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The Alaska energy efficiency challenge Cheapest energy is the energy saved: overcoming the cost hurdle of retrofitting houses and businesses with modern technology ALAN BAILEY Petroleum News
With many parts of Alaska suffering from high energy prices, the reduction of energy costs through energy efficiency and energy conservation should surely be a key strategy for businesses and homes in the state. But the cost of converting a less-than-new building to use modern energy saving technology can prove a barrier. In an Oct. 26 meeting of the Anchorage Chamber of Commerce, staff from state agencies involved in promoting energy efficiency talked about some of the commercial issues surrounding energy efficiency upgrades to buildings.
Katie Conway, assistant program manager for the Alaska Energy Authority’s energy efficiency and conservation program, commented on the value of reducing energy consumption both through energy efficiency - use of energy saving technologies - and through energy conservation by the adoption of behaviors that minimize energy requirements.
Substantial savings Conway quoted the example of Alaska Pacific University, which, she said, achieved annual operating cost savings of $340,000 per year through a $2.5 million energy efficiency retrofit in campus buildings, funded through a bank loan, and with assistance from the Alaska Industrial Development and Export Authority.
“Energy efficiency works ... the cheapest Btu (British thermal unit) is the one that you’re not using,” Conway said.
Energy efficiency can also bring other benefits such as reducing emissions, increasing energy security, alleviating poverty, improving health and creating employment opportunities, she said.
And just carrying out only those building retrofits that clearly make economic sense typically has a 30 percent energy cost savings potential, Conway said. And, while on the one hand formulating an energy efficiency project becomes a question of determining a positive cash flow, a relatively quick payback and an acceptable risk, on the other hand delaying an energy efficiency program wastes money in the form of energy loss, she said.
Access to capital The biggest challenge tends to be access to capital to pay for upgrades to buildings, but there are innovative financing tools available in Alaska.
Tim Leach, an energy specialist with the Alaska Housing Finance Corp., reviewed some of these tools. Residential homeowners, for example, have access to the state’s energy rebate program, which provides funding assistance for home retrofits - there is still funding available in that program, Leach said. There is also a winterization program that has income limits. A second mortgage for energy conservation is another vehicle, Leach said.
In the nonprofit sector there several funding tools available. Publicly owned facilities have access to Alaska Housing Finance Corp’s Alaska Energy Efficiency Revolving Loan program. And there are other publicly available loans through other entities such as the U.S. Department of Agriculture, Leach said.
And private financing through banks and credit unions for energy efficiency retrofits is becoming more available for both publicly owned and commercial facilities, he said.
A commercial building energy audit program through the Alaska Energy Authority may continue to be available. And both the U.S. Department of Agriculture and the Alaska Department of Commerce, Community and Economic Development financial assistance programs for the retrofit of commercial facilities, Leach said.
However, having the knowledge, time and motivation to embark on an energy efficiency program can also be an obstacle. And there can be split incentives between a building owner and a building tenant. In addition, the payback period from an energy efficiency program may last longer than the period of ownership of a property.
PACE legislation Gene Therriault, a member of the management team of the Alaska Energy Authority, talked about bills that are being considered by the Alaska Legislature to introduce what is referred to as a Property Assessed Clean Energy, or PACE, program. PACE, a mechanism that is in operation in several states and that works in conjunction with property tax assessments, would provide low interest, relatively long-term loans to assist commercial energy efficiency projects. In return for a loan, a commercial owner would have to agree to a property assessment. And the collection of the loan repayment would have the same authority rights as property tax collection, Therriault said.
If the PACE legislation is passed, Alaska municipalities could start commercial property loan programs under the terms of the legislation. This could be especially helpful in Fairbanks, where PACE loans could encourage the conversion of commercial properties to the use of natural gas that will become available under the Alaska Industrial Development and Export Authority’s Interior Energy Project, Therriault said.
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