Energy efficiency has been called the "first fuel" of the clean energy transition—cheap, effective, and proven. So why do Americans still overlook it? In this episode of Energy Matters, Claire and Dan unpack the history of efficiency from the 1970s oil crises to today's grid congestion and data-driven energy demand. They explore why utilities resist selling less power, why homeowners skip upgrades, and why low-income communities face the steepest bills. From 1970s tree-planting programs to today's smart thermostats, Claire and Dan show how efficiency could shift from "boring" to transformative—if we can overcome the split incentives and political barriers holding it back. Hosts: Claire Broido Johnson and Dan Kammen
NOTE This file was generated by Descript
00:00:03 --> 00:00:07 Why is energy efficiency so dull and why is no one paying attention to it?
00:00:07 --> 00:00:09 This is energy matters with Claire
00:00:09 --> 00:00:10 and with Dan.
00:00:18 --> 00:00:22 So energy efficiencies called the first Fuel in clean energy transitions
00:00:22 --> 00:00:26 provides some of the quickest and most cost effective mitigation
00:00:26 --> 00:00:28 options while lowering energy bills.
00:00:29 --> 00:00:29 But.
00:00:29 --> 00:00:32 For a really long time, Americans have paid literally no
00:00:32 --> 00:00:33 attention to energy efficiency.
00:00:34 --> 00:00:35 Why do you think that is, Dan?
00:00:35 --> 00:00:40 Well, it should make sense because if you think about what energy efficiency is at
00:00:40 --> 00:00:44 one level, it is the lack of something or it's the using something a different way.
00:00:45 --> 00:00:49 We buy our energy from utilities and they are incentivized to
00:00:49 --> 00:00:51 sell more of their product.
00:00:51 --> 00:00:57 So energy efficiency at one very fundamental level, is the company trying
00:00:57 --> 00:01:02 to sell you something, then selling you less of that because you get a more
00:01:02 --> 00:01:06 efficient commodity, you do something else, you change your behavior, whatever
00:01:06 --> 00:01:10 it might be, and that's a pretty difficult thing to monetize unless.
00:01:10 --> 00:01:16 The utility, the regulator, and then the recipient, the utility user are.
00:01:17 --> 00:01:21 In some kind of thoughtful dialogue, and that already has a whole bunch
00:01:21 --> 00:01:25 of challenges built in that we will unpack a little bit in this episode.
00:01:25 --> 00:01:25 Yep.
00:01:26 --> 00:01:26 I love that.
00:01:26 --> 00:01:30 So when I served under Secretary Chu at the Department of Energy,
00:01:30 --> 00:01:34 we used to say energy efficiency wasn't just the low hanging fruit,
00:01:34 --> 00:01:35 but the fruit on the ground.
00:01:36 --> 00:01:39 And you know, fast forward 15 years and the landscape's
00:01:39 --> 00:01:40 changed dramatically, right?
00:01:40 --> 00:01:43 Ai, cryptocurrency, data centers, everybody's driving
00:01:43 --> 00:01:45 energy demand through the roof.
00:01:45 --> 00:01:50 And we've now accepted a 25% increase in US electricity consumption by 2030.
00:01:51 --> 00:01:55 Also, the one big beautiful Bill Act passed, which eliminates usage of solar
00:01:55 --> 00:01:59 investment tax credit over time, which all has impacts on energy efficiency as well.
00:01:59 --> 00:02:00 And meanwhile, we've got.
00:02:01 --> 00:02:05 Grid congestion issues, transmission bottlenecks, supply constraints.
00:02:05 --> 00:02:08 So, you know, I have a lot of thoughts about energy efficiency.
00:02:08 --> 00:02:12 Having worked on the weatherization Assistance program where you, the
00:02:12 --> 00:02:17 federal government provides, um, funding to low income homeowners.
00:02:17 --> 00:02:22 To do boring things like air sealing and insulation.
00:02:22 --> 00:02:24 It's a very, very effective program.
00:02:24 --> 00:02:28 It's worked for 35 plus years and still nobody's paying
00:02:28 --> 00:02:29 attention or listening to it.
00:02:30 --> 00:02:32 I think there's a number of reasons for that.
00:02:32 --> 00:02:35 One is nobody really cares about boilers or hot water heaters.
00:02:35 --> 00:02:36 It's just boring, right?
00:02:36 --> 00:02:38 Air sealing installation is boring.
00:02:39 --> 00:02:40 Most people, frankly, in the US.
00:02:40 --> 00:02:43 Still don't pay any attention to their energy bills or know
00:02:43 --> 00:02:44 how they use their energy.
00:02:44 --> 00:02:48 It's a little shocking to those of us in the energy world, but it's really true.
00:02:49 --> 00:02:54 Most people really focus on convenience over efficiency, and our utility bills
00:02:54 --> 00:02:57 in the US are really just not that high versus the rest of the world.
00:02:57 --> 00:02:58 So.
00:02:58 --> 00:03:02 Improving energy efficiency or adding solar just is not something
00:03:02 --> 00:03:03 that crosses people's minds.
00:03:03 --> 00:03:04 What do you think about that?
00:03:04 --> 00:03:05 So a couple things.
00:03:05 --> 00:03:08 First, um, energy efficiency is important for everybody.
00:03:08 --> 00:03:13 We'll come back to that, but energy bills are high for low income people,
00:03:13 --> 00:03:17 and so there's a critical feature there, but I think let's, let's back up.
00:03:17 --> 00:03:21 And so that's what we're gonna get to in terms of what's the landscape to
00:03:21 --> 00:03:23 do energy efficiency, to be creative.
00:03:25 --> 00:03:32 In today's market in a little bit, but if we back the story up, one of the political
00:03:32 --> 00:03:37 left, right, or whatever you wanna call it, divides, is that energy efficiency
00:03:37 --> 00:03:42 was really the first tool used by the.
00:03:43 --> 00:03:49 Climate and society innovators who said, we need to deal with climate change.
00:03:50 --> 00:03:53 We need to decarbonize to clean up our economy.
00:03:53 --> 00:03:58 As you said, the piece of fruit on the ground was if you can have a light bulb
00:03:58 --> 00:04:05 that lasts 10 times as long and is 10 or 20% more costly, that's a good deal.
00:04:05 --> 00:04:09 And making it a good deal for the person that buys the light bulb at Home
00:04:09 --> 00:04:12 Depot and the utility is not so easy.
00:04:12 --> 00:04:13 We'll come back to that.
00:04:13 --> 00:04:13 Right.
00:04:13 --> 00:04:19 And then there's this interesting process where, in particular California, but
00:04:19 --> 00:04:23 some other states as well, happened in Vermont and New York and elsewhere,
00:04:23 --> 00:04:26 started to see energy efficiency as.
00:04:27 --> 00:04:31 The liberator of environmentalism and Well, what time period
00:04:31 --> 00:04:31 are you talking about?
00:04:31 --> 00:04:31 So
00:04:31 --> 00:04:35 I'm going back all the way to the seventies.
00:04:35 --> 00:04:35 Right?
00:04:35 --> 00:04:39 And in particular to the OPEC oil embargoes in 72 and 74.
00:04:40 --> 00:04:40 Yeah.
00:04:40 --> 00:04:42 And as energy costs skyrocketed, now notice that.
00:04:43 --> 00:04:47 The OPEC and oil embargoes were about oil.
00:04:47 --> 00:04:48 They weren't electricity embargoes.
00:04:48 --> 00:04:49 Right.
00:04:49 --> 00:04:49 Get to that.
00:04:49 --> 00:04:50 But we'll unpack to unpack that to in the bid.
00:04:51 --> 00:04:54 But the famous process of which there's some kind of Hi
00:04:55 --> 00:04:57 historically important names.
00:04:57 --> 00:05:02 Arthur Rosenfeld, Ralph Kavana, a Marie Lovins, uh, Marilyn Brown, A number
00:05:02 --> 00:05:06 of people who said early on we can.
00:05:07 --> 00:05:11 Cut everyone's energy demand, and we can do so in a way that
00:05:11 --> 00:05:13 enables creativity and flexibility.
00:05:13 --> 00:05:18 And so the idea that Amory Levins wrote, he was a Harvard undergraduate
00:05:18 --> 00:05:24 dropout who then moved very quickly after writing a key article called Soft
00:05:24 --> 00:05:28 Energy Paths to be President Carter's energy advisor as a very, very young.
00:05:28 --> 00:05:30 Creative, uh, man.
00:05:30 --> 00:05:39 And that process led to a look at energy under the traditional or hard path as
00:05:39 --> 00:05:44 something that you must build big new nuclear or coal fired or gas fired or
00:05:44 --> 00:05:49 hydropower plants and bring huge amounts of energy to big cities because energy
00:05:49 --> 00:05:54 demand was growing versus this subversive.
00:05:54 --> 00:06:00 Kind of science and techie perspective that we could efficiency everything.
00:06:00 --> 00:06:06 If, if, um, they say in the Martian, you need to science the blank out of it.
00:06:06 --> 00:06:10 Um, this was, you need to efficiency the blank out of it and make your home
00:06:10 --> 00:06:12 efficient, make your business efficient.
00:06:12 --> 00:06:16 Go to efficient light bulbs, go to smart windows, paint your roof white.
00:06:16 --> 00:06:19 There's a whole series of things, each of which pencils out.
00:06:20 --> 00:06:20 Mm-hmm.
00:06:20 --> 00:06:24 But they pencil out in a technical way and a number of times the
00:06:24 --> 00:06:27 energy efficiency gurus forgot.
00:06:27 --> 00:06:31 Behavioral economics and behavioral activities were also important here.
00:06:31 --> 00:06:37 So it's a long story, but this backstory that I. At one point, the
00:06:37 --> 00:06:43 energy efficiency leading states like California were 40% more efficient
00:06:43 --> 00:06:47 than the national average, meaning that they were using so much less energy
00:06:47 --> 00:06:52 that even if rates were higher in those states, individuals were savings.
00:06:52 --> 00:06:53 The utilities.
00:06:53 --> 00:06:58 That we'll come back to several times we're stuck holding the bag because
00:06:58 --> 00:07:02 their model is sell more of their product electricity, but yet they're
00:07:02 --> 00:07:07 being told by so many of the experts that you should be able to make energy
00:07:07 --> 00:07:11 efficiency available to everyone and you the utility should enable it.
00:07:11 --> 00:07:14 And that conversation has been very complicated over the decade.
00:07:15 --> 00:07:17 Well, very complicated and very regional.
00:07:17 --> 00:07:17 Right.
00:07:17 --> 00:07:18 So I mean, absolutely.
00:07:18 --> 00:07:22 I think, I think, you know, California, I know you think is the panacea of all
00:07:22 --> 00:07:26 things, but I would argue with energy efficiency in the last 15, 20 years, I
00:07:26 --> 00:07:28 would go to Massachusetts and Connecticut.
00:07:28 --> 00:07:28 Absolutely.
00:07:28 --> 00:07:29 Um, in the sense that.
00:07:30 --> 00:07:35 You know, right now 50% of all homes in Connecticut and
00:07:35 --> 00:07:41 Massachusetts are still fuel oil fueled, which is a crazy statistic.
00:07:41 --> 00:07:43 There's not enough natural gas lines.
00:07:43 --> 00:07:46 There's not, you know, and, and those areas are very
00:07:46 --> 00:07:48 transmission constrained, right?
00:07:48 --> 00:07:52 And they don't want offshore wind, and they don't want any more coal, and they
00:07:52 --> 00:07:57 don't want any more nuclear, and some of those counties don't want any more solar.
00:07:57 --> 00:07:58 So what are you gonna do?
00:07:58 --> 00:07:59 You have to use less energy.
00:08:00 --> 00:08:00 Right.
00:08:00 --> 00:08:05 So when I was at Next Step Living, what we did is we would provide, um,
00:08:05 --> 00:08:11 energy audits that were paid for by the utilities, and then we would upsell or try
00:08:11 --> 00:08:16 to sell additional products and services to those residential homeowners, um,
00:08:16 --> 00:08:21 air sealing, insulation, ductless, mini splits, roofing products, all of that.
00:08:21 --> 00:08:23 But that was all paid for by the local electric utility,
00:08:24 --> 00:08:25 which is interesting, right?
00:08:25 --> 00:08:28 Because an electric utility makes money by s. Selling energy
00:08:28 --> 00:08:30 to their rate payers, right?
00:08:30 --> 00:08:35 But even they had to deal with this problem of there's no more energy that
00:08:35 --> 00:08:40 they can manufacture in those states and you're bringing in fuel oil to
00:08:40 --> 00:08:42 heat people's homes in the winter.
00:08:42 --> 00:08:45 So, you know, necessity is the mother of invention with energy.
00:08:45 --> 00:08:45 If.
00:08:45 --> 00:08:48 Efficiency, but it's a very regional business, right?
00:08:48 --> 00:08:52 Because what National Grid needs in Massachusetts when it's very cold is
00:08:52 --> 00:08:55 the complete opposite of what Southern California needs at any given time.
00:08:55 --> 00:08:58 And I think that's part of why energy efficiency has been so difficult
00:08:58 --> 00:09:01 for, for Americans because it, it is a hyper regional business.
00:09:02 --> 00:09:03 It's hyper regional.
00:09:03 --> 00:09:05 But I do have to chuckle because I would argue that all the
00:09:05 --> 00:09:07 utilities around the country.
00:09:07 --> 00:09:13 Essentially learned the tricks of this trade from the California utilities,
00:09:13 --> 00:09:17 from Lawrence Berkeley National Laboratory from some very creative
00:09:17 --> 00:09:22 energy co-ops like in Sacramento with the wonderful name of smud, the Sacramento
00:09:22 --> 00:09:29 Municipal Utility District, because in response to the price spikes and the.
00:09:29 --> 00:09:33 Potential brownouts and shortages that people were fearing
00:09:33 --> 00:09:34 during back in the seventies.
00:09:34 --> 00:09:34 Okay.
00:09:34 --> 00:09:35 Back in the seventies.
00:09:35 --> 00:09:35 Yeah.
00:09:35 --> 00:09:37 Well, that's when really these projects got going, right.
00:09:37 --> 00:09:42 We used to have really creative programs like one that I followed in closely
00:09:42 --> 00:09:47 in Sacramento where a. This is before GIS and mapping your neighborhoods
00:09:47 --> 00:09:48 with all kinds of tools, right?
00:09:48 --> 00:09:53 People from the utility would drive around and if they saw a home that
00:09:53 --> 00:09:58 had exposed windows facing the sunny direction, they would send a letter
00:09:58 --> 00:10:02 to the homeowner and saying, we will plant trees on your property
00:10:02 --> 00:10:05 to shade that window at our expense.
00:10:05 --> 00:10:08 You will save money and we will be able to manage our.
00:10:09 --> 00:10:13 Peak demand more because you won't need to turn up your AC as
00:10:13 --> 00:10:15 much when the sun is blaring in.
00:10:15 --> 00:10:20 And this is gonna get to one of the fundamental rules of energy,
00:10:20 --> 00:10:24 and that is that when you think about the transaction between the
00:10:24 --> 00:10:29 utility and their rate payers, the.
00:10:30 --> 00:10:33 Cost to the utility is determined by the peak demand when they
00:10:33 --> 00:10:36 have to have everything running, they've gotta get power plants on.
00:10:36 --> 00:10:38 They don't wanna have power lines down.
00:10:38 --> 00:10:41 They have those peak demands, whether it's late afternoon in the
00:10:41 --> 00:10:46 summer, or right evening in the winter, but their revenue is based
00:10:46 --> 00:10:48 on something more like the average.
00:10:48 --> 00:10:51 And so there's this huge difference in places like California.
00:10:52 --> 00:10:54 It can be a factor of two.
00:10:54 --> 00:10:55 Meaning that, or even more.
00:10:55 --> 00:10:56 It can be more, but yeah.
00:10:56 --> 00:10:59 But you know, averaging around, it's often around that level.
00:10:59 --> 00:11:04 And so this sets up this really interesting story that I think
00:11:04 --> 00:11:05 we're still grappling with today.
00:11:06 --> 00:11:11 And that is that if the utility is going to see itself as solvent, no matter
00:11:11 --> 00:11:18 what outside experts look at, they need some assurance that there will be some
00:11:18 --> 00:11:20 return to them on energy efficiency.
00:11:20 --> 00:11:20 Right?
00:11:20 --> 00:11:23 And so what we have seen is some really.
00:11:25 --> 00:11:29 Second rate efforts where utilities were given credit for energy efficiency
00:11:29 --> 00:11:33 based just on money spent, not on actual
00:11:34 --> 00:11:34 returns, performances,
00:11:34 --> 00:11:35 and returns.
00:11:35 --> 00:11:40 And so if you or I go and buy the most energy efficient washer or
00:11:40 --> 00:11:44 dryer, refrigerator, and we pick the model that's gonna save us the most.
00:11:46 --> 00:11:50 In the ideal world, there should be a benefit to you by getting the cheaper
00:11:50 --> 00:11:55 product, but also to the utility where those peak demands are gonna be mitigated.
00:11:55 --> 00:11:59 And this process has been one that the energy efficiency experts I mentioned
00:11:59 --> 00:12:04 before have been advising and recommending all kinds of clever things, and it's
00:12:04 --> 00:12:06 been very difficult to get systematic.
00:12:07 --> 00:12:09 Adoption of those across the country.
00:12:09 --> 00:12:11 Well that, and we would've saved a lot of money if that had happened.
00:12:11 --> 00:12:11 Right.
00:12:12 --> 00:12:14 But that's sort of the technical solution to the problem.
00:12:14 --> 00:12:14 Absolutely.
00:12:14 --> 00:12:18 The other thing, you know, that, that most utilities have incorporated, so
00:12:18 --> 00:12:22 I live in Baltimore, Baltimore Gas and Electric provides a peak rewards program.
00:12:22 --> 00:12:27 So they literally will pay me to turn off or put to 50% my
00:12:27 --> 00:12:28 air conditioning and peak hours.
00:12:28 --> 00:12:31 And it, you know, we're at the point now where my nest.
00:12:31 --> 00:12:33 Thermostat will do that automatically.
00:12:33 --> 00:12:33 Right?
00:12:33 --> 00:12:37 And this is the point where I would say energy efficiency, whether it
00:12:37 --> 00:12:40 was boring, watching the paint dry, watching your light bulb do something
00:12:40 --> 00:12:44 right, ha is potentially something we could transition to something exciting.
00:12:44 --> 00:12:49 Because if you can have your app on your phone, your thermostat doing it for you,
00:12:49 --> 00:12:54 and you can see the savings, there's an opportunity where at least in theory.
00:12:55 --> 00:13:01 Both the rate payer and the utility could see and monetize or socialize
00:13:01 --> 00:13:04 the benefits of this process.
00:13:04 --> 00:13:04 Sure.
00:13:04 --> 00:13:04 Yep.
00:13:05 --> 00:13:09 So come from the seventies and go all the way to the nineties and the two thousands.
00:13:10 --> 00:13:13 You do see lots of new technologies that are coming to solve energy
00:13:13 --> 00:13:14 efficiency problems, but.
00:13:14 --> 00:13:17 Again, you have to bifurcate the industry, right?
00:13:17 --> 00:13:21 So homeowners wanna do one set of things and they actually, you know, see the
00:13:21 --> 00:13:23 savings when they add installation.
00:13:23 --> 00:13:26 And there are lots of rebates that are available for that.
00:13:26 --> 00:13:31 On the commercial side, you know, if a big commercial office building is
00:13:31 --> 00:13:33 gonna spend their money, they're gonna spend their money on a lobby, they're
00:13:33 --> 00:13:35 not gonna spend their money on a new.
00:13:36 --> 00:13:38 Boiler until it literally breaks.
00:13:38 --> 00:13:42 And so what you often see with HVAC systems is that they typically
00:13:42 --> 00:13:45 last 20 years, um, typically Right.
00:13:45 --> 00:13:48 But so 5% of them are dying at any point in time.
00:13:49 --> 00:13:50 Nobody pays attention to HVAC systems.
00:13:50 --> 00:13:51 And by
00:13:51 --> 00:13:54 HVAC you mean heating, ventilation, and cooling systems, just to be
00:13:54 --> 00:13:56 clear, your local air conditioning or your big building system.
00:13:56 --> 00:13:57 Yep.
00:13:57 --> 00:14:00 And so most people don't pay any s. Attention to their
00:14:00 --> 00:14:02 HVAC systems until they break.
00:14:02 --> 00:14:06 So 5% of building owners, right, whether they're homeowners or they're big office
00:14:06 --> 00:14:08 buildings, paid literally no five.
00:14:08 --> 00:14:11 Only 5% of those people pay any attention to their HVAC systems, and
00:14:11 --> 00:14:14 that's only after they break, because they'd much rather spend money on their
00:14:14 --> 00:14:19 lobby or making a nicer bathroom for their house than they would on hvac.
00:14:19 --> 00:14:19 This.
00:14:19 --> 00:14:23 Yeah, and let's even extend that because there's lots of key examples
00:14:24 --> 00:14:25 of upgrades that you could do.
00:14:25 --> 00:14:30 You could put smart windows in that know how to do automatic tint, like your
00:14:30 --> 00:14:32 sunglasses, and they shade the building.
00:14:32 --> 00:14:37 There's all these individual things that are hard to get people to adopt, even
00:14:37 --> 00:14:42 if they'll save money, because again, a nicer lobby, another receptionist,
00:14:42 --> 00:14:43 all these things take higher priority.
00:14:44 --> 00:14:47 But then there's also this issue called the split incentive problem.
00:14:48 --> 00:14:53 And the simplest version of this is that if you have a person living
00:14:53 --> 00:14:56 in an apartment, low income or not, and they would like to see
00:14:56 --> 00:14:59 lower utility bills, they're.
00:14:59 --> 00:15:04 Landlord, which we in some cases, but not all cases, call a slumlord and we will get
00:15:04 --> 00:15:06 back to that in later episodes as well.
00:15:06 --> 00:15:08 But their landlord doesn't see the benefit.
00:15:08 --> 00:15:12 And so putting in those more efficient appliances, even if they're given
00:15:12 --> 00:15:16 lots of flyers in their utility bills, you're gonna save money.
00:15:16 --> 00:15:17 Your renters gonna be more happy.
00:15:18 --> 00:15:21 The splint incent incentive problem is something which has plagued
00:15:22 --> 00:15:26 all kinds of energy efforts and a particular efficiency for decades
00:15:26 --> 00:15:28 because why do it if you're not the.
00:15:29 --> 00:15:33 Beneficiary and in particular for low income individuals who are
00:15:33 --> 00:15:36 renting, that is a real challenge.
00:15:36 --> 00:15:38 And their utility bills do really impact.
00:15:38 --> 00:15:41 Do I choose electricity, heat, or food on a given day?
00:15:41 --> 00:15:46 And so there's a real social and environmental justice problem built into.
00:15:46 --> 00:15:50 Our lack of attention to making energy efficiency available to low income.
00:15:51 --> 00:15:54 Thank goodness there are some groups like Grid Alternatives and others,
00:15:54 --> 00:16:00 right, that have made their mission to bring clean energy and energy efficient
00:16:00 --> 00:16:02 services to low income America.
00:16:02 --> 00:16:02 Yep.
00:16:03 --> 00:16:07 So low income folks typically spend a higher percentage of
00:16:07 --> 00:16:10 their total costs on utilities.
00:16:10 --> 00:16:14 And so even up to 30% of the money that they make every month
00:16:14 --> 00:16:15 goes towards their utilities.
00:16:15 --> 00:16:19 That ends up not being an issue for middle and higher income folks.
00:16:19 --> 00:16:24 And so there is really a, a huge issue with, with energy efficiency for low
00:16:24 --> 00:16:27 income folks and something that the Weatherization Assistance Program funded
00:16:27 --> 00:16:31 by the Department of Energy historically has made a big difference too.
00:16:32 --> 00:16:34 So I think these are really interesting examples.
00:16:34 --> 00:16:39 And in the old days it was a very traditional process where essentially.
00:16:41 --> 00:16:46 You might get some flyers, you might read a magazine about, there's a sale
00:16:46 --> 00:16:50 on energy star appliances, so, and more energy efficient appliances.
00:16:50 --> 00:16:53 But there's very little incentive, there's very little education.
00:16:53 --> 00:16:58 So there were multiple studies done where people would go into store selling
00:16:58 --> 00:17:03 appliances and they all had the yellow energy star label on it with the arrows
00:17:03 --> 00:17:08 showing what this unit is compared to a comparable refrigerator air conditioner.
00:17:08 --> 00:17:12 But then you look around and only the inefficient units were available for sale.
00:17:13 --> 00:17:19 And so the technical design of energy efficiency and the practical, bringing
00:17:19 --> 00:17:23 home the products and seeing savings, something that was difficult, and
00:17:24 --> 00:17:26 in particular for low income people.
00:17:26 --> 00:17:26 Now.
00:17:26 --> 00:17:31 Yeah, we have an opportunity to gamify energy efficiency.
00:17:31 --> 00:17:31 Absolutely.
00:17:31 --> 00:17:31 If you
00:17:31 --> 00:17:36 can see the benefits on the app, if you have a tracker of efficiency
00:17:36 --> 00:17:40 in your home or business, you can make this into something a little
00:17:40 --> 00:17:41 bit less dull, a little bit like.
00:17:42 --> 00:17:46 Less like the paint drying, but it takes effort and it takes energy
00:17:46 --> 00:17:49 communication and that's something that we're certainly not very good at.
00:17:49 --> 00:17:51 Yeah, absolutely.
00:17:51 --> 00:17:55 I also think with data analytics today, we can be much more, uh,
00:17:56 --> 00:17:58 surgical about who we reach out to.
00:17:58 --> 00:18:00 So back to next step living.
00:18:00 --> 00:18:06 You know, we were able to pinpoint that in these specific zip codes,
00:18:06 --> 00:18:07 if you have a ranch style house.
00:18:07 --> 00:18:11 That was built in the 1950s, most of which is, was publicly available
00:18:11 --> 00:18:14 data back then and probably is all publicly available right now.
00:18:15 --> 00:18:17 You were 60% more likely to buy a ductless mini split.
00:18:18 --> 00:18:21 So going, you know, it's the outreach, it's the communicating to
00:18:21 --> 00:18:23 people, it's the educating people.
00:18:23 --> 00:18:25 That has been a huge part of energy efficiency and we can do
00:18:25 --> 00:18:27 that much more surgically today than we ever have been able to.
00:18:28 --> 00:18:29 Yeah, and this is not just a US thing.
00:18:29 --> 00:18:32 There have been some interesting efforts for a while, although they abandoned
00:18:32 --> 00:18:35 the program, I think very prematurely.
00:18:35 --> 00:18:40 The United Kingdom had a plan where when a home went up for sale Yes.
00:18:40 --> 00:18:44 Or a change of who was the renter, there would be an inspector that
00:18:44 --> 00:18:47 came out and looked at the home and said, this range and this
00:18:47 --> 00:18:49 refrigerator are far too inefficient.
00:18:50 --> 00:18:55 We're gonna require the transaction of the movement of ownership or
00:18:55 --> 00:19:02 rentership to only be approved when these upgrades have happened.
00:19:02 --> 00:19:04 And just to hold you to it, we're gonna put.
00:19:04 --> 00:19:08 We're gonna require you to put some money into escrow, and I thought that was a
00:19:08 --> 00:19:13 wonderful effort and it would be so much easier today with digital everything.
00:19:14 --> 00:19:17 But it's certainly something that for a brief while really got
00:19:18 --> 00:19:20 homes in the United Kingdom to.
00:19:21 --> 00:19:22 Require periodic upgrade.
00:19:23 --> 00:19:27 'cause one of the big challenges is that if you build a new home and
00:19:27 --> 00:19:30 you are smart about these things, you can really minimize your bill.
00:19:30 --> 00:19:33 But as a home gets older, as appliances get older, you kind of let things sit.
00:19:33 --> 00:19:38 And so this was a way to periodically refresh everyone involved.
00:19:38 --> 00:19:41 Uh, in the British market to do those upgrades.
00:19:41 --> 00:19:41 Yeah.
00:19:41 --> 00:19:43 And that's a great step forward,
00:19:43 --> 00:19:44 a huge step forward.
00:19:44 --> 00:19:47 But back to the split incentives, another interesting example is when
00:19:47 --> 00:19:49 I was at the Department of Energy, we were trying to work with the National
00:19:49 --> 00:19:54 Association of Realtors, um, to add a line item on their paperwork that said
00:19:54 --> 00:19:56 How energy efficient is your home.
00:19:57 --> 00:20:01 And of course they absolutely decried that and said that was a ha a terrible thing.
00:20:01 --> 00:20:02 'cause it makes it.
00:20:03 --> 00:20:06 Harder for realtors to sell homes.
00:20:06 --> 00:20:11 Um, there's just, there's split incentives across the board for energy efficiency.
00:20:11 --> 00:20:14 I think the biggest one is that utilities fundamentally are making less
00:20:14 --> 00:20:16 money if they're selling less energy.
00:20:16 --> 00:20:20 It's true, but I always think, this is a funny example because I'm, I'm a
00:20:20 --> 00:20:24 physicist, not an economist, uh, not a business person, so you have to correct me
00:20:24 --> 00:20:30 on this, but I always thought that making the sale price of a unit, say a home.
00:20:30 --> 00:20:35 Hire was actually good for the realtors 'cause they get a higher percentage,
00:20:35 --> 00:20:41 et cetera, as opposed to let's not do these things because they take a little
00:20:41 --> 00:20:44 more thinking and now that people look at their homes and apartments they're
00:20:44 --> 00:20:49 going to purchase or rent on online, it's actually easy to list these things out.
00:20:49 --> 00:20:54 So I just had this really neat case where someone came to my research
00:20:54 --> 00:20:58 group at University of California, Berkeley before I moved to Hopkins, and
00:20:58 --> 00:20:59 they said, I'm looking at these two.
00:21:00 --> 00:21:05 Different rental units, and one of them comes with a refrigerator that
00:21:05 --> 00:21:10 looks like it's out of Terminator, and this refrigerator is one that.
00:21:10 --> 00:21:12 It has an internal camera.
00:21:13 --> 00:21:13 Yep.
00:21:13 --> 00:21:15 And it's a really smart camera.
00:21:15 --> 00:21:19 And you download on the, on your app, on your phone, the various features.
00:21:19 --> 00:21:26 And it not only tracks, is your milk 80% full, 20% full, but it knows your
00:21:26 --> 00:21:28 location, which is a little big brother.
00:21:28 --> 00:21:28 Creepy.
00:21:28 --> 00:21:28 Yep.
00:21:28 --> 00:21:33 But it says to you, oh, I see you're passing by the grocery store and your
00:21:33 --> 00:21:35 milk is low and you're out of cheese.
00:21:35 --> 00:21:36 Super creepy.
00:21:36 --> 00:21:37 Do you
00:21:37 --> 00:21:40 want to go and buy these things and save yourself a trip?
00:21:40 --> 00:21:46 Out Now that has super creepy, all of the wonderful but scary examples of Big
00:21:46 --> 00:21:49 Brother and energy efficiency and what we'll talk about in our transportation
00:21:49 --> 00:21:54 episode, something called trip chaining, where you don't make 16 individual
00:21:54 --> 00:21:55 trips, you actually combine them.
00:21:55 --> 00:21:59 So all of those things are actually efficiency in the big picture.
00:22:00 --> 00:22:06 But they do sound like you are giving over control to your thermostat and some ai.
00:22:07 --> 00:22:09 Well, and every business in the world wants to own you,
00:22:09 --> 00:22:11 the customer in your home.
00:22:11 --> 00:22:17 So GM for example, is, and a number of the big car companies are trying to figure
00:22:17 --> 00:22:22 out how to incorporate your electric vehicle into your home and trying to sell
00:22:22 --> 00:22:26 electricity back to the grid from your electric vehicle is something that they're
00:22:26 --> 00:22:29 thinking through too, because GM just.
00:22:29 --> 00:22:32 Like Samsung, just like Whirlpool.
00:22:32 --> 00:22:34 Everybody wants to own you as a customer today.
00:22:35 --> 00:22:35 It's true.
00:22:35 --> 00:22:39 So let me do an example of thinking about these things in kind of big picture.
00:22:39 --> 00:22:44 So this is a famous case and it both happened in Vermont and it
00:22:44 --> 00:22:48 happened in China where different analysis came out to say we can
00:22:48 --> 00:22:51 either buy a new big power plant.
00:22:51 --> 00:22:55 In China case, it was building a massive hydro dam in Vermont.
00:22:55 --> 00:23:01 It was buying power from an out-of-state provider, and in each case, a company
00:23:01 --> 00:23:07 showed up and said, we would like to work with you in a performance.
00:23:07 --> 00:23:08 Contract.
00:23:08 --> 00:23:08 Okay.
00:23:08 --> 00:23:13 And the idea here is that if we can do outreach to your customers and we
00:23:13 --> 00:23:19 can get them to be incentivized to purchase more efficient appliances, we
00:23:19 --> 00:23:21 want to sell back to you the utility.
00:23:22 --> 00:23:23 The savings.
00:23:23 --> 00:23:23 Right?
00:23:23 --> 00:23:27 And there's a lot of different ways it gets highlighted, but this idea that
00:23:27 --> 00:23:30 it's a performance contract is kind of with one that I always come back to.
00:23:30 --> 00:23:37 In other words, if you're gonna build a home or, uh, retrofit a building, one
00:23:37 --> 00:23:39 way to do it is to go out and get bids.
00:23:39 --> 00:23:42 And the cheapest bid is the one you're likely to pick.
00:23:42 --> 00:23:45 But what if you tweaked that equation?
00:23:45 --> 00:23:46 What if you said that?
00:23:47 --> 00:23:52 We're going to give the bid to the company that can provide
00:23:52 --> 00:23:54 the lowest long-term cost.
00:23:54 --> 00:23:58 So they have to figure in what's the operation cost, and then the high cost
00:23:58 --> 00:24:01 of being energy efficient shows up.
00:24:01 --> 00:24:05 And just to make this bite, what we're gonna say is that if the
00:24:05 --> 00:24:07 building performs as expected.
00:24:08 --> 00:24:10 Then no one wins or loses.
00:24:10 --> 00:24:16 If the building performs worse than expected, the contractor is going to
00:24:16 --> 00:24:19 not receive all the money they were gonna get, and if the building does
00:24:19 --> 00:24:21 better, they're gonna get a bonus.
00:24:21 --> 00:24:25 So you're really rewarding thinking about a building, not just in
00:24:25 --> 00:24:29 the capital cost to put it up, but the long-term cost operated.
00:24:29 --> 00:24:33 Now that sounds to some people way too socialist.
00:24:33 --> 00:24:37 Others, it sounds way too information intense, but performance contracts
00:24:37 --> 00:24:41 are a thing, and that was one of the ways that efforts took place to try to
00:24:41 --> 00:24:45 educate both the building community, the utilities, and the end users.
00:24:45 --> 00:24:49 Well, and we haven't even talked about energy service companies or ESCOs like the
00:24:49 --> 00:24:51 Amcos and Johnson controls of the world.
00:24:51 --> 00:24:54 I mean, they do have ESCO performance contracts.
00:24:55 --> 00:24:59 So in one of my lives I was a, a. Did some energy efficiency consulting
00:24:59 --> 00:25:01 to Baltimore City Public School.
00:25:01 --> 00:25:01 Why did I do it?
00:25:01 --> 00:25:06 Because my kid was a, was a second grader at a public school and one room was at 40
00:25:06 --> 00:25:08 degrees and the next room was 85 degrees.
00:25:08 --> 00:25:12 So I went to the superintendent, Sonia Sanli, who's a wonderful
00:25:12 --> 00:25:15 human being, and said, look, this, this doesn't make any sense.
00:25:15 --> 00:25:18 And as I dug through it, it was very interesting because
00:25:18 --> 00:25:20 Baltimore City Public Schools did.
00:25:20 --> 00:25:28 Sign an energy service contract in which the company pays for the HVAC systems or
00:25:28 --> 00:25:33 the window upgrades, all of that, and gets paid back over time as a percentage of the
00:25:33 --> 00:25:35 energy savings that are created, right?
00:25:35 --> 00:25:36 So you have to perform.
00:25:36 --> 00:25:43 Um, however, in 2006, I think timeframe, city schools did sign a contract.
00:25:43 --> 00:25:46 Johnson controls Amco, a number of other entities.
00:25:46 --> 00:25:51 Installed those HVAC systems, but in the fine print, the contract said
00:25:51 --> 00:25:54 that city schools had to pay for the operations and maintenance of those
00:25:54 --> 00:25:56 HVAC systems, which they did not do.
00:25:56 --> 00:25:58 And hence the contract was voided.
00:25:58 --> 00:26:01 So city schools really hates ESCO contracts.
00:26:01 --> 00:26:03 We ended up being able to do a pilot program for lighting
00:26:03 --> 00:26:05 and lighting controls.
00:26:05 --> 00:26:08 But you know, these are the things that are going on because energy
00:26:08 --> 00:26:11 efficiency is by default, complicated, even if you're saving money.
00:26:11 --> 00:26:15 And that money is, is that savings can be used to pay for the upfront costs.
00:26:15 --> 00:26:15 Yeah.
00:26:15 --> 00:26:19 So maybe last topic for, for this episode is going to be energy
00:26:19 --> 00:26:21 efficiency and low income people.
00:26:21 --> 00:26:24 And what you just described at a school is a great example of
00:26:24 --> 00:26:29 what could be required in public housing or in subsidized buildings.
00:26:29 --> 00:26:32 And so we're now starting to see efforts.
00:26:32 --> 00:26:35 Um, and I'll pick a California example because I wouldn't be
00:26:35 --> 00:26:38 true to my, you know, California Uber Allis perspective, right?
00:26:38 --> 00:26:40 If I didn't, but now we're seeing.
00:26:40 --> 00:26:46 High rise buildings going up at the, um, at, at the metro stations.
00:26:46 --> 00:26:52 The first floors are, uh, our shops, upper floors are apartments, and the
00:26:52 --> 00:26:55 upper floor apartments are divided between ones that are on the regular market
00:26:55 --> 00:26:56 and those that are rent controlled.
00:26:57 --> 00:27:00 And because there's much more scrutiny of the rent controlled
00:27:00 --> 00:27:02 units, there are efforts to make sure.
00:27:03 --> 00:27:08 That the appliances that are put in by the developer are energy efficient and
00:27:08 --> 00:27:12 they want to reward the developer for doing so, and they know that will produce
00:27:12 --> 00:27:16 savings for the low income people who qualify for those rent controlled units.
00:27:16 --> 00:27:22 So to my mind, that's actually far beyond watching the paint dry and being dull.
00:27:22 --> 00:27:28 That's an example of showing the direct economic benefit of energy efficiency.
00:27:28 --> 00:27:32 But you do need someone to add these things up and they are complicated, but.
00:27:32 --> 00:27:37 There's no reason why in a highly digital age we can't do this building
00:27:37 --> 00:27:38 after building home after home.
00:27:39 --> 00:27:42 So let me see if I can beat you with one last example, which is a company called
00:27:42 --> 00:27:49 Katera, K-A-T-E-R-R-A, which was trying to create prefabricated multifamily housing.
00:27:49 --> 00:27:49 The.
00:27:49 --> 00:27:53 Thir three and four story prefabricated multifamily housing.
00:27:53 --> 00:27:56 They asked me to look into energy efficiency and figure out how they can
00:27:56 --> 00:28:00 incorporate as much energy efficiency as possible, and they were shocked because
00:28:01 --> 00:28:04 every utility will pay a different amount for a low flow shower head.
00:28:04 --> 00:28:08 Every utility will pay and, and even in different zip codes, there are
00:28:08 --> 00:28:11 different things and they just ended up throwing up their hands and disgusted
00:28:11 --> 00:28:15 saying, it's impossible to figure out how these utility regulations happen.
00:28:15 --> 00:28:16 We're just gonna do what we wanna do.
00:28:16 --> 00:28:20 So I think the conclusion here is that while we like to say this or
00:28:20 --> 00:28:23 that as rocket scientists and as they want to be astronaut, energy
00:28:23 --> 00:28:25 efficiency should not be rocket science.
00:28:25 --> 00:28:27 We have the tools to do so.
00:28:27 --> 00:28:29 So we're gonna come back to efficiency.
00:28:29 --> 00:28:33 Again and again, but if you want to send us feedback to look at the other
00:28:33 --> 00:28:36 episodes, this is Energy Matters with Dan
00:28:36 --> 00:28:36 and Claire,
00:28:37 --> 00:28:41 and you can go to the Energy Matters World website or you can email
00:28:41 --> 00:28:45 us at info@energymatters.world.