Energy Efficiency:Tightening Our Energy Belts

Realizing the potential of energy efficiency

The UN estimates that doubling the rate of energy efficiency improvements in G8 countries would:

•

Allow the world to hold CO2

concentrations below 550 ppm•

Avoid US$3 trillion worth of new generation•

Save consumers US$500 billion per year by 2030•

Eliminate the same amount of energy supplied by 2,000 coal power

plants•

Return the globe to 2004 energy consumption levels•

Drive business productivity improvements and new employment opportunities

Source: UN Foundation.

Elements of energy efficiency policies in G8 countries (2006)

Policy Canada France Germany Italy Japan Russia UK USA

Appliances Labels and Standards

Yes Yes Yes Yes Yes Yes Yes Yes

Building Standards No Yes Yes Modest Yes Yes Yes Modest

Fiscal Incentives Few Some Yes Few Yes Few Yes Some

Voluntary Agreements Yes Yes Yes Yes No No Yes Yes

Auto/Fuel Policies No Yes Yes Yes Yes No Yes No

Source: UN Foundation.

Are energy efficiency programs effective?Per capita electricity use (kWh/person)

0

2,000

4,000

6,000

8,000

10,000

12,000

14,00019

6019

6219

6419

6619

6819

7019

7219

7419

7619

7819

8019

8219

8419

8619

8819

9019

9219

9419

9619

9820

0020

0220

0420

0620

08

United States

California

Introduction of first set of efficiency standards

Source: EIA/DOE.

How much energy can be saved?

05,000

10,00015,00020,00025,00030,00035,00040,00045,000

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

Annual Energy Savings from Efficiency Programs and Standards in California (GWh/year)

Source: California Energy Commission

Utility Efficiency Programs at a cost ~1% of electric bill

Building Standards

Appliance Standards

Achievable potential from energy efficiency and demand-response programs in the US

Source: EPRI.

The impact of standards on the energy efficiency of appliances is staggering

Index (1972 = 100)

2030405060708090

100110

1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002

Refrigerators Central A/C

Gas Furnaces

= Effective Dates of National Standards = Effective Dates of State Standards

Source: ACEEE/American Council for an Energy Efficient Economy.

What’s the order of magnitude of energy efficiency standards?

Annual Energy Saved vs. Several Sources of Electricity Supply (USA, GWh)

Energy saved byrefrigerator stds.

=80 power plantsof 500 MW each

Renewables100 Million 1 KW

PV systems

Conventional hydro

Nuclear energy

0100200300400500600700800

Source: California Energy Commission

The issue of “Vampire Load”

•Standby power

(aka

vampire or phantom load) is the electric power consumed by electronic appliances while they are switched off or in standby mode.

•The Lawrence Berkeley National Laboratory of Science estimated in 2006 that using the most efficient available designs could reduce average household standby power consumption by 72%.

•Applying this reduction across developed OECD countries would reduce CO2

emissions by 0.5%, which is equivalent to taking 18 million cars off the road.

Source: The Economist

Martha Amram, CEOHomeZ

Inc.

Source: HomeZ

Inc: Sample of San Francisco Bay Area Homes; audited in 2008.

Energy Use by Home:

Size Does Not Matter

$ 0  

$ 1 0 0  

$ 2 0 0  

$ 3 0 0  

$ 4 0 0  

$ 5 0 0  

$ 6 0 0  

$ 7 0 0  

$ 8 0 0  

$ 9 0 0  

0 1 0 0 0 2 0 0 0 3 0 0 0 4 0 0 0 5 0 0 0

Home Size (Sq. Ft.)

MonthlyEnergyBill

$ 0  

$ 1 0 0  

$ 2 0 0  

$ 3 0 0  

$ 4 0 0  

$ 5 0 0  

$ 6 0 0  

$ 7 0 0  

$ 8 0 0  

$ 9 0 0  

0 1 0 0 0 2 0 0 0 3 0 0 0 4 0 0 0 5 0 0 0

Home Size (Sq. Ft.)

MonthlyEnergyBill

$ 0  

$ 1 0 0  

$ 2 0 0  

$ 3 0 0  

$ 4 0 0  

$ 5 0 0  

$ 6 0 0  

$ 7 0 0  

$ 8 0 0  

$ 9 0 0  

0 1 0 0 0 2 0 0 0 3 0 0 0 4 0 0 0 5 0 0 0

Home Size (Sq. Ft.)

MonthlyEnergyBill

“Eat food. Not too much. Mostly plants.”

Here’s the Norm for Eating.

What is the Norm for Energy Use?

In-Home Energy Monitors: A Technology that Delivers Behavioral Change

Source: Greenbox

Inc. www.getgreenbox.com

Source: New York Times, Feb, 2008: http://www.nytimes.com/imagepages/2008/02/10/opinion/10op.graphic.ready.html

Years to 70% household penetrationStartYear

101992 Internet

1993 Cellphone

1980 Home Computer

1960 Microwave

1950 Dishwasher

1950 Clothes Dryer

1980 Air Conditioner

1925 Clothes Washer

1925 Fridge

1920 Radio

815

20NotYet

4550

2310

45

Years to 70% household penetrationStartYear

101992 Internet

1993 Cellphone

1980 Home Computer

1960 Microwave

1950 Dishwasher

1950 Clothes Dryer

1980 Air Conditioner

1925 Clothes Washer

1925 Fridge

1920 Radio

815

20NotYet

4550

2310

45

Why Will This Technology Adoption Cycle Be Different?

Daily electricity use (kWh)

Price of Electricity

(cents per kWh)

42¢

12¢

35¢

25¢13¢

PG&E –

Northern California

Daily electricity use (kWh)

Price of Electricity

(cents per kWh)

4¢ 8¢

Seattle City Light

TOO COMPLEX TOO CHEAP

Daily electricity use (kWh)

Price of Electricity

(cents per kWh)

7¢ 8¢

DTE (Detroit)

TOO FLAT

Daily electricity use (kWh)

Price of Electricity

(cents per kWh)8¢

5¢

Cedar Falls, IA

DECLINING WITH USE

Weak Electricity Price Signals

Rising EnergyPrices

AgingHomes

Carbon Regs

StressedFamilyBudgets

Energy Efficiency: The Best Action in a Perfect Storm

David Arfin, VP, Customer FinanceSolarCity

Mass Adoption of Energy Efficiency: Lessons from SolarLease

Context: Confusing Maze of IncentivesFEDERAL•Tax Credit/Grants•Accelerated depreciation•Stimulus Dollars

STATE•Tax Credit/Rebates•Income level-based subsidies•Property tax exemptions

UTILITY•Rebates•Tiered Pricing•Time of Use Tariffs

OTHER•Measuring and Monitoring•Manufacturer rebate)•Loans (HELOC, Credit Cards, refinancing)•City or neighborhood incentives

FEDERAL•Tax Credit/Grants•Accelerated depreciation•Stimulus Dollars

STATE•Tax Credit/Rebates•Income level-based subsidies•Property tax exemptions

UTILITY•Rebates•Tiered Pricing•Time of Use Tariffs

OTHER•Measuring and Monitoring•Manufacturer rebate)•Loans (HELOC, Credit Cards, refinancing)•City or neighborhood incentives

Sample Proposal with SolarLease [5.1kW]

Note: Utility prices projected to increase by 6.5% per year

BENEFITS OVER 15 YEARS

Estimated Savings Over 15 years $25,281Net Present Value $12,134Payback Immediate

After-Tax ROI Infinite

MONTHLY SAVINGSBefore Solar SolarLease

Utility Bill $250 $76SolarLease Payment $130Total Monthly Cost $250 $206Net Monthly Savings $44

BENEFITS OVER 15 YEARS

Estimated Savings Over 15 years $25,281Net Present Value $12,134Payback Immediate

After-Tax ROI Infinite

BENEFITS OVER 15 YEARS

Estimated Savings Over 15 years $25,281Net Present Value $12,134Payback Immediate

After-Tax ROI Infinite

MONTHLY SAVINGSBefore Solar SolarLease

Utility Bill $250 $76SolarLease Payment $130Total Monthly Cost $250 $206Net Monthly Savings $44

MONTHLY SAVINGSBefore Solar SolarLease

Utility Bill $250 $76SolarLease Payment $130Total Monthly Cost $250 $206Net Monthly Savings $44

Consumer Adoption and Solar/Energy Efficiency

•MotivatorsEconomic EnvironmentalEnergy SecurityMistrust Utility/Energy Sources

•

ObstaclesTechnological ObsolescenceComplex regulatory environment (permits, incentives)AestheticsQuality Reputation of installer, warranteesFinancial Investment – an up front payment for future benefitsPrice declinesFear of making a bad decisions

Critical Success Factors for

Broad Adoption

•

Full product experience with trusted brand•

Evolve business model from selling equipment to energy services

•

Guarantees Performance •

Educate thru web and PR•

Reinforce thru Community building

•

Change the equation from “investment”

to: “If I could save money and help the environment, why wouldn’t I do this?”

Impact of Innovative Financing on Solar Adoption

Source: California Solar Initiative Program Database

California Residential Reservations Since Introduction of SolarCity’s Lease Option

James Davis, PresidentChevron Energy Solutions

World demand for energy is growing…

Source: Energy Information Administration 2005

All Sources of Energy Will Be Needed

0

400

800

1980 2004 2030QU

AD

RIL

LIO

N B

TU P

ER

YE

AR WIND / SOLAR / GEOTHERMAL / HYDRO

NUCLEARBIOMASS

Coal

Gas

Liquids

Source: IEA REFERENCE CASE

Chevron Energy Solutions =

Negawatts + Clean Megawatts(energy savings) (energy production)

K-12 SchoolsColleges

and UniversitiesLocal, State,

FederalGovernment

Wastewater Treatment Plants

Chevron Energy Solutions’

Customers

Bill Phillips, Director, MerchandisingTHD At Home Services, Inc. –

The Home Depot

Early Concept:

Advertise price points with strong value and homeowners will respond

Energy Marketing Initiative –

Spring 2008

Energy Marketing Initiative –

October 2008Home Audit Brochure

SP Energy Checklist Store Events

Activating the Customer with Energy Solutions

• 1,200 Main Events – one per district per week

• Store Event collateral included in sign package

• Step-by-step guide to identify energy-saving ideas for the home

• Direct customers back to store for product and services

• Visual Survey to identify additional opportunities for homeowners to save money and energy

Home Audit Brochure

SP Energy Checklist Store Events

Activating the Customer with Energy Solutions

• 1,200 Main Events – one per district per week

• Store Event collateral included in sign package

• Step-by-step guide to identify energy-saving ideas for the home

• Direct customers back to store for product and services

• Visual Survey to identify additional opportunities for homeowners to save money and energy

Energy Inefficiency

Hard to Measure What You Can’t SeeHard to Measure What You Can’t See

Energy Tax Credit -

The Opportunity

Increased benefit30% of Material cost (vs. 10%)$1500 Total Credit (vs. $500)

Big win on Windows$1500 vs. $200

More stringent standardsHigher performanceFewer qualifying products

Strong Homeowner message

Pay as You Go –

Coin Operated Appliances

WasherDryerHVACRefrigeratorStoveOvenTVComputer

Mark Pougnet, CFOTendril Networks, Inc.

Initial in‐home hardware $150 ‐

$300 (over 2 years)Software Services $1 ‐

$2 (per month)

How will the costs be divided?

•

Stickiness•

Shed Peak Load•

Avoid Generation•

EE Mandates

•

Cost (Saving $) (5‐20% reduction to $800 annual average bill)

•

Carbon (Being Green)•

Competition (Neighbors, etc.)

UTILITYDRIVERS

CONSUMERDRIVERS

How will the costs be divided?

Speakers:Martha Amram, CEO, HomeZ

Inc; Senior Fellow, Milken InstituteDavid Arfin, Vice President, Customer Finance, SolarCityJames Davis, President, Chevron Energy SolutionsBill Phillips, Director, Merchandising, THD At Home Services, Inc., Home DepotMark Pougnet, Chief Financial Officer, Tendril Networks Inc.

Moderator:Nancy Pfund, Managing Partner, DBL Investors