Senate Bill 17 seeks to expand energy efficiency efforts
by Maisie Thomas
Senate Bill 17, introduced by Anchorage Senator Tom Begich, would extend the state’s existing energy efficiency retrofit program to smaller buildings as well as schools and community centers eligible for the Power Cost Equalization (PCE) program. The goal of the legislation is to retrofit buildings that receive state support for their energy bills, thereby saving the state money while reducing energy consumption in Alaska. The effort builds upon an initiative that began about a decade ago.
History of energy efficiency efforts in Alaska
Energy efficiency has been an overarching goal in Alaska; the state has been trying for years to conduct energy audits and retrofits on public buildings, according to Meera Kohler, former President and CEO of the Alaska Village Electric Cooperative (AVEC).
The context for SB 17 goes back to 2010, when the Alaska Legislature passed a bill, later signed into law by then-governor Sean Parnell, declaring that the state would attempt to be 15 percent more energy efficient by 2020. Alaska had received $28 million in federal funds for energy projects, said Scott Waterman, who spent 25 years as Energy Programs Manager for the Alaska Housing Finance Corporation. Of these funds, AHFC received $14 million and the Department of Transportation and Public Facilities $10 million. AHFC audited roughly 327 municipal buildings, many of which were schools.
DOT was tasked with auditing state buildings. A component of the legislation was that, in order to make Alaska more energy efficient, the state was to retrofit at least 25 percent of public facilities 10,000 square feet or more.
According to Waterman, the program was a “mixed bag” in terms of success. Of the buildings AHFC audited, some building owners went through with many or most of the retrofits, while others either ignored the audits or only made small changes. Essentially, Waterman said, audits are only as valuable as people make them. For those that actually did make changes, “they were quite valuable,” but not so much for those who shelved the audits. A challenge with audits, he said, is that most building owners are going to incorporate retrofits into other maintenance and renovation efforts rather than doing them as stand alone projects. As a result, audits can sit for over a decade before any work is done.
What will happen after an audit under SB 17 is “a bit squishy,” according to Löki Tobin, staff to Begich. However, there is a plan in place. She said that the building owner or operator will need to work with DOT to identify a contractor and schedule the work. Once the retrofit is completed, the contractor or the loan company that funded the work is to be paid back with energy savings accrued by the project.
The Alaska Industrial Development and Export Authority (AIDEA), a state-owned development financing company, would be tasked under SB 17 with helping to bundle smaller projects in order to make them more attractive to private loan companies. For demonstration purposes, Tobin gave the scenario of two small communities. One community has a school and a community center that need new windows and a new heating system. These retrofits would reduce their monthly energy bill by a projected $200 a month. A second small community has a school that needs new energy-saving windows; a change which would also reduce their monthly energy costs by an estimated $200. In this situation, AIDEA would bundle the projects, market them to a private loan company, and work with DOT to hire a contractor. The contractor would complete the work and be paid by the loan company. The communities would use their $200 monthly savings to pay back their part of the loan over a period of time.
SB 17 aims to build upon the method that DOT used, which Waterman described as “very successful.” The state accomplished the retrofit of 25 percent of buildings in 2014. DOT achieved the goal by doing “exactly the opposite” of what most building owners do. That is, after an initial audit, they began complete retrofits of state buildings, beginning with those that were the least energy efficient.
The mixed success Waterman described is perhaps reflected in the results of Alaska’s energy efficiency attempt. According to the Alaska Energy Authority, Alaska achieved nearly half of its 2010 goal of a 15 percent efficiency increase. The state is approximately 6.5 percent more energy efficient than it was a decade ago, said AEA Spokesperson Brandy Dixon. Dixon said that,“While great strides have been made in weatherization programs for thermal efficiency, the capital investment needed at a “utility-scale” and also research and development into the transportation efficiency sector has not seen the same level of success, as has occurred in the lower 48.” According to Dixon, utility-scale capital investment refers to investment in two categories: generation plant efficiency measures intended to “squeeze out every ounce of efficiency possible” and programmatic activities within the respective utilities to incentivize efficiency.
Senate Bill 17
SB 17 is a way of furthering DOT’s work by expanding the number of buildings that receive audits and retrofits. Tobin explained the state is already charged with conducting energy audits on community facilities over 10,000 square feet every seven years. “SB 17 simply decreases the ‘floor’ used to consider which public facilities are audited and targeted for energy retrofits,” she said.
Christopher Hodgin, senior project manager for DOT Division of Facilities Services, said that the Department has had discussions with the bill’s sponsor (Begich) and that “we agree conceptually with the general intent to achieve energy savings with the greater goal of reducing utility costs to the state where possible.”
Specifically, SB 17 would add schools along with government and public use facilities to the list of public buildings as well as community facilities receiving PCE. However, the latter group can opt out of audits if they wish. The bill would reduce the size of the buildings that the state is mandated to audit from 10,000 square feet or more to 5,000 square feet or greater in order to include more buildings and communities in the audits and retrofits.
The size reduction is a way to target smaller, rural communities, Tobin said.
“Many of our public facilities are old – the average age of our rural schools is 60 – and these facilities use outdated technology and building materials, which [result in] increased energy costs. Retrofitting public facilities for energy efficiency reduces energy costs for the state, but also ensures the state is being [fiscally] responsible and prudent with state resources,” said Tobin.
Concerns with energy audits
While she said that she supports energy audits and any way to reduce energy consumption, Kohler is skeptical about the benefits of SB 17. Essentially, Kohler’s opinion is that “energy audits are a good thing, but they are easier said than done, particularly in rural Alaska.” “It’s a feel good sort of bill,” she added. The benefit of conducting energy audits and improvements on commercial buildings receiving PCE, Kohler said, is unlikely to outweigh the expense of the audits.
Energy audits are costly, and even more expensive in communities off the road system — meaning most buildings receiving PCE. Waterman echoed Kohler’s concern.
“The big problem is cost,” he said of audits. Waterman added that, of the federal funds that AHFC received, $7 million went toward audits alone. A large portion of the cost is for labor — Waterman said audits are typically done by engineers, and it is not unusual for them to charge $150 per hour. Moreover, audits — particularly of large buildings — can take days, and this is amplified in remote areas where travel days need to be accounted for. It then takes several days to analyze the data and create a report. Tobin noted that, while in the past there have been federal funds available to help with retrofits and other energy efficiency projects, there currently are none. However, she noted, the Biden administration has not yet produced an infrastructure bill or proposal, so this could change.
Kohler said that audits can be beneficial, and most efforts toward energy efficiency have resulted in lower heat consumption. But, she said, in most rural communities “the electricity [efficiency] ‘low lying fruit’”— such as converting the lighting to LED and turning the thermostat down in the evening when the building is empty — “have already been harvested.”
Moreover, Kohler said that there is simply not that much energy waste in rural Alaska. There are certainly ways to reduce energy consumption, but due to the extremely high cost of fuel in rural Alaska, use is always lower than other areas. Most of the buildings SB 17 would apply to have already undergone some kind of upgrades, according to Kohler.
“How much more is there to be gained?” Kohler questioned. The bottom line, she said, is that most commercial buildings in rural Alaska are already relatively energy efficient, and those that could be improved upon (such as hangars and National Guard armories) are not eligible for PCE. “I’m not sure what there is to accomplish that wouldn’t cost a fortune,” she concluded.
This is not to say there are not any areas for improvement. Yet improvements, Kohler said, need be made in the design phase. For example, she said that she has seen new schools built with extremely high ceilings. This may be aesthetically pleasing, but the design uses more energy than necessary.
Conclusion
AEA spokesperson Dixon said that without a community energy audit of all PCE eligible buildings, it is impossible to know what the energy saving potential is.
Waterman said that while he is not familiar with SB 17, he does believe there is the potential for a lot of energy savings in Alaska. “A lot can be done,” he said. Hodgin said that it is possible to achieve “impactful energy savings” on smaller facilities. Retrofitting smaller buildings, according to Hodgin, can provide benefits and resilience to the state’s facilities portfolio. However, there is a difference between theoretical energy savings and an audit’s actual impact. What determines whether an energy audit results in a success or failure depends upon what is done with information.
With the anticipated post-audit plan, SB 17 appears to have the potential to avoid many of the difficulties Kohler and Waterman described: namely, that audits are costly and ultimately do not result in retrofits and thus energy savings. However, as history shows, no matter how well thought out a plan may be, the effectiveness of audits also depends in part upon the willingness of building owners to go through with the changes.
And, of course, the bill must first pass through the Legislature and be signed by the governor; that alone is a tall order.
