Moving 'beyond meat': Algae is at the center of nutritional innovation

By: Dale Kelly, President of Algarithm, CEO and President of POS Bio-Sciences

With rising consumer concerns about the health and environmental implications of animal-based proteins, the race is on to find sustainable and tasty replacements — and the best option might quite literally be green. Manufacturers in the food, beverage and nutritional supplement industries are rapidly adopting plant-based options that can meet — and in many cases exceed — the benefits of meat and seafood. Ingredients matter, and to meet the pace of consumer demand, these manufacturers are seeking out flexible, healthy and allergen-free inputs that can grow to meet the needs of the industries.

Algae has become a central component of this evolving market that delivers more sustainable and nutritious products to consumers. Offering the same nutritional benefits as meat, without compromising on sustainability, it is poised to scale just as rapidly as plant-based alternatives have in a number of applications.

The strong demand for plant-based alternatives is well-documented. From 2011 to 2015 alone, new product launches featuring plant-based innovations jumped over 60%. Companies like Beyond MeatImpossible Foods with its ”Impossible Burger,” Memphis Meats, and Just (formerly Hampton Creek) have been instrumental and widely successful in mainstreaming the opportunities inherently available in plants as sources of proteins. Now we’re headed into the industry’s next significant evolution as the plant-derived trend matures into a new food supply chain that is being built upon plants and algae.

Akin to the explosive growth of plants in the sector, algae proteins are set to undergo massive market growth and widespread adoption. In their own regard,algae-based products are on track to further redefine the future of the food and beverage industries because they offer better tasting proteins and improve functionality for specific applications. Central to the scale-up of this industry will be technologies that are rapidly bringing more products to market while also meeting strong consumer demand for vegan and allergen-free alternatives to existing products.

While algal fuels have certainly faced problems in scaling, the industry’s pivot towards nutritional segments is addressing a more lucrative market, with omega-3s expected to be worth nearly $7 billion by 2020. This represents a compound annual growth rate of nearly 15% between 2016-2022.

The success of early pioneer TerraVia has proven the versatile and functional attributes of algae  to the industry. Equally important has been the company’s role in transitioning food from its largely antiquated, pastoral roots into what it is now: a burgeoning, high-tech sector with more food companies being born out of this new wave of innovation than ever before.

As the health and functional benefits of algae come to light, no doubt the industry will find itself facing hurdles like a production shortage and a reliance on technologies that have failed to produce functionally flexible products because they aren’t tailored to consumer preferences. On the former, perhaps nowhere is this more pronounced than in rapidly emerging economies, like China’s, where Research and Markets found that demand for omega-3-enhanced baby formulas is outstripping production capabilities. For these formulas and also for other mainstream products, existing algal products have also been limited by processing techniques that compromise flavor or that necessitate adding in animal products.

Just as a majority of traditional processes in the bio-based energy sector have relied on chemicals or solvents to drive production, so too have those in the bio-based nutritional sector. Using solvents is inherently not cost-effective, necessitating additional energy in addition to the price of the solvent itself. These techniques also have the unfortunate side effect of tasting fishy — literally.

Now, with the introduction of new processing procedures — born out of the same shift towards high-tech foods that accelerated TerraVia’s escalation — companies are able to bring these products to market in a way that aligns in large part with consumer preferences. With companies increasingly utilizing hydrolysis technology rather than relying on chemical solvents, these products can circumvent both the price and taste limitations.

In many regards, DHA omega-3s in functional foods are already a well-established dietary component in a number of distinct arenas ranging from Premama’s prenatal nutritional supplements for expectant mothers to Platinum Performance’s wellness products for Olympians. The value of the functional foods market rivals the GDP of many countries, worth $130 billion in 2015, according to Grandview. By supplanting chemical solvent technologies with hydrolysis alternatives, while also offering fish-free options, these products can now be introduced to a greater range of applications, ultimately benefitting a greater segment of the population.

The trend is hardly restricted to niche markets, and some of the biggest names throughout diverse industries are taking note. While notable industry players like Tyson are backing plant proteins, multinational corporations are also backing algae. Take Cargill’s announcement in late 2016 that it was partnering with Algae Natural Food with the implicit goal of bringing algae to the market at scale. Likewise, General Mills has included algae as part and parcel to its larger strategy around expanding its sustainable healthy food options. The confluence of consumer demands and a corresponding shift in industry add further credibility to algae as the future of the food industry.

As we look toward the impending revitalization of the food and nutritional industries, one only needs to see how quickly the plant-based protein sector has grown in a short period of time to understand the scale of the opportunity available in an analogous algae industry. Ultimately, as the world is confronted with a need to feed an ever-swelling population while also ushering in a more sustainable system, algae has a clearly defined role to play in the new food order.

The next billion dollar startup will be in aerospace

By François Chopard

Late last month, 500 people from around the world gathered in Dallas at Uber’s inaugural Elevate Summit.

The invite-only conference was the next actionable step forward, post Uber’s white paper published last fall, “Fast-Forwarding to a Future of On-Demand Urban Air Transportation,” to catalyze the emerging ecosystem around what Uber, along with partners in aerospace, aviation, and energy storage, see as the next Unicorn transportation sector.

On the back of the incredible innovations that have disrupted today’s urban transit systems, with new ride-share models, electric energy, and autonomous technologies, urban air mobility is poised for massive growth over the next five years.

At Elevate, with the entire ecosystem gathered in one place, the discussions ranged from identifying key markets and players with commercially viable vehicles to enabling both technologies like battery storage, aircraft certification and policy like FAA regulation. After more than 20 years in the aerospace sector, uniting early-stage tech innovators with private capital, my takeaway at the end of this 3-day event is that urban air mobility is no longer a future-tech vision…it’s happening now.

It’s only been a few years since we saw the beginnings of a clear renaissance in aerospace.

Early unicorns like SpaceX, OneWeb and Planet, radically transformed the landscape, seeding innovations in spacecraft, earth observation, space communication and space exploration, while today next generation players like Boom, Aurora and Wright Electric are hitting a rapid succession of milestones to bring supersonic jets and regional hybrid aircraft into commercial reality.

Even as I sit between this next generation of Elon Musks and the traditional legacy players, I was amazed to see all the technologies required to bring what many are calling the first flying cars not just to market, but to implementation in what will become an entirely new mode of daily transportation.

The excitement at the event was tangible as we all had the feeling that we are part of something that is going to change the way the world commutes and so the way we live. Just as autonomous, electric cars will introduce new levels of safety, efficiency, and productivity, in this new urban air mobility era, we will spend much less time in transport, in vehicles that will be accessible for most of us and will dramatically reduce the levels of aviation and aerospace emissions.

With Uber pushing the bar, we see a clear business case and a real market for the first commercial vehicle categories. We are shifting from the perception of these as a mere leisure type niche market, relegated to a very small percentage of the population, to opening the way to a much bigger market in terms of the number of vehicles and passengers.

And, as we have a much bigger and commercially-viable market, more investors, from angels to VCs to strategics are entering in the game, translating to the kind of money like OneWeb and Planet have benefitted from.

Uber, in its role as transit pioneer, has been instrumental in drafting the kind of performance levels required for these future vehicles to operate in a profitable way. It first envisions a varied fleet of urban air vehicles, with an estimated size of 500-1000 vehicles per city, to carry out the daily trips.

The first model that’s emerging is the pool/air/taxi, in which an aircraft will average 24 miles per trip, with 4 passengers, including a pilot (at least in the beginning), that can achieve 150 miles per hours, with 5 minute recharges.

The consensus on the best architecture is a mix of a helicopter and an aircraft, like the Aurora project, which has fixed wings and distributed electrical engines, and the vehicle segment that everyone’s talking about, Electric Vertical Take Off and Landing vehicles, eVTOLs, will be part of the class that gets us there. Aurora’s fleet is poised to fly this year or next.

Ideally these trips, which will originate at decentralized helipads, will be fully electric solutions that not only drive cost reductions and fuel safety from day one, but also reduce the noise of the vehicle – an ongoing challenge in aviation – to make these more acceptable in urban environments.

On the technology side, the batteries and chargers – already proven in light-, medium- and heavy-duty applications – have the right performance, energy density, capacity and charging time to support frequent, daily trips. With a few expected improvements in coming years, we will see those batteries double their performance in term of size and manufacturing cost, with higher currents and higher power.

Our next steps, post-Elevate, are three-fold. From an infrastructure standpoint, we will reactivate helipads, where in a city like Los Angeles 300 of them already exist but would need to be equipped with electric charger and get new authorization to operate and begin to build charging stations in Pioneer cities.

Key to this phase will be ensuring new aircraft certifications that are tailored to this new class of vehicles are available and, finally, defining the new rules necessary for safe and efficient air traffic management. Though the last may seem daunting, these vehicles should fit in the current traffic as regular general aviation airplane.

The question I was asked more than once over the last three days was where will we see urban air mobility take flight (and root) first. Though Uber’s initial two Pioneer cities will be Dallas and Dubai, with partnerships, infrastructure plans, typical routes and regulatory discussions well underway, I see the real disruption taking place in the urban dense, emerging megacities in South America and Asia.

Those regions have already proven their technology ability (and appetite) for leapfrogging to wireless communication systems and they are once again poised, with their infamously poor and inefficient transit infrastructures, to leapfrog directly to urban air, where the time saved there would be tremendous, turning a 1.5 hour drive in to a 10 minutes flight, 2x/day…for almost the same cost of an Uber Pool.

California electric vehicle drivers await a critical charge

By Brett Hauser, CEO of Greenlots; Mike Anderson, CEO of Efacec USA; Dave Schembri, CEO of EVgo; Kristof Vereenooghe, CEO of EV-Box

Last week the Environmental Protection Agency (EPA) approved its portion of an electric vehicle (EV) investment plan stemming from the 2016 Volkswagen (VW) settlement, setting in motion the first tranche of four $300 million national investments in EV infrastructure. As part of the settlement, California is set to receive $800 million, split into four $200 million 30-month cycles, to build out zero emission vehicle (ZEV) infrastructure and promote ZEV adoption.

This unprecedented level of investment across the country is a tremendous opportunity for American drivers, clean air, and the growing domestic electric vehicle charging industry at a critical inflection point for driver choice. The existing private sector participants have installed more than 35% of the total volume of electric vehicle fast chargers in the last 18 months, and new extended range vehicles give consumers choices that they can take advantage of if the right investments are made into charging infrastructure to build on successes to date. VW’s wholly-owned subsidiary Electrify America submitted its plan to spend the first $200 million in California, and we strongly encourage the California Air Resources Board (ARB), to approve the first phase of the plan to unlock this investment.

The mandated VW investment represents a consequential opportunity to accelerate the EV market in California without picking winners or losers. The two major barriers to mass EV adoption are: 1) price of range-competitive vehicles, and 2) availability of infrastructure. Already, 2017 is gearing up to be a big year for the market. The Chevy Bolt has the range (240 miles) and price point ($30K with tax credits) that can work for most consumers. And the Tesla Model 3 is on the near horizon. Electrify America’s funding will help break down the crucial second barrier, providing much-needed capital to build charging infrastructure to support those sales. We will never achieve necessary scale of adoption of ZEVs if charging infrastructure continues to lag.

Moreover, Electrify America’s plan will keep California competitive with the rest of the market by helping meet its transportation and emission reduction goals over the next decade. There has long been a debate as to whether electric vehicles need to be on the road before the public charging infrastructure is built or vice versa, known as the industry’s chicken-or-egg question. This investment will help resolve the debate by deploying open-access, high-speed charging along highways, and public chargers in workplaces, multi-family dwellings, and community settings, such as grocery stores and shopping malls. Furthermore, by mandating that all chargers operate on an open standards-based interoperable network, the plan ensures these assets are future-proofed and remain available and relevant to drivers.

Although some vocal paricipants have criticized this proposal and even suggested going back to the drawing board on the settlement itself, we believe this is a shortsighted and dangerous path. Transportation is now the top source of greenhouse gas emissions in the U.S., and California’s continued leadership on tackling emissions from vehicles is critical to solving this challenge. Any delay or reassessment of the VW proposal could lead to a much worse deal from President Trump’s EPA and Justice Department, and the benefits to California’s environment and economy would be thrown into question.

As companies representing the full breadth of the EV charging industry, including EV supply equipment manufacturers, installers, and technology providers, we have come together to urge ARB to implement the requirements of the existing settlement as soon as possible. It is important for California to act during this critical window to invest in zero emissions vehicle infrastructure rather than fall behind.

ARB is a capable and trusted entity that has made California the top state in the country for ZEVs today. We encourage ARB to approve and oversee the VW ZEV investment plan as expeditiously as possible. This first installment of $200 million and the additional $600 million in subsequent years present a significant opportunity to bring EVs to more Californians. We, representing much of the existing electric vehicle charging industry, support this infusion of infrastructure funding and look forward to working with leaders in the state to make sure that VW works with private sector participants in delivering for California drivers. We urge stakeholders to support our efforts and not let this opportunity be squandered.

We firmly believe that our state, our industry, and our planet cannot afford any unnecessary delay in implementing a cleaner future. California has always been the global leader in driving the automotive market towards a safer and more efficient future. The VW settlement and ZEV investment plan represent another unique moment for California to push forward and accelerate broad adoption of EVs.

Why 2017 will be the year for long-tail solar growth and PACE financing

By Jonathan Doochin, CEO of Soligent & Mark Colby, GM of Ygrene

For the last two years, renewable energy has been the largest source of new power generation, and the solar industry will have another banner year of growth, doubling capacity from 2015 with an expected 13.9 GW install base in 2016. Continued growth is imminent as BNEF analysts expect solar to continue to expand, adding 40 gigawatts over the next couple of years, which will be driven largely by economics, rather than historical federal policies, like the solar investment tax credit (ITC).

Even with today’s competitive solar pricing, however, many Americans are still unable to afford financing models that require up-front, out-of-pocket payments and strong personal credit history. Paradoxically, it is this huge market segment that stands to benefit the most from increased access to affordable financing and the predictable energy pricing that solar power brings. Though the demand for this type of financing has existed for years, there’s been a shortage of financial products designed to accommodate and capture this market segment.

Property Assessed Clean Energy (PACE) financing ticks all the boxes and democratizes solar across the socio-economic spectrum of property owners. A competitive alternative to traditional credit-based financing, PACE financing is based on the available equity in the property (among other factors), and not on credit scores, proofs of employment, income or financial statements. The PACE model typically translates to lower payments that are paid over a longer period of time, up to 30 years in many areas.

While the big five solar companies have suffered stagnating growth (12% year over year), the regional long-tail solar contractors, installing both residential and small commercial solar, are growing faster (36% year over year). To feed their demand and assist in their growth, Soligent and Ygrene have partnered to provide participating contractors access to Soligent’s Tier 1 pricing and vastly expanded credit lines. This collaboration enables contractors to build more jobs and offer property owners quality solar equipment with industry beating prices and no money down, 100% financing through the YgreneWorks PACE program.

Looking ahead to the next five years, going solar will not only make sense, it will become the norm as solar prices drop and the ITC continues to provide the near term financial push. Even as it wanes, the ITC will help provide market certainty through 2023 as solar prices and financial products provide electricity cheaper than the grid.

While some competitors are attempting to buy their way into contractor’s businesses, Ygrene and Soligent are committed to materially helping our contractors truly grow their businesses. We are starting by eliminating the most pressing growth inhibitors: credit line limitations and installation capacity. With our innovative partnership, solar contractors gain nearly unlimited access to solar materials, and through Ygrene’s expanding relationships with solar installation providers, contractors will also gain access to “low, fixed-cost” installation services. This dramatically reduces risk by allowing contractors to build more jobs per month now while methodically and thoughtfully expanding the number and size of their own installation capacity over time.

In what promises to be a year of change for the nation, one thing we can count on is that 2017 is poised to be another year of tremendous growth for the long tail solar contractor, fueled by FICO-free financing and nearly unlimited access to quality material. With both economic and environmental benefits, PACE’s reputation as a job creation engine and its widespread support from elected leaders across the nation, will ensure its growth trajectory.

Solar Ownership Comes Full Circle

By Mark Colby 

As solar energy freely moves towards large-scale adoption, the path of how to finance solar energy systems has come full circle. At its onset, solar’s emergence promised a new way for home and business owners to participate in clean energy production. But in this early adopter phase, limited financing options restricted market adoption to those who could afford to purchase the systems, and their associated benefits, outright.

This pain point became a burgeoning market opportunity for organizations nimble enough to create no money down financial vehicles, which, in turn, gave birth to the popular solar leases and PPAs. These third party system ownership models broadened access to solar technologies, and provided those unable to pay high upfront costs, an affordable way to go green.


Leases and PPAs have reigned as an easy way to go solar, and have been instrumental in scaling the industry, if somewhat limited in their optionality. As a result, the industry has evolved new financial tools that build on the strengths of both the earlier purchase and third party system ownership models. Home and business owners are able to assume the responsibility of owning solar in its entirety, while receiving all the benefits the technology has to offer.


Driving the trend: Beyond leases and PPAs
As the economic advantages of solar increase and consumers and business become more savvy about the benefits, more people are willing to assume the risks associated with ownership, like labor costs and maintenance, in exchange for a greater portion of the payback. Home and business owners are shying away from “escalator pricing” typically associated with solar leases and PPAs. In most third party ownership models, the repayment terms escalate year-over-year, and can even become costlier than the savings generated after the first few years. With outright ownership, there is no escalator pricing, so as soon as the solar panels are paid for, electricity becomes essentially free for the consumer. Traditional third party ownership models have been instrumental in scaling solar technology. Now that the industry has moved well beyond the early adopter phase, however, people are looking for a new way to purchase solar: a safe, flexible  financing mechanism that maximizes consumer benefits.


A financing revolution vs. evolution: The emergence of PACE
Even with sliding technology costs, most people are still unable to afford the up-front, out-of-pocket cost of solar; however, they still prefer ownership to leasing. Enter PACE: Property Assessed Clean Energy financing. PACE sits at the intersection of renewable energy and  nance to establish clean, renewable energy for all. Unlike previous financing mechanisms, PACE was built from the ground up, to address the critical need to scale clean energy in order to meet climate goals, while also providing a tool that is beneficial to consumers and with more favorable terms to property owners than its lease and PPA predecessors. 

Like a personal loan or HELOC, PACE provides no money down, 100 percent financing, and allows property owners to make clean energy upgrades, all while avoiding the pitfalls of traditional consumer financing options. Approval for PACE is based on available property equity, not the owner, which means it is unaffected by FICO scores, and applications are usually approved in under 30 minutes. In addition to a seamless application process, repayments are made through the property tax and can be scheduled for up to 18 months later, allowing the property owner to accumulate the savings well before having to make a payment. This financing revolution allows homeowners to go green and free up their current capital for other investments.


PACE in action
Today, PACE has unlocked billions in financing for renewable energy, energy efficiency, water conservation, and climate resiliency upgrades across the United States. The program has found broad-based recognition from consumers, as well as bipartisan support from elected officials in the 32 states that have PACE enabling legislation and the 16 states with active PACE programs. Recently, President Obama announced his administration’s unequivocal support for PACE, and highlighted the program as a key pillar of his Clean Energy Savings for All Americans Initiative. By democratizing access to both new and proven clean energy technologies, national PACE providers are bringing cutting edge financing to cutting edge technologies, building resilient, revitalized communities, creating jobs, and generating value for property and business owners.


From California to Florida, communities are turning to PACE to help with their clean energy transition. Speak to any PACE customer or certified contractor, and you will hear stories detailing the cost savings that solar ownership has brought to a home, the sense of safety that hurricane protection has brought to an at-risk community, or the uptick in business a family- run solar and roofing contractor has experienced, all because of PACE. Now PACE, always on the leading edge, looks to enable the approaching solar plus storage revolution by financing storage technologies. Already a proven success in energy efficiency and climate resiliency, PACE is now poised to reach mass- market status, and serve as the backbone to the coming renewable energy revolution.


As we look to the future of solar, we can be certain that with this new breed of financing options, the opportunity for going solar is stronger than ever before.

Mark Colby is general manager of Solar & Storage at Ygrene Energy Fund. At Ygrene, he is charged with rolling out a new generation of tools, solutions, and financial instruments designed to accelerate the adoption of solar and storage technologies while providing the highest quality safeguards and customer service for property owners to affordably make improvements to homes and businesses, reduce CO2 emissions, and protect our planet for future generations. 


Ygrene Energy Fund | www.ygreneworks.com

The question we should really be asking about electric cars

By: Ian Wright 

Electric cars have been around for more than 100 years and work very well, and yet, plug-in vehicles currently only account for about half a percent of new light-duty vehicle sales in the U.S., despite the runaway success of the numerous electric vehicles (EVs) available on the market.

EVs are also massively efficient: about 85% of the energy from the wall plug is used to drive the wheels, while in conventional vehicles, about 85% of the energy poured into the tank is wasted as heat. Even with larger upstream losses in the case of EVs, electric vehicles still win the well-to-wheels contest and are the most efficient architecture.

   Image: Bloomberg
So, why do plug-in vehicles only make up half a percent of the total market? Scalability.

Case in point: a Nissan Versa costs about $14k and uses about 350 gallons of fuel per year, which is about $1,225 at $3.50/gallon. The same car with electric drive - a Nissan Leaf - costs double and, if driven the same 12,000 miles, uses the equivalent of 106 gallons per year, which is about $371; saving the driver $854. But the Leaf driver invested $16k more than the Versa driver, so the payback for the Leaf takes almost 19 years.

When thinking about scaling electric vehicles, it's almost as if we asked the wrong question. If you ask, “How can we make more efficient cars?” to a roomful of engineers, you will immediately get back “What's the most efficient car we make? And how can we make it better?” And you will get a Nissan Leaf.

If instead you ask, “How can we save the most fuel, per vehicle per year, to get the shortest payback?” You will immediately get asked, “Which vehicles burn the most fuel per year, in the hardest drive cycle?” The answer: trucks. Big, smelly, noisy garbage trucks. Driving 130 miles per day at 2.8 MPG is about 12,000 gallons of fuel per year. At $3.75 per gallon, that’s $45k on fuel alone, not even including maintenance. If we get the same proportional gain as in the Leaf case, we would save 8,366 gallons per year, or $31,372. Plus about $20k per year goes on maintenance, mostly for the brakes. That’s $51k saved per truck, per year.

While it costs about 10 times more to build a powertrain for a garbage truck than for the Leaf, it is actually a more economic proposition. For an additional $150k to replace a conventional diesel powertrain with a range extended electric vehicle (REV) powertrain, the payback is simple: $150k/$51k in fuel and maintenance per year in just under three years. Thus, the economic opportunity to scale electric drive with garbage trucks is an order of magnitude greater than a personal car. The economics are comparably compelling in scores of other heavy- and medium-duty applications – from delivery trucks and city transit buses to drayage trucks.

The cost of the powertrain goes up as you move up into heavier vehicles with harder drive cycles, but the fuel and maintenance saving goes up much faster.

You may ask: can you even do that? And the answer is yes. Locomotives have had electric drive for more than 100 years, and freight trains can weigh 10,000 tons. Massive mining trucks use electric drive. The Queen Mary 2, at 75,000 tonnes, is propelled by four 28,800 horsepower electric motors. So Class 8 garbage trucks that weigh 66,000 lbs. or heavy public transportation buses certainly can too. But it can't be done with batteries alone. The battery pack for a Class 8 garbage truck would weigh 10,000 lbs., cost half a million dollars, and take up half the payload space.

However, it can be done with a range-extended EV powertrain, with only a sixth of that battery pack, and a 50kW range extender or turbine generator, which is actually ideal for these applications. The battery pack can be sized to deliver the peak power (or more importantly, to absorb the peak regenerative braking power) while the range extender only needs to supply average power, which is surprisingly low. That's a consequence of the drive cycle. One-hundred-and-thirty miles in an 8-hour shift is only 16 mph.

If we analyze scalability for the shortest payback time, a range-extended EV powertrain is the clear winner for a Class 8 garbage truck and also for our cities’ most demanding vehicles. The scaling properties work towards the higher consumption vehicles and away from the light duty vehicles. Moreover, a powertrain’s fuel, and maintenance savings all follow a curve and as vehicle weight is reduced and the drive cycle relaxed, the payback gets longer, or vice versa. With current fuel and battery prices, 14,000 lbs. loaded weight in a metro delivery drive cycle is about the lowest limit for a reasonable payback, so Class 8 garbage trucks are the holy grail for displacing fuel and making big savings.

When we think about scaling EVs, it pays to ask the right question. At Wrightspeed, rising demand for our Route powertrain throughout the global transit market indicates the scalability of our approach to transit. Our customers, including FedEx, Ratto Group and NZ Bus, show the strong business case in opting for REV powertrains to improve efficiency and performance for the most challenging jobs on the road. Ultimately, REV powertains offers an ideal and economically attractive to tack urban drive cycles and offers an effective way to improve urban conditions.

For more information on the Technology Pioneers 2016, visit our website.

Published in World Economic Forum

How PACE financing creates new opportunities for solar contractors

By: Louis-Philippe Lalonde 

As renewable energy surges into the mainstream, solar technology has rapidly proliferated to disrupt traditional energy consumption, distribution, and storage models in the United States. According to Greentech Media’s Executive Report on “The Future of US Solar” last year, solar could generate 10% of the country’s total electricity output by 2030–an amount equal to approximately 250 GW or 10 million individual installations. That’s an incredible volume of business for solar contractors and contractors looking to expand into solar.

How might contractors position their businesses for the oncoming solar wave? As the 27.4 GW of solar capacity currently installed (roughly 1% of U.S. output) has developed, an array of innovative, accessible, and consumer-centric financing mechanisms have emerged to streamline solar purchases for property owners and installation processes for contractors.

But for solar to hit the next level of market penetration, contractors need to be able to offer customers a simple, easy-to-implement solar financing program that doesn’t require upfront costs, FICO scores or invasive credit checks but still helps to reduce energy costs. Fortunately, that program is here today: PACE (Property Assessed Clean Energy) is the perfect financing vehicle to help contractors help their customers easily afford solar. As a result, installers can scale their businesses quickly, efficiently, and successfully.

Simplifying the solar sell through PACE financing
So what makes PACE so unique? Traditionally, contractors have turned to debt-inducing financing methods like leases and loans to help property owners finance solar purchases. Compared to these outdated mechanisms, PACE removes the debt factor from the “solar sell” equation, instead incorporating project costs into a recurring payment on the property owner’s tax bill. With no hidden fees, upfront costs, or adverse effects on property transferability, PACE ensures 100 percent financing for thousands of energy efficiency and climate resiliency upgrades–including but not limited to solar, HVAC, roofing, water conservation and hurricane preparedness retrofits.

Approval can take as little as 15 minutes, there’s no debt incurred, and the completed projects don’t factor into the personal credit score of the property owner. It’s fast, it’s efficient, and it’s revolutionizing the way that contractors do business.

For Miami-Dade based solar contractor Raul Vergara, the decision to begin offering PACE transformed his business. “Since we’ve started funding solar projects through Ygrene’s PACE program, Cutler Bay Solar Solutions has installed over 100% more projects,” says Vergara. “We’ve been seeing incredible market success since day one and adopting PACE has helped us evolve from a one-man team into a vibrant solar business active all the way across Miami-Dade County.”

Indeed, PACE-enabled financial products will unlock solar access for a whole new spectrum of residents and businesses alike: unlike traditional lease or loan programs, solar financing through PACE is based on equity available in the property. For contractors hoping to grow their solar businesses, or who are considering entering the solar market, PACE programs offer a wide variety of benefits that consumers will love. At Ygrene, for example, components of our award-winning YgreneWorks program include:

  • Low, fixed payments that may be spread out over long terms (up to 30 years)
  • A low interest rate and simple annual payments made through property taxes
  • Ease of transferability at sale and refinancing
  • No bulk assessment on title

10 Million Strong: building your solar business through PACE
For contractors who have no prior experience in the solar space or who primarily focus on roofing, HVAC, or other electrical equipment installations, PACE offers an easy entry point into the solar market and a way to build a business vertically around renewable energy. It makes it incredibly simple to add a solar financing product offering to pre-existing business models, and many contracting companies throughout California, Florida and other states have already integrated solar and other clean energy programs into their businesses through PACE.

To reach 10 million installations by 2030, contractors and property owners need PACE–a simple, low-cost program focused on consumer satisfaction and a proven mechanism for taking your contracting businesses to the next solar level.

Published in Solar Power World

2016 Hotel and Lodging Survey Details Challenges, Emerging Best Practices in Energy and Water Management

By: Jon Moeller

As a 24/7 industry, hotels and motels are one of the largest consumers of energy in commercial real estate. As such, hospitality operators are primed to adopt sustainability initiatives to reduce consumption and cut costs. A recent survey and study by MACH Energy showed that 61% of hotels ran a sustainability program, yet 42% did not know the results of their own programs. Additionally, only 30 percent of hotels have an energy or water management software system in place.

Intuitively, cost savings go hand-in-hand with reduced consumption, not to mention that sustainability programs are correlated with guest satisfaction and increased revenue. Nevertheless, the priorities for the lodging industry remain unclear when it comes to energy and water management.

To uncover the operational depth and diversity of methods used by hotel teams in running their properties efficiently, MACH surveyed more than 300 hotel operators and management professionals across all major metropolitan areas in the country, targeting

hotels and lodging facilities across a range of categories including: Upscale/Luxury, Full Service, Casino, Historic/Boutique, Select Service, Economy/Extended Stay, and Budget.

According to the survey results, cost reduction is overall the most important goal in implementing hospitality energy and water management programs. In fact, over 70 percent of all respondents listed cost and expense reduction as their most important reason for efficiency efforts. The next most popular reasons were satisfying customer/guest preferences and meeting sustainability standards, accounting for 39 percent and 25 percent of respondents respectively.

Additionally, 56 percent of respondents claimed that the most important element in running hotels efficiently is the operational hotel teams. As behavioral changes have been recently emphasized as a key to successfully reaching energy and water efficiency goals, hotel teams will continue to be the properties' most valuable assets even as technologies are adopted. While effective, operational improvements could also be paired with lower-cost measures in energy management such as energy and water management software to provide actionable analytics for optimizing personnel initiatives and the use of environmental and lighting controls and sensor equipment.

Interestingly, while 92 percent of survey respondents were aware of the square-footage of their common areas such as conference halls, swimming pools and hotel grounds, 32 percent of respondents had no knowledge of energy and water consumption in those areas, and how high those costs could be — a discrepancy that reflects a lack of data-driven energy and water management across the industry.

Of the 63 percent of respondents who affirmed their hotels were running a sustainability program, as many as 42 percent of these respondents did not know how much their sustainability programs were saving in terms of energy cost, or their hotels did not run a sustainability program. 35 percent of those with sustainability programs felt the program generated a savings of 5 percent or less.

When instituting energy and water efficiency measures, hotels need to reduce their utility expenses without sacrificing guest comfort. Paired with operational improvements, simple and cost-effective measures such as energy and water management software could be taken for immediate savings, building on existing systems or as a standalone solution.

The full report 2016 Hotel Industry Survey: Energy and Water Management Best Practices can be downloaded here.

Published in Hospitality Net

A Roofing Contractor Drives Sales and Leads with Fast and Easy Energy-efficiency Financing

By: Pete Mazzuca III

After 15 years in the roofing business, I’ve seen countless construction, design trends and sales methods change over time. The one thing that has always stayed the same? That first discussion with the customer around the kitchen table, looking at the scope of the job and then getting right down to finances. It’s the conversation that can make or break a project: Can the customer get the financing he or she needs to complete the job? Do we need to offer other options? Scale back? Or, even better, can we expand the job and sell into higher-quality products and designs built to last?

KEEPING PACE WITH A GROWING TREND

Ygrene Energy Fund is a leading multi-state provider of Property Assessed Clean Energy (PACE) financing. Supported by local governments, the YgreneWorks PACE program allows property owners to perform energy-efficiency and resiliency upgrades on their homes or businesses with zero down, a low interest rate and simple annual payments made through their property taxes. These “green” roofing projects can include everything from cool roof shingles that slow heat build and save on electricity costs to reflective insulation providing a better thermal barrier for a building.

Increasingly, Cal-Vintage customers are more concerned with how projects impact the environment and are always interested in ways to lower utility bills. In fact, many PACE-qualifying upgrades are now being mandated by law; for instance, Title 24, Part 6, of the California Code of Regulations requires that residential and nonresidential buildings adhere to strict energy-reduction standards mandated by local governments. This has resulted in an uptick in owners who need major roof renovations and also need a way to afford the upgrade. As similar laws gain popularity amongst U.S. cities and states, PACE is a valuable tool for customers looking for better reroof financing options. As a large roofing company, we at Cal-Vintage must take it upon ourselves to offer every way to comply with these rules.

To qualify, Ygrene considers the equity in the property, not the personal credit of the property owner, unlocking finance doors for entire groups of customers. So far, more than 40 Cal-Vintage clients have taken advantage of the PACE option to avoid dipping into savings, escape lengthy paperwork and skip extensive background checks. Securing traditional reroofing loans can be a long and difficult process. With PACE financing, our customers have been able to complete larger, longer-lasting projects faster because the financing comes through in two to three days rather than two to three weeks.

BECOMING A CERTIFIED PACE CONTRACTOR


Our job as roofing contractors is to provide the best value to our customers and community, and in a world of changing regulations and housing needs, this value extends to financing. The entire Cal-Vintage team is trained through Ygrene’s Certified Contractor Education program to know when and how to offer PACE financing as an option at the kitchen-table discussion.
The Ygrene education and certification program includes in-person training for our sales teams matched with webinars and online tutorials that can be accessed from the web anywhere, anytime. Topics cover all the information we need, including details about the PACE program, important consumer protections, step-by-step instructions for helping customers fill out the online application and how to ensure we receive our payment in a timely manner.

 

The Cal-Vintage sales team also received an in-person, individual training by a Ygrene regional area manager dedicated to our team. The training included information about program features and benefits, access to the web portal, the proposal tool and in- depth answers to our questions. As PACE requires a number of legal disclosures and approvals, our contractor team was briefed on the application and approval and funding processes so we could properly answer any custom- er questions. Additionally, Ygrene offers a support call-center to field any additional questions on the financing.

GETTING STARTED

We heard about Ygrene through a customer and reached out to the company’s local representative to become certified. The process was simple, and all of our questions were answered in the training session. Since the company’s inception, Ygrene has trained nearly 3,000 contractor companies in communities across its service territory. With $1 billion in approved applications and $350 million in closed contracts, Ygrene has been generating successful outcomes for customers and contractor partners across the U.S. Those interested in becoming a certified contractor can visit Ygrene Works’ website.

Are We Experiencing Transportation’s Instagram Moment?

By: Zach Barasz, Brook Porter, Paul Yeh

As we write, three powerful trends – electrification, sharing and autonomous drive – are reshaping the future of transportation, with huge implications for the ecosystem. In just the past few weeks, there have been significant developments on all three fronts: the success of Tesla’s Model 3 pre-sales, GM’s $500M investment in Lyft, and more recently, GM’s acquisition of Cruise, a billion dollar exit that could be transportation’s Instagram moment.

Tesla’s Model 3 made history two weeks ago with what was arguably the most successful product pre-sale launch ever, even dwarfing the value of orders placed in advance for Apple’s iPhone. The Model 3 racked up $14 billion in pre-sales for 325,000 cars, resulting in $325 million in deposits in the first week.

To put that into perspective, the Honda Civic, one of the most popular cars on the market, sold 330,000 cars in the US last year. Moreover, this record breaking enthusiasm for electric vehicles (EVs) is occurring at a time when oil prices are hitting a 10-year low, recently down to 30 dollars a barrel.

This signals that EVs are finally breaking free of niche classification to becoming a truly mainstream product. Below is a recent Ventured podcast, where we got together to discuss the convergence of these transportation trends.

Looking forward, the growth of EVs will not be linear. EVs like the Model 3 hit targets for affordability and range that make them useful vehicles for a majority of consumers. Range anxiety, a key concern for early EV adopters, is finally mitigated with a 200-mile range vehicle: that can address 95%+ of an average driver’s miles per day.

There is a binary answer to the question “Will an EV work for me?”, and while before, the answer for most consumers was probably no, it is now probably yes.

In fact, more than 71% of respondents in Southern California were “highly interested” in switching to an electric vehicle according to a 2015 survey by the charging station provider NRG EVgo.

This is a massive shift that will create exponential growth of EVs. In addition, there are positive feedback loops that will accelerate adoption as the market grows.

Most importantly, more vehicles will lead to more infrastructure which will lead to more vehicles. A company we invested in, ChargePoint, found that if there is a charger installed at a workplace, employees are 20 times more likely to actually by a plug-in vehicle.

Desire vs. Economics

We know that Tesla is not the only one talking about a 200-mile range electric car. GM recently announced the Chevy Bolt as well, emphasizing that it would be the first-to-market in 2016 with a 200-mile range EV.

J Mays, former Chief Creative Officer at Ford, used to say “if you go into a person’s house and look at his surroundings, you’ll see exactly who he is, but if you look at the same person in his car, you’ll see who he wants to be.” Do consumers want to be a Bolt or a Model 3?  Is this really about being first-to-market or is it about building the best, most desirable car?

We have seen Tesla capture the spirit of consumer desire by building the best car in its category, not simply by building an electric car. The best car today just happens to be electric (if pre-sales are any measure). But true impact and mass adoption only occurs when the desirable choice becomes economical.

Uber has also pursued a similar strategy that has worked remarkably well.  By starting with UberBlack – an elite service made available at the push of a button for a reduced cost, they established a high-end brand. But it wasn’t until UberX, providing a better ride for 40% less cost than a taxi does, that adoption occurred on a mass scale and fundamentally changed the transportation industry.

Convergence Of Three Trends: Autonomous, Electric, Sharing

We are observing first hand an interesting link between sharing, autonomous driving, and electrification. Today, we know that cars are only used ~4% of the time, and we see autonomous driving as critical to increasing utilization.

Uber drivers today may be using their cars 8-10% or more (more than double average utilization). Regular car-owners may also see their vehicles used 8-10% of the time through sharing the car on unused days on a peer-to-peer carshare network like our portfolio company Turo or the startup Getaround. But, autonomy is the key to driving utilization even higher.

Given that cars are relatively unutilized today, it’s no surprise that most car-buyers think primarily about upfront costs and hardly consider operating and maintenance costs. As utilization goes up, awareness of Total Cost of Ownership increase and consumers are impacted more by operating costs, just ask any Uber driver and they will know how much they pay for gas and maintenance.

Today, the cheapest vehicle to operate is electric. Even with relatively expensive, 15 cents per kilowatt-hour home solar, a mid-size EV costs about $1.25/gallon of gas equivalent to operate – far below even record low oil prices.

We see this directly at another portfolio company of ours, Proterra, the largest producer of electric buses in North America. Their electric buses have the lowest total cost of ownership, even when compared to “cheap” diesel buses. Transit agencies can save up to $365,000 over the 12-year expected lifetime of a single bus.

Autonomous driving will push vehicle utilization up even further, beyond what an Uber car may experience today. Operating cost and complexity will become a more important consideration than upfront cost, and there will be a push towards electric drive as a result.

Can OEMs Embrace Innovation Fast Enough?

The auto market is massive—17 million new vehicles sell every year in US alone, and the used car market is three times larger.

Yet, despite their size and historical reluctance, incumbent OEM’s have demonstrated a willingness over the past year to forge new partnerships with startups, evident by the recent GM – Lyft partnership and investment. The auto market is clearly experiencing massive change as users tend towards a multi-modal transportation future. We believe entrepreneurs are better positioned than ever before to capitalize on this transportation transformation.

Published in TechCrunch

ENERGY STAR Baseline Shift: How EMS Can Help Prepare Your Facility

By: Jon Moeller

Increasingly, institutional investors, asset managers, and consultants are viewing energy efficiency as a core component of a building’s overall valuation, “grading” properties on their sustainability compliance. The ENERGY STAR standards can be a reliable way to grade these assets. Research suggests certified buildings are more attractive by commanding 1-3% higher rents and 10+% higher valuations than non-benchmarked buildings, so a building’s energy footprint and associated ENERGY STAR score can drive significant value. 

Programs such as ENERGY STAR, benchmarking, and LEED have led to an increased adoption of efficient building initiatives ranging from window and lighting enhancements to building and energy management technologies. In particular, the ENERGY STAR program has yielded widespread and incontrovertible results. According to a study conducted by the City of San Francisco and ULI, ENERGY STAR buildings throughout San Francisco became 7.9% more efficient between 2010 and 2014, with median ENERGY STAR scores climbing to 87. In New York, in just a one-year period from 2010 to 2011, the average building score also improved rapidly, increasing by 3 points from 64 to 67.

ENERGY STAR Changes On The Horizon

In the coming months, however, facility executives may be in for a shock, because the EPA is expected to update the baseline energy consumption data that determines ENERGY STAR scoring for buildings. The current Commercial Buildings Energy Consumption Survey (CBECS) data used for calculations is still based on a 2003 survey. As new data comes in from 2012’s CBECS, a long overdue baseline reset could leave commercial buildings vulnerable to ENERGY STAR score reductions, which, in turn, could jeopardize their ENERGY STAR and LEED certifications, ultimately triggering millions in necessary upgrades.

To drill deeper, the ENERGY STAR score of commercial buildings is predicated on baseline data from the CBECS, which is conducted once every four years by the Energy Information Administration (EIA). However, an absence of CBECS reporting in both 2007 and 2011 means that the current ENERGY STAR scores are no longer an accurate measure of current building efficiency. For example, because overall energy usage fell by 7% from 2008-2011 alone, it is highly likely the new 2012 CBECS data will institute a much higher baseline for buildings seeking ENERGY STAR or LEED certification.

While this baseline recalibration may make it more difficult for some buildings to reapply for certification, it could help combat the complacency many CRE industry observers have noted. Currently, many building operators with high ENERGY STAR scores may think “we have a 92 score, we’re done” and, as a result, may delay adoption of Energy Management Software (EMS) and other comparable technologies.

Lowered scores could re-invigorate operators to continue to reduce their energy costs, as EMS remains the most cost-effective and easy-to-implement approach to these reductions. In fact, according to the Department of Energy, a building can often see a 10% operational efficiency improvement by making low cost operating changes. Indeed, commercial properties utilizing multi-functional EMS for electricity, water, gas, and steam, either independently or in tandem with Building Management/Automation Systems (BMS/BAS), will be much better positioned to maintain high ENERGY STAR scores and certification.

As the industry awaits this impending shift, its potential impact underscores the fact that EMS solutions can anticipate these sorts of risks and provide property owners, managers, and chief engineers the measures they need to ensure their portfolios are in compliance. Whether a building team wants to identify cost savings, optimize energy usage, or monitor ENERGY STAR score fluctuations, EMS is unequivocally the easiest and most effective method of adapting to this benchmarking shift and enabling an increase value in net operating income (NOI).

Jon Moeller is CEO of MACH Energy, a provider of cloud based energy management software, where he also heads sales and corporate development. Prior to joining MACH, Jon spent a decade in financial services business development and transactional roles at Banc of America Securities, Cowen and Co., and Storage Technology Corporation. Jon is also currently President of a mixed-use project based in San Francisco, and an active member of ULI San Francisco’s Sustainability Committee. 

Published in Facility Executive

Accelerating Zero-Emission Mass Transit One EV Bus Order at a Time

By: Eric J. McCarthy

During the last ten years the United States has borne witness to a patchwork of federal transportation funding measures.  But on December 4, 2015, President Obama signed into law the Fixing America’s Surface Transportation (FAST) Act, crystallizing a long-term investment future for manufacturers, infrastructure providers and public transit agencies alike. Backed by strong bipartisan support, the $305 billion surface transportation bill marks the first multi-year, fully-funded bill of its kind in over a decade, which sets the historical legislation in stark relief against years of inadequate funding.

The law is of particular importance to the emerging zero-emission bus industry.  Transit agencies will see an 89 percent increase of current funding levels for the Bus and Bus Facilities Program and bolstered investment in the Low or No Emission Vehicle Deployment (LoNo) Program. These changes firmly underscore the federal government’s growing commitment, supported by both sides of the aisle, to reduce emissions through the accelerated adoption of cleaner, more efficient alternative fuel bus transit.

In fiscal years 2013-2014, the FTA’s LoNo program received 50 project proposals, which resulted in over $200 million in requested funds. These proposals exceeded the $55 million of combined available federal resources allocated to the program by nearly four times. And last fiscal year, 2015, the FTA received even more proposals for only $22.5 million in funding. Under the FAST Act, the LoNo program has been integrated into the Bus and Bus Facilities Program, which will allow the initiative’s success and popularity to grow further. In recognition of increased market demand for LoNo buses and to further incentivize their deployment, the FAST Act increases LoNo funding by 144 percent to $55 million annually over five consecutive years, for a total of $275 million. And now that this funding will come from the Highway Trust Fund, it will be more certain and predictable. Doubling the LoNo program is unequivocal proof that Congress believes the program is serving an indispensable role in accelerating zero-emission mass transit.

The FAST Act has strengthened the LoNo program in a variety of other ways as well: it expands eligibility to all transit agencies regardless of air quality status, requires the FTA to promptly award LoNo grants within the same fiscal year that they are requested and eliminates certain regulatory requirements so that transit agencies can now enter into leasing arrangements for vehicles or batteries.  The ability of an agency to lease batteries will reduce costs by as much as $100K per zero-emission electric bus.  And unlike any surface transportation bill to date, the FAST Act takes a novel approach to authorize several innovative procurement practices.  Among other innovations, it allows states to establish cooperative rolling stock procurements, thus enabling any transit agency to purchase buses that a lead transit authority has ordered.  By opening up this process, and shortening the procurement cycle, the FAST Act will enable the industry to scale volume production, reduce procurement costs and ultimately accelerate LoNo bus adoption and ensure that LoNo buses are on the road faster than ever before. 

Lastly, the FAST Act enhances state transportation programs.  For example, California transit agencies can take advantage of the state’s existing Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (HVIP) and still lease batteries through the FAST Act, dramatically reducing upfront capital costs. The expected 12-year Total Cost of Ownership of owning, operating and maintaining an EV bus is now more economically compelling than any other technology.  Alongside the industry’s technological advancements, electric buses have become a compelling financial opportunity that is even more incontrovertible thanks in part to the FAST Act—incentivizing electric transportation options from coast to coast­.

To date American electric buses have logged millions of miles of revenue service, in large part because of the state and federal predecessor programs to the LoNo program.  Municipal agencies in California, Kentucky and elsewhere are placing their second or third orders of zero-emission buses after witnessing the economic and technological viability of these vehicles firsthand, and it is these agencies that will continue to drive a competitive market and push manufacturers to innovate.  The FAST Act will play a critical role in accelerating continued adoption of advanced technology transit vehicles and improving heavy-duty mobility solutions throughout the United States; indeed, the bill is a major victory not only for public transportation, but the transportation sector as a whole, creating funding stability and propelling the EV bus industry toward a critical adoption tipping point.

McCarthy is the vice president of Government Relations and general counsel of Proterra Inc., the leading U.S. manufacturer of zero-emission, all-electric transit buses.  

Published in The Hill

Cultivating a Bio-Based Future in India

By: Mark Schweiker

India is expected to eclipse China as the world's fastest growing economy in 2016, placing the country at a critical juncture. With investment in India's energy infrastructure at a record high and with what will soon be the world's largest population, India is integrating new strategies to ensure energy access and security. Demographically, India is in the midst of a significant transition: By 2050, the population is expected to surpass 1.6 billion, and in the next decade there will be 100 million new high school graduates. Resultantly, India's population needs a cost-effective and sustainable approach to meet the country's growing energy demands while also employing the next generation. One dimension of the answer comes from the Indian government, which has adopted a national bioethanol mandate to revitalize struggling rural economies and address urban pollution concerns. This mandate, which doubles its target of blending ethanol with gasoline, capitalizes on abundantly available resources throughout the country. Bioethanol creates additional profit in the agricultural supply chain by placing market value on crop residues for ethanol production, and ultimately stimulates domestic growth while improving local air quality.

Given India's current development paradigm, a domestically grown bio-strategy is highly complimentary to larger energy plans that target a 40% utilization rate of non-fossil fuel sources by 2030, which Prime Minister Modi established at last year's COP 21. It is also consistent with well-established principles upon which modern India was built. Swadeshi politics - emphasizing economic self-sufficiency that leverage national resources and talent - was proven as effective in principal and practice for helping end British rule. In a modern interpretation of swadeshi politics, the "Make in India" initiative is an overarching strategy that prioritizes domestic industrial production and includes energy. More concrete policies are in line with this and Prime Minister Modi has placed renewable fuels as a key strategy to India's energy approach. Notably, the National Biofuels policy targets a 20 percent blend rate by 2017 with the explicit goals of reducing foreign imports to ensure energy security, revitalizing rural unemployment, improving stagnated wages and producing bioenergy.

Most concretely, India's oil marketing companies (OMCs) have placed bioethanol as a core component of their renewed energy efforts, the three biggest - Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation - pledging to produce over 220 million gallons of biodiesel from local manufacturers before November of this year.

Economies in rural India are predominately agricultural, which employ nearly 50 percent of the country according to World Bank data. Low commodity prices, a volatile agricultural market, and uncertain growing conditions are converging, upending growers' livelihoods and threatening the economy. Just as the United States' Renewable Fuel Standard has spurred economic growth in rural America, a biobased Bharat offers a similar promise for India's villages. While programs like the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) have been posited as the savior for rural economies, the more concerted and industry-wide approaches, like the National Biofuels Policy, are expected to catalyze economic growth throughout the bio-industry and build sustainable sector growth. Already, growers in Odisha are reaping the fruits of bioethanol production, and the Minister of State for Petroleum and Natural Gas, Dharmendra Pradhan, cited that growers producing biofuels from rice residues could earn over $10.9 million. The state, which produces over 3 million tons of rice crops per year, could translate this agriculture prowess into over 30 million liters of ethanol, making the economic upside profound.

Well endowed with crops--from rice regions in West Bengal, to wheat regions in India's Northwest Punjab states through to Tamil Nadu's sugarcane operations in the South--the opportunities to convert crop residues into higher yield returning products, including bioethanol, is vast. Complimentary to these feedstocks is an already well-developed sugar mill industry. Recently, the sugar industry has been in decline with over 100 mills closing operations in 2015. Rather than let the country's robust network of sugar mills and mill-supported communities idle, the existing infrastructure makes them ideally situated to be reused in new and more lucrative ways as biorefineries, tapping into local resources. As sugar mills are reinvigorated and repurposed to make bioethanol, the surrounding rural populations will benefit from job creation, alleviating distressed rural economies.

Furthermore, bioethanol can be a drop-in replacement for high-polluting fuels. In cities like Delhi, where air pollution levels can reach 128 parts-per million, there is significant potential to improve urban conditions for over 10 million residents. Taking into account the country's other cities - from Raipur to Ahmedabad - the positive possibilities available in replacing even just a fraction of the power generation with bioenergy multiply. In this way, bioethanol becomes a tool to combat particulate pollution making the environmental and health benefits of bioenergy profound.

As the country emerges as a pivotal actor in international energy discussions, India's bio-energy strategy will provide a blueprint for other countries with plentiful agricultural waste to leverage and spur economic growth. India's growing support for bio underscores how essential bioethanol will be in the coming years as an energy source.

Schweiker is former Governor of Pennsylvania and SVP at Renmatix, a technology licensing company for the conversion of biomass into cellulosic sugars

Published in The Huffington Post

Why the Bay Area Should Lead the Nation in Zero Emission Transit

By: Ryan Popple

With the rise of electric cars, connected vehicles and on-demand mobility services, the U.S. is in the midst of a complete transportation reinvention, and the Bay Area is ground zero for the disruption. Early on, EV pioneer Tesla Motors and technology titans like Google and Apple established their headquarters here and since then the region has lured a number of major automakers to establish research and development centers in Silicon Valley. The Bay Area leads the world in electric car and on-demand transportation adoption, but is lagging in one critical area –public transit.

Mass transit is the most accessible transportation asset in the country—with roughly 70,000 buses in the U.S. and over 3,000 buses in service in the Bay Area alone. The global electric bus market represents a growing percentage of that market and could reach an estimated annual sales volume approaching 35,000 units by 2020. So, with this kind of market potential in the heart of the world’s innovation capital, the Bay Area should be the global capital for electric buses. 

Customer demand and EV supply chains are already working in mass transit’s favor and enabling technology transfer. As the Bay Area’s congestion rises, and younger generations forgo car ownership, cities are demanding clean and efficient transportation solutions. Simultaneously, a robust network of suppliers, from battery technology companies and charging infrastructure providers already exists here today. Other cities have already seen the economic and environmental opportunities of EV mass transit: Seattle, Stockton, Louisville, and Nashville, are just a few. There is every reason for the Bay Area to be a leader in a movement that was created in our backyard.

The proof of the economic and social values of EV mass transit are already coming in. Volvo Group recently partnered with consulting firm KPMG to quantify the value created by electric buses to show the transport sector the opportunities in developing a sustainable transit system. Results demonstrated that a city of 500,000 residents would save $12 million per year if city buses switched to electricity instead of diesel. If we were to scale this model to the Bay Area’s population of more than 7.5 million residents, that would be $180 million per year saved. In fact, electric buses are already more cost-effective to own than diesel or CNG buses over the expected 12-year life per bus, saving taxpayers and transit agencies hundreds of thousands of dollars in operational costs over the life of each vehicle.  

And as the world struggles to assess the impact of the VW diesel scandal, one thing is clear: the more we learn about diesel pollution, the more obvious the need becomes for zero-emission vehicles in our local communities. Air pollution – the second leading cause of preventable death – causes more than 7 million deaths every year. Another study found that children living in highly polluted cities have up to 10 percent less lung capacity than normal and damage could be permanent. For decades, Southern California and the Central Valley have taken the bulk of air quality criticism, but in the Bay Area we are now facing our own issues as we attracts more people to the region. In the Bay Area, our unhealthy air is often caused by Nitrogen Oxides (NOx), a primary pollutant from heavy diesel engines like buses and trucks. Almost 100,000 people came to the Bay Area between 2013 and 2014.  In 2014 alone, we had over [200] unhealthy air quality days, demonstrating that we have become a highly urbanized region like our neighbors in Southern California – with all of the associated vehicle congestion and health challenges. We’ve seen how transit agencies are working to meet the Bay Area’s growing needs to increase ridership with innovative transit solutions. By converting the Bay Area’s 3,000 buses to electric, cities could reduce greenhouse gas emissions by 360,033 tons per year and significantly improve local air quality. 

California has been a consistent leader on policy for advanced transportation technologies. And with California representing nearly a seventh of the U.S. bus market and the Air Resource Board setting a goal of operating 100% zero-emission bus fleets by 2040, the state is inaugurating a quiet electric vehicle market transformation. With the average bus in use for 12 years, we need to start transitioning fleets now. Bay Area transit agencies led the industry in adopting hybrid technology, now it makes sense for the Bay Area to be the first to perfect zero-emission transit at scale.

Popple is CEO of Proterra and former Tesla Motors executive. Committed to moving the industry forward, Ryan serves on the EV Strategic Council working on long-term strategic planning for the transition to clean vehicles and the Transportation Committee of the Silicon Valley Leadership Group.

Published in Silicon Valley Business Journal

Electric Vehicle Policy Support is Surging; Now We Must Build the Infrastructure

By: Thomas Ashley

On the heels of several successful transportation and clean energy policies in the U.S., the recent Paris Climate Accord upped the global ante for support of electric vehicles (EVs). In parallel to the sweeping accord, the International Zero Emission Vehicle (ZEV) Alliance, which includes eight U.S. states, Quebec, and four European nations, announced that it will strive to make all new vehicles sold in its jurisdictions zero emission by 2050.

Buoyed by direct and indirect policies like the Fixing America’s Surface Transportation (FAST) Act, California’s S.B. 350, the federal Clean Power Plan, and on-going grid modernization efforts in New York (Reforming the Energy Vision), California, Hawaii, and elsewhere, EVs are increasingly viewed as the most promising alternative to petroleum and diesel-fueled transport.  The growing momentum further supports this fact for a brave future of accommodating autonomous vehicles on the nation’s roadways.

The increasing surge of EV policies and state support build on long standing low and zero emission policy in California, led by the California Air Resources Board and made more poignant by Governor Brown’s Executive Order requiring that the state adopt 1.5 million ZEVs by 2025. New York City and a number of West Coast cities, including Los Angeles, have made strong pledges to electrify significant portions of their fleets. Meanwhile, many investor-owned utilities are also working to electrify their fleets and increased coordination between the Edison Electric Institute, the Department of Energy’s EV Everywhere program, and the Northeast States for Coordinated Air Use Management promises to continue to develop EV-enabling policies.

Yet, despite all of these powerful signals and overarching goals, policy norms to support EV infrastructure have not matured. Although EVs and “smart charging” infrastructure represent a major step forward for our clean energy and transportation future, there is a dearth of policies that support a deep and broad network of EV chargers. Such a network will be critical to ensure the integration of intermittent renewable generation and the reduction of transportation sector emissions. An infrastructure that can coordinate EV charging with grid signals will allow our nation to incorporate a greater percentage of renewables and distributed energy resources into our energy mix, while making our aging grid infrastructure more flexible and resilient. To that end, laws and rulemakings (and accords) that require emissions reductions and/or increased penetration of renewables should be understood to benefit EVs.

As EV charging business models evolve to meet this emerging market, there has been a lack of robust infrastructure investment, leaving the burden of both market policies and financing with automakers and government agencies. In California, the Public Utilities Commission (CPUC) has recently authorized ratepayer funds to support infrastructure development, in part because it believes that there may well be a charging market failure. 

The need for sustainable funding for charging infrastructure–especially publicly available direct current fast charging (DCFC)–is particularly acute.  DCFCs are critical for deeper penetration of electric vehicles, including EVs with larger batteries and longer ranges, as the short charge time most closely approximates the type of on-demand fueling that the gas station model has made drivers expect.

The CPUC has just approved the infrastructure applications of Southern California Edison and San Diego Gas and Electric, with a decision on the first phase of Pacific Gas and Electric’s application likely by summer.  The three programs could result in over $1B in ratepayer investment in charging infrastructure over the next 5 years.  While only Pacific Gas and Electric’s application addresses the critically important DCFCs, the impact of this infusion of investment and potential for replication could have an outsized effect on infrastructure policy and economics across the country.

With utility roles evolving within the framework of grid modernization and distributed resource growth, investment in new revenue streams that benefit the grid and decrease emissions is a natural fit for utilities. 

To adequately enable the broad scale-up of electric vehicle adoption, it is essential to have multi-stakeholder collaboration and increased investment in electric vehicle charging infrastructure. This support will also have the direct benefit of enabling a more dynamic and resilient power distribution system.  The future is incredibly bright for clean energy and electric vehicles – now we need to make sure we have the infrastructure to support this all-important paradigm shift.

Ashley is director of Government Affairs and Public Policy at Greenlots.

Smart Policy Ushering in a New Energy Paradigm

By: Mike Gordon

As natural disasters become more frequent and weather patterns less predictable, continuing to create and implement smart energy policies remains one of the best tools available to get to “benign outcomes.” One such policy that is quickly gaining purchase across the U.S. is Community Choice Aggregation (CCA). CCA is essentially an energy procurement model that enables communities to become the default power supplier in preference to the current default provider, which is usually the utility. This is a key step in the “think global, act local” movement and the next frontier seems inevitable: locally sourced energy.

Just last month New York became the seventh state to adopt the model, which addresses one of the key challenges facing municipalities today: creating valuable services for constituents without increasing taxes. In particular, smart energy policies like CCA that capitalize on today’s low natural gas prices and aging energy system is upon us. In recent years, states have adopted CCA as a solution for municipalities that wish to usher in a new energy paradigm—one that includes micro-grids, community-owned solar, and energy efficiency upgrades, financed inexpensively and applied intelligently without raising taxes. CCA is a key tool in delivering on that model and over five million customers across the U.S. are currently engaged through a CCA.

Central to the CCA model is its ability to provide residents with a new option of designating a local energy supplier as the source for their power. If residents do not proactively choose a supplier, they will default to whomever the municipality has chosen. Right now, when 10-15 municipalities come together and purchase energy on behalf of 100,000 homes for three years, this provides great economic value because many buyers under one umbrella exert market clout.

However, this is merely the visible portion of the CCA value iceberg. Natural gas prices are low and the price municipalities negotiate for electricity today is quite advantageous as a result. For example, a fixed price negotiated today could provide sustained value by locking in a market rate when prices are low. This creates potential economic value because communities would hold an option to gain from rising gas prices. Most CCA programs actually offer tax relief that elected officials pass along to their constituents. State energy markets are structured in a way that when you buy electricity competitively, the sales tax on certain portions of the bill comes off, but when you buy from the utility, you pay sales tax on the entire bill.

This opportunity coincides with some remarkable trends, providing good backwind for CCAs. For example, resilience challenges are generating more opportunities to actually inject cash into local economies, just as the cost of infrastructure is dropping. This is especially pertinent today because of the number of reported power outages across the U.S. increased between 2000 and 2014. There’s nothing ambiguous about it. Weather related outages are becoming a greater threat to the economy and energy infrastructure is less effective than it once was.

Multi-stakeholder micro-grids hold the promise to provide dependable electricity service for businesses, public services and homeowners to stay powered and operable, during a blackout. This undertaking has inspired regulators to expand earnings opportunities that come from adjusting consumption on short notice. And of course, micro-grids aren’t a substitute for the central grid. However, micro-grids are showing promise to reduce the amount utilities need to invest in power infrastructure over the foreseeable future. Further, a more decentralized grid safeguards communities in the face of unpredictable weather and can mitigate expensive energy peaks. Community-owned solar is now all the rage with cutting edge regulators. It’s particularly valuable in tandem with CCA and micro-grids and builds upon net metering. It provides substantial value with its all-inclusive, reduced prices for delivery charges, which the utility assesses for providing the poles, wires, and wire maintenance. Moreover, a customer can install a community solar system, and sell the benefits of that system to his neighbor down the road. CCA allows that value to be simply mixed in with the total renewable supply costs. Furthermore, local solar generation has the unique capability of improving the efficiency and power quality on the grid.

The triple play of Community Choice, micro-grid development, and community-owned solar is a coup for regulators and community leaders, achieving goals that local policymakers aim to encourage, such as local economic development, resilience, and clean energy. These policy levers add services, without raising taxes. Indeed, the positive effects of Community Choice Aggregation are manifold: small businesses can thrive without any tax increases, communities are engaged, and there is a virtuous cycle as local communities gain payment and savings for smart energy choices.

Energy conscious mayors are taking notice. There are now proven policy tools that offer immediate value for communities and empower communities locally to finance a distributed, next-generation energy system that is resilient, affordable, and clean. 

Gordon is co-chair of Sustainable Westchester and CEO of Joule Assets, Inc. the leading finance provider for the energy efficiency and demand response industries. 

Creating a Path to Scale for Energy Efficiency Markets

By: Maria Fields

Just ten years ago, PV solar was a small and sleepy industry in which a few companies developed and sold cost saving, environmentally friendly technology, typically with no available financing. In the past decade this industry has transformed into a vibrant market, and just last year attracted $26.5 billion in private capital investments driving growth of 175%. The lessons learned from the solar industry’s market transformation are instructive for the emerging Energy Efficiency (EE) market, which arguably contains much greater investment potential and is largely untapped.  What would it take to stimulate a “solar-like” renaissance in the EE market?

With EE investment potential estimated at $279 billion by Deutsche Bank, an investment expected to yield  $1 trillion in energy savings, the market is attracting significant investor attention. Some institutional investors have learned the lessons of solar, now a mainstream opportunity, and want to get ahead of the next wave. Many are responding to increasing client demand for climate impact investments. It is now up to the efficiency industry to develop investment vehicles to meet this demand.  Historically, a range of market inefficiencies have constrained growth resulting in excellent risk-adjusted returns for those with the expertise to overcome them.  These are exciting times for a long slumbering industry now in rapid transition to achieve scale.  

New Technology is Not the Answer

Although a large portion of clean energy investment goes towards technology development, one lesson from solar’s history is that technology is not the magic bullet for unlocking market growth. The boom in solar sales did not coincide with a technology breakthrough, and it would be a mistake to wait for the development of a future innovation to solve the EE industry’s scaling issue. Advances in clean technology together with falling price points have already created a multitude of capable and cost-effective solutions for reducing and controlling energy use. Many such solutions have well documented energy and economic benefits, yet their path to market remains complex. A central issue is that incumbent business and regulatory models have not kept pace with the benefits these technologies can deliver. Significant opportunity exists at the intersection of the “internet of things” and the economics of energy supply and delivery; where cloud-based monitoring, controls and communication are readily available.  This represents a win-win opportunity to advance both business and energy policy interests. However, taking advantage of this opportunity will require a shift in conventional wisdom.

Energy Policy is its Own Barrier

For commercial-ready energy efficiency technology, the path to the market is complex thanks in large part to regulatory and incentive programs, which paradoxically were designed to promote efficiency. Instead, they create a difficult environment for commercial activity with market fragmentation, regulatory uncertainty, and a commercial market reliant on the next “utility incentive program”. When performance can be measured and verified at a granular level, many legacy program designs become outdated or even counterproductive. Utilities and state regulators are beginning the process of restructuring historical approaches in order to accommodate this new paradigm. Richard Kauffman, New York Governor Cuomo’s “Energy Czar”, put it succinctly: "We want utilities to have the economic incentive to run their systems more efficiently…We need to get to that system not by creating more programs, but by animating markets.”

While policy makers overhaul programs, cloud-based demand side management platforms can help streamline all aspects of project origination, design and management. This allows services to align with cash flows and provides utilities with verified efficiency and demand management benefits for their ratepayer funded programs.  This further allows solution providers to bundle benefits into a single, simplified value proposition for their customers. In fact, business model innovation is credited with solar’s rapid arrival as a mainstream purchase. This came in the form of cloud based project development, coupled with the Power Purchase Agreement (PPA). Together, these innovations removed complexity and financial risk from the customer purchase decision, and the industry is now experiencing the virtuous cycle of falling price points and skyrocketing growth.

Small and Medium Commercial Market – a Large and Untapped Opportunity

Within the EE market, the mismatch between the capability of technology and go to market approaches is especially stark in the market for efficiency upgrades in Small and Medium Commercial Enterprise facilities (SMEs). These buildings account for 97.5% of U.S. commercial building stock, yet are virtually untouched by sophisticated energy saving solutions. Solutions providers that have built consultative sales models around the needs of top tier buildings are ill equipped to meet the needs of the SME market.

Moreover, there are several market differences that are worth noting. While large buildings often have a dedicated facility manager and even a sustainability lead, SMEs do not. Decisions are often made by owner-operators who clearly have bottom line focus but lack the necessary expertise and time to dedicate to decisions around energy efficiency, and would generally prefer to reinvest available dollars in core business growth.  As a result, sales approaches that rely on extensive customer education will continue to face an uphill battle. However, cloud-based building automation solutions can solve many of these problems simultaneously. These systems allow business owners to understand, monitor and manage building functions remotely, acting as an outsourced facilities manager. With the same technology, skilled contractors can manage and control building energy use, turning an outright purchase into a valuable long-term service-- saving business owners both time and money.

Integrated Solutions are the Answer – With Integrated Financing

As current technologies are capable of delivering a broad range of value to customers, there is a critical need in the market for financing solutions that align with these capabilities. Siloed approaches and business models that deliver only a sliver of available benefit to customers are not optimal. This is especially true for SMEs where aggregating and monetizing multiple value streams can create an attractive solution that removes many economic barriers at once. Managed service models have proven their value in some market segments but need to be modified to meet the needs of SMEs. A critical requirement for this market is that solutions be streamlined, low-touch, and low-cost. Innovative sales approaches are a critical need, and without financing integrated into a unified package and offered at the point of sale, cycles will likely remain long and expensive.

Despite challenges, many drivers suggest a bright future for the energy reduction asset movement. Upgrades to the power grid are expected to require $107 billion in energy infrastructure investments by 2020 and demand-side management is increasingly sought after as a cost effective alternative to generation, transmission, and distribution investments. With a range of investors looking to access these energy reduction markets, and a range of proven solutions to access value, it is up to the industry to innovate.  According to Andy M. Sieg, Head of Global Wealth and Retirement Solutions for Bank of America Merrill Lynch: “We’re in the early stages of an innovation cycle. Client demand emerges. Advisers become stimulated by this demand. It drives product creation. It’s happened again and again, and it’s taking place in impact investing.” Market forces and technology are seamlessly converging in the Energy Efficiency sector offering tremendous investment opportunities. A chance to truly do well and do good.

***

Maria Fields is a Managing Director at Joule Assets, A newly-launched Private Equity fund that invests in low carbon energy infrastructure

Published in PEI's Low Carbon Energy Investor


How IT/OT Convergence is Beginning to Manifest in Demand Side Management

 By: Udi Merhav

As the United States and countries across Europe cope with mothballed coal and gas-fired power plants, nuclear phase-out, and the integration of renewables into the energy mix, the problem of decreased available peak generation capacity will continue to escalateDemand Side Management (DSM) will continue to be essential for creating grid flexibility as more renewables come online and utilities aim to cost effectively manage peak loads with demand response, smart grid technologies and energy efficiency programs. In fact, this past year companies raised $1.3 billion for grid edge investments from private equity firms and venture capitalists and demand-side management and data analytics markets were the second largest group of those invested in. DSM operations solutions are enabling hundreds of GWhs in electricity savings for utility customers and millions in annual operational savings for utilities. The Consortium for Energy Efficiency (CEE) reported that US and Canada combined electric and gas DSM program budgets reached $9.6 billion in 2013.

To date, Demand Side Management operations data has been cumbersome to access through various siloed business systems, often built atop outdated IT infrastructure, thus limiting savings and operational efficiencies. Now, secure, cloud-based platforms are cost-effectively managing these programs and as a result, more and more utilities, like Pacific Gas and Electric, Commonwealth Edison, Xcel Energy and Con Edison, are efficiently integrating and aggregating energy data, tracking project costs and quantifying savings in a meaningful way using a streamlined DSM platform which includes cloud enterprise CRM.

Utilities are looking to capitalize on the new operational efficiency savings afforded by seamlessly integrating data from operational technology (OT) systems with their back-end information technology (IT) to improve customer and partner relationships, save money, offer new services and products and manage internal changes within an organization. It’s now beginning to manifest in the world of DSM.

Until now, the two worlds of IT and OT have been largely decoupled; companies are now better able to link business processes to operational technology systems. For instance, the IT/OT convergence is beginning to take root where big data derived from advanced metering infrastructure (AMI) and other building data sources, provide a more transparent energy efficiency landscape. In some cases a “soft audit” can replace boots on-the-ground-energy-audits in the field altogether, and help identify specific measures. Through big data analytics, derived from OT, hidden energy efficiency opportunities are now exposed; digitized Evaluation, Measurement and Verification (EM&V) operations are able to confirm claimed energy. Thus, the IT/OT convergence is leading to a reduction in operating costs, while enhancing greater customer engagement.

Still, there is a lot of data being collected from smart meters and substations, but true IT/OT convergence is still only beginning its journey. A recent survey by Zpryme shows that we’re only in IT/OT convergence infancy: 38% of utilities say they can share data across their entire organization and only 14% of respondents say that that they are collecting terabytes of data every month.

While the industry recognizes the benefits of an IT/OT convergence, the process doesn’t come without its challenges. An organization is tasked with collecting, mining and managing massive amounts of OT data -- for instance, from substations, smart meters and SCADA -- for actionable insights to expose inefficiencies, trends, anomalies and opportunities. Once data is mined and “normalized,” insights must be linked into systems that enable the necessary execution of energy efficiency measures to reduce consumption and peak demand, but ownership and responsibility questions arise -- who owns which parts of the relevant technology and who is responsible for information format and delivery?

Processed OT data, well coupled from IT systems, enables the utility to act upon exposed efficiency and DSM measures, leading to better execution and greater energy savings. Overall, the benefits exceed the challenges and by synchronizing operational technology systems with cloud-based information technology (IT), utilities can:

Reduce Costs:

  • Reduce EM&V, audit, in-house software development and energy efficiency project costs
  • Eliminate hardware costs; all computing capacity is cloud-based

Improve Performance:

  • Transparent, real-time, on-demand reporting, always reflecting reality enables better decision making and alignment to achieve energy savings goals
  • Process optimization and efficient field work operations

Increase Strategy:

  • Improved alignment between operations and business goals
  • Realistic, timely information enables stronger decision making and greater energy efficiency opportunities
  • Greater customer satisfaction from active progress and engagement

A lot of progress has been made on the grid edge, but accommodating and streamlining evolving needs cost-effectively up and down the energy efficiency supply chain for sustainable IT/OT integration will require coordination from many stakeholders.

Udi Merhav is the CEO & Founder of energyOrbit, the leading Demand Side Management (DSM) Operations Platform and a technology industry veteran with over 15 years of executive management experience.

Published in EnergyCentral

 

Move Over, Solar: Efficiency YieldCos Are Here and Could Bear Better Returns

By: Mike Gordon

YieldCos have gotten a lot of coverage lately, especially in residential solar. But there’s a new financing mechanism in town, and it’s based on energy efficiency.

So what is a YieldCo? It’s an investment opportunity that provides safe “yield” for the investor, much like a bond provides a coupon. However, unlike a bond, the investor goes in on a portfolio of assets, like solar panels on a roof, that produce cash flow from homeowners like you and me as we pay for our solar electricity. Aggregated over millions of roofs with a solar payback of ten to fifteen years, solar YieldCos can be a reasonably safe investment­.

Safe, maybe. But are they lucrative investments? Not necessarily, because although these solar YieldCos represent an important starting point for the industry, they might not attract the high-net-worth, institutional or family office investors that typically require a 10 percent return on investment.

So how do we as an industry leverage the YieldCo model to develop a similar option in energy efficiency -- one in which investors experience reasonably secure returns, but with the potential for substantially higher yields than in solar? The key is the underlying instrument. While a typical solar project has a payback of ten to fifteen years, an energy efficiency project that uses established technologies returns the original investment in only four to five years. Compared with rooftop solar, achieving significant returns should be even easier with energy efficiency projects.

As it turns out, the energy efficiency opportunity is vast. McKinsey has estimated that the energy efficiency investment opportunity is close to $1 trillion in the U.S. alone. Market structures in Europe are also budding due to the growing institutionalization of energy efficiency and demand response, making the global opportunity tremendous. Returns on energy efficiency are so promising that energy efficiency investors should be able to do quite a bit better than they can in solar.

So how does an investor make sure his or her money is as safe with a portfolio of efficiency projects as it would be with a portfolio of solar projects?

Many new insurance instruments ensuring that projects yield savings are now coming to fruition, thereby securing returns. Companies like Metrus are using these insurance products combined with engineering expertise to give investors comfort. Hannon Armstrong and its peers have raised efficiency investment funds, and municipalities are attaching efficiency loan obligations to the property through property-assessed clean energy (PACE), rather than to the individual.

At Joule Assets, we’re taking a page from the solar YieldCo playbook, providing upfront financing to energy efficiency vendors and cycling returns and monetized energy savings back to investors in a private equity fund. The YieldCo-like structure generates base returns of 6 percent to 10 percent to investors, while providing additional options like mezzanine returns of 5 percent to 15 percent and the opportunity for equity participation. This gives investors an attractive low-risk entry point to the previously closed energy reductions assets market.

There are three key considerations for a safe and lucrative energy efficiency investment vehicle.

1. Don’t target buildings for financing; target the contractors. By providing pools of capital to the firms that provide the technology, project installation and integration, you speed deployment, shorten time to market and make it easy for contractors, buildings and financiers to align. Most financing vehicles are targeted at the buildings that intend to install the efficiency upgrades, but it’s best to offer pools of capital to the firms that provide the technology, project installation and integration: the contractors.

2. Mitigate risks through a system of checks and balances. Energy efficiency financing can provide a pool of funds to back up projects led by installers. If any of the installer’s customers fail to pay the financing fee, that pool of money keeps investors whole. Because energy efficiency vendors are closest to the customer, they have the most impact on customer satisfaction. And because they will be the first to lose if the customer fails to pay, they work the hardest to vet and service their customers who have bought “energy efficiency.” Investors will not face a loss unless inordinate numbers of these projects fail.

3. Earn high returns through expertise in energy efficiency markets. How is it possible to build on a base of YieldCo-like returns in energy efficiency? Only a few firms understand how to monetize energy reductions, but those who do are able to capitalize on untapped cash flows. Control systems allow a site to earn money by dialing back consumption when the power grid is under stress. Some energy markets actually pay consumers who document the energy efficiency they achieve. Expertise in energy efficiency finance and regulatory frameworks will be the most critical aspect of securing exceptional returns for investors, above and beyond the base returns that a traditional YieldCo would provide.

Right now, who is investing in energy efficiency? At this early stage, informed high-net-worth individuals, family offices and impact investors are taking advantage of the outsize returns that many of these instruments are offering.

Institutions tend to wait longer; they need to analyze years' worth of statistics on failure rates. Institutions also seek tried-and-true investments, but they are exposed when the foundations of an industry shift. That’s why they work hard to spot an early trend, but wait for a short while to make sure new structures are solidly in place. That’s the moment for the more dynamic investors to step in -- and this moment is now for energy efficiency.

***

Mike Gordon is founder and CEO of Joule Assets, Inc. the leading finance provider for the energy efficiency and demand response industries and manager of the Joule Assets ERA Fund, a first-in-kind private equity fund targeting Energy Reduction Asset markets.

Published in Greentech Media

 

Impact Investing No Longer Sacrifices Fund Performance

By: Mike Gordon

Could environmental impact investments give traditional vehicles a run for their money?  In today’s evolving energy markets, energy efficiency assets are following the path of solar markets where assets are now securitized as technology and regulations mature. Traditional funds, big banks and smart investors are moving on energy reduction assets (ERAs), the monetized value of not consuming energy as defined by various regulatory frameworks.

 Michael Gordon, an expert in energy efficiency finance and chief executive of US-based Joule Assets, has provided strategic insight and counsel to the architects of US and European energy markets including: SEDC, Metering Europe, Microsoft Europe, General Electric, FERC, The Energy Regulatory Commission, The European Commission, and The United Nations’ Conference of Parties on Climate Change. In this article, he examines new opportunities for combining energy and impact investments in a shifting global energy landscape.

Energy is back in the news. The Obama Administration’s recent EPA rules on carbon emissions from power plants and the EU’s Energy Efficiency Directive are reigniting the conversation on the energy economy worldwide, underscoring a general agreement on the value of energy efficiency.  Even investors bullish on oil and gas are sitting up and taking notice as regulatory, political and technological dynamics point increasingly toward low carbon investments.

Not coincidentally, new options for impact investors, family offices and wealthy individuals have emerged.  Energy efficiency, the effort to reduce or avoid excess energy use, holds the potential to be a $900 billion global market by the year 2020 according to McKinsey & Co.  The window of opportunity to diversify an energy portfolio while having positive impact on the environment is here.

What is an energy efficiency investment?

Energy efficiency is known as the “low-hanging fruit” of greenhouse gas mitigation because it doesn’t require expensive capital to develop and build wind or solar farms and doesn’t rely on the adoption of a new technology, such as electric vehicles to go mainstream before it starts having positive environmental impact.  Because energy efficiency and its cousin, demand response, are the most cost effective ways to abate greenhouse gases, regulators across the US are requiring utilities or other energy providers to administer programs to help customers to reduce their energy use.  From this regulatory structure, which began in the early 1970s and has now grown to include several states in the US and Europe, the energy reduction assets market was born.

Drawn to proven technologies with demonstrated returns, investors are seeking out new alternative energy investments in energy efficiency.  But how can investors reap lucrative energy efficiency returns without technical knowledge of energy regulations and markets? The markets are complex with only a few firms housing the domain expertise to monetize energy reductions, but those who do are able to capitalize on untapped cash flows.

One such fund is the first-in-kind Energy Reduction Asset (ERA) Fund, a global private equity fund that acts as a channel for individual, family office and institutional investors into the previously closed energy reduction assets market. Once the purview of utilities that, with their customers, reaped the financial returns of energy efficiency and demand response programs, Joule Assets’ ERA Fund offers upfront financing to energy efficiency vendors and cycles returns from their revenues and monetized energy savings back to fund investors, delivering base returns of 6-10 per cent. 

Leveraging decades of experience in the utility industry, energy efficiency markets, and regulatory frameworks, the fund is able to generate additional mezzanine returns of 5-15 per cent, plus offer optional equity participation, giving investors an attractive, low-risk entry point to the energy reductions assets market.  Expertise in energy efficiency finance and regulatory frameworks is the key to securing exceptional returns for investors, above and beyond the base returns that other clean energy investments like a solar energy YieldCo could provide.

What do these energy efficiency projects look like on the ground?  EnerCo, an HVAC efficiency company, works with commercial buildings to identify cooling system corrosion and can address massive energy losses up to 50 per cent through its nanocarbon coil coating technology. NorthWrite, a leading energy information management company specializing in the delivery of energy and facility solutions, expects to finance 50-100 energy efficiency projects in the next 12 months across a spectrum of small commercial buildings, including schools, restaurants, national chains and offices thanks to the conditional cash flow financing agreed on with Joule Assets.  These two small-to-midsized vendors are representative of the myriad efficiency vendors that are hungry for financing to grow their businesses.

Despite proven benefits and return on investment that is double that of solar assets, Joule’s product research shows that 62 per cent of these small- to mid-sized efficiency vendors have faced challenges obtaining financing in the past as large banks were unwilling to take on what was to them an expensive, technical due diligence process. Joule Assets offers insurance-backed financing to these underserved efficiency vendors, opening the floodgates for deeper penetration of the energy efficiency market.

A new era of impact (and energy) investing on the horizon

Impact investing, particularly in clean energy, is entering a new era.  The notion that impact investors must sacrifice returns to align with their environmental values is simply outdated, particularly when it comes to energy, but it continues to perpetuate.

Impact investing has traditionally focused on social causes, particularly in the developing world with traditional socially responsible investment (SRI) proponents having only cursory knowledge of the energy assets landscape.  But doing good is not just about social impact.  The health of our environment and climate provide the clean air, water and food that we require for everyday life on the planet.  Our physical environment is the basis for our very existence and our methods of energy production and our rate of consumption affects every aspect of this.  I’d call that an area for impact.

And what about traditional energy investing?  When you think about energy investment options, oil and gas stocks, energy futures, or solar technology venture investing might come to mind.  These are the investment options from decades past and it’s time that the wealth management industry catches up to the technological advances that have occurred in energy over the last 20 years. 

Recently, new energy investment products such as YieldCos in both solar and energy efficiency have emerged in the environmental impact space that are based on proven energy conservation methods and offer lucrative returns.  A YieldCo is an investment opportunity, originating in the solar market, which provides safe yield for the investor, much like a bond provides a coupon. However, unlike a bond, the investor goes in on a portfolio of assets, like solar panels on a roof, that produce cash flow from homeowners like you and me as we pay for our solar electricity. Aggregated over millions of roofs with a solar payback of ten to 15 years, solar YieldCos are a reasonably safe investment. But energy efficiency is even more lucrative than the solar YieldCo, offering paybacks of four to five years versus 10-15 years for solar from an NPV perspective.  The ERA Fund builds on this YieldCo structure.

Mitigating risk

Energy efficiency financing provides a pool of funds to back up vendor-led projects. If any of the vendors’ customers fail to pay the financing fee, that pool of money keeps investors whole.

Because energy efficiency vendors are closest to the customer, they have the most impact on customer satisfaction. And because they will be the first to lose if the customer fails to pay, they work the hardest to vet and service their customers who have “bought” energy efficiency. Investors will not face a loss unless inordinate numbers of these projects fail.

On June 19, we announced a large round of project finance for energy efficiency vendors with a potential pipeline of $270 million.  Not only is energy efficiency an impact investment, it’s a smart investment to diversify your portfolio in anticipation of the low-carbon economy to come.

Published in Family Wealth Report

The Existential Threat to Demand Response

By: Mike Gordon 

"A recent order curtailing FERC's ability to oversee demand response (DR) could have a chilling effect on the sector. Not because of the order itself, which impacts only a tiny sliver of the total market. But because it could block FERC's ability to regulate that part of the market that really matters. Once again, policy is failing to keep up with current needs, argues Mike Gordon in this guest editorial." - Jesse Berst

Demand response (DR) markets will continue to thrive, despite the fallout from the recent U.S. Court of Appeals ruling on FERC Order 745, which determined that the Federal Energy Regulatory Commission had overstepped its jurisdiction by dictating the compensation that providers of DR resources must receive. Economic DR, which is what this ruling affected, plays a relatively minor role in DR markets nationwide—a percent or two of most DR providers’ revenues.

In itself, the decision has a relatively minor impact. What is disconcerting is that it could serve as a precedent that impedes the ability of the FERC to effectively regulate DR markets more broadly.

Currently, there’s huge potential to expand capacity markets—a far more significant resource nationwide than economic DR. As more renewables are connected to the grid, and commercial buildings upgrade efficiency technology, new markets are opening up for the “negawatts” that demand response can provide. Introducing uncertainty into the marketplace has the potential to slow progress.

Let’s take a closer look at the majority decision. Previously, under FERC Order 745, grid operators (ISOs & RTOs) needed to reimburse customers who curtailed consumption while enrolled in DR the locational marginal price or full market price. Order 745 was an efficient way to keep supply and demand in balance because it’s usually the dirtiest, most expensive power plants that are turned on during peak loads. The majority arguing for repeal didn’t dispute the rule’s efficacy. Rather, the 2-1 majority found that demand response in energy markets is a retail product rather than a wholesale product—and given that states are responsible for regulating retail markets, the FERC had overreached its jurisdiction with Order 745.

The court’s decision will have a relatively minor effect on the economics of demand response markets. While guaranteed energy payments from 745 were certainly good for the DR industry, they are relatively minor revenue stream for most DR providers—rarely more than a percent or two of gross revenue. The real economic value of demand response lies in transmission: the capacity and reserves market.

What could really threaten the DR market is if this precedent extends to the capacity and reserves market in FERC Order 719, where demand can respond to the wholesale price. 719 outlines that DR can be used as a capacity resource and for system emergencies, to allow wholesale and qualifying large retail buyers to bid the day-ahead into DR, real-time energy markets and certain ancillary service markets.

What we need to consider now is two-fold. First, how will this decision on 745 impact FERC’s development of market structures that encourage efficient use of our energy resources in the future, and second, how will vacating these policies affect resources and peak loads? An unpredictable policy environment risks stalling progress in energy efficiency and demand response. FERC lawsuits cause significant market uncertainty—and to end users, the importance of this decision might seem obscure, but resultant uncertainty will impact them at the most basic level: electricity pricing.

Simplified DR investment vehicles are critical to continue momentum as the market matures and the regulatory landscape stabilizes; yet the fragmentation of programs and the complex nature of these markets are prohibiting scale. We’re seeing a growing trend towards private sector solutions, because DR policies have continued to lag behind the industry’s ability to deliver cost-effective demand management solutions that measure and verify kW and kWh reductions.

Rewarding demand response for the value these programs yield is important because DR is a growing competitive resource that can be used to maintain energy supply and demand, balance grid loads, and reap the benefits of associated wholesale markets. We are seeing demand response solidifying in Europe and elsewhere across the globe.  Soon it will take its well-deserved role as a critical piece of the energy markets landscape.

Demand response already plays a vital role in load management and saves customers money. It can play an even bigger role if we have a policy environment that provides clear direction to the market and encourages private investment.

Mike Gordon is founder and CEO of Joule Assets, Inc., the leading finance provider for the energy efficiency and demand response industries and manager of the Joule Assets ERA Fund, a first-in-kind private equity fund targeting Energy Reduction Asset markets.

Published in Smart Grid News

 

 

How Big Data Is Driving the Secondary Solar Market in the US

By: Christos Georgopoulos

In the tech world, big data means opportunity. For solar, it’s no different. With solar securitization dominating the news, it’s hard to imagine that only a few years ago, the PV industry experienced a major upheaval on its way to maturity.

2010 began with a clash of the titans as big solar players like SunPower, First Solar, and SunEdison clung to survival, riding out market saturation, panel price drops and the resulting margin squeeze.  

This survival-of-the-fittest bloodbath, while ugly, was the sign of healthy market maturation as PV struggled to break into the mainstream. After all, similar shakeouts have occurred in every emerging technology market from color televisions to automobiles to penicillin. With PV panel prices now projected to increase in 2014, we may be seeing the leveling of the market.

In the U.S., a secondary market is emerging as surviving developers sell PV projects to secondary investors such as pension funds that had been waiting for risk profiles to decrease, as was also the case in Europe after solar saturation.

Some areas of the market are evolving quickly. Asset-backed securitization, the process of bundling multiple projects and structuring a relatively illiquid asset into a liquid and tradable one (i.e., a security), by investment bankers, capital providers, REITs, MLPs, and most importantly the emerging class of YieldCos, has even allowed some solar assets to become investment vehicles.

What does this industry consolidation and securitization mean for secondary owners and operators? As mainstream investors group solar assets into large portfolios with geographically dispersed plants totaling thousands of megawatts across the globe, scale will become the new currency. And key to the scale game is big data, high-performance processing and powerful analytics.

Sophisticated PV monitoring systems are turning the massive streams of data from these multi-gigawatt-scale portfolios into an additional source of value. These analytical tools can drive optimization of power production, and eventually return on investment. For savvy secondary owners, it’s no longer just the plant and electrons providing value. Today, it’s the plant, electrons, and vast streams of data, creating three interdependent segments of asset value.

Advanced monitoring systems track direct measures and derived analytics of plant performance from inverters, AC/DC subsystems, external grids, communications systems, and more, and can provide several thousand real-time data points per megawatt, generating terabytes of data for large solar portfolios. 

Why is big data valuable? Scale alone justifies paying attention to small changes in plant performance, where a 1 percent savings or increase in efficiency can translate to tens of millions of dollars. It is now possible to analyze equipment performance trends using complex calculations and mathematical models on hundreds of thousands of string-level data. Across gigawatts' worth of installed power capacity, plants can uncover inefficiencies that may correspond to millions of dollars in liquidated damages.

At a recent clean energy industry event, GE’s CEO, Jeffrey Immelt, highlighted the idea of “no unplanned downtime," a paradigm in which monitoring and analytics software create new standards for efficiency. Because of big data, large-scale PV is ripe for this opportunity.  

Much like the energy from a power plant, however, data needs to be managed and optimized. Very soon, these mature PV assets will be part of a mainstream asset market.

As “no unplanned downtime” and massive, fleet-wide analytics become a reality, solar portfolio owners and operators may just see another margin squeeze play out -- not unlike the recent industry growing pains, where those who optimize performance and limit downtime outlive the competition and ensure their future.

 ***

Christos Georgopoulos is co-founder and CEO of Inaccess, a global provider of infrastructure monitoring and control solutions for energy and telecom markets, currently monitoring more than 1,200 plants and 1.5 gigawatts of utility-scale solar assets, with a presence in the U.K., southern Europe, North America and Asia.

Published in Greentech Media 

New Farm Bill Supports the Renewable Chemicals Industry 4523

By: Former Gov. Mark Schweiker (R-Pa.) 

In early February, after nearly four years of debate, President Obama signed the Agricultural Act of 2014 (i.e., the farm bill) into law. In his remarks, the president highlighted the positive impacts the farm bill will have on the U.S. agriculture industry, the jobs sector and rural economies.

For the first time, the farm bill will offer strong support for the emerging renewable chemicals market here in the U.S. Renewable chemicals are those that use sustainable biomass as feedstocks for production, in place of traditional petrochemical inputs.

By creating a more level playing field between renewable fuels and renewable chemicals within U.S. policy, all bio-industry companies will be encouraged to invest in development of new products for both industrial and consumer applications while meeting demand for safer, less resource-intensive ingredients.

Renewable chemicals will now be eligible for funds under specific Title IX energy programs. This will allow companies that produce polymers, plastics or other chemical substances from sustainable biomass to qualify for loan guarantees and other relevant programs. Moreover, it establishes an important status for renewable chemical technology, which has historically been absent in U.S. policy.

An important section of the energy Title programs continued in the farm bill is the Biobased Markets Program. Though only responsible for $25 million of the total allocation, it has far-reaching implications in maintaining the federal preference for procurement of biobased products and the BioPreferred labeling program, which alone is responsible for more than 100,000 jobs.

The inclusion of renewable chemicals into these programs will position the United States as a global leader in this industry, a rapidly growing portion of the $3.5 trillion global chemical market. Companies seeking to produce biochemicals in the U.S. can seek out loan guarantees for manufacturing plants under the Biorefinery Assistance Program, which has traditionally been open only to biorefineries producing fuels. This program will have mandatory budget authority for $100 million in fiscal 2014 and $50 million each in fiscal 2015 and 2016.

The funds made available through the farm bill will help augment an expansion beyond petroleum-based chemicals to support the production and integration of cellulosic biochemicals (made from nonfood plants), at a meaningful scale. This new focus on bio-based chemicals will provide a significant boost to the overall economy in the form of jobs, particularly in rural areas, that cannot be exported. It also underscores confidence in the ability of the nation’s agricultural and technology sectors to work together, which will spur additional private investment in homegrown renewable chemicals. The inclusion of biochemicals in the farm bill is validation of the importance of this growing industry and the role it plays in the emerging U.S. bio-economy.

Schweiker served as governor of Pennsylvania from 2001 to 2003. He is currently chief relationship officer at Renmatix, a King of Prussia, Pa,- based company that makes cellulosic sugars for renewable chemicals and fuels. 

Published in The Hill

Why Utilities Must Take on EV Charging Themselves (and the Right Way to Do It)

By: Brett Hauser

"A few years back, many utilities feared the onset of electric vehicles (EVs). They were concerned about peak load impacts. And about damage to overloaded transformers from nighttime charging.

Today, many utilities are eagerly awaiting EV charging, especially those that have a high percentage of intermittent renewables. They want use EV charging to buffer those renewables as their output moves up and down. To gain those benefits, the utility has to be in charge of deciding when and how fast to charge.

And now the rub: Regulators in many states won't allow their utilities to own and operate charging infrastructure. The solution? Educate them. This guest article may help." - Jesse Berst

There is a lot of talk about the utility death spiral - how business models are outdated and how disintermediation is occurring between utilities and their customer base. Although traditional utility business models are under attack, electric vehicle charging provides utilities a unique opportunity to redefine their relationships with customers to provide a rich, more engaging experience.

Utilities that implement intelligent charging solutions can influence when and how EV charging occurs. This enables them to reduce peak demand and mitigate the impact of EV charging on the grid.

The importance of open standards

By taking on these activities itself, a utility gains new opportunities to engage customers and avoid disintermediation by third parties with similar solutions. By choosing applications that use open standards, utilities gain the flexibility to scale their implementations without the risk of vendor lock-in from proprietary solutions.

Ideally, time-of-use (TOU) rates are available to encourage EV owners to charge at night when demand is lower and electricity prices are cheaper. However, if customers on TOU rates begin EV charging at roughly the same time, they actually create a ‘second peak’ problem. Utilizing automated demand response programs will enable utilities to smooth out demand rather than just shifting the peak from daytime to nighttime.

Published in Smart Grid News

Is There a Fatal Flaw in Proprietary Electric-Vehicle Charging?

By: Brett Hauser

For stakeholders in the electric vehicle industry, the back-to-back bankruptcies of Better Place and ECOtality have been sobering, but not surprising. Though both were early pioneers in the EV charging space, many now believe their major flaw was the proprietary network model adopted by both.

Rather than making all chargers easily accessible to all drivers and providing site hosts the flexibility to mix and match different types for specific needs, ECOtality and Better Place ended up frustrating drivers by making it difficult for non-members to access chargers. They've now left site hosts with more than 4,000 stranded chargers to deal with.

So, we now find ourselves at a crossroads, with the industry doing its best to correct course. ECOtality’s Blink network is still up and running, purchased in a recent auction by Car Charging Group. Better Place’s network of chargers is now in the hands of companies struggling to find a fix for the hundreds of chargers that have been left virtually nonfunctional. Both are cautionary tales highlighting the risks of proprietary networks.

To date, the initial rollout of publicly funded networked charge stations for plug-in electric vehicles (PEVs) in California has been administered by proprietary network management systems and vendors like ECOtality, ChargePoint and Better Place. This has created an issue of “vendor lock-in” for site hosts who are unable to switch the backend software management platform to another network provider. In order to change network management systems, the site host would have to discard the existing hardware and purchase new charge stations on their own dime, a deterrent that moves the industry backward.

There is a better way forward.

While proprietary networks emerged in the U.S., Europe experienced its own network challenges. Faced with vendor lock-in and proprietary network interoperability issues, utilities within Ireland and the Netherlands issued mandates enforcing a new model based on open standards to provide site hosts flexibility and to encourage electric-vehicle adoption by drivers. Now active in more than 50 countries, this open-standards-based approach, made possible by a communications platform called Open Charge Point Protocol (OCPP), has become the industry standard between charge station and the back-end software network.

Charging networks based on open communications standards are an excellent alternative to proprietary networks and have been future-proofing Europe’s EV networks for close to four years now. The open model provides site hosts the freedom to switch network management providers without having to purchase new charging stations. It also stimulates technical innovation by allowing free market competition to push down the costs of both charging station hardware and back-end software, while dramatically derisking the hardware purchase for site hosts.

Unlike the U.S., Canada has started to embrace open standards much earlier in its EV infrastructure rollout, with utilities like BC Hydro choosing open standard-based networks to ensure flexibility for future growth. Here in the U.S., the issue is emerging as a critical decision at the city and state levels. As I write this, at least four cities and states -- including Connecticut, Vermont, Los Angeles County and Sacramento -- have RFPs for open-standards-based EV networks. In California, the California Energy Commission and the California Public Utilities Commission are both in frequent and deep discussion with industry organizations and companies about the best path forward.

The biggest challenge facing the adoption of EVs today is no longer related to “range anxiety” -- rather, it stems from limitations facing drivers and site hosts. By enabling open, flexible EV charging networks, we can usher in the next wave of EV adoption worldwide.

***

Brett Hauser is a founding member of the Open Charge Alliance (OCA), a global consortium of public and private electric vehicle infrastructure leaders, and president of Greenlots, a global open-standards-based technology solutions provider for electric vehicle networks.

Published in Greentech Media

 

What to Know About Entering the $900B Energy Reduction Assets Markets

Q&A with Mike Gordon

Q. What are Energy Reduction Assets (ERAs)? 

Energy Reduction Assets (ERAs) are assets that reduce energy consumption, examples include: building controls, HVAC, programmable thermostats, LED lighting and automated demand response. Depending on asset location and demand response (DR) program eligibility, ERAs may produce commodities such as “negawatts” (units of energy saved) that businesses can buy and sell in the demand response marketplaces or Energy Efficiency Credits (EECs) that businesses can trade to meet Energy Efficiency Portfolio Standards.

Small to midsize energy efficiency projects represent a substantial portion of the global energy efficiency market, estimated to reach $900 billion by 2020, according to McKinsey & Co. Nearly 98 percent of 4.8 million commercial buildings in the U.S. are 100,000 square feet or less, making these projects a natural match for small to mid-size energy solution vendors. 

Q. How can investors in ERAs address market risks? 

Investors can specifically address risks with careful project finance structure. Risks include lack of deployment for funds to scale, contractor failure, and project performance. Fund managers can secure base returns to investors through:

1) Cash collateral from the project originator

2) Contract step-in rights in case of default or lack of performance

3) Ownership of the equipment during the financing term

One of the best ways to help minimize risk is to have contractors and project developers act as originators of projects. Contractor failure is always a potential risk, but if contractors are asked to provide a cash collateral of 15-20 percent of the aggregated project costs, that risk is reduced. In the event of contractor failure or default, fund managers should maintain step-in rights to reassign the project to a different contractor. For projects that don’t meet performance expectations, performance insurance can play a major role.   

Q. How do energy efficiency financiers deal with incentives from utilities and tax advantages? Who owns the hardware installed? 

As an energy efficient financer, it is important to identify and access utility incentives, specifically where they exist in the public sector. Incentives may include: energy efficiency credits, white certificates and demand response rebates. Investors can structure tax incentives for energy efficiency financing, like solar financing, and can take advantage of accelerated depreciation, if fund managers have rights to the equipment that has been installed. This is a valuable tax incentive that encourages businesses to purchase new assets. 

Q. What is the preferred role of utilities in the ERA marketplace? 

Many utility companies have open access cash flows that can enhance the value of energy efficiency projects. A project may have additional demand response revenue coming from places like constricted load zones, and financiers can work with utilities to make sure that those dollars go toward the ERA projects. When utilities rely on preferred and sole source contracts, it is important to be careful about those contracts are structured. Some contracts can enhance the values in a particular location, but it’s important to be mindful of other contractors in the market, and putting down substantial securities with unknown outcomes is risky. There are many players in the field, so exposure to security deposits should depend on the performance of the contractors.

Q. What markets offer the best mix of high rates for efficiency and demand response opportunities? 

The best opportunities are where the need is stark and the markets are well designed. For example, constricted zones throughout the North East with a pre-wholesale market are enabling opportunities. There are some constricted in the PJM area as well, and in the open market. Both of these areas have a well-designed and fungible energy efficiency market, similar to how France is maturing an EE market. The New York market has some potential for developments that could be positive, and it has some really good projects. The California market is a work in progress, but also has good opportunities including projects meeting California’s new Title 24 requirements and those offering fast response demand response to meet California’s growing grid operations challenges, as intermittent resources such as solar and wind continue to grow. There are fantastic features in the pre-wholesale Texas market with some access through packaged energy retailer offerings. It tends to be the more pre-wholesale markets where there are opportunities, and then constrained areas, often urban and quickly growing where project opportunities are most viable.

Mike Gordon is founder and CEO of Joule Assets, Inc., a leading finance provider for the energy efficiency and demand response industries and manager of the Joule Assets ERA Fund, a first-in-kind private equity fund targeting Energy Reduction Asset markets.

Published in Smart Grid News

Six Steps to Cut Your Chain's Energy Costs

By: Mike Gordon

Whether you realize it or not, today’s convenience store owner/operators have a new range of tools in their belt these days when it comes to increasing their bottom line. One of the most immediate and impactful options is energy efficiency. Yes, the term is bandied about a lot these days, but for a reason: convenience store owners are missing an opportunity to save up to 33 percent off their energy bills.

Clearly, managing energy usage can go a long way toward cutting costs and improving the profitability of your stores, but what many franchise leaders don’t realize is how easy it is to use energy more efficiently. And, perhaps most important, many of these options are free and require no additional operating expense.

Here are the top five steps to lowering your store costs, while making additional income:

First, evaluate your current position. Here’s how:

  • Gather zip codes, square footage, and control systems for each location.
  • Use off-hand estimates to determine which power sources in which locations you can afford to turn down or off for limited durations.
  • Conduct research on the demand response programs in your area and see which ones you might be able to participate in. We recommend starting with your local electric utility company.
  • Create and send out an RFP to all Demand Response (DR) providers. They will all offer slightly different terms, so be sure to evaluate their responses carefully.

Second, select your demand response provider using these criteria:                            

· Market value of the programs for which they can register you. Curtailment Services Providers get your load curtailment into the market. They will take a percentage of your market revenue in return. Be sure you know what percentage they are taking. · Willingness of the provider to pay for your smart meters. This should be a given.

Third, Follow system peak management best practices: It’s simple:

Understand how your bill is determined; it is not as straightforward as it may seem.  In fact, in some areas a large portion of your bill is determined by your consumption during only a few hours of the year.  Services like the Joule Peak Power Index track these hours in the relevant location.  Determine which of your locations are large enough to be impacted by additional charges due to excess consumption during peak times. 

Reduce your store’s energy consumption whenever you receive an alert of high power peaks in these locations. Making this simple adjustment can significantly reduce your electricity bill next year as this can impact nearly a quarter of some electric bills  

Bid out your electricity supply beginning in May of the year following your system peak management. If you have performed well, retailers will be able to offer you reduced prices. 

Fourth, evaluate your rebate opportunities:

  • Contact your local utility to find out about Energy Efficiency Audits
  • Use simple online tools like www.dsireusa.org to identify all your rebate opportunities as suggested in the audit. Joule also maintains a database of Energy Efficiency rebates and incentives.
  • Subtract expected rebates from projected measure costs and choose your Payback Hurdle rate

Fifth, look into financing opportunities: Top options include:

  • Property Assessed Clean Energy (PACE) programs. Visit sites like www.pacenow.org/ to identify areas that have implemented commercial DR programs to see if you’re PACE-eligible.
  •  Low-interest financing. Apply for these kinds of options for non-budgeted measures that have a payback of less than four years.

Finally, once you’ve followed these steps to create a program that will fit your criteria, the last step is to send out an RFP for the efficiency work that has been green-lighted.

As more store owner/operators realize the program benefits and financing options available to them, demand response and energy efficiency programs are becoming an integral part of the bottom line, reducing power consumption, while generating revenues.

Mike Gordon is CEO of Joule Assets Inc., a leading provider of energy market analytics, tools and financing. Mike is the strategic lead for Joule Assets, where he is responsible for conceptualizing and developing products and services. Mike has historically played a central role in founding industries in the energy field and building Energy Reduction Asset Markets through empowering consumers.

 Published in CSN

Utility Solar Is Dead; Long Live Distributed Generation

By: Haresh Patel

The shift from the centralized utility model is forcing utilities—for the first time in their existence—to figure out how to compete.

For years we’ve likened the energy sector to the computing world, holding up Moore’s law as a guiding example proving that renewables will achieve grid parity.

Today, as panel costs have dropped 90 percent and adoption is at an all-time high, the analogy between the two seems even more fitting. Just like the massive mainframe disruption spawned by personal computing, distributed generation has already begun to challenge the centralized solar model favored by utilities, with no end in sight.

At an industry level, the evidence of a new distributed era is all around us. Fuel cells like Bloom Energy’s are enabling the C&I transformation to self-made energy. Combined natural gas power plants are on the rise, and microgrids are popping up in states across the nation.

The change may feel sudden, but for most of us, it’s been a long time coming. 2009 marked the beginning of utility-scale’s heyday. Investors interested in deploying capital looked at smaller 1-megawatt to 3-megawatt projects and realized that utility-scale solar had the same diligence cost. Investors promptly abandoned the C&I segment in favor of big projects. Though a good decision at the time, the situation has changed. The number of utility projects have dwindled and the shift from the centralized utility model has taken root and is forcing utilities -- for the first time in their existence -- to figure out how to compete.

There’s no doubt now that utilities will ultimately have to change their business models. In a recent discussion with a well-known utility, top executives admitted that not only had solar utility segment plateaued, but that “utility is dead.” It sounded dramatic, but the sentiment has been the topic of discussion for the last twelve months, both in the media and in more hushed tones in closed meetings. So, how will utilities adapt?

A handful of the most progressive utilities -- Sempra, Duke, PGE, SMUD, Integrys -- are already embracing the change and finding ways to make a profit from generating their own electricity through their unregulated subsidiaries. No longer mandated passive players, solar gives them chance to compete. Those utilities, unfortunately, are the anomaly. The majority of utilities we’ve spoken with seem to be in denial, akin to deer caught in the headlights.

While distributed solar generation brings lucrative benefits, adapting to new business models is only the first step. The big solar business process templates of old relied on large teams with unlimited resources, budgets -- and status-quo business processes. Now, with the shift to small to mid-sized projects, the high cost of diligence and lack of standardization is quite literally killing projects.

Recognizing the shift from utility to DG, we now see companies like NextEra acquiring Smart Energies to penetrate the segment. A smart first step, but acquisition alone does not solve the cost of diligence, project acquisition and financing. New business models require different templates.

The good news is that new templates not only exist, but they’re also gaining incredible adoption rates. Take a look at what’s happened with distributed residential projects.

Once in the shadow of big centralized projects, investors have recognized the potential of these projects and how to package and pool them to meet the $150 million to $250 million minimum of the banks. New templates, created by Clean Power Finance, SolarCity and Sunrun centered around FICO scores, were the lynchpin. Now, new financial products from Morgan Stanley and Mainstreet Power are addressing the next rung of lower credit in residential. Platforms with innovative business processes to lower diligence and acquisition cost for C&I are not far behind to facilitate the DG segment as the next big frontier in solar.

***
Haresh Patel is the CEO of Mercatus and has held senior roles at Agilent, Texas Instruments and PMC Sierra.

Published in Greentech Media

Cultivating a Bio-Based Future in India

By: Mark Schweiker

India is expected to eclipse China as the world's fastest growing economy in 2016, placing the country at a critical juncture. With investment in India's energy infrastructure at a record high and with what will soon be the world's largest population, India is integrating new strategies to ensure energy access and security. Demographically, India is in the midst of a significant transition: By 2050, the population is expected to surpass 1.6 billion, and in the next decade there will be 100 million new high school graduates. Resultantly, India's population needs a cost-effective and sustainable approach to meet the country's growing energy demands while also employing the next generation. One dimension of the answer comes from the Indian government, which has adopted a national bioethanol mandate to revitalize struggling rural economies and address urban pollution concerns. This mandate, which doubles its target of blending ethanol with gasoline, capitalizes on abundantly available resources throughout the country. Bioethanol creates additional profit in the agricultural supply chain by placing market value on crop residues for ethanol production, and ultimately stimulates domestic growth while improving local air quality.

Given India's current development paradigm, a domestically grown bio-strategy is highly complimentary to larger energy plans that target a 40% utilization rate of non-fossil fuel sources by 2030, which Prime Minister Modi established at last year's COP 21. It is also consistent with well-established principles upon which modern India was built. Swadeshi politics - emphasizing economic self-sufficiency that leverage national resources and talent - was proven as effective in principal and practice for helping end British rule. In a modern interpretation of swadeshi politics, the "Make in India" initiative is an overarching strategy that prioritizes domestic industrial production and includes energy. More concrete policies are in line with this and Prime Minister Modi has placed renewable fuels as a key strategy to India's energy approach. Notably, the National Biofuels policy targets a 20 percent blend rate by 2017 with the explicit goals of reducing foreign imports to ensure energy security, revitalizing rural unemployment, improving stagnated wages and producing bioenergy.

Most concretely, India's oil marketing companies (OMCs) have placed bioethanol as a core component of their renewed energy efforts, the three biggest - Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation - pledging to produce over 220 million gallons of biodiesel from local manufacturers before November of this year.

Economies in rural India are predominately agricultural, which employ nearly 50 percent of the country according to World Bank data. Low commodity prices, a volatile agricultural market, and uncertain growing conditions are converging, upending growers' livelihoods and threatening the economy. Just as the United States' Renewable Fuel Standard has spurred economic growth in rural America, a biobased Bharat offers a similar promise for India's villages. While programs like the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) have been posited as the savior for rural economies, the more concerted and industry-wide approaches, like the National Biofuels Policy, are expected to catalyze economic growth throughout the bio-industry and build sustainable sector growth. Already, growers in Odisha are reaping the fruits of bioethanol production, and the Minister of State for Petroleum and Natural Gas, Dharmendra Pradhan, cited that growers producing biofuels from rice residues could earn over $10.9 million. The state, which produces over 3 million tons of rice crops per year, could translate this agriculture prowess into over 30 million liters of ethanol, making the economic upside profound.

Well endowed with crops--from rice regions in West Bengal, to wheat regions in India's Northwest Punjab states through to Tamil Nadu's sugarcane operations in the South--the opportunities to convert crop residues into higher yield returning products, including bioethanol, is vast. Complimentary to these feedstocks is an already well-developed sugar mill industry. Recently, the sugar industry has been in decline with over 100 mills closing operations in 2015. Rather than let the country's robust network of sugar mills and mill-supported communities idle, the existing infrastructure makes them ideally situated to be reused in new and more lucrative ways as biorefineries, tapping into local resources. As sugar mills are reinvigorated and repurposed to make bioethanol, the surrounding rural populations will benefit from job creation, alleviating distressed rural economies.

Furthermore, bioethanol can be a drop-in replacement for high-polluting fuels. In cities like Delhi, where air pollution levels can reach 128 parts-per million, there is significant potential to improve urban conditions for over 10 million residents. Taking into account the country's other cities - from Raipur to Ahmedabad - the positive possibilities available in replacing even just a fraction of the power generation with bioenergy multiply. In this way, bioethanol becomes a tool to combat particulate pollution making the environmental and health benefits of bioenergy profound.

As the country emerges as a pivotal actor in international energy discussions, India's bio-energy strategy will provide a blueprint for other countries with plentiful agricultural waste to leverage and spur economic growth. India's growing support for bio underscores how essential bioethanol will be in the coming years as an energy source.

Schweiker is former Governor of Pennsylvania and SVP at Renmatix, a technology licensing company for the conversion of biomass into cellulosic sugars

Published in Huffington Post

Cultivating a Bio-Based Future in India

By: Mark Schweiker

India is expected to eclipse China as the world's fastest growing economy in 2016, placing the country at a critical juncture. With investment in India's energy infrastructure at a record high and with what will soon be the world's largest population, India is integrating new strategies to ensure energy access and security. Demographically, India is in the midst of a significant transition: By 2050, the population is expected to surpass 1.6 billion, and in the next decade there will be 100 million new high school graduates. Resultantly, India's population needs a cost-effective and sustainable approach to meet the country's growing energy demands while also employing the next generation. One dimension of the answer comes from the Indian government, which has adopted a national bioethanol mandate to revitalize struggling rural economies and address urban pollution concerns. This mandate, which doubles its target of blending ethanol with gasoline, capitalizes on abundantly available resources throughout the country. Bioethanol creates additional profit in the agricultural supply chain by placing market value on crop residues for ethanol production, and ultimately stimulates domestic growth while improving local air quality.

Given India's current development paradigm, a domestically grown bio-strategy is highly complimentary to larger energy plans that target a 40% utilization rate of non-fossil fuel sources by 2030, which Prime Minister Modi established at last year's COP 21. It is also consistent with well-established principles upon which modern India was built. Swadeshi politics - emphasizing economic self-sufficiency that leverage national resources and talent - was proven as effective in principal and practice for helping end British rule. In a modern interpretation of swadeshi politics, the "Make in India" initiative is an overarching strategy that prioritizes domestic industrial production and includes energy. More concrete policies are in line with this and Prime Minister Modi has placed renewable fuels as a key strategy to India's energy approach. Notably, the National Biofuels policy targets a 20 percent blend rate by 2017 with the explicit goals of reducing foreign imports to ensure energy security, revitalizing rural unemployment, improving stagnated wages and producing bioenergy.

Most concretely, India's oil marketing companies (OMCs) have placed bioethanol as a core component of their renewed energy efforts, the three biggest - Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation - pledging to produce over 220 million gallons of biodiesel from local manufacturers before November of this year.

Economies in rural India are predominately agricultural, which employ nearly 50 percent of the country according to World Bank data. Low commodity prices, a volatile agricultural market, and uncertain growing conditions are converging, upending growers' livelihoods and threatening the economy. Just as the United States' Renewable Fuel Standard has spurred economic growth in rural America, a biobased Bharat offers a similar promise for India's villages. While programs like the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) have been posited as the savior for rural economies, the more concerted and industry-wide approaches, like the National Biofuels Policy, are expected to catalyze economic growth throughout the bio-industry and build sustainable sector growth. Already, growers in Odisha are reaping the fruits of bioethanol production, and the Minister of State for Petroleum and Natural Gas, Dharmendra Pradhan, cited that growers producing biofuels from rice residues could earn over $10.9 million. The state, which produces over 3 million tons of rice crops per year, could translate this agriculture prowess into over 30 million liters of ethanol, making the economic upside profound.

Well endowed with crops--from rice regions in West Bengal, to wheat regions in India's Northwest Punjab states through to Tamil Nadu's sugarcane operations in the South--the opportunities to convert crop residues into higher yield returning products, including bioethanol, is vast. Complimentary to these feedstocks is an already well-developed sugar mill industry. Recently, the sugar industry has been in decline with over 100 mills closing operations in 2015. Rather than let the country's robust network of sugar mills and mill-supported communities idle, the existing infrastructure makes them ideally situated to be reused in new and more lucrative ways as biorefineries, tapping into local resources. As sugar mills are reinvigorated and repurposed to make bioethanol, the surrounding rural populations will benefit from job creation, alleviating distressed rural economies.

Furthermore, bioethanol can be a drop-in replacement for high-polluting fuels. In cities like Delhi, where air pollution levels can reach 128 parts-per million, there is significant potential to improve urban conditions for over 10 million residents. Taking into account the country's other cities - from Raipur to Ahmedabad - the positive possibilities available in replacing even just a fraction of the power generation with bioenergy multiply. In this way, bioethanol becomes a tool to combat particulate pollution making the environmental and health benefits of bioenergy profound.

As the country emerges as a pivotal actor in international energy discussions, India's bio-energy strategy will provide a blueprint for other countries with plentiful agricultural waste to leverage and spur economic growth. India's growing support for bio underscores how essential bioethanol will be in the coming years as an energy source.

Schweiker is former Governor of Pennsylvania and SVP at Renmatix, a technology licensing company for the conversion of biomass into cellulosic sugars

Published in Huffington Post