At the Das Haus Net-Zero House Symposium in White Plains on July 17th, 2012, Guy Slicker, Director for Renewable Energy Resources and Technology of the New York Power Authority gave the keynote address. The speech focused on energy efficiency measures that the New York Power Authority was taking to retrofit tax payer support facilities such as municipal buildings, hospitals, schools, libraries. The address also put a particular emphasis on the importance of providing cheap ubiquitous power to all of the New York Power Authority’s customers through various energy sources, highlighting the new use of renewable energy.
Mr. Slicker did a good job in promoting and talking and talking about the efforts that the NYPA has been taking in order to mitigate their carbon emissions. He seemed to be pretty set on track as to where the programs were going, and did not seem to open to change recommended by the audience.
Throughout the whole entire speech I could not help but think how inefficient the programs were that the NYPA were putting into place. I believe that more financial instruments can be implemented to make their energy efficiency programs more effective, such as a “green revolving fund”, which will be discussed more in depth later.
The New York Power Authority is America’s largest state power organization, providing the lowest cost electricity all throughout New York State with 17 generating facilities and more than 1,400 circuit-miles of transmission lines. The Authority derives most of its power from hydroelectric sources, mainly from the Robert Moses Niagara Hydroelectric Power Station on the Niagara River, the St. Lawrence-FDR Power Project on the St. Lawrence River, and the Blenheim-Gilboa Hydroelectric Power Station in the Catskill Mountains, producing a total of 4.2 million kilowatts of electricity. In addition, the NYPA makes use of six other small scale hydroelectric plants all throughout New York State.
Besides for hydroelectric power, the NYPA derives its power from high efficient natural gas power plants on Long Island and Manhattan. With the use of these energy resources they are able to provide the cheapest power in New York State at two cents a kilowatt-hour. Much to our enjoyment at Eco-Brooklyn, we are happy that the NYPA is doing a good job to provide non-carbon intensive power to their customers.
Guy Slicker did not come to the Das Haus Net-Zero House Symposium to discuss the power sources that were already in place. One of the main points that he wanted to make was to discuss the energy efficiency tactics that the Authority was using to retrofit public facilities.
Just in fiscal year 2011, the NYPA invested $186 million invested in energy efficiency projects, completing work at 799 public facilities during the year. Currently the NYPA is financing another 267 projects at more than 1,700 locations statewide, and has invested close to $1.5 billion in these efforts to date. Governor Cuomo has plans to spend an additional $450 million over the next five years.
These actions have reduced the environmental impact of the NYPA’s electricity generation by a substantial amount. By cutting energy costs for close to 3,900 schools and government offices, the Authority is now saving New York taxpayers more than $134 million each year; avoiding emissions of more than 820,000 tons of greenhouse gases each year, so far; and cutting back their demand for foreign oil by more than 2.5 million barrels a year.
I believe that these are all definitively worthy causes, but there is something essentially flawed in all of this work. Currently, the state is spending millions of dollars to reduce energy consumption in public facilities that cut buildings energy consumption “up to 25 percent”, according to the NYPA’s website.
Eco-Brooklyn specializes in the demand side of energy, focusing on building high quality and energy efficient structures that are durable and low cost. Attention is put on using salvaged, sustainable and local materials. But the scope of our work only focuses on the occupants of the building who demand the energy. We have no control over the supply side, which are public utility companies.
At Eco-Brooklyn, we earnestly want to see the utility companies do the right thing in terms of supplying energy. As of right now I think they are on the right track, but they are missing out on a large opportunity to expand and provide a further decrease in supplied energy through their energy efficiency program.
Throughout Mr. Slicker’s speech it seemed to me that the NYPA was consistently funding projects that grabbed at the “low hanging fruit” of energy efficiency, or the projects that seemed easily to complete and were relatively cheap. My predictions turned out to be true: the NYPA only finance the projects that have a payback period of 10 years or less.
Fundamentally, they are shooting themselves in the foot right now because more money will have to be spent in a few years to further reduce the buildings energy intake. A 25 percent reduction in buildings energy consumption will prove to be diminutive as global climate change continues to become even more of a problem. In the future, more money will have to be spent on larger projects that cost more and have longer payback periods.
But if the NYPA and other utility companies can implement financial instruments called “green revolving funds”, it would make it easier to pursue energy efficiency projects beyond the low hanging fruit. This could lead to more prolific energy efficiency measures and renewable energy implementation all across the board.
Started on college campuses across the United States, the details of a green revolving fund are quite simple. The best way a green revolving fund can be explained is through an example. The most effective example we can use is one between a utility company and a customer.
For example, say a utility company such as NYPA implements a renewable energy, energy efficiency, or an energy conservation project on a building. This project would have a quantifiable monetary savings or return; for the sake of our example lets say the total energy savings amount to $50. The utility company would then sign a contract with the customer, stating that they will charge them a flat rate for their electricity. If the occupant of the building was initially paying $200 per year for their electricity consumption, they would continue to pay the $200. In reality, their electricity bill is only $150. This is where the green revolving fund comes in.
The difference between the settled flat rate and the actual rate of electricity are reinvested into the green revolving fund until the project is paid off. After the initial capital invested into the project is recovered, the money saved is added into the green revolving fund to finance more projects.
The choice seems obvious. If the utility companies can set a fund like this up then they will be able to continue to invest in sustainable projects without the use of any new capital. This tool can be a robust instrument that fundamentally changes the way utility companies work.
Currently, green revolving funds are exclusively found on college campuses. If there were to be utilized by utility companies such as the NYPA, then they will be able to move beyond their ‘low-hanging fruit’ stage and into a phase where they can implement more robust projects that will lower energy costs, mitigate environmental impact, and reduce carbon emissions.