The Cheapest Energy Out There

As we often say at CUB, the cheapest kilowatt of energy is the kilowatt that doesn’t have to be produced in the first place. This means we need to make sure that the power we do produce is used as efficiently as possible, simply done by reducing energy losses (and thus unnecessary costs). Technology can help; using fluorescent lights or skylights instead of incandescent lights can provide the same amount of light while using less energy. Weatherizing homes can also decrease energy losses. When a house is not insulated, the homeowners pay for the energy that is leaked out through their windows and walls, even though they don’t get any benefit from it.

Earlier this month, the City of Portland established a pilot project called “Clean Energy Works: Portland” that seeks to address this very issue. By decreasing the amount of energy lost from uninsulated homes, the project will lower the city’s green house gas (GHG) emissions, save homeowners money on energy, and create “green-collar” jobs. This project, which recognizes energy efficiency as an energy resource, is a model not only for Oregon at the state level, but also for other states and the federal government.

Portland’s “Clean Energy Works” Pilot Program

Portland’s pilot project is aimed at reducing the city’s GHG emissions by increasing the information supply and reducing barriers such as high up-front costs for homeowners to weatherize their old homes. The pilot program plans to help 500 qualified Portland homes finance and install energy efficiency upgrades by mid-2010.

Multnomah County Commissioner Jeff Cogen, the City’s partner on the project, believes that the Clean Energy Works program is a key instrument to achieving the region’s goal of dramatically decreasing its green house gas emissions. Cogen says that the planners of the pilot “posit that we can do that while maintaining a strong economy and our strong quality of life.”* The pilot is projected to create about 30-40 direct jobs—well-paying jobs that can’t be outsourced—and a multiplier economic impact of nearly $10 million.

Cogen calls weatherization a “low-hanging fruit” in the effort to reduce the city’s carbon emissions. This is because buildings are responsible for about 44% of the carbon emissions in the Portland region. Insulating homes will go a long way towards decreasing Portland’s emissions. While the 500 homes serviced by the pilot project are only a small bite out of the energy-leaking buildings, it’s an important step in the right direction, and will lead to more, improved projects in the future.

Targeting old buildings is a smart way to combat carbon emissions for many reasons. First, in a time when governments at all levels are challenged to do more with less, improving existing infrastructure rather than focusing only on new buildings, is thrifty. Second—and even more important—the majority of the buildings that will exist in Portland over the next couple decades have already been built. Simply focusing on new buildings does not decrease carbon emissions; it only limits the additions made by new structures. Such policies will not help governments reach their climate goals.

The Clean Energy Works project is impressive in its simultaneous complexity and the simplicity of participation. Coordination of the key players alone was a major undergoing: it is a joint project of the City of Portland and Multnomah County, in collaboration with ShoreBank Enterprise Cascadia (a non-profit, mission-based financial institution that will manage the financing), the Energy Trust of Oregon, NW Natural, PacifiCorp, and PGE. Local contractors will do the actual weatherization work and Work Systems, Inc. will coordinate a long-term workforce development strategy for the pilot period and the eventual full roll-out. Since American Recovery and Reinvestment Act (ARRA) dollars are seeding the pilot, the U.S. Department of Energy will be indirectly involved.

Here’s the easy part: most of the preparation work for weatherization is already done for the participating homeowners. The Energy Trust will act as a consumer assistant/advocate by providing them easy access to qualified and trusted local contractors. Homeowner participants will also get low interest, on-bill financing. This means that they will be able to pay off the cost of their efficiency upgrades in small installments over a long period of time (estimated to be about 20 years for most homes) on their utility bills. The small additions on the homeowners’ bills are expected to be largely cancelled out by their savings on energy, significantly decreasing the costs to weatherizing their home. Some improvements will also be eligible for tax incentives from the state and federal government, further decreasing their out-of-pocket cost. At the same time, less energy leaked from homes will significantly cut carbon emissions.

State Representative Jules Bailey (D-Portland) applauded the project because it will “reduce cost, lower energy bills, put people back to work this summer with good jobs that can’t be outsourced, and confront climate change—one of our most pressing challenges and one of our greatest opportunities.”*

A Model for the State, A Model for the Nation

Another reason Portland’s pilot project is so exciting is that it is only the beginning. Once the pilot project is done, Portland and Multnomah county hope to expand the project to serve a greater number of houses and to offer more types of efficiency updates. The full roll-out will go beyond the basic weatherization (insulation, air sealing, duct sealing), space heating, and hot water updates offered in the pilot project; planners hope to offer solar hot water, solar photovoltaic energy, and upgrades on windows, as well.

At the state level, the Oregon legislature passed the Energy Efficiency and Sustainable Technology Bill (HB 2626) this session (signed this week by the Governor). The bill aims to enable a similar weatherization project on a broader scale. The state project will be available to homeowners and small business owners, hopefully in both urban and rural areas.

When drafting HB 2626, legislators and interested parties looked to Portland’s project for guidance. CUB, which was involved in the creation of HB 2626, found that not only had the Clean Energy Works planners already asked many of the important questions necessary to creating such a project, but they had also largely answered a lot of them!

Rep. Bailey, who co-sponsored HB 2626, told the Portland City Council that the local project “is a model for the state, and really a model for the rest of the nation—and make no mistake: the eyes of the nation are focused on Portland right now, and on this pilot project.”*

Commissioner Cogen seconded this notion, telling council members that the Obama administration is watching Portland’s progress on its efficiency pilot program. An administration member in the U.S. Department of Energy told him personally that, “If you guys pull that off, we’re going to spread it all over the country.”*

Energy Efficiency is the Key Energy Resource for Achieving Climate Goals

“I think the most promising new energy source isn’t new, and it isn’t a source. It’s energy efficiency.” - Christina Page, Yahoo’s Director of Climate and Energy Strategy

Portland’s Clean Energy Works project represents a significant acknowledgment by local government and utility companies that energy efficiency is truly the cheapest, most cost-effective solution to reducing carbon emissions and meeting climate and energy goals. After a long promotion of it by CUB, utilities are finally beginning to see efficiency as a resource, the same as coal and wind energy are resources. Investing in energy efficiency can help cut their costs and help them comply with state and federal regulations for carbon emissions—which saves ratepayers money as well.

Energy efficiency has great potential to help the region meet its carbon emissions goals—in fact, it may be the only way to do so. Energy demand is on the rise, but increased energy use results in increased carbon emissions; the only way to meet climate goals for lower carbon emissions is to make drastic reductions in our use.  This is where energy efficiency comes in. The NW Energy Coalition (NWEC) reports that since 1978, regional energy efficiency measures have produced nearly 3,700 average megawatts of savings—enough to power three cities the size of Seattle! It would have taken approximately six to seven coal plants to produce that amount of power, which ultimately would have been wasted while also causing tons of carbon to be pumped into the atmosphere.

The NWEC argues that there is enough cost effective energy efficiency to meet all of the Northwest’s growing electricity needs and half of its projected growing natural gas needs through the year 2020. Utilities, homeowners, and business owners just need the right incentives.

Recognizing the broad benefits of energy efficiency, many local legislators have called the Clean Energy Works project a “dream” piece of legislation. By simply being more efficient—decreasing energy “leaks” and using fixtures which require less energy to produce the same result—energy consumers can reduce carbon emissions without any loss of power. They can also save on energy costs and promote local green jobs. Energy efficiency helps utility companies cut costs and make headway on meeting regional climate standards. Governments also make strides towards their climate goals through promoting energy efficiency. All the players come together to work towards mutual gain. The project is a dream come true: everybody wins with energy efficiency.

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