Author Archive
ECA becomes EECA (i.e. Energy > Carbon for the Enterprise)
February 8, 2011 | 
Author In 2008, when Groom Energy named and published the first report on “Enterprise Carbon Accounting” (ECA) the corporate world was just starting to track their GHG emissions as a new metric for their company’s sustainability efforts. The financial markets hadn’t yet collapsed and EHS managers were using speadsheets to build GHG baselines and begin regular reporting to the EPA’s Climate Leaders and the Carbon Disclosure Project. We tracked initially 40, and later 75, software vendors with GHG tracking and reporting solutions for this new market.
My how the world changes.
Today energy has risen front and center as the primary method for both saving money AND tracking environmental progress by these same companies. Accordingly in our newly released report today we rename this category Enterprise Energy and Carbon Accounting (EECA) and begin the next chapter of tracking this new market’s growth, challenges, our customer’s learnings and the leading vendors.
Our analysis concludes that the EECA market is growing at 3oo%. So don’t be surprised when our list of vendors grows as well – I predict we’ll cross 100 in the next few weeks.
Snow covered solar panels – what’s the payback for shoveling?
As Boston faces its fourth major snow storm in a month many New Englanders have sunk deep into the “dark months” blues. And each day as I stare at Groom Energy’s snow-covered solar array I can’t dismiss some level of guilt for our environmental faux pas.
But with storms January 12th, 20th, 26th and tomorrow’s monster, I’m left wondering whether we should bother reducing global warming by shoveling tomorrow? or maybe wait a few more days since another storm is probably coming anyway.
A quick look at Fat Spaniel’s solar performance site confirms a variety of approaches to this decision. Some shovel. Some wait for it to melt. Some wait, then shovel, then another storm comes – do they shovel again? You get the picture.
After this past week’s storm the folks at Harvard Business School broke out their shovels while Salem State University focused instead on their studies.
Although HBS feels greener for the effort, their shoveling investment calculation should be based on the Y-axis of the Fat Spaniel performance graph – ie. kilowatt hours produced – vs. snow covered kilowatt hours. And how long they think until the next storm hits…
What’s the payback for shoveling? Are the folks at Harvard Business School or Salem State better investors?
As with all things energy related, its entirely based on the math – and the assumptions.
We made the following for Harvard and Salem State:
Cost of Solar Array:
System size: 100kw monocrystalline
Current cost of electricity per kWh: $0.12
Escalation rate: 3% per year
Total cost of original installation (circa 2010 at $5 per watt): $501,400
NPV of MA SREC’s value @ $0.285 kWh: $254,194
No Federal incentive as Harvard and Salem State are tax-exempt.
Therefore, total net cost: $247,206
Our solar energy model says this system’s average daily production in January is 171.4 kWh per day so the cash flow payback is @ 10 years.
Cost of Shoveling:
Hourly rate (laborer prevailing wage): $15.00
Number of panels (230 watt): 436
Minutes to fully clear a panel: 2
Efficiency: 8 hour day/1 hour of break
Therefore the estimated cost to shovel the 100kW solar array: $249 (+ $14 for shovel)
Cost Benefit for Shoveling:
Interestingly, while the value for the daily solar energy production for this system is only $20.60, the value for the daily Massachusetts SREC production is $48.85.
So the daily economic benefit for shoveling is $69.41 – or a breakeven of 3.6 days.
Which, as it turns out, is almost exactly when the next snow storm hit us.
Maybe the HBS folks figured out that in today’s economic climate getting your original investment back isn’t that bad a deal?
Or maybe Salem State just has a better meteorology department.
Posted in Renewable Energy, Solar PV | 
Tags: Harvard solar PV, snow covered solar, Solar PV | 
No Comments »
The Sputnik moment in US Cleantech? Long term legislation.
Today I attended the Clean Economy Network‘s first conference in Washington, DC, fittingly on the eve of President Obama’s State of the Union address.
The conference covered the latest cleantech policy and legislative debates, as presented by and to venture investors, entrepreneurs, policy makers, NGO and utility executives. The topics were broad ranging, from the EPA’s role in defining GHG rules, to the challenges with upgrading our electrical grid, to alternative fuel sources for the next generation of power plants and transportation systems. The speakers were candid about their views.
My favorite nuggets:
From panel speculating on the EPA:
- Don’t expect an attempt at carbon tax/cap-n-trade legislation from the EPA anytime soon. Even if the EPA thinks they have the authority, the fastest it has ever implemented anything is 18 months – and it is always followed by years of litigation.
- However, the EPA is getting dangerously close on attacking carbon, and if it comes to litigation, history tells us Congress will back off immediately as there is no win for politicians once this happens. The better hope is that the EPA’s direction catalyzes the House and Senate to finally pass climate legislation, BEFORE the EPA reaches this point of no return.
- The US’s current implied price of carbon (based on government and utility incentives) is $90/ton for wind, $400/ton for solar PV, $200/ton for ethanol fuel and $4,000 per ton for “cash for clunkers.”
- Consider history lesson where deregulation in railroads, wireline, wireless and cable TV all led to more competitive markets, where innovation ultimately drove greater efficiency. Energy markets are ready to have the same opportunity.
From Ray Mabus, the US Secretary of the Navy’s presentation:
- Secretary Mabus reminded the audience how controversial each fuel source change to the Navy’s fleet has been – going from wind to coal to oil to nuclear. In each shift there was significant tension about whether the new fuel source was reliable enough. Now as the Navy plans to introduce a clean fuel fleet with demonstrations next year he confirms that skepticism is increasing….
From John Woolard, CEO, BrightSource Energy’s presentation:
- John described the how the renewable energy legislation vacuum beyond 2016 is already impacting any new utility scale solar thermal power plant projects. Without long term legislation investors can’t make their decisions. While we’ve commented before on the need for predictable utility incentives for energy efficiency year to year, John’s observation really puts the long term need in perspective. The cleantech market requires long term visibility and predictability.
On this last nugget, and as I sit here listening to the State of the Union address, I’m left crossing my fingers that President Obama’s outward determination to address our “Sputnik moment” will lead him to drive US cleantech legislation which outlives his presidency and has a lifetime impact on the industry.
Posted in Clean Energy grants, Energy Efficiency, Federal Grants | Tags: Clean Economy Summit, Sputnik moment, State of the Union | No Comments »
Section 1603 extension – a one year holiday gift?
With last night’s tax bill passage by the House, the renewable energy industry has been given a wonderful holiday gift. But this toy’s battery only lasts one year and you might not be able to replace it.
By extending the Section 1603 provision for just another 12 months Congress has extended life for renewable grants, but kicked off another year of scrambling by project developers and customers. During 2011 activity will be harried as everyone wonders if this extension will disappear in 2012, be extended yet again for another year, or be part of a broader cleantech/energy package with different economics, better or worse, starting January 1st 2012.
As we outlined a year ago the key for any energy related incentive, (Federal, State grant or utility rebate) is to have consistency and visibility. Customers, developers and investors need this in order to make long term decisions and not be encouraged to try to game the system – or worse be gamed by missing a holiday special.
While this 1603 extension was bundled into Washington’s more politically important consumer tax cut deal, we have to hope that in early 2011 our legislators can figure out how to give the cleantech market these more permanent signals about economic support, regardless of whether they’re higher or lower. Only then can they catalyze more rational, long term cleantech investment decisions.
Posted in Federal Grants, Renewable Energy, Solar PV | Tags: renewable grants, Section 1603 | 1 Comment »
First look – our Enterprise LED Lighting Report
Tomorrow we’re announcing the publication of our research report Enterprise LED Lighting, distributed with our partners at GreentechMedia.
As we did with our Enterprise Carbon Accounting research we conducted interviews with all the relevant players in the emerging industry – in this case it included DOE engineers, utility managers, vendors, and most importantly, our commercial and industrial customers.
The need for this report became apparent as we were launching Digital Lumens, a spin out company from Groom Energy who announced their business this past May. At the time it was clear the commercial and industrial LED market was going to surge over the coming years and there was very limited market data studying customer’s needs relative to the newest products being introduced.
Once we started building the report it became clear we could answer some important questions:
- Market: How big is the market today and how fast is it growing?
- Applications: which applications are best suited for LEDs today versus in the future?
- Customers: why are early customers buying products today and what are they learning?
- Technology: How are LED systems designed? What are the key technical challenges?
- The Vendors: Who are the players in the market and which products are they offering? (this we addressed through our LED Market Players Guide profiling 50+ vendors)
The key drivers for market growth we identified were:
- Recent LED chip performance advancements which allow more cost effective
designs for replacing existing lighting systems; - Newly introduced utility energy efficiency financial incentives for converting to
these LED-based systems; - Increased interest from building owners in applying sustainably oriented lighting
retrofits that save money for their operations.
The study took longer to complete than we originally anticipated – partly because we underestimated the amount of work – and partly because things in the LED market have been changing so quickly, even while we were compiling our research.
By 2009 we’d compiled a list of @ 100 vendors who were shipping commercial and industrial general illumination LED fixtures – today our list is at 250+ and still going (and more will come out of the woodwork now that we’ve published our list.) When we started there were only “custom” utility rebates and virtually no prescriptive rebates for LED based retrofits. Today, many of the leading utilities have prescriptive schedules for LED PAR, MR, High Bay and Low Bay upgrades. Meaning the customer market is accelerating and this is driving the utilities to react.
So, I’m assuming by next week we’ll already be developing our first update to the report 
ESCOs “sell stuff”
Today I’m attending the 27th annual NAESCO conference in Phoenix, AZ, a conference that serves as an annual checkpoint for the ESCO industry.
Yesterday’s panel, “Does the ESCO Business Model Version 2010 Still Get The Job Done?” featured a number of ESCO legends (senior executives with 20+ years of industry experience) and each openly discussed how the ESCO market is evolving, good and bad, and where things may be headed.
Four topics stuck out:
1. Is the Stimulus program finally done? Thank god…With their focus on performance contracts for tax-exempt MUSH (municipal, university, schools, hospitals) customers, ESCOs were slowed in 2009/2010 by the ARRA/Stimulus program, which tentatively assigned “free” grant capital to their customers. (We heard this last year as well) In practice customers paused on ESCO contract decisions while waiting to see if they would get a grant. One executive said this market stall cost his firm “$50-60 million in project bookings last year alone.”
2. Lobby like the Solar Industry. The solar lobby in Washington and around the country has successfully convinced several state PUC’s to mandate green energy production (i.e. you must buy solar PV), and gained huge solar PV specific ARRA dollars. One panelist commented that “although it makes no sense to put a solar array on an energy inefficient building,” his firm was recently forced to do exactly this as his customer was told by the DOE they “could only get money for a solar array” (which produced a 30-year return on investment). How about the DOE mandating an energy efficient building retrofit with a 10-year return?
3. Its a BIG market – if the capital is made available. According to the McKinsey estimate, there’s a $520 billion total available US market for energy efficiency upgrades. Retrofitting the whole market would generate $1.2 trillion in savings, or a $680 billion stimulus to the economy. Like the US Federal government stepped in for TARP or General Motors and will ultimately gain back their lendings through loan repayment and sale of GM stock in their IPO, a Federally delivered loan program for energy efficiency retrofits could be a massive catalyst.
4. We sell “stuff” because “our customers need stuff.” The ESCOs have a great model, enabling MUSH customers to replace their aging infrastructure. Their customers don’t buy energy savings (like C&I customers), they buy stuff. It just so happens they pay for this stuff with operating savings from their energy bills. MUSH customers have even less money today than a few years ago, but they do have the capacity to borrow through issuing tax exempt bonds. Which means they can pay for the stuff. Even in the rare case where a municipal customer goes bankrupt the ESCOs know that that the customer “will always be around.” And after the bankrupt municipal bonds get restructured? They’ll buy more stuff. What a wonderful model.
Fixing your Haunted House – how fast will Building Envelope investments return your money?
When non-engineers hear the term “building envelope” they typically think of drafty old homes with leaky windows and steam radiators overheating a bedroom while uninsulated parts of the house remain frigid. Cash for Caulkers (the currently proposed and stalled Federal legislation) epitomized the fix for this problem – create new green jobs by arming construction teams with caulk guns for sealing old windows and doors and insulation to stuff into hollow walls, saving taxpayers money and helping our economy.
When energy engineers hear the term building envelope they have a more measured reaction.
These engineers know that low-cost air sealing around windows and doors (ie. applying caulk) can often produce immediate financial payback. They also hear their customer’s misconception that installing new windows, doors or another layer of insulation must also have an immediate financial return. Thermal images of almost any facility visually display wasted energy leaving a building – and since energy is money, the presumption is it must be a great investment, right?
The reality is that the energy math, not the image, drives the investment calculation.
Long run-hour commercial buildings with relatively high cost of energy and good utility incentives can indeed see 5-10 year paybacks on building envelope retrofits. However, energy engineers know that these upgrades more typically have 10-30 year returns on investment, a long time compared to most other energy efficiency measures (HVAC controls, lighting or free behavior change savings.) Although new windows in your home make it feel tighter, the incremental energy cost savings can be minimal where you have low-cost natural gas powering your 10 year old 84% efficient boiler and you already turn down the heat when you head to work in the morning.
At our Halloween themed team meeting this past week Rob presented a whole-building assessment we had completed for a Ohio based customer. While his psycho-ward jumpsuit costume distracted us, he got everyone’s attention when we saw the projected energy savings for upgrading the site’s building envelope – a 4-year ROI!
The explanation was simple. This customer’s site is a freezer cold storage distribution facility.
Keeping a building freezing all year round is expensive (typically using between 1 and 3 kWh annually per cubic foot) and these high energy density facilities can see proportionally high returns for building envelope upgrades. While the cost of energy in Ohio is relatively low (in this case $0.07 per kWh) the Ohio state and utility incentives are strong and these particular upgrades are at a relatively low cost.
So even our energy engineers were impressed with this fast payback building envelope investment.
Posted in Building Envelope, Energy Efficiency | Tags: building envelope, Cash for caulkers, homestar, thermal image | No Comments »
Groom Energy’s first patent – what did we learn?
Today we’re excited to announce that Groom Energy has been awarded US patent #7,771,083 for our GES Hybrid, the energy efficient lighting retrofit product we originally started to develop in 2006.
Our idea came when we saw newly installed HID lighting fixtures that were perfectly fine, but whose energy consumption could be cut in half just by replacing their guts – meaning their relatively inefficient HID lamp and magnetic ballast. Like all things in energy efficiency this had to be done a very low cost to make it interesting.
We literally banged out metal framed retrofit samples in Bob’s basement, then tinkered for several months to come up with a final design which could be used in a wide variety of fixture types (a universal design), generate strong light output (our reflector) and, most importantly, be fully installed for a low cost.
With the help of our legal team we learned how to document our invention for the USPTO noting absolutely everything around our design and all relevant prior art. Along the way we never stopped manufacturing and delivering Read the rest of this entry »
Add a Stanley Steamer to your Factory?
Ever notice that when politicians tour a factory they remove their sportcoats? If you’ve walked an industrial plant you know it can be a pretty sweaty experience. An energy engineer knows this heat can represent a big energy efficiency opportunity.
The most common waste heat recovery application reuses flue or stack heat to produce hot water. With heat exchangers tightly coupled to machines the heat can be captured into water and transported into another hot water process thereby reducing boiler loads. Where an industrial process is less continuous, hot water storage tanks (energy storage) can be added, which cost more, but enable the time shifting use of the waste heat. Where an industrial process produces extremely high temperatures exhaust (1000 degree +) a potentially more powerful opportunity exists – turning this heat into steam, a much higher density energy source than hot water. Read the rest of this entry »
Posted in Industrial Waste Heat Recapture | Tags: ORC, Organic Rankine Cycle, Stirling, waste heat recovery | No Comments »
Section 1603 – Is the Grant party over?
Labor Day typically marks the time when our year-end project installation schedule becomes more clear. Our corporate customers, often operating on a fiscal-calendar year for budgeting, also exhibit end-of-year psychology and “get it done by year end” becomes a priority. Normal product lead times, procurement contracts, permits, and even potential interruptions from winter weather means by Labor Day our construction year is pretty much set.
This year many cleantech project developers have even more tension leading up to their 2011 New Year’s party planning. With Section 1603, the US Federal program for renewable Grants in Lieu of an Investment Tax Credit (ITC), set to expire at the end of 2010, projects which are not at least 5% underway by year end will miss the proverbial party. Read the rest of this entry »
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