Making MUSH Energy Efficient Satya Rhodes-Conway COWS June

COWS “Milk for the Movement”  Research center at UW Madison  “Think-and-do tank” for high-road economic development  Good jobs and clean energy

MUSH?  Municipal/Government, University, School, and Hospital - Buildings under governmental control  State, County, City, Town, etc.  schools (public and private); colleges, universities, and technical colleges  hospitals, clinics, and other healthcare facilities  assorted large institutional buildings, such as museums, places of worship, and nonprofits  Number of buildings? Type of Building OwnerNumber State50 City19,492 County3,033 Town16,519 Special District37,381 School District13,629 Private K-12 School33,740 Charter School Agency2,236 Public Higher Education2,672 Private Higher Education2,823 Hospital5,795 Total137,370

Key Attributes  Decision-makers usually control multiple buildings  Energy intensive buildings  Older  significant energy users such as water utilities, water treatment facilities, hospitals  Energy costs can be up to 10% of a municipal  Beyond the profit motive  No split incentive  Longer time horizon

Energy Efficiency  Investment-grade audit  measures that increase the energy efficiency and are cost effective over a reasonable time horizon  efficient lighting  improved heating, ventilation and air conditioning systems  tightening the building envelope  Motors and appliances  Etc.  Ongoing building management

Why? Pete Davis  Save Money  Reduce Emissions  air quality  public health  global climate disruption  Increase Energy Security  price volatility  supply disruption  Economic Development  direct spending  redirection of dollars saved  Comfort and Health  Increased productivity  Decreased absenteeism  higher student test scores

Current Status  Energy Services Corporations (ESCOs) have worked in this sector for decades  market penetration in the MUSH sector: 20% to 50%  comprehensiveness of the retrofits performed?  new technology  Plenty of opportunity

Barriers  Upfront capital cost  Inability/limited ability to borrow/bond and impact of project bonding on credit rating  Diffuse control of buildings and/or building systems  Lack of reliable information on energy expenditures  Turnover in elected/appointed leadership  Lack of experience with energy efficiency, ESCOs, etc.

Principles  Job Quality and Opportunity  Direct control over the contracting process  Ensure that jobs created are good  Sustainable Financing  Managing your own project may be cheapest  General Obligation bonds (secured by the ability to levy taxes)  Revenue bonds (secured by the expected revenue, in this case the expected savings)  Qualified Energy Conservation Bonds (QECBs), a relatively new type of taxable bond subsidized by the Federal Government  Work with ESCOs  Capture a portion of the savings for use on future projects

Principles  Data-driven decisions  which buildings ought to be retrofitted, in what order, using which technologies?  EnergyStar Portfolio Manager  measurement and verification  Deep Retrofits  longer payback periods and higher upfront costs  increases in energy savings, job creation, and environmental benefits  energy savings from buildings with significant savings potential can be used to offset the cost of pursuing retrofits in buildings with less potential

Principles  Build strong and independent partnerships  Housed in a non-political department or in a separately created new entity  If a program is contracting with an ESCO, the use of an Owners Agent  Build a coalition  Maximize scale  aggregating properties with similar entities  bundled with other capital improvement or renewable energy generation  larger organizations (especially states) assist smaller entities by facilitating aggregation, providing technical assistance, or creating a pool of capital

Principles  Best practices in workforce development  connecting individuals to construction apprenticeships  Community Workforce Agreement (CWA)  high-quality pre-apprenticeship or contextualized basic skills training  social services  Implement complementary policies  drive demand for in the commercial and residential  support a contractor base and workforce able to meet that demand  Generating market demand for efficiency through labeling  Requiring energy efficiency upgrades through Residential/Commercial Energy Conservation Ordinances or retro-commissioning programs

Possible savings  MUSH floor space  about16.5 billion sq ft.  uses about 3.87 quadrillion BTU a year  energy costs about $40.7 billion a year  20% savings would be $8.1 billion dollars per year  Example: City of Milwaukee  municipal operating budget of $69 million per year  controls 229 buildings  spends approximate $16 million per year on energy.  could save nearly $5 million per year

Possible jobs  Primarily construction jobs  Every $1 million spent on energy efficiency projects creates or retains between 4.3 and 8.6 FTE  Between $38.3 billion to $61.2 billion needed to upgrade the entire MUSH sector  Potential to create between 164,690 and 526, 320 FTE

How?  Assess your building stock energy use and prioritize  Audit  Financing options  Bonding  ESCO, municipal lease  Design/Build  RFP  owner’s agent  Include labor standards  Capture savings  Track building performance

It makes sense…  economic crisis  unemployment rates (especially in the construction sector)  environmental imperative  large-scale energy efficiency building retrofits drive job creation  economic, environmental, and community benefits  Relatively straightforward  buildings are controlled by those who have a broader public interest  can determine how much energy they use  can finance the retrofits  can ensure that jobs created are good jobs  ….it doesn’t make sense not to