This point of view may seem radical, but it’s also honest. Honesty seems to be the one thing that many of our current initiatives lack. If we truly care about achieving carbon neutrality – at least in the built environment – these fundamentals must become broadly accepted.
Within the New Energy Cities program, we continue to think about how setting visionary goals is central to progress. These goals shape how leaders engage the public and the way new projects are developed.
When you consider long-term, aggressive goals for energy at a city level, it becomes obvious quickly that projects need embrace whole neighborhoods at a time. This realization is reinforced when in-depth considerations of project financing are added to the conversation, since the kind of capital needed to finance clean energy systems requires a certain scale in order to make the effort.
So, where might we find glimmers of hope that there might actually be a path to carbon neutrality? On April 3-4, 2012, we participated in a discussion that included national leaders in creating neighborhood- or district-scale approaches to urban sustainability. Energy is an obvious priority, and is front and center in many of these efforts. Let’s meet the rest of the players.
The Portland Sustainability Institute has coined the term Eco-Districts and aims to drive innovation around appropriate scale and long-term outcomes. They have done a tremendous job of building tools and processes to help foster district-scale approaches to critical issues. They hold an annual Summit and have begun to provide training to cities around the world.
The Living City Block initiative is similarly focused, although the initial point of engagement starts at a block scale and builds outward. This effort is most active in Denver and Brooklyn, and has a very strong focus on energy.
The U.S. Department of Energy has included Living City Block’s Denver project in its Commercial Buildings Partnership Program, providing funding to continue to advance the notion that all the buildings can work together with key partners to achieve better performance, faster. We are following the specific ways they are contributing to changing engagement, scale, and finance.
Preservation Green Lab is a leader in efforts to address the challenges of existing buildings, and is working on several fronts to understand the value of investing in improvements to existing buildings, considering neighborhood-scale projects that change the way building owners work together with a city, and producing metrics to help drive performance.
They currently are doing ground-breaking work on energy performance at a neighborhood scale, using GIS tools to map energy usage and support deep energy efficiency retrofits and district energy systems. Their work also has led to the development of a performance-based energy code for buildings, which could become an important tool for cities looking to accelerate action.
The Seattle 2030 District is a classic example of a downtown, commercial district project. Through extensive engagement of building owners in the district, this organization has set a goal of carbon neutral energy by 2030, which is aligned with the 2030 Challenge. This process is providing a very strong platform for considering efficiency improvements, infrastructure upgrades (including district energy), and renewable energy.
As these discussions produce new directions for city-led clean energy innovation, we will share those developments, and continue to provide up-to-date information about the emergence of projects that address energy issues at a district or neighborhood scale.
]]>Three regional clean tech entrepreneurs were talking about raising capital last week, and I was struck by how strongly they reinforced the challenges of driving innovation when energy utilities were a central player in bringing an innovation to market.
The energy utilities we have today reflect more than a century’s worth of evolution, from when electricity was first brought to cities. Utilities today are driven by three imperatives: energy must be reliable, universally available, and cheap.
For over 30 years we have pursued a number of strategies and programs to improve efficiency and the use of renewable energy, and those efforts have not achieved anywhere near what was hoped or expected.
Do current utility models have anything to offer us in solving our energy dilemma – transforming our system by driving radical efficiency improvements, smart infrastructure, and multiple kinds of distributed, renewable energy technologies?
Whenever I talk or write about this issue, I emphasize that my point is not to demonize or denigrate energy utilities. They have achieved extraordinary results in terms of reliability and safety through the electricity grid, and the grid is one of the great technical achievements of the 20th Century. Rather, I want to invite utilities to engage in a conversation beyond their current operating parameters and constraints.
If we were to start from scratch, beginning from the perspective of the end users of energy, to build a system that attains not only the same primary imperatives but also carbon-free performance, I seriously doubt any element of our system would look like what we have now, and this presents an extreme challenge.
The Rocky Mountain Institute has launched a program called “Reinventing Fire,” which seeks to influence the very nature of the energy utility. It is worth following the progress of this effort to see if it will engage utility leaders, regulators, and investors in an effort to find a better business model for their customers.
But back to the entrepreneurs. Two of the three are innovating directly in the utility-customer interface.
In listening to their stories, I was struck by just how difficult their start-up experiences have been, at least in part because the customer is so narrowly defined by the utility regulation. The more I think about this challenge, the more I am convinced that innovations must start with the customer, and offer superior service by making the consumption of zero carbon electricity both possible and cost-effective to them.
It may cost more, but we know customers often choose options that are not the lowest price because they see greater value in the more expensive alternatives.
]]>Sure, we have made energy efficiency overly complicated and required the customer to do all the work, but isn’t it time to consider whether we have been selling the wrong thing? Especially now, given that we have so much work to do to turn our energy system into one that stops contributing to global warming and captures the full value of a variety of renewable energy technologies.
Contrast the very slow progress we have made in efficiency with the rapidly growing popularity of distributed solar energy. While still contributing a small amount of energy, solar has become the new black in the energy world, as investors and customers continue to embrace it.
In Germany, a combination of strong, stable policies and a willingness to enable property owners to participate in energy production has produced remarkable results. Last month it was reported that Germany installed more new photovoltaic solar capacity in December alone than the United States installed in all of 2011!
Further, the installed price of PV in Germany was roughly half the cost. What gives, as even with strong incentives the economic returns on solar systems would struggle to compete with those offered by basic efficiency?
In Jackson (WY), political leaders speak about putting energy efficiency “vegetables” before renewable technologies “dessert.” While there is an undeniable logic to this approach, we must begin to acknowledge and accept that energy consumers, like consumers of many things, are not simply logical.
Is it possible that subverting this kind of logic might open doors to more rapid growth in both renewable energy and efficiency investments? Remember that Germany now produces 20 percent of its total energy from renewable sources. Should we be selling solar and giving customers efficiency with their purchase?
Or better yet, what if we offered customers “100 percent clean energy” for a set rate, and included best-in-class efficiency services as part of the offering? Efficiency measures should improve the financial performance of the offering, and may in fact lead to lower energy costs even if rates go up slightly.
This approach is likely to be the best way to address concerns over how increased energy rates may affect lower income households. Rates can go up and total energy costs can go down at the same time. “Pay more per unit of energy, but use significantly less” should become a formula for our future. If efficiency can reduce consumption by 30 percent and rates go up 20 percent, the end user will see lower costs for energy. The benefit gets even better if distributed solar contributes a modest amount of revenue through on-site generation.
If I were running an energy company, that is the value proposition I would want to use to engage customers, as it would allow me to sell them solar and give them efficiency. If I were managing a city, this is the pricing structure I would want for my residents.
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