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Innovative energy cooperatives reach for aggressive energy reduction goals

Marc Lefkowitz  |  04/04/11 @ 2:37pm

The city of Cleveland wants the light to go off for thousands during the self-proclaimed Year of Energy Efficiency now three months along, and it hopes the following deal will pull a few levers: the first 100 homeowners to sign up for its Energy $aver program will get a soup-to-nuts home energy makeover.

The city needs to spend a chunk of the $4.5 million it was awarded in 2009 from the federal Stimulus for energy efficiency, Office of Sustainability Energy Manager Anand Natarajan explained.

Cleveland has committed the money to 14 programs including the new downtown bike station, lighting upgrades at City Hall and the (infamous) LED streetlight replacements. The Energy $aver program has been slow to launch for a number of reasons including low demand (a problem that was noted more than once at last night's Year of Energy Efficiency forum).

But the city expects to have energy audits and the retrofit work (i.e. insulating attics and walls) for 100 homes underway this year. Since this is a pilot, the city also plans to conduct interviews and document the barriers to energy efficiency at home.

Which is a good thing, noted Paul Ettorre of Key Bank and the newly formed Greater Cleveland Energy Alliance. The Alliance hopes to scale up energy retrofits to meet aggressive targets set by the Sustainable Cleveland 2019 Green Building Group: retrofit 50% of the region's buildings to use 50% less energy.

"Industry gets this," Ettorre said. "They've been doing energy performance contracts for the last 20 years. We're not seeing it happen at any scale residentially because it's a science-based transaction, and that's not where most of us live on a regular basis."

The Alliance is modeling itself on successful nonprofit energy efficiency brokers such as the Greater Cincinnati Energy Alliance and the Cambridge Energy Alliance in Boston. Ettorre and Enterprise Foundation regional director Mark McDermott spearheaded the effort which includes foundations, banks and nonprofit. The group got foundation support to hire the same consultants who set up the Cambridge alliance to lead an intense strategic planning session.

Energy alliances fill gaps in the market and hopefully drive demand up by doing two things: offering loans that can be paid back with energy savings, and offering turn-key solutions to the often confusing world of retrofit work.

"We get this piece of paper from the blower door test, and we have no idea if we can trust it," Ettorre said. "There's no doubt about the science of it, but energy efficiency is a high-touch transaction. We need an entity that can step in who's a neutral broker. "

The data is there to back up this disconnect between the energy audit and a DIY or professional retrofit project, says Cleveland Chief of Sustainability Andrew Watterson who is also on the alliance's steering committee. "I was floored by how low it is. Only around four percent (act on their audit)."

The alliance isn't the only regional-focused group working on energy retrofits. Cleveland and 'first' or 'inner-ring' suburban communities have formed a Solar Special Improvement District that can help any business finance and install solar panels through its energy savings. State enabling legislation passed last year also allows Wind, Geothermal and Energy Efficiency SIDs.

Northeast Ohio's is the first multi-jurisdictional Solar SID in the state, said Jennifer Kuzma of the First Suburbs Consortium. The Solar SID has a goal of $9.5 million invested on a range of approximately 70 projects, Kuzma said, from small storefronts with solar paneled awnings to larger industrial plants. The loan is attached to the property as a lien; the first pilot project is expected this summer.

"The property owner defines the project. We hope to be more than the financing but also the tech support," she said. "We also hope this attracts a solar panel maker to the area."

Cleveland State University Sustainability Coordinator Nathan Engstrom was also on the panel, and explained the major investment in energy efficiency being made on "every building" on campus. The university kicked off its campaign when the state passed HB251, which set performance mandates for public institutions. But Engstrom says the school, through its energy services contract (where a company 'guarantees' certain paybacks on energy efficiency work), has exceeded the state target. During the next ten years, it expects to save $63 million on $43 million energy upgrades for a 14% return on investment. 40% energy savings are expected; and the school tracked its emissions reductions-from .020 tons of emissions/sq ft. in 2004 to .017 in 2007.

During the Q&A, realtor Jon Eckerle asked about the scalability of energy efficiency work if loans tied to the equity of the building instead of to the energy savings as envisioned with PACE loans-which Fannie and Freddie have derailed. "What is being done about this in Congress? What can we do?"

Energy alliances and state programs like Pennsylvania's Keystone Home Energy Loan Program are filling in before the private equity markets responds, Ettorre asserted. "Keystone now has $25 million in loans that it wants to securitize and sell. The Pacific Northwest has a program with incredibly low default rates. These are small crumbs, but I would argue that the market will step in. "The opportunity for the energy alliance is having all of the resources and opportunities in one place."

If you're a homeowner in Cleveland and would like to participate in the city's Energy $aver energy retrofit pilot project, call 216-664-2444 xt. 5545.

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