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Alaska Energy Authority
Energy Efficiency Program Evaluation and
Financing Needs Assessment
Final Report
Prepared by:
Vermont Energy Investment Corporation
In Collaboration with:
Cold Climate Housing Research Center
July 2016
Energy Efficiency Program Evaluation and Financing Needs Assessment
Acknowledgments
The Energy Efficiency Program Evaluation and Financing Needs Assessment was conducted by Vermont
Energy Investment Corporation (VEIC) serving as Prime Contractor. VEIC team members participating in
the evaluation included: David Hill serving as Project Team Leader; Chris Badger serving as Project
Manager; Leslie Badger providing building code research and analytical support; Adam Sherman, Brian
Pine, Peter Adamczyk and Elizabeth Chant providing program strategy technical advisor support; and
Frances Huessy providing report editing and production support.
Cold Climate Housing Research Center (CCHRC) served as subcontractor with Nathan Wiltse leading the
CCHRC team and providing direct experience with the Alaska energy efficiency industry; Vanessa
Stevens coordinating research of existing programs and evaluations; and Dustin Madden providing
technical assessment and evaluation of program efficacy.
The VEIC team and the Alaska Energy Authority appreciate the significant time and thoughtfulness that
individual stakeholders contributed through participation in individual interviews and requests for
program data.
This report was written on behalf of the Alaska Energy Authority, but the views expressed in this report
are those of the study authors, consistent with the commissioning of this work as an independent study.
To contact the study authors or the Alaska Energy Authority:
David G. Hill, Ph.D.
Director Distributed Resources
Vermont Energy Investment
Corporation
128 Lakeside Avenue, Suite 401
Burlington, Vermont 05401
802-540-7734
www.veic.org
Neil McMahon
Program Manager for Energy Planning
Alaska Energy Authority
813 West Northern Lights Boulevard
Anchorage, AK 99503
907-771-3000
www.akenergyauthority.org
Table of Contents
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Table of Contents
1. Executive Summary ......................................................................................... 1
Findings ......................................................................................................................... 1
Recommendations ........................................................................................................ 4
Structure of the Report ............................................................................................... 10
2. Alaska’s Current and Historical Initiatives ....................................................... 13
Energy Efficiency as a Resource in Alaska ................................................................... 14
Regional Energy Planning ............................................................................................ 17
Data and Analysis ........................................................................................................ 18
Alaska Energy Efficiency Map ..................................................................................... 20
Alaska Energy Data Gateway (AEDG) .......................................................................... 21
Market Assessments, Reports, and Audits ................................................................. 22
Applied Research and Demonstration ........................................................................ 24
Efficiency Experience: Opportunities and Barriers ..................................................... 24
Weatherization Assistance Program ......................................................................... 25
Home Energy Rebate Program ................................................................................. 26
New Home Rebate Program ..................................................................................... 28
Technical Assistance and Training Grants................................................................. 28
Supplemental Housing Development ....................................................................... 29
Publicly Owned Commercial Buildings ....................................................................... 29
Village Energy Efficiency Program (VEEP) ................................................................. 29
Alaska Housing Finance Corporation Energy Efficiency Revolving Loan Fund ......... 30
Fairbanks Non-Profit Retrofit Pilot ........................................................................... 31
Public Facilities Energy Efficiency Improvement Program ....................................... 32
Community Facilities Direct Loan and Grant Program ............................................. 32
Rural Utilities Service ................................................................................................ 33
Private Commercial Buildings ..................................................................................... 33
Commercial Building Energy Audit (CBEA) ............................................................... 33
Alternative Energy and Conservation Loan .............................................................. 33
Loan Participation Program (LPP) ............................................................................. 34
Sustainable Energy Transmission and Supply Development Fund ........................... 34
Rural Energy for America .......................................................................................... 34
All Building Types ........................................................................................................ 35
Sustainable Southeast Partnership ........................................................................... 35
Strategic Technical Assistance Response Team ........................................................ 35
Energy Efficiency and Conservation Loan Program .................................................. 36
Energy Efficiency Program Evaluation and Financing Needs Assessment
ii July 2016
Water / Wastewater Facilities .................................................................................... 36
Utility Programs .......................................................................................................... 37
Chugach MyPower .................................................................................................... 37
GVEA Energy$ense Programs ................................................................................... 37
HEA Loan Program .................................................................................................... 39
Sitka ENERGY STAR Rebate Program ........................................................................ 39
Red-Yellow-Green Programs ..................................................................................... 39
AVEC Commercial Energy Audit Program ................................................................. 40
Building Energy Codes ................................................................................................. 40
3. Energy Efficiency National Strategies and Best Practices ................................. 45
Developing Comprehensive Energy Efficiency Programs ........................................... 47
Comprehensive Energy Efficiency Administration and Service Delivery .................... 50
Utility-Administered Demand Side Management Programs .................................... 50
Independent Program Administrators for Demand Side Management Programs .. 51
Subscription-Based Energy Efficiency Program Model ............................................. 52
Serving Low-Income Energy Efficiency Customers ..................................................... 56
Zero Net Energy Manufactured Home Replacement ................................................. 57
Residential Home Performance Efficiency ................................................................. 63
Lighting, Residential Plug Loads, and HVAC ................................................................ 67
Upstream Market Initiatives ....................................................................................... 69
Non-Residential Efficiency .......................................................................................... 72
Energy Efficiency Financing ......................................................................................... 75
On-Bill Financing and On-Bill Repayment ................................................................. 76
Property Assessed Clean Energy ............................................................................... 78
Public-Purpose Energy Services Company ................................................................ 80
Rural Utilities Service Loan Program......................................................................... 83
Loan Loss Reserves and Other Credit Enhancements .............................................. 84
Unsecured Lending ................................................................................................... 85
PowerSaver Loans ..................................................................................................... 86
4. Alaska Looking Forward ................................................................................. 91
Efficacy of Past and Current Initiatives ....................................................................... 91
Building Energy Efficiency Codes and Standards in the Affordable Energy Strategy
Study Area ................................................................................................................... 95
BEES Certified Homes in Alaska ................................................................................ 96
Regional Housing Authorities ................................................................................... 98
Building Code Gaps ................................................................................................. 100
Stretch Code Potential ............................................................................................ 101
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Forecast ..................................................................................................................... 104
Residential Energy Efficiency Forecasted Opportunity .......................................... 106
Non-Residential Energy Efficiency Forecasted Opportunity .................................. 108
5. Policy and Strategy Recommendations ......................................................... 113
Direct State Funding ................................................................................................. 116
Weatherization Program Services .......................................................................... 116
Market-Based Statewide Incentive Programs and Services ................................... 116
Upstream Product Initiatives and Incentives .......................................................... 117
Support Expanded Use and Models for Energy Services Contracts ....................... 118
Indirect State Funding ............................................................................................... 118
Technical Services, Training, and Research ............................................................ 118
Regional Coalition ................................................................................................... 119
Requirements and Codes .......................................................................................... 120
Establish a Statewide EERS ..................................................................................... 120
Statewide Building Code Adoption, Support, and Enforcement ............................ 121
Procurement and Product Minimum Performance Standards............................... 121
Targets for Assistance and Portfolio Investments to Support Energy Efficiency
Investment .............................................................................................................. 121
Appendix A: Catalog of Alaska Programs ................................................................. 123
Appendix B: Bibliography ........................................................................................ 133
Appendix C: Efficacy Spreadsheet ............................................................................ 143
Appendix D: Energy and Demographic Forecasts ..................................................... 149
Appendix E: List of Interviewees .............................................................................. 151
1. Executive Summary
In September 2015, the Alaska Energy Authority (AEA) retained the Vermont Energy
Investment Corporation (VEIC), in partnership with the Cold Climate Housing Research
Center (CCHRC), to conduct independent research and analysis of the potential need,
barriers, and opportunities for improvements for financing and funding strategies for
energy efficiency implementation in Alaska. The VEIC-CCHRC Team undertook this task in
the context of energy efficiency’s role in lowering individual and community energy costs.
This report contains findings and recommendations from several hundred hours of
primary and secondary research and analysis by our team. Our research involved:
• A thorough literature review of existing efficiency programs in Alaska and in other
jurisdictions; program documentation, program databases, authorizing
legislation, supporting regulations, program reports, and related literature.
• Meetings and interviews. We conducted dozens of in person and telephone
interviews and meetings, some with multiple participants.
• Analysis of energy and demographic forecasts provided by AEA. An efficacy
assessment of current and past initiatives in Alaska, and consideration of how well
strategies and best practices adopted elsewhere match the particular priorities
and needs of rural Alaska.
The majority of the interviews and discussions were informal, and occurred during two
visits to Alaska. The first occurred in late November-early December 2015, to coincide
with the Bureau of Indian Affairs (BIA) Conference in Anchorage; the second occurred in
April 2016, to coincide with the Alaska Rural Energy Conference in Fairbanks.
The team’s findings are drawn primarily from the literature review, analysis, and feedback
from stakeholders through one or more of the outreach channels. The term
recommendations refers to the team’s professional opinions, all of which are based on
the research findings and our collective experience in the promotion and development of
energy efficiency markets and financing.1 We present findings first in this summary,
because they provide the context and rationale for the recommendations that follow.
Findings
The findings and recommendations from this research are “cross-cutting.” By design, the
work and results do not reflect a deep-dive evaluation of any specific initiative,
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organization, or program, but they do contain substantial analysis across the wide scope
of energy efficiency practices to date in rural Alaska. Rather, the objectives and scope of
work for this study are to identify the overarching needs and opportunities for energy
efficiency in rural Alaska, with particular attention to how financing strategies can help to
improve energy affordability. We have highlighted those areas with the broadest
implications for future policy, program design, management, and implementation.
Looking forward, as Alaska shifts to a practice of sustained investment in energy efficiency
as an energy resource, we discuss the value of ongoing evaluation and monitoring as
methods for informing program design and management, decision making, and
safeguarding public and private expenditures.
Finding 1: There is significant need and opportunity for more energy
efficiency.
Energy efficiency is an important resource for rural Alaska. Efficiency has been
consistently identified by regional plans, many studies, legislative action, and local
communities as a priority. Research conducted in parallel with this study confirms this
finding. In the study area, approximately 41,000 households and 10,000 non-residential
buildings have not yet received comprehensive energy efficiency services during the
2008-2015 time frame. The Forecast section of this report provides details on the
geographic distribution, fuel consumption, fuel costs, and potential fuel savings
associated with providing efficiency services for these buildings. Our research clearly
reaffirms the finding that energy efficiency has great potential for improving energy
affordability in rural Alaska. Investment in energy efficiency is consistently identified
by stakeholders as a priority need and opportunity.
Finding 2: Energy efficiency in Alaska is a cost effective strategy for the
State and local economies.
One of the reasons that energy efficiency is a priority for local communities and is
widely considered by stakeholders to be a key strategy for improving affordability is
that it is cost effective. In rural Alaska, the costs for delivering energy supplies and
efficiency are usually much higher than in non-remote communities. The Forecast
section of this report presents findings indicating the attainability of more than $697
million in present-value net benefits through cost-effective energy efficiency services
to the cohort of residential and non-residential buildings not yet served. The present
value costs for the efficiency improvements are estimated to be $866 million, with
present-value benefits (based on local fuel consumption and prices) estimated to
exceed $1.56 billion. Even when we incorporate the non-measure costs of the
1. Executive Summary
3 July 2016
recommended initiatives and strategies, the savings remain cost effective and provide
an important economic opportunity for the State. The total present-value net benefits
estimated in the Forecast section are the equivalent of more than $3,200 of net
economic value for each of the 215,000 residents in the AkAES study area.
Finding 3: There are significant barriers and unique challenges to
providing energy efficiency services for rural Alaska.
Unique technical, logistical, and cultural factors influence the strategies that are
appropriate for rural Alaska. The energy efficiency solutions that are appropriate
elsewhere in the United States, or even in Railbelt Alaska, might need to be adapted,
and in cases might not apply in rural Alaska. The Efficacy Assessment section of this
report identifies gaps in the current and past initiatives serving the energy needs for
rural Alaska. We supplement the Efficacy Assessment’s broad view with a finer level
of detail on how well a specific new or innovative strategy matches the unique needs
and opportunities of rural Alaska. Sustained investment, training, research,
coordination, monitoring, and evaluation, guided by comprehensive plans and
strategies, are critical to long-term success.
Finding 4: Alaska has excellent resources and experience in delivering
energy efficiency services to rural communities.
Alaska has a strong community of dedicated professionals, organizations and leaders
who understand the challenges and potential for energy efficiency. Alaska also has a
diverse mix of actors in the energy sector with federal, state, local, tribal, non-profit,
for-profit, and academic representatives all actively engaged. The literature review,
program and services catalog, and efficacy assessment sections of this report provide
greater detail and references on the nature, duration, and results across these
initiatives. The collective experience and organizational capabilities are a valuable
resource as Alaska seeks to further energy efficiency.
Finding 5: Certain strategies that have been successful elsewhere can be
a good match for rural Alaska; others are less likely to be
successful.
Our research and this report offer several strategies, classified according to their
relevance to efficiency programs, policy, regulation, and business approach—and
summarized according to the Alaskan context. They are described throughout the
report. These strategies illustrate how promoting energy efficiency deployed
elsewhere might or might not be a good match for rural Alaska. In many cases,
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modifications to or adaptations from the approach, and strategies used elsewhere, will
be necessary to address specific conditions and challenges. The public-purpose energy
services company (PPESCO) model is an example of a strategy that, with adaptations,
holds promise for enhancing efficiency services and investment. Residential property-
assessed clean energy financing (residential PACE) is an example of a strategy that is
gaining some success in other markets. However, because of the administrative, tax,
and property ownership characteristics of rural Alaska, that particular mechanism is not
likely to be a good match.
Finding 6: Regional planning and data are critical for sustained success.
The geographic span and environmental diversity of rural Alaska are immense.
Important differences in the climate, available energy resources, transportation,
economic drivers, demographics, culture, and political structures are all present.
Regional energy planning plays an important role in identifying local priorities, engaging
local communities and stakeholders, and in identifying specific metrics and milestones
for success. As Alaska seeks to use efficiency as a key strategy to improve affordability
in rural communities, coordination and tracking will help to facilitate best practices,
reduce costs, and sustain progress.
Finding 7: Meeting the objectives of the Affordable Alaska Energy
Strategy is likely to require new approaches to funding and
financing.
The total investments for enhancing energy efficiency in rural Alaska are significant
($866 million +), and Alaska faces real challenges and shifts in the fiscal and budget
landscape as revenues from oil have declined and are not likely to provide the same
level for appropriations as they have in the past. Therefore, it is apparent to our
research team and to stakeholders that a shift from appropriations to sustainable
funding and financing strategies is needed. Financing by itself, however is not a panacea
that overcomes all barriers or reaches all potential for energy efficiency. Instead,
financing strategies are one element in a portfolio of direct funding, support services
and sustained consumer education.
Recommendations
Based on our research, analysis, stakeholder feedback, our discussions with AEA staff, and
our team’s professional judgment we recommend six areas for direct and indirect state
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5 July 2016
funding and four additional areas related to adoption of requirements and targets to
further support efficiency. These are shown in Table 1.
Table 1. Overview of essential areas for direct and indirect state funding, and for establishing statewide
requirements
Direct state funding Indirect state funding Establishing /
enhancing requirements
Sustained Weatherization
Program support
Continue with technical
services, training, and
research
Establish an energy efficiency
resource standard (EERS)
Market-based programs and
incentives
Join and/or create
regional coalition(s)
Expand building codes, support
and enforcement statewide;
identify and implement “stretch”
code
Upstream product initiatives
and incentives
Participate in and adopt
minimum product standards
Support energy service
contracts via public and
private channels
Create targets or requirements
for investment of a portion of
assistance, endowment or public
benefit corporate portfolios to
support energy efficiency
The annual funding needs to support these recommendations are estimated to be $61
million as illustrated in Table 2.
Table 2. Study area funding recommendations
Type of funding Annual study area
budget
Direct state funding
Weatherization Services reaching 80% or more of all eligible
rural Alaskan Households within the next ten years $36 million
Market-based direct incentives, services, upstream incentives,
and support for performance contracting $17 million
Study area direct funding subtotal $53 million
Indirect state funding
Research, technical support, and training $6 million
Regional collaboration (In State) and cooperation with out of
state regional networks or alliances $1 million
Study area indirect funding subtotal $7 million
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Type of funding Annual study area
budget
Requirements funding
EERS, code enhancements, product and procurement standards $ 1 million
Total study area recommended annual funding $61 million
The net benefits of the proposed spending are estimated to be $40 million per year.
Three-fourths (75 percent) of the expenditures by the State, presented in Table 3, are
direct energy efficiency measure costs and incentives. The remaining 25 percent are non-
measure costs, such as technical assistance and program delivery costs. The State’s total
expenditures of $61 million leverage additional participant investments of $24 million in
measures, resulting in total expenditures of $69 million on measure costs and $16 million
on non-measure costs annually, as presented in Table 3.
Table 3. Benefit / cost estimates for recommended portfolio
Annual costs
Program: measure costs (direct incentives) $45 million
Program: non-measure costs (non-incentive costs, market
services, support, administration)
$16 million
Participant: leveraged customer investments in measures $24 million
Total annual costs $85 million
Annual benefits
Residential buildings $54 million
Non-residential buildings $71 million
Total annual benefits $125 million
Total annual study area energy expenditures $397 million
Savings as share of annual energy expenditures 31%
Net benefits
Estimated net benefits (total annual benefits – total annual costs) $40 million
Capturing 30 percent (or more) in savings from energy efficiency is an aggressive, yet
attainable, objective. It will require sustained funding, organizational development,
training, commitment and education for consumers. However, as detailed throughout
this report, Alaska has valuable experience and resources to draw upon, across all of these
factors for a more sustainable energy future.
Alaska is facing significant challenges with declining oil revenues and pressure on State
budgets. This study identifies an economic investment opportunity for the State to
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improve energy efficiency in rural Alaska and to create significant net economic benefits.
Together, they will help alleviate, rather than exacerbate, current economic challenges.
The Legislature and other policy / decision makers will need to determine the most
appropriate means for funding the recommended expenditures. Table 4 presents an
example of how investment of this magnitude might be structured and sustained.
Table 4. Illustrative funding profile that Alaska could adopt
Source Annual Funding
Gross receipts tax / system benefits charges for electric and fossil fuel.
Based on 4% of annual expenditures ~$16 million
Allocation of a portion of annual fuel assistance expenditures to support
energy efficiency investments ~$20 million
Coordinate allocation of support from the U.S. Department of Housing
and Urban Development (HUD), U.S. Department of Agriculture (USDA),
BIA, other federal and foundation / private sources
~$15 million
Long-term (10-year) state appropriation / authorization, allocation from
permanent fund, pipeline gas surcharge, etc. ~$10 million
Total $61 million
Coordinated and consistent action across policy, regulatory and implementation
segments of the energy economy will be required to make progress on the recommended
portfolio. The Policy and Strategy Recommendation section of this report provides
further detail on the following ten foundational recommended actions.
Recommendation 1. Establish a sustainable mechanism for Weatherization
funding in rural Alaska.
We recommend the Alaska Affordable Energy Strategy contain an explicit target for,
and associated sustained funding to provide, comprehensive Weatherization services
to all eligible households in rural Alaska over the next ten years. The estimated
investment of $36 million per year to provide these services is consistent with past state
investment levels in weatherization services, and will provide a substantial range of
durable, non-energy benefits to the communities and families that are served.
Recommendation 2. Create statewide market-based energy efficiency
programs, services and incentives.
We recommend that market-based incentive programs and services for rural Alaska
are part of a larger coordinated statewide effort, and that the savings and program
expenditures in rural Alaska are counted towards contributions to broader statewide
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savings targets and performance metrics. The creation of a statewide energy efficiency
resource standard (Recommendation 7) is closely related to the creation of statewide
programs and incentives. We note that a single statewide administrator should be
considered, but is clearly not required to implement these recommendations.
Coordinated and consistent program design and incentives, whether with single or
multiple administrators, should be an objective unless there are specific compelling
reasons for variations. Statewide delivery of efficiency services and effective market
based incentive programs are identified in Recommendations 3 and 4, and are
discussed further in the National Best Practices section of the report.
Recommendation 3. Develop upstream heating equipment and lighting
initiatives and incentives.
We recommend that to capture scale and administrative efficiencies, and to build
market acceptance and awareness, Alaska should coordinate and implement strong,
upstream (supply channel) initiatives in rural areas, as part of a broader, statewide (or
regional) effort. The Strategies in the Alaskan Context section discusses upstream
efficient lighting and heating / ventilation / cooling strategies for the market.
Recommendation 4. Support expanded use and models for energy service
contracts.
The State should create a formal initiative to foster and expand public- and private-
sector actors who seek to provide energy services contract services for rural Alaska.
The Strategies in the Alaskan Context section discusses the public-purpose energy
services company model.
Recommendation 5. Continue support for technical services, research, and
training
Funding for the technical services, training, and research elements of the portfolio
should be leveraged and coordinated with other state funds directed to services in
other sectors, with funding for research and development through academic
institutions, with federal funds, and with private support from foundations—and in
some cases, with private investment.
Recommendation 6. Join and/or form collaborative partnership(s).
We recommend that Alaska continue to encourage collaborations among market actors
and the State, to advance statewide energy efficiency. The Alaska Energy Efficiency
Partnership is a notable example of the benefits of collaboration and sharing of best
practices in energy efficient building design, new technologies and promotion of new
programs and financing supporting energy efficiency. We also recommend
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9 July 2016
participation in out-of-state regional or national alliances or collaborations supporting
energy efficiency as an efficient means to access and maintain resources. Alliances
developed with arctic climate regions in Canada through annual forums – most recently
the Arctic Energy Summit – offer a broader scope of investments in energy efficiency
technologies and building practices. Additional regional and national partnerships can
support the development of resources for quantifying and reporting energy efficiency
gains, such as a Technical Reference Manual (TRM) and standardized Evaluation,
Verification and Monitoring (EM&V) protocols. If such an approach is less successful
than planned, we strongly recommend Alaska consider forming a partnership or
coalition that would more directly match the needs of northern climates and provision
of services in remote communities.
Recommendation 7. Establish a statewide energy efficiency resource
standard (EERS) and develop targets for assistance and
portfolio investments to support energy efficiency
investment.
We recommend Alaska establish a formal EERS, and establish targets for total energy
savings for at least the residential and non-residential building sectors over the 5- and
10-year horizons. See also Recommendation 2. Additionally, the State should
establish legislative targets and guidelines for ensuring revenues, assistance, and other
forms of investment are dedicated to energy efficiency, for the benefit of Alaska
residents and businesses, statewide.
Recommendation 8. Adopt and expand support for statewide energy
efficiency building codes for residential and non-
residential buildings, including a stretch code element.
We recommend that the State expand building code coverage to be statewide, and
create an environment in which technical support is provided and enforcement is
standardized. A stretch code will help support improvements in the code over time,
and can be coordinated with the research and training elements in Recommendation
5.
Recommendation 9. Adopt minimum efficiency design and procurement
standards.
We recommend that the State establish standard purchasing / procurement
requirements for energy-efficient equipment and other measures, ensuring that each
energy-efficient product installed in Alaska meets or exceeds minimum performance
standards established by nationally recognized rating organizations. In addition to
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general market standards, procurement for state, municipal, and tribal organizations
can also adopt minimum efficiency performance requirements and guidelines.
Adoption of this recommendation can be related to research and training
(Recommendation 5) and regional collaborations (Recommendation 6).
Recommendation 10. Establish targets and guidelines to channel a portion of
assistance, endowment, and public-benefit corporation
investments toward efficiency.
The State should establish legislative targets and guidelines for ensuring revenues,
assistance, and other forms of investment are dedicated to energy efficiency, for the
benefit of Alaska residents and businesses, statewide. Such targets and guidance will
help to fund the recommended initiatives and support all of the recommendations
listed above.
Structure of the Report
The VEIC / CCHRC Team has structured this report to optimize and deepen readers’
understanding of opportunities for Alaska’s growth in energy efficiency service delivery—
with special attention to rural communities. Alaska’s accomplishments to date have
prepared the state to evolve toward a comprehensive statewide energy efficiency
strategy. The report supports decision makers in determining a path that considers future
energy needs, costs, reliable funding methods, cost-effective customer project financing,
and other factors that allow utility planners to incorporate the benefits of energy
efficiency into their supply portfolios.
Section 2 offers an overview of Alaska’s current and past initiatives. A catalog of these
practices is contained in Appendix A.
Section 3 presents best-practice strategies that are being used in jurisdictions throughout
the United States, and which have applicability for the Alaskan context.
Section 4, Alaska Looking Forward, assesses the efficacy of existing and past initiatives,
assesses the savings potential for statewide code adoption, and offers a forecast of future
energy in the context of demographic trends and likely resulting energy needs for rural
Alaska. It also contains a discussion of building codes and standards.
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11 July 2016
Section 5 contains policy and strategy recommendations, describing in greater detail the
findings and recommendations articulated in the Executive Summary. The findings
directly reflect the information and feedback gathered from stakeholders in this study.
The findings lead to specific recommendations from stakeholders, but they do not reflect
recommendations from VEIC or CCHRC staff. The recommendations are the result of the
VEIC / CCHRC Team’s synthesizing the research, and reflect the professional experience
of VEIC and CCHRC team members.
Appendices
A – Catalog of Alaska Programs
B – Bibliography
C – Efficacy Spreadsheet
D – Energy and Demographic Forecasts
E – List of Interviewees
Notes
1 This report’s Introduction presents information on the VEIC-CCHRC Team’s professional experience with
energy efficiency market development.
2. Alaska’s Current and Historical
Initiatives
Alaskans have long recognized the important role of energy resources and planning in
supporting rural communities throughout the state. For decades Alaskans have worked
through tribal, private, state, and federal planning and investment to operate energy
infrastructure serving the needs of remote and rural communities. These communities
face unique barriers and opportunities across climate, logistical, cultural, demographic,
and technical dimensions.
In 2014, the Alaska State Legislature passed Senate Bill 138 (SB 138), a piece of natural
gas pipeline enabling legislation that directed the Alaska Energy Authority to propose a
plan for improving energy affordability for Alaska communities that would not have direct
access to the proposed pipeline. The AEA’s program to fulfill this mandate is the
development of the Alaska Affordable Energy Strategy (AkAES).
SB 138 also established the Affordable Energy Fund that, if and when the natural gas
pipeline is built, would receive income from pipeline revenues. Through the research and
analysis conducted for the AkAES, the AEA would recommend plans for achieving near-
term energy cost savings and prepare the state for revenue from the Affordable Energy
Fund.
The full AkAES will have a broad scope and will consider options for efficiency and energy
infrastructure and investments in supply, transmission, distribution, operations, and
supporting energy infrastructure. This study, a contributing element to the broader
AkAES scope of work, addresses efficiency at the consumer level, with a primary emphasis
on the residential and non-residential building sectors.
The details of direct access to the natural gas pipeline remain to be determined. However,
we have excluded from this study the “Railbelt” communities of the Anchorage
Municipality, Fairbanks North Star Borough, Kenai Peninsula Borough, and the
Matanuska-Susitna Borough. Figure 1 shows the areas contained in the study, and the
areas excluded.
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Figure 1. Alaska Affordable Energy Strategy study area: Regions outside the Railbelt.
Energy Efficiency as a Resource in Alaska
The Legislature has recognized energy efficiency in Alaska as a strategic policy objective
with the passage in 2010 of House Bill 306 (HB 306). The resulting law established the
target of achieving 15 percent reductions in per-capita energy consumption by 2020
through efficiency.
SB 138 and HB 306, and the AEA’s initiation of the AkAES, build on a legacy of recognizing
energy efficiency as an important resource, and provides an opportunity to develop an
energy reduction strategy that helps address affordability, health, and safety needs in
rural Alaska.
The AEA, along with other stakeholders and organizations, has emphasized the
importance of efficiency as a long-term strategy for Alaska. Over the past decade, the
following studies have prioritized energy efficiency as a resource:
2. Alaska’s Current and Historical Initiatives
15 July 2016
• Rural Energy Action Council, Findings and Action Recommendations, 2005
• Information Insights (for AEA and Alaska Housing Finance Corporation
[AHFC]), Alaska Energy Efficiency Program and Policy Recommendations,
2008
• AEA and the Alaska Center for Energy and Power, Alaska Energy: A First
Step toward Energy Independence, 2009
• AEA, Alaska Energy Pathway, 2010
• CCHRC (for AEA), Alaska Energy Efficiency Policy and Programs
Recommendations: Review & Update, 2011.
• AEA, Energy Efficiency Policy Recommendations for Alaska, 2012
• Commonwealth North, Energy for a Sustainable Alaska: A Rural
Conundrum, 2012
• ISER, Energy Policy Recommendations, 2013
• Alaska Arctic Policy Commission, Preliminary Report to the Alaska State
Legislature, 2014
• Regulatory Assistance Project and Ernest Orlando Lawrence Berkeley
National Laboratory, Sustainable Energy Solutions for Rural Alaska, 2016
The Rural Energy Action Council, created by Governor Frank Murkowski and convened by
the Alaska Energy Authority, recommended funding for weatherization and strategies
such as a low-interest loan fund to support energy conservation and efficiency in rural
Alaska. The 2008 Energy Efficiency Program and Policy Recommendations cited total
investments in efficiency of more than $706 million, with present value energy savings
estimated to exceed $843 million for a benefit-cost ratio of 1.59:1. The authors
recommended state funding for weatherization of 45,000 households, and action by the
Regulatory Commission of Alaska (RCA) to establish a system benefits charge to provide
sustained funding for efficiency programs.1
The 2009 study prepared by the AEA and the Alaska Center for Energy and Power (ACEP)
noted that end use energy efficiency was a key element to realizing a more affordable
and independent energy economy. The 2010 Alaska Energy Pathway recommended ways
for reaching targets of 20 percent in energy efficiency and conservation improvements by
2020.2
Energy Efficiency Program Evaluation and Financing Needs Assessment
16 July 2016
Commonwealth North’s 2012 report was the result of a comprehensive study that
emphasized the challenges of rural communities. They recommended prioritizing
interconnection of rural communities where feasible, and coordinating planning and
investment in infrastructure, and using efficiency to reduce or eliminate the need for the
Power Cost Equalization program.3
The Institute of Social and Economic Research (ISER) drafted comprehensive Energy Policy
Recommendations for the Alaska Legislative Affairs Agency and State Senate Energy
Working Group in 2013. The priority recommendations primarily called for immediate and
multi-year funding for energy efficiency initiatives that can effectively reduce energy
burden costs for Alaskans, offer good returns on investment, and create jobs.
The ISER study affirms energy efficiency as an effective strategy with significant remaining
potential:
Efficiency appears to be the most effective, dependable path to lowering energy costs for
all segments of energy consumers. Significant potential savings to Alaska businesses and
government - over $125 million and over $200 million per year respectively - remain to be
realized. 4
In examining Alaska’s role in the broader Arctic region, and strategies to support
sustainability and economically viable communities, the Alaska Arctic Policy Commission
made the development of stable long-term funding mechanisms for state weatherization
and energy efficiency programs a priority.5
The U.S. Department of Energy (U.S. DOE) Office of Indian Energy Policy and Programs
released a study “Sustainable Energy Solutions for Rural Alaska” (April 2016) examining
“the reliability, capital and strategic planning, management, workforce development,
governance, financial performance and system efficiency” for delivering energy in rural
Alaskan communities. Several findings and recommendations from the report directly
reflect opportunities for accelerating energy efficiency in the AkAES area: greater
coordination of utilities for achieving greater economies of scale; improving long-term
integrated resource plans (IRP); developing workforce capacity; increasing power system
efficiency and commitment to energy efficiency; improving access to low-cost capital for
rural utilities; and leveraging the existing market for energy efficiency services.
2. Alaska’s Current and Historical Initiatives
17 July 2016
Regional Energy Planning
Since 2014, AEA has provided funding, and technical and planning support to the Alaska
Regional Development Organizations (ARDORs) and other regional and statewide
stakeholders. This effort has resulted in the development of nine separate regional energy
plans in the AkAES area in addition to a separate plan for the Southeast. These plans are
expected to result in strategic plans that prioritize and specify opportunities — including
energy efficiency projects — for reducing the long-term cost of the energy supply and
usage in rural Alaska regions and communities.
The regional energy plans involve individual community demographic data, identified
renewable resources, and building energy data to support the analysis of the potential for
energy savings.6
The regionally led and community-vetted planning process has consistently identified end
use efficiency as a top priority, based on cost effectiveness, the potential for relatively
quick implementation, and the level of their capital cost investments. In the residential
sector, the regional planning studies suggest that between 50 and 85 percent of the
housing stock has not yet received energy efficiency services in the 2008-2014 period.
Table 5. Regional energy planning estimates of remaining residential sector building stock energy
efficiency potential7
Census area
Non-energy-
efficient
housing
Approximate
number of
remaining units
Estimated annual fuel
savings potential
(MMBtu)
Yukon-Kuskokwim 70% 4,187 236,000
Chugach Prince William Sound 81% 2,079 137,419
Interior 49% 1,354 117,000
Bristol Bay 64% 1,495 54,912
Aleutian 82% 1,329 41,114
North Slope 85% 1,671 91,237
Kodiak 63% 1,930 65,148
Bering Straits 90% 2,480 126,381
Southeast 84% 24,077 1,264,520
Northwest Arctic 78% 1,402 57,692
Total 42,004 2,191,423
Energy Efficiency Program Evaluation and Financing Needs Assessment
18 July 2016
The summary of estimated annual fuel savings in Table 5 reflect avoided fuel oil
consumption reported in the regional energy plans. However, they do not reflect savings
from avoided fuelwood use and use of other heating fuels, nor the potential for electric
energy efficiency savings through more efficient lighting, appliances, and other measures
or their indirect fuel savings from reducing electric generation. Therefore, the actual,
total energy savings potential is likely to be higher.
The regional energy plans consistently identify energy efficiency as a high priority for
maintaining or improving energy affordability. This repeated recognition of the role of
energy efficiency and shared opportunities for weatherization of residential buildings,
and improvements in energy efficiency in public and commercial buildings, and water and
sewer systems provides a strong argument for continuing to develop and coordinate
services. Specific recommendations include expanding awareness, reducing barriers and
increasing participation in existing statewide energy efficiency programs; benchmarking
and conducting audits on existing non-residential buildings; upgrading street lighting to
light-emitting diode products (LEDs); and investigating the public-purpose energy services
company (PPESCO) model as a potential opportunity for retrofitting community buildings
and schools. The consistency in the regional plans also indicates community
understanding and “buy-in” on the value and the benefits of energy efficiency.
The regional plans tend to characterize energy efficiency potential in both the residential
and non-residential sectors. However, they are not detailed implementation documents
and therefore contain few specifics on budgeting, program services, delivery methods,
and timeframes for capturing the cost-effective potential.
Data and Analysis
Alaska is rich in data and analysis on current energy consumption patterns and
infrastructure. The work to date provides policy makers and planners with information to
help decision making in investments, program designs and policies. Alaska has several
publicly available data sources on community demographics, number and location of
buildings, energy use, and energy efficiency building retrofits. These data are in public
databases, and are an important source of information for the regional energy plans. The
most extensive database is the Alaska Retrofit Information System (ARIS), which has
energy audit data on an estimated 32 percent of occupied housing in the state, and
information on energy audits of public buildings. The interactive Alaska Energy Efficiency
Map contains summary statistics of these data, and data from AEA’s energy efficiency
2. Alaska’s Current and Historical Initiatives
19 July 2016
programs. Finally, the Alaska Energy Data Gateway offers researchers access to electricity
use data, fuel prices, and other energy information published elsewhere.
ARIS is a SQL database developed jointly by AHFC, CCHRC, and Resource Data, Inc. (RDI).
It stores, tracks, and manages data from residential and commercial energy efficiency
programs. The primary data stored in the database are the inputs and outputs of energy
models. It also contains data on actual fuel billing, program costs, and a regularly updated
library of energy assumptions (fuel prices, R-values of materials, climate data, etc.) are
included.
ARIS can be queried by AHFC-approved researchers, and it contains a web interface.8 The
web interface allows users with accounts to upload information, download AkWarm
energy model files,9 and view automated reports that AHFC personnel use in program
tracking.
ARIS has energy audit data for residential buildings throughout the state. AkWarm home
energy models are stored in the database for every home participating in the Home
Energy Rebate, Weatherization, or Alaska Building Energy Efficiency Standard (BEES)
programs.
In the autumn of 2015, there were more than 80,000 residential AkWarm energy audit
models with unique locations in the database, representing approximately 32 percent of
the occupied housing in the state.10 The AkAES region represents approximately 20
percent of the entries in the database, of which over 50 percent were through the
weatherization program, 25 percent in the Home Energy Rebate program, 18 percent new
construction meeting BEES and remaining 2 percent participating in the New Home
Rebate program. Pre- and post-audit data are available on homes that have been
retrofitted through either the Home Energy Rebate or Weatherization Assistance
programs. This large sample of building information was used in the 2014 Alaska Housing
Assessment in combination with American Community Survey data and other sources to
develop housing profiles for each ANCSA region, Census area, and community in the state.
These profiles characterize the housing stock at each of these levels in four major
categories: community, energy, overcrowding, and affordability.
ARIS also contains data for commercial buildings throughout the state. There are two
primary sources of data on commercial buildings: benchmark data via AHFC’s Retrofit
Energy Assessment for Loan (REAL) benchmark form, and audit data from AkWarm-
Energy Efficiency Program Evaluation and Financing Needs Assessment
20 July 2016
Commercial energy modeling software. The benchmark data for 1,200 buildings are
largely self-reported (by building owners), and come primarily from AHFC’s effort to
provide energy audits and loans for energy efficiency to public buildings throughout the
state. There are 327 commercial building audits in the database that were performed
under AHFC, which provided free ASHRAE Level 2 audits to qualifying buildings.11 The
Alaska Native Tribal Health Consortium (ANTHC) and AEA have also uploaded audits on
village health clinics, water and wastewater treatment plants, and buildings participating
in AEA’s Village Energy Efficiency Program and Commercial Building Energy Audit (CBEA)
program.
ARIS’s appraisal tool calculates the value of energy efficiency for a home by comparing it
to modeled homes in the database. AHFC, CCHRC and the Alaska Craftsman Home
Program jointly created the tool for real estate professionals and appraisers to
incorporate the value of energy efficiency into home price assessments. Users enter a
home’s annual energy costs and the general information (location, square footage,
bedrooms, etc.) and the tool queries ARIS to find comparable homes. The energy costs of
the home being evaluated are then compared to the energy costs of the comparable
homes, and the net present value of the difference in energy costs is calculated over a 5-
year period. Appraisers are advised to use this as the maximum value to be added to the
home being evaluated.
Alaska Energy Efficiency Map
The interactive Alaska Energy Efficiency Map12 shows where energy efficiency work by
AEA and AHFC has been done in the state, as shown in Figure 2.
2. Alaska’s Current and Historical Initiatives
21 July 2016
Figure 2. Screen shot of the Alaska Energy Efficiency Map.
This AEA map contains data for:
• AEA’s Commercial Building Energy Audit program (specific buildings)
• AEA’s Village Energy Efficiency Program (community totals & some specific
buildings)
• AEA’s Energy Efficiency and Conservation Block Grant program (specific
buildings)
• AHFC’s Home Energy Rebate and Weatherization Assistance Programs
(community totals)
• AHFC’s Public Building Audits (specific buildings)
The map also details the total amount of cost savings possible from energy efficiency
measures that have been identified through audits, and the total savings that have been
achieved by implementing energy efficiency retrofits in these buildings.
Alaska Energy Data Gateway (AEDG)
The University of Alaska’s Institute for Social and Economic Research (ISER) created the
Alaska Energy Data Gateway, in collaboration with AEA. The searchable database
contains data from the Power Cost Equalization (PCE) program’s mandatory reporting
requirements, as well as bulk fuel inventory and 2012 powerhouse inventory, fuel prices
from the AHFC and Department of Community and Regional Affairs (DCRA) biennial fuel
price survey, economic and demographic information from the Alaska Department of
Labor and Workforce Development research division and the U.S. Census Bureau, and
Energy Efficiency Program Evaluation and Financing Needs Assessment
22 July 2016
tables from the Alaska Energy Statistics publication. PCE offers a subsidy for electricity in
rural Alaska and requires that utilities report their generation, diesel generator efficiency,
sales, and other data for every community that participates. The Gateway provides access
to many years of reports in API, CSV, Excel, or SPSS file formats. Several of the Gateway’s
datasets are not publicly available elsewhere including Renewable Energy Fund (REF)
project performance and detailed time-series operational data for all operational REF –
funded projects.
Market Assessments, Reports, and Audits
A significant number of reports, market assessments and project / facility specific audits
help quantify and characterize the savings potential and needs related to Alaska’s energy
efficiency resources. These involve survey studies that expand on the data sets listed
above, compilations of data from audits, and benchmarking for the energy performance
of existing buildings, irrespective of whether their owners have undertaken energy
efficiency improvements. Recent reports and assessments that are valuable to future
planning and delivery of efficiency services are:
• Alaska Energy Authority, End Use Study, 2012.
• Alaska Housing Finance Authority, A White Paper on Energy Use in Alaska’s Public
Facilities, 2012
• Alaska Housing Finance Authority and Cold Climate Housing Research Center,
Energy Efficiency of Public Buildings in Alaska: Metrics and Analysis, 2014
• Alaska Housing Finance Authority, 2014 Housing Assessment
The findings from the White Paper on Public Facilities and supplementary analysis of
schools and other public buildings illustrate the rapid paybacks on average of four to five
years for investments in energy efficiency. The series of white papers evaluates the
cumulative opportunity identified through 327 investment-grade audits conducted on
public facilities by AHFC and an additional 65 audits completed by ANTHC on health
clinics, washaterias, and water treatment facilities. Financing for public facilities through
AHFC’s Energy Efficiency Revolving Loan Fund (EERLP) is highlighted as a cost-effective
way for communities to accelerate the rate of efficiency improvements, as shown in
Figure 3. It also provides an attractive annual return on investment: 26 percent for schools
included in the study.
2. Alaska’s Current and Historical Initiatives
23 July 2016
Figure 3. The regional average costs, savings, and payback from efficiency retrofits of public buildings. 13
Although the AHFC loan program has not yet been used, the benchmarking and audits
have created a trained workforce of Certified Energy Auditors, prompted the majority of
the buildings to implement some amount of energy efficiency retrofit work, and increased
the amount of information available on commercial-scale building efficiency in the state.
The audit and benchmark data have informed two types of reporting in the ARIS database:
the White Paper on Energy Use in Alaska’s Public Facilities and follow-up, topic-specific
reports, Energy Efficiency of Public Buildings in Alaska.14 In addition to providing energy
metrics for different building types specific to Alaska,15 these reports produced the
following key findings:
● Ventilation rates appear to be the largest driver of thermal energy efficiency16
in Alaska.
● There is no correlation between building age and energy efficiency, even when
compared to similar building use types in similar climates. A lack of
commercial building energy codes is likely a large factor.
● Operations and maintenance can play a significant factor in energy use in
buildings.
● In rural communities, operations and maintenance changes or retrofits that
can be done with local labor are the most cost-effective energy efficiency
measures.
● Energy audits indicate that the average annual cost savings per building, if the
building owner were to undertake the recommended measures, was $21,000.
The costs to implement the corresponding efficiency measures was $82,000
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
$180,000
Installed Cost ($)Annual Savings ($)
Energy Efficiency Program Evaluation and Financing Needs Assessment
24 July 2016
per building, leading to average return on investment of approximately 4
years.
Applied Research and Demonstration
CCHRC is the most prominent Alaskan organization with research scientists, engineers,
and practitioners delivering a hands-on approach to designing, testing, demonstrating,
and deploying energy and building system technologies. They have designed their
approach to be particularly appropriate for rural Alaska. Each is an essential resource for
training new tradespeople and professionals. Each also makes significant contributions in
designing sustainable and innovative energy efficiency solutions for buildings.
This approach targets efforts to support high-performance buildings for rural Alaska, to
reduce residents’ upfront capital costs, improve health and performance of homes, and
support significant reductions in energy use. CCHRC’s Sustainable Northern Communities
(SNC) program supported two prototype projects in Quinhagak and Anaktuvuk to address
location-specific challenges to the construction of high-performance buildings.17
Performance monitoring of the Anaktuvuk Pass prototype buildings suggest heating fuel
reduction of 78 percent over comparable buildings in the 2009 Alaska Housing
Assessment and 41 percent reduction over BEES rated homes in Anaktuvuk. The
prototype home completed in Quinhagak resulted in similar reductions in fuel usage to
comparably sized homes in the community with a usage of 171 gallons of fuel oil. The
Quinhagak building was built with local labor for $220,000 – lower cost than a recently
constructed affordable housing building.
In February 2015 the Association of Alaska Housing Authorities (AAHA) hosted a
collaborative training event, Developing Alaska Sustainable Housing (DASH). The event
was an opportunity for experts and key stakeholders to discuss topics such as housing
design, building materials, construction methods, and project financing within the context
of building cold-climate, high-performance buildings, in the context of energy
affordability in Alaskan communities.
Efficiency Experience: Opportunities and Barriers
Alaska also has decades of experience with the delivery of energy efficiency services
through efficiency program initiatives. However, rural Alaska offers many logistic,
environmental, and institutional challenges to program design and delivery. This
2. Alaska’s Current and Historical Initiatives
25 July 2016
subsection offers an overview of the literature and experience from existing programs.
Section 3 offers a gap analysis of existing program initiatives; the analysis supports the
recommendations on priority strategies. The listing in this section concentrates on the
major program initiatives. Appendix A presents a fuller catalog listing of programs.
Weatherization Assistance Program
The Weatherization Assistance Program (WAP) began in Alaska as a purely federal
program and has been in existence since 1981. In response to the spike in oil prices in
2008, the Alaska State Legislature enacted Senate Bill 289, which dramatically increased
funding for the program and expanded the income eligibility requirements from
households earning up to 60 percent up to 100 percent of Area Median Income (AMI).
AMI is determined by the U.S. Department of Housing and Urban Development (HUD)
and adjusted by family size. Between enactment of the legislation in 2008 and September
30, 2015, $323.4 million have been spent, resulting in 16,914 unit retrofits. The program
has historically been funded through the State of Alaska’s capital budget. The most recent
authorizations for Weatherization are significantly lower. The FY 2016 allocation was $7.1
million, of which $1.5 million was from federal funds.18 Federal spending for
weatherization in Alaska has historically been a lower share compared to the state
funding ranging from a low of $360,000 to a high of $2.5 million in 2008.
Five separate agencies and 14 regional housing authorities carry out the Weatherization
retrofits. As in the Home Energy Rebate Program, pre-project audits and post-project
audits are performed for every participating home using AkWarm, and the most cost-
effective energy efficiency measures are recommended. The energy assessors then
prioritize the energy efficiency measure recommendations, taking into consideration
project budget constraints, and which agency or housing authority can undertake the
work. Each region has a funding allocation. Homes on the Railbelt or Marine Highway may
receive up to an average of $11,000 in energy and health and safety measures per home,
and homes in remote rural areas may receive up to an average of $30,000 per building.
Applicants must meet one of the qualifying criteria (for example, relating to income or
disability) to be accepted; once accepted, they are ranked according to need.19
CCHRC published an evaluation in 2012 of the Weatherization Assistance Program, with
an unpublished data update performed at the end of that year. The data update showed
that homes participating in the Weatherization program reduced their energy
consumption by approximately 28 percent for single-family homes and 18.5
percent for multi-family units, for an average annual fuel cost savings of $1,295 per
Energy Efficiency Program Evaluation and Financing Needs Assessment
26 July 2016
year and $396 per year, respectively. Based on the cumulative number of homes
weatherized, the program is estimated to save 371 million MMBTUs annually, equivalent
to 2.7 million gallons of #1 heating fuel, or 3.7 million therms of natural gas.
Because of issues with data quality (both cost reporting and a significant number of
energy audits that were not uploaded into the ARIS database), the study team could not
perform a cost-effectiveness analysis of the Weatherization program.
Regionally, the Weatherization program performs a larger percentage of retrofits in rural
Alaska than does the Home Energy Rebate Program. Based on available data,
approximately 42.5 percent of the retrofits completed by the Weatherization program
were in the AkAES region; the rest were performed in the Cook Inlet region (36.6 percent)
and the Fairbanks North Star Borough (20.9 percent). However, approximately 60 percent
of State program funding for Weatherization is directed to the AkAES region, because of
higher per-unit costs for efficiency improvements in rural areas of the state.
Home Energy Rebate Program
The Home Energy Rebate Program provides an energy retrofit rebate based on the
amount of estimated energy savings for participating Alaskan homeowners’ primary
residences. The program was started in 2008 in response to high oil prices that burdened
Alaskan citizens with high energy costs. The Alaska State Legislature supported the
program with a significant increase in funding. As of November 1, 2015, approximately
$204.6 million has been spent since the inception of the program, resulting in 23,980
energy efficiency retrofits and leveraging over $120 million in homeowner investments.20
The program is funded by the Legislature through the Alaska State Capital Budget, but in
March 2016, AFHC suspended the Home Energy Rebate Program for new applications to
the program due to state funding constraints.
From a customer perspective, the Home Energy Rebate Program involves an energy audit
performed by an AHFC-qualified energy rater certified as a Building Performance Institute
(BPI) Building Analyst. This audit uses the AkWarm home energy modeling software to
provide an energy rating score and a list of potential energy efficiency improvements
prioritized according to cost-effectiveness. The homeowner then implements their
chosen energy efficiency improvements and a post-project audit is conducted. Depending
on the modeled increase in the energy efficiency of the home,21 the homeowner receives
a rebate from between $4,000 and $10,000, not to exceed the actual cost of the
improvements, as verified by receipts.22
2. Alaska’s Current and Historical Initiatives
27 July 2016
CCHRC evaluated the Home Energy Rebate Program in 2012,23 and supplemented the
evaluation with an internal update for program data through December 2012. The
evaluation determined that the average energy savings for a building was 34 percent,
resulting in an average reduction in energy consumption of approximately 102.7 million
BTUs (equivalent to 742 gallons of fuel heating oil) of energy per home and annual energy
savings of $1,297. The study also evaluated the cost-effectiveness of the program, in
terms of simple payback and return on investment, described in Table 6. The cost-
effectiveness analysis compared AHFC spending, homeowner spending (based on
submitted receipts), and total spending. Anecdotally, the report notes that some
participants did not submit receipts beyond the amount for which they expected to be
reimbursed. Underreporting of homeowner expenses would result in decreasing the
evaluated cost-effectiveness of the program and increasing the average payback period
for energy efficiency improvements.
Table 6. Home Energy Rebate Program cost effectiveness
Average costs
(2012 $)
Simple payback
(years)
Return on
investment
AHFC $6,516 5.0 20%
Homeowner $4,447 3.4 29%
Total $10,963 8.5 12%
The Home Energy Rebate Program evaluation has shown that it is effective in reducing
energy use and costs for participants. However applicable these results might be for all
Alaskans, it is primarily the state’s urban residents who have taken advantage of the
program, to date. At the time of the December 2012 update, the vast majority of the
participants were in the Cook Inlet Region, accounting for 72 percent of all building
retrofits.24 An additional 14 percent of retrofits were located in the Fairbanks North Star
Borough,25 leaving the remaining 14 percent in the AkAES regions. The 2012 CCHRC report
noted that the lowest participation rates were in regions with the highest construction
costs, but that participation rates are potentially impacted by a lack of trained energy
raters in rural areas, program awareness, lower homeownership rates, and the
demographics of typical program participants among other variables. A 2013 web survey
of 574 program participants found that the demographics were not representative of
Alaska as a whole; participants had higher average incomes and significantly higher
education levels than Alaskan averages.26
Energy Efficiency Program Evaluation and Financing Needs Assessment
28 July 2016
One significant result of the Home Energy Rebate Program has been the development of
an energy efficiency industry in the state. Prior to the program’s inception in 2008, there
were very few trained energy auditors. Currently there are 59 active BPI- and AHFC-
certified energy auditors.
New Home Rebate Program
The New Home Rebate Program is a branch of the Home Energy Rebate Program. It
provides a cash incentive to buyers of new homes that meet a “stretch” code for building
energy. The program was started in 2008 and initially paid out rebates of $7,500 for
homes that received an energy rating of 5 Star Plus using the AkWarm modeling software.
When the BEES was updated in 2013, the incentive level was changed so that buyers of a
5 Star Plus home could qualify for a rebate of $7,000, and buyers of the newly added
stretch goal of 6 Star could qualify for a rebate of $10,000. This new rebate level for 6 Star
homes was informed by an economic analysis of the additional costs required to increase
the energy efficiency of a home from the minimum BEES standard to a 6 Star Rating.27 It
should be noted that the rebate is paid directly to the buyer; builders have suggested that
more homes would be built to these standards if the rebate went directly to them.28
Since the inception of the program to November 2015, AHFC has paid out 2,954 5 Star
Plus rebates and 139 6 Star rebates.
Technical Assistance and Training Grants
The Association of Alaska Housing Authorities offers a grant program for training and
technical assistance. The program began in 2013, and is offered in collaboration with the
U.S. Housing and Urban Development (HUD) Alaska office of Native American programs,
regional housing authorities, and housing experts. The grant program’s purpose is to
promote community sustainability and build capacity in Alaska's remote villages that are
not otherwise connected to training resources.
Training and energy technical assistance are key to providing high-value energy efficiency
measures for residential (and commercial) customers. Enabling this expertise to be
available in remote areas helps strengthen communities in the context of workforce
development and economic opportunity for contractors.
The program is an on-demand program, and plans training and technical assistance for
tribes and regional housing authorities that ask for assistance with specific topics. Since
2013, the program has delivered more than 180 hours of Alaska-based workshops,
provided training for more than 370 attendees, and offered more than 1,000 hours of on-
2. Alaska’s Current and Historical Initiatives
29 July 2016
site assistance to housing programs in rural areas.29 Workshop topics have included Indian
Housing Plans, Annual Performance Reports, and environmental reviews. The technical
assistance has involved policy development, filing system development, self-monitoring
procedures, staffing plans, and program compliance. The program has also provided
needs assessments, materials and tools relevant to housing development, and direct on-
site technical assistance.
In 2015 the AAHA hosted a training event Developing Alaskan Sustainable Housing (DASH)
to bring together key stakeholders and industry professionals to support the design and
development of sustainable housing. The training included elements of housing design,
building materials, construction methods and project financing.
Supplemental Housing Development
The Supplemental Housing Development Grant Program, which has been in existence
since 1981, is legislatively funded and promotes energy efficiency in rural housing. The
program received $3 million in state funding in 2014. The funds are used for grants to the
regional housing authorities for use on HUD new construction or rehabilitation of homes.
They can fund up to 20 percent of HUD's total development cost per project, and the
homes in the project must meet the AHFC BEES to qualify. Housing authorities can apply
for the grants in one of four categories: on-site sewer and water facilities, road
construction to project sites, electrical distribution facilities, and energy efficiency design
features.30 In fiscal year 2015, there was a total of approximately $8.4 million from state
funding and leftover funds made available for grants. This money was applied via 14
grants to 12 of the housing authorities and was used on the construction of 176 units and
the rehabilitation of 170 units. Over $5 million of the funding was used in the energy
efficiency design category; 47 of the newly constructed homes achieved 6 Star rating, the
highest attainable rating under the 2012 BEES.31
Publicly Owned Commercial Buildings
Village Energy Efficiency Program
The Village Energy Efficiency Program (VEEP) is a rural energy efficiency program run by
the Alaska Energy Authority. With funding from the Denali Commission the program
started as the Village End Use Efficiency Measures Program (VEUEM) in 2005 and
primarily provided lighting upgrades and some weatherization measures. The program
received American Recovery and Reinvestment Act (ARRA) funding between 2010 and
2012, at which point the program was expanded to include more significant building
energy upgrades.
Energy Efficiency Program Evaluation and Financing Needs Assessment
30 July 2016
The Village Energy Efficiency Program assists with community-driven priorities in energy
efficiency. Local organizations can apply, provided that they are located in communities
of 8,000 people or fewer. In the most recent iteration of the VEEP, communities
underserved by energy efficiency programs became a priority for service. These
communities also had the highest fuel costs, and were in areas with the highest level of
heating demand. The communities that have participated in one of the rounds of the VEEP
are in the Affordable Energy Strategy study area, lack road access, and are generally not
large enough to be a hub community for surrounding villages.
The program has reported outcomes at the village level between 2005 and 2010. The
program has also aggregated data from the work done by the Alaska Science Building
Network (ABSN) for the ARRA-funded retrofits performed between 2010 and 2012. The
aggregate numbers showed that the ABSN retrofits on average achieved a simple payback
period of 5.4 years, taking into consideration village in-kind contributions of labor and
materials.32
The study team analyzed the 40 VEEP energy audits that used AkWarm modeling software
and which had been uploaded to the ARIS database. These models appear to be from
several different phases of the VEEP work. This analysis of pre- and post-retrofit energy
models showed that on average, building energy use was reduced by 28 percent, for
average annual energy cost savings of approximately $6,000 per building. This analysis
was for space heating data only; the ABSN report showed that electricity savings were
approximately 44 percent of total savings from the buildings retrofitted in the village.
Extrapolating this proportion to the buildings modeled in AkWarm would result in
combined space heat and electricity energy cost savings of approximately $10,700
annually per modeled building.
Alaska Housing Finance Corporation Energy Efficiency Revolving Loan Fund
Senate Bill 220 established the Energy Efficiency Revolving Loan Fund (EERLF), which
AHFC makes available for building efficiency upgrades by the State of Alaska,
municipalities in the state, the University of Alaska system, and regional education
attendance areas. AHFC led an ARRA-funded project to provide energy audits to public
facilities throughout the state, which would then be able to take out loans to perform the
auditor-recommended energy efficiency measures.
2. Alaska’s Current and Historical Initiatives
31 July 2016
The AHFC-led public building audit program was a multi-phase process. AHFC made an
effort to obtain energy use benchmark data for public buildings. Statewide, 1,200
buildings self-reported their electricity and fuel use and costs via the Retrofit Energy
Assessment for Loan (REAL) benchmark form. AHFC then identified the candidates most
likely to benefit from energy efficiency retrofits and provided free energy audits, ensuring
that every region was covered. AHFC offered training to increase the number of Certified
Energy Auditors in the state, after which the auditors conducted 327 energy audits
throughout the state, with approximately 58 percent of them occurring in the Affordable
Energy Strategy study area. Although building owners and operators welcomed the
audits, no loans have resulted through the program through June 2016.
AHFC subsequently contacted representatives for 76 percent of the buildings that
received an audit.33 Of these, 84 percent reported implementing some of the energy
efficiency recommendations from the energy audits, funding them with bonds (29
percent), grant money (22 percent), and cash on hand (33 percent). The remainder were
not specific about how they funded their projects.
Fairbanks Non-Profit Retrofit Pilot
The Fairbanks Nonprofit Retrofit Program launched in 2014 to help nonprofits and tribal
organizations in the Fairbanks area realize energy savings through energy efficiency
upgrades. The pilot project, funded by the Denali Commission and the Rasmuson
Foundation, provided energy audits, technical assistance, and the opportunity to finance
retrofits through low-interest loans. The program chose 14 buildings, owned by 12
applicant organizations, for the pilot cohort. Each building has received an energy audit,
and the organizations are now in varying stages of the retrofit process: 2 buildings have
completed retrofits, 7 have begun the retrofit process, and 5 have plans to retrofit in the
future. One project was loan-funded, 1 was grant-funded, 7 are being self-financed, and
5 have combined different funding mechanisms.
Although outside of the AKAES region, the retrofit pilot addresses some of the consistent
barriers to participation found with non-residential customers, especially non-profits. The
Program published an interim report on the pilot at the end of 2015.34 It contains
information about how the project was designed and carried out, identifies barriers to
energy efficiency loan financing, and offers lessons learned about energy retrofit
programs. One of the primary recommendations from the pilot was for providing a
“packaged” retrofit program that includes both comprehensive technical and advisory
guidance, as well as offering flexibility in responding to the variability in the type and
Energy Efficiency Program Evaluation and Financing Needs Assessment
32 July 2016
needs of different customers and buildings. The primary barriers to loan participation
were the organizations’ ability to self-finance, reluctance of nonprofits to take on debt,
unfavorable loan terms, long approval process to acquire loans, and grant restrictions for
paying off debt. The report also identified possible improvements to future retrofit
programs, and suggested ways to address the barriers to energy efficiency loan financing.
The project is scheduled to continue through 2016 so that researchers can document and
evaluate the retrofits, the retrofit project financing, and the energy audits’ ability to
predict energy savings.
Public Facilities Energy Efficiency Improvement Program
Alaska Department of Transportation and Public Facilities (DOTPF) manages the Public
Facilities Energy Efficiency Improvements Program. The program began via 2010
legislation directing the public facilities division of DOTPF to perform energy retrofits on
the worst-performing 25 percent of state-owned buildings over 10,000 square feet. This
mandate was met in 2014, but the program has continued. The state funds two salaried
positions to manage energy retrofit projects, and building managers work with these
employees to implement energy retrofits in their buildings.
Project funding varies, and can involve state funding, grant funding, and loan financing.
Each project begins with a feasibility analysis, and if that has a positive outcome, proceeds
with an investment grade audit to benchmark energy and water consumption, identify
detailed cost and savings for efficiency improvements and develop bundled proposal with
financing, implementation and verification plans. All projects involve post-project energy
measurement and verification. For some projects, this verification occurs immediately
following construction, and with others, it can occur annually for up to three years. Each
year, the energy savings are compiled with project summaries into an annual report for
the Legislature.35 Thus far, the program has completed approximately 60 energy retrofits;
the estimated cumulative energy savings are greater than $2.7 million. The legislative
reports and energy tracking spreadsheets are available on request.
Community Facilities Direct Loan and Grant Program
USDA's Community Facilities Direct Loan and Grant Program has existed for over 40 years.
The program provides loans and grants to public bodies, community-based nonprofits,
and tribes in rural areas. The funds can be used for purchasing, constructing, and
improving community facilities. The funds can be used for building energy-efficient
facilities, or to make existing buildings more energy efficient. These facilities provide
essential services to communities, such as health care; travel; and education; and food
2. Alaska’s Current and Historical Initiatives
33 July 2016
production, distribution, or storage. Financed projects must serve the area in which they
are located, demonstrate community support, and undergo an environmental review.36
The funding can be a grant, loan, or combination of the two. Grant funds are prioritized
for small communities and communities with low median income. From 2009 to 2013,
the program funded 23 loans and 55 grants for over $100 million in Alaska. Since then,
the program has issued 21 loans and awarded 10 grants in 2014 and 2015.37
Rural Utilities Service
The U.S. Department of Agriculture (USDA) offers Rural Utilities Service grants and loans
to organizations that run water, environmental, and electric programs. Examples of
eligible organizations are public bodies, nonprofits, Indian tribes, cooperatives, and
states. The funds can be used for infrastructure projects in rural communities to improve
the quality of life for rural residents. Programs that fund sustainable renewable energy
development and energy conservation qualify, along with programs that increase access
to broadband and telecommunications, improving the reliability of electric systems,
integrating smart grid technologies, and developing reliable water and wastewater
systems.38
Private Commercial Buildings
Commercial Building Energy Audit (CBEA)
The Alaska Energy Authority has offered three rounds of funding for privately owned
commercial buildings to obtain reimbursements for energy audits. The program ran in
2011, 2012, and 2013. The Alaska State Legislature allocated funds for rebates, which
have been distributed for approximately 300 audits. Overall, AEA estimates that the
average energy savings predicted by the audits is 33 percent of energy costs, with the
retrofit investments having simple paybacks of just over 6 years.39 AEA has made copies
of the audits available for parties wanting to analyze them.
Alternative Energy and Conservation Loan
The Alaska Department of Commerce, Community, and Economic Development offers
this loan fund for small businesses to construct and install alternative energy systems, or
make energy conservation improvements in commercial buildings. The Legislature
amended the Alternative Energy Loan program in 2010 and made effective in 2012 with
a capital outlay of $2.5 million.40 The maximum loan amount from the fund is $50,000,
and the maximum loan term is 20 years. The loan interest rate is fixed at the time of
Energy Efficiency Program Evaluation and Financing Needs Assessment
34 July 2016
approval. Applicants must be Alaska residents for 12 months before they may apply for a
loan.41 As of the end of 2015, no loans had closed.
Loan Participation Program (LPP)
In 2012, the Legislature expanded AIDEA's Loan Participation Program for commercial and
nonprofit buildings to include "qualified energy development" projects. This classification
allowed energy conservation projects and projects involving the transmission,
distribution, generation, and storage of energy. The program was originally funded by a
one-time appropriation from the State of Alaska, and is now self-sustaining through
interest from loans and loan repayments. Businesses and nonprofits can receive loans
from the program by first obtaining a loan from a qualified financial institution, and then
using AIDEA as the secondary lender. The loans have a long-term fixed or variable rates,
offering the potential to lower loan payments if the term of the loan is lengthened. Thus
far, the program has been used for one energy efficiency project, with a loan of over $2
million issued to the Alaska Pacific University for deep retrofits in some of the campus's
older buildings.42
Sustainable Energy Transmission and Supply Development Fund
This program originated with legislation in 2012, which allocated $125 million into a fund
for the Alaska Industrial Development and Export Authority (AIDEA), to directly issue
loans and bonds for energy development projects in Alaska. The program can finance up
to one-third of project costs, from a minimum of $5 million up to a maximum of $20
million (loans exceeding that require legislative approval).43 The program is self-sustaining
because interest and loan repayments return to the fund. The rates for financing in this
program are fixed or variable, and are set equal to the interest rates in the Loan
Participation Program, so that the two programs do not compete with each other. Thus
far, this program has not been used to fund an energy conservation project.44
Rural Energy for America
The USDA Rural Energy for America Program provides loans and grants for renewable
energy systems and energy efficiency. The federal budget governs the funding for this
program, which is open to agricultural producers and rural small businesses for
purchasing, constructing, and installing renewable energy systems or for energy efficiency
improvements. There is also funding available for feasibility studies or to develop
renewable energy projects. Businesses can apply for a loan, grant, or combination of the
two.45 The grants can be used to fund up to 25 percent of the project cost, and loans for
up to 75 percent of the project cost. The 2012 USDA reports that from 2009 to 2011, Rural
Energy for America awarded 44 grants totaling over $1 million in Alaska. Fifteen of these
2. Alaska’s Current and Historical Initiatives
35 July 2016
grants were for energy efficiency projects; the total amount awarded, $174,380, saved an
estimated 629,000 kWh.46 Sample projects were a lighting upgrade on commercial
properties in Wasilla, and energy efficiency improvements for a business in Chicken.
All Building Types
Some statewide programs address more than one type of building. A program offered by
the USDA to utility businesses for implementing customer programs is one example;
another is a regional partnership that leverages resources. A third is the U.S. Department
of Energy (DOE) Office of Indian Energy’s Strategic Technical Assistance Response Team
(START) program, which offers assistance with village energy plans. In each case, the
programs take a comprehensive view of a village. They address high-need areas and
identify opportunities for programs to address more than one type of building.
Sustainable Southeast Partnership
The partnership is made up of seven Southeast communities47 and several organizations
that work in Southeast Alaska. They have partnered under a common framework and
guiding principles to fund and implement resiliency and sustainability projects as a group.
One of its objectives is energy independence for the region. The goal of this component
is to help Southeast Alaska become less dependent on outside energy and encourage the
more efficient use of existing energy resources. Their most recent energy efficiency
project was providing 20 walk-through (ASHRAE Level 1) energy audits to businesses in
Hoonah and Haines. The audits were supported and funded by the Partnership, AHFC,
USDA, the Southeast Conference, the USDA’s Rural Energy for America Program (REAP),
and AEA.48 Other energy efficiency projects are currently in planning stages.
Strategic Technical Assistance Response Team
The START program is delivered by DOE's Office of Indian Energy and the Denali
Commission to rural Alaska native communities and village corporations. The program
aims to reduce the cost and use of energy in rural areas, and to increase local capacity,
energy efficiency, and conservation through training and public education. It also
increases renewable energy deployment. The program is currently in its third round. Each
round has been slightly different from the last, and in the current round villages can
receive technical assistance for advancing tribal energy and infrastructure projects for
financing and construction, but does not include funding for community grants as per
previous years. DOE and the Denali Commission will decide whether to fund a fourth
round after they review results from the third round. In total, there have been 15 projects
Energy Efficiency Program Evaluation and Financing Needs Assessment
36 July 2016
in Alaska. Some of these are listed on the program website.49 Thirteen projects supported
community energy planning and clean energy projects in villages, and a community-scale
biomass system. There are some data on individual projects available through different
agencies (such as the AEA, Tanana Chiefs Conference, the AHFC, and Regional Housing
Authorities) that worked with the program in different villages. Documentation of 30
previous round projects are tracked on DOE’s START web portal.51
Energy Efficiency and Conservation Loan Program
USDA recently began offering the Energy Efficiency and Conservation Loan Fund for
businesses or services that provide electric service to rural areas. The electric utilities can
apply to become borrowers for loan funds that are to be used to implement energy
service projects for their customers. The utilities design the programs, which must
improve energy efficiency or reduce peak demand on the customer side of the meter,
reduce overall electric load in the system, use existing electric facilities more efficiently,
attract new businesses or create jobs, or encourage the use of renewable fuels or reduce
the use of fossil fuels.52 For example, programs could implement on-bill financing, energy
audits, demand-side management, energy efficiency measures, or renewable energy
systems, re-lamping, and outreach programs. To date, two programs have been funded
through this nationwide program, one in North Carolina, and one in Arkansas.53 See also
Section 2, Rural Utilities Service Loan Program.
Water / Wastewater Facilities
Water and wastewater treatment plants in rural Alaska can be responsible for a significant
amount of a community’s energy use—and thus can burden residents with very high
utility costs. These systems often require heating of the water to prevent freezing, either
centrally or by using electrical heat tape on lines connected to homes. The Alaska Native
Tribal Health Consortium (ANTHC) estimates that 10 to 35 percent of a community’s
energy use can be attributed to the community sanitation system for small communities
with inefficient systems.54 However, more broadly across the AkAES regions, wastewater
represents approximately 2% of total energy usage. ANTHC documents that in some
areas of rural Alaska, “…it is common for households to spend over 10 percent of their
incomes on utility service fees,” but ANTHC estimates that approximately 50 percent of
the cost savings from water and wastewater efficiency improvements appear as a
reduction in PCE payments—offering savings to the state program. ANTHC provides
guidance for communities to target the best candidates for energy efficiency
improvements—for example, small northern villages with vacuum sewer systems. The
2. Alaska’s Current and Historical Initiatives
37 July 2016
majority of the energy efficiency work on water and wastewater treatment plants has
been performed by ANTHC, with 46 energy audits and completed retrofits of community
sanitation systems leading to total annual energy cost savings of approximately $3.8
million.55
Utility Programs
The size and sophistication of utilities in Alaska range from large, grid-connected systems
in urban areas to isolated micro-grids. The few energy efficiency programs offered by
Alaskan utilities have thus far been in urban areas. The programs described here
represent the types of utility programs that exist in Alaska. Absent cost recovery
mechanisms and/or sustainable funding sources, Alaska utilities have offered efficiency
programs in limited scope and duration, typically responding to customer demand or
need due to high costs of energy or grants supporting pilot programs.
Chugach MyPower
Chugach Electric has offered the online program MyPower to its residential customers
since 2013. The program is ending this year, but it has allowed customers to track their
electricity use and compare it to that of their "neighbors," through their online bills.
Members could also use MyPower to create an energy plan online and identify
recommended personalized tips on saving energy. In 2014, Chugach Electric used
MyPower to create (from the online website) and send out to residents e-mailed reports
on their energy use, with comparisons to neighbors’ energy use. A test group of 10,000
residents has demonstrated an approximate 1.5 percent reduction in electricity use,
compared to a control group that did not receive the e-mails.56
GVEA Energy$ense Programs
GVEA’s Energy$ense Program currently consists of Home$ense, an energy efficiency
program that provides one-on-one homeowner education. However, Energy$ense has
historically offered two other programs, Business$ense (for commercial buildings) and
Builder$ense (for new homeowners).
Home$ense. GVEA has offered the Home$ense program for its residential customers
since 1992. Today, the program offers one-on-one electrical energy audits to
homeowners. These audits involve personalized information-sharing, information
handouts, more efficient light bulbs, and a vehicle timer. It costs $19.95, or is free to
income-qualified homeowners. The basic premise of the program has remained the same
Energy Efficiency Program Evaluation and Financing Needs Assessment
38 July 2016
since it began, although details such as the program costs, handouts, and equipment have
varied over the years. The program helps the utility build personal relationships. It is
marketed to homeowners with high energy bills and / or low incomes, and empowers
people to take control over their own energy use. During the program's first 20 years, the
program provided audits for 7,958 homes or 21% of its residential accounts for a total
expense of $2,219,556. The estimated cumulative kWh savings during that time was just
over 44 million, resulting in an average program cost of $0.05 / kWh during that time or
a reduction of approximately 275 kWh annually per household. Results of a 2013 survey
of participants indicated that there was a high satisfaction with the program, with 106 out
of 108 homeowners saying that they found the auditor recommendations helpful, plan to
follow up on the recommendations, and now understand more about their bill, electricity
use, and potential energy savings of behavior changes and energy efficiency
improvements.57
Business$ense. GVEA offered Business$ense, a lighting rebate program for commercial
buildings, from 1994 to 2012. During that time, more than 200 businesses received
rebates from GVEA for lighting upgrades that decreased peak load and overall demand
while maintaining lighting output. To receive a rebate, businesses submitted proposals
containing an estimate of savings, and then submitted to pre- and post-project
inspections. The rebate covered up to 50 percent of the equipment and installation cost,
with the exact amount based on the anticipated load reduction. The program was funded
annually, and funds would often run out before it could be renewed. Also, a few large
rebates in an annual funding period could deplete the program funding with only a few
retrofits. The program cost $0.05 per kWh saved over its lifetime.42 GVEA’s current
commercial rate is $0.115 per kWh for general service, and $0.06 / kWh for large general
service.58
Builder$ense. GVEA offered Builder$ense, a program targeted at promoting electrical
efficiency in new homes, retrofits, and additions, from 1993 to 2012. Builders could
contact GVEA for an inspection of newly completed construction, and receive a rebate for
energy-efficient equipment such as efficient light bulbs for hard-wired fixtures, exterior
motion detectors, vehicle timers, vehicle switch outlets, insulating blankets on water
heaters, and water heater timers. Builder$ense offered GVEA an opportunity to connect
with new utility customers and local builders. However, few builders were aware of the
program and it did not fund more expensive appliances. Further, GVEA allocated the
annual funding in the order in which requests came in; it frequently ran out of funds prior
to the next funding cycle. From 1993 to 2012, GVEA tracked the expenses and estimated
2. Alaska’s Current and Historical Initiatives
39 July 2016
savings from the program, which had an average cost of $0.04 per kWh during that time
period. Total participation involved more than 1,000 buildings.
HEA Loan Program
The Homer Electric Association promotes “buy local” and energy efficiency initiatives
through a loan program for its residential members. Members can obtain a loan up to
$5,000 for equipment and labor from a local vendor.59 Members typically take advantage
of the loan to replace a failing appliance or for purchasing appliances when buying a new
home. Loans are re-paid through an automatic draw-down from a line of credit or bank
account over the course of 6 to 36 months. The program itself is self-sustaining, since the
interest earned supports the program's administration.
Sitka ENERGY STAR Rebate Program
The City and Borough of Sitka's Electric Department ran a rebate program for residents to
exchange old, inefficient appliances with ENERGY STAR equivalents. The program reduced
the peak electrical demand and dependence on diesel back-up generators. Prior to its
funding the program, the Electric Department conducted a survey to gauge interest and
choose the appliances that would qualify. The program began in February 2012 and was
scheduled to end in June 2013, or when funds ran out. Because of the popularity of the
program, funds expired in January 2013. Through the program, residents installed 18
freezers, 3 heat pump water heaters, 75 refrigerators, 58 washing machines, and 40 heat
pumps. The appliances they replaced were recycled or given to other residents. A synopsis
of the program, published by the City and Borough of Sitka estimated that the electrical
savings from the program were approximately 34,000 kWh.60
Red-Yellow-Green Programs
There are two areas in Alaska that employ a Red-Yellow-Green program to indicate to
electric customers when rates might rise because the electricity is being produced using
more expensive fuels. In Sitka, the City and Borough of Sitka Electric Department
advertises green for times when there is no shortage of hydropower resources, yellow
when diesel back-up might be used, and red when diesel back-up generation is being
used. In the Mat-Su area, several utilities and the borough collaborate on an Energy
Watch program that similarly lets consumers know when there is a potential shortage of
natural gas for producing electricity, and when more expensive fuels may be employed.
The Mat-Su program has not been used recently, but is still in existence in case it is needed
again. Both programs then rely on consumers to change their behavior and use less
electricity during times advertised as "yellow" or "red."
Energy Efficiency Program Evaluation and Financing Needs Assessment
40 July 2016
AVEC Commercial Energy Audit Program
The Alaska Village Electric Cooperative received $200,000 in funding from the USDA Rural
Business Enterprise Grant (RBEG) program to support technical assistance and up to 42
commercial energy audits for small businesses in their service territory. As of May 2015,
the allotted 42 audits were completed on for-profit and non-profit small businesses in 11
of the 56 communities that AVEC serves. Applications for grants for supplemental funding
through the USDA Rural Energy for America Program (REAP) were identified to support
energy audit recommended improvements.
Building Energy Codes
Alaska has no mandatory statewide building energy codes for either residential or
commercial buildings. Responsibility for the adoption and enforcement of energy
efficiency building standards has been assigned to AHFC, the Department of Education
and Early Development, and the Department of Transportation and Public Facilities.61 The
state allows individual municipalities to adopt and enforce codes that meet or exceed the
requirements of the state agencies. However, residential housing constructed since 1992
must undergo an approved inspection process to be eligible for financing by Alaska
Housing Finance Corporation.62
Several key reports on building energy codes in Alaska have been released since 2008:
• 2012 Statewide Codes White Paper (CCHRC).
• 2012 Gap Analysis and a Strategic Compliance Plan (Building Codes Assistance
Project; BCAP).
• 2011 Comparative Analysis of Prescriptive, Performance-Based and Outcome-
Based Energy Code Systems (Cascadia Green Building Council).
BCAP’s Alaska Gap Analysis63 evaluated the state’s building code environment and
described the missing policies that would be needed to meet the DOE goal of 90 percent
compliance with model codes by 2017. AHFC’s concurrent Strategic Compliance Plan64
recommended steps to meet this goal.
The Gap Analysis identified several findings:
• Absence of mandatory statewide energy efficiency code.
• Multiple building code agencies’ adopting and enforcing building codes.
2. Alaska’s Current and Historical Initiatives
41 July 2016
• Alaska’s legislated goal of a 15 percent reduction in energy assigns no
responsibility to a single agency, allocates no funding, and directs no coordinated
formal action to meet the goal.
• Absence of a method for fully tracking new construction starts in the state.
• No lenders other than AHFC are required to ensure that homes are being built to
BEES.
• No study has been conducted to evaluate efficiency of homes that have not been
BEES-certified in various areas of the state.
The Strategic Compliance Plan described a framework for Alaska to achieve 90 percent
compliance with codes by 2017. The first three steps in this plan are:
• Establish a stakeholder group to promote code adoption.
• Grant authority to a single state agency for codes.
• Implement a statewide building energy code with secured funding, establishing a
framework for enforcement and future evaluation of compliance with the code.
Funding for evaluating code compliance was estimated to be approximately
$100,000 to $200,000 with a smaller funding allocated for training and “code
ambassadors.”
The recent 2016 Governor’s Housing Summit and Workgroup Report65 identified several
recommended actions and focus areas to improve housing affordability in rural Alaska
directly and indirectly related to energy efficiency:
• Reduce costs of construction for homeowners through collaboration with regional
housing authorities, AHFC, USDA, Rural Community Assistance Corporation
(RCAC), Housing & Urban Development (HUD) with current Alaskan self-help
programs and other stakeholders.
• Improve access and address funding gaps for homeowners.
• Implement a Statewide Residential Building and Energy Code authorized and
maintained under AHFC.
The 2011 Comparative Analysis of Prescriptive, Performance-Based, and Outcome-Based
Energy Code Systems by the Cascadia Green Building Council summarized the pros and
cons of the three different types of building energy code for commercial buildings. The
study recommended the adoption of outcome-based codes because they account for
whole-building energy use (including plug loads).66 The report also recommended energy
use disclosure, which is necessary for an outcome-based requirement, and using variable
Energy Efficiency Program Evaluation and Financing Needs Assessment
42 July 2016
loan interest rates to motivate owners of commercial buildings to continue to maintain
their commitment to lowering energy use.
Section 4 contains an update on the potential for codes to enhance energy affordability
for rural Alaska.
Notes
1 Information Insights for AEA and AHFC, 2008 Alaska Energy Efficiency Program and Policy
Recommendations, 8 and 15.
2 Alaska Energy Pathways, 2010, Executive Summary, 7.
3 Commonwealth North, 2012, Executive Summary, 2.
4 ISER, Energy Policy Recommendations, 2012, 3.
5 Alaska Arctic Policy Commission, 2014, 11.
6 Alaska Energy Authority Regional Energy Planning Fact Sheet, November 2015.
7 Draft Regional Energy Plans and AHFC 2014 Housing Assessment, for North Slope and Southeast; VEIC
has based its calculations on average annual consumption and application of an assumed 26 percent
comprehensive savings.
8 https://akrebate.ahfc.us/ARISWeb/Default.aspx
9 AkWarm, AHFC home energy rating software.
http://www.analysisnorth.com/AkWarm/AkWarm2download.html.
10 Energy audit model count as of October 16, 2015. Percentage calculated from ~251,899 occupied
housing units in Alaska; 2013 American Community Survey 5-Year Estimates: Table DP04: Selected
Housing Characteristics.
11 The American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) sets national
standards for commercial building energy audits. https://www.ashrae.org/resources--
publications/bookstore/procedures-for-commercial-building-energy-audits.
12 http://akenergyefficiencymap.org
13 AHFC Potential Paybacks from Retrofitting Alaska’s Public Buildings Appendix A
14 See: https://www.ahfc.us/efficiency/research-information-center/energy-efficiency-public-facilities/
15 Energy use intensity and energy cost index are reported nationally in publications like CBECS; they
survey few buildings in very cold climates; Alaskan energy professionals generally do not consider them to
be representative.
16 Defined here as BTUs of energy used annually per square foot, per heating degree-day.
17 Garber-Slaght, Robbin. Cold Climate Housing Research Center. “Monitoring and Verification of
Sustainable Northern Shelter Building Performance Quinhagak Prototype House Final Report,” December
2011.
18 https://www.omb.alaska.gov/ombfiles/16_budget/Rev/Enacted/2016proj50683.pdf.
19 See AHFC’s Weatherization Operations Manual:
https://www.ahfc.us/files/5414/2842/3326/wom2015.pdf.
20 AHFC Program Update 6.1.15.
21 The ENERGY STAR® rating is used to characterize building energy efficiency; the rebate amount is set by
the number of star-step increases achieved.
22 See AHFC’s Home Energy Rebate Consumer Guide for more details.
2. Alaska’s Current and Historical Initiatives
43 July 2016
23 Home Energy Rebate Program Outcomes.
http://www.cchrc.org/sites/default/files/docs/HERP_final.pdf
24 The Cook Inlet watershed region has 400,000 inhabitants, nearly two-thirds of the state’s total
population.
25 Fairbanks North Star Borough population is ~100,000, accounting for one-sixth of the state’s total
population.
26 Dodge, K., Y. Hossain, N. Wiltse, CCHRC. A Report on the Effectiveness of Alaska Craftsman Home
Program Consumer Education Classes and Recommendations for Improvements. 2013
27 AHFC, Alaska-Specific Amendments to IECC 2012, 2014.
https://www.ahfc.us/files/5014/0328/1907/final_AK_Spec_Amendments_to_IECC_2012_061814.pdf
28 Personal communication with builders during BEES update presentations.
29 http://www.aahaak.org/training.php.
30 https://www.ahfc.us/pros/grants/development-grants/supplemental-housing-development-grant-
program/
31 Supplemental Housing Program Activity Highlights for State Fiscal Year 2015.
32 ABSN VEEP 2010-2012 Executive Summary.
33 Ramsey, Carolyn. ARRA Level II Audit Summary. Alaska Housing Finance Corporation.
34 Danny Powers, Vanessa Stevens, Dustin Madden. Fairbanks Nonprofit Retrofit Pilot Project Interim
Report: Documentation and Recommendations. Cold Climate Housing Research Center. May 2016.
35 Alaska Sustainable Energy Act Annual Report: 2014 Progress Report. Alaska Department of
Transportation and Public Facilities. January 2015.
36 http://www.rd.usda.gov/programs-services/community-facilities-direct-loan-grant-program
37 USDA 2015 Progress Report. http://www.rd.usda.gov/files/USDARDProgressReport2015.pdf
38 http://www.rd.usda.gov/about-rd/agencies/rural-utilities-service
39 Personal communication, Cady Lister, Alaska Energy Authority, November 5, 2015.
40 Personal communication, Jim Andersen, Loan / Collection Manager, DCCED, November 5, 2015
41 https://www.commerce.alaska.gov/web/ded/FIN/LoanPrograms/AlternativeEnergyLoanProgram.aspx
42 Personal communication, Mark Davis, Chief Infrastructure Development Officer, AIDEA, November 4,
2015.
43 http://www.aidea.org/Programs/EnergyDevelopment.aspx.
44 Personal communication, Mark Davis, Chief Infrastructure Development Officer, AIDEA, November 4,
2015.
45 Personal communication, Renee Johnson, November 6, 2015.
46 USDA REAP Report, 2012. http://www.rd.usda.gov/files/reports/rdREAPReportMarch2012.pdf
47 Sustainable Southeast Partnership communities: Hoonah, Hydaburg, Kake, Kasaan, Sitka, Klawock and
Yakutat.
48 http://sustainablesoutheast.net/energy/.
49 http://www.energy.gov/indianenergy/resources/start-program.
50 http://www.energy.gov/indianenergy/resources/start-program
51 http://www.rd.usda.gov/programs-services/energy-efficiency-and-conservation-loan-program
52 USDA 2014 Progress Report.
53 Dixon, G., D. Reitz, C. Remley, M. Black. Energy Use and Solutions in Rural Alaskan Sanitation Systems.
ANTHC. http://www.anthc.org/dehe/documents/Energy_Efficiency_Paper.pdf.
54 ANTHC Rural Energy Initiative 2014 Report on Activities. http://anthc.org/wp-
content/uploads/2015/12/REI_2014ReportonActivities.pdf
Energy Efficiency Program Evaluation and Financing Needs Assessment
44 July 2016
55 Personal communication, Kate Ayers, November 5, 2015.
56 CCHRC. 2014. GVEA Energy$ense: Program Review and Recommendations. Fairbanks: CCHRC.
57 GVEA rate tariff, 2016. http://www.gvea.com/rates/rates.
58 http://www.homerelectric.com/line-of-credit-program/.
59 Personal communication, Member Services Supervisor, November 4, 2015.
60 Agne, J. (2013). ENERGY STAR Rebate Program. Sitka: City and Borough of Sitka Electric Department.
61 Davies, John, and Kathryn Dodge. Statewide Codes White Paper. Fairbanks: CCHRC, 2012.
62 Alaska Statute (AS) 18.56.300
63 Alaska Gap Analysis. Building Codes Assistance Project. 2012.
http://energycodesocean.org/sites/default/files/resources/Alaska_Gap_Analysis_FINAL_November_2012.
pdf
64 Alaska Strategic Compliance Plan: Improving Energy Code Compliance in Alaska’s Buildings. November
2012. AHFC, CCHRC, and Building Codes Assistance Project. http://bcap-energy.org/wp-
content/uploads/2016/01/Alaska-Strategic-Compliance-Plan.pdf
65 Governor’s Housing Summit. Workgroup Reports. January 6, 2016.
http://gov.alaska.gov/wp-content/uploads/sites/5/20160411_housing-summit-report-final.pdf
66 Spataro, Katie, Marin Bjork, and Mark Masteller. Comparative Analysis of Prescriptive, Performance-
Based, and Outcome-Based Energy Code Systems. Cascadia Green Building Council. 2011, 15.
https://www.ahfc.us/files/9013/5754/5384/cascadia_code_analysis_071911.pdf
3. Energy Efficiency National Strategies
and Best Practices
National, regional, state, utility, and community investments in the energy efficiency of
residential homes, businesses, and industries have dramatically increased in North
America over the last several decades. States and utilities supporting energy efficiency
and demand response reported that U.S. and Canadian combined gas and electric
demand side management (DSM) program budgets reached nearly $9.9 billion in 2014
and saved an estimated 25,177 GWh of electricity, and 473 million therms of natural gas
in 2013.1 These expenditures support individual programs and sectors—commercial,
industrial, residential, and demand response—as well as the program administration
costs associated with marketing, evaluation, and customer rebates and incentives.
Evaluating the effectiveness of individual strategies for energy efficiency program delivery
is critically important for achieving aggressive federal, state, and municipal annual goals,
as well as in leveraging external private and public financial investments. Although many
different evaluations have been conducted on individual state and utility programs, the
American Council for an Energy-Efficient Economy (ACEEE) has developed a State Energy
Efficiency Scorecard2 to track and compare individual state efforts around energy
efficiency. The annual scorecard incorporates state efforts in six areas:
• Utility and public benefits programs and policies
• Transportation policies
• Building energy codes and compliance
• Combined heat and power (CHP) policies
• State government–led initiatives around energy efficiency
• Appliance and equipment standards
Alaska currently ranks 42nd nationally in its overall efforts in the 2015 State Scorecard,
ranking relatively high for state government initiatives, but very low for utility and public
benefits programs and policies. In the annual report, ACEEE highlights the fact that 25
states currently have established and adequately fund energy efficiency resource
standards (EERS) to identify specific energy savings targets for customer energy efficiency
programs administered by utilities or independent statewide program administrators. An
EERS provides a framework for supporting long term, cost-effective investments in
increasing energy efficiency and for tracking the associated economic and environmental
Energy Efficiency Program Evaluation and Financing Needs Assessment
46 July 2016
benefits. To this end, ACEEE emphasizes the importance of individual state “utility and
public benefits programs and policies” that incorporate an adequately funded EERS.3
In addition to the mandated efficiency targets established by an EERS for utility and
statewide efficiency programs, regulatory mechanisms involving cost recovery and
performance incentives provide an equitable revenue balance similar to those provided
for supply side investments. The Edison Electric Institute for Electric Innovation report
on “State Electric Efficiency Regulatory Frameworks”4 provides a description of these key
mechanisms:
• Direct-cost recovery. “…recovery of costs related to the administration of the
efficiency program by the administrator, implementation costs such as marketing,
and the actual cost of product rebates and mid-stream product buy-downs. Such
costs are recovered through rate cases, system benefits charges, and tariff
rider/surcharges.”
• Fixed-cost recovery. “…decoupling and lost revenue adjustment mechanisms that
assist the utility in recovering the marginal revenue associated with fixed
operating costs. Rate making practices tie the recovery affixed costs to volumetric
consumption charges with rates set based on an assumed level of energy sales.
The purpose of electric efficiency programs is to reduce the consumption of
electricity; decoupling and lost revenue adjustment mechanisms allow for timely
recovery affixed costs.”
• Performance incentives. “…mechanisms that reward utilities for reaching certain
electric efficiency program goals, and impose a penalty for performance below the
agreed-upon goals. Performance incentives allow utilities to earn a return and
impose a penalty for performance below the agreed-upon goals. Performance
incentives allow utilities a return on their investment in electric efficiency, typically
similar to the return on supply-side investments.”
This section of the report examines national practices and in particular cases presents
discussions of how well specific strategies for improving energy efficiency financing are
matched to the needs of rural Alaska. These provide thumb-nail overviews of a strategy,
where and how it has been used elsewhere, along with a specific discussion considering
how well the strategy does – or as importantly, does not – meet the priority needs, issues
and challenges facing rural Alaska. The materials are based on professional experience of
subject matter experts at VEIC, and we have reviewed and discussed each with informed
Alaska stakeholders in order to provide insights on the goodness of fit.
3. Energy Efficiency National Strategies and Best Practices
47 July 2016
Developing Comprehensive Energy Efficiency Programs
Utility or state efficiency program portfolios typically reflect the primary sector
expenditures for electricity and natural gas: commercial, industrial, agricultural and
residential. Demand response programs also target opportunities to reduce the impacts
associated with the transmission, distribution, and generation during peak periods during
the day and year for a particular service territory or region. As reflected within the ACEEE
State Scorecard, a growing emphasis on state level efforts to address transportation
efficiency, building codes, and equipment standards are increasing the scope and roles of
efficiency programs nationally.
Expenditures for efficiency programs recognize the balanced investments in the direct or
in-direct rebates and incentives.
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48 July 2016
Figure 4. The structure of a third-party energy efficiency program.
Source: Lawrence Berkeley National Laboratory
3. Energy Efficiency National Strategies and Best Practices
49 July 2016
During 2013 commercial and industrial programs represented the largest share (41
percent) of $6 billion in electric DSM expenditures in the United States with slightly lower
residential (36 percent), demand response (16 percent), and cross-cutting (9 percent)
program expenditures. The customer class breakdown is presented in Figure 5 (for
electricity) and Figure 6 (for natural gas).
Figure 5. U.S. electric DSM expenditures by customer class (2013).5
Alternatively, 70 percent of the U.S. natural gas expenditures are targeted toward
residential customers, including low-income and multifamily customers. The recent
declines of the cost of natural gas have reduced the overall energy burden on customers,
but they have affected the cost-effectiveness, approaches, and scale of natural gas DSM
programs.
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50 July 2016
Figure 6. U.S. natural gas DSM expenditures by customer class (2013). 6
Efficiency program strategies are evolving at a dramatic rate, but specific examples of
exemplary programs serving residential, commercial, and industrial customers provide
benchmarks for comparing programs.7 In a 2013 study, ACEEE identified leading programs
nationally and core elements of best practices in program strategy:
• Ability to adapt, to continue to achieve cost effectiveness.
• Simplifying processes for customers and “one-stop shops.”
• Diverse financing strategies in all customer sectors.
• Consistent statewide programs and initiatives.
• Incorporation of advanced and emerging technologies (for example, LEDs).
• Targeting underserved markets and customers with new programs.
Comprehensive Energy Efficiency Administration and Service Delivery
Utility-Administered Demand Side Management Programs
Nationally, utilities have historically dominated the delivery of energy efficiency
programs8 and are often guided by legislative or regulatory requirements for achieving
cost-effective annual savings targets for customer or DSM energy efficiency programs.
The majority of programs are supported by regulated, investor-owned utilities (IOUs), but
an increasing number of municipal utilities and electric cooperatives are introducing more
comprehensive efficiency programs to reduce the collective and individual costs of energy
for their customers.
3. Energy Efficiency National Strategies and Best Practices
51 July 2016
Comprehensive DSM programs are typically funded through a system benefits charge
(SBC) applied to residential and commercial customer monthly utility bills. The SBC
funding is then either administered by the utility or a statewide program administrator to
support energy efficiency programs within the utility’s service territory or, alternatively,
statewide.
The potential advantages of utility-administered programs are pre-established customer
engagement and identification as a trusted energy advisor; direct access to customer
energy data; established business (utility) model; and existing customer service
departments such as marketing, customer service, and engineering. In turn, the potential
disadvantages are lost opportunities associated with greater economies of scale for
marketing or partnership with market actors; financial conflicts associated with lost
revenue from efficiency; market confusion around customer eligibility with neighboring
utilities; and regulatory burdens associated with approvals of annual program plans.
Independent Program Administrators for Demand Side Management Programs
Nationally, several states—Vermont, Oregon, New York, Wisconsin, Maine, New Jersey,
Delaware, and the District of Columbia—have statewide energy efficiency programs
administered by a third party, or they operate as a hybrid program coordinated with
individual utility programs.9
The advantages of independent statewide-administered programs are frequently cited
for providing better coordination across multiple utilities serving a state and for providing
economies of scale and consistency in marketing programs to customers and key market
actor partners. However, long-term continuity of programs can often depend on the
strength of the legislated structure for the statewide entity. Utilities remain as important
key partners in this model in providing access to customer data, increasing awareness of
programs, and establishing financing mechanisms (for example, on-bill financing) to
support efficiency investments.
Alternative models to the statewide-administered efficiency programs are regional
organizations that provide services supporting multiple utilities. Examples of this
approach are:
• Northwest Energy Efficiency Alliance (NEEA). This is a non-profit organization
supporting 140 regional investor-owned and public-owned utilities and energy
efficiency organizations in the Northwest. It represents more than 13 million
natural gas and electricity customers. NEEA’s initiatives are targeted toward
Energy Efficiency Program Evaluation and Financing Needs Assessment
52 July 2016
transforming markets through economies of scale and risk pooling, for broader
market strategies and initiatives. NEEA’s program activities leverage the direct
program implementation activities of its regional partners to advance the
customer adoption of energy-efficient products, services and practices.10
• Bonneville Power Administration (BPA). BPA offers wholesale electrical power
from 31 federal hydroelectric projects, one nonfederal nuclear plant, and several
small nonfederal power plants to more than 142 individual electric cooperatives,
municipalities, and investor-owned and tribal utilities in the Pacific Northwest.11
To meet aggressive energy efficiency savings targets set regionally by the
Northwest Power and Conservation Council, BPA has established agreements
with 133 publicly owned utilities to provide efficiency services and acquire energy
savings from its customers. BPA’s primary role in acquiring savings is to “guide
the delivery of opportunities and programs, and provide the necessary tools,
technical support and financial resources to its Utility Customers” for commercial,
industrial, agricultural, and residential programs.12 To support the “Case for
Conservation” with its partnering utilities, BPA developed multiple financial
models from the regional, retail utility and consumer perspectives demonstrating
the direct and indirect savings from energy efficiency—and its value as a least-
cost resource acquisition.13
• Efficiency Smart. Established in 2011 by American Municipal Power (AMP),
Efficiency Smart® provides energy efficiency services to member public-power
communities that subscribe to its services. Efficiency Smart provides services such
as technical assistance and financial incentives to residential, commercial, and
industrial customers of participating public-power communities. Efficiency Smart
is administered under contract by a third party that provides a comprehensive
program of technical services and independent evaluation under a subscription-
based agreement with individual member utilities. Each participating community
gets a performance guarantee for delivered energy savings and program services
are tailored to individual community needs.
Subscription-Based Energy Efficiency Program Model
Strategy Summary: Develop a subscription-based energy efficiency program model for
rural Alaskan communities served by regional electric utilities or other organizations. This
model pools technical services and targeted financial rebates to provide guaranteed
annual energy savings to participating communities and increases the overall cost-
effectiveness of the program through economies of scale. This strategy can be
complemented with a centralized pool of statewide technical support services and / or
3. Energy Efficiency National Strategies and Best Practices
53 July 2016
financial incentives, to coordinate and streamline industry engagement and leverage the
market and scale of the Railbelt communities.
When faced with challenges such as increased energy demand, limited budgets, or
environmental concerns, a growing number of municipal electric utilities are choosing to
invest in energy efficiency services to offset these pressures. For these utilities, energy
efficiency provides many short- and long-term benefits, including lower levelized costs
(Figure 7):
• The lowest-cost resource compared to other long-term power supply options.
• The least risk of any resource, alleviating uncertainty associated with market
variability, financial exposure to potential carbon regulations, and mitigating
exposure to transmission and capacity costs.
• Local job creation assistance, supporting approximately 21 jobs for every $1
million14 in related investments.
• Significant cost reduction in transmission and distribution charges, which are likely
to increase in value each year.
• A reduction in power bills for end users—possibly even when energy prices go up,
which frees up funds for consumers to reinvest in the economy and may ultimately
induce a second round of spending and job creation.
• A primary business retention and attraction tool that can aid in economic
development by helping businesses to reduce their operating costs.
Figure 7. Comparison of levelized cost of energy options for Efficiency Smart customers.15
Pooling program services helps participating municipal electric systems compete with
surrounding utilities, providing comprehensive energy efficiency services that rival those
of investor-owned utilities. It also assists municipalities’ customers to overcome common
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54 July 2016
barriers to energy efficiency, such as a lack of knowledge or resources. Additional benefits
from a subscription-based model like Efficiency Smart are:
• Tailored services to fit the needs and resources of the municipal electric system
and its customers.
• Savings guaranteed at the municipal level.
• Independent, third-party measurement, verification, and evaluation of savings
claims turnkey services supported by an experienced staff with extensive
technical expertise a consultative approach that goes beyond simply offering
rebates.
• Customized incentives and services for large commercial and industrial utility
customers partnerships with local organizations, such as area economic
development agencies community-based and customer-focused tactics.
• Cost-effective solutions, with an emphasis on making energy efficiency affordable
to all customer classes.
A comprehensive program portfolio includes residential, commercial and industrial
services.
Targeted residential services offer renters and homeowners in participating communities
many options to reduce their electricity use, save on energy bills, and make their homes
more comfortable. Prescriptive financial rebates for purchasing qualified energy efficient
products are often cooperatively promoted through local retailers, distributors or direct
to consumer through mail-in coupons. Typically common household appliances including
refrigerators, clothes washers and dryers, high efficiency water heaters, dehumidifiers,
air source heat pump technology and LED and CFL lighting products are supported with
financial rebates.
Commercial and Industrial (C&I) services often include a consultative approach that
combines technical assistance with financial incentives to help business customers of its
subscribing municipal electric systems implement energy-saving improvements at their
facilities. Account managers help large commercial and industrial customers identify and
assess energy efficiency opportunities while energy consultants work closely with these
customers to understand the proposed technology, the amount of energy savings they
can expect to realize, and the economic implications of their decisions. Program managers
and customer support specialists provide technical advice about qualifying products and
projects for small to midsize businesses. Targeted business outreach provides additional
assistance for businesses with economic or other resource barriers to implementing
energy efficiency projects on their own. Typically the technical services include: Proposal
and design review; Energy and cost savings analysis; Product and control strategy
3. Energy Efficiency National Strategies and Best Practices
55 July 2016
optimization; and Project verification and inspection. The C&I custom or consultative
approach is complimented by prescriptive rebates to better serve small and midsize
businesses to assist with completing energy saving upgrades and improvements at their
facilities. These rebates support common energy efficiency measures including:
Compressed air; food service equipment; heating, ventilation, and air conditioning
(HVAC); lighting and lighting controls; motors and variable frequency drives; and
refrigeration.
Additionally, programs and initiatives can be designed to concentrate on specific areas
such as targeted populations, educational outreach, supply chain relationships, workforce
development, and job creation in the region.
Comprehensive Energy Efficiency Administration and Service Delivery - Alaska Context:
The above examples illustrate the potential benefits of a single organization providing
energy efficiency services for multiple local utilities, whether through a statewide agency,
regional non-profit or a private subscription based service. One of the largest barriers to
this strategy for individual communities and utilities is developing a compelling case to
initially participate in a statewide or subscription based efficiency program model.
Addressing revenue losses from increased efficiency in participating utilities and
communities is important, as the fixed charges for operations typically do not decrease
correspondingly. Communities that are already members in a regional electric utility or
other fee based organizational structure can provide a strong basis for an extension of
services and alleviate the concerns around cross-subsidization of other participating
communities. The increased efficiency services offered in the communities can serve as
an effective tool for attracting businesses to come or stay in participating communities by
addressing the high cost of energy and can offset revenue losses.
Application in Today and Tomorrow’s Rural Alaska. Regional organizations and utilities
currently providing services to rural communities in Alaska can provide a supporting
structure for effective residential and commercial efficiency services. However, this
efficiency service model would likely benefit from drawing on a more centralized and
statewide pool of efficiency technical services also serving larger hub or Railbelt
communities to leverage economies of scale. Similar to the existing role that state
agencies, regional utilities and organizations serve, coordinated efficiency services can
access funding sources at the state and federal level to offer streamlined administrative
services and cost-effective financing for implementing efficiency projects in individual
utility service territories.
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Serving Low-Income Energy Efficiency Customers
Low-income residents of single-family and multifamily housing face more barriers to
energy efficiency than the populations of nearly any other part of the built environment,
with the result that the sector often lags other building sectors in energy improvements,
and its residents bear the brunt of high energy costs. A recent study found that low-
income households typically spend a disproportionate share of annual income: 17
percent, compared to 4 percent for households not in this category.16
There are four broad categories of low-income housing:
• Single family
• Public housing owned and operated by public housing authorities (PHAs)
• Assisted housing, with reduced mortgage or subsidized operating costs
• Naturally affordable housing—units that, by virtue of their rent levels, are
considered affordable with no subsidy
The most effective and least-cost methods for achieving significant improvements in
energy efficiency in low-income housing are:
• Requiring the highest levels of energy efficiency at the time of new construction
or major rehabilitation. This is the time at which energy efficiency has the lowest
cost, and affordable housing developers should be encouraged to maximize every
opportunity.
• Increase availability of capital for energy upgrades at time of new construction or
major rehabilitation. Any and all energy systems being addressed should be
optimized at this time. Capital should be made available specifically for energy
upgrades so that they are not value-engineered out when project budgets do not
align with available resources.
Low-income weatherization programs provide energy efficiency services, as well as health
and safety and some housing durability measures, to income qualified households at no
charge to the customer. In addition to energy savings, low income weatherization
programs also provide a range of non-energy benefits, or benefits other than direct
energy bill reductions.
Current and past national evaluations of the federal WAP, conducted by Oak Ridge
National Laboratory, quantify the effects of non-energy benefits. The last national
evaluation report (2002) and a new evaluation now under way will take a fresh look at
the program’s impacts. Generally, non-energy benefits are viewed from three
3. Energy Efficiency National Strategies and Best Practices
57 July 2016
perspectives: household benefits, utility benefits, and societal benefits.17 Household
benefits are increased affordability of housing, as well as health and safety
improvements. Utility benefits include reduced bill arrearages (lower bad debt write-off,
reduced carrying costs on arrearages, and fewer notices and customer calls), as well as
fewer utility shutoffs and reconnections (and their associated costs). Societal benefits are
typically considered as the environmental benefits of reduced energy use, and the local
economic benefits of increased spending on energy efficiency upgrades (which are
installed by a local workforce, using materials purchased through local retailers).
Some non-energy benefits can be hard to quantify effectively. However, many of the
Weatherization Assistance Program’s impacts are documented and are significant.
Consequently, several states have chosen to include a low-income “adder” to the cost-
effectiveness screening requirements for utility-funded low-income programs. A report
by the National Consumer Law Center found that non-energy benefits could justify
adjustments anywhere from 17 to 300 percent.18 An example of how this has been
implemented at the statewide level can be seen in the Colorado Public Utilities
Commission’s direction of electric DSM programs to increase benefits included in the
Total Resource Cost (TRC) calculation by 20 percent “to reflect the higher level of non-
energy benefits that are likely to accrue from DSM services to low-income customers.”19
Zero Net Energy Manufactured Home Replacement
Strategy Summary: Develop an alternative to mobile and manufactured homes that fits
the same footprint as a traditional manufactured home but with energy characteristics
that make it affordable and durable for the long-term.
The strategy is to partner with affordable housing providers and other key stakeholders
to design, build, and properly site a new kind of high-performance modular home in the
footprint of a traditional manufactured home. Built to the highest construction standards,
and sited on a foundation (or piers if desired) these homes balance a higher initial
purchase price against significantly lower operating and lifetime costs when financed and
titled as real property.
For mobile / manufactured homes, the benefits of low upfront purchase prices are
degraded by high energy and operating costs for decades. Mobile and manufactured
homes have higher energy costs, and these costs often end up being a public cost as part
of the Low-Income Home Energy Assistance Program (LIHEAP), state or federal
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58 July 2016
weatherization programs and other public or utility subsidies. There is now an alternative
to mobile and manufactured homes: a Zero Net Energy Modular Home (ZNE MH).
In order to achieve the objectives for ZNE MH, it is imperative to develop a coalition with
the breadth and depth of knowledge to deal with full range of tasks and issues associated
with the design (architectural, structural, mechanical, site-work, etc.), permitting and
zoning, financing options and appraisals, partner relations and legal agreements. In other
states including Vermont, Delaware and the Northwest, the working groups have included
affordable housing entities, state and private financing organizations, high-performance
home builders, universities and other key stakeholders.
As of April 2016, thirty-three ZNE MHs are located in 18 different communities across
Vermont. Twelve are on owned land and 21 of the homes are in parks on leased land,
with 17 located in nonprofit / resident-owned parks.
Key elements for successful development and implementation for an initiative:
• Refinement and final identification of the pilot program market, with
determination of pilot market size characteristics with a focus on supporting low-
and moderate-income participants
• Develop ZNE MH technical specifications optimized for the Alaska climate,
housing affordability and manufacturability
• Identification of the supply and delivery chain with an emphasis on a reasonable
geographic area
• Creation of the customer economic model
• Determination of program eligibility, partners, incentives, and other resources
• Development of an evaluation plan to verify pilot effectiveness
What are the major barriers to this strategy’s being successful? A low-load home is by
definition a building with an extremely tight thermal shell, and this requirement
complicates the utilization of conventional heating and ventilation strategies to ensure
both the comfort and health of the occupants in parallel to optimization of efficiency of
the building. Eliminating forced ventilation with new technologies—for example,
conditioning energy recovery ventilator, cold climate ductless mini-split, heat pump water
heaters and vent-less heat pump clothes dryers—has the potential to put partnering
builders and ultimately the homeowners at the “bleeding edge” of innovation. A
successful ZNE MH pilot must ensure an adequate level of training and technical
assistance to minimize the risk of the technologies being unreliable and incurring greater
expense for the early adopters.
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59 July 2016
It is important to incorporate design optimization to balance the higher incremental
capital costs against the longer term operating costs to not only to support the
affordability of the new modular design for low-load homes, but also to the financial
viability of the partnering home builder’s business. In Vermont, a combination of existing
commercialized technologies was often selected over the introduction of a non-
commercialized product to avoid creating technical and market barriers to the broader
objective of a viable high-performance modular home.
It is important to develop a cost-benefit analysis, with a summary of non-energy benefits
and a cash flow analysis of estimated housing and energy costs and savings to derive the
net present value of lifetime housing and energy costs. In both Vermont and Delaware,
the Department of Energy Building Life Cycle Cost tool was used to perform this type of
analysis.
Vermont Experience with Innovative Financing and Incentives
• The Vermont Housing Finance Agency (VHFA) does not provide mortgage
financing to homes on leased land because of restrictions of the sale of such
mortgages on the secondary market. However, VHFA allocates a portion of the
Vermont Affordable Housing Tax Credit to creating a pool of funds used to make
0 percent, deferred down-payment loans on new manufactured and modular
homes located in parks. For income-eligible buyers, $25,000 is available for new
manufactured homes and high-performance home buyers are eligible for a
$35,000 down-payment loans. The loans are repaid when the home is sold to the
next buyer or loans may be assumed by the next buyer if they are income-eligible
and meet underwriting criteria.
• Efficiency Vermont provides an incentive for ZNE MHs of $8,500 for buyers with
incomes below 80 percent AMI or $2,000 for buyers above this income level.
• Credit-worthy customers (based on standard underwriting criteria) have been
able to qualify for reasonable financing terms from local financial institutions. A
statewide credit union offers conventional financing for high-performance
modular homes and incorporates projected energy savings in the underwriting
process. Buyers have received rates and terms as favorable as 4.875 percent
(fixed) on a 25-year loan, as opposed to 20-year financing for HUD ENERGY STAR
manufactured homes at interest rates as high as 12.5 percent.
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60 July 2016
• In June 2015, the U.S. Department of Agriculture (USDA) announced a pilot
program to allow buyers of ZNE MHs to access long-term, fixed-rate mortgage
financing in Vermont and New Hampshire. Under the USDA Energy Efficiency
Manufactured Home Pilot Program, a low-income homebuyer purchasing a ZNE
MH and placing it in a mobile home park would be eligible for a 30-year mortgage
at a 3.25 percent. Very low-income home buyers may be eligible for an interest
subsidy down to 1 percent. The park owner must be willing to offer a lease that
exceeds the mortgage term by at least 2 years. A comparison of home ownership
costs is found in Figure 8.
Figure 8. Comparison of monthly home ownership costs between traditional and high-performance
manufactured homes.
• The gap between the cost to build and site the ZNE MH and the fair market
appraised value has decreased with recent homes appraising for $140,000 and
higher. To ensure that ZNE MHs are valued accurately, Efficiency Vermont works
with the Vermont Chapter of the Appraisal Institute to both expand the number
of certified green appraisers and to educate the local appraisal community on the
values of this new durably-constructed home. Using funds from Efficiency
Vermont, we have provided incentives for appraisers to complete the courses
required to earn inclusion on the Appraisal Institute’s Valuation of Sustainable
Buildings Professional Registries.
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61 July 2016
Lessons Learned
In Vermont the ZNE MH is not affordable to the originally targeted market of very-low
and low-income buyers without public subsidy. Affordable mortgage financing is the key
to making ZNE MHs feasible on leased land. Since most lenders do not offer long-term,
fixed-rate financing for homes on leased land (regardless of the energy performance),
most low-income buyers would not qualify for a mortgage without the $35,000 down-
payment loan and the $8,500 Efficiency Vermont incentive. Appropriate mortgage
financing that utilizes the substantial energy savings can result in monthly housing costs
similar to what a buyer of a new, conventional manufactured home would pay.
• Find a building partner that is committed to high performance and high quality. In
Vermont, the builder’s—VerMod’s—commitment to building only this level of
performance has helped maintain focus and has given the project the ability to
work through the design issues endemic to this type of construction. A builder
who will not cut corners and provides construction quality will provide benefits
throughout the life of the program.
• Know the market. Understand the economic and demographic profile of potential
buyers, including location and design preferences and concerns. Vermont is still
working on this. Expect the product to evolve, and include time and funds in the
program development schedule to make design adjustments.
• Educate the real estate community about this new housing type. A key element to
appraising high performance buildings is ensuring appraisers are provided with all
relevant information relating to energy efficient features of a property, so they
can more thoroughly analyze and make appropriate judgments for building energy
performance and help lenders understand their collateral risk. Moreover, high
performance buildings require enhanced competency and the services of highly
qualified appraisers.
• Be honest about the key barriers, including high first-cost and confidence in
energy savings. Again, Vermont is still working on this. We have discovered that
one of the best approaches is to shift the buyers’ reference point to focus on the
losses they will incur if they do not purchase a ZNE MH. Lack of understanding or
belief in the ability to achieve net zero at a reasonable price requires additional
education. Promote the full range of benefits. Position these as losses that will
accrue if a conventional manufactured home is purchased. These include comfort,
quiet, air quality, construction quality, asset appreciation, etc.
• Put a team together that has the breadth of knowledge to deal with full range of
tasks and issues that will arise as part of a pilot program: design (architectural,
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62 July 2016
structural, mechanical, site-work, etc.), permitting and zoning, financing options
and appraisals, and partner relations and agreements.
• Develop soft funding sources to help subsidize pilot program sales. Pair with the
best possible hard financing options to show “operating cost equivalence” to
prospective buyers.
Key Market Actors for a Successful Effort
A critical step in the process of developing a statewide program like this is bringing
together diverse organizations and people who share common goals: to increase the
quality of low-income housing and decrease energy costs for residents. These groups are:
• electric utilities
• electric efficiency providers
• energy service providers
• modular home manufacturers
• mobile home park owners and residents
• affordable housing providers
• low-income advocates
• financial institutions
Alaska Context. Alaskan housing authorities, non-profits, builders and building science
organizations—including CCHRC—have been actively developing and building high
performance homes designed for the Alaskan climate. CCHRC’s Sustainable Northern
Communities (SNC) program supported two prototype high performance buildings in
Quinhagak and Anaktuvuk Pass to reduce residents’ upfront capital costs, improve health
and performance of homes, and support significant reductions in energy use.20 The
collaborative training event hosted by the Association of Alaska Housing Authorities
(AAHA), “Developing Alaska Sustainable Housing” (DASH), established a forum for experts
and key stakeholders to discuss topics such as housing design, building materials,
construction methods, and project financing within the context of building cold-climate,
high-performance buildings, in the context of energy affordability in Alaskan
communities.
Application in Today and Tomorrow’s Rural Alaska. Transportation of modular homes
to remote areas of Alaska remains a barrier for many communities, however prototype
buildings have established that cost-effective approaches are available to tailor the
approach to the individual Alaskan regions and communities. Leveraging the
collaboration of key stakeholders and funding sources including HUD, the U.S.
Department of Energy’s Office of Insular Affairs (DOE OIA), state organizations, housing
3. Energy Efficiency National Strategies and Best Practices
63 July 2016
authorities, builders and non-profits can support both new construction, as well as the
planned replacement of existing buildings to reduce the energy burden on communities
in the AkAES area.
Residential Home Performance Efficiency
Nationally 32 states, including Alaska and the District of Columbia, currently offer
residential home retrofit services under the Home Performance with ENERGY STAR
Program (HPwES).21 The Home Performance with ENERGY STAR Program is administered
by the U.S. Department of Energy. It coordinates this brand with the Environmental
Protection Agency (EPA) as a public-private voluntary partnership with utilities, states,
municipalities, and nonprofit organizations that promote energy efficiency and
renewable energy. In 2013, individual programs reported more than 330,000 completed
Home Performance with ENERGY STAR projects nationally. Table 7 provides a summary
comparison of leading state efforts on HPwES, including Alaska.
Energy Efficiency Program Evaluation and Financing Needs Assessment
64 July 2016
Table 7. Benchmark summary of leading Home Performance with ENERGY STAR programs
2013
HPwES
projects
Market
penetration
Energy audit
price HPwES incentive Rebates
for HVAC
Assisted
HPwES22
Loan
interest
rate
Loan term
(years)
Loan
maxi-
mum
AK 2,550 1.01% Varies; $500
rebate
Avg: $6,534. Max: $10,000 for
identified improvements Yes No 3.125%23 15 $30,000
AZ 2,980 0.24% $99 co-pay Measure-based Yes No 7.99% Not listed Not listed
CT 11,520 1.41% $99 co-pay $99 co-pay for DI measures
including air sealing Yes Yes Varies; 0%
for HVAC Up to 10 $15,000
MA 25,382 1.85% Free 75% of insulation cost up to
$2,000 plus free air sealing Yes No 0% Up to 7 $25,000
MD 2,542 0.23% $100 co-pay 50% of cost up to $2,000 Yes No 9.99% Up to 10 $20,000
MI 1,956 0.07% Market pricing;
discounts Measure-based Yes No NA NA NA
NJ 4,805 0.27% Market pricing Based on total energy savings up
to $5,000 No No 0% Varies;
usually 10 $10,000
NY 8,355 0.26% Free 10% of cost up to $3,000 No Yes 3.49% 5,10,15 $25,000
OR 1,309 0.14% Market pricing Measure-based Yes No Varies Varies Varies
VT 1,187 0.61% $100 discount Measure-based up to $2000 Yes No Varies Varies Varies
WI 2,560 0.17% Market pricing 33% of cost up to $1,250 No Yes 10.99-
19.99% Up to 10 $20,000
3. Energy Efficiency National Strategies and Best Practices
65 July 2016
Home Performance with ENERGY STAR provides a consistent brand and platform for
developing an infrastructure of qualified contractors offering home improvement services
to address both the efficiency and health of the home. Individual programs have the
flexibility underneath this program platform to develop incentives, financing and training
to support the growth of the energy efficiency market and quality of services provided to
homeowners. To support the quality of services individual programs typically require
participating contractors to be certified as BPI Building Analysts or RESNET Home Energy
Rating System raters. Additional recommended core elements of a sponsor program are
defined as:24
• Program administration. Program design and strategy, staff management,
customer relations management (CRM) software, and quality assurance.
• Workforce management. Contractor recruitment, training and certifications, and
mentoring.
• Incentives. Homeowners, partners, and well-qualified participating contractors.
• Marketing. Direct advertising, websites, events, campaigns, and cooperative
agreements.
• Evaluation, measurement, and verification. Market impact studies, research,
surveys, and analysis.
Strategies for supporting long-term energy efficiency improvements in homes typically
follow either a prescriptive or performance-based path. A whole-home or a prescriptive
program is typically limited to delivering cost-effective improvements with specific
savings and rebates for each eligible measure. Alternatively, a performance-based path
offers a greater degree of flexibility and schedule for home improvement projects and
more closely maps to a homeowner’s specific timetable, finances, and needs. However,
this also requires additional flexibility from the program to work with a broader array of
building contractors and trade allies, and to offer streamlined programs to meet the
industry’s needs. In both strategies, an assessment of the home by a certified Home
Performance contractor identifies the largest and most cost-effective energy savings
opportunities in order to develop a scope or plan for the home improvements without
compromising the health and safety of the house and its occupants. The Department of
Energy is currently engaging with key stakeholders to evaluate the approaches for
achieving deeper energy savings of homes in the United States at a faster pace through a
multi-faceted approach to Home Performance with ENERGY STAR (Figure 9).
Energy Efficiency Program Evaluation and Financing Needs Assessment
66 July 2016
Figure 9. Home Performance project characteristics and their several outcomes.
This proposed shift in strategy reflects the aggressive goal set by the DOE to achieve the
“reduction of typical home energy use by an average of 20 percent by 2020, 25 percent
by 2025, and 40 percent by 2030, while improving indoor air quality, durability and
comfort of the improved homes.” A multi-pronged approach established nationally and
the state level would seek to tap into the larger opportunity of an estimated 30 million
annual home improvement projects, approximately 90 percent of which offered
significant energy savings potential. 25
3. Energy Efficiency National Strategies and Best Practices
67 July 2016
Lighting, Residential Plug Loads, and HVAC
Lighting and plug loads—appliances and consumer electronics—make up a significant
share of residential (35 percent)26 and commercial (53 percent)27 energy use. The energy
use of plug loads is forecasted to increase by 21 percent over the next several decades in
the United States, as gains in lighting efficiency are offset by the proliferation of
miscellaneous electric loads and consumer electronic devices. These shifts are presented
in Figure 10. Change in residential electricity consumption, 2012 - 2040 (kWh). .
Figure 10. Change in residential electricity consumption, 2012 - 2040 (kWh). 28
Retail products programs provide targeted rebates and messaging to consumers,
community partners, manufacturers and retailers for the purchase/sale of selected
energy efficient products. Recently, efficiency programs have transitioned toward greater
upstream and midstream program strategies, versus targeted rebates directly to
customers, to increase engagement and leverage manufacturer, distributor and retailer
incentives and marketing dollars. The objectives of upstream programs are to increase
the efficacy and streamline the program process by aligning more closely with the
industry and consumer needs by providing instant, point-of-sale rebates, avoiding the
costs and barriers to mail-in rebate processing and streamlining the sales process. These
programs are designed to be aligned with and to complement other residential and
commercial programs, including new construction and Home Performance programs.
Significant gains in market share of higher efficiency products through coordinated
voluntary efficiency programs nationwide have resulted in rapid advancements in federal
Energy Efficiency Program Evaluation and Financing Needs Assessment
68 July 2016
minimum standards,29 resulting in long-term energy savings. Utilities or statewide
efficiency programs often provide technical support for the development of such
upgrades to federal standards, tracking of activities and monitoring developments, and
review and modification of program designs to integrate changes to the standards and
codes. Regional northern climate efficiency program partnerships—notably the
Northwest Energy Efficiency Alliance and the Northeast Energy Efficiency Partnerships—
are both active in advancing federal standards to reflect colder climate appliances and
performance.
Recent federal legislation enacted through the Energy Independence and Security Act
(EISA) in 2007 has rapidly increased the minimum levels of performance for general
service lamps, resulting in a transition away from incandescent lighting towards halogens,
compact fluorescent and solid state or LED technologies. This legislation established a
phased timeline for increasing the performance requirements. During the first phase
completed in 2014, general service lamps were to achieve a 27 percent reduction in
energy use over conventional incandescent technology. The second phase, referred to as
the “backstop,” will go into effect in 2020, when general service lamps will be required to
be 60 to 70 percent more efficient than the standard incandescent.30 Currently, only LED
products can meet this performance level. Accelerating the consumer awareness of LEDs
in the market and penetration in homes in Alaska are key opportunities for avoiding lost
opportunities for achieving short-term energy cost savings in residential and commercial
buildings.
Lighting has historically offered the most cost-effective and largest share of residential
and commercial energy savings for energy efficiency programs.31 The increase in the
federal minimum standard for lighting in 2020 will require programs to rapidly shift
strategies in the coming years to focus on a broader array of appliances and plug loads to
meet the shortfall in program energy savings.
Upstream program strategies for streamlining and increasing the scale of lighting
programs are now being leveraged to great effect in retail appliances, consumer
electronics, and HVAC programs. Recently, the EPA announced the launch of the ENERGY
STAR Retail Products Platform, a pilot offering a similar public-private partnership to
target partnerships between efficiency programs and retailers to accelerate the sale of
high efficiency ENERGY STAR products.32 Pilots are currently planned for 2016 in 13 states
and the District of Columbia, with partnerships among three national retailers: Best Buy,
Sears, and Home Depot. Similar upstream program strategies are being applied to water
3. Energy Efficiency National Strategies and Best Practices
69 July 2016
and space heating and cooling technologies to leverage the role of HVAC distributors and
dealers in sales to contractors.
Upstream Market Initiatives
Strategy Summary: Adopt streamlined, market-focused incentive programs to address
the higher incremental costs, availability and consumer awareness and demand for
efficient lighting and space and water heating technologies. These programs target the
manufacturer, distributor and retailer channels to accelerate the market for new efficient
technologies by offering “upstream” incentives to manufacturers to buy down or
distributor / retailers to mark down the cost of the highest efficiency lighting and heating
technologies for consumers. This delivery mechanism offers the discount at the time of
purchase—for example, at the point of sale, and thus does not require any application or
paperwork from the end-use customer or contractor in the case of distributor or dealer
sales. Compared to the higher costs of whole-home retrofits, consumer product rebates
(dominated by lighting in most residential and commercial programs) offer an average
cost of saved energy of $0.021 per kWh, as shown in Figure 11.
Figure 11. Total cost of saved electricity for various types of residential programs.33
Energy Efficiency Program Evaluation and Financing Needs Assessment
70 July 2016
The barriers for new, efficient technologies addressed by this strategy are:
High Incremental Cost
The higher incremental cost stands as a barrier until customers have an opportunity to
become more familiar with the efficiency value proposition and price competition
intensifies between manufacturers, as well as their distributor and retailer partners.
Lack of Consumer Awareness and Demand
Although ENERGY STAR lighting—CFLs and LEDs—have increased dramatically in market
share in the U. S. market, Alaska stands out as one of a handful of states without an
upstream lighting program. These programs are often critical for raising awareness of
customer tradeoffs among product attributes such as price, annual energy costs and
product performance.
Availability
There are several dimensions to the availability issue for rural Alaska. First, many Alaskans
purchase goods outside of their communities through online stores and other larger
retailers in hub communities or large municipalities (for example, Anchorage) that serve
as distribution centers. Second, it is important to understand products come in different
model types and configurations to match existing installation conditions or preferences.
Third, the required timing for delivery, especially in the case of duress purchases in the
case of equipment failure.
Duress Purchases
For certain products a large majority of the equipment selection, purchase and
installation is made under duress, when the incumbent equipment has failed, and must
be replaced immediately so that the building that it serves can continue to fully function.
What is in stock at the local distributor is typically what gets purchased and installed.
Split Incentives
There is a split incentive of energy savings in situations where building owners select and
purchase equipment, but building lessees or renters pay the utility bills.
Key players in the commercial program are supply channel participants: manufacturers,
manufacturer’s representatives, dealers and distributors; and contractors, customers,
and building owners.
Key areas of opportunity for the supply channel are:
3. Energy Efficiency National Strategies and Best Practices
71 July 2016
• Supplying energy-efficient products can quickly increase gross margins and net
income.
• Increase inventory turns through collaborative sales, marketing, and training
strategies.
• Develop agreements with manufacturers to extend accounts payable, and add
flexibility to product return policies.
• Decrease distributors’ accounts receivable through rapid efficiency program
incentive reimbursement.
• Recognize the crucial role of efficiency programs in adding value to the supply
chain and engagement with customers.
Typically partnerships with manufacturers, distributors and retailers for an upstream
initiative are driven by a request for proposal (RFP) or through negotiated promotions.
This allows for manufacturers to provide best pricing in a competitive solicitation in
partnership with their retailers, distributors or dealers.
Alaska Context: Although residential and commercial lighting and HVAC upgrades have
been supported in Alaska through direct installation, product rebates and grant programs
from individual utilities, weatherization agencies and state programs, incentives are
typically targeted at the consumer not at the market actors—manufacturers, retailers and
dealer / distributors. In addition, absent regulatory mandated efficiency and appropriate
cost recovery mechanisms, utilities often have a financial disincentive to develop
comprehensive efficiency programs to support their customers. State programs have
historically focused on more comprehensive home efficiency (for example,
weatherization) instead of incremental efficiency opportunities offered by lighting and
HVAC upgrades.
Application in Today and Tomorrow’s Rural Alaska: Initial research and stakeholder
feedback suggests that an upstream program strategy supporting efficient lighting and
HVAC upgrades targeted at larger hub and distribution centers (for example, Anchorage
and Fairbanks) would have a large impact on the AkAES communities due to the higher
costs and limited product availability in local communities. Targeted strategies for
supporting smaller, local community stores and dealers can also be introduced as a
complementary strategy to support both planned and emergency purchases, avoiding
lost upgrade opportunities. By reducing the incremental cost of more efficient lighting
and space and water heating technologies, utility or statewide efficiency programs can
accelerate the market in the state through collaborative promotions with the industry –
manufacturers, retailers, distributors and contractors.
Energy Efficiency Program Evaluation and Financing Needs Assessment
72 July 2016
Non-Residential Efficiency
Approximately 6 million commercial and industrial buildings in the United States expend
roughly $400 billion in annual energy costs and represent approximately 45 percent of
U.S. greenhouse gas emissions.34 However, as shown in Figure12, commercial and
industrial buildings have a large range of building use and associated energy intensity (Btu
/ square foot). ENERGY STAR provides a framework for supporting individual companies,
efficiency program administrators, states and federal agencies with improving the
efficiency of buildings and plants. Specific tools and resources, notably ENERGY STAR
Portfolio Manager allow for benchmarking of commercial buildings against comparable
buildings nationwide.35
This framework involves:
• Targeted sector-level marketing.
• Benchmarking of building energy and water usage with ENERGY STAR Portfolio
Manager.
• Guidelines for establishing a strategic energy management approach and
individual plans.
• Supporting whole-building performance assessments and upgrades.
• Ongoing monitoring and verification to evaluate the continued performance of
the building.
3. Energy Efficiency National Strategies and Best Practices
73 July 2016
Figure 12. Sector-based commercial building energy use per square foot and percentage of total. 36
Leading commercial and industrial (C&I) efficiency programs address the diversity of the
building use by developing targeted sector-level initiatives and offering both custom and
prescriptive savings strategies for customers. A national benchmarking study37 identified
common strategies in non-residential comprehensive efficiency programs that:
• Supplement prescriptive rebates with a focus on custom efficiency measures and
projects.
• Target and scale rebates to incentivize custom and comprehensive (whole-
building) projects.
• Support customers and energy service companies with competent engineering
staff.
• Involve a review and proof of project completion as part of the incentive approval
process.
• Provide consistent program funding and efficient application and payment
processes.
• Develop effective measurement and verification processes and conduct thorough
evaluations to that address process, impact, and net-to-gross issues.
• Support the development of private sector energy efficiency services market.
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
0
100
200
300
400
500
600
Consumption (thousand Btu/SF)Consumption Percent of Total
Energy Efficiency Program Evaluation and Financing Needs Assessment
74 July 2016
Although most efficiency programs in the C&I market are implemented directly by utility
or statewide efficiency program staff or in-directly by program implementation
contractors, ACEEE highlighted the Washington State University (WSU) Extension Energy
Program for its innovative partnerships and funding to provide services for industrial
customers. The program is supported by a broad mix of funding from federal, state,
private, non-profit and individual industrial customers.38 WSU offers a complimentary
service to industrial customers to provide technical training and services and to help
develop efficiency opportunities through existing utility efficiency programs.
The DOE Better Buildings program and EPA ENERGY STAR programs have targeted
alliances with large companies, state and federal agencies to “lead by example” to scale
up efficiency in the C&I sector and provide a roadmap to achieve 20 percent energy
savings by 2020.39 The DOE Better Buildings Alliance provides a framework for
corporations to make commitments to achieving energy savings goals and to collaborate
with their peers at a sector level to identify best practices in their industry and new
strategies for energy reductions.
Commercial building codes have dramatically improved the efficiency of new buildings,
but efficiency programs and energy service companies have supported retro-
commissioning as a best practice for on-going improvements to energy performance in
existing buildings and their operation (Figure 13). Retro-commissioning (RCx) is defined
as a “process for instituting a rigorous testing, verification, and upgrade protocol to an
existing building control system to identify and correct operational inefficiencies.”40 RCx
is intended as a critical stage in the process of efficiency improvements to support and
complement specific equipment (for example, lighting and HVAC) upgrades. Energy and
non-energy benefits are achieved through comprehensive energy improvements that
incorporate retro-commissioning.41 Efficiency programs typically offer low interest loans
and direct financial incentives to customers based on the scale of electricity, gas or power
demand offset through operational improvements. As an example, Pacific Gas & Electric
offers customers $0.08 per kWh, $1.00 per therm, and $100 per on-peak kW, capped at
50 percent of the total project cost.42
3. Energy Efficiency National Strategies and Best Practices
75 July 2016
Figure 13. Commercial retro-commissioning in identifying energy system deficiencies.
Energy Efficiency Financing
Nationally and at individual state levels, the aggressive targets set for DSM programs will
necessitate significant capital improvements to buildings. Taxpayer and utility ratepayer
funding represent a small fraction of the total investment needed.
In the face of this funding gap, many energy efficiency program administrators are seeking
to increase their reliance on customer financing with the aim of amplifying the impact of
limited program funding.
A few national examples of this increasing reliance on financing:
• In California, the Public Utilities Commission (CPUC) has approved $200 million
of pilot programs to test whether transitional ratepayer support can trigger
self-supporting (that is, subsidy-free) programs (CPUC 2013).
• In Connecticut, the Connecticut Green Bank’s 2013–2015 Strategic Plan notes
that its programs “will reflect the strategic transition away from technology
innovation, workforce development, formal education, and subsidies toward
a focus on low-cost financing of clean energy deployment … [to] seek to
leverage ratepayer dollars …” (CEFIA 2013).
Energy Efficiency Program Evaluation and Financing Needs Assessment
76 July 2016
• In New York, the $1 billion Green Bank’s goals include overcoming disparate
one-time subsidies and offering public credit and investment programs that
require only a small amount of government funds (Cuomo 2013).43
These data must be balanced against the reality that financing programs as stand-alone
products rarely, if ever, achieve ambitious goals. For example, despite more than 200 loan
programs for residential energy efficiency in the United States, only a tiny fraction of the
population has been reached. Many of the programs reached less than 0.1 percent of
their potential customers annually, and an annual penetration rate of 0.5 percent is
regarded as standard. This points to the need for an integrated approach to offering
financing, as one part of a comprehensive approach. Programs that have higher
participation rates tend to have networks of engaged and informed contractors who use
the financing program as a sales tool.44
To expand the scope of energy efficiency programs to a larger audience, and to integrate
financing options effectively within overall program design, ACEEE offers the following
recommendations: 45
• Budget for and invest in ongoing marketing of the program.
• Simplify the loan application process.
• Offer attractive loan terms.
• Design the program for a target audience.
• Consider on-bill financing.
Some of the financing strategies being deployed effectively nationally are:
On-Bill Financing and On-Bill Repayment
On-bill financing (OBF) programs are a promising way for utilities to help customers invest
in energy efficiency improvements. On-bill financing comes in the form of a loan made to
a utility customer—such as a homeowner or small business—pay for energy efficiency
improvements to the customer's house or building. Utilities already have a billing
relationship with their customers, as well as access to information about their energy
usage patterns and payment history. Typically, the criteria for loan approval are based
primarily or exclusively on payment history, rather than more traditional measures such
as credit scores. In addition, many such programs require no down payment and
determine the length of the repayment period based on the energy savings of the
investment.
3. Energy Efficiency National Strategies and Best Practices
77 July 2016
The capital for such loans comes directly from the utility. Utilities’ exceptional ability to
raise money from capital markets is largely based on their lengthy history of strong
repayment performance. In order to rely on this history, on-bill financing payments must
“rank pari passu” with utility payments, meaning that all customer payments are
allocated proportionately between energy use charges and debt service. The regular
monthly loan payments are collected by the utility on the utility bill until the loan is repaid.
The possibility of service shutoff in the event of non-payment is frequently put forward
as an added security of OBF. However, in a climate such as Alaska’s, it is less likely that
this would be seen as an available option, especially for residential customers, as utilities
might not be willing to be responsible for the hardship caused. A report issued by the
State and Local Energy Efficiency Action Network (SEE Action) breaks down existing on-
bill financing programs into categories and evaluates their performance.46
On-bill repayment (OBR) also requires the customer to repay the loan through a charge
on their monthly utility bill as well, but with this option, the capital is provided by a third
party, not the utility, which acts only in a collection capacity.47 Some utilities have been
initially reluctant to take on this role, citing new and often costly software requirements,
lack of experience in servicing debt, and concern that any negative feelings about the
performance of the installed measures will be directed toward the utility as the client-
facing entity.
In some on-bill repayment programs, the loan is transferable to the next owner of the
home or building—that is, it “stays with the meter.” This provision can address the “split
incentive” problem for renters because they can benefit from energy-saving measures
while they occupy a building, but are not obligated to pay off any remaining loan balance
when they move out. Renters are generally most willing to take this option for measures
that result in positive cash flow—that is, the energy savings exceed the on-bill payment
amount. To make these improvements, renters must obtain permission from the building
owner, who will often consent because the improvements to the property will add value
to the rental property at little or no cost to them.
It should be noted that the greatest success in on-bill programs have been in “bill-neutral”
situations, where the loan repayment is on the same invoice as the reduced energy
charge. So, for example, using an electric utility bill to invoice thermal improvements
could result in a much larger electric bill and a much smaller fossil fuels bill. There are
Energy Efficiency Program Evaluation and Financing Needs Assessment
78 July 2016
currently far fewer data to support the idea that consumers and businesses will pay these
bills as reliably as in the bill-neutral scenario.
An example of an OBF program is currently offered through a partnership between Craft3,
a Community Development Financial Institution (CDFI) and Energy Trust of Oregon’s
Savings Within Reach (SWR) or Clean Energy Works (CEW) program.48
Alaska Context: Alaska has many small municipal and cooperative utilities and the costs
of implementing and servicing an on-bill program might be seen as onerous. If a program
were to be successfully implemented in one of the largest utilities in Alaska first, this
might serve to alleviate concerns as well as increase demand for this option.
Property Assessed Clean Energy
Strategy Summary: Enact enabling legislation for property-assessed clean energy (PACE),
authorizing Alaska government entities to provide financing for energy efficiency and
renewable improvements to buildings.
PACE was developed as a new financing mechanism for funding energy efficiency and
renewable energy improvements on private property.49 PACE programs allow local
governments, state governments, or other inter-jurisdictional authorities, when
authorized by state law, to fund the up-front cost of energy improvements on commercial
and residential properties, which are paid back over time by the property owners,
typically for up to 20 years. Because property owners pay only the assessment while they
own the property and are realizing the energy savings, they can finance projects with
much longer paybacks than would otherwise be possible. Although PACE serves only a
small portion of the market—the portion of homeowners and business owners with
sufficient equity in their buildings—the combination of long loan terms and transferability
directly addresses some of the biggest barriers to action. In addition, this option provides
an opportunity for access to financing for property owners who might be unwilling or
unable to qualify for traditional financial institutions’ offerings.
Residential PACE: Federal Housing Finance Agency (FHFA) guidance letters (in 2010 and
2014) have caused many residential PACE programs nationally to suspend operations, as
the FHFA has stated that any residential mortgage that has a PACE assessment in a senior
position will be determined to be “non-conforming,” and therefore ineligible for
purchase. Recent announcements by the Federal Housing Administration (FHA) might
address the issue by clarifying that PACE assessments will be permitted for FHA mortgages
subordinate to primary mortgages. FHA has stated since August 2015 that specific
3. Energy Efficiency National Strategies and Best Practices
79 July 2016
guidance will be published, but this has not yet happened and it is not clear when this will
occur. Some PACE advocates are hopeful that the FHA model will eventually serve as a
template for acceptance by Fannie Mae and Freddie Mac, but it is likely to be some time
before a clear consensus emerges.
FHFA guidance does not affect commercial PACE programs. FHFA re-asserted their
position that mortgages supported by Fannie Mae and Freddie Mac must remain in first-
lien position. This precludes PACE financing from taking priority ahead of a Fannie Mae or
Freddie Mac mortgage to collect the proceeds from the sale of a foreclosed property. In
Vermont, Maine, and Rhode Island, this barrier was addressed by ensuring subordinate
lien status for all PACE loans. FHFA has endorsed the junior lien PACE approach.
After a delay caused by regulatory concerns, residential PACE started back up in California
in 2014. The State of California established a residential PACE reserve to protect mortgage
holders, including Fannie Mae and Freddie Mac, from losses associated with PACE liens.
The California PACE reserve is administered by the California Alternative Energy and
Advanced Transportation Authority.50 CA PACE loans remain in senior position and
homeowners are required to sign a document stating they understand that the presence
of a senior lien might affect their ability to sell their house because the buyer may require
a Fannie or Freddie mortgage. In this case, the PACE loan must be repaid in full prior to
obtaining a mortgage backed by Fannie or Freddie.51
Commercial PACE, by contrast, has experienced tremendous growth in the last two years,
as shown in Figure 14. Commercial mortgages are not affected by the regulatory concerns
that have hindered the growth of residential PACE, for two reasons: (1) Fannie Mae and
Freddie Mac purchase only residential mortgages; and (2) commercial mortgages contain
a standard provision called the “due-on-encumbrance” clause, which requires written
consent from any existing mortgage lienholders before any additional lien-secured debt
(whether senior or junior to the mortgage) may be taken on. As a result of this provision,
commercial PACE projects typically have excellent economics as measured by the savings-
to-investment ratio (SIR), and mortgage holders can view these projects as favorable—
both because they reduce the occupants costs of occupancy and because the measures
generally involve installation of equipment that increases the value of the property.
Energy Efficiency Program Evaluation and Financing Needs Assessment
80 July 2016
Figure 14. Commercial PACE programs nationally have experienced tremendous growth in the last two
years. Source: www.pacenation.us/commercial-pace/
Alaska Context: PACE is essentially an add-on to an existing property tax infrastructure.
Although only 36 municipalities in Alaska levy a property tax (out of 168 in the state), they
represent approximately 90 percent of the population. Opportunities to implement PACE
would need to be targeted to these communities after enabling legislation is in place.
Given the uncertain regulatory status of residential PACE, the focus on commercial PACE
in currently proposed legislation is well advised. Innovative approaches to PACE in
Vermont may provide a template for individual communities to elect to have a
centralized, self-funding program administrator who provides the supporting services for
implementation.52
Public-Purpose Energy Services Company
Strategy Summary: Establish a PPESCO that provides comprehensive energy services:
• Technical assistance, from initial project walk-through to commissioning and
verification of savings
• Installation (or oversight) of efficiency and renewables improvements
3. Energy Efficiency National Strategies and Best Practices
81 July 2016
• Access to financing at favorable rates and terms
• Energy performance contract
A PPESCO allows the owners of the public and private buildings that serve the needs of
Alaska’s communities, including affordable housing, libraries, state and municipal
buildings, small health care facilities, and education facilities, to make their buildings
more efficient, with confidence that the future energy savings will be there to finance
current energy work, including technical services that are headache-free.
PPESCO is modeled on traditional ESCO services, but they serve underserved markets and
unserved buildings that are integral parts of the community. There are four markets of
interest:
• Multifamily affordable housing
• Education, including K-12 and colleges and universities
• Health care
• Municipal or community facilities
The barriers that PPESCO addresses:
• Access to technical capacity: Too often personnel in the targeted sectors are
already stretched too thin with existing job responsibilities.
• Access to technical capability: Personnel often are not expert in efficiency and
fear making a mistake that could jeopardize ongoing operations.
• Knowledge of funding sources: Keeping up to date on utility incentives and local,
state, or federal programs that can provide direct funding to a project takes
significant resources that many of these organizations do not have.
• Access to capital financing at reasonable cost: Although some PPESCO clients
might have access to low-cost financing through municipal bonding, tax-exempt
leasing, or other sources, PPESCO can help to line up all the documents needed to
access such funding or provide additional sources of project financing
• Lack of certainty in savings to use as basis for financing: Expertise in building
energy systems that goes beyond a single portfolio allows PPESCO to project
energy savings with certainty.
• Project size required by traditional ESCOs: Although there are a few examples,
projects in the range of $200,000 to $800,000 are not normative for ESCOs, and
are not served well by current models.
• Project measures: Traditional ESCOs tend to concentrate on energy measures that
are relatively easy to monitor. A PPESCO will also do these measures, but will
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82 July 2016
supplement these with additional measures, such as insulation and air sealing,
that are cost-effective but not so easily metered.
Although PPESCO as a business entity is a relatively new entrant to the market, the
underlying concepts have been in use for 30 years, since many entities completed
mission-driven or nonprofit energy performance contracting.
PPESCO is now operational in several states. In 2014, the Vermont Energy Investment
Corporation created a wholly owned subsidiary, Commons Energy L3C
(www.commonsenergy.com), to provide PPESCO services in Vermont, Ohio, and the DC
metropolitan area. Other entities are exploring how they might provide PPESCO services
in their local jurisdictions. These organizations are Southface (Southeast) and the
Adirondack North Country Association (New York), among others. VEIC, which created
the PPESCO concept, has always believed that success is measured in the number of other
organizations, each with deep roots in their respective regions, adopting and rolling out
this model.
Success is reliant on a few key factors:
• Strong partners with community roots and relationships.
• Unmet need for energy improvements in specific community-oriented sectors.
• Long-term capital at or below market rate with underwriting requirements that
value the energy savings of the project.
• Technical knowledge of building energy systems, improvements, and savings
calculations.
VEIC partners as a coach and mentor whenever a PPESCO is being established, helping to
assess competencies and needs, and developing an appropriate business model and plan.
Further information is available at www.ppescohowto.org, the open-source, public-
domain site offering the operating details of how to create and deploy a PPESCO model
(of which Commons Energy L3C is an example). This accessibility to information is a way
of encouraging the proliferation of this type of market model to address the needs of tens
of thousands of underserved public-purpose buildings in communities throughout the
country.
Alaska Context: Although the challenges to establishing a PPESCO in Alaska are
substantial, this model does offer an approach to providing comprehensive energy
retrofits to underserved public-serving buildings in many of Alaska’s smaller communities.
Bundling of multiple public-purpose buildings in to a package for the PPESCO model may
3. Energy Efficiency National Strategies and Best Practices
83 July 2016
allow individual communities to develop a compelling and cost-effective opportunity with
sufficient scale.
Rural Utilities Service Loan Program
Strategy Summary: Determine which of the eligible utilities in Alaska might have the
capacity and interest to apply for financing from the USDA Energy Efficiency and Loan
Conservation Program. Develop a program to support the use of these funds for energy
efficiency and renewable projects.
Through its Rural Development mission area, USDA offers the Energy Efficiency and
Conservation Loan Program (EECLP), which can provide funding to rural electric
cooperatives and municipal utilities—many of which already have energy efficiency
programs in place—that can then re-lend the money to help homeowners or businesses
make energy improvements. In addition to energy audits, the loans may be used for
upgrades to heating, lighting, and insulation, and for conversions to more efficient or
renewable energy sources.
This flexible capital could enable thousands more moderate-income Alaskans, who are
not always able to access traditional financing, to save money on their energy bills by
completing energy efficiency and renewable energy projects. It would improve economic
vitality in Alaska’s rural communities, and have a positive long-term impact through
ongoing energy cost savings. The capital from RUS is long term and low interest; for
example, at current interest rates, a utility could offer a 20-year loan at a fixed interest
rate of 3.625 percent.
Eligible applicants are municipal and cooperative regulated utilities whose service area
includes rural communities. Investor-owned utilities are excluded from the program. The
application process is typical of a federal program of this size, and has several
requirements that might prove daunting to a small utility.53 For example, a borrower must
have:
• An Energy Efficiency Business Plan.
• A Quality Assurance Plan, including the use of qualified energy managers or
professional engineers to evaluate program activities and investments.
• A risk analysis, including an evaluation of the financial and operational risk
associated with the program, including an estimate of prospective consumer loan
losses.
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84 July 2016
The maximum amount that may be borrowed is determined by the financial status of the
utility borrower. Once the borrower is approved, the utility has four to five years to
disburse funds Loans may be made to any consumer, business, or municipality in the
service area of the utility borrower; loan terms are set by project economics and the
expected useful life of the measures. Maximum loan terms are in the range of 15 to 20
years. The borrow rate from RUS is fixed for the life of the loan and is determined by the
loan term. A maximum of 1.5 percent to cover program administrative costs may be
added to this rate when lending to the end user.
Alaska Context: RUS funds could be combined with any of the other financial strategies
described above. For example, RUS funds could provide capital for on-bill financing or
PACE, or help public-serving entities obtain capital for PPESCO services. The benefit of
using this program is not just the capital, but the flexibility to offer underwriting and loan
terms that would allow for loans to borrowers who might not be able to qualify for
traditional financing products that do not include the economic value of the energy
savings.
Loan Loss Reserves and Other Credit Enhancements
Strategy Summary: Consider offering credit enhancements to reduce transaction risk.
A credit enhancement is a financial tool that reduces the risk of a transaction by
contributing additional collateral, insurance or guarantees to improve the chances that
financing will be repaid. This reduced risk can also result in lower interest rates than might
otherwise be available. If the goal is to expand private sector financing for energy
efficiency, putting funds toward credit enhancements can be a good option because they:
• Encourage private lenders and investors to put money into unfamiliar markets or
products (such as residential energy efficiency lending).
• Can absorb risk of loss and, as a result, be used as a negotiating tool to convince
lenders to reduce interest rates or provide longer loan terms.
• Can be to convince lenders to stretch their underwriting criteria in order to lend
to individuals or businesses with lower than typical credit profiles.
• Offer the potential for a small amount of program funds to leverage a large
amount of private capital, providing much greater savings than from a direct
expenditure.
Loan loss reserves (LLRs) put program funds in a “first loss” position, meaning that the
program dollars are used to absorb losses from default or non-payment by borrowers,
3. Energy Efficiency National Strategies and Best Practices
85 July 2016
limiting losses to private capital. The LLR facility reduces risk to lenders by covering a
specified amount of losses from possible loan defaults in an energy financing program.
Interest rate buy-downs (IRBs) can be an effective tool to lower the cost of capital, but
they are a relatively expensive way to drive consumer demand, especially for longer loan
terms, and frequently result in free-ridership, in which participants who could use other
financing options choose the lower program-subsidized rate, even though this is not a
determinant for going forward with the project. LLRs have been successful in attracting
private capital to energy efficiency lending at a lower cost than IRBs.
The major cost barriers to consider are the establishment of LLRs and the cost of directly
purchasing interest rate reductions. A loan loss reserve of adequate size for a relatively
large energy efficiency or renewable energy program would require a substantial
commitment of funds. For example, Michigan’s Home Energy Loan Program (HELP)54 loan
loss reserve was originally established with $10 million from federal ARRA funds.
A well-designed energy financing component of an overall program would likely contain
elements of each of the credit enhancements described above. An excellent overview of
the relationship between these options is available in a 2012 paper by the Lawrence
Berkeley National Laboratory.55
Alaska Context: As Alaska faces imminent decreases in funding for incentives and other
direct expenditures to support energy efficiency and renewables, a review of the
potential from financing programs is warranted. Although, as noted earlier, a stand-alone
financing program is unlikely to drive substantial demand. Nevertheless, the existence of
available financing options within energy programs that can enable cash-flow-positive
projects can help some projects move forward, even without substantial subsidies.
Unsecured Lending
The objective of the Warehouse for Energy Efficiency Loans (WHEEL) program56 is to
provide low-cost, large-scale capital for residential energy efficiency loan programs
sponsored by states, local governments, and utilities. When fully implemented, WHEEL
will be the country’s first true secondary market for residential energy loans. WHEEL is
designed to create a loan program that can ultimately be sustained without additional,
ongoing sponsor subsidy.
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86 July 2016
WHEEL funds unsecured residential energy efficiency loans originated in participating
programs. This addresses an important barrier, as many homeowners are unwilling to
accept a lien on their property for energy borrowing. Experience to date suggests that
unsecured energy loans have a very similar repayment record to secured loans. The loans
are aggregated into diversified pools, secured by LLR funds provided by sponsoring
programs, and will be used to support the issuance of rated bonds sold to institutional
investors. Proceeds from these bonds allow WHEEL to continue purchasing eligible loans
(“warehousing”) from state and local programs for future rounds of bond issuance.
Kentucky and Pennsylvania and the Greater Cincinnati Energy Alliance currently have
loans in the WHEEL portfolio. Florida has signed a Letter of Intent to join (and has funding
committed via the Southeast Energy Efficiency Alliance and elsewhere) and the NY Green
Bank is in the diligence phase but has announced that this is expected to be one of their
deals in early 2016. Other states are in the final stages of approval or fund commitment.
Although the long-term objective is to provide very competitive interest rates for these
loans, at this time rates are in the range of 10 percent.
PowerSaver Loans
PowerSaver loans, which are backed by the Federal Housing Administration (FHA), offer
single-family homeowners up to $25,000 to make energy efficiency improvements. The
PowerSaver program is currently in a pilot phase, and is available in specific target
markets through participating lenders.57
Although backed by the FHA, PowerSaver loans also include significant investment from
private lenders. FHA mortgage insurance covers up to 90 percent of the loan amount in
the event of default. Lenders will retain the remaining risk on each loan, incentivizing
responsible underwriting and lending standards. FHA provides streamlined insurance
claims payment procedures on PowerSaver loans. In addition, lenders may be eligible for
incentive grant payments from FHA to enhance benefits to borrowers, such as lowering
interest rates.
PowerSaver loans are designed to meet a need in the marketplace for borrowers who
have the ability and motivation to take on modest additional debt to realize the savings
over time from a home energy improvement. PowerSaver loans are available only to
borrowers with good credit, manageable overall debt, and at least some equity in their
home (maximum 100 percent combined loan to value).
3. Energy Efficiency National Strategies and Best Practices
87 July 2016
Notes
1 Consortium for Energy Efficiency, "Annual Industry Report - 2014 State of the Efficiency Program
Industry.” 2015. http://library.cee1.org/content/2014-state-efficiency-program-industry
2 American Council for an Energy-Efficient Economy (ACEEE), The 2015 State Energy Efficiency Scorecard,
October 2015. http://aceee.org/sites/default/files/publications/researchreports/u1509.pdf.
3 Maryland was the “Most improved” state in the 2015 ACEEE State Scorecard, largely because the state’s
Public Service Commission requires utilities to ramp up energy savings targets by 0.2 percent each year to
reach the state’s 2 percent savings goal and the state’s early adoption of the 2015 International Energy
Conservation Code® (IECC) standards for commercial and residential buildings.
4 Institute for Electric Innovation. “State Electric Efficiency Regulatory Frameworks Report.” December
2014.
5 Data from 320 efficiency program administrators in both the United States and Canada; data for the
number of U.S. administrators were not given. Consortium for Energy Efficiency, Annual Industry Report -
2014 State of the Efficiency Program Industry. 2015, 6.
https://library.cee1.org/sites/default/files/library/12193/CEE_2014_Annual_Industry_Report.pdf.
6 Data from a subset of 320 efficiency program administrators in the United States and Canada. See
previous footnote. Consortium for Energy Efficiency, "Annual Industry Report - 2014 State of the
Efficiency Program Industry.” 2015.
https://library.cee1.org/sites/default/files/library/12193/CEE_2014_Annual_Industry_Report.pdf.
7 Nowak, Seth et al. American Council for an Energy-Efficient Economy (ACEEE).“Leaders of the Pack:
ACEEE’s Third National Review of Exemplary Energy Efficiency Programs (June 2013).
http://aceee.org/sites/default/files/publications/researchreports/u132.pdf.
8 A 2010 study by the Institute for Energy Efficiency (IEE) found that 93 percent of energy efficiency
programs were delivered by electric and gas utilities.
9 ACEEE. “Overview: Administrative Structures for Utility Customer Energy Efficiency Programs in the
United States.”
10 Northwest Energy Efficiency Alliance 2015-2019 Strategic Plan. http://neea.org/docs/default-
source/default-document-library/neea-2015-2019-strategic-plan-board-approved.pdf?sfvrsn=2
11 Bonneville Power Administration 2014 Fact Sheet.
https://www.bpa.gov/news/pubs/GeneralPublications/gi-BPA-Facts.pdf
12 Bonneville Power Administration. 2012 Update to the 2010-2014 Action Plan for Energy Efficiency.
March 2012.
13 Bonneville Power Administration. “Case for Conservation: Helping Public Power Utilities Make the
Business Case for Energy Efficiency.” 2014 ACEEE Summer Study on Energy Efficiency in Buildings.
14 ACEEE Fact Sheet: “How Does Energy Efficiency Create Jobs?” November, 2011.
15 Presentation on Efficiency Smart business services at NASEO Regional Meeting. April, 2015.
16 Shelter Report 2015 “Less Is More: Transforming Low-Income Communities through Energy Efficiency.”
17 http://weatherization.ornl.gov/pdfs/ORNL_CON-484.pdf, page vi.
18 Howat and Oppenheim, 1999, page 23.
19 Colorado PUC, Docket No. 07A-420E, Decision No. C08-0560, page 43.
20 Garber-Slaght, Robbin. Cold Climate Housing Research Center. Monitoring and Verification of
Sustainable Northern Shelter Building Performance Quinhagak Prototype House Final Report, December
2011.
21 Home Performance with ENERGY STAR.
Energy Efficiency Program Evaluation and Financing Needs Assessment
88 July 2016
22 Assisted Home Performance with ENERGY STAR is a variation of the program that increases subsidies
for income eligible households – 80% of AMI in the case of NYSERDA and qualifies for up to $5000 per
project compared to $3000 for higher income households.
23 The AHFC offers a Home Energy Loan to compliment the Home Energy Rebate program. The rebate is
applied against the remaining balance of the loan.
24 Home Performance with ENERGY STAR Sponsor Guide and Reference Manual (v1.5), U.S. Department of
Energy Building Technologies Office, March 2014.
25 2014 ACEEE Summer Study on Energy Efficiency in Buildings. “Is It Time To Move Beyond the Whole
House Approach?”
26 2009 Residential Energy Consumption Survey (RECS)
27 National Renewable Energy Laboratory, “Assessing and Reducing Plug and Process Loads in Office
Buildings”, April 2013.
28 U.S. Energy Information Administration Annual Energy Outlook 2014, April 2014.
29 U.S. Department of Energy’s (DOE’s) Appliance and Equipment Standards Program (Standards Program)
covers more than 60 products, representing about 90 percent of home energy use, 60 percent of
commercial building energy use, and 30 percent of industrial energy use. (U.S. Department of Energy
Appliance & Equipment Standards Program Fact Sheet / February 2016)
30 Environmental Protection Agency, Energy Independence And Security Act of 2007 (EISA) Backgrounder,
April 2011.
31 The Northeast Energy Efficiency Partnerships (NEEP) Regional Lighting Strategy 2014-2015 Update
reported that 67 percent of annual electric energy savings for Massachusetts efficiency programs – 86
percent if behavioral programs are excluded.
32 Environmental Protection Agency, ENERGY STAR® Retail Products Platform 1-Pager, October 2014.
33 Lawrence Berkeley National Laboratory, “The Total Cost of Saving Electricity through Utility Customer-
Funded Energy Efficiency Programs: Estimates at the National, State, Sector and Program Level”. April
2015.
34 ENERGY STAR 2014 program facts and statistics based on U.S. DOE Better Buildings program and 2012
Commercial Buildings Energy Consumption Survey (CBECS) and Manufacturing Energy Consumption
Survey (MECS).
35 https://www.energystar.gov/buildings?s=mega
36 Analysis of Commercial Sector Energy Consumption from Buildings Energy Data Book: 3.1, March 2011.
37 California Best Practices Project Advisory Committee, National Energy Efficiency Best Practices Study,
Vol. 5, Non-Residential Large Comprehensive Incentive Programs Best Practices Report, December 2004.
38 ACEEE. States Stepping Forward: Best Practices for State-Led Energy Efficiency Programs. September
2010.
39 U.S. Department of Energy. Better Buildings Alliance – Winter 2015 Progress Update.
40 Massachusetts Energy Efficiency Advisory Council (EEAC). Retro-commissioning Best Practice Study.
June 2014.
41 ENERGY STAR Building Upgrade Manual. 2008 Edition.
42 Pacific Gas & Electric Retrocomissioning Program Fact Sheet. January 2014.
https://www.pge.com/includes/docs/pdfs/mybusiness/energysavingsrebates/analyzer/retrocommissioni
ng/fs_retrocommissioning.pdf
43 State and Local Energy Efficiency Action Network. (2014). Energy Efficiency Financing Program
Implementation Primer. Prepared by M. Zimring, Lawrence Berkeley National Laboratory.
44 https://www.veic.org/documents/default-
source/resources/reports/energy_efficiency_financing_report-merrian_fuller_2008.pdf, 6.
3. Energy Efficiency National Strategies and Best Practices
89 July 2016
45 Hayes, S., et al 2011. What Have We Learned from Energy Efficiency Financing Programs?
http://aceee.org/research-report/u115. Washington, D.C.: American Council for an Energy-Efficient
Economy.
46 https://www4.eere.energy.gov/seeaction/system/files/documents/onbill_financing.pdf
47 www.aceee.org/sites/default/files/publications/researchreports/e118.pdf
48 http://www.craft3.org/Borrow/energyore
49 http://energy.gov/eere/slsc/property-assessed-clean-energy-programs
50 California First is operating residential PACE in municipalities across California:
https://californiafirst.org/.
51 For the recent FHFA guidance on PACE, see
http://www.fhfa.gov/Media/PublicAffairs/Pages/Statement-of-the-Federal-Housing-Finance-Agency-on-
Certain-Super-Priority-Liens.aspx
52 https://www.efficiencyvermont.com/services/financing/homes
53 http://www.rd.usda.gov/files/UEP_EE_Final_PowerPoint.pdf
54 http://michigansaves.org/program/help
55 http://aceee.org/files/proceedings/2012/data/papers/0193-000155.pdf
56 https://wheel.renewfund.com/
57 For more information, see http://www.afcfirst.com/info/energy-lending-programs and Pennsylvania –
PowerSaver Loans http://www.keystonehelp.com/, and Efficiency Maine,
http://www.efficiencymaine.com/at-home/energy-loans/.
4. Alaska Looking Forward
As oil revenues have declined, Alaska is facing a transition in the energy economy and
more broadly with relationship to state funding for services and programs. As illustrated
in the preceding sections of this report, the State has a wide range of experience and
models to draw upon. These come from both Alaska’s significant historic activities
promoting and supporting efficiency and from other states and regions. To directly
address the needs of rural Alaska there are particular opportunities and challenges that
need to be considered and addressed.
The remainder of this report examines the opportunities for Alaska looking forward. We
start by providing a “snap-shot” gap analysis of current and past initiatives. While it is
beyond the scope of this report to conduct a full evaluation of the programs and their
efficacy, it is valuable to have a more general assessment. Our objective is not to provide
a definitive assessment or analysis of any single program or initiative. Neither is it to
evaluate any of the individual organizations that are providing services. Rather, by
stepping back, the gap analysis is intended to provide indicators of the areas where there
are opportunities and potential to enhance current activities, design and implement new
strategies, and target resources to cost effective investments.
Following the efficacy assessment, is an analysis of the current potential for statewide
building codes, with a particular focus on the Affordable Energy Strategy Study Area. This
is followed by a forecast of the need and opportunity for energy efficiency in rural Alaska,
with results presented by region and for the residential and non-residential sectors. The
energy, economic and demographic projections and forecasting presented in this section
have been completed for the Alaska Energy Authority by contractors under separate
contracts.
Efficacy of Past and Current Initiatives
In assessing the efficacy of both current and recent utility, state, and federal energy
efficiency and financing programs, the study team expanded the metrics beyond simple
cost effectiveness to include the continuity and level of program funding, process and
reporting performance, applicability, and energy savings potential in the AkAES regions.
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92 July 2016
It also looked at long-term market impacts, non-energy benefits in the communities, and
job creation.
We have examined 23 initiatives in the residential sector and 24 initiatives in the non-
residential sector, across 11 criteria. We provide each with a high, medium, or low score,
using quantitative and qualitative data, considered in the context of our team’s subjective
professional judgment.1
The efficacy analysis is not an evaluation of the individual programs or their performance.
That type of comprehensive evaluation can provide valuable insights, but it is beyond the
scope and resources of the current study. Instead, the efficacy analysis identifies macro-
level patterns, gaps, strengths, and weaknesses at the portfolio level of the initiatives that
are addressing energy burdens in rural Alaska. This rapid and high level “gap analysis”
informs the policy and strategy recommendations presented in Section 5 of this report.
Table 8 defines the criteria used for assessing efficacy.
Table 8. Definitions used in the efficacy analysis
Term Definition
Budget The cumulative total funding received by the program from all sources, from
2008 through 2015.
Percent of
buildings in
AkAES area
served
The estimated (or calculated) percent of structures within the AkAES
geographic area that have received assistance from the program.
Job creation A qualitative metric that evaluates the type of jobs the program creates and
whether they might occur in the AkAES geographic area.
Energy savings The cumulative estimated (or measured) energy savings achieved by the
program from 2008 through 2015.
Years of
activity The duration of program availability in the AKAES geographic area.
Steady funding A qualitative metric indicating whether the program has had steady funding
since its inception or since 2008, whichever is more recent.
Future funding A qualitative metric of current funding, and the method of funding for this
program.
Market
transformation
A qualitative metric to capture the extent to which the program has
additional effects beyond the program, if funded.
Benefit-cost The benefit-to-cost ratio for the program.
4. Alaska Looking Forward
93 July 2016
Term Definition
Process
coordination &
reporting
A qualitative metric indicating how well the program accommodates in-kind
matches and other financial interactions with other programs and funding
sources. This metric also contains the programs’ reporting and tracking of
performance results.
Non-energy
benefits
A qualitative metric indicating other effects by category the program might
have, beyond energy savings.
Regional cover A qualitative reference that indicates to what degree the areas of the AkAES
geographic area are served by the program.
The full table of efficacy assessment results for the residential and non-residential sectors
are presented in Appendix C.
Major observations from the efficacy assessment are:
• Of the efficacy criteria identified in Table 8, we gave the greatest number of high
and medium scores to the benefit-cost and non-energy benefits criteria. This
suggests, across most of the initiatives and programs, that investments in energy
efficiency in rural Alaska provide net economic benefit from the energy savings,
and also provide non-energy benefits for the community and for individual
households, businesses, and public entities. Given the high costs of energy in rural
Alaska and the challenging environmental conditions, this finding affirms the
proposition that energy efficiency investments and initiatives can be expected to
provide economic and other societal benefits.
• Some of the initiatives and programs reviewed require codes or minimum
performance standards for new construction. Other initiatives and programs,
such as participation in a rebate program, are market driven and optional. Because
they have an element of mandatory participation, the initiatives with
requirements offer a greater opportunity to reach a high percent of rural
population. The initiatives that depend on market demand or voluntary
participation are more likely to have at least some gaps in the coverage and ability
to reach and impact rural Alaska. For example, there are indications that not all
rural communities take advantage of weatherization or Power Cost Equalization,
to the fullest extent possible.
• The job creation benefits of energy efficiency investment are likely to be
associated with direct service programs and training. It is less likely that initiatives
based purely on a financing offer (such as low-interest loans), will experience the
uptake and concentration required to support job growth. Initiatives involving
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94 July 2016
consumer-purchased and installed items, such as efficient lighting or electronics,
or upstream incentives, will also have lower job creation impacts.
• The energy savings potential for rural communities is likely higher with direct
service programs. Financing—and possibly also audit and technical service
offerings—are important complementary strategies but might not be sufficient to
prompt energy project development and realized savings.
• The portfolio of efficiency services and initiatives in Alaska includes some that
have been operating for decades and some that have been initiated in the last
several years. Building upon and coordinating with other initiatives will help to
avoid undue duplication of services, market confusion, and unneeded complexity
or administrative burdens. At times new initiatives and services, may meet
specific, unique and unmet market needs, but there also appear to be
opportunities to coordinate, bundle and streamline multiple existing efforts rather
than launch new initiatives.
• Initiatives driven by availability of specific project funding are challenged to
sustain broad and deep market impacts over time. There are indeed
circumstances under which the significant funding of demonstration projects may
hinder market development, and lead consumers as decision makers to think that
if full project funding is not available, they should wait and hope that in the future
they can obtain grant funds rather than invest their own resources in efficiency.
• Lack of steady funding is a major issue for some programs and makes the delivery
of services on a sustained basis very difficult. Alaska’s significant investment of
state funds in Weatherization is an example where the decline from annual
budgets authorized in the 2008-2015 period (total of $323 million over 7 years) to
the current level ($7 million in fiscal year 2016) creates serious issues with regard
to sustained workforce training, engagement, impact and service levels.
• Many of the initiatives have potential to help transform energy markets in rural
Alaska. Consideration on how to balance the benefits that direct fuel assistance
provide against the possible disincentive for efficiency should continue to be
considered. In addition, grant funding has been a very important element
supporting energy infrastructure and projects in Alaska, but given current budget
challenges, the ongoing consideration of how to help transition away from grant
funds as the prime motivator for projects needs to be emphasized.
• Energy efficiency in rural Alaska appears to be broadly cost effective, but detailed
impact benefit cost analyses have not been completed in many instances. Greater
investment in regular and detailed evaluation processes and protocols can help to
enhance program delivery and capture the most cost effective savings.
4. Alaska Looking Forward
95 July 2016
• Process coordination and enhanced reporting across agencies and various levels
of activity from the Federal, State, Regional and municipal organizations provides
an opportunity to create better results and service delivery. Alaska has a large
and diverse set of actors who are active and have valuable experience and
expertise in the energy sector. This is a benefit, but underscores the potential
need and value of coordination and communication. Information sharing across
initiatives is underway, with the Alaska Energy Efficiency Partnership as an
example, and could provide a foundation or model for greater cooperation in
areas such as service delivery, evaluation, procurement, program design.
• Services that improve energy affordability in rural Alaska are likely to create
substantial non-energy benefits. These benefits are relate to health and safety,
building durability, reduced environmental impacts, reduced difficulties for
customers with bill payment and arrears, and improved comfort and productivity.
Coordinated research, testing, and documentation of these impacts will serve only
to enhance the benefits resulting from efficiency investments and value returned
to the economy.
Rural Alaska is part of the state economy, and statewide initiatives to enhance energy
efficiency performance or to build statewide capacity will likely help to improve the
situation in rural Alaska. At the same time, some services and initiatives solely or primarily
serving rural Alaska might continue to be necessary.
Building Energy Efficiency Codes and Standards in the Affordable Energy
Strategy Study Area
Currently there is no mandatory statewide energy efficiency building code in Alaska.
However, there is a Building Energy Efficiency Standard (BEES) developed and maintained
by the Alaska Housing Finance Corporation (AHFC). This standard is based on the 2012
International Energy Conservation Code and the 2010 ASHRAE 62.2 standard, along with
Alaska-specific amendments. In order to better understand the current state of energy
efficiency standards and the potential to save energy through mandatory codes and / or
stretch code incentives, as part of the AkAES efficiency assessment CCHRC conducted an
analysis of the number of homes that have met BEES since 2000 and additionally
conducted key-informant interviews with Regional Housing Authorities.
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96 July 2016
BEES Certified Homes in Alaska
There are two main avenues for certifying a home as meeting BEES: (1) the prescriptive
method, in which each component of the home meets a certain minimum, and (2) the
performance method, where homes are modeled using AkWarm energy rating software
and pass if they meet or exceed a minimum rating score. There are no data on the number
of homes that meet BEES prescriptively; however, anecdotally the vast majority of homes
are certified to BEES using the performance method. The standard is updated regularly
along with the IECC code cycle, however, the performance requirement has only changed
once: the minimum rating score was 4 Star Plus / 83 points until 2013, when it changed
to 5 Star / 89 points upon adoption of the 2012 IECC-based BEES.2 Although future funding
has been discontinued, there has also been an incentive program for homes meeting the
“stretch goals” of 5 Star Plus and the recently added 6 Star designation.
CCHRC conducted an analysis comparing the number of homes with BEES AkWarm ratings
to new construction numbers collected by the Alaska Department of Labor's annual
survey. Based on this analysis, while 36 percent of new construction in Alaska has been
certified to meet BEES, only approximately 22 percent of new construction in the
Affordable Energy Strategy area was certified as meeting BEES. Figure 15 shows the
regional breakdown of these numbers for the period from 2000 to 2015.
4. Alaska Looking Forward
97 July 2016
Figure 15. Percentage of new construction that is BEES-certified, by Census Area, from 2000 to 2015.3
Table 9 shows the actual numbers of BEES-certified homes for each region as compared
to the total new construction estimates from the Department of Labor for the period
between 2000 and 2015.
Table 9. BEES-certified homes, compared to new construction estimates, by Census area
Census Area BEES-certified
homes (ARIS)
New construction
estimate (DOL)
Aleutians East Borough 3 23
Aleutians West Census Area 5 145
Anchorage municipality 6,350 17,914
Bethel Census Area 83 510
Bristol Bay Borough 2 25
Denali Borough 224 5
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98 July 2016
Census Area BEES-certified
homes (ARIS)
New construction
estimate (DOL)
Dillingham Census Area 12 118
Fairbanks North Star Borough 2,234 6,913
Haines Borough 17 177
Hoonah-Angoon Census Area 8 62
Juneau City and Borough 364 1,645
Kenai Peninsula Borough 1,737 1,636
Ketchikan Gateway Borough 82 521
Kodiak Island Borough 276 622
Lake and Peninsula Borough 8 11
Matanuska-Susitna Borough 6,689 18,104
Nome Census Area 57 222
North Slope Borough 34 168
Northwest Arctic Borough 23 279
Petersburg Census Area 45 168
Prince of Wales-Hyder Census Area 30 202
Sitka City and Borough 79 668
Skagway Municipality 20 159
Southeast Fairbanks Census Area 144 5
Valdez-Cordova Census Area 85 310
Wade Hampton Census Area 4 203
Wrangell City and Borough 14 77
Yakutat City and Borough - 9
Yukon-Koyukuk Census Area 51 173
TOTAL 18,478 51,074
Affordable Energy Strategy Area 1,446 6,502
Railbelt Area 17,032 44,572
Regional Housing Authorities
Regional Housing Authorities are the primary builders of new homes in rural Alaskan
communities that are off the road system. All of the housing authorities interviewed
receive Supplemental Housing Development Grant funding from AHFC, and are thus
required to meet the latest version of BEES. Correspondence with seven of the regional
housing authorities found that many of them are exceeding the BEES standard, regularly
building 6 Star Homes, as can be seen in Table 10. A primary motivator for the majority
of these housing authorities is to reduce the long term energy costs for their occupants,
as fuel prices in these remote areas are typically significantly higher than those found in
urban Alaska.
4. Alaska Looking Forward
99 July 2016
Table 10. Summary of regional housing authority interviews
Housing
authority
name
Current building
standard
Super-efficient
pilots?
Would build to
stretch code?
Estimated % of
homes not built by
housing authority
Aleutians HA
6 Star, moving
towards Net Zero
Yes, Living
Building
Challenge If there is incentive 5-10%
NW Inupiat HA
5 Star Plus (would be
6 Star w/ HRV)
Yes, CCHRC home
in Buckland If there is incentive 5-10%
Bristol Bay HA
6 Star (all but 2
homes) No
Not sure; already
meeting 6 star < 5%
Native Village
of Kotzebue
BEES (>=R30 walls,
R38 ceiling/floors) No
Yes, if the incentive
were sufficient
Few units; mostly
native non-profit
TNHA (Arctic
Slope) 6 Star
Yes, partnership
with CCHRC
Maybe, but worried
about restricting
innovative solutions
Build 90% in villages,
3% in Barrow.
Copper Basin
Regional HA BEES, 2012 IRC No
Unsure; may
increase costs too
much <5 %
Bering Straits
Regional HA BEES, some 6 Star No
Would be
encouraged by
performance targets,
especially if there
were additional
funding
opportunities
Few, mostly teacher
housing and some
through Native Corp.
Non-profit
IRHA
BEES, most recent
homes reach 6 Star
Yes, built a
Fairbanks Pilot
and two 6 Star
cabins in Tetlin
Would need to carry
a significant financial
incentive
~ 10% in villages are
building their own
homes
Information from the interviews in some cases conflicted with the estimates of new
construction meeting BEES obtained from AHFC and the Alaska Department of Labor. For
example, the Aleutians Housing Authority appears to be building well above the BEES
standard, and estimates they are building 90 percent or more of the new housing units in
the region, and yet the data shows that only approximately 5 percent of the homes in the
Energy Efficiency Program Evaluation and Financing Needs Assessment
100 July 2016
Aleut ANCSA region have been certified to meet BEES. According to AHFC, this is likely
due to missing data in the ARIS database, as while housing authorities have always been
required to meet BEES by turning in compliance forms signed by the builder and the
energy rater, it is only in the past one to two years that they have been required to upload
their home energy ratings as proof of this.
CCHRC obtained records showing the total number of housing units built by four housing
authorities between 2000 and 2011 to better estimate the number of homes meeting the
BEES standard in these areas. A comparison of these construction numbers to the Alaska
Department of Labor's new construction estimates for the region showed that while the
numbers varied from region to region, approximately 63 percent of the estimated 1,050
homes built in these areas were constructed by the regional housing authorities. Table
11 shows the total number of new housing units built according to the Department of
Labor, the number of homes that were recorded as being BEES-certified, and the housing
authorities' construction numbers. While regional housing authorities are required to
meet BEES, there are significantly fewer BEES records than the numbers reported by
housing authorities, supporting AHFC's suggestion that BEES certifications have simply
been under-reported in these areas.
Table 11. Reported new construction from 2000 to 2011, for four rural regions
ANCSA region AK-DOL BEES Housing
authority
% units built by
regional housing
authorities
Arctic Slope Regional
Corporation 113 13 60 53%
Bering Straits Native
Corporation 181 55 77 43%
Bristol Bay Native
Corporation 137 11 83 61%
Calista 619 80 443 72%
Total 1,050 159 663 63%
Building Code Gaps
While the BEES standard covers the regional housing authorities, which are the primary
builders in the remote communities throughout the state, there are several notable gaps
where information is lacking about the relative energy efficiency of new construction.
The first and likely most important of these is the village and tribal housing entities that
are building using a combination of funding sources including BIA grants and others, but
4. Alaska Looking Forward
101 July 2016
that aren’t receiving supplemental housing development grants from AHFC. It is unknown
how many units these various groups are building, but according to some of the
interviewed regional housing authority staff and one interview with one of these entities,
they are not required to meet any kind of energy efficiency standard. That said, the
primary motivator for all those interviewed was to reduce the cost of operating buildings,
which is particularly expensive in these remote areas. The Native Village of Kotzebue, the
primary builder in their community, meets the BEES standard prescriptively despite not
being required to.
Another potential gap in new construction meeting an energy efficiency standard is
private builders. Interviews indicated that the private construction market varied
significantly from region to region. For example, there are very few private builders in
the Bristol Bay, Northwest Arctic, and Copper Basin regions, whereas in the hub
community of Barrow there are a variety of for-profit and non-profit organizations
building homes apart from the regional housing authority.
The final sector of new homes that haven’t been verified to meet an energy efficiency
standard are owner-built homes. Interviews indicated that while there generally are
homes built this way, it is a relatively small number.
Assuming the construction data from the four Regional Housing Authorities are
representative of the Affordable Energy Strategy region as a whole, these building code
gaps represent approximately 37 percent of the new construction in the area. Since 2000,
an average of 414 new homes have been built in this area each year. Thus, if the trend
continues, an estimated 153 non-BEES homes will be built every year. Assuming that
these homes are being built to the old BEES standard of 4 Star Plus, this represents missed
energy savings of approximately 2.7 billion BTUS annually, or the energy equivalent of
19,700 gallons of fuel oil per year. If the current homes are being built to a level that is
less efficient than 4 Star Plus, these annual savings would be correspondingly higher.
Stretch Code Potential
One significant finding from the interviews was that many housing authorities already
appear to be either meeting or aiming to meet the 6 Star standard, which is roughly
equivalent to a HERS score in the low 30s. These regional housing authorities currently
do not qualify for the $10,000 rebate from AHFC, so the motivations are primarily from
operating costs. The number of new homes in the study area that have received one of
these rebates is very low, with only 255 that are on record as being paid out. This is
Energy Efficiency Program Evaluation and Financing Needs Assessment
102 July 2016
approximately 8 percent of the total number of rebates paid throughout the state, which
means that rural areas have a lower participation rate, because approximately 19 percent
of new homes have been built in the area since the program’s inception.
The amount of energy saved by moving from a BEES home to a 6 Star home will vary.
Nevertheless, an analysis of all homes that have been certified to meet BEES in the
Affordable Energy Strategy area showed that on average, a 6 Star home will use
approximately 31 percent less energy than a home that meets the BEES minimum
standard. Using the median size of new construction in the area, this 31 percent
reduction equates to approximately 36 million Btus annually, the energy equivalent of
267 gallons of fuel oil. Given these savings estimates, increasing by 30 percent the
proportion of new homes that meet 6 Star instead of the current BEES minimum would
save 4.5 billion BTUs annually, the equivalent of 33,160 gallons of fuel oil.
Both building costs and heating fuel prices are much higher in rural areas of the state.
The additional costs and the estimated fuel savings from building to 6 Star instead of the
current BEES standard were modeled in order to determine the cost-effectiveness of
building to this higher standard. The baseline home was modeled using the average
component size of homes in Western and Northern Alaska and the efficiency levels from
a sample of 10 homes with AkWarm energy ratings near the BEES minimum requirement
of 89 points. A sample of homes in these same regions that had met 6 Star was then
analyzed to determine which types of upgrades would be reasonably familiar to
organizations building in the area. The energy cost savings for these models were
estimated using AkWarm energy modeling software, with Nome as the baseline for fuel
prices and climate. The additional up-front labor and material costs required to
implement the upgrades necessary to meet 6 Star were estimated for urban areas of
Alaska using a combination of RS Means and local contractor estimates. These costs were
then adjusted using factors for Nome from the annual construction cost survey conducted
by AHFC.5
The results of the economic and energy modeling showed that overall, moving from the
BEES minimum requirements to 6 Star is cost effective. The additional incremental cost
of going to 6 Star is estimated to be $10,120, with a modeled annual energy savings of
approximately $890 at current fuel prices. These cost savings are a result of annual fuel
savings of 192 gallons of heating oil and 240 kWh of electricity (mostly due to decreased
use of mechanical equipment). Using the DOE real discount rate and fuel escalation
factors, the calculated savings-to-investment ratio over the 30 year life of the upgrades is
4. Alaska Looking Forward
103 July 2016
2.1, meaning the net present value of the savings are more than double the initial capital
costs.
Given the favorable economics of moving from the BEES minimum standard to the 6 Star
stretch goal, it should be supported. The fact that many of the regional housing
authorities are already meeting this high standard suggests that it is achievable even with
the high costs of construction in rural Alaska. We recommend that the 6 Star stretch goal
be supported via a combination of: additional outreach and publicity efforts, providing
free technical assistance to builders looking to reach 6 Star, and by reinstating some
amount of financial incentive.
Assuming that the construction data from the four Regional Housing Authorities in Table
11 is representative of the Affordable Energy Strategy Area as a whole, 63 percent of new
construction in this area is already meeting the BEES minimum standard. The energy
efficiency of the other 37 percent of new construction is unknown; while reducing energy
costs was a strong reason for all of the regional housing authorities surveyed to build
efficient homes, the high cost of construction in these areas may lead other builders that
are not required to meet BEES to build less efficient housing. Statewide building codes
would ensure that all new construction would meet minimum energy efficiency
requirements, reducing the energy cost burden to future occupants. The BEES standard
is currently administered efficiently, with methods in place to reduce the reporting costs
in rural areas; the flexibility of the standard also drives innovation, with several of the
Regional Housing Authorities using the free AkWarm software as a design tool to help
reduce the cost of construction while maintaining energy savings.
While BEES provides a floor for energy efficiency, building to the even more efficient 6
Star stretch goal is also cost effective. This goal is already being pursued by many Regional
Housing Authorities, and it should be supported to help continue to cost-effectively
increase the efficiency of new construction in the study area and throughout the state.
Additional publicity efforts might help to encourage other builders to attempt to meet
the goal, providing technical assistance to builders to help them meet the goal more cost-
effectively. Reinstating some amount of financial incentive for buildings that have been
certified as 6 Star might also be necessary.
Energy Efficiency Program Evaluation and Financing Needs Assessment
104 July 2016
Forecast
The community energy consumption and project evaluation model developed by AEA to
support the Alaska Affordable Energy Strategy study has characterized the residential and
non-residential opportunity for energy efficiency in the AkAES area. Although the AEA
forecast model was developed independently, the VEIC / CCHRC Team provided
supporting review during its development and received community-level summary data
for this assessment.
The AEA community energy model provides the current energy use (fuel oil, electricity,
and total heating fuels), remaining building stock to be served, estimated first-year
savings, and a 15-year projection of the net present value of the forecasted costs and
benefits to the communities—for all cost-effective energy efficiency improvements.
Additional PCE program data allowed estimates of total residential electric use by
community, and costs based on the average residential electric rate and effective electric
rate with PCE.
The community energy forecast model incorporates data from various databases,
including ARIS, reported weatherization and new construction activity through AHFC
programs, AEA Village Energy Efficiency Program (VEEP), ANTHC water and wastewater
projects, and individual reported commercial and residential projects.
These data can be gauged in the context of Alaska’s consumption and expenditures for
energy, as shown in Figure 16.
4. Alaska Looking Forward
105 July 2016
Figure 16. Energy Information Administration energy and expenditure data in Alaska, by energy sector.
Although energy consumption across Alaska is dominated by the industrial and
transportation sectors,6 commercial and residential energy consumption and
expenditures have significant direct impacts on rural Alaskan communities and
households. Because jet fuel and oil extraction accounts for a significant portion of
energy use in Alaska, previous policy recommendations have suggested that Alaska's
efficiency goals exclude these end-uses.7 With this assumption, each of the four sectors
accounted for approximately one-quarter of the remaining energy use in 2010, as can be
seen in Table 12.
Table 12. Modified net statewide energy consumption, by sector (TBtu)
Energy Use Sector Energy Consumption
(TBtu)
Residential 75.3
Commercial 85.4
Industrial 72.8
Transportation 83.4
Total Energy Consumption 316.9
Data applied to the AEA forecast model show that the AkAES regions is estimated to have
total annual expenditures of $843 million for electricity and fuel oil in 2017. Expenditures
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
Expenditures (Million $)0
50
100
150
200
250
300
350
Energy (TBtu)
Energy Efficiency Program Evaluation and Financing Needs Assessment
106 July 2016
in the residential and non-residential sectors are split almost equally, with annual
expenditures of $397 million and $446 million respectively. The breakdown of these
sector expenditures is presented as Figure 17.
Figure 17. AkAES regional annual expenditures on electricity and heat.
Residential Energy Efficiency Forecasted Opportunity
The regional distribution of the 41,000 residential homes that have not participated in
energy efficiency services between 2008 and 2014 are geographically concentrated, with
Southeast Alaska representing half the total remaining potential households, and only
one other region, Lower Yukon-Kuskokwim, accounting for more than a 10 percent share
of remaining potential, as shown in Figure 18.
4. Alaska Looking Forward
107 July 2016
Figure 18. Remaining residential efficiency opportunity in the AkAES area.
Although representing a smaller share of the total remaining potential, other regions—
Bristol Bay, Northwest Arctic, and Yukon-Koyukuk / Upper Tanana—have approximately
40 percent of their households remaining to be weatherized.
Table 13 offers the forecasted costs and benefits in residential buildings over a 15-year
period for the AkAES regions. The costs and savings for individual communities are based
on reported data of homes that have historically participated in AHFC Weatherization and
Home Energy Retrofit programs between 2008 and 2014. These residences represent a
high potential for energy efficiency savings, on the order of 24 percent average annual
savings. Consistent with the distribution of remaining residential units that haven’t yet
been served, the majority of the potential energy savings are concentrated in Southeast
(Figure 19). However, the higher cost of fuel oil and electricity in other regions8 outside
the Southeast offer a disproportionately higher share of net benefits (70 percent) from
energy efficiency.
1,500
2,500 1,600
2,800 2,200
5,200
1,900 1,300
20,400
1,600
0
5,000
10,000
15,000
20,000
25,000
30,000
Aleutians Bering
Straits
Bristol
Bay
Copper
River
Chugach
Kodiak Lower
Yukon-
Kuskokwim
North
Slope
Northwest
Arctic
Southeast YK / Upper
Tanana
Houses Remaining to Retrofit Houses Retrofit Retrofit Opportunity
Energy Efficiency Program Evaluation and Financing Needs Assessment
108 July 2016
Table 13. Potential for residential energy savings and benefits, by Alaska region
Region NPV
benefit NPV cost NPV net
benefit
Bene-
fit –
cost
ratio
Heating
oil price
(per
gallon)
Electricity
rate
(non-PCE)
Aleutians $21,879,130 $19,001,089 $2,878,041 1.38 : 1 $4.81 $0.63
Bering Straits $56,167,870 $41,110,927 $15,056,945 1.81 : 1 $6.06 $0.58
Bristol Bay $25,085,433 $16,250,931 $8,834,502 1.55 : 1 $6.20 $0.71
Copper River / Chugach $69,820,875 $29,293,108 $40,527,766 2.61 : 1 $4.91 $0.71
Kodiak $38,141,675 $24,343,109 $13,798,566 1.40 : 1 $5.15 $0.54
Lower Yukon-
Kuskokwim $104,897,233 $71,516,480 $33,380,756 1.72 : 1 $6.42 $0.72
North Slope $31,630,796 $22,338,423 $9,292,373 1.42 : 1 $0.22 $0.14
Northwest Arctic $36,072,225 $21,032,632 $15,039,592 2.20 : 1 $7.74 $0.68
Southeast $254,357,484 $184,109,119 $70,248,365 1.32 : 1 $4.20 $0.50
Yukon-Koyukuk / Upper
Tanana $42,749,206 $20,734,520 $22,014,689 1.99 : 1 $5.76 $0.73
AkAES $680,801,927 $449,730,338 $231,071,595 1.74 : 1 $5.15 $0.59
The AkAES region is estimated to have total annual expenditures of $272 million for
heating fuels, and $125 million in electricity in residential households. Although other fuel
(for example, wood and kerosene) costs are not broken out separately in these estimates,
they represent 20 percent of the total heating fuels used in the AkAES region and offer
targeted opportunities for efficiency for different heating sources. The AkAES area has a
forecasted net benefit from energy efficiency savings in the residential sector of $231
million over a 15-year period.
Non-Residential Energy Efficiency Forecasted Opportunity
Non-residential buildings data in the AEA community forecast model represent a
combination of sources, including documentation from building benchmarking, regional
planning, ARIS, and direct reporting from state agencies.
Non-residential buildings in AkAES communities account for one-fifth—approximately
10,000—of the total residential and non-residential building stock. However, the
significantly higher energy intensity of non-residential buildings and larger square footage
results in an outsized opportunity for reducing heating fuels and electricity consumption
in AkAES communities. Evaluation of energy audits for commercial efficiency projects on
public buildings in rural Alaska and of completed projects shows rapid paybacks are
possible, averaging five years for investments in energy efficiency (see Figure 3).
4. Alaska Looking Forward
109 July 2016
Additionally, the forecast model data identify a specific opportunity for efficiency in water
and wastewater systems in the AkAES regions. The total heat and electricity consumption
of approximately $16 million in AkAES communities for water and wastewater services
creates an opportunity for targeted efficiency for equipment replacement—and for
improved operating efficiency of the existing water and wastewater systems, as shown in
Table 14.
Table 14. Benefits, costs, and scope of energy savings opportunities for non-residential buildings and
water and wastewater facilities in AkAES regions
Region NPV
benefit NPV cost NPV net
benefit
Bene-
fit-
cost
ratio
Heating
oil price
(per
gallon)
Electricity
Rate $
(per kWh)
Number
of
buildings
Aleutians $54,050,171 $28,924,901 $25,125,271 1.74 : 1 $4.81 $0.49 541
Bering Straits $71,570,227 $32,016,624 $39,553,603 2.23 : 1 $6.06 $0.50 587
Bristol Bay $68,937,126 $26,357,863 $42,579,262 2.67 : 1 $6.20 $0.70 841
Copper River
/ Chugach $62,118,444 $23,661,129 $38,457,315 2.58 : 1 $4.86 $0.47 613
Kodiak $41,741,914 $22,352,444 $19,389,469 1.70 : 1 $5.15 $0.31 540
Lower
Yukon-
Kuskokwim
$168,977,364 $72,428,319 $96,549,045 2.18 : 1 $6.42 $0.55 1,523
North Slope $27,586,736 $41,527,644 $13,940,908 0.34 : 1 $0.22 $0.15 670
Northwest
Arctic $99,873,900 $35,070,998 $64,802,902 3.08 : 1 $7.74 $0.59 691
Southeast $247,647,518 $148,931,655 $98,715,864 1.54 : 1 $4.20 $0.29 2,994
Yukon-
Koyukuk /
Upper
Tanana
$67,131,278 $26,611,524 $40,519,753 2.58 : 1 $5.76 $0.65 896
AkAES Area $882,047,943 $416,355,457 $465,692,486 2.26 : 1 $5.14 $0.47 9,896
The AkAES non-residential building stock is estimated to have total annual expenditures
of $265 million for heating and $181 million in electricity, with consumption values of 52
million gallons of fuel oil and 596 million kilowatt-hours. The AkAES area has a forecasted
net benefit from all cost-effective energy efficiency savings of $466 million across a 15-
year period. These energy savings involve a reduction of more than 13 million gallons of
fuel oil and 155 million kWh annually. Total residential costs and benefits are shown in
Table 15.
Energy Efficiency Program Evaluation and Financing Needs Assessment
110 July 2016
The resulting average cost of fuel and electricity saved in the energy efficiency forecast
model is equivalent to $2.75 per gallon of fuel oil for residential weatherization and $2.35
per gallon of fuel oil and $0.14 per kWh for non-residential efficiency improvements. The
levelized cost of efficiency is significantly lower than the average cost of heating ($4.52
per gallon fuel oil) and electricity ($0.27 per kWh).
Table 15. Total residential and nonresidential benefits, costs, and scope of energy savings opportunities
in AkAES regions
Benefit or cost Units Non-
residential Residential Total
NPV benefit 2017 $ $882,047,943 $680,801,927 $1,562,849,870
NPV cost 2017 $ $416,355,457 $449,730,338 $866,085,795
NPV net benefit 2017 $ $465,692,486 $231,071,595 $696,764,081
Benefit – cost ratio 2.12 : 1 1.51 : 1 1.80 : 1
Heating oil saved Gallons / year 12,060,240 14,021,062 26,081,301
Electricity saved kWh / year 144,523,827 144,523,827
Heating fuels saved Mmbtu / year 1,670,343 1,941,917 3,612,260
Electricity saved Mmbtu / year 493,115 493,115
Heating fuels saved $ / year $59,943,689 $58,289,646 $118,233,335
Electricity saved $ / year $42,485,618 $42,485,618
Measure lifetime Years 9 12 10
Cost of fuel saved $ / gallon $2.35 $2.75 $2.51
Cost of electricity saved $ / gallon $0.14 $0.14
In addition, the study team has evaluated the effect of workforce development and
economic development as further benefits of energy efficiency implementation. The
Institute of Social and Economic Research has estimated that 7 direct retrofit jobs and 5
indirect jobs are created for every $1 million of public spending, and that 11 jobs are
generated by every $1 million dollars of annual fuel savings. Based on the June 2015
estimate of public spending, the study team estimates 2,381 direct jobs have been
created. Using 2012 savings, at least 250 induced jobs are estimated to have been created
because of increases in available income from reduced energy costs.
Notes
1 The Efficacy Assessment Spreadsheets are contained in Appendix C.
2 The performance standard of 89 points was determined by modeling the 2012 BEES prescriptive
requirements for each of the climate zones found in Alaska.
3 See following table and notes that address the factors accounting for the fact that there are more BEES
records than estimated homes built – resulting in BEES-certified percentages exceeding 100%.
4. Alaska Looking Forward
111 July 2016
4 Several factors could account for the fact that there are more BEES records than estimated homes built.
The Alaska Department of Labor annually surveys all communities, including those outside areas with
property assessment records. This survey might miss homes being built outside well-established
communities. Further, although there are automated and human checks built into the accounting system
for BEES records, there is still the possibility that some records were counted more than once.
5 https://www.ahfc.us/files/7714/2793/1526/constcosts_2015final.pdf
6 Neil McMahon noted that industrial energy is primarily based on the North Slope and that transport
energy is heavily impacted by international air travel.
7 Davies, John, and Kathryn Dodge. Energy Efficiency Policy Recommendations for Alaska. Fairbanks:
CCHRC for AEA. 2012.
http://www.akenergyauthority.org/Content/Efficiency/Efficiency/Documents/EfficiencyPolicyRecommen
dations2012.pdf.
8 Subsidized fuel oil costs and electricity in the North Slope region dramatically reduce the participant
benefits and net benefits for energy efficiency. However, societal benefits – recognizing the fuel subsidies
as a transfer payment – would more closely reflect those of other regions in rural Alaska.
5. Policy and Strategy
Recommendations
This section contains recommendations on realistic and achievable policy and strategies
that will help Alaska capture cost-effective energy efficiency savings in rural communities.
The outcomes will be improved energy affordability, and more resilient and healthy local
rural economies. Investments in cost-effective energy efficiency will save money for
households, public facilities, and private commercial facilities, and that the retained
dollars will provide benefits to the local communities.
The recommendations consider the difficult situation that Alaska’s Legislature and public
officials face in addressing the reductions in State funds due to declining oil revenues. In
the face of this challenge, the benefits of prudent investments in energy efficiency, and
in continued state services to serve the priority needs of rural Alaskan communities
should not be overlooked. Alaska’s leaders have the possibility of turning the current
situation into one where the long-term economic performance of the State’s energy
economy will be improved by strategically directed investments and initiatives. With
ongoing oversight, clear policy directions, and coordination among the many actors and
organizations, there is real potential to benefit all.
A portfolio of policy, supporting regulations, investment, and implementation services is
the best approach to unlocking the economic potential of efficiency for Alaska. This is
consistent with experience in other jurisdictions. The sustained capture and promotion
of energy efficiency is not the result of a single approach or single policy. It is also not the
result of a static approach, but requires consistent evaluation and re-evaluation on
progress and gaps that might arise among priority objectives, milestones, and
implementation. The activities occur across a broad range of market actors and in various
segments of the economy. No single agency or entity will deliver the goods.
The policy and strategy recommendations presented in this section provide a foundation
upon which the state can build, taking advantage of past activity, and also setting the
stage for deeper and more consistent future energy efficiency savings. The
recommended portfolio, summarized in Table 16, offers a mix of direct state funding,
indirect state funding, and requirements and mandates.
Energy Efficiency Program Evaluation and Financing Needs Assessment
114 July 2016
Table 16. Rural Alaska energy affordability energy efficiency portfolio components
Direct state funding Indirect state funding Requirements
Sustained Weatherization
Program support
Continue with technical
services, training, and
research
Establish an energy efficiency
resource standard (EERS)
Market-based programs
and incentives
Join and/or create
regional coalition(s)
Expand building codes, support and
enforcement statewide; identify and
implement “stretch” code
Upstream product
initiatives and incentives
Participate in and adopt minimum
product standards
Support energy service
contracts via public and
private channels
Create targets or requirements for
investment of a portion of assistance,
endowment or public benefit
corporate portfolios to support
energy efficiency
The annual funding needs to support these recommendations are estimated to be $61
million as illustrated in Table 17.
Table 17. Study area funding recommendations
Direct state funding Annual study area
budget
Weatherization services reaching 80% or more of all eligible rural
Alaskan Households within the next 10 years $36 million
Market-based direct incentives, services, upstream incentives, and
support for performance contracting $17 million
Study area direct funding subtotal $53 million
Indirect state funding
Research, technical support, and training $6 million
Regional collaboration (in state) and cooperation with out-of-state
regional networks or alliances $1 million
Study area indirect funding subtotal $7 million
Requirements funding
EERS, code enhancements, product and procurement standards $ 1 million
Total recommended study area annual funding $61 million
The net benefits of the proposed spending are estimated to be $40 million per year.
Three-fourths (75 percent) of State expenditures presented in Table 17 are direct
5. Policy and Strategy Recommendations
115 July 2016
measure costs and incentives. The remaining 25 percent are non-measure costs, such as
technical assistance and program delivery costs. The State’s total expenditures of $61
million leverage additional participant investments of $24 million in installed efficiency
measures, resulting in total annual expenditures of $69 million on measure costs and $16
million on non-measure costs, as presented in Table 18.
Table 18. Benefit-cost estimates for recommended portfolio
Annual costs
Program: Measure costs (direct incentives) $45 million
Program: Non-measure costs (non-incentive costs, market services,
support, administration) $16 million
Participant: Leveraged customer investments in measures $24 million
Total annual costs $85 million
Annual benefits
Residential buildings $54 million
Non-residential buildings $71 million
Total annual benefits $125 million
Total annual study area energy expenditures $397 million
Savings as a share of annual energy expenditures 31%
Net benefits
Estimated net benefits (total annual benefits minus annual costs) $40 million
Capturing 30 percent or more savings from energy efficiency is an aggressive, yet
attainable, objective. It will require sustained funding, organizational development,
training, commitment, and information sharing for consumers. As detailed throughout
this report, Alaska has valuable experience and resources to draw upon across all of these
segments.
Alaska is facing significant challenges with declining oil revenues and pressure on state
budgets. This study identifies an economic investment opportunity for the State to
improve energy efficiency in rural Alaska and to create significant net economic benefits.
These benefits will help alleviate, rather than exacerbate, the current economic
challenges. The Legislature and other policy / decision makers will need to determine the
most appropriate means for funding the recommended expenditures. Table 19 shows
how investment of this magnitude might be structured and sustained.
Energy Efficiency Program Evaluation and Financing Needs Assessment
116 July 2016
Table 19. Illustrative funding profile
Source Approximate annual
funding
Gross receipts tax / system benefits charge for electric and
fossil fuel. Based on 4% of annual expenditures $16 million
A portion of annual fuel assistance expenditures allocated to
support energy efficiency investments $20 million
Coordinated allocation of U.S. Department of Housing and
Urban Development, USDA, BIA, other federal and foundation
/ private support
$15 million
Long-term (10-year) state appropriation / authorization,
allocation from permanent fund, pipeline gas surcharge, etc. $10 million
Total $61 million
The remainder of this section offers further detail on elements of the recommended
portfolio.
Direct State Funding
Weatherization Program Services
These are the most direct and impactful means for improving energy affordability for rural
Alaska. There is a history of direct state investment in Weatherization, and we strongly
recommend that future strategies include sustained Weatherization Program support, as
a cornerstone of the portfolio. Sustained funding will help to build and maintain
workforce skills, and will contribute to more healthful and durable buildings. As in the
past, Alaska will need to rely primarily on investment of State funds, with federal funds
providing supplemental support.
We recommend the Alaska Affordable Energy Strategy contain a target of supporting
comprehensive Weatherization services to all eligible households in rural Alaska over the
next ten years. This will require providing service to between 4,000 and 5,000 households
per year. This is a significant target, and one that will not be easily achieved or
maintained; but with consistent funding and policy support it is attainable. Of the
strategies recommended in this report, it is perhaps the most central for improving
energy affordability for rural Alaska.
Market-Based Statewide Incentive Programs and Services
These services are a second pillar in the portfolio of direct services. Not all rural Alaskan
households qualify for Weatherization Program services. In addition, public and private
5. Policy and Strategy Recommendations
117 July 2016
non-residential facilities represent important opportunities for cost-effective energy
efficiency savings in rural communities. Market-based incentive programs are designed
and implemented to identify and reduce barriers to improved energy efficiency. At times,
direct incentives are the most suitable strategy for catalyzing investments in cost-
effective efficiency. In other cases, consumer information, technical advice from a trusted
third-party advisor, or a “concierge” type service that helps consumers pull together
available incentives will help consumers understand and compare investment
opportunities.
Alaska has prior experience with market-based incentive programs and services (the
Home Energy Rebate Program and the New Home Rebate Program, for example).
Programs that address the opportunity and needs of the non-residential sector can be
designed on the template of small commercial direct install, equipment replacement, and
retrofit initiatives in other markets. Ideally, to take advantage of scale, and to broaden
market awareness and uptake, market-based services for rural Alaska will not be separate
from initiatives that support energy efficiency statewide. When necessary, there might
be a need for supplemental incentives or services to overcome barriers that are particular
to rural Alaska. These can be created, tested, evolved, and retired over time, in response
to the particular circumstances regarding barriers to energy efficiency in rural Alaska. We
recommend the market-based incentive programs and services for rural Alaska be part of
a larger, coordinated statewide effort, and that the savings and program expenditures in
rural Alaska be counted toward contributions to broad statewide savings targets and
performance metrics.
Upstream Product Initiatives and Incentives
Initiatives and incentives to the efficient-product supply channel complement the direct
market services described above. Direct services interact at the retail level with
consumers and provide energy efficiency services and products to households and non-
residential consumers. But “upstream” initiatives and incentives positively influence the
availability, visibility, marketing, and consumer support for high-efficiency products and
technologies at the distribution and wholesale levels of the market. This is done by
working with contractors, distributors, and manufacturers to offer them direct incentives,
for example, to increase the share of efficient products and services above baseline.
Upstream initiatives and incentives are suitable for lighting, HVAC, appliances, and
electronics.
Energy Efficiency Program Evaluation and Financing Needs Assessment
118 July 2016
Similarly to the direct services, to capture scale and administrative efficiency, and to build
market acceptance and awareness, upstream initiatives serving rural Alaska should be
coordinated and implemented as part of broad statewide or regional efforts. Once again,
a particular incentive or support service might need to be tailored or increased to
overcome the logistic and supply chain challenges common in rural Alaska.
Support Expanded Use and Models for Energy Services Contracts
The State should also create a formal initiative to encourage public- and private-sector
actors who want to offer energy service contract services for rural Alaska. Financing is
often a key component of such services. In the best situations, comprehensive energy
efficiency retrofits and upgrades provide savings that more than offset the required
monthly financing costs, making the project “cash-flow positive” from the start. The work
does not stop only with projects that are cash-flow positive, however. There are many
instances in which a prudent investment, with manageable financing and cash flow
profiles, provides very positive lifetime financial returns.
The initiative’s objectives, from the State’s perspective, is to help well-qualified private
and public firms to deliver appropriate (durable, technically sound) cost effective
solutions to residential and non-residential consumers. At times, these providers will rely
on incentives or support services to help make a project viable, or to help “sell” a project.
The Energy Efficiency National Strategies and Best Practices section of this report
discusses the particular requirements and applicability of a PPESCO in Alaska. There are
many possible pathways for the development of public or private energy service
companies in Alaska. Rural Alaska faces logistical challenges and projects that are
typically smaller and potentially more risky than those the private sector will take on, and
therefore there may be a need for incentives to reduce risk or enhance the returns.
Alternatively, the PPESCO model can provide services to improve energy affordability and
a lower rate of return or a higher risk threshold. Organizations with strong potential to
help initiate, invest in, or operate ESCO services—either as public-purpose or as for-profit
entities—are fuel distributors in Alaska, and the native corporations.
.
Indirect State Funding
Technical Services, Training, and Research
Alaskans have been addressing the challenges of creating and maintaining durable,
efficient, affordable, and environmentally sustainable buildings and facilities for
generations. Much knowledge of and experience with practical applications and
adaptation of what does and doesn’t work are prevalent throughout the state. Reliability,
5. Policy and Strategy Recommendations
119 July 2016
durability, adaptability, simplicity and proven solutions are highly valued in environments
where access and logistics are very expensive and limited for much of the year.
Over the years, Alaskans have developed strong applied research, training, and
supporting institutions that serve energy and other sectors such as health care, public
safety, water and wastewater, and education. Making the best use of existing applied
knowledge and combining this with new technologies, communications, and sensible
approaches provide rich opportunities for advancing solutions that benefit rural Alaska.
In many cases, there is potential for the export of knowledge, services, and business
models. For example, today’s evolution of the electric grid and networked distributed
energy resources are leading many jurisdictions toward higher interest and investment in
micro-grids, storage, combined heat and power, and distributed renewable generation.
These are all components of a total energy portfolio for which Alaska is in a good
competitive position to create solutions and test new approaches.
Building and maintaining the workforce to provide integrated energy services in rural
Alaska require ongoing commitment to research and training. Funding for the technical
services, training, and research elements of the portfolio can be leveraged and
coordinated with other state funds directed to services in other sectors. In this sense,
funding for research and development through academic institutions, with federal funds,
and with private support from foundations, and in some cases with private investment,
are all possible.
Regional Coalition
Some important elements of market development remain, in which Alaska can benefit
from collaboration with other entities. Without specifying any particular partnership or
organization, we provide examples of the topic areas in which collaboration is expected
to enhance services and lead to the more efficient capture of savings opportunities. If the
available opportunities for a partnership or coalition membership do not, upon further
investigation, prove to be suitable or viable for Alaska’s needs, then we recommend that
Alaska strongly consider taking the lead in forming a partnership or coalition that would
directly match the needs of northern climates and the need for services in remote
communities.
Technical reference manuals, evaluation and monitoring protocols, and coordinated
procurement are three areas in which collaboration has helped programs elsewhere
attain greater efficiencies over what individual efforts can attain. Technical reference
Energy Efficiency Program Evaluation and Financing Needs Assessment
120 July 2016
manuals (TRMs) take into account particular market, environmental, and technical
characteristics to document the typical savings for measures. TRMs usually offer data on
measure lifetimes, associated non-fuel savings, measure incremental costs, the peak
savings for electric measures, estimates for operation and maintenance savings, and
information on non-energy benefits. Rather than have each implementing organization
research, document, and maintain this valuable information, there is significant benefit
in having coordinated TRM development, review, and updates.
Regional partnerships and collaborations also help members coordinate and learn about
monitoring and evaluation protocols and research planning. Items such as methods for
cost-benefit testing and accounting, and evaluation and cost effectiveness testing
methods are examples. Partnerships have also coordinated procurement standards (for
example, for state procurement) and activities such as upstream incentive program
design and procurement.
Requirements and Codes
Establish a Statewide EERS
Efficiency is a cost-effective resource statewide, not just in rural Alaska. We recommend
Alaska establish a formal EERS with savings targets for total energy savings for at least the
residential and non-residential building sectors, over the 5- and 10-year horizons. This
policy guidance at the statewide level can be a logical extension of or complementary to
the Legislature’s action from House Bill 306. That resulting law set the target of reducing
per-capita energy consumption by 15 percent by 2020. Establishing the policy directive,
and a process for tracking and reporting progress statewide, will enable many of the
savings and activities that are identified in this report for rural Alaska. The Statewide EERS
can establish the overall, sectoral, and geographic distribution of savings targets. Defining
the roles and responsibilities of various parties under the EERS will require further
planning and negotiations, and multiple parties will need to be engaged. Setting the
target levels of savings could be done by the Legislature as a top-down directive, or
determined by a regulatory / stakeholder process.
This study is limited to an assessment of the efficiency and financing needs for the rural
Alaska study area, and so no specific recommendation on an appropriate level for a
statewide EERS is offered. However, we observe that the savings potential for the rural
residential and non-residential sectors identified in this report can contribute useful
information to an eventual statewide standard and the development of programs and
strategies to achieve the statewide savings targets. We recommend consideration of this
5. Policy and Strategy Recommendations
121 July 2016
information, in support of a standard. It is also critical that a statewide standard give
appropriate attention to the costs and benefits and needs for efficiency in rural Alaska, to
avoid the potential for designing a standard or initiatives that do not address the needs
of rural communities.
Statewide Building Code Adoption, Support, and Enforcement
Codes for residential and non-residential buildings, along with technical support and
enforcement, help establish and build consistent statewide practices that can improve
building safety, durability, affordability, comfort, and efficiency. The analysis
documented in earlier sections of this report indicate that a good share of the new
construction and major rehabilitation work in rural Alaska is either already required or is
voluntarily meeting advanced code requirements. (See Building Energy Efficiency Codes
and Standards in the Affordable Energy Strategy Study Area.)
Expanding code coverage to be statewide will encourage contractors and service
providers to invest in the necessary design, procurement, workforce training and building
practices that are required to meet code. It can also be a platform for consumer education
and improve understanding of the minimum levels of building efficiency and performance
that can be expected. Therefore, we recommend that the State expand code coverage to
be statewide, create an environment in which technical support is provided, and
standardize enforcement protocols.
Procurement and Product Minimum Performance Standards
We recommend that the State establish standard purchasing / procurement
requirements for energy-efficient equipment and other measures, ensuring that each
energy-efficient product installed in Alaska meets or exceeds minimum performance
standards established by nationally recognized rating organizations.
Targets for Assistance and Portfolio Investments to Support Energy Efficiency
Investment
The State should establish legislative targets and guidelines for ensuring revenues,
assistance, and other forms of investment are dedicated to energy efficiency, for the
benefit of Alaska residents and businesses, statewide.
Energy Efficiency Program Evaluation and Financing Needs Assessment
122 July 2016
123 July 2016
Appendix A: Catalog of Alaska Programs
Name Incentive
type
Funding
source Administrator Sector Eligible efficiency
technologies
Incentive /
maximum
Alternative Energy
Conservation Loan
Fund
Loan
program AK
AK Division of
Economic
Development,
DCCED
Commercial (All)
Furnaces, boilers, caulking /
weather-stripping, duct / air
sealing, building insulation,
windows, doors, custom /
others pending approval
$50,000.00.
/ 20 years.
/ 5% (eff July 1,
2015)
Association Loan
Program
Loan
program AK
Alaska housing
finance
corporation
Residential (multi-
family)
Custom / others pending
approval
15 year term /
fixed rates
Building Energy
Code
Building
energy code AK
Alaska housing
finance
corporation
Commercial,
construction,
installers/contractor
s,
residential (all)
Comprehensive measures /
whole building Not applicable.
Commercial
Building Energy
Audit Program
Rebate
program AK Alaska energy
authority Commercial (all) Energy audits Not applicable.
Energy Efficiency
Improvement
Program
Internal
loan
program
Varies
Alaska
Department of
Transportation
and Public
Facilities
Government (State),
Commercial
(Institutions)
Yes; specific technologies not
identified Not specified.
Energy Efficiency
Interest Rate
Reduction
Program
Loan
program AK
Alaska Housing
Finance
Corporation
Residential
(single family or low-
income)
Comprehensive
measures/whole building,
custom/others pending
approval
Rate reduction
applies to first
$200,000; after
this amount, a
blended interest
rate applies.
/ rate reductions
vary from -0.125%
to -0.750%.
Energy Efficiency Program Evaluation and Financing Needs Assessment
124 July 2016
Name Incentive
type
Funding
source Administrator Sector Eligible efficiency
technologies
Incentive /
maximum
Energy Efficiency
Revolving Loan
Fund Program
Loan
program AK
Alaska Housing
Finance
Corporation
Government
(local, state or
schools),
institutional
Custom / others pending
approval, yes; specific
technologies not identified
Not specified.
Fannie Mae Green
Initiative- Loan
Program
Loan
program US Fannie Mae Residential
(multi-family)
Clothes washers, dishwasher,
dehumidifiers, water heaters,
lighting, furnaces, boilers, heat
pumps, air conditioners,
caulking/weather-stripping,
duct/air sealing, building
insulation, windows, roofs,
comprehensive measures/whole
building, custom/others pending
approval, insulation, tankless
water heater
Not specified
/ not specified
/ up to 10 basis
points lower than
standard
Home Energy
Rebate Program
Rebate
program AK
Alaska Housing
Finance
Corporation
Residential (Single
Family or Low-
Income)
Comprehensive
Measures/Whole Building,
Custom/Others pending
approval
Varies / $10,000
for energy
efficiency
improvements
(plus $500 for
energy audit);
Loan Participation
Program
Loan
program AK
Alaska Industrial
Development
and Export
Authority
Commercial (all) Custom/others pending
approval Not specified.
New Home Rebate Rebate
program AK
Alaska Housing
Finance
Corporation
Residential (all) Comprehensive
measures/whole building $7,000 - $10,000
Power Project
Loan Fund
Loan
program AK
Alaska Industrial
Development
and Export
Authority
Government (Local),
Utilities (Municipal
or Cooperative)
Custom/Others pending
approval
No maximum
/ 50 years.
/ Varies
Appendix A: Catalog of Alaska Programs
125 July 2016
Name Incentive
type
Funding
source Administrator Sector Eligible efficiency
technologies
Incentive /
maximum
Second Mortgage
Program for
Energy
Conservation
Loan
program AK
Alaska Housing
Finance
Corporation
Residential (Single
Family or Low-
Income)
Comprehensive
Measures/Whole Building
$30,000
/ 15 years.
/ Varies
Small Building
Material Loan
Loan
program AK
Alaska Housing
Finance
Corporation
Residential (all) Custom/others pending
approval, other ee
$100,000
/ 15 years.
/ 15 year rural loan
program plus 0.5%
Sustainable
Energy
Transmission and
Supply
Development
Fund
Loan
program AK
Alaska Industrial
Development
and Export
Authority
Commercial (all) Custom/others pending
approval
$20 million
/ varies.
/ fixed rate
Technical
Assistance and
Training Grants
Training AK
Association of
Alaska Housing
Authorities
Government (local,
tribal),
residential (all)
None specified. Not applicable.
USDA -
Community
Facilities Direct
Loan and Grant
Program
Grant / loan
program US
U.S.
Department of
Agriculture
Public Facilities Yes; specific technologies not
identified
Varies.
/ 40 years.
/ Fixed rate.
USDA - Energy
Efficiency and
Conservation Loan
Fund
Loan
program US
U.S.
Department of
Agriculture
Utilities Yes; specific technologies not
identified
Varies.
/ 15 years.
/ Varies.
USDA - High
Energy Cost Grant
Program
Grant
program US
U.S.
Department of
Agriculture,
Rural Utilities
Service
Government
(local, state, tribal,
schools)
Commercial
(nonprofit,
institutional)
Industrial (all),
Residential (all)
Yes; specific technologies not
identified
$50,000-
$3,000,000 / $3
million
Energy Efficiency Program Evaluation and Financing Needs Assessment
126 July 2016
Name Incentive
type
Funding
source Administrator Sector Eligible efficiency
technologies
Incentive /
maximum
USDA - Rural
Energy for
America Program
(REAP) Energy
Audit and
Renewable Energy
Development
Assistance
(EA/REDA)
Program
Grant
program US
U.S.
Department of
Agriculture
Government (local,
state, or federal),
Schools
Commercial
(institutional)
Industrial
(agricultural)
None specified Not specified
USDA - Rural
Energy for
America Program
(REAP) Grants
Grant
program US
U.S.
Department of
Agriculture
Commercial
(all)
Industrial
(agricultural)
Yes; specific technologies not
identified
Renewable grants:
$2,500-$500,000
Efficiency grants:
$1,500-$250,000
Loan and grant
combination: grant
portion must
exceed $1,500 /
25% of project cost
USDA - Rural
Energy for
America Program
(REAP) Loan
Guarantees
Loan
program US
U.S.
Department of
Agriculture
Commercial (all)
industrial
(agricultural)
Yes; specific technologies not
identified
$25 million per
loan guarantee
/ loans guaranteed
60%-85%
depending on loan
amount
USDHSS - Low
Income Home
Energy Assistance
Program (LIHEAP)
Grant
program US
U.S. Dept. of
Health and
Human Services
Government (tribal),
Residential
(low-income)
Varies
USDOE - Energy
Goals and
Standards for
Federal
Government
Energy
standards
for public
buildings
US
U.S.
Department of
Energy
Government
(federal)
Comprehensive
measures/whole building, yes;
specific technologies not
identified
Not applicable
Appendix A: Catalog of Alaska Programs
127 July 2016
Name Incentive
type
Funding
source Administrator Sector Eligible efficiency
technologies
Incentive /
maximum
USDOE - Federal
Appliance
Standards
Appliance /
equipment
efficiency
standards
US
U.S.
Department of
Energy
Industrial (all)
Clothes washers, dishwasher,
refrigerators/freezers,
dehumidifiers, ceiling fan, water
heaters, lighting, furnaces,
boilers, heat pumps, air
conditioners, motors, other
energy efficiency
Not specified
USDOE - Loan
Guarantee
Program
Loan
program US
U.S.
Department of
Energy
Government
(local, state or
schools)
Commercial
(nonprofit,
institutional),
industrial
(agricultural)
Yes; specific technologies not
identified
Not specified
/ 30 years or 90%
of the projected
useful life
USDOE - Strategic
Technical
Assistance
Response Team
Training US
U.S.
Department of
Energy
Government (tribal) Yes; specific technologies not
identified
Varies by
solicitation
USDOE - Tribal
Energy Program
Grant
Grant
program US
U.S.
Department of
Energy
Government (tribal)
Refrigerators / freezers, water
heaters, lighting, lighting
controls/sensors, chillers,
furnaces, boilers, air
conditioners, programmable
thermostats, energy
management systems / building
controls, caulking/weather-
stripping, duct/air sealing,
building insulation, windows,
siding, roofs, comprehensive
measures/whole building, other
energy efficiency
Varies by
solicitation
Energy Efficiency Program Evaluation and Financing Needs Assessment
128 July 2016
Name Incentive
type
Funding
source Administrator Sector Eligible efficiency
technologies
Incentive /
maximum
USDVA - Energy-
Efficient
Mortgages
Loan
program US
U.S.
Department of
Veterans Affairs
Residential (all) Yes; specific technologies not
identified
$8,000, maximum
loan limits can be
exceeded by the
energy
improvements
being financed
USHUD - FHA
PowerSaver Loan
Program
Loan
program US
U.S.
Department of
Housing and
Urban
Development
Residential (single
family or low-
income)
Water heaters, furnaces, air
conditioners, programmable
thermostats, energy
management systems / building
controls, caulking / weather-
stripping, building insulation,
windows, doors, comprehensive
measures / whole building
Powersaver Home
Energy Upgrade:
$7,500
Powersaver
Second Mortgage:
$25,000
Powersaver Energy
Rehab (203(k)):
$217,500 to
$625,000
/ Maximum of 20
years
/ 4.99% to 9.99%
USHUD -
Supplemental
Housing
Development
Grant Program
Grant
program AK / US
Alaska Housing
Finance
Corporation
Residential (all) Varies; specific technologies not
identified Not specified
Appendix A: Catalog of Alaska Programs
129 July 2016
Name Incentive
type
Funding
source Administrator Sector Eligible efficiency
technologies
Incentive /
maximum
USIRS - Energy-
Efficient
Commercial
Buildings Tax
Deduction
Corporate
tax
deduction
US U.S. Internal
Revenue Service
Government (State
or Federal),
Commercial
(Construction)
Equipment insulation, water
heaters, lighting, lighting
controls / sensors, chillers,
furnaces, boilers, heat pumps,
air conditioners, caulking /
weather-stripping, duct / air
sealing, building insulation,
windows, siding, roofs,
comprehensive measures /
whole building, other energy
efficiency, tankless water heater
$0.30-$1.80 per
square foot
USIRS - Energy-
Efficient New
Homes Tax Credit
for Home Builders
Corporate
Tax Credit US U.S. Internal
Revenue Service
Commercial
(construction)
Comprehensive
measures/whole building
$1,000 - $2,000 /
$2,000
USIRS - Qualified
Energy
Conservation
Bonds (QECBs)
Loan
Program US U.S. Internal
Revenue Service
Government
(local, state, or
tribal)
Yes; specific technologies not
identified Not specified.
USIRS - Residential
Energy
Conservation
Subsidy Exclusion
(Corporate)
Corporate
Tax
Exemption
US U.S. Internal
Revenue Service
Residential
(single family or
multifamily)
Yes; specific technologies not
identified 100% of subsidy
USIRS - Residential
Energy
Conservation
Subsidy Exclusion
(Personal)
Personal
Tax
Exemption
US U.S. Internal
Revenue Service
Residential
(single family or
multifamily)
Yes; specific technologies not
identified 100% of subsidy
Energy Efficiency Program Evaluation and Financing Needs Assessment
130 July 2016
Name Incentive
type
Funding
source Administrator Sector Eligible efficiency
technologies
Incentive /
maximum
USIRS - Residential
Energy Efficiency
Tax Credit
Personal
Tax Credit US U.S. Internal
Revenue Service Residential (all)
Water heaters, furnaces, boilers,
heat pumps, air conditioners,
building insulation, windows,
roofs
Varies / for
purchases made in
2011 - 2016:
aggregate amount
of credit is limited
to $500. Taxpayer
is ineligible for this
tax credit if this
credit has already
been claimed by
the taxpayer in an
amount of $500 in
any previous year.
For purchases
made in 2009 or
2010: aggregate
amount of credit
for all technologies
placed in service in
2009 and 2010
combined is
limited to $1,500
Village Energy
Efficiency Program
Grant
Program AK Alaska Energy
Authority
Government
(local, state, tribal, or
schools)
Electrical efficiency measures Not applicable.
Appendix A: Catalog of Alaska Programs
131 July 2016
Name Incentive
type
Funding
source Administrator Sector Eligible efficiency
technologies
Incentive /
maximum
Weatherization
Assistance
Program (WAP)
Grant
Program US
Alaska Housing
Finance
Corporation
Government
(tribal)
Residential
(low-income)
Furnaces, heat pumps, air
conditioners, caulking /
weather-stripping, duct / air
sealing, building insulation,
doors, other energy efficiency,
insulation
Free; specific
improvements will
be determined
case by case,
depending on the
specific needs of
the home / the
adjusted average
expenditure limit
for program year
2015 is $7,105
Energy Efficiency Program Evaluation and Financing Needs Assessment
132 July 2016
133 July 2016
Appendix B: Bibliography
Agne, Juliet. ENERGY STAR Rebate Program, Final Report. Sitka: City and Borough of Sitka
Electric Department, 2013.
http://www.cityofsitka.com/government/departments/electric/documents/EnergyStarReb
ateProgramFinalReportwithAppendices.pdf.
Alaska Building Science Network. Village Energy Efficiency Program, ’10-’12. Executive Summary.
Juneau: ASBN, 2013.
http://www.akenergyauthority.org/Content/Efficiency/EEC/Documents/ABSN%20VEEP%20
Executive%20Summary_Final.pdf.
Alaska Department of Commerce, Community & Economic Development. Alternative Energy
Conservation Loan Fund (Loan Programs). Juneau: State of Alaska, 2016.
https://www.commerce.alaska.gov/web/ded/FIN/LoanPrograms/AlternativeEnergyLoanPr
ogram.aspx.
Alaska Department of Transportation & Public Facilities and the Department of Administration.
Alaska Sustainable Energy Act Annual Report: 2014 Progress Report. Juneau: State of
Alaska, 2015.
Alaska Energy Authority. Alaska Energy Pathway: Toward Energy Independence. Anchorage:
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Energy Efficiency Program Evaluation and Financing Needs Assessment
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142 July 2016
Appendix C: Efficacy Spreadsheet
143 July 2016
Appendix C: Efficacy Spreadsheet
Residential
Program
Budget Percent of
homes served Job Creation
Energy
Savings
(Potential)
Years of
Activity
Steady
Funding
Market
Transformation
(Potential)
Benefit to
Cost Ratio
Process
Coordination
& Reporting
Non-Energy
Benefits
Regional
Coverage
Cumulative
since 2008
Cumulative
since 2008 Qualitative Cumulative
since 2008 Start Qualitative Qualitative Qualitative Qualitative Qualitative Qualitative
Technical Assistance
and Training Grants Low Medium Medium Medium 2013 Medium High Medium High High High
Association Loan
Program Low Low Low Low Medium Medium Medium Low Medium High
Building Energy
Code Low High Medium Medium 1993 Medium High High High High High
Energy Efficiency
Interest Rate
Reduction Program
Low Low Low Low 1996 Medium Medium Medium Medium Medium Low
Home Energy
Rebate Program High Low Medium Medium 2008 Low High High High Medium Medium
New Home Rebate
Program Medium Low Medium Medium 2008 Low High High High Medium Medium
Second Mortgage
for Energy
Conservation
Low Low Medium Low Medium Medium Medium High Medium Low
Small Building
Material Loan Low Low Low Low Medium Medium Medium Medium Medium Medium
USHUD -
Supplemental
Housing
Development Grant
Program
High High High High 1981 High High Medium High High High
Weatherization
Program (State +
Federal)
High Medium High High 1981 Low Medium High High High High
Energy Star Rebate
Program Low Low Low Low 2012-13 Medium High Medium Medium Medium Low
Energy Efficiency Program Evaluation and Financing Needs Assessment
144 July 2016
Residential
Program
Budget Percent of
homes served Job Creation
Energy
Savings
(Potential)
Years of
Activity
Steady
Funding
Market
Transformation
(Potential)
Benefit to
Cost Ratio
Process
Coordination
& Reporting
Non-Energy
Benefits
Regional
Coverage
Fannie Mae Green
Initiative- Loan
Program
Low Low Low Low Medium Medium Medium Medium Medium Medium
USDA - High Energy
Cost Grant Program Low Low Low Low 2015 Medium Medium Medium Medium Medium Medium
USDHSS - Low
Income Home
Energy Assistance
Program (LIHEAP)
High Medium Low Low 2010 High Low Low Medium High Medium
USDVA - Energy-
Efficient Mortgages Low Low Low Low High Medium Medium Low Medium Low
USHUD - FHA
PowerSaver Loan
Program
Low Low Low Low 2015 High Medium Medium Low Medium Low
USIRS - Residential
Energy
Conservation
Subsidy Exclusion
(Corporate)
Low Low Low Low High Medium Low Low Medium Low
USIRS - Residential
Energy
Conservation
Subsidy Exclusion
(Personal)
Low Low Low Low 1993 High Medium Low Low Medium Low
USIRS - Residential
Energy Efficiency
Tax Credit
Low Low Low Low 2006 Medium Medium Medium Low Medium Low
Power Cost
Equalization High Medium Low Low 1984 Medium Low Low Medium High High
Services supporting
Residential Sector
Efficiency -
Education,
Outreach, Technical
Support, Efficiency
Partnership
Low Medium Medium High High High Medium High High High
Appendix C: Efficacy Spreadsheet
145 July 2016
Residential
Program
Budget Percent of
homes served Job Creation
Energy
Savings
(Potential)
Years of
Activity
Steady
Funding
Market
Transformation
(Potential)
Benefit to
Cost Ratio
Process
Coordination
& Reporting
Non-Energy
Benefits
Regional
Coverage
Remote Alaskan
Communities
Energy Efficiency
Competition
(RACEE)
Low Low Medium Medium Low High Medium High High High
USIRS - Energy-
Efficient New
Homes Tax Credit
for Home Builders
High Low Low Low 2014 High High High Low High Low
Energy Efficiency Program Evaluation and Financing Needs Assessment
146 July 2016
Non-Residential
Program
Budget
Percentage
Buildings
Served
Job Creation
Energy
Savings
(Potential)
Years of
Activity
Steady
Funding
Market
Transformation
(Potential)
Benefit to
Cost Ratio
Process
Coordination
& Reporting
Non-Energy
Benefits
Regional
Coverage
Cumulative
since 2008
Cumulative
since 2008 Qualitative Cumulative
since 2008 Start Qualitative Qualitative Qualitative Qualitative Qualitative Qualitative
Commercial Building
Energy Audit
Program
Medium Medium Low Low 2011 Medium Medium Low Medium Medium High
Village Energy
Efficiency Program Medium Medium Medium Medium 2005 Medium High High High High High
Energy Efficiency
and Revolving Loan
Fund
High Medium Low Low 2010 High Medium Low Medium Medium High
Building Energy
Code Low Medium Medium Medium 1993 High High High High High Medium
Loan Participation
Program High Low Low Low 1980s High Low Medium Low Low Low
Power Project Loan
Fund High Low Low Low 2008 High Low Medium Low Low Medium
Sustainable Energy
Transmission and
Supply Development
Fund
High Low Low Low 2012 High Medium Medium Low Low Medium
Alternative Energy
Conservation Loan
Fund
High Low Low Low 2009 High Medium Medium Medium Medium High
Energy Efficiency
Improvement
Program
Medium Medium Medium Medium 2010 High Medium High Medium Medium High
Rural Energy
Initiative
(Water/Wastewater)
High Medium Low Low 2010 Medium High Medium High High High
Fairbanks Non-Profit
Retrofit Pilot Low Medium Low Low 2014 Low Medium Medium High High Low
USDA - Community
Facilities Direct Loan
and Grant Program
High Low Low Low 1980s High Low Medium Low Medium High
Appendix C: Efficacy Spreadsheet
147 July 2016
Non-Residential
Program
Budget
Percentage
Buildings
Served
Job Creation
Energy
Savings
(Potential)
Years of
Activity
Steady
Funding
Market
Transformation
(Potential)
Benefit to
Cost Ratio
Process
Coordination
& Reporting
Non-Energy
Benefits
Regional
Coverage
Cumulative
since 2008
Cumulative
since 2008 Qualitative Cumulative
since 2008 Start Qualitative Qualitative Qualitative Qualitative Qualitative Qualitative
USDA - Energy
Efficiency and
Conservation Loan
Fund
High Low Low Low 2013 Medium Medium Medium Low Medium High
USDA - Rural Energy
for America Program
(REAP) Energy Audit
and Renewable
Energy Development
Assistance
(EA/REDA) Program
High Low Low Low 2003 High Medium Medium Low Medium High
USDA - Rural Energy
for America Program
(REAP) Grants &
Loan Guarantees
High Low Low Low 2003 High Medium Medium Low Medium High
USDA - High Energy
Cost Grant Program High Low Low Low 2015 High Low Medium Low Medium High
USDHSS - Low
Income Home
Energy Assistance
Program (LIHEAP) /
Multifamily
High High Low Low 2010 High Low Low High High High
USDOE - Energy
Goals and Standards
for Federal
Government
Low High Medium Medium 2005 High High High High High High
USDOE - Federal
Appliance Standards Low High High High 1975 High High High High High High
USDOE - Loan
Guarantee Program High Low Low Low 2005 High Medium Medium Low Medium High
USDOE - Strategic
Technical Assistance
Response Team
Low Medium Low Low 2012 High High Low High High High
Energy Efficiency Program Evaluation and Financing Needs Assessment
148 July 2016
Non-Residential
Program
Budget
Percentage
Buildings
Served
Job Creation
Energy
Savings
(Potential)
Years of
Activity
Steady
Funding
Market
Transformation
(Potential)
Benefit to
Cost Ratio
Process
Coordination
& Reporting
Non-Energy
Benefits
Regional
Coverage
Cumulative
since 2008
Cumulative
since 2008 Qualitative Cumulative
since 2008 Start Qualitative Qualitative Qualitative Qualitative Qualitative Qualitative
USDOE - Tribal
Energy Program
Grant
Medium Low Low Low 2002 High Low Medium High High High
USIRS - Qualified
Energy Conservation
Bonds (QECBs) High Low Low Low 2008 High Medium Medium Low Medium High
USIRS - Energy-
Efficient Commercial
Buildings Tax
Deduction
High Low Low Low 2006 High Medium Medium Low Medium High
149 July 2016
Appendix D: Energy and Demographic Forecasts
Village Sector Energy Costs – Forecast Model
Total heat
(Mmbtu)
Total heat
(cost 2017 $)
Cost of heat
($ / Mmbtu)
Electricity
(Mmbtu) Electricity
Total
electricity
(cost 2017 $)
Cost of
electricity
($/Mmbtu)
Cost of
heating
($/gallon)
Cost of
electricity
($/kWh)
Residential 9,049,144 $271,624,068 $30.02 1,806,789 529,539,444 $125,561,322 $69.49 $4.16 $0.24
Non-
Residential 7,387,791 $265,126,038 $35.89 2,102,828 616,303,684 $181,174,574 $86.16 $4.97 $0.29
Total 16,436,935 $536,750,106 $32.66 3,909,617 1,145,843,127 $306,735,897 $78.46 $4.52 $0.27
Residential Forecast Model Data
Region NPV benefit NPV cost NPV net
benefit
Benefit-
cost
ratio
Average
heating oil
price (per
gallon)
Occupied
houses
Houses
to
retrofit
Percent
region
remaining
Percent of
total
remaining
Aleutians $21,879,130 $19,001,089 $2,878,041 1.38 : 1 $4.81 1,784 1,462 82% 4%
Bering Straits $56,167,870 $41,110,927 $15,056,945 1.81 : 1 $6.06 2,950 2,487 84% 6%
Bristol Bay $25,085,433 $16,250,931 $8,834,502 1.55 : 1 $6.20 2,540 1,572 62% 4%
Copper River / Chugach $69,820,875 $29,293,108 $40,527,766 2.61 : 1 $4.91 3,593 2,796 78% 7%
Kodiak $38,141,675 $24,343,109 $13,798,566 1.4 : 1 $5.15 3,012 2,166 72% 5%
Lower Yukon-Kuskokwim $104,897,233 $71,516,480 $33,380,756 1.72 : 1 $6.42 7,092 5,238 74% 13%
North Slope $31,630,796 $22,338,423 $9,292,373 1.42 : 1 $0.22 2,155 1,867 87% 5%
Northwest Arctic $36,072,225 $21,032,632 $15,039,592 2.2 : 1 $7.74 2,046 1,299 63% 3%
Southeast $254,357,484 $184,109,119 $70,248,365 1.32 : 1 $4.20 27,122 20,444 75% 50%
Energy Efficiency Program Evaluation and Financing Needs Assessment
150 July 2016
Region NPV benefit NPV cost NPV net
benefit
Benefit-
cost
ratio
Average
heating oil
price (per
gallon)
Occupied
houses
Houses
to
retrofit
Percent
region
remaining
Percent of
total
remaining
Yukon-Koyukuk / Upper
Tanana $42,749,206 $20,734,520 $22,014,689 1.99 $5.76 2,698 1,555 58% 4%
AkAES $680,801,927 $449,730,338 $231,071,595 1.74 $5.15 54,992 40,886 74% 100%
151 July 2016
Appendix E: List of Interviewees
The list of identified interviewees, both in-person and phone, reflect a breadth of stakeholders affiliated with energy efficiency
programs in Alaska and provided a diversity of perspectives on the barriers and opportunities for energy efficiency in rural
Alaska.
Last name First name Title Organization
Galton William Microgrid Project Manager ABB Inc.
Astorga Pablo Global Sales Manager Microgrids ABB Inc.
Davis Mark Chief Infrastructure Development Officer AIDEA
Keen James CDP AKT, CPAs and Business Consultants
Dushkin Colleen Administrator Alaska Association of Housing Authorities
Roe George Research Professor Alaska Center for Energy and Power
Andersen Jim Loan/Collection Manager Alaska Department of Commerce, Community, and
Economic Development
Hodgin Christopher Program Manager, Energy Office Alaska Department of Transportation & Public Facilities
Smith Rebecca Lead Project Manager, Energy Office Alaska Department of Transportation & Public Facilities
Hodgin Chris Program Manager Alaska Department of Transportation and Public Facilities
McMahon Neil Program Manager for Energy Planning Alaska Energy Authority
Conway Katie Assistant Program Manager, Energy Efficiency
and Conservation Program Alaska Energy Authority
Lister Cady Assistant Program Manager, Energy Efficiency
and Conservation Program Alaska Energy Authority
Garrett Rebecca Project Development Specialist, Energy
Efficiency and Conservation Program Alaska Energy Authority
Lockard David Solar Program Manager / Bulk Fuel Alaska Energy Authority
Drolet Jedediah Energy Information Analyst, Regional Energy
Planning Alaska Energy Authority
Skaling Sean Policy and Programs Director Alaska Energy Authority
Leach Timothy Energy Specialist I Alaska Housing Finance Corp
Energy Efficiency Program Evaluation and Financing Needs Assessment
152 July 2016
Last name First name Title Organization
Waterman Scott State Energy Program Manager Alaska Housing Finance Corp
Ord Jimmy Energy Program Information Manager Alaska Housing Finance Corporation
Burbage Mimi Weatherization Program Manager Alaska Housing Finance Corporation
Waterman Scott State Energy Program Manager Alaska Housing Finance Corporation
Bowers Kari Home Energy Rebate Program Manager Alaska Housing Finance Corporation
Combs Esther Supplemental Housing Coordinator Alaska Housing Finance Corporation
Anderson John Director, Research & Rural Development Alaska Housing Finance Corporation
San Juan Jeff Infrastructure Development Finance Officer Alaska Industrial Development and Export Authority
Dixon Gavin Senior Project Manager, Rural Energy Initiative Alaska Native Tribal Health Consortium
Duame Dan Executive Director Aleutians Housing Authority
Dushkin Colleen Administrator Association of Alaska Housing Authorities
Strait Dena Energy Programs Manager Bettisworth North
Larson Emil Deputy Director Bristol Bay Housing Authority
Tennyson Kevin Planner / Weatherization Director Bristol Bay Housing Authority
Ayers Kate Energy Efficiency and Conservation Specialist Chugach Electric Association
Bolling Lee Mechanical Engineer Coffman Engineers
Hebert Jack Chief Executive Officer/Founder Cold Climate Housing Research Center
Wiltse Nathan Policy Program Manager Cold Climate Housing Research Center
Madden Dustin Policy Researcher Cold Climate Housing Research Center
Kochanowski Givey Alaska Program Manager DOE Office of Indian Energy
Pierce Lizana Program Manager DOE Office of Indian Energy Policy and Programs
Kassel Karl Mayor Fairbanks North Star Borough
Van Cleve Ramona Tribal Liaison FEMA Alaska Area Office
Bradish Corinne Director of Member Services Golden Valley Electric Association
Hackenmueller Paul Economic Development Coordinator Haa Aaní, LLC / Sealaska
Lautaret Tonya Member Services Supervisor Homer Electric Association
George Jana Chief Executive Officer Interior Regional Housing Authority
Mikulski Pearl Planner KAWERAK, Inc.
Banister Charles Principal Kumin Associates
Estey Julie Director of Public Relations Matanuska Electric Association, Inc.
Isaacson Doug General Manager Minto Development Corporation
Garoutte Ed Housing Director Native Village of Kotzebue
Beardsley Peter Principal Nortech
Appendix E: List of Interviewees
153 July 2016
Last name First name Title Organization
Adams Guy Executive Director Northwest Inupiat Housing Authority
Collins Chris Deputy Director Northwest Inupiat Housing Authority
Hanson Natalie Program Coordinator Nuvista Light and Electric Cooperative, Inc.
Ferland John VP of Project Development Ocean Renewable Power Corporation
Fredeen Craig Senior Associate, Mechanical Engineer PDC Inc. Engineers
Rose Chris Executive Director/Founder Renewable Energy Alaska Project
Foster Wilder Piper Deputy Director Renewable Energy Alaska Project
Kilcoyne Shaina Energy Efficiency Director Renewable Energy Alaska Project
Wilson Adam Mechanical Project Engineer RSA Engineering, Inc.
McDonough Amber Account Executive Siemens
Pelunis-Messier Dave Rural Energy Coordinator Tanana Chiefs Conference
Klouda Nolan Executive Director University of Alaska Business Enterprise Institute
Johnson Renee Director Business Programs US Department of Agriculture, Alaska State Office
Jensen Les Housing Program Officer US Department of Interior, Bureau of Indian Affairs
Johnson Renee Director of Business Programs USDA
Qatalina Shaeffer Jackie Project Specialist WHPacific
Zulkosky Tiffany Vice President of Communications Yukon-Kuskokwim Health Corporation (Formerly Nuvista)