Making MUSH Energy Efficient

1. Making MUSH Energy Efficient Satya Rhodes-Conway COWS June 16 2011

2. COWS“Milk for the Movement” • Research center at UW Madison • “Think-and-do tank” for high-road economic development • Good jobs and clean energy

3. MUSH? • Municipal/Government, University, School, and Hospital - Buildings under governmental control • State, County, City, Town, etc. • schools (public and private); colleges, universities, and technical colleges • hospitals, clinics, and other healthcare facilities • assorted large institutional buildings, such as museums, places of worship, and nonprofits • Number of buildings?

4. Key Attributes • Decision-makers usually control multiple buildings • Energy intensive buildings • Older • significant energy users such as water utilities, water treatment facilities, hospitals • Energy costs can be up to 10% of a municipal • Beyond the profit motive • No split incentive • Longer time horizon

5. Energy Efficiency • Investment-grade audit • measures that increase the energy efficiency and are cost effective over a reasonable time horizon • efficient lighting • improved heating, ventilation and air conditioning systems • tightening the building envelope • Motors and appliances • Etc. • Ongoing building management

6. Why? • Save Money • Reduce Emissions • air quality • public health • global climate disruption • Increase Energy Security • price volatility • supply disruption • Economic Development • direct spending • redirection of dollars saved • Comfort and Health • Increased productivity • Decreased absenteeism • higher student test scores Pete Davis

7. Current Status • Energy Services Corporations (ESCOs) have worked in this sector for decades • market penetration in the MUSH sector: 20% to 50% • comprehensiveness of the retrofits performed? • new technology • Plenty of opportunity

8. Barriers • Upfront capital cost • Inability/limited ability to borrow/bond and impact of project bonding on credit rating • Diffuse control of buildings and/or building systems • Lack of reliable information on energy expenditures • Turnover in elected/appointed leadership • Lack of experience with energy efficiency, ESCOs, etc.

9. Principles • Job Quality and Opportunity • Direct control over the contracting process • Ensure that jobs created are good • Sustainable Financing • Managing your own project may be cheapest • General Obligation bonds (secured by the ability to levy taxes) • Revenue bonds (secured by the expected revenue, in this case the expected savings) • Qualified Energy Conservation Bonds (QECBs), a relatively new type of taxable bond subsidized by the Federal Government • Work with ESCOs • Capture a portion of the savings for use on future projects

10. Principles • Data-driven decisions • which buildings ought to be retrofitted, in what order, using which technologies? • EnergyStar Portfolio Manager • measurement and verification • Deep Retrofits • longer payback periods and higher upfront costs • increases in energy savings, job creation, and environmental benefits • energy savings from buildings with significant savings potential can be used to offset the cost of pursuing retrofits in buildings with less potential

11. Principles • Build strong and independent partnerships • Housed in a non-political department or in a separately created new entity • If a program is contracting with an ESCO, the use of an Owners Agent • Build a coalition • Maximize scale • aggregating properties with similar entities • bundled with other capital improvement or renewable energy generation • larger organizations (especially states) assist smaller entities by facilitating aggregation, providing technical assistance, or creating a pool of capital

12. Principles • Best practices in workforce development • connecting individuals to construction apprenticeships • Community Workforce Agreement (CWA) • high-quality pre-apprenticeship or contextualized basic skills training • social services • Implement complementary policies • drive demand for in the commercial and residential • support a contractor base and workforce able to meet that demand • Generating market demand for efficiency through labeling • Requiring energy efficiency upgrades through Residential/Commercial Energy Conservation Ordinances or retro-commissioning programs

13. Possible savings • MUSH floor space • about16.5 billion sq ft. • uses about 3.87 quadrillion BTU a year • energy costs about $40.7 billion a year • 20% savings would be $8.1 billion dollars per year • Example: City of Milwaukee • municipal operating budget of $69 million per year • controls 229 buildings • spends approximate $16 million per year on energy. • could save nearly $5 million per year

14. Possible jobs • Primarily construction jobs • Every $1 million spent on energy efficiency projects creates or retains between 4.3 and 8.6 FTE • Between $38.3 billion to $61.2 billion needed to upgrade the entire MUSH sector • Potential to create between 164,690 and 526, 320 FTE

15. How? • Assess your building stock energy use and prioritize • Audit • Financing options • Bonding • ESCO, municipal lease • Design/Build • RFP • owner’s agent • Include labor standards • Capture savings • Track building performance

16. It makes sense… • economic crisis • unemployment rates (especially in the construction sector) • environmental imperative • large-scale energy efficiency building retrofits drive job creation • economic, environmental, and community benefits • Relatively straightforward • buildings are controlled by those who have a broader public interest • can determine how much energy they use • can finance the retrofits • can ensure that jobs created are good jobs • ….it doesn’t make sense not to

17. satya@cows.org608 262 5387www.cows.orgwww.efficiencycities.org