HomeMy WebLinkAboutAlaska Energy Efficiency Program & Policy Recommendations Cold Climate Housing 06-12-2008
Alaska Energy Efficiency
Program and Policy Recommendations
Final Report to
Cold Climate Housing Research Center
June 12, 2008
Project funded by:
Alaska Energy Authority
Alaska Housing Finance Corporation
INFORMATION INSIGHTS, INC.
212 FRONT STREET, STE. 100
FAIRBANKS, ALASKA 99701
907 450-2450
429 L STREET
ANCHORAGE, ALASKA 99501
907 272-5074
Report authors: Information Insights
Cady Lister, Senior Consultant
Brian Rogers, Principal Consultant
Charles Ermer, Economist
Acknowledgements
Project Sponsor:
Cold Climate Housing Research Center
John Davies, Research Director
Subcontractor:
Rocky Mountain Institute, Boulder CO
Natalie Mims
Chad Riley
Funders
Alaska Housing Finance Corporation
Alaska Energy Authority
We would also like to thank the many energy professionals in Alaska for sharing their
wisdom in developing this report.
Alaska Energy Efficiency Program and Policy Recommendations
June 12, 2008
Table of Contents
Introduction 1
Methodology 5
Summary of Costs and Benefits 7
Recommendations 9
State Leadership 12
Funding Energy Efficiency Programs 14
Public Education and Outreach 17
Collect Baseline Data 18
Existing Residential Buildings 21
New Residential Construction 29
Existing Commercial Buildings 32
New Commercial Construction 34
Public Buildings 35
Budget 45
Appendices 47
Alaska Energy Efficiency Program and Policy Recommendations Page 1
Information Insights Inc.
Introduction
Energy is the issue of the day both nationally and locally. The pain of the energy crisis is felt
acutely in Alaska. Utility bills skyrocket and the issue escalates, affecting homeowners, renters,
businesses and industry. Legislators are concerned and looking for the best strategy to provide
some form of relief to residents.
The Anchorage Chamber of Commerce Southcentral Energy Task Force report Hope is not a
Strategy describes the impact of increased energy prices on Alaska families:
“High energy prices have eliminated a great deal of discretionary income for many Alaska
families; the situation in rural Alaska is especially troublesome.”
One strategy for addressing energy cost stands out: increased energy efficiency. As the Interior
Issues Council’s Cost of Energy Task Force report, Fairbanks Energy, notes:
“Conservation and efficiency increases are by far the most effective means of reducing cost,
reducing emissions and reducing fuel usage. The beauty of increasing efficiency is we can
start today.”
The State and has recognized the importance of having an energy plan that addresses the need for
affordable and reliable energy - for both electricity and home heating. Demand side efficiency
measures need to be a component of that plan. This report outlines energy efficiency measures
that can be rolled into the State energy plan and implemented immediately.
Demand side management or energy efficiency and conservat ion are often overlooked by
politicians in favor of supply side solutions which offer constituents new projects and funding
opportunities. To be sure, supply side solutions are necessary in Alaska, but efficiency measures
should be step one in any energy plan - they are the single least expensive way to decrease
demand and save money.
Numerous studies show that energy efficiency measures can be undertaken at low cost, paying
back initial investment in a matter of months or a few years. The high return on investment of
energy efficiency is a key reason that major corporations are investing heavily in their own
energy conservation measures, for both cost savings and decreased greenhouse gas emissions.
Governor Palin’s administrative order establishing the Climate Change sub-Cabinet echoes the
emphasis on cost savings and reduced greenhouse gas emissions, calling on the group to develop
recommendations on
“ . . . the opportunities to reduce greenhouse gas emissions from Alaska sources, including
the expanded use of alternative fuels, energy conservation, energy efficiency, renewable
energy, land use management, and transportation planning.”
Recognizing the need to take action, the Alaska Housing Finance Corporation (AHFC) and the
Alaska Energy Authority (AEA) asked the Cold Climate Housing Research Center (CCHRC) to
sponsor a comprehensive review and analysis of the energy efficiency policies and programs in
the State of Alaska. CCHRC contracted in December 2007 with Information Insights and its
subcontractor, the Rocky Mountain Institute, for this study. The review focuses on programs that
address end-use energy consumption in space heating and electrical needs of residential and
Alaska Energy Efficiency Program and Policy Recommendations Page 2
Information Insights Inc.
commercial users. Although the funders recognize the dire energy situation in rural Alaska,
primary emphasis of this report is on Railbelt communities, recognizing that there is an existing
rural energy plan.1 The study is not intended to address transportation or industrial energy
efficiency opportunities.
Energy in Alaska
Perhaps not surprisingly, Alaska has focused on energy supply, rather than demand. Alaska is an
energy giant – a leading energy supplier of oil and gas, the state also has tremendous reserves of
coal, and substantial renewable energy resources in hydro, wind, geothermal, biomass and solar
energy. But while renewable resources are plentiful, the energy they can produce will be slower
to market. Energy efficiency measures can be implemented immediately; they represent the low
hanging fruit in the overall plan to create energy sustainability.
Alaska uses significant amounts of energy. In 2005 Alaska used 0.8 percent of total U.S. energy
consumption with only 0.2 percent of total population. It is worth noting that the military is a
significant user of energy, as are the air freight, and oil and gas industries:
· Alaska total energy consumption in 2005 = 779 Trillion BTUs
o Residential 55.7 Trillion BTUs
o Commercial 62.4 Trillion BTUs
o Industrial 417.3 Trillion BTUs
o Transportation 263.8 Trillion BTUs
The State of Alaska lags somewhat behind other states in energy planning in general, and in
policies and programs for energy efficiency in particular. A recent report by the American
Council for an Energy Efficient Economy (ACEEE) ranked Alaska 41st on their State Energy
Efficiency Scorecard2. ACEEE rates states by activity and spending in each of the following
eight categories:
· Utility spending on energy efficiency: this measure rates the annual per capita utility
spend on energy efficiency programs. To receive half the possible points, or 7.5, a state
must have annual spending of $11.25 per person.
· Energy efficiency resource standards (EERS): this measure rates standards that are set by
state government and require utilities to meet certain energy savings targets within an
established timeframe.
· Combined heat and power (CHP): this measure looks at four state policies that promote
combined heat and power. The four policies are standard interconnection rules, presence
of an incentive program, inclusion of CHP/waste heat recovery in the state EERS, and
output based emissions regulation.
1 Alaska Rural Energy Plan: Initiatives for Improving Energy Efficiency and Reliability – by MAFA in
collaboration with Northern Economics
http://www.akenergyauthority.org/AEAdocuments/REPV1ExecutiveSummary.pdf
2 . State Energy Efficiency Scorecard for 2006” by the American Council for an Energy Efficient Economy,
published June 2007 http://www.aceee.org/
Alaska Energy Efficiency Program and Policy Recommendations Page 3
Information Insights Inc.
· Building codes: this measure rates the energy efficiency requirements in both residential
and commercial building codes.
· Transportation policies: this measure evaluates states on policy initiatives that encourage
transportation efficiency. The specific measures are: California’s tailpipe emissions
standards, exemplary land use policies, transit funding, and state fleet requirements.
· Appliance standards: this measure is scored on how many appliance efficiency standards
have been implemented since 2002.
· Tax incentives: this measure rates the availability of tax incentives for: green
commercial, energy efficient new residential, weatherization, efficient equipment and
vehicles.
· State lead by example: the criteria for rating state lead by example are: energy efficiency
performance criteria (i.e. Energy Star or LEED), new and existing state building energy
use targets, energy efficient product procurement, and research and development.
Table 1 ACEEE Energy Efficiency State Ranking
Rank
State Utility Spending on EE EE Resource Standards Combined Heat & Power Building Codes Transportation Policies Appliance Standards Tax Incentives State Lead by Example Possible Points 15 5 5 5 5 3 3 3
41 Alaska 0.0 0 2 2 1 0 0 0.0
21 Montana 5.5 0 0 4 0 0 3 0.5
6 Washington 9.5 3 3 4 4 2 1 0.5
1 Vermont 15.0 5 3 3 4 2 0 1.0
1 California 7.0 5 5 5 5 3 3 3.0
Failing to address the demand side of the energy equation fails to consider the cheapest, cleanest
way to meet Alaska’s energy needs.
It is important to note that using energy more efficient ly does not necessarily mean seeing a
decreased level of service. With advances in technology and simple changes in behavior,
significant savings can be realized without compromising level of service. Alaskans will
continue to need warm rooms, cold freezers and well-lit classrooms. End-use management aims
to meet energy demand by looking at opportunities for reducing that demand. The way to reduce
energy demand without reducing end-use services is through energy efficiency. Put simply,
improving energy efficiency does not mean “freezing in the dark,” but providing “hot showers
and cold beer” with minimum expenditure of energy.
Energy efficiency and conservation first entered into the larger public consciousness in 1973,
propelled by an oil embargo that created an energy crisis in America. Federal energy regulations
followed in 1975, 1976 and 1978. When Iran and Iraq ended their outward conflict and flooded
Alaska Energy Efficiency Program and Policy Recommendations Page 4
Information Insights Inc.
the world market with cheap oil, the light that had been shining on energy efficiency dimmed
considerably. The next major piece of federal energy efficiency legislation to move was the
National Appliance Energy Conservation Act of 1987, followed by the Clean Air Act in 1990
and the Energy Policy Act of 1992.
The 1992 energy act required public service commissions to “consider” standards that would
direct utilities to employ Integrated Resource Planning (IRP). A number of states both
considered and implemented standards requiring IRP and from this planning came many of
today’s end-use management programs. The Regulatory Commission of Alaska (RCA) gave no
such mandate.
In Alaska, particularly in northern parts of the state, people are keenly aware of energy efficiency
as it relates to home heating. Weatherization programs, started in 1976, have made significant
impact and have refined the science of building in cold climates over the last 30 years.
The 1978 Alaska legislature formed an Energy Policy Committee and the 1980 legislature passed
an omnibus bill that had significant energy efficiency/energy conservation provisions. The first
Alaska-specific energy policy adopted into regulation was the building energy code, Building
Energy Efficiency Standard (BEES), introduced in 1985 and finally adopted and implemented
January 1, 1992.
BEES certification is required on all residential and community owned buildings financed with
Alaska Housing Finance Corporation underwriting, covering more than 40 percent of home
mortgages made in the state. Very little has happened at the policy level in Alaska regarding
energy efficiency since these early efforts. Today, as we face a new energy crisis, there is an
opportunity to implement lasting programs and policies to use energy efficiently and help create
a sustainable energy future.
Alaska Energy Efficiency Program and Policy Recommendations Page 5
Information Insights Inc.
Methodology
This project is being conducted in two phases, as detailed below:
Phase I tasks:
Literature review: Alaska energy programs
Information Insights conducted a literature review and market inventory of energy efficiency
programs currently operating in Alaska. In addition to presently funded programs, staff reviewed
past efforts that are no longer funded.
Key informant interviews: Alaska energy programs
Following a literature review and market inventory Information Insights staff gathered additional
information through key informant interviews with energy program staff and representatives. A
list of all key informants will be provided in the bibliography of the final report. These
interviews provided an in-depth history of efficiency projects in the state as well as expert
perspective on the reasons for the success and failure of different efforts.
Literature review: best practices
Information Insights conducted a literature review of best practices from around the United
States, Canada and other northern countries. Many states and provinces have been involved in
energy efficiency and end-use management and there is much that can be learned from their
experience. The Rocky Mountain Institute, a leading U.S. energy policy think-tank, guided
Information Insights staff in identifying best practices that could be easily adapted to fit Alaska.
Energy efficiency work session
On January 16, 2008 Information Insights and the Rocky Mountain Institute hosted a two-day
work session at the Alaska Housing Finance Corporation. More than 30 energy professionals
from Anchorage and Fairbanks participated, drawing on combined experience of more than 350
years of energy work in Alaska. These stakeholders offered their collective wisdom in
developing and prioritizing recommendations.
One outcome of the work session was a clear understanding of the importance of evaluation and
measurement in demonstrating the success of end-use programs and policies.
Data collection and cleaning
There is limited data on end-use energy consumption in Alaska. Information Insights staff
collected data from a variety of places; major sources include:
· Local/state - the Alaska Energy Authority, the Alaska Housing Finance Corporation, the
State of Alaska, the Municipality of Anchorage, Regulatory Commission of Alaska,
Institute of Social and Economic Research, and area utility generators and distributors
· National/international - the Department of Energy, U.S. Census Bureau, Oregon Trust,
California Department of Energy, the American Council for an Energy Efficient
Economy, Energy Star and the Canadian Office of Energy Efficiency
Development of recommendations
The project team evaluated possible recommendations based, when appropriate, on:
Alaska Energy Efficiency Program and Policy Recommendations Page 6
Information Insights Inc.
· Return On Investment (ROI) –Estimated over the life of the energy conservation
measure. Where there is no defined life, a ten-year time horizon is used. Calculations
assume three percent interest rate.
· Benefit Cost Analysis (B/C) – Assumptions: three percent fixed rate interest rate,
estimated over the life of the energy conservation measure or ten years.
· Carbon Reduction – Carbon reduction was not assigned a dollar value for the purposes of
initial evaluation of benefit/cost but is considered on its own merit.
· Present Value of Savings (PVS) – Estimated over the life of the energy conservation
measures. Where there is no defined life, a ten-year time horizon is used. Calculations
assume three percent interest rate and utilize market rates for energy.
· Ease of Implementation – Determined in large part by whether or not there is an existing
infrastructure. The infrastructure necessary for a program to move forward can include:
regulatory approval, funding mechanism, and established delivery method – (an
organization that already does this kind of work). If there is a clear path to
implementation, success is more likely. Finally, the level of public interest in and support
for the policy or program affects ease of implementation.
Where Alaska specific data was available, we used it. Where it was not, we used regional climate
zone 1 data. The Energy Information Administration gives the following explanation for climate
zones. “...climate zones are groups of climate divisions, as defined by the National Oceanic and
Atmospheric Administration (NOAA), which are regions within a state that are as climatically
homogeneous as possible.
Alaska specific ranges for heating degree days are utilized:
· Southeast – 7,000 to 9,500
· Southcentral – 9,000 to 11,000
· Interior – 13,000 to 14,500
· North Slope and North West – 16,000 to 20,000
Interim Recommendations
The interim report, delivered in February 2008, incorporated research, analysis and the results of
the January 16, 2008 Energy Efficiency work session. It presented a set of recommendations,
policies and programs, highlighting those ready for adoption in the 2008 legislative session.
Final Report
This final report incorporates the Phase I research with information gathered in meetings with
CCHRC, AHFC and AEA, and is updated to incorporate the actions of the 2008 legislative
session.
Alaska Energy Efficiency Program and Policy Recommendations Page 7 Information Insights Inc. Summary of Costs and Benefits The tables below summarize three distinct types of recommendations: State programs and initiatives, state programs with immediate measurable returns and state goals. The grand total presented at the bottom reflects estimated costs and benefits associated with ALL recommendations. Estimates are made with imperfect data and further analysis of recommendations will likely lead to some adjustments in both costs and benefits. State programs and initiatives Program Implementing cost – one time cost Implementing cost – annual cost Notes Establish Baseline Data $ 225,000 Sunk cost necessary to evaluate effectiveness of programs and policies. Public Outreach Campaign $ 500,000 Long term measurement of benefits is possible but costly. Energy Training and Certification Program $150,000 This cost could be absorbed into estimates for cost of weatherization but was left separate because it is a workforce development issue. Energy audits households over 100 percent median income $500,000 Benefits depend on the percentage of homeowners who choose to implement energy conservation measures as well as on the measures they choose. Residential building inspection and Quality Assurance $210,000 Costs associated with this program can be absorbed in property transaction fees. Data is not available to measure benefits. Subsidize commercial energy audits $80,000 Benefits depend on the percentage of commercial properties that choose to implement energy conservation measures as well as on the measures they choose. K-12 Institutional Conservation Program $2,000,000 Benefit cost ratios for school districts that have received energy conservation grants vary too widely (between 1 and 27) to project savings. It is however, safe to say that all approved measures will be cost effective Subtotal $375,000 $3,790,000
Alaska Energy Efficiency Program and Policy Recommendations Page 8 Information Insights Inc. Program Implementing cost - one time cost Implementing cost - annual cost Electricity saved (kWh) Space heating saved (MBtu) 3PV energy cost savings Carbon reduction (tons) Ben /cost ratio Notes State Programs with immediate measurable returns K-12 Energy Audit and Education Program $1,738,000 $234,500 18,418,602 $2,364,948 12,350 1.36 10% reduction in electric cons. Smart Meters $ 1,875,000 2,664,000/yr $7,832,610 /5 yrs 8,798 / 5 yrs 4.18 Building Code $100,000 $123,000 1,750 1.23 Change from 4 star plus to 5 star, 1,000 houses/year Low Income Weatherization $686,100,000 $796,296,923 786,648 1.58 45,000 Houses Relamping state facilities $ 6,564,975 33,536,455 $36,931,994 56,343 5.63 44% kWh reduction Subtotal 1.70 one year State goals 4 State Facilities - - 21,024,316 79,267,986 23,637 Per year UA Buildings - - 9,650,149 48,956,854 12,388 Per year State Energy Star Procurement Policy - - 782,742 5,341,431 $322,626 569 34.2 kWh per year, PV over 5 years Grand Total $706,655,950 $234,500 86,076,264 133,566,271 $843,872,101 902,483 1.59 3 The present value of energy cost savings is a moving target based on energy prices in a given region at a given point in time. 4 Costs associated with achieving a 20 percent reduction in energy consumption in state facilities will be determined on a facility by facility basis. The methods we recommend to achieve the goal are outlined in greater detail in the body of the report.
Alaska Energy Efficiency Program and Policy Recommendat ions Page 9
Information Insights Inc.
Recommendations
Circumstances present Alaska with a challenge – and a unique opportunity in 2008. Higher
energy prices cost residents more for heating and electricity, while the state coffers grow with oil
taxes and royalties.
A downturn in the housing market appears likely to make a lean summer for Alaska’s
homebuilders. The situation presents an opportunity to use state funding to spur home and
commercial energy efficiency improvements.
As described in the introduction, efficiency improvements start paying back immediately and
provide long-term cost savings. They also reduce greenhouse gas emissions, mitigating Alaska’s
impact on the climate.
A wide variety of actions can impact Alaska’s energy use. For purposes of this report, we have
focused on those that:
· The State of Alaska can influence through incentives or requirements
· Provide cost savings to Alaska residents and businesses
· Have experienced measurable results in Alaska or elsewhere
· Provide a financial return on investment
Our recommendations are broken out into nine categories:
· State Leadership
· Funding Energy Efficiency
· Public Education and Outreach
· Baseline Data
· Existing Residential Buildings
· New Residential Construction
· Existing Commercial Buildings
· New Commercial Construction
· Public Buildings.
Within each of these categories, we recommend actions that can be taken in 2008; many require
a long-term commitment in order to achieve the best results.
State Leadership
1. The Governor should articulate an energy efficiency vision for Alaska.
2. The Governor should designate a sub-cabinet for State end-use efficiency programs.
Alaska Energy Efficiency Program and Policy Recommendat ions Page 10
Information Insights Inc.
Funding Energy Efficiency
3. The state should fund energy efficiency programs through legislative appropriation.
4. The RCA should implement a System Benefit Charge to support end-use efficiency programs,
or
5. The state should capitalize an end-use efficiency endowment to support end-use efficiency
programs.
6. The state should offer matching grants to local governments interested in creating a local
energy plan that incorporates energy efficiency and conservation.
Public Education and Outreach
7. The Legislature should fund a comprehensive public awareness campaign with at least
$1,000,000 per year.
Baseline Data
8. The Alaska Housing Finance Corporation and Alaska Energy Authority should conduct an
end-use survey of residential and commercial energy consumers.
9. The Alaska Energy Authority should establish and report an Energy Use Index (EUI) for all
public buildings.
Existing Residential Buildings
10. The Legislature should significantly increase funding for Low-Income Weatherization.\
11. AHFC should create a certification and training program for energy retrofit and energy
efficient new construction.
12. AHFC should subsidize up to 100 percent of costs for home energy audits for households not
eligible for low-income weatherization, and offer low-interest loans for energy conservation
improvements.
13. The Legislature should fund a pilot Smart Meter program through AHFC/AEA.
New Residential Construction
14. The Legislature should adopt BEES as the new state residential energy efficiency building
code.
15. The State Division of Corporations, Businesses, and Professional Licensing should enforce
regulations on building codes and contractor licensing to ensure quality and energy efficiency.
Existing Commercial Buildings
16. The AEA should subsidize energy audits for commercial facilities and offer loans for energy
efficiency improvements.
17. The RCA should require utilities to implement Pay As You Save loan programs.
Alaska Energy Efficiency Program and Policy Recommendat ions Page 11
Information Insights Inc.
New Commercial Construction
18. AEA should contract for a stakeholder process to develop a commercial energy efficiency
building code.
Public Buildings
19. The Governor should direct each state agency to reduce energy consumption in its facilities
by 20 percent from 2000 levels by 2020.
20. The Board of Regents should direct the university to reduce energy consumption in its
facilities by 20 percent from 2000 levels by 2020.
21. The Legislature should fund an energy audit for every school in the state.
22. The state should fund AEA to revive the Institutional Conservation Program to offer public
K-12 schools energy conservation matching grants.
23. The Alaska Energy Authority should establish a low- interest loan program for public
facilities to make energy efficiency improvements, with payments geared to projected savings.
Alaska Energy Efficiency Program and Policy Recommendat ions Page 12
Information Insights Inc.
State Leadership
1. The Governor should articulate an energy efficiency vision for
Alaska.
Alaska’s route to energy efficiency must begin with a clear vision communicated by the state
leadership. The Governor has partially addressed the issue in her Administrative Order 238,
establishing the Climate Change sub-Cabinet. That group will develop recommendations for:
“...the opportunities to reduce greenhouse gas emissions from Alaska sources, including the
expanded use of alternative fuels, energy conservation, energy efficiency, renewable energy,
land use management, and transportation planning; and
“...the opportunities to reduce greenhouse gas emissions from the operations of Alaska state
government.”5
Other states’ governors have been more explicit about energy efficiency goals. California
Governor Arnold Schwarzenegger, for example, set a goal for California of reducing energy
consumption in buildings 20 percent by 2015 from 2003 levels. Far from stopping there,
California has an overall goal of reducing greenhouse gas emissions by 80 percent from 1990
levels by 2050.
We recommend Governor Palin adopt similar goals, expressed in clearly measurable terms, such
as:
· Alaska shall have a policy to reduce energy consumption in buildings 20 percent by 2020
from 2000 levels.
· The State of Alaska and its political subdivisions shall set an example by reducing energy
consumption in state-owned facilities by the same amount – reducing consumption 20
percent by 2020 from 2000 levels.
· The State of Alaska shall implement energy conservat ion measures wherever they are
cost-effective – in facilities, purchasing, transportation, etc.
The political climate is ripe for leadership in energy conservation. Citizens of the state face an
uncertain economic future and rising utility costs; people are looking for relief and the state can
provide a path to reduced monthly bills and long-term energy security.
2. The Governor should designate a sub-cabinet for State end-use
efficiency programs.
It is important to maintain a distinction between energy supply-side planning and energy
demand-side planning. Too often they are lumped together and the supply side becomes
dominant. Even though energy efficiency efforts usually bring significant cost savings, with a
lack of focus on these demand side efforts, little action occurs.
5 Governor Sarah Palin’s Administrative Order #238, sections 10 and 12.
Alaska Energy Efficiency Program and Policy Recommendat ions Page 13
Information Insights Inc.
Alaska’s existing energy efficiency policies and programs are spread through a variety of state
entities, as shown in the report appendices listing the statutory and regulatory basis of existing
programs. The most significant roles include:
· AHFC – The Alaska Housing Finance Corporation has a broad range of residential
housing energy efficiency programs and services, including low-income weatherization,
energy efficient home mortgages, outreach and education.
· AEA – Alaska Energy Authority can issue bonds for energy conservation projects,
provides energy efficiency technical assistance and is funding a variety of end use
efficiency projects in villages, focusing on public facilities.
· DEC – The Department of Environmental Conservation has statutory responsibility for
thermal and lighting efficiency standards and for training public building maintenance
officials.
· DOT/PF – The Department of Transportation and Public Facilities is responsible for
capital construction and maintenance of state facilities, and has statutory responsibility
for energy conservation programs in state facilities.
· OMB – The Governor’s Office of Management and Budget reviews and approves state
agency budget submittals, and prepares the Governor’s budget request for all programs,
including energy efficiency programs.
· RCA – The Regulatory Commission of Alaska regulates electric utilities and authorizes
spending for utility energy efficiency programs.
· UA – The University of Alaska Board of Regents is responsible for university capital
construction and facility maintenance.
With efforts spread through state government, it is easy to lose focus on the overall state effort.
We recommend the Governor designate a sub-cabinet for state end use efficiency programs in
order to achieve the recommended goals. We see the sub-cabinet in a coordinating and coaching
role, and not necessarily as the implementer of state energy efficiency policies.
The sub-cabinet on energy efficiency should include representatives of AHFC, AEA, DOT/PF,
DOLWD the Regulatory Commission of Alaska (RCA) and the University of Alaska, and should
be charged with developing coordinated approaches toward meeting the Governor’s goals,
promoting and coordinating cost-saving energy efficiency measures in state agencies, developing
common performance measures for accountability, and developing policy, program and budget
proposals. The energy efficiency sub-cabinet should coordinate closely with the Governor’s sub-
cabinet on climate change.
Alaska Energy Efficiency Program and Policy Recommendat ions Page 14
Information Insights Inc.
Funding Energy Efficiency Programs
It is easy to see similarities between the political and economic climate now and in the early
1980s. That was the last time the state made significant headway in energy conservation. Then,
like now, state coffers are flush with cash resulting from high fuel prices. Last time, there was
generally no long-term financing method attached to legislated programs and policies, resulting
in many unfunded mandates and short-lived programs.
3. The state should fund energy efficiency programs through legislative
appropriation.
The 2008 building season provides an opportunity to jump-start energy efficiency programs in
Alaska. While we advocate a long-term funding source in recommendation 4, below, that
approach does not provide funding to take advantage of the immediate opportunity – or the
immediate need for energy efficiency relief for Alaska residents.
We therefore recommend legislative funding of the energy efficiency programs as shown in the
budget section above. Current state funding is inadequate for energy efficiency programs; the
only way by which significant progress can be made is through an infusion of state funds. The
housing programs can be paid for with portions of the AHFC dividend, but other programs will
need general fund appropriation, or funds borrowed by AHFC and AEA for the recommended
loan programs.
In the long term, the System Benefit Charge and bond funds from AHFC and AEA can address
most of the recommendations, but state funding is appropriate and will be required for certain
energy efficiency projects as noted in the budget.
The options outlined in the next two recommendations are means through which certain energy
efficiency programs might be funded in Alaska indefinitely.
Creating and implementing energy efficiency programs and policies is not a short-term project,
just as high energy prices are not a short-term problem.
4. The RCA should implement a System Benefit Charge to support end-
use efficiency programs, or
Twenty-seven states in the U.S. and three provinces, representing more than one-third of
Canada’s population, spent roughly $2.6 billion in energy-efficiency programming in 2006.
Implementation of a system benefit charge raised the great majority of this money. The two other
most common sources of funds are: procurement funding where utilities apply to the state for
funding to support their efficiency programs as part of Integrated Resource Planning; and Cap
and Trade – a method by which polluters pay for the right to produce emissions.
Utilities in Alaska are significantly under-investing in end-use efficiency programs compared to
national norms. Only Alabama, Oklahoma, Arkansas, Louisiana and Maryland utilities spend
less per capita. Montana utilities spend nearly 54 times as much per person on end-use efficiency
programs as Alaska utilities, $8.63 versus $0.16 respectively. 6
6 State Energy Scorecard for 2007
Alaska Energy Efficiency Program and Policy Recommendat ions Page 15
Information Insights Inc.
Table 2 Energy Efficiency Spending - Select States
State 2004 Total
Spending
($000)
Per Capita
Spending
($)
Ranking by
Spending Per
Capita
Score
Alaska $ 103 $ 0.16 40 0.0
Montana $ 8,002 $ 8.63 14 5.5
Washington $ 88,522 $ 14.26 5 9.5
Vermont $ 14,000 $ 22.54 1 15.0
California $ 380,009 $ 10.68 10 7.0
The Regulatory Commission of Alaska (RCA) should exercise its authority to implement a
system benefit charge of $0.002 per kWh for residential, commercial and industrial users with a
set cap for industrial users. This is the option we prefer over the legislative funding approach
listed below. It would generate approximately $3.2 million for energy efficiency programs
through charges only to residential users, but that could rise to more than $12 million per year if
the charge applied to all users.
Benefits:
· Long term and consistent funding source
· Low cost per ratepayer, averaging $1 per month for residential users, $2 for small
commercial
· Not dependent on price of oil
· Dedicated resource
· Increases with use, both moving with population and reinforcing the idea that increased
use increases cost
Challenges:
· Alaska utilities have historically operated in a weak regulatory environment; it is unlikely
the RCA will exercise its authority to implement a systems benefit charge without a
mandate from the Governor or from the Legislature.
In 2003, the Alaska Governor’s Energy Advisor prepared an interim report on energy policy and
strategy. The report notes “Energy conservation must be encouraged for all Alaskans.” The
recommendation at the time was for a public benefits program within energy utilities to create
incentives to reduce energy consumption. This is essentially a System Benefit Charge with
program implementation responsibilities placed with utilities.
Policy makers of all political stripes have been trying for years to get a System Benefit Charge in
Alaska. Resistance from utility companies is usually attributed to a desire not to put any
additional charges onto customer bills. Golden Valley Electric Association (GVEA) staff and
board noticed little, if any, public disapproval from the additional charge to cover energy
efficiency programs7.
The charts below demonstrate potential income from a system benefit charge of $0.002 per kWh.
The potential growth revenue from a system benefit charge can be tied to projected population
and electricity consumption in the Railbelt.
7 GVEA Energy Specialist Todd Hoener
Alaska Energy Efficiency Program and Policy Recommendat ions Page 16
Information Insights Inc.
P oten tia l Sy stem Ben efit Ch a r ge ba sed on $.002 per kWh
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
Ch uga ch Electr ic GVEA Hom er Electr ic MEA ML&P
R even u e - a ll u ser s
R even u e - r esiden tia l u ser s on ly
5. The state should capitalize an end-use efficiency endowment to
support end-use efficiency programs.
The state could capitalize an endowment with $200 million, with a five percent annual payout.
Such an endowment would provide approximately the same amount of funding as the Systems
Benefit Charge listed above. We believe the Systems Benefit Charge is the preferable option,
but the current state budget surplus provides an opportunity to consider the endowment
approach.
Benefits:
· Long term and consistent funding source
· Committed money
6. The State should offer matching grants to local governments
interested in creating a local energy plan that incorporates energy
efficiency and conservation.
The state should consider funding to local governments to support local and regional energy
planning. There are innovative solutions being implemented throughout the state based on the
particular assets present in a particular community. Local governments are uniquely positioned
to assist in the development of localized energy plans that consider the assets and challenges
unique to the area.
Alaska Energy Efficiency Program and Policy Recommendat ions Page 17
Information Insights Inc.
Public Education and Outreach
7. The Legislature should fund a comprehensive public awareness
campaign with at least $1,000,000 per year.
Every end-use management and energy efficiency program researched by Information Insights
staff for this study included public education and awareness as an important component of the
overall effort. Every key informant interviewed for the project also stressed the importance of
including public education and awareness.
We recommend a campaign modeled after successful public awareness efforts, such as: seatbelt
use for children and adults; fire alarms in every home; tobacco control; and dangers of drinking
while pregnant. Lessons learned from these campaigns indicate that to be successful a campaign
must:
· Be sustained
· Be truthful
· Deliver the message through a variety of media
· Focus on what people care about—in the case of energy efficiency, this means cost
and impacts of inaction
The public awareness campaign needs to recognize the different needs and approaches for
differing segments of the Alaska public, encouraging lower income residents to apply for low-
income weatherization, while higher income residents can use the new rebate program, low
interest loan options, or fund energy efficiency improvements themselves.
We recommend that this campaign ramp up in subsequent years to $800,000 annually, funded by
the System Benefit Charge, earnings from the energy efficiency endowment, or by legislative
appropriation.
$800,000 per year
· Workshops for commercial and residential
· Public speakers
· Media campaign – radio, TV, print
· Labeling buildings with energy information – commercial and residential
$200,000 per year
· Outreach
Alaska Energy Efficiency Program and Policy Recommendat ions Page 18
Information Insights Inc.
Collect Baseline Data
Cost of Recommendations:
Year one = $225,000. Cost over 10 years including year one = $425,000.
The most recent comprehensive survey of energy end-use in the Railbelt was conducted two
decades ago in 1988. Both energy efficiency technology and awareness have progressed
considerably in that time. Understanding how people use energy will help policy makers and
program managers better target their efforts. The European Union residential end-use survey
found the majority of household electricity consumption came from lighting and six basic
appliances; all end-use efficiency actions were targeted to those uses. While in Europe 29
percent of household electricity consumption goes to light ing8, in the United States the
breakdown of residential energy consumptions looks quite different:9
· 49 % Heating/air conditioning
· 13 % Water heater
· 10 % Lighting
· 8 % Other
· 7 % Electronics
· 6 % Clothes washer and dryer
· 5 % Refrigerator
· 2 % Dishwasher
More significantly, energy conservation program and policy effectiveness cannot be measured
without establishing a current baseline. Collecting baseline data is the first step in launching a
meaningful energy efficiency program. Energy users and policy makers will be encouraged if
they have evidence that energy efficiency measures are working and will have the opportunity to
change course if they are not.
The passage of a significant boost to low-income weatherization programs and the creation of the
home energy rebate program by the 2008 legislature presents an opportunity to improve the
understanding of these programs’ effects. A portion of AHFC’s baseline data collection should
include a survey of homes that have been weatherized, measuring energy use to determine the
reliability of estimates and actual results achieved. AEA should determine an effective method
to gather energy savings data for commercial and industrial users.
8 European Commission Joint Research Centre http://ec.europa.eu/dgs/jrc/index.cfm
9 US Department of Energy Office of Energy Efficiency and Renewable Energy http://www.eere.energy.gov/
Alaska Energy Efficiency Program and Policy Recommendat ions Page 19
Information Insights Inc.
8. The Alaska Housing Finance Corporation and Alaska Energy
Authority should conduct an end-use survey of residential and
commercial energy consumers.
AHFC and AEA should conduct a household survey to collect information about energy end-use
and user behavior. Overall analysis should include survey data, AKWarm10 data and utility data.
The purpose of an end-use survey is to determine the specifics of residential energy consumption
– how many people use electric hot water heaters versus gas; average age of refrigerators and
industrial walk-in freezers in Alaska; the number of people and businesses that have switched to
efficient lighting; and so on.
Baselines should be established by facility type and type of user.
· Quantify current energy use by
o Residential – per household and type of user, i.e. multi-family versus single
family
o Commercial/public – square footage and type of user, i.e. hours per year of
facility use; number of daily users
AHFC and AEA need to establish mechanisms for updating energy user data on an annual or
biennial basis. Costs associated with these recommendations should be included in overall
program administration.
The effect on homeowners and business owners of the recent run-up in energy prices (and in
Juneau, the effect of temporary electrical transmission problems), has resulted in a variety of
responses by state and local policy-makers. Additional information on end uses, updated
periodically, would assist state and local policy-makers in choosing among policy options.
9. The Alaska Energy Authority should establish and report an Energy
Use Index (EUI) for all public buildings.
The AEA should establish an energy use index for all public buildings, employing user and
utility information. AEA should act as clearinghouse for EUIs, collecting and standardizing end-
use information specific to Alaska. Energy use is usually then reported out in relation to square
footage, type and hours of use, number of users, etc.
The Oregon Energy Trust has developed a simple and easy-to-use tool utilized by public schools
in Oregon and Northern California based on the following ideas.
· A simple EUI can be established with 12 months energy use data (utility bills) and basic
information about buildings use
· EUIs will help guide energy efficiency program funding to the highest users
· The EUI will serve the function of supplying basic baseline energy use information for
public facilities
We recommend the state contract for coordination and consolidation of EUI data; an estimated
one-time cost of $50,000 would cover this effort. Set-up for such an endeavor would include
10 AKWarm database housed at AHFC includes energy ratings on more than 25,000 households in Alaska.
Information on energy used for home heating can be found for homes in parts of state the fuel source used for home
heating is not used for other purposes.
Alaska Energy Efficiency Program and Policy Recommendat ions Page 20
Information Insights Inc.
choosing or developing a data gathering tool; working with Alaska DOT/PF to identify the
contact person at each facility; contact and assistance to collect information; and consolidation of
data. The state could choose to keep this project in-house but it is unlikely that costs would be
reduced, they would just be less apparent.
Alaska Energy Efficiency Program and Policy Recommendat ions Page 21
Information Insights Inc.
Existing Residential Buildings
High energy prices impact existing homeowner energy bills, while increasing state general fund
revenues. This combination of circumstances argues for a special effort in 2008 to create new
programs for residential energy efficiency – and expand existing ones – to help Alaska residents
reduce energy bills, and to help Alaska’s builders and their construction workers weather the
market downturn.
In 2005 the estimated statewide housing stock was 278,118 units. These units represent a broad
range in both quality and age. More than half of the housing stock statewide is more than 21
years old. According the 2005 Statewide Housing Needs Assessment survey of households, there
are an estimated 20,741 units in need of major repair in 2005. Survey findings included:
· Of the more than 1,500 survey respondents, roughly 7.5 percent, indicated their housing
was in need of repair that they were unable to make.
· Five percent of people who live in homes with 300 square feet per resident or fewer also
report living in a dwelling that is falling apart and in need of replacement.
· Sixty-eight percent of households with less than $10,000 annual income report having
homes that are drafty.
In addition to variability in condition and age of housing stock the climate in Alaska plays a
significant role in home heating. The mean heating degree days for Anchorage from 1991 to
AHFC Weatherization Regions
Alaska Energy Efficiency Program and Policy Recommendat ions Page 22
Information Insights Inc.
2000 was 10,470 while in Fairbanks it was nearly 14,000 for the same period. Factors such as
temperature and wind are factored into the estimates of annual savings for weatherization energy
conservation measures.
10. The Legislature should significantly increase funding for Low-Income
Weatherization.
The low-income weatherization program was created in the 1970s in response to the energy
crisis of the day. The program offers weatherization services to eligible low-income households
in Alaska. In 2007 just over 600 homes received weatherization services and more than 500 were
waitlisted. According to the 2005 Alaska Housing Assessment there are more than 45,000
eligible homes throughout the state with an estimated 24,445 low-income households unable to
maintain a comfortable room temperature. Those 24,445 homes should be the highest priority
for low-income weatherization, but it is likely that all 45,000 would see net energy savings
benefits from the program.
State funding of weatherization has increased since 2000 but has a long history of significant
changes in funding from year to year. The graph below illustrates the volatile nature of state
funding for weatherization programs.
State Funding - Low Income Weatherization
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Current funding allocated for each home is $6,000 for urban homes and $15,000 for rural home.
Allocations per home have been held down for several years and are no longer sufficient. Due to
funding limitations the number of homes served has decreased and those homes receiving
services are not provided with all cost effective measures. AHFC weatherization staff
recommends a rate of $10,000 per urban home and $25,000 per rural home. This new funding
level recognizes erosion to services that have resulted from the increased cost of labor and
materials not being met with an increase in funding.
Alaska Energy Efficiency Program and Policy Recommendat ions Page 23
Information Insights Inc.
The budget for weatherization until this year was $6.4 million, annually, including both state and
federal funding. Addressing the needs of all 45,000 eligible homes would cost $486 million, in
addition to this year’s $200 million capital appropriation. Weatherizing two-thirds of the homes
to get an average 20 percent energy reduction would cost $257 million, including the current
appropriation.
Table 3 Low income weatherization annual budget breakdown
Distribution of
homes
Number of
homes
Cost per home Cost for all
eligible homes
Urban 65 % 29,250 $10,000 $292.5 million
Rural 35 % 15,750 $25,000 $393.6 million
TOTAL 100 % 45,000 $686.1 million
New $ $486.1 million
According to a 2006 study conducted by the Oak Ridge National Laboratory (ORNL) the
average natural gas heated house that participates in the low income weatherization program sees
a 32.3 percent decrease in energy consumption for space heating.
Recent legislation has increased the income limit for participation in the low income
weatherization program to 100 percent of median household income, making eligible tens of
thousands of additional households. Increasing income limits brings services to a population of
people who are traditionally ineligible for services but often lack the financial capacity to pay for
household efficiency improvements themselves.
The interim report that was presented prior to the passage of this legislation argued for increasing
the limit to 80 percent of median household income. Households earning 60 to 80 percent of
median income - $35,636 to $47,514 in 2006 dollars – are often not able to save the money
necessary to pay for home weatherization themselves. Approximately 26,454 households in
Alaska have incomes at 60 to 80 percent of median income. Weatherizing these homes would
cost just over $400 million; weatherizing two-thirds would cost $267 million.
However monies are ultimately distributed we recommend that priority be given to lower income
households who are as yet, underserved by current weatherization programs and have the
greatest need for financial relief.
Data from the low-income weatherization program stored in the AKWarm database was used to
develop the table below, showing historic costs and savings of weatherization efforts statewide
and regionally.
Alaska Energy Efficiency Program and Policy Recommendat ions Page 24
Information Insights Inc.
Table 4 Historic average costs and annual savings per house – low income weatherization program
Region
Install
cost
Savings
annual
Present
value of
Savings B/C11
Energy
rating
points
CO2
reduction
(lbs)
Rating
Point
increase
Southcentral $ 7,777 $ 427 $ 6,270 1.07 82.96 34,280 14.1
Interior $ 4,303 $ 518 $ 6,838 2.00 72.55 49,458 12.5
Four Dam
Pool $ 3,274 $ 356 $ 5,280 1.91 65.05 21,822 18.7
Other AK $ 6,910 $ 696 $ 10,700 2.00 73.52 23,245 17.7
Statewide $ 6,518 $ 526 $ 7,565 1.58 77.48 34,962 15.0
Notes on Quantitative Analysis
There have been no controlled experiments to determine the savings received from incremental
versus comprehensive weatherization services. Energy savings estimates are based on an average
of homes that received a wide variety of services, from simple caulking to comprehensive
heating system and insulation retrofits.
AHFC maintains the AKWarm database with more than 25,000 records of homes that have
received energy audits. Several thousand of these homes are recipients of low-income
weatherization program services.
The AKWarm software takes household information entered by an energy auditor and estimates
the most cost effective energy conservation measure. The software then estimates energy
consumption for the house before and after applying the measure; this function is repeated until
several energy conservation measures are included for each house. The AKWarm database offers
invaluable and plentiful data on actual houses in Alaska; the software also offers a model by
which to estimate potential savings. Unfortunately there are few “actual” data points taken after
weatherization services have been provided to measure real reductions in energy use.
Ease of Implementation
AHFC already has contracts with existing weatherization programs statewide:
· Municipality of Anchorage serves the Municipality of Anchorage.
· Interior Weatherization serves Fairbanks North Star Borough and the road system south
to Cantwell and east to Delta junction.
· Tanana Chiefs Conference serves interior Alaska.
· Alaska Community Development Corporation serves the Matanuska-Susitna Borough,
Kenai Peninsula Borough, Copper River Valley, Southeast Alaska (except Juneau),
Prince William Sound and Aleutians.
· RurAL CAP serves western Alaska, northern Alaska and Juneau.
11 The benefit cost ratio is the present value of all benefits from a project divided by cost of implementing the
program. In benefit cost analysis values should be estimated for all impacts (costs and benefits) future and present.
Alaska Energy Efficiency Program and Policy Recommendat ions Page 25
Information Insights Inc.
The biggest challenge to implementation is lack of skilled workers. CCHRC estimates a need for
30 or more additional qualified energy raters, and for a concerted effort to train-up the current
workforce to do energy conservation work, and is working with AHFC to begin the training
necessary for both raters and construction workers. Workforce development is addressed in more
detail in the following recommendation.
Timeline
Immediate implementation once money is appropriated
Assumptions
Three percent discount rate
The workforce needed to implement the recommendation will be available.
11. AHFC should create a certification and training program for energy
retrofit and energy efficient new construction.
We recommend that AHFC fund a collaborative effort between AHFC, CCHRC and the Alaska
Works Partnership to create a certification and training program to develop the workforce
necessary to implement energy efficiency retrofits and new construction.
Include energy retrofit and energy efficient new construction curricula at AVTEC and six new
construction academies. An Alaska energy conservation building curriculum should be included
in the general construction curriculum in Alaska. One model of builder education has been to
teach the code – the minimum acceptable level. A better model is to teach best practices in
building science; this is the model Alaska should employ.
Energy contracting is a growing industry in the lower 48 states. Homeowners are beginning to
understand that home energy use is not a fixed amount. Many homeowners are making energy
conservation investments in their properties because they see immediate results in lower utility
bills, extending the life of the house, and increasing the market value of the house.
Weatherization programs around the state, AHFC, Alaska Building Science Network (ABSN),
CCHRC, Green Star and others all report a consistently increasing number of inquiries from
homeowners looking to reduce their energy consumption and reduce their monthly bills. These
consumers are willing to pay for energy improvements to their homes but the market lacks
enough qualified people to do energy conservation work.
This is workforce development that could employ a number of people consistently and
indefinitely.
Alaska Energy Efficiency Program and Policy Recommendat ions Page 26
Information Insights Inc.
12. AHFC should subsidize up to 100 percent of costs for home energy
audits for households not eligible for low-income weatherization, and
offer low-interest loans for energy conservation improvements.
The U.S. slowdown in housing sales is hitting Alaska, affecting the prospects for Alaska’s
builders this summer. Many observers predict a very slow season for new housing starts, as
builders sit on unsold inventory from 2007.
At the same time, high energy prices are affecting existing homeowner’s energy bills, and
increasing the state general fund revenues.
This combination of circumstances argues for a special effort in 2008 to create new programs –
and expand existing ones – for residential energy efficiency. Taking advantage of this
opportunity will help Alaska residents reduce energy bills, and will help Alaska’s builders and
construction workers weather the market downturn.
AHFC should offer low-interest loans to medium and upper income households - those not
covered by other programs12 - to implement energy conservation measures. AHFC should
provide an automatic offer to add an efficiency loan at time of purchase and should send mail-
outs to AHFC mortgage holders already in their homes. Efficiency loans would include an
energy audit and recommendations for improvements. AHFC should offer a list of certified
auditors and contractors proficient in residential energy conservation retrofits.
Key to the success of this loan program will be advertising its existence. Existing energy
efficiency mortgage and interest rate reduction programs nat ionwide are underutilized in large
part because no one knows about them. Lenders have no incentive to inform their clients about
these programs because they create additional work with no additional income.
Lender incentives, extensive awareness campaigns, or some combination of the two are
necessary for full implementation. Once up and running, delinquency rates should be minimal -
people will have reduced utility bills and the relative increase in monthly bills will be small.
Most existing energy efficiency loan programs require a lien be placed on the property as
insurance for the loan; we recommend AHFC follow suit. Loans should target homeowners with
homes built prior to 1992 when BEES was implemented.
AHFC has as much experience with loans as anyone in the state and will exercise sound
judgment in determining the specific terms of the loan. One item that ought to be weighed
carefully is whether or not setting a minimum will act as a deterrent to potential customers.
There are many examples of energy efficiency loan programs and most of them have several
energy conservation measures in common. We recommend that AHFC adopt those measures that
have demonstrated success in other places as well as in Alaska, including:
· Shell – insulation/sealing/caulking
· HVAC – right-sizing/upgrading to more efficient system
· Lighting – residential retrofit
12 Note that the 2008 legislature funded the weatherization program for HH up to 100 percent of median income –
prior to the 2008 legislative session only HH at or below 60 percent of median income were eligible for
weatherization services.
Alaska Energy Efficiency Program and Policy Recommendat ions Page 27
Information Insights Inc.
· Water heaters – right-sizing/upgrading to more efficient system
The Oregon Trust offers 11 residential and commercial energy loan programs. The programs
loan $20,000 to $20 million with no maximum amount. Terms generally run five to 15 years, the
only requirement being payback within the life of the project – so if the loan were for a lighting
retrofit with a three-year payback the terms of the loan would include a three-year payback
period.
Eligible energy efficiency measures include: water heaters, lighting, chillers, boilers, heat pumps,
air conditioners, CHP/cogeneration, heat recovery, programmable thermostats, energy
management systems/building controls, caulking/weather-stripping, duct/air sealing, building
insulation, windows, motors, irrigation, and wastewater treatment.
Program costs:
Funding weatherization agencies to perform 100 percent subsidized energy audits on 500 eligible
homes has a total cost of $500,000 per year. Homeowners realize all savings after they
implement energy conservation measures; if they choose not to weatherize their homes, the
energy audit is a sunk cost. As long as half of the homes audited choose to weatherize their
homes, absorbing the audit cost of those who did not, the benefit cost ratio would still be greater
than one.
Ease of Implementation
AHFC has extensive experience with residential loan programs in Alaska. Creating and rolling
out a new loan program should be relatively straightforward.
Workforce: Existing weatherization programs would have to hire 2.8 FTE new auditors,
assuming four audits per week per auditor. The success of this effort relies on the availability of
skilled energy auditors. Existing weatherization programs are the ideal setting for on-the-job
training for energy auditing.
Timeline
Implement as soon as funds are appropriated
13. The Legislature should fund a pilot Smart Meter program through
AHFC/AEA.
Smart meters tell consumers how much energy they are using at the moment they are using it.
The meters also will detail how much that energy is costing. A recent study by the Department of
Energy found that the more information energy consumers had about their consumption the more
likely they were to behave in a more efficient way – reducing energy consumption by around 10
percent. Some of the reduction is attributable to consistent energy use behavior outside of peak-
shaving times – if you turn off your lights during peak times you don’t then leave them on for
longer at a different time.
Smart meters have generally been deployed to reduce demand load during peak times. Alaska
does not face peaks in electricity demand that challenge the capacity of our utility system. In
practice what has been found is an overall reduction in energy consumption when smart meters
are introduced.
Alaska Energy Efficiency Program and Policy Recommendat ions Page 28
Information Insights Inc.
Potential pilot size and budget
· 1,250 meters in Anchorage
· 500 meters in Wasilla/Palmer
· 500 meters in Fairbanks
· 250 meters in Juneau
· 2,500 meters into five villages
Program costs total $1,875,000, comprised of $875,000 in the four urban communities and the
remaining $1,000,000 in five rural villages. We assume a cost of $300 per meter, with $50
installation costs in urban Alaska and $100 in rural villages; we also assume participation of
utilities. Smart meters run from $100 to $500 per unit and have varying levels of “smarts” - $300
is a mid-range unit.
In-kind administrative support should be offered by participat ing utilities in the form of project
monitoring and reporting monthly results for one year.
Table 5 Projected savings – smart meters
#
HH
Average
kWh/HH
5 percent
reduction
Total kWh
savings
B/C13 Total carbon
reduction
(tons)
5,000 10,656 532.8 13,320,000 4.18 8,798
If the pilot proves successful we recommend expanding the program. The province of Ontario
and the United Kingdom are both currently in the process of replacing all meters with smart
meters. California also has an extensive smart metering program. Advocates of smart meters
claim a ten percent reduction in energy consumption; we have used a more conservative figure of
five percent based on the assumption that high levels of savings cannot be achieved without
implementing a variable rate structure for energy.
In addition to state and utility funding for smart meters we recommend that AHFC add smart
meters as an allowable efficiency measure for Housing Authority supplemental grants and the
low-income weatherization assistance program.
13 The benefit cost ratio is the present value of all benefits from a project divided by cost of implementing the
program. In benefit cost analysis values should be estimated for all impacts (costs and benefits) future and present.
Alaska Energy Efficiency Program and Policy Recommendat ions Page 29
Information Insights Inc.
New Residential Construction
Residential new construction in Alaska boomed from 2001 through 2006, with between 4,179
and 4,709 new units being added each season. Following the recent burst in the housing bubble,
the sub-prime mortgage crisis, the credit crunch and uncertainty about the economy, it is likely
that the industry should prepare for slower years in the foreseeable future.
However, even in slow years new homes are constructed. Members of the building community
and Alaskans who work in the energy conservation field know that the biggest impacts on
residential energy consumption are through improving the efficiency of housing stock. The
science needed to build these homes is readily available and the majority of builders utilize
energy conservation techniques to some degree.
14. The Legislature should adopt BEES as the new state residential
energy efficiency building code.
It is difficult to quantify the impact of creating a residential energy efficiency building code
because there is so little information about homes that are built below that standard. The
AKWarm database maintained at AHFC holds more than 25,000 records; the majority of them
are energy audits conducted on homes for the purpose of financing the sale through AHFC,
which will lend on homes that meet BEES.
New homes built without AHFC financing in mind do not get audited. Some of these homes
would surely pass an energy audit and meet the standard; others would not. The majority of the
homes in AKWarm that do not meet BEES receive low-income weatherization services, and the
majority of them are not new homes. Comparing old inefficient homes to new standards is not
realistic.
Anecdotally, there is evidence that AHFC has been successful in influencing the housing market.
Members of the building community in the Anchorage report that Four Star Plus homes are the
norm. Large contractors build to BEES in order to stay competitive and reach the market of
buyers who have AHFC loans. Outside of the Anchorage builders report that standard building
practices generally meet Five Star standards.
Ivan Moore Research (IMR) conducted a survey of Four Star Plus and Five Star plus homes to
evaluate satisfaction level and understanding of the homeowners in February 2001. Moore
randomly selected 1,520 energy efficient housing units from within three energy rated
classifications – Four Star Plus, Five Star and Five Star Plus. Results indicate that people have a
high level of satisfaction with energy efficient housing.
Key findings include:
Mean purchase date May 1999
Mean purchase price of just over $200,000
Just over 63 percent of respondents purchased an energy efficient home to enjoy lower
utility rates
Nearly 50 percent indicated they were motivated by a reduction in interest rates
Only 4.5 percent of respondents reported being dissatisfied with their homes
Alaska Energy Efficiency Program and Policy Recommendat ions Page 30
Information Insights Inc.
More than 60 percent of respondents actually received an interest rate reduction when
purchasing their home
Reasons for dissatisfaction included anticipated savings, durability and efficiency of
homes falling short of expectation.
Most respondents – 81.2 percent – indicated they would be very likely to purchase an
energy efficient home again.
The tables below show the marginal change in energy consumption when moving from one
energy rating level to the next. All homes sampled were built between 2000 and 2007.
Unfortunately there were only 14 Four Star homes in AKWarm, making analysis of the change
between Four Star and Four Star Plus impossible.
We do not know how many newly built homes do not meet BEES standards, and because they
are not rated we also do not know their real energy consumption. We do know that major
builders are constructing to BEES standards to remain competitive and that there are
demonstrated and real energy savings in efficient building practices.
Even if impacts are not immediately evident, raising the bar on residential construction is an
important piece of consumer protection policy. Tying the state Railbelt/Four Dam Pool
residential energy efficiency building code to AHFC standards ensures that the code will be a
living document, receiving a critical eye and regular review.
Table 6 Energy use per year – by BEES energy ratings
Stars # of houses Average
floor area
Average
energy cost
(2007 dollars)
Average
energy cost
per sq ft
Average
C02
(tons annually)
5 Star Plus 92 2,203 $ 1,369 $ 0.62 11.4
5 Star 1,428 1,873 $ 1,495 $ 0.73 12.0
4 Star Plus 5,435 1,842 $ 1,495 $ 0.81 13.7
Ease of Implementation
AHFC recently adopted changes to BEES, recommended by CCHRC, with almost no negative
feedback. The ease of that change results from a posit ive working relationship with the building
community. Establishing this same standard for the Railbelt and Four Dam Pool should receive
relatively little resistance since the majority of the people it will impact have already bought in.
AHFC should enlist CCHRC to work with the Alaska State Homebuilders Association and state
policy-makers to develop a consensus proposal for introduction in the next legislature.
Timeline
Recommend adoption spring of 2009
Alaska Energy Efficiency Program and Policy Recommendat ions Page 31
Information Insights Inc.
15. The State Division of Corporations, Businesses, and Professional
Licensing should enforce regulations on building codes and
contractor licensing to ensure quality and energy efficiency.
Building inspection quality assurance is an important piece of consumer protection, particularly
for residential properties. A consumer who purchases a home based on the belief that it passed
energy efficiency inspection has little recourse upon learning that the inspector did not do their
job. There is currently no state government employee whose sole function is to do periodic
check-ups and site inspections to assure that building inspect ions are of sufficient quality to
ensure results; contracted building inspectors operate with limited oversight.
When a statewide residential building code is adopted it will be important to enforce the code,
which will require inspectors or oversight of private inspectors. We recommend three new
positions within the state Division of Corporations, Businesses, and Professional Licensing.
The state should add provisions to existing contractor licensure for an energy efficiency
endorsement, requiring the contractor to demonstrate education and experience with energy
efficient technologies and building retrofits.
Ease of Implementation
It has been challenging to obtain support for adding new positions in state government, but
achieving the state energy efficiency goals without state enforcement would be difficult.
Timeline
Implement as soon as funds are appropriated for new positions.
Assumptions
The salary for building inspectors would be an average of $50,000 per year, plus 40 percent
overhead costs for benefits.
Three positions: one headquartered in Fairbanks and two in Anchorage. The positions will
require sufficient travel and training funds.
Home purchasers and sellers at the point of sale would absorb a portion of the added cost of
quality assurance.
Alaska Energy Efficiency Program and Policy Recommendat ions Page 32
Information Insights Inc.
Existing Commercial Buildings
The Alaska Energy Authority previously provided energy audits with no- and low-cost energy
savings recommendations. When the program was active, fuel prices were considerably lower;
there is little evidence on which, if any, of the recommendations were implemented. Recent high
fuel prices have piqued interest in this old program; AEA has received a number of inquiries
from businesses looking for copies of their energy audits. Providing energy audits detailing low-
and no-cost energy conservation measures gives businesses something they can implement with
little or no assistance. Energy conservation measures that require some capital investment can be
addressed through implementation of a Pay As You Save loan program.
16. The AEA should subsidize energy audits for commercial facilities and
offer loans for energy efficiency improvements.
Alaska does not have a state energy efficiency program for commercial facilities, but AEA has
the statutory authority to lend to some organizations for energy efficiency and energy
conservation purposes; AIDEA has statutory authority to lend for all commercial purposes.
We recommend AEA renew its program of commercial energy audits, and expand to offer an
energy efficiency audit/loan program for commercial buildings that mirrors the AHFC program
for residential housing in recommendation 12. AEA would develop a list of certified auditors
and contractors proficient in commercial energy conservation retrofits and would pay 50 percent
of the cost of the energy efficiency audit. AEA would then offer low-interest loans for
improvements suggested by the audit, with repayment periods based on anticipated savings from
the audit.
A simplified energy efficiency loan program, without an energy audit, could be based on those
items that have a reasonably quick payback, including
· Building envelope – insulation/sealing/caulking
· HVAC – right-sizing/upgrading to more efficient system
· Lighting – relamping and fixture retrofits
· Water heaters – right-sizing/upgrading to more efficient system
· Programmable thermostats
As is the case for other energy efficiency programs, advertising its existence is key to the success
of this loan program. Existing energy efficiency and interest rate reduction programs nationwide
are underutilized in large part because businesses do not know about them. Lender incentives,
extensive awareness campaigns, or some combination of the two are necessary for full
implementation.
AEA has shown its ability to move rapidly to meet commercial energy needs, so there should be
few institutional impediments to creating an energy efficiency loan program. AEA’s bonding
capacity gives it the ability to borrow at favorable market rates, which can be passed on to
commercial borrowers in the program.
Alaska Energy Efficiency Program and Policy Recommendat ions Page 33
Information Insights Inc.
17. The RCA should require utilities to implement Pay As You Save loan
programs.
PAYS programs are offered by utilities all over the United States, Canada and the United
Kingdom. A utility creates the parameters within which its program will offer low interest loans
to commercial vendors for energy conservation measures (ECM). The business continues to pay
its pre-ECM utility bill while using less energy until the loan is repaid. Most utilities require that
businesses have work done by a list of approved contractors.
We recommend that Alaska electric utilities offer a limited list of eligible improvements to their
commercial customers including lighting retrofit and purchase of Energy Star approved
commercial appliances.
Fuel providers should be encouraged to offer programs to cover weatherization including
shell/HVAC and Duct/Air sealing.
Ease of Implementation
The accounting function for a PAYS program is relatively simple if the program is run through a
utility. Energy providers have established accounting departments and access to customer
accounts. There would be some additional cost associated with administering a new program but
those costs could be folded into the overall loan.
Timeline
Program start is dependent on availability of funds to capitalize the loan program. Funds could
come from AEA and/or from a System Benefit Charge.
Assumptions
Mandate by RCA, incentive for utilities, or cooperation of utilities
Availability of seed money to start the loan program
Alaska Energy Efficiency Program and Policy Recommendat ions Page 34
Information Insights Inc.
New Commercial Construction
18. AEA should contract for a stakeholder process to develop a
commercial energy efficiency building code.
There is currently no mandatory energy building code for commercial properties in Alaska. It is
in the best interest of businesses to conserve energy, thus reducing costs. Many of the large box
stores and chains operating in Alaska are headquartered in the lower 48; they have a template
building that they construct in all markets allowing standardization in stocking, inventory control
and workflow.
The economic benefits of constructing an efficient building have yet to overcome the benefits of
standardization. However, these companies operate in markets with commercial building
standards and they meet them. Implementing a commercial building code will have little if any
serious negative impact on businesses operating in Alaska.
Once the code is adopted, the state should condition provision of state loans and other financial
assistance upon compliance with the code.
Ease of Implementation
Once an appropriate code is decided upon implementing is a matter of the state codifying the
change.
There is often resistance from the building community to changes in building code and there is
nearly always resistance from the business community if there is the perception that a change
might increase the cost of doing business. It will be important to the success of this
recommendation that buy-in is obtained from the business and building communities.
Timeline
AEA should issue an RFP to perform work as soon as funding is available - 2008
Alaska Energy Efficiency Program and Policy Recommendat ions Page 35
Information Insights Inc.
Public Buildings
There are three main categories of public building in Alaska: state, university, and public K-12
school buildings. Recommendations are provided for each of these distinct groups of buildings.
Although the process for application of energy conservation measures is similar, the financing
mechanisms and incentives are different.
19. The Governor should direct each state agency to reduce energy
consumption in its facilities by 20 percent from 2000 levels by 2020.
· 19.1: Conduct Energy Life Cycle Analysis on all proposed capital projects
· 19.2: Require all new publicly constructed buildings to meet LEED or equivalent
standards
· 19.3 Expand ESCO contracts to retrofit state facilities
· 19.4: Relamp state facilities
· 19.5: Participate in Energy Star procurement
Energy service companies (ESCO) develop, install, and arrange financing for projects designed
to improve the energy efficiency and maintenance costs for facilities. Typically an ESCO will:
· Develop the design and arrange financing
· Install and maintain the energy efficiency equipment (for an agreed period)
· Measure, monitor and verify the project’s energy savings
· Assume the risk that the project will save the amount guaranteed at the start of project
Because ESCOs front the cost of energy improvements there is an interest rate charged on that
loan which is wrapped into the overall payback timeframe – usually seven to ten years. Project
financing is generally tied to projected and actual savings that result from energy efficiency
measures. Measurement and monitoring costs are folded into total project cost.
Large organizations with the internal capacity to implement energy saving retrofits often do not
use ESCOs in an effort to avoid the added cost associated with their services. However, many
organizations that have the capacity in terms of expertise, lack the staff resources or time to
make large scale energy projects happen.
State Facilities:
The State of Alaska owns more than 15 million square feet of facility space. Analysis and
recommendations apply to 9.537 million square feet of this space including nearly 35,000 square
feet located on military bases around the state. The other 5.63 million square feet were removed
from analysis.
The 2007 State facilities data set lists more than 2,200 records and includes facility types ranging
from latrines and covered walkways to office buildings and airport terminals. An inconsistent
naming convention in the database created challenges in determining the type and/or use of each
facility. For the purposes of estimating the impact of end-use efficiency recommendations the
following changes were made to the original data set:
· “Storage” is unheated space and not included in analysis
· “Warehouse” is heated and is included in analysis
Alaska Energy Efficiency Program and Policy Recommendat ions Page 36
Information Insights Inc.
· Latrines and outhouses were removed
· Public use cabins and volunteer cabins were removed
· Boat sheds and other “sheds” were removed
· Covered outdoor space was removed
· Greenhouses were removed
· Parking garages were removed
· Utility, generator and electrical buildings were removed
· Snow removal equipment buildings were removed
Even with the above facilities removed from analysis there is significant variability in use of
state owned facilities. Several facilities are fully operational 24/7, i.e. prisons, youth facilities,
and psychiatric hospital. Others have specific HVAC requirements. It is outside the scope of this
project to assess energy conservation measures specific to each type of state facility. That said,
opportunities exist for significant energy-use reduction by accepting some basic
recommendations. Developing specific energy conservation measures for state facilities will
require significant up-front data collection. The most realistic, or implementable, method to
reduce energy use is to:
· Apply a few tried and true general ECMs to all facilities
· Solicit the services of ESCOs to improve the energy efficiency of all state-owned
facilities, starting with highest energy-use facilities and moving down the list.
Realizing 20 percent savings is achievable through expanded state contracting with ESCOs to
cover more facilities. The up-front cost to the state is mostly administrative and negligible.
Arranging performance contracting through an ESCO that “fronts” the money for energy
conservation measures means there is no need for legislative appropriation.
Table 7 and Table 8 on the following page show the estimated energy use in state facilities and
the projected benefits of a 20 percent reduction in energy consumption in both electric
consumption and space heating.
Alaska Energy Efficiency Program and Policy Recommendat ions Page 37
Information Insights Inc.
Table 7 Annual potential savings – 20 percent reduction in electric energy consumption/state-owned facilities
Region/Fuel
Source
sq ft kWh/
sq ft
Total kWh
(000)
Total
MBtu
20% kWh Net reduction
in CO2 tons
Southcentral/
Natural Gas
3,668,072 12.1 44,384 191,383,808 8,876,734 5,863
Mat-Su &
Denali/ Natural
Gas
552,471 12.1 6,685 28,825,720 1,336,980 883
Kenai
Peninsula/
Natural Gas
718,805 12.1 8,698 37,505,776 1,739,508 1,149
Interior/Coal 839,669 12.1 10,160 43,809,920 1,031,998 2,129
Interior/Oil 279,890 12.1 3,387 14,604,744 677,333 667
4 Dam Pool/
Hydro
804,000 12.1 9,728 41,947,136 1,945,680 0
Other AK/Oil 2,630,221 12.1 31,826 137,233,712 6,365,135 6,266
Military/Coal 34,275 12.1 415 1,789,480 82,946 87
TOTAL 9,527,403 115,282 497,100,296 21,024,316 17,044
Table 8 Annual potential savings – 20 percent reduction in space heating energy consumption/state-owned facilities
Region/Fuel Sq ft MBtu/
sq ft
Total MBtu 20% MBtu Net reduction in
CO2 (tons)
Southcentral/
Natural Gas
3,668,072 41.6 152,591,795 30,518,359 1,785
Mat-Su &
Denali/ Natural
Gas
552,471 41.6 22,982,793 4,596,559 269
Kenai
Peninsula/Oil
718,805 41.6 29,902,288 5,980,458 350
Interior/Oil 1,119,558 41.6 46,573,612 9,314,723 1,785
4 Dam
Pool/Oil
804,000 41.6 33,446,400 6,689,280 269
Other
Alaska/Oil
2,630,221 41.6 109,417,193 21,883,439 350
Military/Oil 34,275 41.6 1,425,840 285,168 1,785
TOTAL 9,527,402 396,339,921 79,267,986 6,593
Alaska Energy Efficiency Program and Policy Recommendat ions Page 38
Information Insights Inc.
Recognizing that a whole building energy retrofit – as with an ESCO – for every state facility
will take several years, we recommend immediate utilization of two energy conservation
measures.
· Re-lamping
· Energy Star Procurement
Relamping
Retrofitting the lighting for state, and other public, facilities will likely be part of any ESCO
contract. However, we recommend that relamping be done on a shorter timeframe than whole-
building retrofits can be achieved. We also recommend whole building group relamping rather
than on a per unit basis. The labor costs associated with changing out light fixtures is
significantly reduced with group relamping. The 44 percent energy savings on lighting energy
conservation measures are based on pre and post measurements taken at eight state-owned
facilities by Siemens as part of their performance contract with the state. Findings are in line with
industry average savings going from T-12 to T-8 lighting.
One third of the program should be funded through legislat ive appropriation with the other two-
thirds picked up by a longer-term funding mechanism such as a system benefit charge or
endowment.
Table 9 Costs and benefits of relamping state facilities
Region
Sq ft
median est
# of
lamps Total cost
Total kWh /
year
44% kWh
reduction
per year PV Savings
Ben/cost
ratio
Southcentral 2,310,885 36,108 $2,527,531
29,344,576
12,911,613 $14,141,807 5.60
Mat-Su &
Denali
Borough 348,057 5,438 $380,687
4,419,768
1,944,698 $2,141,597 5.63
Kenai
Peninsula 452,847 7,076 $495,302
5,750,440
2,530,194 $2,786,374 5.63
Interior 705,322 11,021 $771,445
8,956,464
3,940,844 $4,339,851 5.63
4 Dam Pool 506,520 7,914 $554,006
6,432,000
2,830,080 $3,116,623 5.63
Other Alaska 1,657,039 25,891 $1,812,387
21,041,768
9,258,378 $10,195,781 5.63
Military 21,593 337 $23,618 274,200 120,648 $132,864 5.63
Total program costs are just under $6.6 million. Total present value of savings is almost $37
million dollars and the benefit cost ratio is 5.63. Light ing retrofits are the low-hanging fruit of
commercial energy savings.
Estimates in tables above are based the following assumptions:
Alaska Energy Efficiency Program and Policy Recommendat ions Page 39
Information Insights Inc.
· Median estimate of 63 percent of state buildings utilizing outdated and inefficient lighting
· National average of 64 square feet per lamp for commercial office space
· $70 for 4-lamp T-12 to 2-lamp T-8 change14
· 8 kWh per square foot for pre-retrofit lighting
· 44 percent lighting energy savings
· Three percent discount rate
Timeline
2008 to 2011 assuming funds are made available in 2008
Energy Star Procurement
Energy Star is a project of the US Department of Energy and the US Environmental Protection
Agency. Energy Star continually updates a list of approved efficient appliances. Establishing a
policy to use Energy Star procurement removes the information barrier to efficient procurement
by providing the research necessary to make an informed decision. The rationale for energy
efficient procurement practices is clear.
· Good stewardship of taxpayer dollars
· Good stewardship of the earth
The state should participate in energy efficient procurement practices. Anecdotal evidence
suggests a certain amount of efficient purchasing is already happening.15 Creating a policy of
energy efficient procurement practices would ensure that all departments are participating.
The State of Alaska does not track purchases in a central location but was able to supply
Information Insights with its last 12 months’ purchases from Dell computers. The vast majority
of computers purchased for state use come through this contract. Additionally, several
municipalities and school districts use state purchasing contracts. The information in the table
below represents only computers purchased for state use.
Table 10 Projected savings – Energy Star procurement
Category Qty Diff energy
usage kWh
per item
Energy saved
kWh
Energy
Cost
Savings
Present
Value of
Savings
Ben/
Cost
Computers
Notebook
2,402 24 57,648 $ 5,188 $ 23,761 9.9
Computers
Desktop
6,984 103 719,352 $ 64,742 $ 296,498 42.5
Monitors 58 99 5,742 $ 517 $ 2,367 40.8
Totals $ 782,742 $ 70,447 $ 322,626 34.2
14 Green Star staff estimates
15 Interviews with state personnel in State of Alaska Department of Administration
Alaska Energy Efficiency Program and Policy Recommendat ions Page 40
Information Insights Inc.
One of the benefits of Energy Star procurement practices is that no one within the state will be
responsible for tracking advances in energy efficiency technology because Energy Star is
constantly monitoring and adjusting the items on its approved list of goods. The benefit/cost
ratio shown on the chart above assumes a five-year computer life, and three percent discount rate,
with costs similar between Energy Star and other computers.
Ease of Implementation
The Consortium for Energy Efficiency published a guide for implementing an energy efficient
procurement program titled “State and Local Government Purchasing Model Program Plan: A
Guide for Energy Efficiency Program Administrators.” The plan supplies a roadmap to
implementation that could be easily adopted to meet the State of Alaska’s needs.
Timeline
Relamping of state facilities and procurement changes can begin in 2008. The process for
reaching the Governor’s goal for state facility energy reduction and cost savings is already
underway with ESCOs, but will need to be accelerated.
20. The Board of Regents should direct the university to reduce energy
consumption in its facilities by 20 percent from 2000 levels by 2020.
· 20.1: Conduct Energy Life Cycle Analysis on all proposed University of Alaska
capital projects
· 20.2: Require all new University buildings to meet LEED or equivalent standards
· 20.3 Use state ESCO contracts to improve energy efficiency of University of
Alaska facilities
· 20.4 Relamp University of Alaska facilities
· 20.5: Participate in Energy Star procurement
Like the State of Alaska, the University of Alaska is a major public facility owner, with over six
million square feet of classroom, office, research and student housing buildings.16
The issues and arguments for university facilities are nearly identical to those for the State of
Alaska, except that the UA is responsible for its own facilities and has its own bonding capacity.
Savings to the UA system over the long run are considerable, as shown in the next charts. The
primary challenge is that energy efficiency improvements must compete with deferred
maintenance and facilities required for new programmatic initiatives for both capital project
appropriations and university bonded projects. The university can achieve some of the savings
by using the state’s ESCO contract, but will ultimately have to balance energy efficiency
priorities with other deferred and major maintenance issues.
The tables that follow show the potential benefits and savings from a 20 percent reduction in
energy consumption in University of Alaska properties.
16 For analysis on University of Alaska properties the following types of buildings were removed from calculation of
total square footage:
Animal related facilities such as barns and feed storage
Parking garages
“Sheds” and “storage” (assumed to be cold)
Utility and generator buildings
Transmitter stations
Alaska Energy Efficiency Program and Policy Recommendat ions Page 41
Information Insights Inc.
Table 11 Annual potential savings – 20 percent reduction in electric energy use/university facilities
Region/Fuel
Source
Sq ft UA
facilities
Annual
kWh/
sq ft17
Total UA
facility
annual kWh
(000)
Total UA
facility
annual
MBtu
20% savings
annual kWh
(000)
Net
reduction
in CO2
tons
Southcentral
/Natural Gas 2,168,703 8.2 17,783 76,680,296 3,557 2,349
Interior
/Coal 2,206,790 8.2 18,095 78,025,640 3,619 3,791
Interior
/Oil 735,597 8.2 6,032 26,009,984 1,206 1,188
Four dam pool
area/Hydro 166,769 8.2 1,367 5,894,504 274 0
Other AK
/Oil 606,378 8.2 4,972 21,439,264 994 974
UA System
Totals 5,884,237 48,251 208,049,688 9,650 8,383
Table 12 Annual potential savings – 20 percent reduction in space heating energy consumption/university facilities
Region/Fuel Sq ft UA
facilities
Annual
MBtu/sq ft
Total UA facility
annual MBtu
20% savings
annual MBtu
Net reduction in
CO2 (tons)
Southcentral
/Natural Gas 2,168,703 41.6 90,218,056 18,043,611 1,040
Interior
/Coal 2,206,790 41.6 91,802,474 18,360,495 1,953
Interior
/Oil 735,597 41.6 30,600,825 6,120,165 494
Four dam
pool area
/Oil
166,769 41.6 6,937,590 1,387,518 12
Other AK
/Oil 606,378 41.6 25,225,325 5,045,065 407
UA System 5,884,237 244,784,271 48,956,854 4,005
A relamping program at the University of Alaska for its 5.9 million square feet of space would
cost roughly the same as the cost to the State of Alaska for its 6.0 million square feet of space, or
roughly $6.6 million with a benefit/cost ratio of 5.6.
17 Note that average kwh/sq foot for education facilities is considerably lower than for most other types of
commercial facilities.
Alaska Energy Efficiency Program and Policy Recommendat ions Page 42
Information Insights Inc.
21. The Legislature should fund an energy audit for every school in the
state.
Alaska has 469 elementary and secondary schools statewide. There are 199 K-12 public schools
on in the Railbelt utility area, 38 in the Four Dam Pool utility area, and 232 schools in the rest of
Alaska. Simple behavior changes could reduce energy consumption as much as ten percent in
public schools.
Table 13 Annual electric potential savings in Public K-12
Region/Fuel
Source Sq ft
kWh/
sq ft
Total kWh Total MBtu 10% kWh
savings
Net CO2
reduction
(tons)
Southcentral
/Natural Gas 11,490,003
8.2 94,218,025 321,471,901 9,421,803 6,443
Interior
/Coal 2,011,604
8.2 16,495,149 56,281,448 1,649,514 1,728
Interior
/Oil 670,535 8.2 5,498,383 18,760,483 549,838 275
4 Dam Pool
/Hydro 2,156,650
8.2 17,684,530 60,339,616 1,768,453 0
Other Alaska
/Oil 6,132,919
8.2 50,289,936 171,589,262 5,028,994 4,951
Total 22,461,710 184,186,022 18,418,602 13,477
As is the case for state and university facilities, Alaska has a substantial inventory of school
district facilities. The opportunity for energy efficiency cost savings is also significant, as shown
on the tables above.
Through audits and user education, electricity energy savings of ten percent are readily
achievable. A ten percent decrease in electric usage would save 18 million kWh per year, for
additional annual savings of $2 million.
Assumptions
· One fixture per 64 square feet
· An average 80 watts of savings per fixture
· Average use of eight hours per day
· 252 days per year total
· 30 percent of schools are utilizing efficient lighting
In addition to energy audits we recommend supplemental user education in the form of a four-
hour education session during a school in-service to help teachers and other staff understand how
user behavior can save energy. Educators in public schools can then demonstrate energy
conserving behaviors to their pupils, developing and instilling conservation behavior early.
We do not have data on lighting uses in public schools in Alaska, but if the lighting use per
square foot of space is approximately equal to that of the State of Alaska, it would cost $24.7
Alaska Energy Efficiency Program and Policy Recommendat ions Page 43
Information Insights Inc.
million to relamp all public schools in the state, with a net present value savings of $138.5
million.
Ease of Implementation
The expertise and equipment exists in the state to accommodate easy implementation of this
recommendation. School holidays and scheduled in-service days offer easy opportunity to
perform audits and education without significant disruption. School district administration must
be convinced of the potential benefits before they are likely to give teacher training time to an
energy saving effort. Training could also be tied to a school’s ability to apply for the institutional
conservation program grants described in the following recommendation.
The biggest challenge is likely to be finding the trained workforce to accomplish the task in a
timely manner.
Timeline
Funding for energy audits should go to AEA as soon as appropriated with a goal of completing
100 audits per year. Assuming 20 percent of schools have already received audits, the remaining
375 school audits should be complete in just under four years.
22. The state should fund AEA to offer Institutional Conservation
Program grants up to incentivize energy conservation in public K-12
schools.
An institutional conservation program would offer matching grants to school districts interested
in implementing energy conservation measures. The program could offer a 50 percent buy down
on costs up to $100,000 per school building up to $2 million per year.
This program would offer at least 20 schools per year the opportunity to receive matching funds
for energy conservation work. Working closely with energy specialists and AEA program staff
would ensure all measures taken were cost effective.
Ease of Implementation
Federal USDOE funds used to be available for an institutional conservation program in Alaska,
run through AEA. The program ran successfully years starting in the mid 1980’s and ending in
1996.
Timeline
Implement as soon as funds are available
23. The Alaska Energy Authority should establish a low- interest loan
program for public facilities to make energy efficiency improvements,
with payments geared to projected savings.
The previous two recommendations addressed opportunities for energy efficiency savings for the
University of Alaska and Alaska school district facilities. There are similar opportunities in
Alaska’s municipal and other public facilities.
The Alaska Energy Authority should establish a loan program for energy efficiency
improvements to public facilities, with repayment terms geared to the life of anticipated savings.
Alaska Energy Efficiency Program and Policy Recommendat ions Page 44
Information Insights Inc.
The legislature could allow Alaska school districts to borrow from AEA for audited energy
efficiency improvements, secured by future state payments to the school districts under the public
school foundation formula. Based on the audit recommendations, the program could split
anticipated savings, with a major portion going to AEA, and the rest remaining in the school
district for educational programs. The AEA program could also work for the University of
Alaska, Alaska municipalities, or facilities owned by other public entities in Alaska.
AEA’s experience in loans for energy production facilities would allow rapid deployment of a
new loan program for energy efficiency improvements. As with commercial facilities, the
biggest challenge would be ensuring awareness of the program and its benefits for public facility
managers. Pegging the repayment schedule to a portion of anticipated savings is a key to success
of the program, as any faster repayment requirement would put energy efficiency facility changes
in competition with other facility needs.
Alaska Energy Efficiency Program and Policy Recommendat ions Page 45
Information Insights Inc.
Budget
The budget on the following page provides preliminary numbers for costs of implementing
recommended energy efficiency programs and policies.
Column one of the budget captures the year one costs to implement all program
recommendations. Policy recommendations do not have a budget line item. For example it is our
recommendation that the state set a goal of reducing energy consumption by 20 percent in all
state owned facilities. The budget associated with the execution of this policy recommendation
will be found on a facility-by-facility basis.
The second two columns show future annual funding levels and funding source for
recommendations that are require ongoing support. Recommendations that are tied to a utility
funding mechanism, such as the Pay As You Save program, are not included in the budget. If the
state chooses to implement a system benefit charge then the utility would simply use some of that
revenue to capitalize a revolving loan fund for eligible energy conservation measures.
As a long-term funding mechanism for energy efficiency programs we recommend a system
benefit charge. However, if an endowment is chosen as the method for funding energy efficiency
programs long-term, the state should capitalize the fund with at least $200,000,000 to generate
roughly $10 million in available funds per year.
Alaska Energy Efficiency Program and Policy Recommendat ions Page 46
Information Insights Inc.
Energy Efficiency program implementation and maintenance budgets
– costs per year in 2007 dollars -
2008
legislative
appropriation
Future legislative
appropriation
after 2008
(* = one-time)
Annual budget System
Benefit Charge or
Endowment after 2008
Public Education / Outreach
Campaign $400,000 $800,000
Outreach $100,000 $200,000
Baseline Data
Survey $150,000
Utility data $25,000
Update survey $20,000
Energy use index $50,000
Existing Residential
Low-income weatherization
program
$200,000,000+
$200,000,000 $286,000,000*
Training & certification program $150,000
Energy audits for households
above 80% median income $500,000 $500,000
Smart Meter pilot program $1,875,000 Unknown
Three new positions for
residential building inspection
and quality assurance $210,00018
Existing Commercial
Energy Audit - 80% subsidy $80,000 $80,000
New Commercial
Commercial building code
development $100,000
Public Buildings
School energy audits &
education $7,000,000 234,50019
Public K-12 Institutional
Conservation Program $2,000,000 $2,000,000
Relamping state facilities
$6,600,000
Relamping university facilities $6,600,000
Relamping school district
facilities $24,700,000
Public facility retrofit fund $500,000,000
TOTAL $948,925,000 $289,615,000 $1,834,500
18 Note that the cost of quality assurance for building inspection can be wrapped up in the price that consumers pay
for building inspection so the actual cost to the state is zero.
19 After all school energy audits are complete, the remaining annual cost will be $100,000 for user support and
$134,500 for ongoing user education
Alaska Energy Efficiency Program and Policy Recommendat ions Page 47
Information Insights Inc.
Appendices