisible energy source, virtual power plants, or something else—are a cornerstone of our nation’s energy system and critical to a clean and affordable energy future. In fact, energy efficiency is now the third largest resource in the US electric power sector, as shown in a new report we released today.

How we crunched the numbers

Last year we set out to quantify the size of the energy efficiency resource that currently exists in the electric power sector using a bottom-up approach to estimate energy savings achieved through specific policies and programs. We looked at three areas. First, through our State Energy Efficiency Scorecard, we had 10 years of state-level data on evaluated energy savings from utility-sector energy efficiency programs. Second, we used state-level energy savings estimates of appliance efficiency standards from the Appliance Standards Awareness Project (ASAP). And third, we used state-level energy savings estimates of building energy codes from the Pacific Northwest National Laboratory (PNNL).

Energy savings produce huge benefits

The combined impacts of these three major energy efficiency efforts since 1990 amount to a remarkable accomplishment in the US electric power sector. We estimate that not only is efficiency our third largest resource, but, more importantly, it has averted the need to build the equivalent of 313 power plants since 1990. We also estimate that efficiency reduced annual carbon dioxide emissions, a major contributor to climate change, by 490 million tons in 2015. We can see further evidence of efficiency’s impact in the fact that electricity consumption has flattened in recent years even as the economy has grown. What’s more, energy efficiency has saved consumers $90 billion annually on electric bills. For American households, this translates to average savings of $840 per year.

Many more benefits come from investing in energy efficiency. For example, efficiency is especially important for low-income, African-American, Latino, and renting households because it lowers their energy bills over the long term and helps alleviate their disproportionate energy burden (the percentage of household income spent on utilities). Our new report also details other benefits of efficiency such as economic development, job creation, community resilience, and improved health, safety, and comfort.

Energy efficiency could become our number one resource by 2030

We can do much more through energy efficiency in the electric power sector, as ACEEE and others have recently documented. If we increase our application of the three major policies examined in this report (appliance and equipment efficiency standards, utility energy efficiency targets of 1.5% per year, and building energy codes), efficiency could become our nation’s largest electricity resource by 2030, providing one-third of total expected electricity generation needs. These additional energy savings would avoid the need for electrical capacity equivalent to 487 power plants. Combined with the gains since 1990, savings from energy efficiency could amount to the output of 800 power plants by 2030.

State-level policy action is critical to this level of achievement. ACEEE has found that energy efficiency policies can play a major role in each state’s compliance plan for the Environmental Protection Agency’s (EPA) Clean Power Plan, which is aimed at reducing greenhouse gas (GHG) emissions in the electricity sector to limit climate change. Most states could meet at least 25% of their emissions reduction requirement through efficiency policies and the resulting investments, and many could achieve 100%.

Other sectors have huge energy efficiency potential

While this paper tells the story of the efficiency resource in the electricity sector and its emission reduction benefits, there is much more to the story of energy efficiency and climate change mitigation. According to the EPA, the transportation sector accounts for 26.5% of GHG emissions in the United States, followed by industrial (21.4%), buildings (12.4%), and agricultural (9.2%), Efficiency has an important role to play in all of these areas. For example, the transportation sector could potentially reach zero emissions by 2050, with more than half the reductions coming from energy efficiency, including both vehicle and transportation efficiency. The International Energy Agency estimates that energy efficiency will need to account for nearly half of all GHG emission reductions through 2040 to reach a scenario in which the global increase in temperature is limited to 2 degrees Celsius.

We will need major investments and critical support from government, industry, and the nonprofit community to reach these relative levels of energy savings in the US and realize all the benefits they can bring. Just as major policies and commitments in recent decades have helped energy efficiency become our third largest electricity resource today, now we need a new era of visionary policy to create opportunity for future generations.


New resource details past and future of ACEEE’s work on the water-energy nexus
August 18, 2016 - 1:36 pm

By David Ribeiro, Senior Analyst


ACEEE’s interest in the energy–water nexus comes from the fact that a large amount of energy is consumed in the water and wastewater industries, as well as in water end-uses, primarily water heating. Addressing water and energy efficiency together can lead to substantial cost-effective energy and water savings. Other benefits include mitigating and adapting to climate change, and increasing community resilience.

Increased coordination between the water and energy sectors breaks down traditional silos and paves the way for an integrative approach to saving energy and water. ACEEE has been at the forefront of these efforts along with several partners, including the Alliance for Water Efficiency (AWE), the Water Environment Federation, the National Association of Water Companies (NAWC), and a number of national laboratories.

Today we’re releasing a new resource, The Energy–Water Nexus: Exploring the Stream of Opportunities, summarizing our efforts over the past decade and describing opportunities for future ACEEE work.

Looking at past work on the nexus

ACEEE first forayed into the energy–water field in 2005 by convening thought leaders to chart a path forward for research. In 2011, ACEEE and AWE held a workshop with 41 organizations from the water and energy sectors. We released the workshop’s takeaways in Addressing the Energy–Water Nexus: A Blueprint for Action. The blueprint outlined eight ways to advance our understanding of the energy–water nexus and, consequently, change the way energy and water are managed.

Since then, we have pursued research on various aspects of the blueprint. To address its second element—to better understand how energy is embedded in water and water is embedded in energy—ACEEE began conducting research and collecting data to inform program design. Our first effort was the 2014 report, Watts in a Drop of Water: Savings at the Water–Energy Nexus. This study included energy-intensity ranges for water conveyance, distribution, and treatment, and for wastewater treatment and discharge. Our 2015 follow-up report, A Survey of Energy Use in Water Companies, analyzed surveys of NAWC member companies concerning energy use in water processing.

Another element of the blueprint we focused on is the increased collaboration between the energy and water communities. ACEEE’s 2013 report, Saving Water and Energy Together: Helping Utilities Build Better Programs, identified the opportunities and benefits of creating joint programs to save water and energy in the residential, commercial, industrial, agricultural, and municipal sectors.

What does the future hold?

We’ve kept busy, but there’s more to do. In addition to disseminating our research to new audiences, we'll consider updating past research, like our work on joint energy and water utility collaboration. We'll also consider new topics, including the connection between climate change and the energy–water nexus, and how efforts to increase efficiency in water end-uses and the water system can increase community resilience. Future research could document how these efforts can reduce community exposure to acute and chronic stressors, including high utility bills for low-income households.

Check out the resource for more details, and stay tuned for our future work. ACEEE will continue to collaborate with our partners to prioritize research areas and deliver insightful, high-quality analysis on ways to efficiently save both energy and water.


How increasing efficiency can stem climate change impacts on the energy-water nexus
August 05, 2016 - 10:00 am

By David Ribeiro, Senior Analyst


ACEEE’s first entry in our energy-water blog series outlined the ways climate change could fundamentally affect the energy-water nexus. In this post, we explore the roles of energy efficiency and water efficiency in moderating some of the adverse impacts of climate change that we covered in the prior post.

Several of ACEEE’s past reports document the inherent linkages between energy and water, and their implications for reducing waste (see here, here, and here). You’ve heard it before, but it’s important to restate: efforts to save water save energy, and efforts to save energy save water. Recognizing this linkage is especially important as climate change begins to alter the dynamics of the energy-water relationship. 

Ways to waste less energy in water services and in homes

Before addressing the climate change connection, we’ll touch on what increased efficiency looks like in the water and wastewater sectors, as well as in homes and businesses. There are lots of opportunities to reduce the amount of wasted energy that is related to water. Take drinking water plants for example. Generally speaking, 80% of energy use at drinking water plants is for running motors that pump water. Capital upgrades at water treatment plans, such as installing more energy-efficient pumps or those with variable speed drives, can be part of the solution to increase energy efficiency at these energy-intensive public facilities.

At wastewater treatment plants, even more energy savings are possible by using byproducts of the treatment process to efficiently generate energy for use onsite. Rather than flaring biogas from sludge digesters, some facilities use the gas to operate combined heat and power units to generate heat and electricity.

At the water customer site, energy can be saved through greater use of “greywater” in appropriate applications—we need full water treatment for drinking water, but less pure water can often be used for non-drinking applications (see case studies here). 

In addition, there are myriad opportunities for increasing efficiency when heating water for our homes and buildings. Check out presentations from our 2016 Hot Water Forum for examples. 

Climate change creates stress on water systems, but energy efficiency can help

As we discussed in our previous blog post, energy use for extraction and treatment of drinking water is expected to increase. For example, saltwater intrusion into some water supplies may mean turning to more energy-intensive water treatment processes. The opportunities to reduce energy in water processes should be seen as part of the solution. Improving energy efficiency can not only soften the blow of increasing energy requirements, but it can also soften the blow on municipal budgets (electricity use for water and wastewater utilities is already a significant operating expense for municipalities). Those treatment plants in flood plains will need significant capital investments to protect them from sea level rise and flooding, so it is a good time to incorporate efficiency as part of these capital investments.

On the electric power generation side of the equation, as cooling water becomes warmer during hot spells or becomes more scarce, the capacity of thermoelectric power generating plants may also decrease. While there are steps that can be taken, such as dry cooling, these come at a significant cost and efficiency penalty. Energy efficiency is not a silver bullet for the changing availability of cooling water; however, increased efficiency can offset some of the decreased capacity and make the energy supply go further, easing resource constraints when it is important to do so.

Using water efficiency to reduce climate stresses

There are many tools in the water conservation toolbox that can alleviate climate stresses, too. Reducing water lost in the distribution system through leak detection programs (see examples here and here) and using water-saving products—like WaterSense-labeled appliances—are two examples. (Both leak detection and water efficiency retrofits are part of the reason water demand from communities served by the Massachusetts Water Resources Authority has fallen by nearly a third since 1980.) These technologies and practices will be important for moderating water demand, when climate change may push demand upwards or alter supply. Tamping down on water waste throughout the system will cushion the impact of likely increased demand for water end-uses like agricultural irrigation and refrigeration equipment. Attention should also be paid to considering water availability when making crop choices—it makes little sense to grow water-intensive crops in the desert.

Green infrastructure (like rain gardens and bioswales) also share some of the climate change benefits discussed above. When a storm hits a community with a combined sewer system, green infrastructure reduces the flow of wastewater into treatment plants, potentially lessening energy demand. Some green infrastructure (like green roofs) can also reduce the urban heat island effect, lessening cooling loads. Green infrastructure’s benefits also are important to keep in mind as climate change necessitates new infrastructure investments.  

Accelerating efficiency efforts

The topics discussed here only scratch the surface of efficiency’s adaptation properties, while not touching on its mitigation properties (as others have here, here, and here). Accelerating efforts to save both water and energy will be key in making communities more resilient as the impacts of climate change continue to manifest themselves. We will write about more ways to specifically accelerate efforts, like increasing efficiency programs administered by water and energy utilities, in future posts.

What is the current state of efficiency at the water-energy nexus? The 2015 City Energy Efficiency Scorecard gives us a snapshot for the water utilities and wastewater utilities serving 51 large US cities through its metrics on water efficiency, energy efficiency in water and wastewater facilities, and energy-efficient stormwater management policies. What does it tell us? With only 9 cities receiving perfect scores, there’s room for improvement, and lots of untapped potential. 


Mobile homes move toward efficiency
August 03, 2016 - 10:00 am

By Lowell Ungar, Senior Policy Advisor


Do you know which government in the United States is the biggest laggard on energy codes for homes? The federal government. But that’s about to change.

Manufactured homes and the “HUD Code”

Although building codes are mostly set by states, the federal government sets codes for manufactured homes (sometimes called mobile homes) because the factory does not always know where a home will end up. Manufacturers shipped 70,519 homes in 2015, more than the number of single-family homes built in any state except Texas.

Texas and the other states that built the most houses (Florida, California, North Carolina, Georgia, and South Carolina) all have energy codes as good as or better than the 2009 International Energy Conservation Code (IECC), the model code for “stick-built” homes. Unfortunately, the energy provisions of the “HUD Code” (set by the Department of Housing and Urban Development) that governs manufactured housing have not been changed significantly since 1994. Since then the IECC was created and has been updated five times.

So even though manufactured homes are relatively small, the owners pay a lot in energy bills, a national average of $1,800 per year in 2009. Although this is a little less than the average bill for single-family homes, the average energy cost per square foot is more than twice as high. And most of the people who pay the bills are low-income residents. The median income of families in manufactured homes is about $30,000. Many of them spend more on their energy bills than on home loans.

The new standard is a big saver

In 2007, Congress got fed up and directed the Department of Energy to set energy standards for manufactured homes based on the most recent IECC. The 2011 deadline came and went without even a draft. In 2014 DOE convened stakeholders for a negotiated rulemaking, and in October 2014 we (I was on the committee) successfully came to agreement on the key terms. A year later DOE submitted the proposed standard for Office of Management and Budget Review, and in June, after more than eight years, DOE finally issued the draft. The draft is open for comment through August 16.

The standard will make a real difference for homeowners and rural electric grids. DOE estimates the typical manufactured home will save 27% of energy use compared to a home that meets the current HUD Code. Average lifetime savings for homeowners are estimated at almost $4,000 net present value. Cumulative national savings include 2.3 quadrillion Btu of energy (equivalent to the energy use in one year of all homes in New York and Florida), $3-11 billion customer benefits (depending on discount rate), and 160 million metric tons of carbon dioxide.

In developing the draft, we started from the 2015 IECC but made many changes. Here are a few. We reduced the number of climate regions from eight to four, divided mostly along state lines, to make implementation easier. We replaced the performance path with an overall building shell heat transfer (U-factor) requirement, the metric currently used in the HUD Code (and we left out the new Energy Rating Index, which the manufacturers did not plan to use). We replaced the air leakage standard with construction quality requirements because it is hard to test a two-section home until it is assembled in the field. We adjusted for the lack of room to add roof insulation and still be able to truck the homes. And we eased up on required efficiency levels in the Southeast because manufacturers were especially concerned about the impact of the first cost on their low-income buyers there. But the standard would still save 28% compared to the HUD Code in that region.

Moving forward

Perhaps most importantly, the committee’s scope did not include implementation or enforcement, and DOE still needs to work out how to ensure manufacturers meet the new code without undue burden or conflicts with HUD’s enforcement of health and safety requirements. There also are more energy savings we should achieve in manufactured homes through voluntary programs or future measures, in part because we did not touch on appliances or heating or cooling equipment.

But the proposed standard would greatly benefit homeowners who need the help. We hope DOE will complete the standard and set a better example for states adopting codes without further delay.


America’s Transportation Energy Burden for Low-Income Families
July 29, 2016 - 11:26 am

By Shruti Vaidyanathan, Senior Transportation Researcher


ACEEE recently released Lifting the High Energy Burden in America’s Largest Cities, a report highlighting the financial burden energy costs can place on households in cities across the United States. The analysis found that the overwhelming majority of low-income households and households of color experience higher-than-average energy burdens. On average, the percentage of household income that low-income households pay on their home energy bills is more than three times what their higher-income counterparts pay. Energy efficiency can help reduce this burden and improve energy affordability for households.

Transportation costs are higher for low-income households

The elevated burden on low-income households is compounded by transportation costs which are the second largest expense for households in the United States after housing-related expenditures. The average household in the US spends almost 20% of its total income on transportation expenses. For low-income households, this average burden can be as high as 30%, according to a survey conducted by the Center of Neighborhood Technology (CNT) of 28 metropolitan areas across the country. As cities have grown outwards and jobs have moved away from urban cores, many low-income and minority communities are inadequately served by affordable and efficient transportation options. With personal vehicles serving as the primary mode of transport, expenditures for vehicle, fuel, insurance, and maintenance for these households can be very large and very unpredictable.

CNT’s Housing +Transportation Affordability Index emphasizes the importance of incorporating transportation costs into cost burden analyses by providing an overview of affordability at the neighborhood level that packages housing and transportation costs together. Their research has found that, among the 337 metropolitan areas included in the H&T index (which captures 80% of the US population and 90% of US GDP), the number of communities considered affordable drops dramatically when the definition of affordability includes not just housing costs but transportation costs as well.

Likewise, when it comes to discussing household energy burden, heating and electric bills don’t tell the whole story. Transportation energy costs must be part of a discussion about the energy burden for low-income and minority households in the United States, especially since the amount a household spends on fuel is determined by factors such as location, access to public transit, and global oil prices—a factor that is out of household control.

Targeted policies and programs can help, but more research is needed

Protecting these households against an overwhelming transportation energy burden requires a targeted set of policies and programs to achieve a balance of housing and jobs, provide communities with transportation alternatives, and reduce commute distances. Encouraging the development of compact, transit-oriented home construction increases the likelihood that residents will have the option to use public transit and non-motorized modes of transport as their primary means of travel in order to save on car-related expenditures. Ensuring that home construction is mixed-income goes one step further in ensuring that the housing stock around transit hubs is financially accessible to low-income households, eventually removing occupants’ need to move farther from mass transit in order to find affordable living spaces, thus minimizing the expensive commute to job centers.

Additionally, implementing codes and laws to ensure that streets are connected and accessible to pedestrians, bicyclists, and public transit gives residents more travel options and more control over their transport expenses. Portland’s Pearl District is an example of these policies in practice. All homes within the district are within 500 meters of a transit stop and affordable housing is available for families and individuals earning less than 80% of the median income of the region.

When communities have convenient, affordable, and reliable alternatives to driving, household transportation expenditures can be controlled more effectively and protected against fluctuations in fuel prices. Additional research is needed to characterize the transportation energy burden for a variety of metropolitan areas, income groups, and household types to develop a coherent approach to addressing the total energy burden for communities in the United States. 


Bank of America’s Energy Efficiency Financing Program shows path to combining energy savings and community development
July 28, 2016 - 1:29 pm

By Jim Barrett, Chief Economist


If you spend any time with the energy efficiency crowd, you will often hear us call it the lowest cost energy resource out there. What you will never hear us say is that energy efficiency is free. Efficiency can do many great things: It saves money, cuts pollution, increases productivity, and creates jobs. What it can’t do is defy one of the fundamental laws that governs all investments—it takes money to make money.

We want to get money flowing into well-designed energy efficiency projects, especially those that can do the most good where it is the most needed, but that’s not as easy as it sounds. It can be particularly challenging to attract investment in low- and moderate-income communities. Buildings in low- and moderate-income (LMI) communities are often older and have outdated and aging materials and equipment that leave lots of room for efficiency improvement. So we look at these buildings, we see a lot of low-hanging fruit, and we think that there should be a way to invest in them. But we’re not sure if we can.

A few years ago, Bank of America decided to test the proposition. Bank of America works with Community Development Financial Institutions (CDFIs), nonprofit loan centers that focus on LMI neighborhoods, to help invest in the communities they serve. In 2011, they launched their Energy Efficiency Financing Program to provide up to $55 million of low-cost capital to CDFIs for energy efficiency and other clean energy loans. The Bank of America Charitable Foundation also provided $5 million in grants to help CDFIs offset the administrative costs of running their programs. Bank of America teamed up with Bright Power to track pre-retrofit and post-retrofit data so that the results of the program could be analyzed, and they asked us to take a look at the results of the program. Today, we’re releasing a report on our findings, that gives a detailed analysis of the results of their efforts.

The aim was to help CDFIs scale up successful existing programs and support promising new pilots, as well as to create jobs in the post-recession economy. Bank of America also sought to find out if the savings from energy efficiency investments were sufficient and stable enough for this to be a viable financial market.

In total, the CDFIs loaned out more than $70 million, which included additional funds from other sources. The loans were used for efficiency upgrades, solar panel installations, and conversions from heating oil to natural gas. In many cases these were done in conjunction with other repair or upgrade projects. The table below gives a summary of the loans that were made.

Looking at the data both on the loans and the buildings themselves, we found the results to be fairly strong. For individual buildings, we calculated a projected Savings to Investment Ratio (SIR) for the subset of buildings for which we got energy data. The SIR compares the present value of the lifetime savings that the energy measures should provide to their upfront costs (excluding the costs of any non-energy measures). The figure below ranks the buildings in terms of SIR from lowest to highest. Buildings with SIRs of over one have measures that will more than pay for themselves over their useful life. We also looked at a threshold of 0.33. Because high-efficiency equipment typically costs no more than 50% more than similar equipment of average efficiency, a project that generates enough savings to cover 33% of the its total cost is probably saving enough to cover the extra expense of the high-efficiency equipment. This means that for projects that involve replacing old equipment, a SIR of .33 should be enough to justify the extra expense of more efficient equipment.

As you can see, the buildings fared pretty well. Some did extraordinarily well, returning over 10 times the cost of the upgrades. Others did just OK, and a couple actually had negative SIRs, which means they consumed more energy after the upgrade than before. This is probably due to entirely unrelated reasons, like the addition of a family member to a household or a change of operating hours for a business.

The loans that financed the upgrades did well, too. At the time of reporting, 1.2% of the loans by original volume were 30 days past due and 0.7% were in default. These numbers likely understate the success of the program because even if a loan goes into default, some of it has already been paid back. In speaking with the CDFIs, they felt confident that most of these loans would eventually be brought back into good standing.

The program was successful on two levels. First, as the chart shows, the upgrades performed on the buildings in our sample saved quite a bit of energy, and in most cases, it was more than enough to cover their costs. In our discussions with the CDFI lenders, it was clear that relying on existing or new partnerships with experienced efficiency implementers was key. Energy is not usually at the top of people’s minds, whether they own an apartment building, a business, or their own home. The programs were most effective when CDFIs, who know the owners and often already have them as customers, partnered with energy experts who could design and implement effective upgrade projects.

Second, the loans have also been successful, and the portfolio is performing well. This is due in part to strong partnerships between CDFIs and Bank of America. Bank of America created a flexible loan program CDFIs could shape to the needs of their customers. With that capital and flexibility, CDFIs, in turn, leveraged their knowledge of the local community to invest in energy efficiency projects that will have long lasting impacts. 

Of course, our data is not exhaustive, and these results don’t guarantee that projects like these will always perform well. At the same time, for building owners, CDFIs, and large investors, we see good news here. Homeowners and building owners can clearly save money investing in efficiency, and CDFIs can include energy efficiency in their mission to serve economically challenged communities. For large banks, this is clear evidence that it is possible to design financially viable efficiency-lending programs that could help solve the problem of how to attract investment dollars to help generate energy savings. Finally, this is good news for energy consumers everywhere. As the efficiency market continues to mature and key financial institutions learn how to make it part of their business model, we will see more and more investment in efficiency for homes and businesses, bringing the savings, job creation, pollution reduction, and other benefits of energy efficiency to a steadily broadening audience.


Is PACE moving to prime time?
July 18, 2016 - 11:36 am

By Jim Barrett, Chief Economist


One of the distinctions we often make between energy and energy efficiency is that energy acts more like a cost, and energy efficiency acts more like an investment. Like most investments, energy efficiency works by using an up front expense to generate a stream of economic benefits. Every year, our Energy Efficiency Finance Forum conference looks at ways to manage these up-front costs and how to use that stream of benefits to turn energy efficiency into a viable investment market.

This upfront expense can often act as a significant barrier to energy efficiency. Buying a house used to have the same problem, but a long time ago, some smart people came up with the idea of a mortgage to help work around it.

How to finance energy efficiency improvements

More recently, some other smart people came up with a similar idea for energy efficiency. Property Assessed Clean Energy (PACE) financing is a relatively new strategy for funding efficiency and renewable investments that is really starting to take off. It works like this: let’s say you’ve identified a number of efficiency upgrades for your house, but you don’t have the cash on hand to pay for it. PACE financing will cover those upfront costs, but unlike a mortgage where a bank lends you the money that you use to buy the house and eventually pay back to the bank, a PACE financing company will pay for the upgrades directly and they tack the monthly payment onto your property tax bill by using something called a voluntary assessment.

The difference between PACE and a mortgage loan may not sound like a big deal, but it is. Mortgages work because in exchange for the loan, the bank puts a lien on your house. If you don’t pay, they can foreclose and sell the house to get their money back. Efficiency upgrades would be hard to foreclose on: Banks don’t want to rip out your insulation, and if they did, how much could they sell it for? Instead, PACE companies get their security from the assessment. If a house goes into foreclosure, the assessment stays attached to the house, and whoever buys it picks up payment where the previous owner left off. The same thing happens when you sell the house, which means that you won’t be afraid to undertake larger projects that need longer terms. If you sell the house, the new owner gets the benefits of the efficiency upgrades and pays for them through the assessment. By linking to the property tax, risk to the financer goes down, allowing lower interest rates and sometimes allowing credit to be extended to moderate income homeowners who might not normally qualify for an unsecured loan.

As in past years, PACE was a hot topic of conversation at our Energy Efficiency Finance Forum. Part of the reason is its rapid growth. Even though the concept is relatively new, over $2 billion has been invested in about 97,000 homes through residential PACE financing. PACENation estimates that residential PACE projects have created over 17,000 jobs just in implementing the upgrades. Our research on efficiency projects indicates that the energy savings they generate create as many net new jobs as the implementation does, so the total is really about double the PACENation estimate. PACE is increasingly being used in the commercial sector with about $250 million of loans issued according to PACENation.

Providing clarity for repayment

Anytime people get creative with finance, some questions come up, and PACE is no exception. In its early days, many PACE assessments were what is called first-position, which means that if a home went into foreclosure, any past due PACE payments would get paid before the mortgage did. This is standard for property taxes, but bankers and regulators were concerned that it would increase the risk of mortgages not getting fully paid off. They were also worried that a foreclosure would mean that all of outstanding PACE payments would immediately come due, including future ones that weren’t due yet. Last year, the White House and the Federal Housing Authority announced forthcoming guidance for PACE financiers to follow. Among other things, this guidance will clarify that PACE financing should go in second position—after the mortgage. This is important because it gives PACE financiers clarity on how to structure the assessments to make sure that the homes are still eligible for FHA mortgage insurance, which is critical to many borrowers.

The PACE industry was already moving to make second-position liens the industry standard and to make sure the assessments could stay in place in the event of a foreclosure. They were pleased with the announcement about forthcoming guidelines because they will give them a formal set of rules they could follow and know that they weren’t running afoul of banks and mortgage regulators. With these guidelines, the PACE market appears to be ready for another huge leap forward, particularly if key secondary mortgage players such as Fannie Mae and Freddie Mac decide to adopt these same guidelines. PACE is a powerful tool for communities, helping homeowners save money and reduce energy-related pollution. It’s just one example of what can happen when people think creatively about how to shape the emerging energy landscape, which is the kind of thing that happens regularly at our Finance Forum conference. I hope to see you at next year’s Energy Efficiency Finance Forum in Chicago.


The 2016 International Scorecard is almost here. Tune in next week to see the Olympics of energy efficiency
July 13, 2016 - 10:18 am

By Chetana Kallakuri, Research Analyst, Federal Policy


As world-class athletes descend on Rio for the 2016 Olympic Games, twenty-three countries are vying in a very different arena to become leaders in energy efficiency.

On July 20, ACEEE will release the 2016 International Energy Efficiency Scorecard, showcasing winning energy efficiency policies and programs from around the globe. This year’s report examines 23 of the world’s top energy-consuming countries’ efficiency policies and performance. Together these countries represent 75% of all the energy consumed on the planet and over 80% of the world’s gross domestic product in 2013.

Changes since the last edition

New countries: The 2016 report features eight new contestants: Indonesia, the Netherlands, Poland, Saudi Arabia, South Africa, Taiwan, Thailand, and Turkey. They will join the 2014 competitors which include Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Mexico, Russia, South Korea, Spain, the United Kingdom, and the United States.

New metrics: We use 35 metrics, including 4 new ones to evaluate each country’s national commitment to energy efficiency as well as its efficiency policies and performance in the buildings, industry, and transportation sectors. New metrics include data availability, presence of energy management systems in industry, efficiency standards for motors, and Combined Heat and Power (CHP) policy.

Policy versus performance weighting: This year’s scorecard leans more heavily towards energy efficiency policy, allocating 60% of the points to policy metrics and 40% to performance metrics, as opposed to the 50/50 breakdown used in the previous scorecard. Our new weighting allows for a fairer comparison between the countries since performance metrics can be affected by factors other than energy efficiency that cannot be controlled such as climate, geography, and economic structure.

Who wins this year, and who loses? Tune in here next week for the 2016 report to see how the top energy-consuming countries fare in our energy efficiency rankings. A few surprises may be in order!


Energy-water nexus issues heighten in the face of climate change
July 08, 2016 - 5:11 pm

By Steven Nadel , Executive Director


ACEEE and many others have noted the importance of the nexus between energy and water issues. Energy is used to move, treat, and heat water. Water is vital for producing energy, such as for cooling electric generating plants. Insufficient water availability can increase energy use for pumping and decrease energy production. Flooding can damage both energy and water systems. And there are many opportunities to promote both energy and water efficiency at the same time. Next month we will release a fact sheet on our work on the energy-water nexus and how both energy and water efficiency play critical roles. But first, I want to explore how the relationship between energy and water may evolve in future years, particularly in response to climate change.

Impacts on water supply and demand from Climate change

Parts of the US—primarily in the triangle from Montana to southern California to western Texas—are already experiencing water stress, meaning that water is being withdrawn from water sources at a rate that might not be sustainable (see map on page 272 here).

According to the US Global Change Research Program, as the climate changes, some regions, such as south of the Great Lakes, will get more precipitation and other regions, like the southwest, will get less. A stylized map of expected precipitation changes from their 2008 report is below.

Water flow change in 2040-2060 relative to 1901-1970. Source: US Climate Change Science Program, p. 138. (following this report the program was renamed the US Global Change Research Program).

But precipitation is only part of the picture. Population and other trends will also affect water withdrawals. In the 2014 National Climate Assessment report, the US Global Change Research Program compared expected withdrawals with and without climate change. As shown below, they found that without climate change, withdrawals would increase in roughly half of the US, with particularly large increases in Arizona, Florida, Maine, and east of the Cascade Mountains. With climate change, they estimate substantial increases in withdrawals in most regions except for around the Great Lakes.

Projected changes in water withdrawals from 2005 to 2060 assuming (a) change in population and socioeconomic conditions based on preferred emissions scenario, but with no change in climate, and (b) combined changes in population, socioeconomic conditions, and climate according to the same emissions scenario (gradual reductions from current emission trends beginning around mid-century). Source: US Global Change Research Program, Water Resources chapter, p. 85.

Four potential impacts on the energy-water nexus

What does all this mean for the energy-water nexus? This question can be divided into several issues, largely drawing from the US Global Change Research Program 2014 report referenced above.

First, energy use for water extraction and treatment is likely to increase. For example, with water scarcer in some regions, energy use for water pumping is likely to increase, particularly for groundwater in areas with declining water tables such as California’s Central Valley and the Ogallala Aquifer in the Great Plains. Additional energy will also likely be needed to improve drinking water quality in areas like Florida where water supplies could become saltier. And in areas with large water deficits, there may be a need for energy-intensive water reuse and even desalinization plants. We have not seen any good estimates of how much energy use may increase as a result of these multiple factors.

Second, demand for water might increase for some end-uses such as irrigation and water-cooled air-conditioning and refrigeration equipment. Warmer and dryer weather would increase use of irrigation and cooling, but how much of this increased need is served with more water, versus avoided with improved water management practices is an open question. For example, a 2015 review by USDA of multiple studies found a median estimate of modest increases in irrigated acreage through 2060 (increasing water use in the medium-term), but then significant declines in the 2060-2080 period (decreasing water use in the long-term due to shifts in cropping patterns). In addition, water demand for energy production (power plant cooling and fracking) could increase, but in regions with tight water supplies this increased demand could perhaps be offset by major efforts to improve the efficiency of water use, or to avoid power production or fracking entirely.

Third, changes in water availability in some regions could affect energy production. For example, an assessment by DOE of the effect of climate change on power produced by federal hydro facilities found increases in some regions, decreases in other regions, and often a shift towards more production in winter and less in summer, requiring changes in seasonal power management practices.

For fossil fuel and nuclear power plants, lack of cooling water or cooling water that is too warm could prevent operation of a few power plants during dry and hot periods, problems that have at times already affected power production in the southeast and other regions (see here and here). A study by European and American researchers estimated that thermoelectric power generating capacity in the US will decrease by between 4–16% between 2031 to 2060, and 6–19% in Europe due to lack of cooling water. Limited water availability could also affect oil and gas production in some regions.

Fourth, excessive water, due to floods and/or higher tides, will affect some coastal energy and water facilities. The problem may affect many wastewater treatment facilities located on flood plains that serve areas like Seattle, New York City, and parts of Massachusetts. Flooding could also affect the electric distribution system, as happened in New York State and New Jersey during Superstorm Sandy, causing power outages and expensive system repairs.  Similar problems could happen elsewhere.

In summary, major changes are likely for many of the issues involved in the energy-water nexus. In future blog posts we will explore these issues further to address:

  • Ways accelerated energy and water efficiency efforts can help address the issues discussed above
  • Past and future ACEEE water-energy nexus work
  • The need to improve energy efficiency for water reuse and desalinization
  • The need for increased planning and management to make communities more resilient as conditions change

Want to increase your community’s resilience? ACEEE can help
July 06, 2016 - 12:37 pm

By David Ribeiro, Senior Analyst


How is energy efficiency connected to community resilience? We answered that question in a report last year, Enhancing Community Resilience through Energy Efficiency. The report found that energy efficiency should be a core resilience strategy because it strengthens energy systems and the communities they serve by providing more reliable and affordable energy. Energy efficiency reduces a community’s vulnerability to an array of hazards and increases their capacity to cope when disruptions occur (check out this infographic for more details). Our resilience research is ongoing; we will present our next paper on this topic at the 2016 ACEEE Summer Study on Energy Efficiency in Buildings.

How ACEEE can help

Many communities are actively developing resilience plans or pursuing resilience activities (see  here, here, and here). Local governments, planning organizations, and other stakeholders in these communities might find hands-on assistance helpful. Today we are announcing a technical assistance opportunity to help them. We will be able to offer assistance to a small number of communities interested in using energy efficiency to increase their community resilience. For those selected, we can answer questions like: how should my community incorporate energy efficiency into its planning activities, or what types of energy efficiency should my community consider? Here are some of the ways we can assist:  

  • Participate in local convenings to discuss energy efficiency’s role in increasing community resilience
  • Review draft resilience plans and suggest how energy efficiency can be incorporated
  • Assist in prioritizing policies or programs and identifying relevant best practices

We will also work with partners in this effort. The Clean Energy Group’s Resilient Power Project works to catalyze the use of resilient power in low-income communities and vulnerable populations. They are a leading expert on the impact of solar and energy storage in increasing resilience. The Public Technology Institute provides support to local and county governments on a number of topics, including local energy assurance planning. Both organizations have unique expertise with synergies to our energy efficiency expertise. These partnerships not only streamline technical assistance offerings related to resilience and energy, but by teaming efficiency, solar, storage, and assurance planning expertise, they can amplify the impact of this opportunity. Energy efficiency is part of the solution, but a multi-faceted strategy can have a greater impact on resilience efforts.

How to contact us

If you are involved in resilience activities in your local government and are interested in having ACEEE help out, please send me a note at dribeiro@aceee.org by July 29. In your note, tell me about your community’s current commitment to resilience and other resilience activities under consideration. We will consider cities on a case-by-case basis, and prioritize those actively involved in resilience planning.