Friday, April 19, 2013

Report 90by50 from the Urban Green Council

The recent 90by50 report from the Urban Green Council was an exceptionally well targeted feasibility study of the potential for drastic energy infrastructure change in New York City building stock. I already wrote about it on my green energy promotion blog. There is a lot to like about it, but it will also most likely be abused and bastardized in the process and the potential never realized. We seem to be a long way away from the kind of concerted action that is really needed, although the feasibility can no longer be in doubt.

While the report identifies clearly that things like New York's PlaNYC2030 were too conservative, and doomed to produce failure because it merely tinkers at the margins, this plan is too high level to be actionable as such, and therefore it may end up being its own worst enemy if we're not careful. Such a high level view has merits, but becomes tricky when it is combined with other high level views such as macro-economists are wont to produce and administrative institutions are wont to consume, so together they can make the high level nonsense that goes for energy policy, and worse, incentives.

However, the helpful implications are the fact that since reducing carbon emissions is definitely of primary importance, the sorts of marginal improvements that PlaNYC2030 envisaged were insignificant, if not counter-productive. There is great need to be more drastic than that. This was one of the reasons why, with my consulting company DaBx Demand Side Solutions, we issued a report 2 years ago, DaBx PlaNYC2020, to make the point that there was at least one class of buildings in New York that was capable of much faster and more drastic change in energy infrastructure, and achieve an 80-90% reduction in CO2 emissions in short order, with today's technology.

PlaNYC2020 alternatives, in relation to 90by50

In one way, I would consider our DaBx PlaNYC2020, of which Mayor Bloomberg was given a complimentary copy on July 4th, 2011 (which we dubbed 'energy independence day' for the occasion) to be a special case under the 90by50 approach, and in a way perhaps the low hanging fruit, although the technology path implied there is quite a bit different from the 90by50 model.

What the 90by50 report identified correctly, and one of the reasons why it chose a 37 year implementation period, is that the economically optimal way of achieving this transition would be to tie in as much as possible with the normal infrastructural overhauls that buildings need periodically. In our report we had argued that same point. For example, the program to phase out #6 oil and use natural gas or either #2 or #4 oil instead forces the issue and even provides subsidies to encourage such conversions, and thereby it preserves the carbon economy without any attempt to asses if renewable energy alternatives might be within reach. Clearly, if we could achieve substantial reductions in CO2 emissions, and at the same time improve long term building values by decoupling buildings from energy price hikes, not to mention any potential future CO2 assessments that would be desirable.

In short, there are certain building types that could make the transition to a low carbon lifestyle quicker than others, but that's being stopped by Soviet-style top-down twenty year plans and incentives to switch to Natural Gas. What we really need is grandfather provisions for buildings that commit to a renewable energy transition, but would be forced not to do so by the present deadlines for the conversion. Here is yet another example of how 'one size fits all' does not work for this problem, since there is such a wide range of structural potential and problems in different groups of buildings.


Methodology for Achieving the Green Energy future sooner

Bottom-up, not top-down

The risk of both the City's PlaNYC2030 and the 90by50 report is that they tend to steer towards a top-down approach. Much of this is predicated on how planners get their data. Planners are fed macro-economic pablum, which in the area of energy typically means an argument that by far energy efficiency gives us the best bang for the buck, and renewable energy is still mostly uncompetitive on the margin. And based on all that wonderful stuff, the administration then establishes policies accordingly.

Nobody seems to notice that in the process, the existing energy infrastructure is being taken for granted and treated as an unstated assumption, for the existing programs are typically geared towards energy efficiency, with the occasional cameo role for renewable technology. In other words, we start right away by optimizing for a secondary objective, efficiency, while skipping the initial make/or buy decision which should come first. It tends to be done correctly for new developments, but for existing buildings, this step is being overlooked. The further mistake that is implicitly made, is that renewables are evaluated in roles that are traditionally defined by the carbon energy model, and rarely do we see a systematic attempt to figure out what you can do differently with renewable technology, because of its unique properties, so that possibly you can pick up design advantages as compared to plugging renewable technology into a carbon based energy distribution model.

The first part of the insight into the potential of renewable technology is the extent to which it can be installed locally, so that a building in whole or in part supplies its own energy. A good example is sometimes provided by solar thermal. It is an often overlooked technology, yet it is 95-98% efficient compared to Solar PV at 15-20% efficiency. The question is, is there a practical way to integrate it into an existing building infrastructure. The cost of integration may kill the idea. However, it should evidently be tried, and be part of an evaluation.


CAPM, CAPM and more CAPM - the Capital Asset Pricing Model

In short, buildings should really begin to be looked at as potential energy producers, that can become partially independent from the grid. Net-zero is not a feasible objective in most cases for an existing structure, but enormous advances are feasible with today's technology. And such transitions can be incorporated in long term capital plans that take into account a 20-30 year equipment life cycle. Besides good engineering, the most critical piece is really  financial: a rigorous application of the Capital Asset Pricing Model should be the standard. If this is done, a far greater use of renewable energy technology is possible compared to what is being done today, and many existing incentives are counter productive at least some of the time, because the favor vendors of equipment and or the energy companies themselves, at the expense of the long term economic interests of the building owners.

There are also some regulatory hurdles that will need to be addressed. The famous split-incentive problem between landlords and tenants will have to be addressed. In low income housing there are rules that are promulgated by HPD and CPC, which prevent the highly necessary redesigning of energy infrastructure in building rehabilitations. And again, many incentive programs and tax abatements tend to steer property owners in the wrong direction. All of this is misguided policy, driven by the same macro-economic assessment that is erroneously applied to micro-economic planning at the building level, and it produces government sponsored capital destruction.

So again, we need to start working as if we were a capitalist society, from the viewpoint of the buildings as an asset, not with top-down soviet-style 20 year plans, that shove the macro-economic square peg, in the micro-economic round hole. Too many decisions are made driven by the latest incentive, instead of on a sound long-term economic basis, which would accrue to improved building values. An accelerated conversion to renewable energy would be more constructive to building preservation than the current regime of moving the deckchairs on the Titanic, and switching to natural gas as the "less dirty" carbon fuel. The vaunted role of natural gas as a "bridge fuel" is really a very destructive postponement, if it forestalls renewable energy in applications where it is economical today. Present HPD/CPC policies are merely creating the slums of the future, with real estate values held for ransom by energy prices, and landlords that are beholden to these rules are like lemmings waiting for the next energy crisis.

Tuesday, April 16, 2013

The little ones that add up

So, I used to run my kitchen lighting as follows:
  1. Ceiling light 2x 14W  Cfl bulbs, probably 8 hours a day - 224W/day 
  2. and 2x 50W PAR20 flood lights, probably 3 hours a day - 300W/day
  3. as well as another 27 watt Cfl in a desk lamp say 3 hours a day - 81W/day
  4. 224 + 300+ 81 W = 605W/day, at 30.5 days/ mo = 18.5 kWh at ca 33 cents/kWh = $6.11/mo

But now I changed my 2 50W PAR20 floods to 2 8W R20 LEDs, and the pattern changes
  1. Ceiling Light 2x 14W Cfl - 3 hours a day = 84W/day
  2. Floodlights 2x 8W 8 hrs/day = 128W/day
  3. Desk lamp 27W 3 hrs = 81W/day
  4. 84 + 128+81 = 293W/day times 30.5 days =  8.94 kWh/mo at 33 cents = $2.95/mo.

The savings therefore are $3.16/mo and the bulbs cost me $16.08 including tax or $32.16 total, and my payback at this rate is 10 months. And that calculation does not even take into account they have an expected 30,000 hour life span, versus an average expectancy of 10,000 hours or so for CFl bulbs.

In short, this is a winner. And actually, now that I'm switching to the fixture with the two PAR20 lamps for my main 'background' lighting, I'll probably have them running at 30% most of the time and at full strength perhaps no more than two hours a day. So if that's the case, the floodlights will use 64W/day instead of 128W/day, for 229W total per day and the monthly number becomes  6.98 kWh at $0.33 for $2.30 total monthly cost.

If you can see little opportunities like that, saving energy is actually fun. I better start buying some energy guzzling equipment soon, for I'm already at the top of my class of residence, averaging 218 kWh/mo even before this change. I also just signed up for the CoolNYC program (www.coolnycprogram.com), which should reduce my A/C bills this summer, Plus, you get $25 for participating. You get a bonus for saving money. Cool! Literally.

Of course the above is also the way energy companies and equipment manufacturers would like you to make all your energy decisions, and while this is fine for a renter, and fun to do, it is not the way you should look at things as a building owner. If you own the building, your business purpose is definitely not to figure out how you become a more efficient customer of your local utility or oil company. And if they try to convince you to invest in energy efficiency, let them do it, as long as you realize that they are investing in you as a customer, so their objective is maximizing their profits, not maximizing the value of your property. If they can get you fool enough to actually invest your money in becoming a more efficient customer of theirs, they have the best of all things: a customer retention program, financed by the customer!

As a building owner you should look at maximizing building value in the long term. That requires a vastly different approach, for if you follow the methodology used here, you'll be frittering away your money over time and doing exactly what I described: investing your own money in a (volunteer) customer retention program for your utility.