Emily and Hillary 7/20/16 Emily and Hillary 7/20/16

Finding Regional Consistency in GHG Accounting: The GLobal Covenant of Mayors and the GPC

Many of our municipal and county clients ask us to help them identify a community greenhouse (GHG) accounting approach that aligns with their peers and avoids double counting. Although there are a lot of resources, finding the right one can be tricky. Recently, a team of world leaders and international sustainability organizations got together to tackle this very problem. Drawing on extensive expertise in sustainability for local governments, the team formed the Compact of Mayors (Compact) agreement.

The Covenant is a global agreement between cities to combat climate change. It provides a systematic approach for mitigating and adapting to climate change and includes requirements for GHG accounting, GHG reporting, and the development of action plans that set ambitious, voluntary GHG emission reduction goals.

One of the major requirements of the Covenant is that all community GHG inventories follow the Global Protocol for Community-Scale Greenhouse Gas Emissions Inventories (GPC). The GPC prescribes a standardized and transparent approach to collect GHG activity data, prepare inventories, and report GHG data. In this way, GPC is designed to help cities draw consistent inventory boundaries, prevent emission double counting, and provide a holistic inventory of all relevant GHG emissions. This is particularly important for a group of local cities that seek regional consistency.

Once GHG inventories and action plans are complete, Covenant members report their data to either the Carbon Disclosure Project (CDP) or Carbonn. The data is publicly available and allows interested parties to search for a city’s commitments and targets.

Since its launch in September 2014, the Covenant of Mayors has gained momentum and now boasts the largest voluntary membership base of cities in the world while encouraging coordination with the larger global community. According to ICLEI’s Executive Director, Angie Fyfe, more than 150 cities nationwide have signed on to the Global Covenant of Mayors Agreement. This number continues to increase as more and more communities look for a consistent and methodical GHG management approach. Covenant members are nationally and globally recognized for their efforts and are exalted as global climate leaders.

We believe that this work is so important because population growth is growing at unprecedented levels. According to the World Health Organization the “urban population in 2014 accounted for 54% of the total global population, up from 34% in 1960, and continues to grow.” Some estimates guess that 80% of the world population will live in cities by 2050. That is over 1 billion new people living in urbanized areas by 2050. (See our blog: The Power of Municipalities for more information).

Cities have the ability, responsibility, and often the encouragement from the public, to take the lead and address climate change.

If you are considering making a locally and globally recognized commitment to GHG reduction and climate change, we encourage you to consider joining The Global Covenant of Mayors for Climate and Energy agreement.

Emily and Hillary 5/2/16 Emily and Hillary 5/2/16

An Overview of Colorado C-PACE: A Conversation with Paul Scharfenberger

Last week, Lotus was fortunate to speak with Paul Scharfenberger, the Director of Finance and Operations at the Colorado Energy Office, about the new financing tool being rolled out called Colorado’s Commercial Property Assessed Clean Energy (“Colorado C-PACE”). C-PACE financing is an innovative, yet proven, financing mechanism for commercial, agricultural, institutional, industrial, non-profit and multifamily (residential units with 4 or less units are excluded) properties to obtain low-cost, long-term financing (up to 20 years) for renewable energy, energy efficiency and water conservation upgrades.

Since many of our clients are interested in C-PACE, we were thrilled to ask him a few questions

Since many of our clients are interested in C-PACE, we were thrilled to ask him a few questions:

Recent conversations with private sector entities has highlighted that the interest in commercial PACE is growing and many believe it is a “game changer” for Colorado’s commercial and multifamily property owners. How is C-PACE different than other financing mechanisms for energy efficiency, renewable energy, and water conservation?

C-PACE is different from other financing mechanisms used to support energy and water improvements in the commercial and industrial sector in a variety of ways, but one of the most important distinguishing characteristics associated with C-PACE is the long term nature of the financing. C-PACE can be used to provide financing up to 20 years for these improvements, whereas standard commercial loans – the next likely alternative that a commercial property owner would pursue - typically only extend to 5, 7, or 10 years depending on the loan recipient, the project being financed, and the lender providing the financing. By offering 20 year financing terms, C-PACE more closely aligns with the payback periods often associated with energy and water improvements and, in doing so, dramatically improves the cash-flows associated with these projects.

Beyond the long-term nature of C-PACE financing, the fact that it can be used to finance 100% of the project costs is unique to C-PACE. It can be used to finance the soft-costs associated with a project (e.g. any associated energy audit, feasibility study, etc.) as well as the hard costs (e.g. equipment and construction), whereas other financing mechanisms typically can be only used to finance the hard costs associated with a project. What this means is that a commercial property owner participating in C-PACE doesn’t have to bear any out of pocket costs for these improvement projects. This is particularly attractive for small to mid-size (Class B & C) building owners who often lack the capital budget for capital-intensive equipment upgrades, yet have pent-up demand to modernize their building. Moreover, the importance of this aspect of the program cannot be understated, especially in terms of how this provision of the program impacts our contractor communities’ ability to leverage this program to convert prospective projects to sales.

Finally, C-PACE is founded on the premise that it allows the financing obligation to transfer to the new owner of the property in the event of a sale of the property. With other financing mechanisms, the commercial property owner would have to be assured that he/she would remain in the property long enough to enjoy the financial payback associated with it. For deep energy/water retrofits, that payback period can be in excess of 10 years and, although it might be counterintuitive, commercial property owners do change locations quite frequently. By allowing the financial obligation to be tied to the property as opposed to the property owner, PACE ensures that the project costs and savings are always connected and, in doing so, addresses one of the primary barriers that commercial property owners face when considering whether to pursue an energy/water improvement project.

Approximately 19% of Colorado’s energy is consumed by commercial buildings, yet implementing energy efficiency and renewable energy upgrades in commercial buildings can be a (sometimes insurmountable) challenge. Which major roadblocks for energy efficiency, water conservation, and renewable energy upgrades does C-PACE address?

As I alluded to in my last response, the lending terms (typically 5-7 years) associated with other financing mechanisms and programs often don’t align well with the economics associated with energy and water improvements. These projects can have lengthy payback periods and it is imperative to structure the financing terms associated with these projects accordingly in order to make financing an attractive option to property owners considering these improvements – otherwise, commercial property owners likely won’t pursue these improvements due to their other competing budgetary demands. C-PACE addresses this issue head-on by enabling long-term financing (up to 20 years) that is more commensurate with the payback of these projects. As a result, C-PACE provides an attractive (“too good to be true”) financing option to commercial property owners that is difficult to overlook.

The transferability of the C-PACE financial obligation at the point of sale also addresses a major barrier that commercial property owners face when considering these improvements. If a property owner isn’t 100% positive that they’ll remain in the same location long enough to enjoy the financial payback associated with an energy/water improvement, then it makes financial sense for them to err on the side of caution and not pursue the project. This is a huge issue in the commercial property sector - this barrier keeps many property owners who are interested in improving the energy/water performance of their buildings and enjoying the related utility costs savings from ever pursuing these improvements. Again, C-PACE addresses this issue head-on. A commercial property owner can pursue an energy/water improvement and if he/she decides to move and change locations a few years down the road, the financial obligation associated with the PACE improvement will remain with the property and fall to the next owner of that property, as will all of the utility cost savings that that project produces on an annual basis.

Lastly, triple net leases are extremely prevalent in Colorado’s commercial sector. With a triple net lease, a building owner can pass increases to their property taxes (i.e. in the form of the PACE special assessment that is included on the property owner’s annual property tax bill) through to their tenants who often pay the utility bills. With other financial mechanisms, property owners are often deterred from paying for these building improvements because they will bear the cost, but their tenants will enjoy the benefit of the reduced utility costs – a barrier often referred to as the “split incentive”. Obviously, most property owners will not choose to pursue such an arrangement, but because the PACE obligation is tied to the property taxes and can be passed through to the tenants with a triple net lease, property owners can finally pursue these projects and pass the costs and savings to their tenants, thereby addressing the “split incentive” barrier.

Now that we understand the many benefits, can you outline how C-PACE works?

Absolutely. Colorado’s C-PACE program operates within a statewide, voluntary special assessment district, called the New Energy Improvement District (NEID), that each county has the option to opt into through a resolution by the Board of County Commissioners. Once a county opts into the program, commercial business owners in that county can apply to the NEID to receive financing from private lenders for eligible energy and water improvements. The project applications, eligibility information, lists of eligible contractors and lenders, and other important program information can be found on www.copace.com. In applying to the program for financing, a property owner can either come to the table with an eligible contractor and/or lender in hand or it can apply without establishing those partnerships and the program administrator (Sustainable Real Estate Solutions, Inc – SRS) will help to connect those property owners with the eligible contractors and/or lenders who have already been approved to participate in Colorado C-PACE.

SRS will then review the project application to ensure that it meets the requirements and standards of the Colorado C-PACE program. If it does, then SRS and the NEID will begin working with the applicant to obtain mortgage holder consent which is required to move forward with the PACE special assessment. If consent is provided, then a special assessment/lien will be recorded within the county land records and the project will move forward to completion.

The NEID then provides each participating county a certified assessment roll that will include the PACE assessment amounts to be placed on the property tax bills for each property that has received PACE financing. This will be a separate line item on the property owner’s property tax bill that will be identified as the, “New Energy Improvement District Special Assessment”. The property owner will then pay their property taxes and the PACE assessment to the county treasurer - exactly as they would for their property taxes – and then the county treasurer will remit the PACE special assessments to the NEID who, in turn, will remit those payments back to the private lenders who provided the original PACE financing.

This continues until the entire PACE special assessment amount is repaid, at which time the special assessment/lien will be satisfied and removed from the property. I realize that it sounds complicated, but it is a proven model that is being used across the country and, as we discussed earlier, it offers several advantages as compared to other finance mechanisms.

One of the benefits that many individuals and companies highlight regarding C-PACE is that it addresses the split incentives dilemma. Can you provide some background on how it does this?

Yes, happy to. As discussed earlier, the “split incentive” refers to the dilemma that a property owner faces when considering to pursue an energy/water improvement to a property that contains tenants who are responsible for paying their respective portions of the utility bill. The issue is that the property owner pays for the improvements, but it is the tenants that receive the benefits associated with those improvements that come in the form of reduced utility costs. This dilemma often results in a property owner not pursuing these improvements because it doesn’t make financial sense for them to do so.

This is where PACE comes into play. As mentioned, PACE operates under the guise of a special assessment that is repaid through the property taxes. Also as mentioned, triple net lease between building owners and tenants allow building owners to pass increases to their property taxes through to their tenants. What does this all mean? It means that PACE addresses the split incentive dilemma under certain lease arrangements which are common in Colorado by allowing the property owner to pursue and pay for these building improvements and then pass on the repayment obligation to their tenants who enjoy the benefits associated with the program.

Before closing, the benefit to the tenant under this situation should not be overlooked. In the majority of cases, the savings associated with these improvements will exceed the costs associated with them – the mortgage holder consent aspect of Colorado C-PACE all but guarantees this – meaning the tenants will benefit from utility costs savings that will exceed the costs that are being passed through to them.

Are there any energy efficiency, renewable energy, and water conservation upgrades that are not allowed under the Colorado program?

The statute dictates eligibility based on utility savings and increased generation from renewables. This means that the eligibility requirements are broad and encompass a wide variety of different energy and water measures. That said, Colorado C-PACE relies on private sector lenders to provide the financing for these building improvements and the participating lender will have to be comfortable with, and ultimately sign off on, the measures being financed. In other words, a vast majority of measures that are proven and have demonstrated reliable utility cost savings will absolutely be supported by C-PACE financing, but nascent and emerging technologies may have a harder time obtaining financing because lenders may be weary of the payback expectations associated with them.

Colorado’s program is unique because Counties have to voluntarily opt-in to a New Energy Improvement District in order to participate. Which Counties have opted in to date?

Well, it should be noted that they don’t “have to” opt-in to the NEID, but we sure do hope that they choose to – I not only feel that C-PACE will produce significant benefits to Colorado’s commercial property owners, but also the counties within which those properties reside.

To-date, Boulder County is the only county that has officially opted into the program, but I have met personally with 15 other counties in the State and am extremely confident that we will see the number of participating counties increase in the very near future.

If any of our readers live in a County that has not opted in to C-PACE but they are interested what are the next steps?

Well, for one, we’d like to hear from those folks. We are compiling a list of projects in counties that haven’t opted into the program because that is compelling information for us as we engage with counties – being able to show very real demand and economic development opportunities is obviously a powerful communication tool.

Beyond engaging with the NEID, it’s important for county representatives to learn of Colorado C-PACE from a variety of individuals and organizations. Although PACE is a model that has been pursued and proven across the country, it is a relatively new program to Colorado and it will take time and effort from a variety of stakeholders to inform decision makers as to the benefits that it can produce to the counties of Colorado.

If any of our readers have additional questions, how can they find more information?

www.copace.com is a great resource for program information, testimonials, application documents, etc., but your readers should always feel free to reach out to SRS (contact information is contained within the aforementioned website) and/or directly to me if they ever have questions about the program – we’re always more than happy to field inquiries and hopefully help your readers understand and navigate this very exciting program.

Thank you so much, Paul! More information about CoPACE can be found at the Colorado C-PACE website at www.copace.com.

Note: Photo by Matthew Wiebe.

Emily and Hillary 12/4/15 Emily and Hillary 12/4/15

LOW-INCOME SOLAR SUCCESS STORIES

Improving the accessibility and uptake of community solar to low-income households is limited by a variety of marketing and communication, demographic, programmatic, and financial challenges. Fortunately, public and private entities are actively trying to solve this issue. So where have we seen some successes ?

In Colorado, approximately 30% of households are considered energy burdened (more than 4% of their annual income is spent on utility bills) and 11% are considered energy impoverished (paying more than 10%). On average, low-income families spend over twice the proportion of their total income on energy bills then the average person in the United States. Posada, a housing authority located in Pueblo, Colorado, reports that this percentage can be even higher. They have worked with low-income households that spend as much on their utility bills as they do on rent, and in some cases utility bills can exceed rent payments.

At the same time, the number of solar installations is growing rapidly and the costs of solar systems have drastically reduced. However, even with the reduced costs and myriad of incentives and procurement options, the benefits of solar photovoltaic (PV) remain largely out of reach for low-income households. Even more problematic, low-income households pay into utility PV rebate and incentive pools, yet they rarely, if ever, directly benefit from the rebate and incentive pools themselves. The 49.1 million households that earn less than $40,000 per year (approx. 40% of all US households) account for less than 5% of solar installations. Improving the accessibility and uptake of community solar to low-income households is limited by a variety of marketing and communication, demographic, programmatic, and financial challenges. Fortunately, public and private entities are actively trying to solve this issue. So where have we seen some successes ?

Success #1: Community Solar: Helping low-Income households that rent or live in multifamily housing access solar

Many low-income households live in multifamily housing and/or rent. Therefore, there is little incentive to put a solar system (long-term investment) on a roof that may not be theirs within a few years. Solar gardens have helped solve this problem. Solar gardens consist of a large photovoltaic array on a large parcel of land. Individuals or businesses can buy a number of solar panels from a solar garden array or purchase electricity generated by a specified number of solar panels and receive credit, as utility incentives, on their electricity bills for the energy production that they own. Generally speaking, community solar is cheaper than individual modules because of the bulk purchase. Depending on how the solar garden is structured many times low-income households do not need to any upfront capital and see savings right away.

Click here for resources on how community solar can support low-income households. In addition, you can view the cutting edge Colorado Community Solar Gardens Act, which requires that 5% of electricity from each solar garden goes to low-income households by clicking here.

Success #2: Helping address the barrier of financing solar for low-Income households

There are many issues that arise for low-income subscribers when it comes to financing. Low-income households rarely have upfront capital to support a project and many low-income households are unable to get financing due to low or no credit scores (most solar leasing companies require a minimum credit score of 700!). In addition, even if they are able to get financing many households have too low tax liability to take full advantage of tax federal and state tax incentives.

Several companies have found workarounds by providing low-cost financing for low-income households. For example, PosiGen, a solar leasing company, has developed a low-income solar system leasing model that has successfully installed more than 4,000 systems since 2011. In order to fully utilize all of the tax credits, PosiGen leases the systems from US Bank who owns the panels. In addition, they utilize community redevelopment points, which are necessary to comply with the Community Reinvestment Act to reduce the interest further.

Many companies are also utilizing the public interest in supporting solar through crowdfunding, bonds, and impact investing. For example, Mosaic is providing low-interest financing through crowdfunding, while SolarCity is selling Solar Bonds. All three mechanisms are creating pools of money to pay for low-income solar outright or provide low-interest loans.

For more information on various funding sources see our blog Finding Money and the great working paper by the GW Solar Institute. Also GRID Alternatives (a non-profit that focuses on bringing renewable energy to underserved communities) website has many resources that can be viewed.

Success #3: Utilizing LIHEAP funds for solar investment

The Low-Income Home Energy Assistance Program (LIHEAP) has historically assisted about 15 percent of all low-income households with their utility bills. This accounted for approximately $3.4 billion in 2014. Yet the costs of energy are rising and the need for energy assistance is growing rapidly. Traditionally, very little of these funds cover solar investment or energy efficiency and the majority of low-income households do not benefit from LIHEAP. Thankfully this is starting to change.

The state of California installed solar systems for 1,482 low-income households using LIHEAP ($14.7 million) funds and a match from outside partners ($3.5 million). Also, the State of New York has proposed that all recipients of LIHEAP automatically become enrolled in community solar projects. The goal of these programs is to stop paying simply for utility bills but have a more sustainable program that reduces costs over the long run enabling the program to support more than just 15% of low-income households.

These aforementioned challenges are just a few of the dozens of issues that lead to very few low-income households realizing the numerous benefits of solar. However, the overall theme from industry experts is that solutions are arising every day and there is great hope that in the near run through public, private, and nonprofit initiatives that we will be able to bridge the solar income gap.

For more information on how solar benefits the low-income market and what financing options may be of most interest contact us at emily@lotussustainability.com or hillary@lotussustainability.com

DISCLAIMER

Disclaimer: The information presented above is based on the opinions and experience of the authors. The authors are not liable for any errors or omissions in this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information.

AUTHORS

Emily Artale, PE, CEM, LEED AP is Principal and Owner at Lotus Engineering and Sustainability, LLC, www.lotussustainability.com. She has been working in the industry for nearly a decade and she has a background in energy management, sustainability planning, and water quality. Emily helps teams develop action-oriented solutions that will improve efficiency and integrate sustainability into current processes. She received her undergraduate and graduate degrees in environmental engineering from the University of Colorado at Boulder. She is a Colorado native and spends most of her time outdoors with her family.

Hillary Dobos, MBA, LEED GA is Principal and Owner at Lotus Engineering and Sustainability, LLC. Hillary brings both expertise and creative thinking to working with clients which she draws from her experience as a consultant advising public and private clients throughout the United States, as well as the one tasked with embedding sustainability throughout a 25,000+ person organization. Hillary has served on various local and national boards focused on conservation, energy efficiency, and renewable energy. Hillary earned her B.A. in Art History and Economics from Bowdoin College in Maine and her MBA from the University of Colorado-Boulder. Hillary was born and raised in Denver, Colorado, where she currently enjoys life with her husband, sons, and moderately trained canine, Mr. Smiles

Emily and Hillary 9/15/15 Emily and Hillary 9/15/15

Finding Money

Many sustainability professionals have experienced the frustration of not being able to implement energy efficiency and renewable energy upgrades for the sole reason that they are not able to pay for it. Even if the return-on-investment is great, the cost of delaying the upgrade is high, and there is staff buy-in sometimes upgrades simply do not fit within the budget. However, the world of energy efficiency and renewable energy financing has matured considerably over the last ten years enabling many public and private sector entities to implement upgrades that would have previously not been feasible

Many sustainability professionals have experienced the frustration of not being able to implement energy efficiency and renewable energy upgrades for the sole reason that they are not able to pay for it. Even if the return-on-investment (ROI) is great, the cost of delaying the upgrade is high, and there is staff buy-in sometimes upgrades simply do not fit within the budget. However, the world of energy efficiency and renewable energy financing has matured considerably over the last ten years enabling many public and private sector entities to implement upgrades that would have previously not been feasible. In fact, over the past decade, public-private financing programs for energy efficiency and renewable energy has grown to approximately $3 billion in 2013.

The following is a quick description of different financing mechanisms and funding resources that public and private sector entities can potentially tap into to finance energy efficiency and renewable energy projects (Note: each state and public jurisdiction has its own laws and statutes that may limit their ability to utilize some of the following mechanisms):

Bond Financing: Bonds are a very common mechanism for financing in the public sector. They utilize debt security that can be used to pay for energy efficiency and renewable energy upgrades.
Credit Enhancement Mechanisms: Credit enhancement is a method to expand the pool of borrowers who are able to access funding by improving the credit worthiness. Credit enhancement mechanisms include loan guarantees, interest rate buy-downs, and loan loss reserves.
Energy Performance Contracting (EPC): EPC is a very popular way for public sector entities to finance improvements with guaranteed savings. EPC makes use of the cost saving from reduced energy and water consumption to help repay the cost of installing energy and water conservation measures. EPC takes advantage of tax-exempt lease-purchase agreements, which allow public organizations to pay for upgrades by using money already set aside in annual utility budgets. For more information on Colorado’s EPC program click here. For more information on other states EPC programs click here.
Grants: Grants can be a lot of work to apply for and the timing can be an issue but they can make the difference of whether or not to move forward with a project. Grants can be provided through public sector entities (federal, state, and local) and non-profits.
Green Banks: Green Banks are generally public financing institutions that support “green” investments by offering below-market interest rates or other financing incentives.
On-Bill Financing and Repayment Programs: On-bill mechanisms are loans made by or in partnership with a utility. They allow customers to implement energy and water efficiency measures and then repay the loan with an additional monthly fee on their utility bills.
Property Assessed Clean Energy (PACE): PACE is an increasingly common financing mechanism that enables property owners to implement energy and water improvements on their property and repay the costs through an annual assessment on their property tax bill. Click here to find out if PACE is available to you.
Rebates and Other Incentives: For a better understanding of the rebates and other incentives available in your area see the DSIRE website.
Revolving Loan Funds: Revolving loan funds provide financing for improvements. As loans are repaid, additional loans are made by the utility, government entity, or lending agency.

For additional information on financing program options, see the excellent NASEO report, Unlocking Demand: An Analysis of State Energy Efficiency and Renewable Energy Financing Programs in the Buildings and Industrial Sectors, which summarizes best practices from 21 state energy financing programs.

If you need any support wading through the many options for financing and funding a project please contact us at hillary@lotussustainability.com or emily@lotussustainability.com.

AUTHORS

Emily Artale, PE, CEM, LEED AP is Principal Engineer and Owner at Lotus Engineering and Sustainability, LLC. Emily has been working in the industry for nearly a decade and she has a background in energy management, sustainability planning, and water quality. Emily helps teams develop action-oriented solutions that will improve efficiency and integrate sustainability into current processes. She received her undergraduate and graduate degrees in environmental engineering from the University of Colorado at Boulder. She is a Colorado native and spends most of her time outdoors with her family.

Hillary Dobos, MBA, LEED GA is Principal and Owner at Lotus Engineering and Sustainability, LLC. Hillary brings both expertise and creative thinking to working with clients which she draws from her experience as a consultant advising public and private clients throughout the United States, as well as the one tasked with embedding sustainability throughout a 25,000+ person organization. Hillary has served on various local and national boards focused on conservation, energy efficiency, and renewable energy. Hillary earned her B.A. in Art History and Economics from Bowdoin College in Maine and her MBA from the University of Colorado-Boulder. Hillary was born and raised in Denver, Colorado, where she currently enjoys life with her husband, sons, and moderately trained canine, Mr. Smiles.

DISCLAIMER

Emily and Hillary 8/11/15 Emily and Hillary 8/11/15

The Power of Municipalities

Over the last 10+ years, we have worked with dozens of municipalities throughout the US on their sustainability initiatives. What are cities doing to address their impact? Everything! From studying their greenhouse gas emissions to setting reduction targets to implementing water and energy efficiency improvements to increasing renewable energy usage to increasing public transit, cities are reducing their impact. An impact that is being amplified as urbanization increases rapidly throughout the US and world.

Why are municipalities so powerful?

Population Growth: Municipalities’ population growth is growing at unprecedented levels. According to the World Health Organization the “urban population in 2014 accounted for 54% of the total global population, up from 34% in 1960, and continues to grow.” Some estimates guess that 80% of the world population will live in cities by 2050. That is over 1 billion new people living in urbanized areas by 2050.
Gross Domestic Product (GDP): Cities produce the majority of global GDP (we have seen estimates ranging from 60% to 80%!). This number is only supposed to increase as population increases.
Resource consumption: The United Nations Environment Programme (UNEP) estimates that cities currently consume 75% of all natural resources and produce about 50% of global waste. This number once again is expected to rise.
Greenhouse Gas Emissions: UNEP also estimates that cities currently produce between 60% and 80% of all GHG emissions making cities a critical participant and partner in the sustainability movement.

Per the statistics above, cities have the ability to make a huge impact but they also have a key advantage. Most (not all) municipalities have the freedom and ability to set goals and initiatives that directly resonate with their local audience by having a deep understanding of the various values, demographics, services available, cost of services, and available resources within their community. In return, they are able to set and make substantial headway on far reaching goals more efficiently and effectively.

In addition, cities act as a lab for innovative initiatives. Their successes (i.e., reduced costs, pollution control, etc.) and lessons learned help other governments (local, state, federal) improve upon their own sustainability initiatives (see ICLEI-USA for hundreds of great examples).

If you are looking for support on your sustainability initiatives contact us at emily@lotussustainability.com or hillary@lotussustainabiliity.com. We can help define sustainability initiatives and bring relevance and insight into setting community sustainability targets.

DISCLAIMER

AUTHORS

Emily Artale, PE, CEM, LEED AP is Principal Engineer and Owner at Lotus Engineering and Sustainability, LLC. Emily has been working in the industry for nearly a decade and she has a background in energy management, sustainability planning, and water quality. Emily helps teams develop action-oriented solutions that will improve efficiency and integrate sustainability into current processes. She received her undergraduate and graduate degrees in environmental engineering from the University of Colorado at Boulder. She is a Colorado native and spends most of her time outdoors with her family.

Hillary Dobos, MBA, LEED GA is Principal and Owner at Lotus Engineering and Sustainability, LLC. Hillary brings both expertise and creative thinking to working with clients which she draws from her experience as a consultant advising public and private clients throughout the United States, as well as the one tasked with embedding sustainability throughout a 25,000+ person organization. Hillary has served on various local and national boards focused on conservation, energy efficiency, and renewable energy. Hillary earned her B.A. in Art History and Economics from Bowdoin College in Maine and her MBA from the University of Colorado-Boulder. Hillary was born and raised in Denver, Colorado, where she currently enjoys life with her husband, sons, and moderately trained canine, Mr. Smiles.

Emily and Hillary 4/11/15 Emily and Hillary 4/11/15

Achieving Substantial Sustainability Goals: You might be doing better than you think

By Hillary Dobos and Emily Artale

Many sustainability professionals have inherited far-reaching sustainability goals that they did not create or they have aligned their goals to meet national goals such as the Better Buildings Challenge with little understanding of how to actually achieve their goals. This can pose an intimidating proposition that can result in entities giving up on their goals because they are seen as impossible to achieve. However, before giving up on goals or setting less lofty new ones know that there are many external trends that are already helping you and you might be doing better than you think.

By Hillary Dobos and Emily Artale

Greenhouse Gas Reductions: Utilities Might Help You Achieve Your Goal

Due to increased (actual and projected) regulations, cheaper renewable energy and natural gas, and grid improvements the CO2 emission factors for electricity have reduced almost universally across the US. Therefore, when calculating your GHG emissions for electricity you will most likely see a decrease in emissions over time even if your electricity use remained constant or increased slightly. Sometimes this CO2 emission factor decrease is so substantial that an entity could meet much of their GHG reduction goal based on the reductions in the emission factor alone. For example, Xcel (Colorado subsidiary) reduced their CO2 emission rate per MWh generated by 22% between 2005 and 2013 and expect to see a 35% reduction by 2020 compared to 2005. Therefore, an entity with facilities in Xcel’s territory will experience a substantial decrease in GHG emissions even if their electricity use remains constant.

Renewable Energy is Cheaper and Easier to Purchase

Historically, many entities have shied away from purchasing renewable energy to meet their goals because of procurement costs. However, due to large leaps in technology, tax benefits, new financing mechanisms, and competition renewable energy is quickly becoming or is already cost effective. See our past blogs An Overview of Solar Power Procurement Options, Increasing Transparency of the Solar Garden Process, and Renewable Energy Credits (REC): A Review of the Basics and Questions to Ask before Utilizing RECs as a Way to Meet Renewable Energy Goals for a review of how to purchase renewable energy.

Cars in the U.S. are more Fuel-Efficiency than Ever

Almost every year the United States hits a new record for fuel efficiency. This is driven by consumer demand, new technologies (hybrid vehicles, lighter vehicles, gasoline direct injections, etc.), international competition, oil prices (current and expected), and strict new fuel-economy standards. As such, many fleets have become fuel efficient without even intending to and, as with electricity CO2 emission factors, this universal increase in efficiency has led to reduced transportation CO2 emission factors.

Normalize Data: Don’t be penalized for success or growth

Many goals do not take into account growth (population, employees, building stock square footage, etc.). Without normalizing goals for growth an organization can be unfairly penalized for success. For example, if a company’s building stock grows by 20% during their energy reduction goals timeline they will be unfairly penalized for this growth unless they normalize by square feet. While we still encourage an overall reduction in resource usage, if a company or public entity is having trouble meeting their goals, it is important to see if some of this is caused by growth. If so, normalize the data and you might not be as far away from your goals as you had thought.

If you are trying to set, achieve, or calculate your sustainability goals, we are here to help. For more information please contact us at hillary@merrillgroupllc.com or emily.artale@lotussustainability.com.

Disclaimer

Authors

Hillary Dobos is Principal and Owner of Merrill Group, LLC, www.merrillgroupllc.com. Hillary brings both expertise and creative thinking to working with clients which she draws from her experience as a consultant advising public and private clients throughout the United States, as well as the one tasked with embedding sustainability throughout a 25,000+ person organization (Colorado State Government). Hillary earned her B.A. in Art History and Economics from Bowdoin College in Maine and her MBA from the University of Colorado-Boulder. Hillary was born and raised in Denver, Colorado, where she currently enjoys life with her husband, sons, and moderately trained canine, Mr. Smiles.

Emily and Hillary 3/23/15 Emily and Hillary 3/23/15

Selling Sustainability

By Emily Artale and Hillary Dobos

There are skeptics everywhere. How do we, as energy and sustainability professionals, convince them that pursuing sustainability is not only the right thing to do, but it can also be profitable?

One approach has been to share the dozens of case stories of big businesses and progressive municipalities saving money through sustainability initiatives (think Dow Chemical, Interface, City of Boulder, City of San Francisco, King County, etc…). But, for some reason these stories do not always result in a massive buy-in of sustainability and sometimes you may even lose the attention of your audience.

And why does this happen? Perhaps these stories do not provide a roadmap that is relevant to the values, demographics, location, and other unique factors of the community that you are speaking to.

By Emily Artale and Hillary Dobos

There are skeptics everywhere. How do we, as energy and sustainability professionals, convince them that pursuing sustainability is not only the right thing to do, but it can also be profitable?

And why does this happen? Perhaps these stories do not provide a roadmap that is relevant to the values, demographics, location, and other unique factors of the community that you are speaking to. For instance, although the City of San Francisco may be a good example of what should or could be done (e.g., 80 percent waste diversion goal!), it may not provide the roadmap necessary to sell your audience on what they can do locally.

To recapture the attention of your audience and to convince them that sustainability does have value to them and to their stakeholders, we need to make this conversation relevant. And we can do that by basing our plans, projections, and best guesses on data that is pertinent and specific to the needs of your audience.

Look at what initiatives may resonate with your audience by considering the values, demographics, services available, cost of services, and available resources within your community. Start by asking some simple questions, for instance:

Does your community have a history of progressive change or do they prefer to keep things “as they always have been”? Are they willing to change?
How willing is your utility company to work with your community in reducing energy?
What resources exist in the community to help guide and maintain change?

Use the answers to these questions to help shape your sustainability initiatives. But, don’t stop there, do your homework and look at the performance data from the entities and individuals that have been in your shoes to help define sustainability targets. Research, analyze data, question data, interview communities and professionals, evaluate your results, and discuss with your community. From this data you can tell what worked, what didn’t, what target levels were achieved, and most importantly, how these target levels were achieved.

Based on your research, consider offering a menu of options and let your audience decide which initiates most resonate with them. Even though all initiatives may share the common theme of sustainability, people may naturally rally behind certain initiatives because they support their values.

Not sure how to create a menu of sustainability initiatives specific to your community? Contact us: emily.artale@lotussustainability.com or hillary@merrillgroupllc.com; we can help define sustainability initiatives and bring relevance and insight into setting community sustainability targets.

Emily and Hillary 11/18/14 Emily and Hillary 11/18/14

Storytelling with Utility Data

By Emily Artale and Hillary Dobos

One of the first steps of any successful energy management program should be an analysis and review of your building’s utility data. This is one way in which your building tells a story of its performance. We, as Energy Managers, use this story to verify personal narratives of your building’s operation, evaluate opportunities for improvement, identify patterns and trends of energy consumption, and benchmark against similar facilities. And, sometimes we can use this data to identify immediate solutions for cost savings.

How can such a seemingly simple resource provide so much valuable information? Utility data is objective and accurate; it documents actual consumption values and actual costs with an infallible memory. It can tell us when the building becomes occupied, when the building is reaching its peak demand, and when abnormalities in use and costs occur.

By Emily Artale and Hillary Dobos

For example, a building operator believes that the Administration complex “turns on” at 5:30 a.m., ahead of when most occupants will be in the building, however when reviewing real-time utility data we notice that a large spike in use begins at 4:00 a.m.! During discussions with building staff it was revealed that the building’s energy systems were turned on at 4:00 am a few months ago in advance of an early morning meeting, but the building’s systems were never reset. Changing the settings back to the original time will result in annual energy and cost savings.

In another real-life example, a review of utility data shows that a local government agency has consistently been charged for taxes over the last five years. A summary of this data was brought to the attention of the utility company and all tax payments were refunded.

In both instances, a review and analysis of utility data resulted in annual cost savings with no upfront payment!

Likewise, you, as a manager of a building, can use utility data to encourage investments in efficiency improvements. Once building improvements have been made, you can continue to track utility data to identify energy savings from the building improvements themselves. Some organizations also use utility data as an innovative way to promote changes in occupant behavior. In lieu of sharing actual utility bills, these organizations may publicly share energy consumption through a dashboard tool in hopes that a demonstration of energy use will encourage better occupant behavior.

And, as you review your utility data be sure to benchmark it. This can give you additional insight as to how your building is performing against its peers or how several buildings compare against one another on a large campus.

For a relatively simple data analysis there are a variety of free tools from which to choose such as ENERGY STAR’s Portfolio Manager and EnergyCAP’s GreenQuest or even a simple Excel spreadsheet. For a more robust analysis consider a more sophisticated tool such as EnergyCAP or CLEER’s ultra-useful Building Energy Navigator tool.

There are hundreds of utility tools available to you. We are both experienced at selecting appropriate utility tools, implementing them, and analyzing the resulting data. Feel free to contact us at emily.artale@lotussustainability.com or hillay@merrillgroupllc.com.

Authors

Emily and Hillary 10/28/14 Emily and Hillary 10/28/14

An Overview of Solar Power Procurement Options

By Hillary Dobos and Emily Artale

Many of our clients have shown interest in pursuing solar energy but are quickly overwhelmed by the myriad of solar power procurement options available to them. Common questions include:

What are all of my options?
Should I participate in a solar garden or purchase solar RECs?
What is the difference between a solar lease and a Power Purchase Agreement (PPA)?
What are the advantages/disadvantages of purchasing the solar panels outright?

This blog provides a brief overview of some of the options for procuring solar power. As different organizations may have diverse goals for solar procurement, finding the “right” option(s) will also vary. We do not specifically endorse any one method over the other, but rather provide some basic information to answer some of the most common questions.

By Hillary Dobos and Emily Artale

Many of our clients have shown interest in pursuing solar energy but are quickly overwhelmed by the myriad of solar power procurement options available to them.

Solar Procurement Options

Renewable Energy Credits (also known as RECs, Renewable Energy Certificates or greentags)

A grid-tied renewable electricity generator, such as a solar array, produces two distinct products: 1) electricity and 2) a package of environmental benefits resulting from not generating the same electricity and emissions from a conventional natural gas or coal-fired power plant. These environmental benefits are collectively known as Renewable Energy Credits, or RECs. RECs are sold, traded, or bartered on a market or through bilateral transaction. RECs are used by entities as a way to reduce their environmental footprint and help fund renewable energy development. They allow organizations to claim that the electric power they are using comes from renewable sources and apply the renewable attributes to any facility.

Unique benefits: Simple transactions, flexible market in that you can select the location, resource type, and vintage of RECs, you can claim environmental benefits if RECs are retired, and one time purchases are possible, unlike other options where long-term contracts are usually required.
Things to consider: RECs do not hedge against increasing energy costs, they do not always come from a local project, and the environmental attributes can be hard to explain to constituents.

For more on RECs see the following blog “Renewable Energy Credits (RECs): A Review of the Basics and Questions to Ask before Utilizing RECs as a Way to Meet Renewable Energy Goals.”

Participate in a Community Solar Garden

Solar gardens consist of a large photovoltaic array on a large parcel of land. Individuals or businesses can buy a number of solar panels from a solar garden array or purchase electricity generated by a specified number of solar panels and receive credit, as utility incentives, on their electricity bills for the energy production that they own. Solar gardens make sense for entities that are unable or not prepared to host or own a system on their building’s roof or adjacent to their property and do not want to be responsible for the maintenance of a system.

Unique benefits: Operation and maintenance is administered by a third party, solar is ideally located for maximum production output and is usually from a local resource, and the owner usually has the ability to transfer renewable energy to different premise locations. In addition, potentially save money compared to regular electricity costs and provides a fixed cost of electricity over the life of the system helping hedge against increased energy costs.
Things to consider: Community solar gardens are not widely available, participating entity might not be able to claim environmental if RECs are not retained, and participating in a solar garden can be a complex transaction.

For more information on Solar Gardens see the following blog “Increasing Transparency of the solar Garden Process: The Top 4 Questions You Should Ask When Considering Participation in a Solar Garden.”

On-site Generation

An organization that is able to install solar on their own facilities can take advantage of several unique financing options including (but not limited to): leasing solar panels, Power Purchase Agreements, and buying the system outright.

Unique benefits: On-site solar is visible and tangible and therefore easily communicated to constituents, supports local jobs, usually reduces demand charges, sometimes increases property value, and typically provides a fixed price for electricity over the life of the system hedging against increased energy costs.
Things to consider: On-site solar can require more upfront planning and project management then other solar options. Other considerations include on-site maintenance of equipment; energy production is limited by location and shape of building(s); and many times substantial upfront capital is needed.

Own the system

Many entities decide to purchase their systems outright through self or third-party financing.

Some additional unique benefits: Some host entities can benefit from the cash rebates, Federal Investment Tax credits, State Tax Credits and other incentives (including balance sheet benefits such as depreciable asset on the books) available for installing solar (see DSIRE website for a list of incentives, rebates, etc.).
Additional considerations: Maintenance requirements will fall on the host entity. Please note that owning a system outright can be very legally exhausting for many public and private sector entities that must consider indemnification laws, insurance requirements, and for some public entities TABOR laws before interconnecting to the grid.

Power Purchase Agreements (PPAs)

In a PPA a third party project developer (usually called a solar services provider) coordinates the building and maintenance of an entities on-site system. The entity, in return, purchases only the power that is produced from the system. This model greatly simplifies the process of solar by having the experienced solar service provider deal with complex design and permitting processes, benefit from tax credits (something the public sector and some private entities do not benefit from) and take on some of the system performance risks. In addition, little or no upfront capital costs is needed because the entity pays only for a stable, and sometimes lower cost of electricity, then would be paid to their utility. Power purchase agreements are typically for large centralized solar generation stations that provide energy directly to a utility.

Some additional unique benefits: No upfront capital costs are needed, projects are sometimes cash flow positive on day one, long-term energy costs are known, and solar service providers are incentivized to maintain panels.
Additional considerations: Long term contracts are usually required and if you sell your property before the lease is up you might have to pay a fine or removal fee.

Solar Lease

A solar lease is very similar to a PPA except for a very important difference that with a solar lease you rent the equipment, while with a PPA you are buying electricity. Therefore, even when the array is producing less due to weather or maintenance issues the entity pays the same (or predictably increasing) amount for the equipment.

Some additional unique benefits: Very predictable cost structure.
Additional considerations: The host might be required to do some of the maintenance of the equipment. Long term contracts are usually required and if you sell your property before the lease is up you might have to pay out the remaining lease payments.

Next Steps

Before moving forward we recommend that you do the following before further pursuing solar:

Understand your motivations for wanting to pursue solar energy. This will directly affect which option you pursue.
Understand your budget and whether or not financing is an option.
Take a look at your buildings solar potential. The National Renewable Energy Laboratory provides several free calculators (PVWatts Calculator and System Advisor Model) that allow you to estimate the energy production and cost of energy for installing a PV system.
Research solar power procurement options available to your location. See EPAs Green Power Locator and/or the Solar Energy Industries Association database for a list of providers.
Contact us at emily.artale@lotussustainability.com or hillary@merrillgroupllc.com for a more thorough review of each option and the resulting costs/savings to your community/company.

Authors

Emily Artale is Principal and Owner at Lotus Engineering and Sustainability, LLC. She has been working in the industry for nearly a decade and she has a background in energy management, sustainability planning, and water quality. Emily helps teams develop action-oriented solutions that will improve efficiency and integrate sustainability into current processes. She received her undergraduate and graduate degrees in environmental engineering from the University of Colorado at Boulder. She is a Colorado native and spends most of her time outdoors with her family.

Hillary Dobos is Principal and Owner of Merrill Group, LLC. Hillary brings both expertise and creative thinking to working with clients which she draws from her experience as a consultant advising public and private clients throughout the United States, as well as the one tasked with embedding sustainability throughout a 25,000+ person organization (Colorado State Government). Hillary earned her B.A. in Art History and Economics from Bowdoin College in Maine and her MBA from the University of Colorado-Boulder. Hillary was born and raised in Denver, Colorado, where she currently enjoys life with her husband, son, and moderately trained canine, Mr. Smiles.

Emily and Hillary 9/30/14 Emily and Hillary 9/30/14

Question Everything

By Emily Artale and Hillary Dobos

In the television series, Cosmos, Neil deGrasse Tyson explains that one reason science works is because science requires that we question everything. And, through this process we uncover the truth. As you embark on new sustainability and energy projects and programs we encourage you to apply this practice in your search for the most effective, economic, and sustainable outcome.

As more and more people demand sustainable solutions, we see an increase in the number of sustainability options offered by a variety of private, government, and non-profit organizations. It can be overwhelming. How do we know what is a legitimate offering and what is too good to be true? Our proposed answer: QUESTION EVERYTHING. And, while you are at it, document everything.

By Emily Artale and Hillary Dobos

For we all want a more sustainable and low-carbon planet, but no project, no matter how enticing, provides a 100% guarantee of project performance. One of the best things that we, as project managers, can do is to educate ourselves so that we may understand the projected performance and the implications of project risks. Furthermore, it is our responsibility to ensure that:

1) Project performance is based on sound and realistic assumptions and assumptions are clearly defined and documented;

2) Our expectations for project performance are reasonable and clearly communicated and understood by all direct stakeholders; and

3) Performance risks are properly identified in the beginning of a project so that we may be adequately prepared in the event that a modification occurs (for it most likely will).

Consider applying the following quasi-linear approach when evaluating the reasonableness and effectiveness of new or relatively new programs and projects.

As you develop and implement new programs to improve your sustainability and the sustainability of your community, we encourage you to ask lots of questions and do not stop until you get clear and definitive answers. Create a legacy document for future staff by documenting your questions and the responses. Identify performance risks and understand the implications if such issues were to occur while preparing your staff for the impacts. Clearly communicate this process with your direct stakeholders to set expectations and to get buy-in from the group. As required, this process may need to be repeated.

No matter how attractive a project may seem at first it will only be as successful as shown by its performance after the project is completed. And in some cases, we may not understand a project’s performance until a year later.

To encourage the success and development of sustainable technologies, programs, and projects we need to be sure that our programs are robust and transparent. We can accomplish this by using one of the fundamental principles of science – question everything.

Not sure which questions to ask and/or which responses are reasonable and align with general best practices? Contact us: emily.artale@lotussustainability.com or hillary@merrillgroupllc.com. “Questioning everything” is our job.

News

Visiting the Energy, Utility & and Environment Conference in San Diego, February 2015? Be sure to connect with Emily Artale while you are there. Emily will be participating on an NREL panel of industry experts to present on community solar gardens. She will demonstrate how you can apply the practice of “questioning everything” to uncover the risks and opportunities of solar gardens.

Authors

Emily and Hillary 9/15/14 Emily and Hillary 9/15/14

Setting Reduction Targets with Limited Information

By Hillary Dobos and Emily Artale

Setting sustainability targets can be one of the most intimidating and invaluable steps in creating a robust sustainability program. Goals need to be measurable and have real appeal to constituents and decision makers, but most importantly, goals need to be credible. We define a credible goal as one that can be realized while pushing the organization to make meaningful, aggressive changes where real benefits accumulate. But, how can an organization identify quantifiable, credible targets with limited information? How can they ensure that their goals are achievable so they do not miss their targets, while ensuring that they are not so easy that they are perceived as pointless?

By Hillary Dobos and Emily Artale

The following is a list of tips that we have found helpful through our experiences helping clients – large and small - set credible, impactful and quantifiable goals with little or no information:

Ask facility and fleet managers what they think is possible. Often these employees are much closer to the day-to-day activities of existing procedures and they are among the first to recognize opportunities. In addition, they will (hopefully) be able to provide an overview of recent or expected upgrades that might affect the reduction potential. For example, if a fleet has switched over 25% of their vehicles to electric vehicles, then a goal for petroleum reduction must reflect this recent change. Lastly, facility and fleet managers will also play a critical part in achieving these goals so their input and buy-in is invaluable.
Research your competitors. Competitors that have set goals (internal and external) provide a wealth of knowledge of what can be accomplished and what goals speak to your constituent. Companies that have reported on whether or not they have met their goals are especially valuable examples. In addition, if competition with competitors is one of the drivers for your sustainability efforts, you will want to make sure that your company has equivalent (or close to) goals as competitors.
Be creative on where to acquire past data. Most sustainability managers that are creating plans from scratch have very little data to base their goals on; however a lot of data might be more accessible then one thinks. For example, most companies have tracked their utility costs through their accounting system. Using some “back of the envelope” calculations, a manager can understand if their overall utility costs have been going up at a quicker or slower rate than normal utility cost increases. As long as the process is consistent and transparent overtime your goals will be sound.
Understand your budget. Many goals will cost money upfront even if they have a great return-on-investment. Understanding where and how that budget will be allocated will help you know what is realistic.
Align goals with national goals. Many public and private sector entities have simply matched/joined on to national goals such as the Better Buildings Challenge with the thought process of “they will figure it out as they go”. While this can be risky many companies and public sector agencies have signed on to these goals and have risen to the challenge to meet these targets because the 1) goals come off as credible; and 2) are very public.

Lastly, before setting sustainability targets, we recommend that an organization familiarizes itself with the SMART (Specific, Measurable, Achievable, Relevant, Time Bound) framework for setting goals. The following shows how the framework would be used for a goal for energy reductions for a company.

Specific: We will reduce energy use per square foot (kBtu/sq. ft.) by 20% by 2030 for our entire building stock. (Note: Make sure your goals can be normalized for growth to ensure that you are not penalized for company’s successes. For example, if a company’s building stock grows by 20% during their energy reduction goals timeline they will be unfairly penalized for this growth unless they normalize by square feet.)
Measurable: We will track data through software on a monthly basis. (Note: Never underestimate the time consuming nature of tracking data. If you can’t find a transparent, realistic way to track data, then you might want to look at qualitative goals instead. Note: see our last blog titled Why You Should Never Overlook Qualitative Achievements When Developing Your Sustainability Goals to understand why qualitative goals are really important.)
Achievable: We believe we can achieve this through low-cost upgrades and behavioral change.
Relevant: Energy reduction supports the company’s goals of leading by example, transparency, and reducing costs.
Time Bound: The 20% reduction goal will be broken down into intermediate goals of 5% reduction by 2015, 10% reduction by 2020, 15% reduction by 2025, 20% by 2030.

For more information on goal setting see our webinar “How to Set Effective and Measurable Sustainability Goals” and contact us at emily.artale@lotussustainability.com or hillary@merrillgroupllc.com.

Authors

Hillary Dobos 8/20/14 Hillary Dobos 8/20/14

Why You Should Never Overlook Qualitative Achievements When Developing Your Sustainability Goals

By Emily Artale and Hillary Dobos

When setting goals that support sustainability initiatives we typically think that our quantitative achievements will be more compelling and more important than our qualitative achievements. Quantitative achievements can be easier to define, easier to communicate and easier to link to dollars spent or dollars saved. This makes their value stand out and makes them the preference of many “goal-setting experts”.

However, environmental and sustainability initiatives and programs are different than most traditional initiatives and programs that you might encounter in your organization. Sustainability programs are still evolving and some of these programs are still new to many public and private organizations. In some instances, we are still learning what is possible and therefore, we do not always have a legacy of projects from which to learn.

In this case, identifying and promoting your qualitative achievements may be just what you need to effectively describe the value of your program or initiative.

By Emily Artale and Hillary Dobos

In this case, identifying and promoting your qualitative achievements may be just what you need to effectively describe the value of your program or initiative. Not only can qualitative goals and achievements provide you with the opportunity to be innovative, creative, and push the edge of what is seemingly possible, they also require less investment to track (including time and money), they can quickly illustrate the value of your program, they can be easily customizable, and they can help support quantitative goals and/or help you develop a baseline for future initiatives.

We have identified three basic ways in which qualitative achievements bring significant value to your project:

(1) Proving that a program or initiative was completed: Sometimes you will be starting an initiative completely from scratch, such as creating an Environmental Purchasing Policy or Recycling Program. It may take more time and money that it is worth to define quantitative goals for this new initiative, and by simply identifying the accomplishments of the program you may have enough information to show that you have met your initiative’s goals.

(2) You are not sure what is possible and/or your do not have a baseline of your past performance: As you work through your program try to record as much data as possible. This may include contact information, demographic and geographic information, notes from conversations, assumptions from participants, etc. At the end of the program organize this data so that you can identify patterns. As you begin to notice significant patterns, you may see that some of these topics are valuable to your program and/or constituents. And, although, these topics may not have been identified in the beginning, these repeated topics could suggest significant qualitative achievements. If you wish to demonstrate your qualitative achievements as numeric values, simply convert your qualitative achievements to a more quantitative metric by expressing your qualitative achievements as a count. Use this count to determine if your original goal was achieved. For instance: You are running a program that provides sustainability services to your community. One of your goals is to promote sustainability within your community (aka qualitative goal). However, you do not have the budget or time to define what it means to “promote sustainability”. Once your project is complete you look at notes from your conversations with participants and realize that 60% of your participants were brand new to sustainability before you came along. You can now say that your 60% of your program participants have engaged in sustainability when no opportunity existed before and you have met your goal of promoting sustainability within your community.

(3) Revising existing initiatives or developing baseline for future programs: Using the example identified above, you can dig a little deeper and use this information to define quantitative goals for future initiatives and/or refine goals for existing initiatives.

Lastly, make sure to use your qualitative achievements as bragging rights to promote the success of your program!

To learn more or get help with your goal setting please contact us at emily.artale@lotussustainability.com or hillary@merrillgroupllc.com.

Authors

Emily and Hillary 7/23/14 Emily and Hillary 7/23/14

Renewable Energy Credits (RECS): A Review of the Basics and Questions to Ask Before Utilizing RECs as a Way to Meet Renewable Energy Goals

By Hillary Dobos and Emily Artale

Renewable Energy Credits (also known as RECs, Renewable Energy Certificates, or greentags) are becoming an increasingly common way for individuals, households, and organizations to reduce their environmental footprint and help fund renewable energy development. The following blog provides a brief overview of RECs and a list of questions that can help guide your decision to purchase RECs and guide your discussion with your REC supplier.

By Hillary Dobos and Emily Artale

The Basics

A grid-tied renewable electricity generator, such as a solar array, produces two distinct products: 1) electricity and 2) a package of environmental benefits resulting from not generating the same electricity and emissions from a conventional natural gas or coal-fired power plant. This package of environmental benefits is known as Renewable Energy Credits (also known as RECs, Renewable Energy Certificates or greentags). A REC represents the collective environmental benefits, such as avoided carbon dioxide and mercury, as a result of generating one MWh or 1000 kWh of renewable energy. RECs are then sold, traded, or bartered on a market or through bilateral transaction.

There are two distinct markets for RECs: compliance and voluntary.

Compliance Market

The compliance market is made up almost entirely of energy companies that are mandated through a Renewable Portfolio Standard to own or purchase a certain percentage of renewable energy. Many utilities rely on RECs to help achieve these renewable energy percentages. Compliance RECs are usually more expensive and required to be purchased from within a specific region. For example, Xcel Energy is mandated through the State of Colorado’s Renewable Energy Standard to generate or cause to be generated at least 30 percent of its electric sales from “eligible energy resources”, one of which is renewable energy sources.[1] One way that Xcel Energy meets its mandate is by purchasing RECs from solar arrays that are interconnected into Xcel Energy’s grid. When RECs are purchased from the solar array, the owner or subscriber of that array can no longer claim the environmental benefits of the system.

Voluntary Market

The voluntary market is made up of individuals, households, and organizations that chose to buy RECs as a way to reduce their environmental footprint and help fund renewable energy development. RECs allow organizations to claim that the electric power they are using comes from renewable sources and apply the renewable attributes to any facility. Additional benefits include hedging against future electricity price increases and numerous public relations benefits such as brand differentiation, generating customer loyalty and employee pride, and leading by example.

In general, voluntary RECs are cheaper than compliance RECs. Between 2010 and mid-2013, wholesale REC sales in voluntary markets have generally traded at less than $1/MWh (J. Heeter and T. Nichols, NREL Report, 2013) In general, the cost of RECs can depend on many factors such as type of renewable energy (e.g. solar RECs are generally much more expensive than wind), the vintage (year in which REC was generated), where the REC was generated, the volume purchased, and if the RECs are 3rd party certified (e.g. Green-e Energy). Low prices often make the purchase of RECs a very cost effective option for supporting renewable energy.

RECs can be purchased through utilities, REC marketers, and other third party entities who may sell RECs alone or bundled with electricity. For a current list of companies offering voluntary RECs click here.

What You Can Do

There are several questions that you can ask to better inform yourself before purchasing RECs

Clearly understand your motivation for purchasing RECs and make sure it aligns with your sustainability and energy goals.
Consider all of your options for procuring renewable energy such as community solar or entering into a power purchase agreement before committing to the purchase of RECs.
There are many ways to purchase RECs (wholesale, long-term contracts, through your local utility). It is worthwhile to consider a few of the options to find the best fit.
Make sure your RECs are third party certified (i.e. Green-e Certified) to guarantee that they are not double-counted (only one buyer can claim the RECs) and meet national standards for resource content and environmental impact. You can also buy RECs that have been issued by a regional certificate tracking system.
If supporting local renewable energy generation is important to you, make sure to ask where the RECs were generated.
Ask what vintage your RECs are (the date when the RECs were created), as well as the renewable generators vintage (the year the renewable generator was built). Older RECs might be cheaper but it is harder to make the argument that your purchase is leading to the creation of new renewable energy if the RECs were created in past years.
Discuss the role of additionality with your REC vendor. Additionality means that the purchase of RECs introduces new renewable energy into the electricity grid beyond what would have happened in a “business as usual” scenario. In other words, your purchase of RECs is not simply subsidizing renewable energy that has already been added to the grid but instead helping an electricity supplier generate electricity from a renewable energy source that would otherwise be too costly.
Consider long-term purchase agreements. Many companies are entering long-term REC purchase contracts (10-20 years). These contracts help stimulate renewable energy production by providing predictable cash flow to a developer and usually provide cheaper RECs due to the bulk purchase.
If your company or organization owns a renewable energy system, research the utility connection agreement to see if you have retained your RECs. If so, then you can claim the environmental benefits. If you have sold your RECs, your organization cannot make certain environmental claims such as “we are reducing our greenhouse gas emissions” or “we are using or generating a certain percentage of renewable energy to offset electricity use.”

We are available to help you wade through the complicated world of RECs, carbon offsets, and financing renewable energy purchases. For more information please contact us at hillary@merrillgroupllc.com or emily.artale@lotussustainability.com.

[1]“2014 Renewable Energy Standard Plan”. Public Service Company of Colorado. July 2013. http://www.xcelenergy.com/staticfiles/xe/Regulatory/Regulatory%20PDFs/CO-RES-Plan-2014-Vol-1.pdf

Join us for our webinar series that discusses emerging topics in the sustainability and energy fields. Our next webinar titled, “How to Set Effective and Measurable Sustainability Goals” on July 30th, 2014 at 12:00 p.m. MDT. To register please visit: http://www.anymeeting.com/PIID=EA57D680844A3B

AUTHORS

Emily Artale, PE, CEM, LEED AP is Principal and Owner at Lotus Engineering and Sustainability, LLC, www.lotussustainability.com. She has been working in the industry for nearly a decade and she has a background in energy management, sustainability planning, and water quality. Emily helps teams develop action-oriented solutions that will improve efficiency and integrate sustainability into current processes. She received her undergraduate and graduate degrees in environmental engineering from the University of Colorado at Boulder. She is a Colorado native and spends most of her time outdoors with her family.

Hillary Dobos is Principal and Owner of Merrill Group, LLC, www.merrillgroupllc.com. Hillary brings both expertise and creative thinking to working with clients which she draws from her experience as a consultant advising public and private clients throughout the United States, as well as the one tasked with embedding sustainability throughout a 25,000+ person organization (Colorado State Government). Hillary earned her B.A. in Art History and Economics from Bowdoin College in Maine and her MBA from the University of Colorado-Boulder. Hillary was born and raised in Denver, Colorado, where she currently enjoys life with her husband, son, and moderately trained canine, Mr. Smiles.

Emily and Hillary 7/10/14 Emily and Hillary 7/10/14

Increasing Transparency of the Solar Garden Process: The Top 4 Questions You Should Ask When Considering Participation in a Solar Garden

Community solar gardens are an emerging and an innovative approach to acquiring renewable energy. Many of our clients are asking us about the risks and benefits of participation, with an emphasis on understanding potential impacts on their financial bottom line and the ability to meet community sustainability and energy goals. We invite you to read our take on this process and use this information to guide conversations with your solar garden developer or utility company representative.

To learn more or receive an analysis specific to your organization contact us at emily.artale@lotussustainability.com or hillary@merrillgroupllc.com.

What are solar gardens? Solar gardens consist of a large number of solar panels connected as an array and located on a large parcel of land. Government agencies, businesses, non-profits, and residences can buy a select number of solar panels from an array or purchase electricity generated by a select number of solar panels and receive credit, as utility incentives, on their electricity bills for the electrons that they own.

Why solar gardens? As we all know, solar energy provides numerous environmental and financial benefits. There are a variety of mechanisms in which an organization or individual can acquire solar energy, and solar gardens are just one of the many options. Solar gardens make sense for entities that are unable or not prepared to host or own a system on their building’s roof or adjacent to their property.

Solar garden arrangements provide unique benefits including established operation and maintenance practices administered by a third party, the potential to avoid land management issues, the ability to transfer renewable energy to different premise locations, and ideal placement that can maximize the production output.

Understanding the risks and opportunities. As with any project, sustainable or otherwise, we recommend that you have a solid understanding of the risks and opportunities. To aid you in that analysis we have crafted four questions that we suggest you discuss with your solar garden developer, utility company, and/or a neutral third-party consultant before you sign a contract (usually 20 years).

1. What is the role of REC payments and how will REC payments influence my sustainability and renewable energy goals?

2. What reduction in electricity use and electricity costs could I expect to see on my bill?

3. How are changes in electricity rates determined and how could future electricity rates impact my payback period and potential long-term savings?

4. How are changes in future utility incentives determined and how could future utility incentives impact my payback period and potential long-term savings?

What you can do. There are several approaches that you can take to better inform and prepare yourself before committing a solar garden membership:

Understand your motivation for participating and make sure it aligns with your sustainability and energy goals.
Discuss the questions listed above with your solar garden developer and utility company representative.
Clearly understand your project proposal and all contract language.
Conduct a utility bill analysis to better understand your utility rates and potential for change.
Model your risk and various “what-if” scenarios.

We are available to conduct a neutral third-party technical analysis of your project proposal and we can help you evaluate the potential opportunities, risks, and various “what-if” scenarios for your solar garden project. For more information please contact us emily.artale@lotussustainability.com or hillary@merrillgroupllc.com.

Join us for our next webinar titled, “How to Set Effective and Measurable Sustainability Goals” on July 30th, 2014 at 12:00 p.m. MDT. To register please visit http://www.anymeeting.com/PIID=EA57D680844A3B

This webinar is part of a series that discusses emerging topics in the sustainability and energy fields based on real-world consulting experience.

Authors

Disclaimer: The information presented above is based on the opinions and experience of the authors. Additional information could become available from the solar garden developer and/or utility company that could impact the statements made above.

Thank you so much, Paul! More information about CoPACE can be found at the Colorado C-PACE website at www.copace.com.

DISCLAIMER

AUTHORS

AUTHORS

DISCLAIMER

DISCLAIMER

AUTHORS

Greenhouse Gas Reductions: Utilities Might Help You Achieve Your Goal

Renewable Energy is Cheaper and Easier to Purchase

Cars in the U.S. are more Fuel-Efficiency than Ever

Normalize Data: Don’t be penalized for success or growth

Disclaimer

Authors

Authors

Solar Procurement Options

Renewable Energy Credits (also known as RECs, Renewable Energy Certificates or greentags)

Participate in a Community Solar Garden

On-site Generation

Next Steps

Authors

News

Authors

By Hillary Dobos and Emily Artale

Authors

By Emily Artale and Hillary Dobos

By Emily Artale and Hillary Dobos

Authors

The Basics

Compliance Market

Voluntary Market

What You Can Do

AUTHORS

Certifications & memberships