Whats Behind the Wheels of Investing: Loyd

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Any project in renewable energy must first begin with implementations and feedback for economics, social, and environmental policies as these are the driving forces behind sustainable development. The key elements towards successful funding and ongoing operations are analyzing the risks, costs, evaluations, and monitoring guidelines. The risks of renewable energy come with any business venture for if the objectives, costs, and effectiveness are overvalued or undervalued the system can be a failure to the bottom line. As we know, renewable energy projects must make sense to the bottom line for the opportunity cost of investments are high. “Will this project help my business more than, let’s say additional capital, technology, etc.?” Therefore, it is extremely important that the funder knows what the business is up against in terms of risk and potential costs associated with the installations and operations. In addition to understanding and evaluating the costs and risks, it should be established that continuous monitoring and evaluations are carried out and reported to compare to the primary targets. Evaluations of renewable energy systems could be as simple as keeping track of the energy base load that is collected and comparing it to the initial targets agreed to by the project funder. This would ensure the funder that the system is operating at expected targets and is operating at peak efficiency. The key elements of any large investments are understanding the costs, evaluating risks, and comparing the expected outcomes with the real outcomes to gain a complete analysis of the project.

The key elements of finance-based procedures that ensure success are evaluating and understanding the system’s return on investment, weight average cost of capital and net present value. Although, there are other cost analysis procedures that can be performed, these three should be largely used to gain strategic results reliant on the investment. First, the return on the investment (ROI) is simply the total of gain of the investment minus the cost of the investment divided by the cost of the investment. The return of the investment gives the institution a measure of efficiency to analysis or compare to other investments. Second, the evaluation of the weighted average cost of capital (WACC) displays the firm’s capital proportional weighted value which validates the risk according to the rate of return. Third, the net present value (NPV) should be calculated to determine the value and profitability of an investment. The calculation can be derived from the results of the WACC by taking the present values of the cash flows discounted at WACC. Overall, these three procedures would provide the firm to analyze the future profitability and costs of the investment.

http://www.investopedia.com/

L8: Understanding the Cost of Capital – Bret Cole

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Knowing how to talk money in any business is the ultimate key for explaining business proposals and getting investors interested in a product or service. Especially in the renewable industry, knowing the finances, values, and return on investments of projects is extremely important. Key mechanisms and calculations to explain to a potential investor for a renewable energy project are:
• What is the rate of return of return of the project
• Present, annual, and future worth of the project
• Before tax and after tax cash flow of the project
• and Net Present Value of the project
These calculations will show if the project is even feasible or would generate any cash flow after taxes. With these, finance-based processes like providing the opportunity cost of capital and payback period analysis are also important in explaining the project’s potential for success. Stermole and Stermole describe payback period as, “the time required for positive project cash flow to recover negative project cash flow from the acquisition and/or development years” (Stermole, page 488). A payback period analysis would be a great way to show investors that the project is sound and would be able to recover any initial costs that the investor puts forward.

Works Cited

Stermole, F. J., & Stermole, J. M. (2012). After Tax Investment Decision Methods and Applications. Economic evaluation & investment decision methods (13th ed., p. 488). Lakewood, Colo.: Investment Evaluations Corp..

Stallard — The Cost of Capital; Not Just Money

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I approached this assignment as if I were submitting a proposal to my board of directors for a project that would be funded by the member/owners of my electric cooperative — funding that is in part debt, retail electricity rates and member equity. The key concepts are the same for any proposal that involves a financial investment — to present the financial facts along with an industry and political forecast and perspective that will demonstrate the project is viable from the beginning and profitable in the end. The project needs to make sense for the people who will be funding it. In the case of a renewable energy project, I would need to be able to explain the short-term and long-term need for the power output of the project; the capital outlay or investment; what incentives, grant money or funding is available; any political, regulatory or market-based disruptions and support or opposition for the project.

With regard to the financial justification, several processes are involved. First, I would need to demonstrate the return on investment which in its very simplest terms is the ratio between the gain from investment and the cost of that investment. This represents the benefit the investors — in this case, the paying membership — gain from the utility doing the project. Second, I would calculate the return on equity, which is the net income after tax divided by shareholder equity. This is a little more complex for an electric cooperative, but given that business model, it would be the net income (income after expenses) compared to member equity and would represent the membership’s investment in the effort. The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. While it might mean the minimum the company must make to satisfy its creditors or investors, in the case of an electric cooperative, it would mean that the cooperative has money or member equity left over after all expenses are paid. Most cooperatives have an established equity level that must be maintained to satisfy internal controls and financial institution requirements. I would also need to calculate and communicate the net present value, which explains the potential for the success of the project. The NPV projects the change in the project’s value from the time the investment is made for a period of years. A positive NPV means the project is viable in the long-term.

Overall, the financial calculations need to be presented as the payback on investment, given the individual circumstances and geographical differences. Information and data used in the analysis needs to represent the true, most up-to-date cost of a project as those costs are constantly evolving with technological advances. Ultimately, it goes beyond just cost to considerations that include projections with regard to government incentives as well as legislative and regulatory initiatives. All ultimately affect cost.

Renewable Power Generation Costs in 2012. International Renewable Energy Agency. 2013. Retrieved from http://www.irena.org/DocumentDownloads/Publications/

Lesson 8 – Cost of Capital – Jackson

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It is important to remember that to be successful, sustainability must be an integrative concept. Social equity, environmental protection, and economic development must all be considered. As someone who is attempting to promote sustainability and renewable energy projects, it is important to be able to explain all three pillars and how your project will allow an investor to be successful in all. In the real world, business decisions are most often based on the bottom line. An investor or company may have the best intentions of pursing a sustainability project, but if the costs are not advantageous, the project will not be approved.

There are several key financing terms and concepts that need to be understood and explainable to prove the worth of a project. Return on equity (ROE) is the amount of net income returned as a percentage of shareholder equity. It is used to measure profitability by revealing how much profit a company generates with the money shareholders invest. It also can be used for comparing a company’s profitability to other firms in the same industry. Weighted average cost of capital (WACC) is the rate a firm must earn to satisfy its shareholders and is used to determine whether an investment is worthwhile. Finally, net present value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows. This is another tool to determine the profitability of a proposed investment or project.

Although there are many other financial and accounting tools, the three listed are useful for determining the value of a company and of an investment or project. When looking for investment for a renewable energy project, it may be useful to focus on NPV. This is used to compare the initial cost of a project to the total value of future revenue generated by that project.  Calculating and getting a positive NPV shows that you understand the costs and revenues associated with the project and can explain exactly how the project will be profitable over a longer time period. Demonstrating a knowledge of finance will make it more likely to find investors for a project.

http://www.investopedia.com/terms/n/npv.asphttp://www.investopedia.com/terms/w/wacc.asp

UNDERSTANDING THE COST OF CAPITAL – MSWALE

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Every business needs to have a plan, not only a general business plan but a financial and marketing plan as well. The financial plan is essential to understanding how the business is going to survive and hopefully expand. Without knowing the financial aspects of the business means not knowing how to explain how the business is going to be successful to a potential funder of the venture. The financial plan of course gives you more than just the basic knowledge of how the business will work but helps the owner understand what needs to be done on a month to month, semi-annual, or annual bases to keep the company operating or even looking at a future expansion. Being able to measure the ROI and for a more in-depth analysis ROE helps people understand how the company is doing. This helps determine if the company is meeting the financial objectives set for them. Calculating the NPV also gives another view on the company’s financial stance by comparing the inflow and outflow of funds.

L3_What have we Learned_Branddun Casara

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One of the best policies the government could promote in order to increase efficiency would be to aim at reducing electrical loss and waste. The current electrical transmission systems use lines that have been in use for decades and are a very inefficient way to move electricity. Many of the current lines lose an average of about 7% of the transmitted kW in the form of heat and corona discharge. If the government were to subsidize the cost of a smart grid system especially in areas of higher electricity use the overall system would be immensely more efficient. Additionally for high usage areas subsidies could be promoted for local electricity generators which cuts loss down to negligible levels

Energy efficiency can be promoted by restricting heavy electrical usage to off peak hours. By using appliances like washing machine, dryers, charging of electric vehicles and other high energy use products between the hours of 8:00p.m. and 7:00a.m. it reduces the need of peak hour generators which tend to be coal or natural gas fired. During the peak hours of the day air conditioning and lighting keeps the mainline generators busy but at night many generators are offline. By creating a company that produces affordable timing devices so that a family can program their high electric appliances to start in the off peak hours this is especially true with the highest electrical need devices like electric vehicle charging. Widespread usage of timing devices in combination with smart grid technologies would drive efficiency towards realistically sustainable levels.

Lesson 3 What Have We Learned?

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  • What types of policies on the part of government could promote energy efficiency?
  • How would you develop a business that has the potential to move this idea forward?

Government policy is one of the best ways to make noteworthy changes in the energy world.  In an effort to promote energy efficiency, policies surrounding vehicle fuel economy could make an impact and drive companies to become more competitive in these fields.  Fuel economy has a tremendous impact on energy and fuel use in our country and the technology exists to make it more efficient.  Policies that increased the minimum mile-per-gallon for all new cars and light duty trucks would have a great effect.  Also, these policies would cause car manufacturers to work harder to achieve maximum fuel efficiency and compete with their counterparts.  This action drives research and technology forward in vehicle fuel economy.

A plausible business idea that would have the potential to move this idea forward is a company that could provide technical assistance and research for car companies to assist them in making informed decisions to enhance their fuel efficiency.  This business could be developed using researchers and scientists and even partnering with universities and local bodies of government to pull together all of the best information that is currently available, create a database or system to make that data usable, and further research and test new ideas.  This business would be vital to the car companies development of new technology and useful to them in meeting the standards set by the new policies.

Lesson 3_Promoting Conservation

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The government is often looked at to provide stimulus to emerging technologies and concepts that otherwise run counter to business as usual. When it comes to promoting sustainability and efficiency, the government could easily set forth a good example of “putting your money when your mouth is.” By retrofitting government-subsidized housing with modern energy efficient features, we can provide the private sector with a functional proving ground to promote the adoption of said features. According the Department of Housing and Urban Development (HUD), there are approximately 1.2 million units of publicly funded housing in the United States. On top of that, millions of additional Americans receive heating assistance funding. The government could create more efficient use and increased impact of this funding by promoting energy efficiency upgrades for the publicly and privately held properties. As stated by McKinsey Global energy, a 28% reduction in energy consumption can be achieved using only NPV positive improvements. With an upfront investment, state and federal governments could reap significant savings over time. This means either more people could be served with the existing funding level or the same number of current recipients could be served for fewer dollars per capita.

I believe a public-private partnership could be forged between the local governing bodies responsible for administering public housing and heating benefits and private sector contractors which would focus on bolstering the weatherization and insulation of all public housing units while also offering subsidized work on private properties whose owners receive heating assistance. The business model would be based off of a series of systematic grants given out in the form of labor contracts. The contractor would be responsible for sourcing any and all necessary parts and equipment as long as it meets specific criteria set forth by the governing body. In the end, public housing and private homeowners would be less burdened by utility costs, occupants would experience better seasonal comfort, and private industry would receive the economic boost.

http://portal.hud.gov/hudportal/HUD?src=/topics/rental_assistance/phprog
Unlocking Energy Efficiency in the US Economy, McKinsey Global Energy, page 29, July 2009

Cap and Trade..

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  • What types of policies on the part of government could promote energy efficiency?
  • How would you develop a business that has the potential to move this idea forward?

 

I believe the number one goal of energy efficiency is the conservation of energy, with an end goal of reducing carbon emissions. Carbon emissions should be the number one priority given the amount of data supporting climate change that is available now. The biggest impact government policies could make is to seek to control of carbon emissions, and the most promising method to accomplish this has been cap and trade. The U.S. government can do much to further promote an economic system for companies to barter carbon credits.

As for business opportunities, there are many opportunities available. As businesses move to comply with cap and trade regulations, they will need consultation to be able to ensure compliance. There are also new opportunities for businesses that reduce carbon to get into the cap and trade market, that would need introduction to the regulations and how to promote themselves.

David Westsmith – What we have learned

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New Developments in Policy Encourage Green Investments

 

The government most recently have been promoting more efficient use of energy and our limited resources.  However, dollar for dollar, it is still much easier to obtain subsidies for nuclear power.  Nevertheless, green energy investments are on the rise.  In my home state of California, the profitability of green investments such as those in the dry, hot and arid California deserts, have generated large investment and intense focus.

In  Mojave, California exists the Ivanpah solar power facility.  A 377 megawatt net thermal concentrating solar plant, (CSP), focusing the power of the sun on solar receivers atop power towers.  The facility consists of three separate plants and the combined output provides clean electricity to serving more than 140,000 homes in California and will reduce CO2 emissions by more than 400,000 tons per year.  The construction of Ivanpah supplied 2,600 jobs and in full operation only needs 65 fulltime and part-time staff.

What we have learned from Ivanpah is that virtually un-farmable, and arguably useless land can be developed by installing CSP power facilities that provide sustainable, profitable and environmentally clean energy.   It helps to answer the question of how can this type of land be used most efficiently.  Using this land for CSP plants provide far more profit than would be attainable if farming, for example, was used in its place.   Furthermore, none of the environmentally hazardous waste associated with running other forms of power, such as nuclear exists.

Ivanpah and plants like it are economically feasible as well.   After the cost of construction, support staff is minimal and maintenance costs are a fraction of nuclear power plants because less highly skilled, highly paid technicians are needed.  Expensive governmental regulatory safety checks necessary for nuclear are un-necessary.   Governmental policies are encouraging this form of investment and have made projects like Ivanpah that much more fundable.

Business Developments

In California we are in the process of designing and adopting greener building codes.  These building codes are suggested as incentives.  However, they have been becoming mandatory.  Greener building is better for the environment and a good sell but it is the adaption and transition to greener mandatory building codes that will bring new interest and therefore retrofits, the adaption in new construction and business opportunities.

As information of the cost savings of installing a 4 to 5 kilowatt roof top or ground mount solar panel array for example becomes available, homeowners, whether involved in new construction or retrofit, will want to participate.  This combined with the lower costs of panels will make the decisions to greener technologies even easier.  There are large opportunities in consulting in commercial as well as residential.  Many large commercial real-estate holders are loading roof tops with  solar arrays.  Ohlone College at Newark, California has one of the largest roof top solar arrays in Silicon Valley.  At 600kW the system covers 38,000 feet of roof space.   Examples such as this, lead the way to further investment by commercial real estate owners who have the resources to spend for the long term.

Works Cited

Doris, Elizibeth, Jaquelin Cochran, and Martin Vorum. “Energy Efficiency Policy in the United States: Overview of Trends at Different Levels of Government.” Http://www.nrel.gov/. National Renewable Energy Laboratory, 1 Dec. 2009. Web. 16 Sept. 2014.

 

What Have We Learned

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As of right now we are trying to increase the economic sustainability with in our country. We have made some steps towards being more resourceful, but these steps are baby steps in light of the situation. The US cannot continue “business as usual” prolonging the process of taking action towards becoming efficient. We need to instill stronger standardized regulations and guidelines requiring companies to create more efficient ways of conducting business. More education on tax credits, grants and reimbursements through federal, state, and local governments could increase the likely hood of companies establishing sustainability departments. This would help fast track the concept of becoming more efficient and sustainable in all three of the energy consuming sectors, residential, commercial, and industrial.

Energy auditing companies are becoming more abundant and are easily available to the public. However many companies only preform the audit and give the results. I believe it is imparative to bridge the gap between what the public knows about becoming more efficient and what the experts know. Not only is there a need to educate homeowners on energy efficiency, but there is a need for a standardized way of conducting business that helps build a plan that best fits customers needs and capabilities, then implement that plan. This type of full circle structure would help comfort people and allows for a more efficient progress of the project.

Lesson 3 What have we learned

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Policy on energy efficiency is lacking, largely due to lack of expectations and guidelines on the current technologies today. Energy efficiency and sustainability is something that most see as a necessity in the far distant future, not in our lifetime. In reality, the sooner the world comes to recognize that importance of becoming energy efficient, the sooner we have a chance of correcting some of the impact of emissions into the atmosphere.

I believe that a policy that the government could use to promote energy efficiency would be one that regulates output of harmful emissions. If companies were charged for their output of emissions, they would be more inclined to develop more energy efficient processes. Energy companies produce what is necessary to keep themselves in business, and often are not overly concerned with the negative impacts their production processes may have. Another policy that should be implemented by government is one that offers guidelines, although they are not established yet, on what businesses and energy companies are expected to do in regards to incorporating energy efficient practices. Policies that explain the amount of energy a company could be able to produce with their own form of sustainable energy, as compared to the larger amount of energy from non-renewable sources.

If I were to develop a business that has the potential to move the idea of energy efficiency forward, I believe that I would need to find an aspect of the energy efficiency ‘business’ that isn’t as well developed. I believe that a good place to start a company would be in consulting or in regulation of energy efficient practices. At this time there really is no ‘guidelines’ to follow or expectations on what are good practices. I believe that, with regulation and consulting, these guidelines could be established firmly and allow for future developments. The move toward energy efficiency and a more sustainable future is only in the fledgling stages. There are so many opportunities that can be seized in working towards this goal.

Lesson 3: “What Have We Learned” – Dominique Wells

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What types of policies on the part of government could promote energy efficiency?

The Executive Office and the US federal government could promote energy efficiency by amending the Energy Policy Act of 2005 (EPAct) to remove the incentives and loopholes provided to the oil and gas producers specifically favoring hydraulic fracturing (fracking). The fracking process, although lucrative to the production companies, has cause extensive damage to the environment and human health. The amendment would redirect funds to provide less support to fossil fuels and more support toward renewable projects in all areas providing tax credits, grants, and other incentives. A change like this will show the Nation where Congress and the administration’s priorities lie, promote new investment in green research, technology development, and efficient production of renewable resources. This “amendment” could also provide similar incentives to all business who confirm implementation of sustainable values that successfully contribute to the Nations goal. Change on the federal level would force change of energy laws on state levels

How would you develop a business that has the potential to move this idea forward?

Addressing the area regarding incentives to businesses with sustainable values, a new division of consulting firms could aid the process of moving this idea forward. Green consultants could offer a full analysis service regarding the energy efficiency (or lack of) to new and existing companies of all scales in order for them to transition their company toward sustainable habits spanning from records management, office structure, supplies/materials, building structure, etc. With a major change in policy, consulting firms regarding energy efficiency have an opportunity to have extensive expansion given companies need to capitalize on government incentives.

pcm5122, lesson 3, energy efficiency policy

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From our lesson and readings, energy efficiency is a relatively low cost opportunity to realize substantial energy savings in the long term. Of all the barriers listed in the McKinsey report, education about energy efficiency should be paramount in government policy making for social responsibility, and it should be started in two places: Corporate America and kindergarten. In educating Corporate America, the government should spearhead existing working programs (and experimental programs which show strong potential) with incentives for short term payback and measurable long term programs that will directly show results to the bottom line. By beginning energy efficiency education in kindergarten, we make efficiency education part of the program, not just the conversation. In order to educate the kids, however, we first have to educate the adults. As with Corporate America, the government can provide affordable incentives to produce realistic, tangible paybacks periods for the investments that the government would like ordinary citizens to make towards energy efficiency.

According to the U.S General Services Administration, as part of the American Recovery and Reinvestment Act, the government provided 5.5 billion dollars to green federal buildings. Let’s do some math. $5,500,000,000 divided by 50 states equals $110,000,000 million dollars per state. 110 million divided by 3303 (the number of public schools in Pennsylvania) comes to 33,303 dollars per school. If that investment were quadrupled, it would be $133,212.00 dollars per school. In Philadelphia, the district manages about 300 schools (including charters) which would come to $39,963,669 dollars for the district.

If the U.S is going to go green, we’re going to need skilled workers for that to happen, and our schools seem like the perfect place to start. Most Philadelphia schools have massive amounts of roof space that would be perfect for solar installations and CHP and could provide realistic hands-on training for students to enter the workforce. In the districts 30 million dollar per year energy budget, 55.5% of that goes to electricity costs. If the electricity bill alone could be negated, it would be a savings of 16.65 million dollars that could be re-invested into additional efficiency programs. At least that’s on my wish list.

If, for example, the government mandates future home sales to meet minimum efficiency compliance, it will need government certified energy auditors or inspectors to ensure that compliance. My business idea would be to set up training centers across the United States to produce certified auditors or inspectors, because financial institutions will need them in order to process mortgages.

 

http://webgui.phila.k12.pa.us/offices/f/facilities/programs–services/energy-management

http://pennsylvania.educationbug.org/public-schools/

http://www.gsa.gov/portal/content/105326

What have We Learned? Lesson #3

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  • What types of policies on the part of government could promote energy efficiency?

Regulatory policies could address and mandate energy efficiency on virtually every level by imposing constraints on individuals as well as groups. These types of policies can regulate pollution controls by implementing taxes for inefficient energy technologies or impose fines for excessive energy use. On the flip side, they may also offer tax breaks or credits for utilizing energy efficient technologies or even government grants or subsidized loans for creating such technology. Regardless of how groundbreaking a regulatory policy may be in regards to energy efficiency or conservation, there will almost always be individuals or groups who feel they are being wronged by its implementation and more than likely, a negative financial impact.

 

 

  • How would you develop a business that has the potential to move this idea forward?

Business would have many options whether it is the implementation of new technology or providing services from existing technologies. For instance, a solar company can “rent” rooftop space, sides of building space or residential spaces to install solar panels to create electricity during the day while offering full or partial electric service for utilizing these spaces. The solar companies can sell the excess energy to the grid while the individual or businesses agreeing to have this on their property could have the flexibility to not purchase the equipment but benefit from the discounted electricity.   I say “discounted” because the end-user would pay for the aesthetically displeasing look of the units on their property. The customer could have the option to sign a contract so there is an opportunity to release them from the agreement if they so choose.

Pushing Energy Efficiency

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Governmental policies have proven to be effective in steering behavior either through incentives like grants and rebates, or penalties including taxes and fines. The Smart Grid Investment Grant as authorized by the Recovery Act is an example of how the government provided $4.5 billion toward merit based applications of smart grid technologies to promote technological improvement and investment. TVA has partnered with the Department of Energy through the Smart Wire Focused Initiative and has installed an array of retrofit devices across a span of transmission lines in Knoxville, Tennessee.  The Database of State Incentives for Renewables and Efficiency (DSIRE) provides an abundance of information and resources to fit residential, commercial, and industrial sectors, at both state and federal levels. On the restrictive side, cap and trade programs are in place and increasing worldwide, as well as green taxes. The spin-off is that the natural economic response to this demand would be increased production and technological advancement. This generates growth that spreads from STEM professions to construction and manufacturing, and across to supportive businesses and retailers. Although some restrictions penalize producers and consumers, the typical reaction is to improve technology to avoid costs since energy is an inelastic good.

 

Home energy audits is one niche that seems to have risen from energy efficiency trends, and it provides a win-win for all players. The home/business owner generally has short payback period on initial investment before reaping long term benefits of reduced utility costs from improved energy efficiency. The higher efficiency translates to a reduced load on utility providers as well as less stress on the environment. A certified technician armed with a toolbox and knowledge of government programs inspects the building envelope and it energy consumption to identify points of improvement and applicable resources for assistance. The auditor may advise the addition of insulation and/or updates to inefficient appliances, especially energy hogs like air-conditioning and water heating, and follow with calculations of both initial costs and payback periods, or course including available government incentives. Home energy auditing is a valuable service in any geographic region that requires relatively low training and overhead.

Race to Efficiency

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Both the federal and local governments can give incentives to reduce electricity and overall energy use.  When companies become dedicated to saving energy, society will follow as will other nations. Policies that will require resident and business to not just use clean energy but to use less energy. Tax incentive for decreased monthly energy use would be a start in affecting electricity use. Competition always helps drive and improve business.  Local and even federal governments could set up a “race” to energy efficiency.  Companies who successfully use less energy percentage wise compared to others will receive notoriety and positive publicity.  Energy use could be measured consistently and made public influencing firms to take saving energy seriously.

My new business would need to have sustainability and energy efficiency at the forefront of the model.  Everything we did from shipping, electricity use, and waste management would have the goal of saving energy and using clean energy. We would strive to be the leader in the energy saving “race”.  We would even make an effort to get other companies more involved in the competition. Our company would support green organizations and projects improving sustainability in the community.  Expansion would be focused on moving into areas where sustainability may not be as important and working to demonstrate the benefits.

What I have learned- Bethany Steiner

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What types of policies on the part of government could promote energy efficiency?
There are already many states that have policies in place to promote energy efficiency. Energy Efficiency Portfolio Standards, utility policies, appliance efficiency standards, and building codes to help enforce energy efficiency are a few ways in which states are already promoting efficiency. ENERGY STAR offers many programs and resources to allow buildings and homes to become more energy efficient. While some states are taking advantage of programs and policies to make their communities more efficient, other states are not doing as much. There are some policies at the federal level, but some of the state policies are stricter than national policies. With that being said, there should be a national Renewable Portfolio Standard. Since becoming an ESP major and learning about RPS, I always believed that we should have a RPS at the federal level. This would definitely promote energy efficiency and allow all states to do their part in regards to energy efficiency. Another policy that could help promote energy efficiency would be a federal cap and trade or emissions trading. This would have to be implemented in particularly with large companies or corporations. If companies did not have their allowance, they would have to cut back on their emissions or find a more efficient way to produce their product.

How would you develop a business that has the potential to move this idea forward?

Businesses that could benefit from a national Renewable Portfolio Standard and a federal cap and trade program would be actual energy conscious businesses. For this reason, I would develop a business to help make existing business more energy efficient. We could present alternative, more efficient products for companies to use. This business may even be able to help corporations invent new machines that give off little to no carbon dioxide.

“State and Local Climate and Energy Program.” United States Environmental Protection Agency. United States Environmental Protection Agency, n.d. Web. 17 Sept. 2014. <http://www.epa.gov/statelocalclimate/state/topics/energy-efficiency.html>.

Energy Efficiency – Policy and Implementation

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There are several government programs already in place that have the effect of promoting energy efficiency. One such program would be the plethora of state-based Renewable Portfolio Standards (RPS), which typically include a carve-out for a certain percentage of the goal to be met through energy efficiency measures. This means that rather than investing in renewable energy technologies to meet 100% of the RPS goal, utilities may also reduce the total amount of energy consumed in their service area as part of the effort to reduce total greenhouse gas emissions. Many utility companies promote that option by offering rebates or incentives to businesses and homeowners for upgrading their appliances or lighting to more efficient models. The US government also mandated that manufacturers and importers may no longer produce or supply 40 or 60 watt incandescent lightbulbs as of January 1, 2014, however there are numerous loopholes to that law such as slightly modifying the wattage of the bulb (http://www.theverge.com/2014/1/1/5263826/the-incandescent-light-bulb-isnt-dead). The idea here was to force individuals and businesses to switch from highly inefficient incandescent bulbs to more efficient halogen, CFL, or LED lightbulbs.

I think that if the Federal Government was really serious about promoting energy efficiency, they would institute a nation-wide “buy back program” where the government would provide a rebate incentive to individuals and businesses to trade in their older and more inefficient technologies for more efficient, but also more expensive ones. There could also be tax credit incentives offered to homeowners who upgrade their insulation and windows, improving the envelope of their homes and substantially reducing the energy required for heating and cooling. Tax credits such as these have been offered in the past but expired for any improvements not implemented before January 1, 2012 (http://www.irs.gov/uac/Tax-Credits-Available-for-Certain-Energy-Efficient-Home-Improvements).

As a business opportunity, a company could assist individuals and businesses in claiming these buy-back incentives while also providing the equipment and installation of the new upgrades. A large company can leverage their purchasing power to obtain better prices on this equipment than a typical homeowner could find on their own. The company could also manage the paperwork and rebate process for the customer to make it an easy “one stop shop”. Then the company would take possession of the old equipment and could recover scrap value or revenue from parts, enhancing their bottom line. A truly comprehensive business offering would also include the installation of insulation and window upgrades and the related tax credit forms. A homeowner could receive one quote for all of their energy efficiency needs and receive professional assistance with obtaining the appropriate tax credits and rebates.

Learning Activity: “What have we learned?”

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  • What types of policies on the part of government could promote energy efficiency?

There are many policies and provisions that help generate more energy efficiency. The Energy Policy Act of 2005 also known as the EPA act. Included in this act are provisions and policies that set standards for both the public and private sector in the energy industry. There are different ways the government can promote energy efficiency which include tax credits, energy standards, new markets, as well as regional programs that are set and monitored by the government. Having the government monitor such programs will insure accurate and enforceable methods that when put in place are effective and earth changing.

 

  • How would you develop a business that has the potential to move this idea forward?

I would develop a business that would benefit from the repercussions of the standards and policies that are put in place. For example there is a massive shift in solar industry specifically in the residential photo voltaic solar systems. Due to some much needed policies changed and amendments with current energy policies currently in place, there is now an opportunity for people to get solar on their house without having to spend a single dime. I too would look at all the policies to see where my business plan would be most effective. An example would be any sort of credits that could come to.

Efficiency for Days

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  • What types of policies on the part of government could promote energy efficiency?

I think the policy, or policy type, that would have the greatest impact is a carbon tax.  So far we have seen numerous companies commit to sustainability, and numerous states have implemented their own cap and trade or RPS, and while there has been some improvement in terms of efficiency I think we would experience a bit more should policy be implemented at a federal level.  By instituting a cap and trade or enforcing an RPS, it forces the industry to innovate at a much quicker pace, this innovation breeds competition which ends up reducing costs across the board as implementation and adoption are fast-tracked.

  • How would you develop a business that has the potential to move this idea forward?

I don’t know that any one business would have the potential to push an RPS or cap and trade policy.  Rather, this is something a coalition would do and various businesses or industries would lobby the government and market to the people why it is so necessary.  For example, the energy production industry could become much more efficient by eliminating antiquated technologies and investing in new.  However, they won’t have much incentive to do so unless it is profitable or the government sector requires it of them.  A coalition could help educate people on why it is important to utilize new technologies, for both short term and long term benefits.  In a sense this would be a nonprofit business whose goal is to convince the public these policies are important.

Lesson 3: Energy Efficiency – Cole

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If the goal is to use efficiency improvements to put the United States on a track to potentially use less power than today, there needs to be a cooperation between businesses, the government, and individuals. Governments can promote energy efficiency through a variety of programs and policies. Raising minimum efficiency standards for appliances, offering tax incentives on energy efficiency renovations, and raising energy taxes are some polices that the government can impose. The United States government already requires some appliances like refrigerators and dishwashers to meet certain efficiency standards. However fails to address other major household appliances in terms of energy efficiency. The government should raise the efficiency standards higher for the appliances already included in this policy and expand standards to other major household appliances to put the United States on a better track. Offering more tax incentives for replacing old windows, furnaces, insulation, door, etcetera, and other energy efficiency renovations, would be a another policy. This gives individuals and businesses “incentives” to increase the efficiency of their houses, buildings, or factories while using electricity. Another way of doing this and generating revenue would be to increase energy taxes. That will sure get individuals and business to cooperate and increase their energy efficiency.

I believe that energy consultation and servicing firms already have the potential to move with these types policies. To meet efficiency standards and save money by investing in renovations, individuals and businesses will have to consult with firms that are very knowledgeable in doing research and providing plans to meet with their energy efficiency needs.

Energy Efficient Buildings

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There are so many policies the government could promote energy efficiency, where to start…I think that one policy that would have a large impact would be policies that have to do with construction of new buildings. For example, in certain (colder) states, there should be a policy that all new buildings have to be constructed with fiberglass window frames for better insulation. I even believe that in states that receive 200+ sun days a year should have a policy that all new buildings automatically have solar panels installed. By installing the solar panels at the time of construction, it makes it cheaper than adding them on later and will produce energy for that building. Other things to consider for building construction is also the direction the building is facing and the amount of foliage around the building. I think that having policies regarding building construction would be great to promote energy efficiency.

The business I would develop would be an environmental consulting firm. My consulting firm would be help to help in the planning and implementation of all environmental aspects of the building. Help pick out and order the correct window frames, work with PV companies (and hopefully get a little discount by using them) for solar panels. Help in the design of the building so that it is energy efficient as possible. This consulting firm would be really involved in the construction of new buildings to make sure that all governmental policies relating to new buildings are met.

3.5 “What have we learned”- Barnes

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The best policies are the policies that everyone loves. For energy policies to really take hold and be effective, everyone needs to embrace them. Everyone needs to be on board, wanting to because it makes sense, believing not doing it would be totally un-cool and very irresponsible. For example, we all agree that if an ambulance is in an emergency and needs to get through we all pull over, there is no right or wrong way to do it, we all just use common sense and pull over (unless we are listening to music). We do it because it makes sense and we would like people to do the same. My point is that government needs to develop energy policy with this type of thinking in mind. The U.S. government historically uses PSA’s (public service announcements) for pressing issues relating to public health, the environment, and the earliest form of PSA, that of war time government bonds which, through some web work for this post, I learned is credited with giving birth to advertising. Companies made note of how effective war time bond ads were and soon placed the very first product advertisements ever, that for baking powder, soap, and railroad travel in newspapers. Some people are familiar with Keep America Beautiful’s PSA featuring the crying Native American as he witnesses someone throwing fast food trash out their car window. Also, who could forget the “This is your brain on drugs” PSA in the 1980’s. If done tastefully, with honesty and truth, PSA’s and even public school age sustainability awareness courses have the potential to change the way young people use and think about energy. Hopefully it can serve as a catalyst for a generational shift in our approach to energy efficiency and sustainability. Most energy policies make sense, but most people don’t understand them. Even further they avoid changing until change is blatantly and overwhelmingly accepted.

My business idea is to develop a graphics and production company specializing in extremely effective, visually captivating service ads and commercials. We would contract famous and respected people from all genres and age groups explaining the need to take steps as a species to live smarter more sustainable lives. To piggyback an earlier discussion post of my own, where I mention using a “total transparency” method of publishing a product or service’s real cost after adjusting for negative and positive externalities could be used in PSA’s as well. These “energy facts” will expose energy wasteful products and hopefully reward companies that are considering their carbon footprint and striving towards sustainability.

References:

Goodwin, Bill. “PUBLIC SERVICE ADVERTISING.” PSA Bibliography. Web. 14 Sept. 2014. <http://www.psaresearch.com/bib9830.html>.

“Greening Schools – Resources – Sustainability – Integration into Teaching.” Greening Schools News. Illinois EPA and WMRC. Web. 14 Sept. 2014. http://www.greeningschools.org/resources/view_cat_teacher.cfm?id=113

“Keep America Beautiful.” Keep America Beautiful. Web. 14 Sept. 2014. <http://www.kab.org/site/PageServer?pagename=index>.

“The Crying Indian – Full Commercial – Keep America Beautiful.” YouTube.com. Web. 14 Sept. 2014. <https://www.youtube.com/watch?v=j7OHG7tHrNM>.

Lesson 3 – Mulhollem – Energy Efficiency Policy

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National Energy Efficiency Policy

When it comes to energy efficiency in the United States there are many policies that could be discussed but there is one major government policy that could promote energy efficiency more than the others. That would be to have a national energy efficiency policy put in place. There needs to be a standard that applies to all the states. Each state needs to do its part in the battle against climate change. Many states are well on their way in doing this but why should other states just sit back and do little or nothing? Twenty-five states have established an energy savings target or an energy efficiency resource standard (EERS). These states make up almost 60 percent of the electricity sales in the United States. (ACEEE 2014) That leaves 40 percent of the states to do nothing or have their own policy. There needs to be a minimum efficiency percentage that each state must make every year. If each state met a 2.5 % energy efficiency every year there would be a very large decrease in energy consumption. If a state went over 2.5% it could carry the excess over to the next year or get federal monies in return as an incentive. A national energy efficiency policy would put the states in competition for funding to comply. This could promote their states economy by funding different state programs to reach their goal.

 

One big issue for the federal government to implement a policy of this size is to verify how much each state actually did? How can they prove that the state has increased its efficiency and at what percent? I would develop a business that would go to different states and audit their energy efficiency policy. My company would also train state employees the correct process to work with private sector companies in getting the approval for energy efficient projects. Along with auditing and training, my company would help in the scheduling and planning of their future projects and goals. Future goals are the key to staying on track. If the state knows what it has to do in order to meet or exceed the minimum percentage it makes it easier to reach the goal. The business would not be involved in the states projects just the process of making sure they are in compliance. We would also send out monthly reports to show where they were in relationship to the set schedule. Someone has to monitor and verify that the states are doing what they say they are. I think a non-governmental private energy auditing company is a good business and a necessary business. The business name would be Energy Auditors of North America. (EANA)

ACEEE. ACEEE Policy Brief. April 9th, 2014. http://www.aceee.org/files/pdf/policy-brief/eers-04-2014.pdf (accessed 9 14, 2014).