We write a lot of stories these days about the remarkable growth of solar and wind power and how they are truly transforming the energy landscape. Another important component of this sea change is energy efficiency (EE), though we haven’t been writing as much about that, perhaps because it’s not as sexy and exciting as shiny new solar panels or towering wind turbines. But there is another reason: Investment in energy efficiency projects has been in a long-term decline, going back to a peak of about $2 billion annually in 1992, which has drifted down to about $1.2 billion in recent years.
Last year, utilities in Indiana were ordered to refund $32 million to ratepayers. Those funds represented the balance of $74 million that was collected for energy efficiency projects, many of which were never implemented.
In Nevada, EE savings declined 61 percent last year, compared to those realized four years earlier. Reports blamed a lack of state policies and incentives for the decline. This seems apparent when comparing Nevada with neighboring Arizona where utility customers saved three times as much due to efficiency measures, despite the similar climate.
State incentives constitute one factor in the decline; financing is another. A program called PACE had been quite popular until 2010, when it ran into trouble. PACE, which stands for Property-Assessed Clean Energy Financing, essentially allowed homeowners to borrow money from the city for clean energy and energy efficient upgrades, and then repay the loans through annual property tax assessments. Complex financing rules made it impossible for the loans to be sold to Fannie Mae and Freddie Mac for consolidation, which really put a damper on things.
Chris Hummel, chief marketing officer of Schneider Electric, thinks that all of that is about to change. After ticking off some $7 billion in new financing going into efficiency from state banks in Europe and the U.S., he told the Guardian the reasons why energy efficiency is about to come roaring back.Click to continue reading »