MARKET TRANSFORMATION is a popular topic these days in energy conservation, and this issue of Con.WEB takes a look at it from several perspectives. On June 17, a chartering committee of major Northwest energy players met in Portland to establish a $30 million per year Market Transformation Trust. Another comes from north of the United States-Canada border, where the highly visible Power Smart program faces a crossroads after six years of transforming markets for energy efficiency. We also cover a June 10 discussion in Portland among government, academic and business people (all of them key collaborators in market transformation) that explored their myriad activities as well as challenges and opportunities they face in transforming markets. And our Briefs section contains a short update on the Regional Energy Review work group for conservation, renewables and public purposes; market transformation is a central (if yet unresolved) topic in their deliberations.
There's more, too. We invite you to take a look and, as always, please feel to share any thoughts with us via e-mail (marko@newsdata.com).
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What began in 1989 as an innovative demand-side management program at B.C. Hydro has become a well-known symbol for energy efficiency throughout Canada--and an effective tool in market transformation.
As Power Smart celebrated its sixth birthday this spring, it counted 30 utilities--most of those that operate in Canada, and others in Brazil, Mexico, the United States and Eastern Europe--and more than 100 manufacturers as members. But the six-year milestone also marked a crossroads for Power Smart: as the utility industry becomes more competitive and utilities' attitudes toward conservation and DSM change, Power Smart will have to change, too, to survive.
The Power Smart board--including representatives from the seven Canadian utilities that own the company--met recently to discuss future strategic direction. "Customer value is becoming more important with potential deregulation," said Power Smart spokeswoman Colleen Brennan. "The direction we're getting is that they [members] want a program that can be a long-term customer service program." Rebates will probably disappear as utilities trim costs and try to make DSM self-sufficient, Brennan said, but customers of Power Smart members will still expect innovative product promotions and other activities that have been Power Smart's hallmark from the beginning.
Brennan also said Power Smart board members are in agreement that there is still merit in having one entity work at market transformation on behalf of member companies. In the future, utilities will be selling convenience and comfort, not electricity per se, Brennan said. To successfully position electricity for that future, "The real link is to product."
That's where Power Smart comes in--in a big way. Besides
providing member utilities with energy efficiency
information, Power Smart works with trade allies--primarily
manufacturers and retailers of energy-efficient products--to
promote endorsement and marketing of products that meet Power 
Smart's efficiency and quality standards. Brennan said 60
categories of products have been rated by Power Smart and
1,700 individual products carry its distinctive logo,
including appliances, water saving devices, lights,
motors--anything that uses electricity.
Market research indicates Power Smart is viewed positively by the public, Brennan said, and 50 percent of Canadians are aware of the concept and its purpose: those who had heard of it knew it meant energy efficiency. Portland General Electric, Power Smart's only U.S. member utility, reports similar results from customer surveys. "It's a great program--customers love it," said John McLain, PGE manager of residential programs. "It represents energy efficiency in the customers' mind." Brennan also pointed out that a Power Smart endorsement provides third-party credibility, since it isn't the manufacturer touting the benefit of a particular product, but an independent company that has tested the item and verified its efficiency. "People are starting to become more aware of the advantage of energy-efficient products."
Power Smart's initial success came in transforming the motors market in Canada. In the late 1980s, high-efficiency motors accounted for less than five percent of total sales; today, about half the motors sold in the Canadian market are high-efficiency models. That transformation might not have occurred without the collaborative effort Ontario Hydro and B.C. Hydro started in 1990 and which expanded, with Power Smart itself, to utilities throughout Canada. Although the program initially offered rebates for purchase of qualifying motors, it also established minimum efficiency standards and verification testing, a high-efficiency motors database and a national marketing program.
Member utilities report similar increases in the sale of energy-efficient endorsed by Power Smart. In Ontario Hydro's service territory, sales of energy-efficient products more than doubled between 1991 and 1994. B.C. Hydro--Power Smart's originator--reports an average increase of 20 percent in annual sales of energy-efficient products and a savings of 1.85 million kilowatt-hours per year. The British Columbia utility has been so pleased with Power Smart's success it has instituted BC21 Power Smart, a program to support innovative energy-efficiency demonstration projects. Twelve projects have been selected for the initial year of the program, receiving grants totaling up to $500,000.
But as competition among utilities intensifies, at least one Power Smart member--PGE--questions whether the organization's current emphasis on collaborative activities will continue to make sense. "As long as it wasn't affecting choices, it was cost-effective to join together," said PGE's McLain. In a competitive market, there's less value in working together and putting the same message in the marketplace. "Competing companies try to differentiate," he said, and if customers choose their electric company based in part on its commitment to energy efficiency, "You're going to want to be more noted than your competitor."
Power Smart director of member services John-Pierre Finet disagrees.
"What good would it be if they [utilities] had different brands? There's no leverage possible with this; it's more difficult to move the market." Finet said when Canadian utilities first started promoting energy conservation, manufacturers of energy-efficient products didn't want to deal with all the different labeling requirements of individual utility programs. That was one reason Power Smart was formed: to give the manufacturers some assurance of sufficient demand for their products if supply was increased.
In fact, this concept has a name at Power Smart: co-opetition, or competition with cooperation. Utilities may want to join under one umbrella to compete against other fuel sources, suggested new Power Smart president Bob Watson; or perhaps gas and electricity will converge in the future, rather than compete. Then Power Smart could swing the consumer market to energy-efficient products, regardless of fuel source.--Jude Noland
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Transforming markets for energy efficiency is by definition a collaborative effort, and among the key collaborators in the Northwest are people from government, educational institutions and businesses. More than a dozen of them gathered near Portland June 10 to discuss the ways they are already working (in the words of Bonneville Power Administration) "to induce lasting structural or behavioral changes in the market that result in increases in the adoption and penetration of energy efficient technologies and practices." The day-long dialogue at Marylhurst College identified numerous challenges in market transformation--chiefly political, financial and behavioral--but it also raised potential opportunities and solutions.
Bureaucrats, educators and business people already are engaged in an impressive array of market-transforming work in Washington, Oregon, Idaho and Montana. Among the many examples cited June 10 were energy-code development and implementation; financing and tax-credit programs; building operator training; technical assistance; resource conservation manager programs; home energy ratings; software programs; energy education (including on-line learning); procurement of energy-efficient products; and more.
These ongoing efforts continue to evolve. For example, Lane Community College in Eugene, which now offers a two-year technical energy management program, plans to expand into comprehensive training for energy professionals--first in technical areas (starting with heat pumps this fall) then moving into behavioral aspects. "We need this kind of stuff in our region," said Lane EMP coordinator Roger Ebbage. In Montana, Department of Environmental Quality staff plans to use its expertise in school financing to broker customized deals that promote efficiency. And in Washington, the transfer of many Washington State Energy Office functions to Washington State University Energy Extension Service (see Con.WEB Issue No. 5, May 1996) could lead to interactive television programs, partnerships with engineering and/or architecture professors, and who knows what else. "We'll have new opportunities we don't even know of," said WSEO's Kristine Growdon.
A major opportunity for market transformation, and a major challenge as well, lies within the financial markets. Stan Price of the Northwest Energy Efficiency Council said members of his business trade group consider access to information and capital as the most critical needs in expanding their markets. "The history of efficiency is largely trying to get over the first-cost hurdle," he noted, and with utility funding in decline, private-sector financing becomes even more important. There are indications this market is emerging. Growdon cited a Washington credit union that finances solar photovoltaic systems. Tom Livers of the Montana DEQ mentioned interest in Montana projects from East Coast investors. And Bonneville's Ken Keating announced that three Chase Manhattan branches in the Northwest will provide quick-turnaround loans, and a $500 reduction on closing costs, to Super Good Cents-certified homes, site-built as well as manufactured. In the end, said Keating, if a market is truly transformed--and not just subsidized--capital will be available.
Financing and technology, however, are only part of the market-transformation equation, cautioned Dave Philbrick of Oregon State University Energy Extension. Paraphrasing the National Rifle Association, he said, "Buildings don't use energy. People do." Influencing behavior produces more sustainable energy savings, he emphasized.
On the political front, some concern was expressed about potential energy-code rollbacks in the Northwest, as a consequence, largely, of prevailing anti-regulatory attitudes. This could be yet another battlefront--or, as facilitator Jeannie Dodson-Edgars suggested, an opportunity to turn political enemies (i.e. homebuilder associations) into partners. "That sounds like a market-transformation activity beyond the energy code," she said.--Mark Ohrenschall
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A group of 25 people representing major players in Northwest energy affairs met in Portland June 17 as a chartering committee for a $30 million per year Market Transformation Trust. The Trust would be governed by a representative board and would superintend program disbursements for regional programs aimed at penetrating energy efficiency markets.
The "chartering committee" consisted of members from Bonneville Power Administration, investor-owned utilities, public power, the environmental community and the Northwest Power Planning Council. The consensus of all parties favored establishing the Trust, and Council staff, BPA and committee members are drafting a "straw man" proposal for creation in some detail of the Trust and its board-based governing arrangement. This document will be delivered to those in attendance soon and will be revised in time for the next meeting on July 15, again in Portland.
The Northwest EnerNet website will provide continuing information on the creation of the Trust. The EnerNet's IOD--Information on Demand--department has a Webwatch section with a selection of Market Transformation Trust documents. First select the IOD hotlink and then select Webwatch. As of the posting of this issue of Con.WEB, the section was still to be assembled; if it is still in process, try later--Cyrus Noë
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As growth in metropolitan Portland surges at a rapid pace, a critical question arises: Can the estimated 500,000 newcomers expected by 2001 be absorbed without contributing to urban sprawl, in housing that is affordable, attractive, appropriate to existing neighborhoods and resource-efficient? Yes, judging from the example set by City Life, an 18-unit development in Portland's Brooklyn neighborhood. City Life opened last fall as a cooperative demonstration project that shows how urban areas can grow without sacrificing housing prices, local neighborhoods or the environment.
The concept for the project was born in fall 1992 when Brian Scott, executive director of Livable Oregon, happened upon an urban Chicago alternative to the typical Street of Dreams display of large homes on large lots in the suburbs. With that as inspiration, he and others set out to develop their own urban dream housing for Portland.
In addition to Scott, the steering committee included representatives from the homebuilding and real-estate industries, a community development group, architects and the city of Portland. Another key participant was Portland General Electric. PGE sold the previously vacant 40,000-square-foot site to City Life (at 10 percent under appraised value), sponsored a home show last October that attracted 10,000 people and contributed energy efficiency rebates.
From an energy conservation perspective, the most notable unit is the Earth Smart duplex on City Life's south end, which exceeds energy-code standards by 40 percent. It includes foam-core structural paneling in the walls and roofs, which minimizes air leakage; electric zonal space heating with microchip setback controls; triple-pane, low-E windows with heat mirrors; and compact fluorescent lighting complemented by extensive daylighting. The two units are environmentally sensitive in other ways; they include carpets made from recycled plastic bottles, non-toxic paints, and landscaping with native plants. "I think the whole idea is great," said duplex resident June Palmer, who called the lighting scheme "the best part of the house."
Although the other 17 units all meet Super Good Cents standards, none reach the super-efficient Earth Smart benchmark. Scott acknowledged that affordability was a higher priority than energy efficiency, although he pointed out that City Life has many other efficiency benefits. An elementary school, a park, neighborhood services and major bus lines to downtown are all within walking distance, saving considerable transportation energy. And the project also uses land very efficiently, while still providing such amenities as off-street parking (in the alley behind the units), an inner courtyard and a small plot of land for each unit.
With so many different interests involved in City Life, compromises in the final product were inevitable. For example, the architects chosen through a design competition revised their original work to accommodate neighborhood concerns about aesthetics. And because the city of Portland wanted City Life to retain storm water on site, Scott said, $200,000 worth of dry wells were installed--even though an existing storm sewer runs nearby.
In the end, though, City Life appears to have largely succeeded in all its major goals. One was market viability; as of early June, all but one of the units had sold. Another goal was affordability; subsidized units sold for between $65,000 and $85,000, while market-rate units sold for less than $125,000 (expect for the $200,000 duplex). Those prices are bargains today in Portland. In addition, City Life's design blends well with the Brooklyn neighborhood, and the project innovatively and efficiently uses space and materials.
Scott believes City Life--and its wide exposure to the general public along with building, planning and architectural professionals--already has made an impact. "The whole sort of nature of the way people think about housing in the city has changed as a result of this project," he said.
City Life real-estate agent Diana McCredie also notices substantial interest. "I get people asking all the time: Is there going to be another one like this?" The answer apparently is yes. A PGE-sponsored Earth Smart design/build competition--intended to encourage more housing like City Life--is planned to begin later this year, according to consultant Debbi Allen of River City Resource Group.--Mark Ohrenschall
The most energy-efficient lighting source of all comes streaming into buildings every single day, from the grayest depths of winter to the brightest sunshine of summer. Daylighting offers pleasing light conditions and a connection to the natural world often missing within the built environment. It can effectively complement electric lighting--if thoughtfully and properly applied, as it has been many places around the Northwest. But daylighting also faces a variety of hurdles to widespread use, especially in the commercial sector.
As an energy-saving strategy, daylighting has astounding potential. Lawrence Berkeley Laboratory reports that perimeter daylighting theoretically can save 40 percent or more of the electricity used in a commercial space, including electric lighting and associated cooling needs. That's especially impressive since lighting consumes 40 to 50 percent of the electricity in most commercial settings.
However, the theory and the reality of daylighting do not quite ideally match. "I've never seen any building achieve the high end of what's talked about there," acknowledged Barbara Erwine, daylighting specialist at the Lighting Design Lab in Seattle. In fact, she continued, very few buildings have been monitored to determine the energy savings from daylighting. Among them are some that earned Energy Edge designation from Bonneville Power Administration--but those, however, fared poorly for daylighting. A big reason: the switching mechanisms to turn electric lights on and off in response to daylight were not accepted by office workers and were frequently overridden.
Although daylight itself is free of charge, putting it to use indoors is not. It costs money to design and install daylighting systems, which can include physical features (light shelves, louvers) as well as electronic devices such as photocell lighting controls. With the Northwest's low electric rates, "You cannot pay for those components with the energy savings," said Erwine. "No one even tries to make that argument." But daylighting, she pointed out, provides a comfortable working space in which people are likely to be more productive.
Daylighting and electric lighting exhibit many different characteristics, Erwine explained during a May 30 workshop at the Lighting Lab. Daylighting is dynamic, changing with the weather and the time of day; it connects us with nature, orients us in space, and sets our circadian rhythms. Plus it's free. Electric lighting, meanwhile, is much easier to control, to focus, to adjust to human needs. "It's a really malleable, flexible source [but] you do have to pay for it," Erwine said. In addition, daylighting generally has a higher color temperature--bluer, cooler--than electric light, and it also renders colors more correctly than almost all electric lighting sources other than incandescents. Both types can be used as diffuse light or point sources.
The trick lies in integrating electric light and daylighting. "How these two sources work together, or against each other, determines the success of the lighting design," Erwine wrote in a recent issue of Architectural Lighting.
There are many considerations. First is an understanding of the daylighting potential, which must account for the local solar resource (ironically, the gray skies common west of the Cascades are considered a fine daylighting source) as well as characteristics of the site, the building and the affected spaces inside. Then come the details of how daylight can be meshed with electric sources to create a desired lighting scheme--without overheating a space from too much glazing, or creating excessive glare on work spaces. And how will lighting-control mechanisms be applied to respond to changing levels of daylighting? Lighting design is both art and science, and as Erwine pointed out, there is no single right answer.
Daylighting is the original light source for humankind, and Erwine anticipates it will become increasingly emphasized, driven by environmental concerns and more stringent energy codes. Daylighting, she noted, already is commonly applied in home design--if not yet in the commercial-building sector.--Mark Ohrenschall
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A regional policy group sorting through a potential future for Northwest energy conservation and renewables has reached consensus on at least one thing: a set of goals and objectives. Participants in the Conservation, Renewables and Public Purposes Work Group of the Regional Energy Review (see Con.WEB Issue 4, April 1996) have been meeting in subgroups for conservation, renewables and low-income energy assistance, and, as of mid-June, they continued to debate a host of issues relating to the role of the marketplace, potential governance and funding mechanisms, market transformation, utility responsibilities and more. A June 6 update on the work group's activities is available on the Northwest EnerNet Regional Review site.
The work group is scheduled to present its final report to the Regional Review steering committee on July 11 in Seattle. Con.WEB's July issue will report on the work group's conclusions. Summaries also will be available on our EnerNet website.
SIDEBAR LINKS:
Portland General Electric has asked the Oregon Public Utility Commission to approve a proposal to refinance most of the utility's unrecovered conservation investments through a bond sale. PGE has asked the OPUC to issue an order designating certain conservation expenditures a "bondable conservation investment." That way, PGE can offer $90 million in conservation bonds for sale, which would cover the utility's unrecovered investments in conservation through Dec. 31, 1995.
The proposal would save customers about $6 million per year from lower financing costs that would result from the bond sale, according to PGE director of regulatory affairs Kelly Marold. Customers would still pay for the utility's conservation investments through rates, but rather than keeping the payments, PGE would pass it on to investors who purchase the conservation bonds.
Marold said Puget Power provided PGE with the idea for the conservation bond sale when it arranged a similar offering in Washington state As in Washington, legislative action was required in Oregon before such bonds could be sold; Marold said that came during the last session of the Oregon Legislature.
OPUC has held two public hearings on the proposal. While there are still some details that need to be worked out between OPUC and PGE staffers, Marold said the utility "hopes to be in the marketplace sometime this fall."--Jude Noland
Energy efficiency and renewable energy resources have been identified as key principles to be supported in any electric industry restructuring in Montana. This explicit support comes from the Montana Public Service Commission, which on May 21 issued a set of electric restructuring principles as part of its ongoing notice of inquiry into industry restructuring.
Under the heading of "Public Benefits," the PSC wrote, "Energy efficiency, renewable resource technologies and research and development are important to a sustainable and efficient energy future. Alternative means of pursuing these public interests should exist before public utility mechanisms are abandoned." That's one of 10 principles enunciated by the PSC in addition to its stated core principle for restructuring: "Economic efficiency should be balanced with social equity."
Marketplace approaches for an increasingly competitive energy future will be the focus of a one-day forum in Portland on Sept. 11. Sponsored by Bonneville Power Administration and intended for utility marketing/conservation managers and staff, the forum will examine the latest developments and emerging technologies in today's rapidly changing electric utility environment.
Keynote speaker Paul Hawken, author of the popular book, The Ecology of Commerce, will discuss changes in the electric industry and their effects on the marketplace. In addition, the forum will feature a panel of commercial and industrial customers, a presentation from the Electric Power Research Institute, discussions by utility and industry representatives, and a debate on the role of energy efficiency in a more competitive environment. Displays, booths, exhibits and demonstrations of currently available electrotechnologies also will be featured. For more information, e-mail Jim Brands of the Northwest Public Power Association, which is producing the forum for Bonneville, or call him at (360) 254-0109.
A public-interest group has deposited $100,000 in a Portland community bank as a source of financing for projects that benefit the environment, including energy conservation and renewable resource activities. The Northwest Environment and Self-Reliance Trust created the "Oregon Earth Fund" in April at the Albina Community Bank, a new financial institution primarily serving northeast Portland. Money from the fund will be available for a wide range of activities, including solar installations, residential weatherization, commercial retrofits, removing recyclable material from solid wastes, and more.
"I think (the fund is) very unique," said bank president Leon Smith. "We're looking for additional deposits along those lines (for) anyone that has an interest in promoting environmental conservation. We want to position ourselves as a bank that is promoting environmental conservation and reduction of the solid-waste stream." Projects financed by the fund will need to benefit the bank's target market, northeast Portland and to a lesser extent the greater Portland area. NEST advisor Dan Meek noted Albina can leverage the earth fund money to borrow additional dollars from other sources, such as the Federal Reserve Bank. For more information, call Smith at (503) 287-7537.--Mark Ohrenschall
A technically advanced solar-thermal plant sponsored in part by two Northwest utilities has started producing power in California's Mojave Desert. The 10-megawatt Solar Two project uses some 2,000 sun-tracking mirrors to focus sunlight on a central receiver atop a 300-foot-high tower. The demonstration project also features a liquefied-salt energy storage system, so electricity can be produced around the clock.
"Solar Two marks a significant milestone in solar energy production," said Fred Buckman, president and chief executive officer of PacifiCorp, one of the utility sponsors of Solar Two. "It demonstrates the technical feasibility and cost of storing solar energy. Using the molten-salt technology as a heat transfer medium for energy storage is a major breakthrough. We believe Solar Two is an important stepping stone toward full-scale, commercial generating plants--producing electricity from the sun in the 100- to 200-megawatt range," he said. Idaho Power also is a partial sponsor of the $48.5 million project. Other partners include Southern California Edison, U.S. Department of Energy, Arizona Public Service, Bechtel Corp., California Energy Commission, Electric Power Research Institute, Los Angeles Department of Water and Power, Sacramento Municipal Utility District and the Salt River Project.
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