Cool Leadership Training

September 23, 2007 Cliff Majersik Program Director Institute for Market Transformation Phone 202-328-5149 [email protected]

www.imt.org

Most Mid-Atlantic (PJM) electricity comes from coal Oil Gas Hydro 1% 5% 1% Nuclear 35%

23,600 US deaths each year and $160 billion in US healthcare bills can be attributed to air pollution from power plants.

Coal 57% Renewables 1% Source: 6/2006 PEPCO Standard Offer Service Disclosure

Source: US Energy Information Administration Statistics (Architecture 2030)

Housing generates 20% of all U.S. CO 2 emissions Commercial buildings generate 18% of all US CO 2

Maryland Carbon Dioxide Pollution by Sector, 2004 Source: “Maryland Blueprint for Action,” Environment Maryland, June 2007

Washington spent $810 million on electricity in 2003 Commercial buildings consume the lion’s share Industrial 2% Residential 17% Transportation 3% Source: US Energy Information Agency www.eia.doe.gov/emeu/states/sep_fuel/html/fuel_es.html

Commercial 78%

WASTE MANAGEMENT 7% TRANSPORTATION 18% BUILDINGS 75%

DC Greenhouse Gas Emissions

Source: DC GHG Inventory

Image by NOAA

Dr. James E. Hansen Director, NASA Goddard Institute for Space Studies December 6, 2005

“Action must be prompt, otherwise CO 2 - producing infrastructure will be built within a decade that will make it impractical to keep further warming under 1 0 C”.

Dr. James Hansen, NASA GISS

Dover Ocean City Norfolk Hampton Virginia Beach Weiss and Overpeck, University of Arizona

Dover Ocean City Norfolk Hampton Virginia Beach Sea Level +1M Weiss and Overpeck, University of Arizona

Dover Ocean City Norfolk Hampton Virginia Beach Sea Level +6M Weiss and Overpeck, University of Arizona

Average US Homeowner’s Energy Costs

Source: EPA

VALUING WHAT YOU CAN’T SEE LIGHT BULB PERFORMANCE

Compact Fluorescent vs. Incandescent:

Same Light, ~80% less heat,

700% more durability 100 Watts 10 Watts Light

[10%] 26 Watts

10 Watts Light

[40%] 100% Electricity

90 Watts Heat

[90%] 100% Electricity

16 Watts Heat

[ 60%]

1,000 Hour Life 8,000 Hour Life

VALUING WHAT YOU CAN’T SEE VALUE BASED ON PERFORMANCE

Incandescent Lighting

(8 years)

CFL Lighting

(8 years)

Init. Investment: 8-yr. Operation: $ .50

$64.00

8-yr. Added Cool’g: $12.00

Bulb Replacement: $ 3.50

Init. Investment: 8-yr. Operation: $ 4.00

$16.00

8-yr. Added Cool’g: $ .00

Bulb Replacement: $ .00

Total Cost:

$80.00

Total Cost:

$20.00

Water tips

• Turn down water heater to 120 degrees • Don’t leave water on while brushing teeth, etc.

• Try to run washer and dishwasher only when full; get a good diswasher and don’t pre-rinse dishes • Always run set to 100% hot water when waiting for hot water to come from tap • Insulate hot water pipes • Plan to replace an old water heater before it dies with an efficient water heater; consider solar or indirect heaters

Efficiency’s $700 Billion Gift

Energy Consumption in the United States 1949 - 2005 200 175 $ 1.7 Trillion Avoided Supply = 70 Quads in 2005 150 125 If E/GDP had dropped 0.4% per 100 $ 1.0 Trillion New Physical Supply = 25 Q 75 Actual (E/GDP drops 2.1% per year) 50 25 70 Quads per year saved or avoided corresponds to 1 Billion cars off the road 0 1949 1953 1957 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005

Efficiency Drives the Economy

• Energy services create more jobs and investment than all the energy supply industries combined • $1 invested in efficiency creates more jobs than $1 invested in supply • Efficiency has saved more energy than any fuel produced since 1973

Typical Energy Uses in DC Office Buildings

15% 25% 5%

30%

Space Heating 15% Space Cooling 25%

Lighting 30%

Source: Transwestern Commercial Services 25% User/Occupant Equipment 25% Water Heating 5%

Energy is the largest cost for DC Office Buildings Average Shares of Total Operating Cost, Downtown Washington Office Building

security 8% admin.

20% cleaning 18% road/grounds 2% utilities 32%

Source: IMT analysis of 2005 BOMA Experience Exchange Report

repair/maint.

21%

Even in existing buildings, typical ROIs from efficiency are anything but typical

On average each $1 invested in energy performance retrofits increases asset value by $2 to $3 (Assumes a 10% cap rate) Source: ENERGY STAR research

Investments in Energy Performance Have High Returns*

Building 100,000 sf Invest ment/SF Rate of Energy Savings $ Savings/ SF/Yr Increase to NOI Asset Value Increase Simple Payback Janitorial Services O&M $0.01

$0.05

5% 9% $0.14

$0.20

$13,500 $19,800 $135,000 $198,000 Immed iate 4 months Lighting HVAC $1.04

$1.21

16% 9% $0.36

$0.21

$36,000 $20,700 $360,000 $207,000 3 years 6 years All Measures $2.31

Source: ENERGY STAR research

39% $0.90

$90,000 $900,000 2.5 years

* Calculations based on national averages and $0.09 per kWh.

Huge Savings Possible Even Without Capital Improvements

Case Study: Class A Office Building Downtown Chicago, IL 20,000,000 18,000,000 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0    Under Previous Management (1995 – 1997) averaged 17,265,528 kWh at a cost of $1,184,843 Under Hines (1998 – 2001) averaged 11,074,991 kWh at a cost of $785,255 Average Annual Electrical Savings of $0.48 PSF, a 34% reduction 1995 1996 1997 1998 1999 kWh Cost 2000 2001 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 ($)

The office tenant’s perspective

Tenant’s costs Employee Costs = 84% of Total

Salaries Benefits Rent Utilities Electricity Cleaning Maintenance Planning Ameneties Lighting

Source – LightRight, BOMA

Per Capita Electricity Sales (not including self-generation) (kWh/person) 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 California United States

12,000 10,000 8,000 6,000 4,000 2,000 0

California’s Big Three

At least $2 saved per $1 spent

Utility Efficiency Programs at a cost of ~1% of electric bill Building Standards Appliance Standards

Efficiency: The Cheapest kWh

Levelized Cost of Electricity by Source 10.

00 9.

0

IGCC w/o CCS

8.

0 7.

0 6.

0 5.

0 4.

0 3.

0 0

Wind @ 29% CF NGCC @ $6 gas Pulverized Coal w/o CCS

10 20 30

Carbon price: Dollars per ton Biomass Nuclear

Energy Efficiency 40 50

Leading State Programs’ Cost-effectiveness State Benefit/Cost All programs C/I programs B/C Res. Programs B/C Cost of saved kWh($) California Connecticut Maine Mass.

New Jersey New York Rhode Island Vermont Wisconsin

Median

2.0 – 2.4

NA 1.3 – 7.0

2.1

2.4 to 2.6

2.4 to 2.7

2.5

2.5

3.0

2.1 to 2.5

3.3

2.9

2.0

2.5 to 2.6

1.5 to 1.7

1.3 to 2.1

1.5

1.8

4.3

1.6 to 1.7

0.03

0.023

0.04

0.03

0.044

0.03

0.03