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Energy Efficiency: First Line of Defense
Monday, May 2, 2011
3:50 PM - 5:00 PM
Energy efficiency savings far outweigh costs
Source: McKinsey & Company.
$229 B
$125 B $113 B
$395 B
$290 B
$442 B
0
100
200
300
400
500
600
Residential Commercial Industrial
US$ billions
Initial costs
Present value of energy savings (2009-2020)
Energy efficiency is needed to meet our goalsWhat if we cut U.S. emissions in half?In billions of tons of carbon
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Reducing electric use through efficiency
Reducing non-electrical energy through efficiency
Increasing passenger vehicle efficiency
Enhancing efficiency in heavy trucks and airplanes
Expanding renewable energy use
Capturing and storing energy
1970 1990 2010 2030 2050
Source: NRDC, adapted from Pacala and Socolow, 2004, and Kuuskraa et al., 2004.
Cost of delivered electricity, 2009
Sources: Energy Information Administration, American Council for an Energy-Efficient Economy
0
50
100
150
200
250
300
350
400
450
500
$/delivered MWh
“Insulation is sexy stuff.” -- President Obama
Source: Los Angeles Times (12/15/2009).
U.S. energy consumption by sector
Source: EIA Annual Energy Outlook 2011.
18
20
22
24
26
28
30
32
34
36
38
2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034
Quadrillion Btu
Residential
Commercial
Transportation
Industrial
Electric vehicle adoption
Sources: Chart: McKinsey and Co., Milken Institute.
Map: Ford Motor Co. http://gigaom.com/cleantech/fords-top-25-cities-paving-the-way-for-electric-cars/ Ltd.
Energy Information Administration, http://tonto.eia.doe.gov/cneaf/electricity/epm/table5_1.html
* Estimated impact to load based on 12,000 annual miles per
vehicle, 280 million vehicle miles, and 4 miles traveled per kWh.
Vehicle electrification impact*
Penetration
(% of fleet)
Electricity
load
increase
(TWh)
Percentage
of 2010 U.S.
electricity
use
1% 8 0.2%
5% 41 1.1%
10% 84 2.2%
15% 126 3.4%
20% 168 4.5%
100% 840 22.4%
Non-water-related85.8%
Water supply and treatment
3.8%
Residential79.4%
Commercial20.6%
Water heating10.5%
Total energy use: 3,660,969 million KWh
Where water and energy intersectU.S. water-related energy use, 2005
Sources: Energy Information Administration, River Network.
Sources: Sandia National Laboratories, River Network, U.S. Census Bureau, U.S. Geological Survey.
Water usage in the United States
• Power production (49%) was the biggest use of water in 2005, followed by
irrigation (31%).
• 19% of California’s electricity production is water-related.
• Coal plants use 25 gallons of water per 1 kWh generated.
• U.S. population increase between 2000-2010 was concentrated in water-
deficient states in the South (48.5%) and the West (32.6%).
The benefits of a solar lease
Source: www.ennovationz.inc
Residential35%
Commercial25%
Industrial40%
Each sector’s share of potential energy savings
Source: Energy Information Administration.
California emissions reduction goals for 2020
Source: California Energy Commission.
Oligopoly: The Western cooling challenge
Market uncertainty:
Negotiating codes and standards
Bridging markets: This is not a pool
SolarLease®
OLD ELECTRIC
BILL
SOLARLEASE
PAYMENT
NEW ELECTRIC
BILL
Save money from day one
with zero upfront cost
— Rhone Resch, SEIA President
“SolarLease is the most
significant residential
financing innovation the
industry has ever seen”
Impact of providing financing
Data Source: California Solar Initiative Database, May 2010.
SolarLease®
Launch
April 2008
Wind and solar growth and size
Source: US PREF.
Availability of “tax equity” drives adoption
Source: US PREF.
Extended thru
2011 but
uncertain future
Fallout in tax equity players
Source: US PREF.
Tax equity investors in 2007 Tax equity investors in 2008 Tax equity investors in 2009
• JP Morgan
• Union Bank of California
• Wells Fargo
• New York Life
• Bank of America
• GE Capital
• Morgan Stanley
• HSH Nordbank
• Key
• Northern Trust
• John Hancock
• Prudential
• Northwestern Mutual
• Citi
• ABN Amro*
• Fortis*
• Lehmann Brothers*
• Wachovia*
• AIG*
• Merrill Lynch*
Renewables tax equity market: $6.1 Billion
•JP Morgan
•Union Bank of California
•Wells Fargo
•New York Life
•Bank of America
•GE Capital
•Morgan Stanley
•HSH Nordbank
•Key
•Sun Trust
•Northern Trust
•Sempra Energy
•US Bank
•JP Morgan
•Union Bank of California
•Wells Fargo
•New York Life
•Bank of America
•GE Capital
•Morgan Stanley
•Credit Suisse
•Key
•Northern Trust
•Citi
•US Bank
$3.4 Billion $1.2 Billion
Departed tax equity base
during 2008-2009 due to
insufficient taxable income
or bankruptcy.
*Permanent departure
Energy efficiency potential is large but complex
and difficult to realize
0
5
10
15
20
25
30
1970 1980 1990 2000 2008
China
U.S.
EU 15
Japan
Barrels of oil equivalent consumed per $1,000 of gross domestic product
Source: IEA Statistical Data.
Wood Mackenzie Theoretical Construct for
Energy Efficiency Estimation
Wood Mackenzie theoretical construct for
energy efficiency estimation
Source: Wood Mackenzie.
Source: US Energy Information Agency, Annual Energy Outlook (AEO) 2011; US EIA - Annual Energy Review (AER) 2009/2010.
0
10
20
30
Residential Commercial Industrial
0%
25%
50%
75%
100%
End-use
Other
Washing
Cooking
Electronics
Lighting
Cooling
Heating
Heating
Lighting
Cooling
Cooking
Other
0%
25%
50%
75%
100%
End-use
Refining
Chem., Plastics
Paper
Mining, Metals
0%
25%
50%
75%
100%
End-use
U.S. energy consumption by sectorQuadrillion BTU (Quads)
Total
Primary
EnergyDelivered
Energy
Total
Primary
EnergyDelivered
Energy
Total
Primary
EnergyDelivered
Energy
Office EquipmentVentilation
DurablesFood
Misc.ElectronicsTextilesMetals
Delivery Loss
Breakdown of where non-transport energy is
consumed today
Chevron’s alternative energy focus
Invest in renewable energy technologies…
Capture profitable positions
EMERGING DEMONSTRATION COMMERCIAL
CTV: Ocean
Energy
CTV: Biofuels
CTV: Solar - to - SteamCTV: Non - Conv
Geothermal
CES: Fuel Cells
CES: Solar PV
Global Power & IBU: Geothermal
Global Power: Wind
Tomorrow Today
CTV: Waste Heat Recovery
CES: LED Lighting
CTV: Hydrogen
Chevron Energy Solutions:
Efficiency, reliability, renewable power
FACT: Energy efficiency and conservation are the most
affordable and readily available sources of “new” energy
Energy
Controls
Lighting
& HVAC
CogenerationFuel CellsSolar Biomass
0
5000
10000
15000
20000
25000
0% 10% 20% 30% 40% 50% 60%
No
brainers
Great
investments
Long-term
thinking
Cost ($)
% Savings achieved
Residential energy efficiency requires a guide
Mass Save HEAT Loan: 0%, up to 7 years
Why it is effective
• No upfront payment
• Monthly savings can exceed monthly payment
• “Once per home” rule encourages going deeper to take
advantage of it
Why it is not used
• Hawaii calling
• No more debt!
• If I have to finance it, that’s too much energy efficiency
Energy efficiency barriers and solutions
Type of barrier Barrier Solution Difficulty
Structural
Landlord/tenant split POL Make it FREE High
Home tenure < Payback period MKT New products High
Costs uncertain MKT Market package Low
Distorted incentives POL High
Benefits risky and uncertain BOTH Financing; rebates Medium
Behavorial
Lack of awareness MKT Outreach; reporting Medium
Habits MKT Outreach Medium
High threshold until action POL Subsidies Medium
Availability
Bad productizing MKT Attractive packages Low
Lack of financing BOTH Programs High
Product availability MKT Outreach Low
Installation and use MKT Outreach; reporting Medium
Sources: McKinsey; Next Step Living, Inc.
Show the “sexy” stuff…create desire for change
Insulation and basic measures are
“prep” for cool stuff
Energy efficiency goes beyond $ and CO2:
The other “very big” motivators
JOBS
DEATHS
TOXIC
WASTE
For our community… For our country… For our children…
SHIFT
SPENDING
LESS
POLLUTION
NEXT
GENERATION
STRONGER
ECONOMY
NATIONAL
SECURITY
GREENER
U.S.
What connects energy efficiency with
pride, identity, and “sexy” ?
