Archive for Energy efficiency

Beyond the Clothesline – Five more tips for efficient clothes drying.

It seems like “using a clothesline” makes every top-10 list of energy saving measures you can make at home.  But clotheslines are lousy at getting out wrinkles, and in humid climates often give clothes a chance to mildew.

If and when you use a dryer, there are a few things you can do to use as little energy as possible.  I found these in the study “Are We Missing Energy Savings in Clothes Dryers?” by Paul Bendt of Ecos, which was part of ACEEE’s 2010 Summer Study on Energy Efficiency in Buildings.

  1. A natural gas dryer is cheaper to operate and has lower environmental impacts than an electric dryer.   (Note: this assumes an average electricity mix – if most of your electricity is renewable, you’ll likely have lower impact with an electric dryer- but it still won’t be cheaper.)
  2. High washer spin speeds are more efficient than evaporating the water in the dryer.
  3. Drying full loads is more efficient than a larger number of partial loads.
  4. A “low heat” setting is more efficient than higher heat settings (I had a hunch that this was true, and found the study with a little Googling to find out if my hunch was correct.)
  5. A “less dry” setting is more efficient than “normal” or “more dry

One frequent tip that doesn’t work:

  • Cleaning the lint trap has little effect on energy use, although it does speed drying time.

Now you know what I’m doing with my Easter Sunday afternoon… maybe I’ll celebrate Earth Day by enjoying the just-arrived spring with a clothesline.

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Adding a Programmable Thermostat to Mitsubishi Mr. Slim Heat Pumps

As part of an ongoing energy upgrade of my 1930 home, I had four Mitsubishi Mr. Slim mini-split heat pumps installed (three MUZ/MSZFE09NA 9000 BTU units, and one MUZ/MSZ12NA 12,000 BTU unit.)

If price had been no object, I probably would have gone for Waterfurnace’s (TSX:WFI/OTC:WFIFF) Series 7 or Climatemaster’s Trilogy ground source heat pumps,  but my home’s existing heating is an oil boiler and radiators, and the Series 7 would require installing air ducts throughout the house.  The mini splits have the advantage that the refrigerant lines can run up the outside of the house, making them much easier to retrofit.

The geothermal systems I was quoted would have cost $50,000 to $60,000 (minus a $500 rebate from my utility), while the mini-splits cost $15,500 (minus a $2000 rebate.)

Because I’m also doing extensive insulation and air sealing, my heating bill is only about $2000 a year, even using oil at over $4 a gallon.  After using the air source heat pumps for two months, I expect these mini splits will approximately halve that.  The geothermal system would have done better, but even if it cut my heating bill by an impossible 100%, it would have taken 25 years to pay back my investment.  The mini-splits will have an estimated payback of about 13 years, which is not great, but both they and the geothermal system have the added advantage of giving me efficient air conditioning in a home that did not previously have it.  In New York’s Hudson Valley where I live, A/C is only useful for about 1 month a year, but it’s sure nice to have during that hot and sticky month!

In any case, I’m happy with the mini splits except for one thing: they have very limited programability, something I did not realize before I had them installed.  The best you can do with the included remote controller is set them to turn on and off once each during a given 24 hour period, and you have to manually set this up every day to use them that way.

There is an available programmable thermostat (Mitsubishi kit MHK1), but it is intended to be installed with the heat pumps, not after the fact.  My HVAC contractor offered to install them anyway, but he wanted $350 each, or a total of $1,400 for all four.  That’s not unreasonable, since the MHK1 retails for  $243, but it was more than I was ready to pay.

Since he told me he would have to figure out how to do the install from the documentation, and I had seen him struggling with the translated-from-Japanese when he was trying to figure out what was wrong with one of the units when it was first installed.  (It turns out two of the wires were reversed.)   I’m decent at that sort of thing, so I decided to give it a go myself.

There was one point where the documentation was completely unhelpful.  I figured it out eventually, but the rest of this post should save you a lot of trouble if you’re trying to do the same thing.

Installing Mitsubishi Programmable Thermostat Kit MHK1 on Mr. Slim Heat Pumps

  • Tools needed: Phillips screwdriver
  • Time required: 15 min (experienced) to 1 hour (first time).

Manual

Not only does the manual say to install the data cable before the heat pump is installed, there is no information about where the “CN105″ connector on the control board is to be found, or even where the control board is.  None of the documentation I found online was any more helpful.  Eventually, I figured out where the control board and CN105 connector were, and how to get to them.  Here’s how:

Turn off the power to your heat pump at the circuit breaker.

Remove the horizontal vanes

Remove the horizontal vanes

remove screw covers

remove screw covers

Covers removed... screw locations circled

Covers removed… screw locations circled

After 2 screws holding the unit cover are in place, the cover can be removed by pressing in around the edges, and popping it off.

When the cover is removed, the bar containing the i-see and indicator lights may swing down.

When the cover is removed, the bar containing the i-See and indicator lights may swing down.

Don't panic, just hang it back on the two plastic hooks like the one shown here

Don’t panic, just hang it back on the two plastic hooks like the one shown here

Now remove the Emergency operation switch by pressing on the tab shown here

Now remove the Emergency Operation switch by pressing on the tab shown here

You can now remove the screw that holds the control board cover

You can now remove the screw that holds the control board cover and remove the cover to access the board.

These wires, too.

You’ll need to disconnect this wire to slide out the control board.

SONY DSC

This wire, too.

Now you can gently slide out the control board and connect to the CN105 port, shown here.

Now you can gently slide out the control board and connect the control wire to the CN105 port, shown here, circled.  It’s located in the bottom back corner of the control board.

You’ll want to snake the control wire through the unit so that it’s hidden when everything is installed.   Make sure you’ve left plenty of slack on the control wire, so it does not pull off when you put the control board back.

Now you can reverse the above process to put everything back where you found it.

You can now connect the wireless receiver, and proceed as described in the installation guide.

You can now connect the wireless receiver, and proceed as described in the installation guide.

The rest of the manual was no harder to follow than these things usually are.

It took me a few hours to figure this out… hope I can save a few readers the aggravation.

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How to Get a Free Energy Assessment on a Home Before You Move In

Image TK note: I get a lot of submissions for guest articles at AltenergyStocks.com, most of which are off-topic (like this one.)  But this one from Whitefence Savings was a subject I’m interested in- understanding the energy use of a home before you buy, so I thought I’d post it here.

I paid for an energy audit of my home before I moved in, but was not able to get a free one… my utility required having an established account, and the current home owners had moved out a year before and were in bankruptcy.  The audits are inexpensive anyway… the most useful part for me was the infrared audit, although you should note that such audits work best when the house is being heated in winter or air conditioned in summer.

Walking through a house a few times while you’re thinking about making an offer on it will give you an idea of how much you like the house, but not an accurate estimate regarding its energy usage. You might notice the occasional drafty door or a window that needs sealing, but there’s no way to tell just how well-insulated or efficient a home is during a walkthrough. Have no fear! There is a way to eliminate unpleasant surprises regarding efficiency before it’s too late: get a free energy assessment on the home before you take the plunge into buying it.

Contact the Local Utility Company

The local utility company probably gives free assessments to its customers, or at least an average usage for the last calendar year or so. Though you are not their customer yet, the people currently living in the house are and will have access to that information. You would need to set up a time with the current owners for the assessment anyway, so you may as well see if they would be willing to speak with the utility company to have a free assessment done. From there they can share the results or allow you to be part of the process.

Schedule an Assessment with Energy Service Corps

Energy Service Corps is a group that has an overall goal of saving energy, saving the environment and saving you money. This is a great free option because they not only come out and assess the energy efficiency of your home, but they’ll also seal cracks around windows and doors to block drafts, change out your older bulbs for energy-saving models and make other small adjustments that will lower the cost of your utilities right away. As part of the assessment, they will give suggestions on other changes you should make to see greater improvements in energy efficiency. However, you should be aware they are limited in where they can go to provide their services.

Do It Yourself

You can do some informal assessments yourself. Ask the current homeowner about their energy usage, or call their utility company for an average use from the previous year. Keep in mind, this method will not tell you what areas of the house need updating or changing in order to create a more energy-efficient environment. Some ways you can assess the energy levels yourself is to feel along the walls for cool patches to determine where more insulation is needed. Along those same lines, feel along the windows and door frames and note where leaks are. Another thing you can do is peek into the attic to see about the state of the insulation. If it’s on the skimpy side, put that on a list of things that would need updating. If the basement is unfinished, check to see if the ceiling has any insulation which will impede the coolness of the basement from seeping up through the floors of your main level rooms. After your self-assessment is finished, you can determine if you need to hire a professional to determine if there are larger issues or be satisfied with your findings.

[ED note: Also see my own checklist for a DIY Energy Audit]

Know Why an Energy Assessment is a Good Idea

Before you move into a home, you’ll want to get an energy assessment so you can either know what improvements you’d like the owners to make as part of your offer on the house, or so you know what changes you’ll want to make once you do move in. Some things that are more serious, such as needing to replace windows and siding, may be more convenient if they’re completed before you start moving. Other, less pressing items such as caulking your windows or adding insulation to your attic, can probably wait until after you’ve purchased the house and moved in. Updating your home in small ways can lower your electric bills year round and impact the environment by lowering it’s carbon footprint.

Learn What Assessors Will Look For

Some assessors do tests to see how air-tight your home is. They mark where air leaks through, and can tell you the best way to eliminate those leaks. Others may do what is called a thermographic inspection that will measure the temperature levels along the walls of your home. This can be done indoors or outdoors depending, depending upon the season.

The most important thing to keep in mind is that, in order to increase the efficiency of the home and lower your energy bills, you must make the changes suggested by the assessor. Most changes that can be made to lower bills are relatively affordable and easy to do on your own. Don’t consider a house to be a lost cause just because it is not currently living up to it’s full potential in terms of efficiency, as you may be able to make small adjustments that have a big impact overall.

Resources:
http://www.energystar.gov/index.cfm?c=home_improvement.hm_improvement_au…
http://environment.about.com/od/greenlivinginyourhome/a/energy_audit.htm

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How a Storm Can Help Your Home’s Energy Efficiency

I was fortunate last night here in New York’s Hudson River Valley, unlike many neighbors who lost power, and the people in NYC and New Jersey who had to deal with an unprecedented storm surge of 13.88 feet and winds (video) which NYC utility Con Edison says caused the largest power outage in the company’s history.

While the high winds around me last night were causing power outages and worse damage, I was going around with a screwdriver and outlet cover gaskets to stop the air leaks which I could easily feel with my bare hands.

It was also a good way to keep my mind off the storm.

Sealing electrical outlets and switchplates  is one of the cheapest and most effective measures you can take to improve your home’s energy efficiency, as cost-effective as CFLs, with the added bonus that it makes your house less drafty.

Sure, it’s better to simply have the whole house spray foamed, as I recently did in my basement (see pic) , but that is a big job, and usually requires existing insulation to be removed.

These walls have been foamed, and the workers are in the process of shaving off the excess that extends beyond the studs.

My house, which was built in 1930, has an old urea-formaldehyde based foam insulation in the walls which was probably installed in the 60s or 70s.  The product was banned in 1982.

Over time, that foam shrunk and now does little to prevent air movement in the walls, and I can only replace it by tearing the walls open.

Formaldehyde based foam revealed during bathroom renovation

Hence, I’m taking smaller steps with air sealing.

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The One Alternative Energy Sure Thing?

It looks like Tom Gardiner at Motley Fool is pushing one of my current favorite stocks, Ameresco (AMRC). The Stock Gumshoe deciphered the clues here, giving my Forbes blog about Ameresco a link.

A appreciate the Gumshoe for his dry sense of humor and ability to deflate the hype newsletter promoters are always trying to drum up. Not that I mind when those propmoters are pushing a stock I already own a substantial chunk of!

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Outdoor Advertising and LEDs: Jevons’ Paradox or Not?

I’ve blogged before about when Jevons’ Paradox applies, and when it does not. When energy consumers are price sensitive, they may respond to increasing efficiency by using more energy services. When they are not price-sensitive, they don’t.

But here is a new twist: increasing efficiency may come bundled with additional features. Those features may lead consumers to use more energy, even if the increasing efficiency alone would not.

In the case of outdoor billboards, the advent of inexpensive LED lighting may not be so much due to increased efficiency over traditional lighting technology, but the result of additional utility. LED bilboards can show animation, and also can show time-sensitive advertisements. These extra features are leading to an increased use of electricity in billboards, even as the technology is becoming more energy efficient… at least in terms of lumens per watt?

Perhaps I’m splitting hairs here, but I think the increased use of energy in outdoor signage using LEDs is due more to the additional services and interactivity that LEDs provide compared to traditional halide lighting (see this article in the Economist). Put simply, when something becomes more useful, people use more of it, not, as Jevon’s paradox would imply, that people use more outdoor signage lighting as it becomes cheaper.

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JouleBug

Competition may just be the key to getting normal people to adopt energy efficiency. Keeping up with the Joneses is a lot more important to most people than saving money (otherwise, we’d never buy an expensive car to impress the neighbors.)

That’s why I’m excited to hear about JouleBug, a social App/game for the iPhone (and soon Android) that turns saving energy into a reality-based friendly competition.

Players compete to earn badges from various energy-saving activities

JouleBug launched today at the South by Southwest Trade show. Press release follows. Read the rest of this entry »

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Net Benefits of CAFE stadards

I just frittered away an hour poking holes in a 2002 paper from the American Enterprise Institute and the Brooking Institution that purports to show a net cost to society from higher CAFE standards. Even using the paper’s questionable results, my calculation show an a posteriori net benefit had CAFE standards been raised at the time the paper was written.

Here are links to the original article on Knowledge Problem that spurred me to defend CAFE standards, a link to the AEI/Brookings paper, and my comments on the weaknesses in the paper’s analysis.

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When it Makes Sense to Worry About Jevons Paradox, and When it Doesn’t

Why High MPG Cars May be a Problem, But Efficient Lighting Isn’t

Tom Konrad, Ph.D.

Jevons Paradox: is the proposition that technological progress that increases the efficiency with which a resource is used tends to increase (rather than decrease) the rate of consumption of that resource.

-Wikipedia

Recently The Economist reported on research that concluded “making lighting more efficient could increase energy use, not decrease it.” Micheal Giberson at Knowledge Problem thought this was worth commenting on as an example of Jevons Paradox. I’m here to tell you that before we get worried about more efficient lighting, we should keep in mind when Jevons Paradox applies and when it does not.

Jevons’ Paradox is a consequence of the downward slope of the demand curve: when the price of something falls, we tend to demand more of it. The slope of the demand curve is also known as the elasticity of demand. A gently sloped demand curve (where consumption increases rapidly with decreasing price) is said to be "elastic," while a steeply sloping demand curve (where consumption increases only slowly with decreasing price) is said to be inelastic.

I recently wrote about some research showing that the elasticity of the demand for driving has increased in recent years. That means that the effect of Jevons Paradox is becoming more significant when it comes to driving: increases in automobile efficiency that decrease the cost of driving will have the effect of increasing driving more than they would have in the past, meaning that we should not count on increases in CAFE standards (which increase the efficiency of automobiles) to do much to reduce gasoline usage. Instead, we should focus on structural changes that reduce driving by increasing its marginal cost or decrease the marginal cost of alternative modes, such as mass transit.

Micheal Giberson’s note prompted me to look at the paper on which the Economist article was based. I found that the researchers assumed that the demand elasticity for light had not changed over the last 160 years, and would not change in the future. I find this assumption highly questionable, given that the structure of the lighting market has changed greatly as technology changed from candlelight to gas light to electric light.

When candles were the primary light source, acquiring light required a lot more effort than just flipping on a light switch, and it was possible to see the light you purchased being used up as a candle burned down. Today, we would have to go outside our house (at night) and watch the meter spin to see visual evidence of the cost of light, and even then it would be difficult if not impossible to isolate the effect of the cost of light from the cost of watching TV or running our refrigerator.

Because it’s much harder today for a consumer to determine the true cost of the light he is using, I expect that consumers will be much less sensitive to changes in the price of light than they were in the past. In other words, contrary to the assumptions in the paper, demand for light has most likely become much more inelastic in recent years, and so we should not expect that increases in lighting efficiency (and the associated decreases in lighting cost) will have much effect on total light consumption.

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Renewable Energy World Podcast: The Renewables Gap

As a long-time listener to the Stephen Lacey’s weekly podcast, I was happy to join in as he takes an in-depth look at the Renewables Gap: the question of where the energy is going to come from to power the necessary transition to a clean energy economy, an issue I looked at in Managing the Peak Fossil Fuel Transition.

I’m in great company on this podcast, so if you don’t tune in for me, you might want to know what Bill McKibben has to say about it.

You can download or listen to the podcast here.

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The ERoEI of Energy Efficiency

In previous articles, I’ve often claimed that the Energy Return on Energy Invested (ERoEI) for energy efficiency measures is much higher than the ERoEI for Renewable or fossil energy generation. This was based on the logic that a high ERoEI is needed to sustain the high financial returns from energy efficiency. Unfortunately, there are few studies of the energy return on energy efficiency, so most of my evidence was anecdotal.

No longer. I was just reading the 2009 Annual report for Green Building company PFB Corporation (PFBOF.PK.) PFB manufactures SIPS (Structural Insulated Panels) and ICFs (Insulated Concrete Forms) and in their sustainability report, they found that the energy saved by their insulation over 50 years would be approximately 130 times the energy used in its manufacture (see chart.)

Since ERoEI is a flawed measure, I also calculated the Energy Internal Rate of Return (EIRR), using both 25 year and 50 year lifespans… they worked out to be 262% and 264%, respectively. For comparison, the highest EIRR I’ve found for a energy generation technology is 205% for wood cofiring. The EIRR for a wind turbine is around 84%, and a combined cycle natural gas plant has an EIRR about 164%.

In otherwords, insulation is a slam-dunk when it comes to energy economics. That’s no surprise, but it’s nice to have some numbers, so we have a better idea of just how good a slam dunk it is.

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Other Objections to PACE Programs

Micheal Giberson over at Knowledge Problem bounced off my article on why PACE financing would be unlikely to damage the mortgage market to mention several of his own worries about how such programs are implemented.

He and I are in agreement that there’s little wrong with PACE programs in principle, but they raise some thorny issues in practice. Here are a few of his worries. Micheal says:

If PACE is just a way for homeowners to scrape up subsidies – i.e. to improve their properties and make their neighbors’ pay for it – then I’m against it.

I agree, but with a caveat: one justification for subsidies for energy efficiency is that energy efficiency has positive externalities, and creates societal benefits. To the extent that energy efficiency subsidies are societal payments for societal benefits, there is no problem with using PACE to scoop up as many as possible. In fact, it should be encouraged.

Here are some of the societal benefits of energy efficiency:

1. Lower energy consumption reduced the need to build and upgrade energy infrastructure, a cost which is borne by all.
2. Lower greenhouse gas emissions.
3. Predictable energy bills reduce bankruptcies and foreclosures, lessening the need for social services and raising property prices.
4. Less money spent on energy assistance programs.
5. Local jobs from the economic multiplier when money is not spent on fossil fuels imported from outside the region.
6. Reduction in local air pollution from local power plants.
7. Lower water use in electricity generation.
8. Lower energy prices because of reduced energy demand.
9. More total jobs because energy efficiency improvements tend to be more labor-intensive than capital-intensive energy production.

Micheal goes on to say:

If my local government was proposing such a program, I’d worry that mismanagement would lead to future obligations for non-participating taxpayers. What is the mechanism that ensures civil servants will be effective loan officers? Will they get bonuses for doing good work or just be paid the same salary and promoted on schedule whether or not the loans they approved achieve intended results?

I agree with Micheal on this one, but this all depends on the particular implementation, although I just finished reading Micheal Lewis’s excellent book The Big Short: Inside the Doomsday Machine
on the Wall Street’s role in the subprime mortgage meltdown, and so I’m compelled to point out that civil servants would be hard pressed to do a worse job extending loans to unqualified buyers than any of dozens of mortgage lenders from 2005 to 2008.

And finally:

Maybe the more interesting question is how and why the retail energy and home mortgage marketplaces became so bollixed up that a municipal-government-sponsored home-improvement-lending tax authority work-around is seen as a promising way to help consumers make sensible energy-related improvements to their homes.

Now that’s a great question. If you want to know why the mortgage market is so messed up, I highly recommend The Big Short, a book that makes highly technical subjects easy to understand. I can say that because I had to learn exactly how CDS’s on CDO’s work in order to pass my Chartered Financial Analyst exams, and I wish this book had been around back then… it would have made the task much simpler.

As for why the energy market is bollixed up, I think it has to do with lack of just about everything that improves market efficiency. The consumer energy market has limited price transparency, a lack of price information and real-time pricing, a single monopoly supplier, a lack of knowledge on the part of the consumer, regulated prices, a cost-plus pricing model for most suppliers, and subsidies for the purchase of energy for many classes of customers. With all this going against it, it’s no surprise at all that the market is so dysfunctional that civil servants as loan officers starts to sound like a good idea.

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Will PACE Financing Damage the Mortgage Market?

The Federal Housing Finance Agency (FHFA), which oversees the government agencies Fannie Mae and Freddie Mac, is now joining them in saying that Property Assessed Clean Energy (PACE) financing “could damage the mortgage market.”

PACE financing is an important program that addresses multiple barriers to energy efficiency. First, it addresses upfront cost: although energy efficiency measures usually pay for themselves, most require an up-front investment which many people have trouble making. PACE financing also helps address split incentives. Because efficiency improvements can take several years to pay back, and most Americans move every few years, the benefits of efficiency don’t always accrue to the people who invest in them. With PACE, the loan used to make the improvement is assessed on the property, so the person who is saving money in energy costs is always the same person who is paying for the energy improvements.

Jonathan Hiskes at Grist makes the counter-argument that PACE financing is not really something new, as the FHFA and the mortgage giants claim, and I agree with him, but there are several stronger arguments against the mortgage regulator’s position that I have not yet seen made.

The FHFA is worried that the “lending is not based on the homeowner’s ability to pay, it bypasses consumer protections such as the Truth-in-Lending Act, and it may not lead to meaningful reductions in energy consumption.” I’ll address each of these points in turn:

Ability to pay. The lending does not need to be based on the borrower’s ability to pay, because the energy improvements improve that ability to pay. For example, Boulder Colorado’s now canceled PACE program required that the homeowner first get an energy audit, which is then used to estimate the cost savings of possible energy improvements. If the homeowner is able to pay for his or her current mortgage (which, supposedly, is based on his ability to pay), then after the energy improvements and the PACE loan, he or she should have better cash flow, and be better able to pay. In other words, PACE should improve the owner’s ability to pay, and actually strengthen the mortgage market.

Consumer protections Unlike complex mortgages, the most important thing about a PACE loan is that the monthly payment be less than the monthly savings, so they are inherently easier for consumers to understand. But if consumer protections are necessary, there’s no reason they could not be added to PACE lending programs without canceling the whole program, as the FHFA seems to want.

May not lead to meaningful reductions in energy consumption. Quite simply put, this is an attempt to throw the baby out with the bathwater. A good PACE program requires an energy audit and professional installation in order to ensure energy savings. It’s important to design PACE programs carefully, but that’s true for any lending program, or any program whatsoever.

Rather than putting a stop to all PACE lending, as has happened, good programs (such as Boulder’s) that do provide some assurance that energy savings will be achieved should continue, since they strengthen borrower’s ability to pay rather than weakening it.

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Fannie and Freddie Trip Up PACE Financing Program

Bad news for both her economic stimulus and energy efficiency. The New York Times reports that PACE (Property Assessed Clean Energy) financing for energy efficiency improvements, for which $150M in stimulus money was set aside is running into a roadblock from another arm of the government: the mortgage agencies Fannie and Freddie.

See the full article here: http://www.nytimes.com/2010/07/01/business/energy-environment/01solar.html?_r=1&pagewanted=1&hp

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Greenwashing at KB Home

Poor attic insulation melts snow
I took this picture on February 7, 2010, in Denver’s Stapleton New Urbanist development in Denver.  Most of the houses in Stapleton are EnergyStar qualified, but this picture tells a story about some that aren’t.  The blue house in the background was built in 2009 by Wonderland Homes.  The tan house in the foreground is a KB Home built in 2008. 

Note how the still-falling snow is melting on the north-facing roof of the tan KB Home, but not on the similarly oriented roof of the blue Wonderland home.  Also note that clear lines of unmelted snow where the roof trusses add an extra layer of insulation between the attic and the roof.  This is a clear sign that the KB Home (NYSE:KBH) lacks sufficient attic insulation, and enough heat is escaping from inside the house to the attic to melt the snow on the roof as quickly as it is falling.  Nor was it just this one house… all the houses I saw that were built by KB showed signs of snow melting on the roof, while all the houses I saw built by other builders (New Town Builders, Wonderland, and McStain) showed no signs of melting.  Many were built in 2007, before either of the homes in the photo.

I was shocked.  The Stapleton website proudly proclaims “Since 2006, every Stapleton builder had been an EnergyStar partner.” I’d taken this to mean that every home built in Stapleton since 2006 was an EnergyStar home… an assumption I’m sure Forest City (NYSE:FCE-A) and KB Home would love us to assume.  Instead, I have to assume it means that KB builds some EnergyStar homes, somewhere.

KB’s web page for their Coach Series homes in Stapleton displays the EnergyStar logo in two locations.  One logo appears with the text “An EnergyStar qualified neighborhood” (emphasis mine) and the other is in a box that says “Save 30-45% on your utility bills with a new KB home compared to a home built as recently as the 1990s.”  The implication is clearly that the Coach series homes are EnergyStar homes, but my photo shows clear evidence that they are not.  (Ironically, the New Town and Wonderland websites display the EnergyStar logo much less prominently.)

From page 19 of KB Home’s2009 Sustainability Report [pdf]: We have a long history of building ENERGY STAR qualified homes. The percentage of our homes that are built to this exacting standard has grown from 1% of our home deliveries in 2001, the year we began working with ENERGY STAR for Homes, to 37% in 2008. One-third of our divisions built every one of their new homes to this standard in 2008, and only one of our divisions did not build at least some ENERGY STAR qualified homes.

I’m underwhelmed.  First, EnergyStar is not an “exacting standard.”  An EnergyStar home must save at least 15% of the energy used by a standard code-built home.  According to a 2008 National Renewable Energy Laboratory study [pdf p.14], “for a 2,000-gsf house built to achieve 30% energy savings relative to standard practice, a homeowner can save $512 a year more on his or her energy bills than the extra cost of the slightly larger mortgage.”  In other words, this “exacting standard” leaves a lot of money on the table, even when the additional cost (and mortgage) is accounted for.

Further, 37% EnergyStar qualified is better than your average homebuilder… but your average homebuilder does not plaster their website with the EnergyStar logo. 

I wonder if the owner of the tan house (or any of the many other KB Homes I saw with melting snow on the roofs) think they are living in EnergyStar homes?

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Is There a Tradeoff Between Economics and the Environment?

Tom Konrad Ph.D.

California’s RETI process lends insight into the near-term prospects of Solar, Wind, Geothermal, and Biomass.  

In September, California’s Renewable Energy Transmission Initiative (RETI) released their Phase 2A report, which outlined potential transmission corridors to collect renewable energy from Competitive Renewable Energy Zones (CREZ) that had been identified in previous phases.  As part of Phase 2A, they also screened each CREZ for environmental impact, and the potential difficulty of obtaining land for renewable energy development.  

I previously looked at the results from Phase 1A and gained some insight into the cost of renewable energy technologies.  However, what renewable energy projects actually get built has to do with a lot more than just economics.  If it raises too many environmental concerns, such as infringing on endangered Mojave Ground Squirrel habitat, it isn’t going to get built.

Drawing on the spreadsheet "Supplemental Materials, CREZ Data" I put together the following charts, graphing the economics of each type of renewable energy in each CREZ against the expected environmental impact of that CREZ.  

Each circle represents one type of renewable energy at one of 35 CREZs.  Concentric circles in different colors appear where a single CREZ offers multiple types of renewable energy development.  The only difference between the two graphs is the size of the circles.  In the first graph, circle sizes represent the potential annual energy production (GWh/yr) of a CREZ, while circle sizes in the second shows power rating (MW.)  Geothermal and Biomass resources are relatively larger in the first graph because these are typically baseload technologies generating electricity near peak capacity all the time, while solar and wind are variable.

The cluster of circles in the middle right represent resources outside California: they were not rated for environmental concerns, so I assigned them an arbitrary value in the middle of the range in order to display them on the charts.

Economic/Environmental Tradeoff?

I found it surprising that there is little evidence of a tradeoff between economic viability of CREZ’s and environmental impact.  In fact, the circles in the graphs above are generally clustered along a line from the lower left (high environmental impact, bad economics) to the upper right (little environmental impact, good economics).  A tradeoff between economic viability and environmental concerns would manifest itself in a clustering along a line from the upper left (bad economics, little environmental impact) to the lower right (good economics, large environmental impact.)

Considering these four major renewable energy technologies, as they might be deployed in California, there is no real tradeoff between economics and the environment.  The best economics coincide with the least environmental impact.  If we were to include energy efficiency in the analysis, the trend would be even more pronounced: energy efficiency has the best economic profile of all, yet avoids the use of energy and hence does less harm to the environment.

The exception here is biomass.  The small green dots don’t show a pronounced trend in any direction, meaning that there may be some tradeoff for biomass.  Such a tradeoff would not be surprising, because harvesting plant matter on a large scale is bound to have significant ecosystem impacts.  Note that Biomass here does not include such technologies as waste to energy, which can be environmentally benign, or even an improvement compared to land filling.  In this study, the biomass in remote regions that do not yet have transmission, since lack of sufficient transmission was one of the requirements to be a CREZ.

With clean energy, it may actually be possible to do well while doing good.

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Cheap and Free Ways to Promote Energy Efficiency

by Tom Konrad, Ph.D.

Big spending Demand-Side Management programs are not the only way to promote Energy Efficiency.

The Sierra Club’s Rocky Mountain chapter has decided that one of their priorities for 2010 is promoting Energy Efficiency. Since that decision was, at least in part, due to my suggestions as part of their Energy Committee, I volunteered to chair the effort for at least as long as I’m still in Colorado. (I’m planning a move to Connecticut with my wife, but we are waiting for our house to sell first.)

In normal times, we might consider lobbying the state government for incentives to promote energy efficiency, such as those offered as part of the stimulus package. However, a state legislator who came to our last Energy Committee meeting was quite clear: Colorado will be eliminating all (or nearly all) tax incentives next year, so Energy Efficiency programs that rely on state funds are not going to be an effective way forward. For people who, like me had hoped to use Colorado’s recently passed 85% tax credit for PHEV conversions next year, that means we’re probably out of luck. You heard it here first.

Not All Bad News

As I wrote at the start of the financial crisis, even though there may be less subsidies for energy efficiency, leaner budgets make people more open to the idea of cost saving from energy efficiency. Since subsidies are less likely to be available to break down some of the cost barriers against energy efficiency, it makes sense to use our efforts to break down some of the non-cost barriers.

Eric Hirst of Oak Ridge National Laboratory identifies these barriers to energy efficiency improvements:
Barriers to improving U.S. energy efficiency:

Structural barriers­conditions beyond the control of the end user

  • distortions in electricity pricing
  • supply infrastructure limitations

Behavioral barriers­conditions that characterize end users

  • efficiency attitudes and awareness
  • perceived riskiness of efficiency measures
  • obtaining and processing information
  • limited access to capital
  • misplaced incentives
  • inconvenience, loss of amenities

The ones that might be addressed without much money are:

  • efficiency attitudes and awareness
  • perceived riskiness of efficiency measures
  • obtaining and processing information
  • misplaced incentives

Attitudes and Awareness

This barrier has to do with people’s mistaken beliefs: For instance, the belief energy efficiency always requires giving something up (not true: a better sealed and insulated home is less drafty and more comfortable as well as being more energy efficient.) Similarly, some people like to waste energy because conserving is un-macho.

Public relations efforts to make people feel better about efficiency can be very inexpensive. For instance, SMUD’s monthly reports to its customers as to how their consumption compares to their neighbors is something that could be emulated by other utilities.

Another method that might also help to make energy efficiency a social norm also involves competition with neighbors: households with low energy use might also be given inexpensive yard signs, allowing them to brag about their energy sipping lifestyle. This might also address some of the perceived riskiness barrier, because when people see others doing something, they are much more inclined to feel that it is both acceptable and safe.

Misplaced Incentives

Misplaced incentives occur when the person who would pay for efficiency improvements is different from the person who pays the energy bill (and would receive the benefits.) Two examples are landlords and tenants, and homebuilders and home buyers.

Builders have been making strides communicating the energy efficiency of their homes through various certification schemes, such as LEED, Built Green, and Energy Star. When the building buyer can assess the efficiency of a building because it carries a widely recognized green certification, he is likely to be willing to pay more for that building. The same is true for renters.

These voluntary moves are a start, but making energy use disclosure mandatory, as opposed to voluntary, should help bring along the reluctant majority who are not already following these practices. If an energy audit or past energy bills were required to be provided by the seller or landlord whenever a building is sold or leased, buyers and renters could decide for themselves how much more they would be willing to pay for an efficient building, and the current owner would have an incentive to make cost-effective improvements beforehand.

Markets and Information

Efficient markets require good information. A large part of the reason that so many opportunities for energy efficiency exist is that information about energy use is not widely available and often difficult to come by. Measures such as those I suggest above all improve information about energy use, and hence should promote the more efficient use of energy at very little cost.

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Managing the Peak Fossil Fuel Transition 

EROI and EIRR

by Tom Konrad, Ph.D.

Current renewable energy technologies must be adopted in conjunction with aggressive Smart Growth and Efficiency if we hope to continue our current standard of living and complex society with diminished reliance on fossil fuels. These strategies have the additional advantage that they can work without large technological breakthroughs. 

Energy Return on Investment

Energy keeps our economy running.  Energy is also what we use to obtain more energy.  The more energy we use to obtain more energy, the less we have for the rest of the economy.  

The concept of Energy Return on Investment (EROI), alternatively called Energy Return on Energy Invested (EROEI) has been widely used to quantify this concept.  The following chart, from a SciAm paper, shows the EROI of various sources of energy, with the tan section of the bar representing the range of EROIs depending on the source and the technology used.  I’ve seen many other estimates of EROI, and this one seems to be on the optimistic (high EROI) end for most renewable energy sources.

The general trend is clear: the energy of the future will have lower EROI than the energy of the past.  Low carbon fuels such as natural gas, nuclear, photovoltaics, wind, and biofuels have low EROI compared to high-carbon fuels such as coal and (formerly) oil.   

The graph also clearly shows the decline in the EROI over time for oil.  Other fossil fuels, such as coal and natural gas, also will have declining EROI over time.  This happens because we always exploit the easiest resources first.  The biggest coal deposits that are nearest to the surface and nearest to customers will be the first ones we mine. When those are depleted, we move on to the less easy to exploit deposits.  The decline will not be linear, and new technology can also bring temporary improvements in EROI, but new technology cannot change the fact that we’ve already exploited all the easiest to get deposits, and new sources and technologies for extracting fossil fuels often fail to live up to the hype.

While there is room for improvement in renewable energy technologies, the fact remains that fossil fuels allow us to exploit the energy of millions of years of stored sunlight at once.  All renewable energy (solar, wind, biomass, geothermal) involves extracting a current energy flux (sunlight, wind, plant growth, or heat from the earth) as it arrives.  In essence, fossil fuels are all biofuels, but biofuels from plants that grew and harvested sunlight over millions of years.  I don’t think that technological improvements can make up for the inherent EROI advantage of the many-millions-to-one time compression conveys to fossil fuels.

Hence, going forward, we are going to have to power our society with a combination of renewable energy and fossil fuels that have EROI no better than the approximately 30:1 potentially available from firewood and wind.  Since neither of these two fuels can come close to powering our entire society (firewood because of limited supply, and wind because of its inherent variability.) Also, storable fuels such as natural gas, oil, and biofuels all have either declining EROI below 20 or extremely low EROI to begin with (biofuels). Energy storage is needed to match electricity supply with variable demand, and to power transportation. 

Neither hydrogen nor batteries will replace the current storable fuels without a further penalty to EROI.  Whenever you store electricity, a certain percentage of the energy will be lost.  The percent that remains is called the round-trip efficiency of the technology, shown on the vertical axis of the graph below, taken from my earlier comparison of electricity storage technologies. (Click to enlarge.)

Storage Technology Comparison

Round trip efficiency (RTE) for energy storage technologies is equivalent to EROI for fuels: it is the ratio of the energy you put in to the energy you get out.  You can see from the chart, most battery technologies cluster around a 75% RTE.   Hence, if you store electricity from an EROI 20 source in a battery to drive your electric vehicle, the electricity that actually comes out of the battery will only have an EROI of 20 times the RTE of the battery, or 15.  Furthermore, since batteries decay over time, some of the energy used
to create the battery should also be included in the EROI calculation, leading to an overall EROI lower than 15.

The round trip efficiency of hydrogen, when made with electrolyzers and used in a fuel cell, is below 50%, meaning that, barring huge technological breakthroughs, any hoped-for hydrogen economy would have to run with an EROI from energy sources less than half of those shown.

Taking all of this together, I think it’s reasonable to assume that any future sustainable economy will run on energy sources with a combined EROI of less than 15, quite possibly much less. 

It’s Worse than That: The Renewables Hump

All investors know that it matters not just how much money you get back for your investment, but how soon.  A 2x return in a couple of months is something to brag about, a 2x return over 30 years is a low-yield bond investment, and probably hasn’t even kept up with inflation.

The same is true for EROI, and means that users of EROI who are trying to compare future sources of energy with historic ones are probably taking an overly-optimistic view.  For fossil fuels, the time we have to wait between when we invest the energy and when we get the energy back in a form useful to society is fairly short.  For instance, most of the energy that goes into mining coal comes in the digging process, perhaps removing
a mountaintop and dumping the fill
, followed by the actual digging of the coal and shipping it to a coal plant.  Massey Energy’s 2008 Annual Report [pdf] states that "In 2008… we were able to open 19 new mines, and ten new sections at existing underground mines."  This hectic rate of expansion leads me to believe that the time to open a new mine or mine section is at most 2 years, and the energy cycle will be even quicker at existing mines, when the full cycle between when the coal is mined and when it is burnt to produce electricity requires only the mining itself, transport to a coal plant, and perhaps a short period of storage
at the plant.  Most coal plants only keep a week or two supply of coal on hand.

In contrast, Nuclear and Renewable energy (with the exception of biofuels and biomass) present an entirely different picture.  A wind farm can take less than a year to construct, it will take the full farm life of 20 years to produce the 10 to 30 EROI shown in the graph.  Solar Photovoltaic’s apparent EROI of around 9 looks worse when you consider that a solar panel has a 30 year lifetime.  Only a little of the energy in for Nuclear power comes in the form of Nuclear fuel over the life of the plant: most is embodied in the plant itself.   

Jeff Vail has been exploring this concept on his blog and the Oil Drum.  He refers to the problem of the front-loading of energy investment for renewable energy as the Renewables Hump.  He’s also much more pessimistic than the above chart about the actual EROI of most renewables, and found this chart from The Economist which illustrates the up-front nature of the investment in Nuclear and Wind: 

In terms of EROI timing, those technologies for which the cost of generation includes more fuel have an advantage, because the energy used to produce the fuel does not have to be expended when the plant is built.

In a steady state of technological mix, EROI is the most important number, because you will always be making new investments in energy as old investments outlive their useful lives and are decommissioned.  However, in a period of transition, such as the one we are entering, we need a quick return on our energy investments in order to maintain our society.  Put another way, Jeff Vail’s "Renewables Hump" is analogous to a cash-flow problem.  We have to have energy to invest it; we can’t simply charge it to our energy credit
card and repay it later.  That means, if we’re going to keep the non-energy economy going while we make the transition, we can’t put too much energy today into the long-lived energy investments we’ll use tomorrow.

To give a clearer picture of how timing of energy flows interacts with EROI, I will borrow the concept of Internal
Rate of Return (IRR)
from finance.  This concept is covered in any introductory finance course, and is specifically designed to be used to provide a single value which can be used to compare two different investments with radically different cash flow timing by assigning each a rate of return which could produce those cash flows if the money invested were compounded continuously.

Except in special circumstances involving complex or radically different size cash flows, an investor will prefer an investment with a higher IRR.

Energy Internal Rate of Return (EIRR)

I first suggested that IRR be adapted to EROI analysis by substituting energy flows for investment flows in early 2007.  I called the concept Energy
Internal Rate of Return, or EIRR
.  Since no one else has picked up the concept in the meantime, I’ve decided to do some of the basic analysis myself.

To convert an EROI into an EIRR, we need to
know the lifetime of the installation, and what percentage of the energy cost is fuel compared to the percentage of the energy embodied in the plant.  The following chart shows my preliminary calculations for EIRR, along with the plant lifetimes I used, and the EROI shows as the size of each bubble.

 EIRR

The most valuable energy resources are those with large bubbles (High EROI) at the top of the chart (High EIRR.)  Because of the low EIRR of Photovoltaic, Nuclear, and Hydropower, emphasizing these technologies in the early stage of the transition away from fossil fuels is much more likely to lead to a Renewables Hump scenario in which we don’t have enough surplus energy to both make the transition without massive disruption to the rest of the economy.

How to Avoid a "Renewables Hump"

Note that the three fossil fuels (oil, gas, and coal) all have high EIRRs.  As we transition to lower carbon fuels, we will want to keep as many high EIRR fuels in our portfolio as possible. 

The chart shows two renewables with EIRRs comparable to those of fossil fuels: Wood cofiring, and Wind.  Wood cofiring, or modifying existing coal plants to burn up to 10% wood chips instead of coal was found to be one of the most economic ways of producing clean energy in the California RETI study. The scope for incorporating biomass cofiring is fairly limited, however, since it requires an existing coal plant (not all of which are suitable) as well as a local supply of wood chips.  Some coal plants may also be converted entirely to wood, but only in regions with plentiful supplies of wood and for relatively small plants.  The EIRR for this should fall somewhere between Wood cofiring and Wood Biomass, which is intended to represent the cost of new wood to electricity plants.

Natural Gas

To avoid a Renewables Hump, we will need to emphasize high-EIRR technologies during the transition period.  If domestic natural gas turns out to be as abundant as the industry claims (there are serious doubts about shale gas abundance,) then natural gas is an ideal transition fuel.  The high EIRR of natural gas fired generation arises mostly because,
as shown in the chart "it’s a gas" most of the cost (and, I assume energy investment) in natural gas generation is in the form of fuel.  Natural gas generation also has the advantage of being dispatchable with generally quick ramp-up times.  This makes it a natural complement to the variability of solar and wind.

However, I think it is unlikely that we’ll have enough domestic natural gas to both (1) rely much more heavily on it in electricity generation and (2) convert much of our transportation fleet to natural gas, as suggested by T Boone Pickens.  We’re going to need more high-EIRR technologies to manage the transition.  Fortunately, such technologies exist: the more
efficient use of energy.  

Energy Efficiency and Smart Growth

I have been unable to find studies of the EROI of various efficiency
technologies.  For instance, how much energy is embodied in insulation, and how does that compare to the energy saved?  We can save transportation fuel with Smart Growth strategies such as living in more densely populated areas that are closer to where we work, and investing in mass transit infrastructure. 
The embodied energy of mass transit can be quite high in the case of light rail, or it can be very low in the case of better scheduling and incentives for ride sharing.

Many efficiency and smart growth technologies and methods are likely to have much
higher EIRRs than fossil fuels.  We can see this because, while the
embodied energy has not been well studied, the financial returns have. 
Typical investments in energy efficiency in utility run DSM programs cost
between $0.01 and $0.03 cents per kWh saved, much less than the cost of new fossil-fired generation.  This implies a higher EIRR for energy efficiency, because part of the cost of any energy efficiency measure will be the cost of the embodied energy, while all of the savings are in the form or energy.   This relationship implies that higher IRR technologies will generally have higher EIRRs as well.  

Smart growth strategies also often show extremely high financial returns, because they reduce the need for expensive cars, roads, parking, and even accidents [pdf.]

Conclusion: Brian or Brawn

The Renewables Hump des not have to be the massive problem it seems when we only look at supply-side energy technologies.  By looking at demand side solutions, such as energy efficiency, conservation, smart growth, and transit solutions, we need not run into a situation where the energy we have to invest in transitioning from finite and dirty fossil fuels to limitless and clean renewable energy overwhelms our current supplies.  

Efficiency and Smart Growth are "Brain" technologies, as opposed to the "Brawn" of traditional and new energy sources.  As such, their application requires long-term planning and thought.  Cheap energy has led to a culture where we prefer to solve problems by simply applying more brawn.  As our fossil fuel brawn fades away, we will have to rely on our brains once again if we hope to maintain anything like our current level of economic activity.

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Market Predictions

Predicting market moves is notoriouslly difficult, but I’m feeling pretty good about my recent efforts.
On October 11, 2008, I stoped being a permabear and said, “the market as a whole now seems to me to be fairly valued.” The S&P 500 closed the previous Friday just below 900; today it closed at 919.32. In the fear that abounded last October, it was a hard call to be even that bullish, bit it seems to have worked out.

On June 2, I said we were near a market peak/ The S&P 500 closed that day at 944.74, and is currently down 3% almost a month later, having only bearly exceeded that number by a fraction of a percent.

Since I’m currently short-term bearish, I’ve started a series of articles not to by now, but to buy when a market decline puts them back on sale. Here are may clean enrgy shopping list articles so far:

  • Transmission stocks
  • Energy Efficiency Stocks
  • Clean Transport Stocks
  • Why market timing makes sense
  • Two Landfill Gas and Three Geothermal Stocks
  • Five Solar Stocks
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    WillYouSacrificeUs?

    Chevron’s willyoujoinus campaign rubs me the wrong way.  What is the message here?

    • I will use less energy
    • I will bike to work 3 days a year.
    • I will leave the car at home more.
    • I will use solar power.
    • I will reuse things more.

    To me, this seems to be saying:

    1. Taking small steps is enough (3 days a year!!!?)
    2. Sacrifice is required (leave the car at home, use less energy, spend a lot on solar panels.)

    These types of messages undermine energy efficiency.  There are many ways to save energy which don’t involve inconvenience, and help your bottom line.  For instance, you can now buy a power strip for your TV or computer which switches off all the peripherals when the main electronic device is switched off.  If you just set it up to turn off your VCR and DVD players when the TV is off, that will probably be a savings of 50 watts.  If the TV is off 18 hours a day vor a year, that’s over 330 kW, or a savings of about $60 in the Northeast, $47 in California, or $33 in Colorado… but the powestrips cost only $25-$40, depending on which version you get… more than a 100% return in one year.

    Saving energy does not need to be about sacrifice.  I ride the bus out of choice… I’m less likely to get in an accident, and I can get work or reading done in the process.  One day they were doing maintenance on the standard diesel that serves my route, and instead the bus was one of the newer hybrids.  The ride was much smoother… so RTD saving energy by using a hybrid not only saved the transit district money, it made the passengers more comfortable.

    Energy Efficiency is a win-win.  When Chevron equates it to sacrifice, everyone loses.

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