On a recent afternoon, two energy auditors were poking
around West Phillie Produce, checking out the lights and taking pictures of all
the appliances in the store.
They were paying special attention to the three
refrigerators and four freezers that run 24/7.
The owner, Arnett Woodall, opened this community grocery
store in 2009 because there were few places to buy fresh fruit and vegetables
in his West Philadelphia neighborhood.
But "one of the most challenging aspects of having a
fruit and produce business in the community is the electric bill," Woodall
said, "'Cause when they're coming in at commercial rates, these
refrigerators — it's a killer."
He said his electric bill is about $1,000 a month.
Woodall was getting this audit for free as part of a
pilot program for The Philadelphia Energy Campaign — City Council President
Darrell Clarke's massive plan to invest $1 billion into energy-efficiency
projects in all city buildings and public schools, as well as 25,000 low- to
moderate-income homes and 2,500 small businesses.
Clarke, who announced the plan last February in the
Mayor's Reception Room at City Hall, promised the $1 billion investment would
result in 10,000 "green jobs" over the course of 10 years.
At the time, he admitted he didn't know exactly how it
would work, how the city would lure private investors into getting in on the
plan, or how much public money would be spent.
"The devil is in the details and we are currently
working with the devil to get the details of some of those programs,"
Clarke said, as laughter filled the high-ceilinged room.
'Energy is a vehicle like no other'
One year later, the plan is slowly taking shape as it
enters the pilot phase.
Last week, Clarke and schools superintendent William Hite
announced a plan to chip away at $4.5 billion in outstanding repairs and cut
the district's energy bills in half. The district plans to enter into an energy
services performance contract with a company that will guarantee it can save 50
percent by making upgrades to lighting, windows, boiler and HVAC systems and
other retrofits.
Pilots are also underway at more than 30 small businesses
and four multifamily buildings.
Emily Schapira is executive director of the Philadelphia
Energy Authority, or PEA, the city agency carrying out Clarke's vision.
She said high utility bills are a challenge for many
small-business owners and low-income people, especially in a city like
Philadelphia where more than one-quarter of its residents live in poverty and
in some of the nation's oldest housing stock. And, she pointed out,
government-backed home-repair programs have long waiting lists and limited
funding.
"Energy is a vehicle like no other," Schapira
said.
"We talk about healthy homes and the need to address
asthma and lead paint in homes ... and those things do not pay for
themselves," she said. "If you incorporate energy into this, all of a
sudden, now you have a return on investment that you can use to pay for those
things."
That's where the city has its work cut out for it, said
Christina Simeone, an analyst at the University of Pennsylvania's Kleinman
Center for Energy Policy.
Simeone said private investors tend to be more attracted
to projects in large, institutional buildings, such as schools, because they
use a lot of energy and have larger systems to upgrade, so the potential return
on their investment is higher. Also, the risk of default is much lower.
When it comes to lower-income housing and small
businesses, "some of the results are going to be uncertain," Simeone
said.
"I think, because of that, it's going to be very
hard to attract the private sector to serve these projects," she added.
"So I think if you're talking about leveraging public dollars by bringing
in the private sector, that's going to be a challenge — maybe not impossible,
but it's going to take a lot of creativity."
Schapira said PEA and several partners are testing
various models through the pilot programs.
For example, in a few months, PEA will hand business
owners like Arnett Woodall proposals that could cut their electric bills. The
goal is to save them 30 percent, doing things like replacing those
energy-sucking refrigerators and freezers with new, more efficient ones.
Schapira said most of the costs will be covered by grants
from the state Department of Environmental Protection and rebates offered by
utilities PECO and PGW.
Woodall will have to take out a loan for the rest, which
he'll pay back over time with savings on his electric bills.
"It's all designed to have positive cash flow,"
Schapira said. "So your savings will be more than your monthly payment on
any loan you'd take out."
Once the project is running at full scale, the hope is
that as Woodall and other participants are saving money, others will be getting
jobs doing energy audits and installing new boilers, lighting, refrigeration
and HVAC systems.
Do these projects pay off?
Catherine Wolfram, an energy economist at the University
of California Berkeley, and some of her colleagues set out to answer the
question of whether these programs pay off a few years ago. They studied what
happened when the federal government paid for energy-efficiency upgrades in
thousands of low-income homes in Michigan. The project was part of President
Barack Obama's economic stimulus plan, which put roughly $5 billion toward the
Weatherization Assistance Program.
The results were not good.
"We saw the federal government was spending about
$5,000 to deliver savings of about $2,500, so that's not a good return,"
she said.
Wolfram is seeing similar results in a study she's
currently conducting in California schools, where she said energy-efficiency
projects are realizing only 60 to 70 percent of the projected savings.
Energy savings are difficult to measure because it's hard
to figure out how much energy building owners would be using if they had not
made any upgrades.
So Wolfram said savings are often based on engineering
projections that overstate how much a program will help.
"If you're the bureaucrat in the federal government
who runs the program, you want to make it look good. You want to demonstrate
that it's saved a lot of energy," she said. "And since it's hard to
come up with the baseline, you can come up with a lot of ways to estimate the
energy that's saved and why don't you come up with the one that makes it look
the best?"
As Philadelphia embarks on this ambitious plan, Wolfram
said, the city should be careful to measures its results accurately and hire a
third-party evaluator.
Schapira said while most of these projects are in the
pilot phase, PEA is measuring savings in-house by collecting building owners'
utility bills before and after upgrades are made.
It could be another year before the pilots start to show
significant results.
In the meantime, the agency is looking to other cities
that have claimed success in retrofitting homes and small businesses.
One of them is BlocPower, a New York City-based startup
that bundles four or more buildings, such as churches, homes and grocery
stores, into portfolios that will provide investors with a larger payback.
CEO Donnel Baird said the company has done projects in
about 500 buildings and cut their energy bills by an average of 38 percent. He
agrees that accurately measuring the savings is key and argues there's technology
readily available to do that.
"Ten years ago, if you wanted to green 1,000
buildings, hard to do," Baird said. "Now, there's smartphones,
there's low-cost sensors that can collect a ton of granular data on those
buildings. That stream of data gives investors much more confidence in the
ability their capital will be accurately leveraged and that the returns will
actually be there."
Otherwise, Philadelphia won't be able to attract the
private investors it needs to pull off this $1 billion plan.
Source: NewsWorks
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