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CBO — Using ESPCs to Finance Federal Investments in Energy-Efficient Equipment

March 30, 2015 Comments off

Using ESPCs to Finance Federal Investments in Energy-Efficient Equipment
Source: Congressional Budget Office

A variety of laws and executive orders require federal agencies to improve the energy efficiency of their facilities and to pursue a range of other energy-related goals. Because the availability of annual appropriations is limited, the Administration encourages federal agencies to use other types of financing—such as energy savings performance contracts (ESPCs)—to fund investments related to energy efficiency.

Under an ESPC, a private party agrees to pay to design, acquire, install, and, in some cases, operate and maintain energy-conservation equipment—such as new windows, lighting, or heating, ventilation, and air conditioning (HVAC) systems—in a federal facility. In return, the federal agency agrees to pay for those services and equipment over time, as well as for the vendor’s financing costs, on the basis of anticipated and realized reductions in the agency’s energy costs.

Such contracts are examples of third-party financing, in which vendors privately fund investments for federal agencies. In the case of an ESPC, the vendor is usually an energy service company (a business that focuses on projects and technologies to reduce energy use). Similar arrangements exist, called utility energy service contracts (also known as UESCs), in which the services and equipment are provided by a utility. Although data about the characteristics and results of utility energy service contracts are less readily available than similar data about ESPCs, the discussion of ESPCs in this report generally applies to those other contracts as well.

CRS — Energy Tax Incentives: Measuring Value Across Different Types of Energy Resources (March 19, 2015)

March 25, 2015 Comments off

Energy Tax Incentives: Measuring Value Across Different Types of Energy Resources (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

The majority of energy produced in the United States is derived from fossil fuels. In recent years, however, revenue losses associated with tax incentives that benefit renewables have exceeded revenue losses associated with tax incentives benefitting fossil fuels. As Congress evaluates the tax code and various energy tax incentives, there has been interest in understanding how energy tax benefits under the current tax system are distributed across different domestic energy resources.

This report provides an analysis of the value of energy tax incentives relative to primary energy production levels. Relative to their share in overall energy production, renewables receive more federal financial support through the tax code than energy produced using fossil energy resources. Within the renewable energy sector, relative to the level of energy produced, biofuels receive the most tax-related financial support.

The report also summarizes the results of recently published studies by the Energy Information Administration (EIA) evaluating energy subsidies across various technologies.

PJM Interconnection Economic Analysis of the EPA Clean Power Plan Proposal

March 24, 2015 Comments off

PJM Interconnection Economic Analysis of the EPA Clean Power Plan Proposal (PDF)
Source: PJM Interconnection

At the request of the Organization of PJM States, Inc., PJM Interconnection has analyzed potential economic impacts on electric power generation in the PJM footprint resulting from the U.S. Environmental Protection Agency’s Clean Power Plan. The plan, proposed by EPA in June 2014, seeks a 30-percent reduction in carbon dioxide emissions from the electricity sector by 2030 (compared to 2005 levels). PJM does not take positions for or against pending regulations but does provide independent expert analysis on the potential economic and reliability impacts of proposed regulatory rules and legislation.

The Organization of PJM States, which represents state utility regulators in the region served by PJM, requested analyses of several scenarios including a comparison of regional compliance versus state-by-state compliance. PJM included additional scenarios with different assumptions in the analysis to provide modeled results covering a wide range of possible outcomes. In total PJM analyzed 17 distinct scenarios – each was evaluated with and without the implementation of the Clean Power Plan. The scenarios covered varying combinations and levels of renewable resources, energy efficiency, natural gas prices, nuclear generation and new entry of natural gas combined-cycle resources.

High-level insights from the economic analysis include:

• Fossil steam unit retirements (coal, oil and gas) probably will occur gradually. As the CO2 emission limits decline over time, the financial positions of high-emitting resources should become increasingly less favorable, with lower-emitting resources displacing them more often in the competitive energy market.
• Electricity production costs are likely to increase with compliance because larger amounts of higher-cost, cleaner generation will be used to meet emissions targets.
• The price of natural gas likely will be a primary driver of the cost of reducing CO2 emissions if natural gas combined-cycle units become a significant source of replacement generation for coal and other fossil steam units.
• Adding more energy efficiency and renewable energy and retaining more nuclear generation would likely lead to lower CO2 prices; this could result in fewer megawatts of fossil steam resources at risk of retirement because lower CO2 prices may reduce the financial stress on fossil steam resources under this scenario.
• State-by-state compliance options, compared to regional compliance options, likely would result in higher compliance costs for most PJM states. This is because there are fewer low-cost options available within state boundaries than across the entire region. However, results will vary by state given differing state targets and generation mixes. PJM modeled regional versus individual state compliance only under a mass-based approach.
• State-by-state compliance options would increase the amount of capacity at risk for retirement because some states likely would face higher CO2 prices in an individual compliance approach.

See also: State-Level Detail (PDF)
See also: FAQs (PDF)

Solar panels reduce both global warming and urban heat island

March 24, 2015 Comments off

Solar panels reduce both global warming and urban heat island
Source: Frontiers in Environmental Science

The production of solar energy in cities is clearly a way to diminish our dependency to fossil fuels, and is a good way to mitigate global warming by lowering the emission of greenhouse gases. However, what are the impacts of solar panels locally? To evaluate their influence on urban weather, it is necessary to parameterize their effects within the surface schemes that are coupled to atmospheric models. The present paper presents a way to implement solar panels in the Town Energy Balance scheme, taking account of the energy production (for thermal and photovoltaic panels), the impact on the building below and feedback toward the urban micro-climate through radiative and convective fluxes. A scenario of large but realistic deployment of solar panels on the Paris metropolitan area is then simulated. It is shown that solar panels, by shading the roofs, slightly increases the need for domestic heating (3%). In summer, however, the solar panels reduce the energy needed for air-conditioning (by 12%) and also the Urban Heat Island (UHI): 0.2 K by day and up to 0.3 K at night. These impacts are larger than those found in previous works, because of the use of thermal panels (that are more efficient than photovoltaic panels) and the geographical position of Paris, which is relatively far from the sea. This means that it is not influenced by sea breezes, and hence that its UHI is stronger than for a coastal city of the same size. But this also means that local adaptation strategies aiming to decrease the UHI will have more potent effects. In summary, the deployment of solar panels is good both globally, to produce renewable energy (and hence to limit the warming of the climate) and locally, to decrease the UHI, especially in summer, when it can constitute a health threat.

Clean Economy Rising

March 24, 2015 Comments off

Clean Economy Rising
Source: Pew Charitable Trusts

This collection of policy briefs examines state clean energy economies. The states selected have demonstrated leadership in clean energy policies, installations, and economies, or are at a crossroads in their energy futures.

Country Analysis Brief: Angola

March 23, 2015 Comments off

Country Analysis Brief: Angola
Source: Energy Information Administration

Angola is the second-largest oil producer in sub-Saharan Africa, behind Nigeria. The country experienced an oil production boom between 2002 and 2008 as production started at several deepwater fields. In 2007, Angola became a member of the Organization of the Petroleum Exporting Countries (OPEC).

Selling Into the Sun: Price Premium Analysis of a Multi-State Dataset of Solar Homes

March 19, 2015 Comments off

Selling Into the Sun: Price Premium Analysis of a Multi-State Dataset of Solar Homes
Source: Lawrence Berkeley National Laboratory

Capturing the value that solar photovoltaic (PV) systems may add to home sales transactions is increasingly important. Our study enhances the PV-home-valuation literature by more than doubling the number of PV home sales analyzed (22,822 homes in total, 3,951 of which are PV) and examining transactions in eight states that span the years 2002–2013. We find that home buyers are consistently willing to pay PV home premiums across various states, housing and PV markets, and home types; average premiums across the full sample equate to approximately $4/W or $15,000 for an average-sized 3.6-kW PV system. Only a small and non-statistically significant difference exists between PV premiums for new and existing homes, though some evidence exists of new home PV system discounting. A PV green cachet might exist, i.e., home buyers might pay a certain amount for any size of PV system and some increment more depending on system size. The market appears to depreciate the value of PV systems in their first 10 years at a rate exceeding the rate of PV efficiency losses and the rate of straightline depreciation over the asset’s useful life. Net cost estimates—which account for government and utility PV incentives—may be the best proxy for market premiums, but income-based estimates may perform equally well if they accurately account for the complicated retail rate structures that exist in some states. Although this study focuses only on host-owned PV systems, future analysis should focus on homes with third-party-owned PV systems.

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