Report 90by50 from the Urban Green Council

The recent 90by50 report from the Urban Green Council was an exceptionally well targeted feasibility study of the potential for drastic energy infrastructure change in New York City building stock. I already wrote about it on my green energy promotion blog. There is a lot to like about it, but it will also most likely be abused and bastardized in the process and the potential never realized. We seem to be a long way away from the kind of concerted action that is really needed, although the feasibility can no longer be in doubt.

While the report identifies clearly that things like New York's PlaNYC2030 were too conservative, and doomed to produce failure because it merely tinkers at the margins, this plan is too high level to be actionable as such, and therefore it may end up being its own worst enemy if we're not careful. Such a high level view has merits, but becomes tricky when it is combined with other high level views such as macro-economists are wont to produce and administrative institutions are wont to consume, so together they can make the high level nonsense that goes for energy policy, and worse, incentives.

However, the helpful implications are the fact that since reducing carbon emissions is definitely of primary importance, the sorts of marginal improvements that PlaNYC2030 envisaged were insignificant, if not counter-productive. There is great need to be more drastic than that. This was one of the reasons why, with my consulting company DaBx Demand Side Solutions, we issued a report 2 years ago, DaBx PlaNYC2020, to make the point that there was at least one class of buildings in New York that was capable of much faster and more drastic change in energy infrastructure, and achieve an 80-90% reduction in CO2 emissions in short order, with today's technology.

PlaNYC2020 alternatives, in relation to 90by50

In one way, I would consider our DaBx PlaNYC2020, of which Mayor Bloomberg was given a complimentary copy on July 4th, 2011 (which we dubbed 'energy independence day' for the occasion) to be a special case under the 90by50 approach, and in a way perhaps the low hanging fruit, although the technology path implied there is quite a bit different from the 90by50 model.

What the 90by50 report identified correctly, and one of the reasons why it chose a 37 year implementation period, is that the economically optimal way of achieving this transition would be to tie in as much as possible with the normal infrastructural overhauls that buildings need periodically. In our report we had argued that same point. For example, the program to phase out #6 oil and use natural gas or either #2 or #4 oil instead forces the issue and even provides subsidies to encourage such conversions, and thereby it preserves the carbon economy without any attempt to asses if renewable energy alternatives might be within reach. Clearly, if we could achieve substantial reductions in CO2 emissions, and at the same time improve long term building values by decoupling buildings from energy price hikes, not to mention any potential future CO2 assessments that would be desirable.

In short, there are certain building types that could make the transition to a low carbon lifestyle quicker than others, but that's being stopped by Soviet-style top-down twenty year plans and incentives to switch to Natural Gas. What we really need is grandfather provisions for buildings that commit to a renewable energy transition, but would be forced not to do so by the present deadlines for the conversion. Here is yet another example of how 'one size fits all' does not work for this problem, since there is such a wide range of structural potential and problems in different groups of buildings.

Methodology for Achieving the Green Energy future sooner

Bottom-up, not top-down

The risk of both the City's PlaNYC2030 and the 90by50 report is that they tend to steer towards a top-down approach. Much of this is predicated on how planners get their data. Planners are fed macro-economic pablum, which in the area of energy typically means an argument that by far energy efficiency gives us the best bang for the buck, and renewable energy is still mostly uncompetitive on the margin. And based on all that wonderful stuff, the administration then establishes policies accordingly.

Nobody seems to notice that in the process, the existing energy infrastructure is being taken for granted and treated as an unstated assumption, for the existing programs are typically geared towards energy efficiency, with the occasional cameo role for renewable technology. In other words, we start right away by optimizing for a secondary objective, efficiency, while skipping the initial make/or buy decision which should come first. It tends to be done correctly for new developments, but for existing buildings, this step is being overlooked. The further mistake that is implicitly made, is that renewables are evaluated in roles that are traditionally defined by the carbon energy model, and rarely do we see a systematic attempt to figure out what you can do differently with renewable technology, because of its unique properties, so that possibly you can pick up design advantages as compared to plugging renewable technology into a carbon based energy distribution model.

The first part of the insight into the potential of renewable technology is the extent to which it can be installed locally, so that a building in whole or in part supplies its own energy. A good example is sometimes provided by solar thermal. It is an often overlooked technology, yet it is 95-98% efficient compared to Solar PV at 15-20% efficiency. The question is, is there a practical way to integrate it into an existing building infrastructure. The cost of integration may kill the idea. However, it should evidently be tried, and be part of an evaluation.

CAPM, CAPM and more CAPM - the Capital Asset Pricing Model

In short, buildings should really begin to be looked at as potential energy producers, that can become partially independent from the grid. Net-zero is not a feasible objective in most cases for an existing structure, but enormous advances are feasible with today's technology. And such transitions can be incorporated in long term capital plans that take into account a 20-30 year equipment life cycle. Besides good engineering, the most critical piece is really  financial: a rigorous application of the Capital Asset Pricing Model should be the standard. If this is done, a far greater use of renewable energy technology is possible compared to what is being done today, and many existing incentives are counter productive at least some of the time, because the favor vendors of equipment and or the energy companies themselves, at the expense of the long term economic interests of the building owners.

There are also some regulatory hurdles that will need to be addressed. The famous split-incentive problem between landlords and tenants will have to be addressed. In low income housing there are rules that are promulgated by HPD and CPC, which prevent the highly necessary redesigning of energy infrastructure in building rehabilitations. And again, many incentive programs and tax abatements tend to steer property owners in the wrong direction. All of this is misguided policy, driven by the same macro-economic assessment that is erroneously applied to micro-economic planning at the building level, and it produces government sponsored capital destruction.

So again, we need to start working as if we were a capitalist society, from the viewpoint of the buildings as an asset, not with top-down soviet-style 20 year plans, that shove the macro-economic square peg, in the micro-economic round hole. Too many decisions are made driven by the latest incentive, instead of on a sound long-term economic basis, which would accrue to improved building values. An accelerated conversion to renewable energy would be more constructive to building preservation than the current regime of moving the deckchairs on the Titanic, and switching to natural gas as the "less dirty" carbon fuel. The vaunted role of natural gas as a "bridge fuel" is really a very destructive postponement, if it forestalls renewable energy in applications where it is economical today. Present HPD/CPC policies are merely creating the slums of the future, with real estate values held for ransom by energy prices, and landlords that are beholden to these rules are like lemmings waiting for the next energy crisis.

The little ones that add up

So, I used to run my kitchen lighting as follows:

1. Ceiling light 2x 14W  Cfl bulbs, probably 8 hours a day - 224W/day 
2. and 2x 50W PAR20 flood lights, probably 3 hours a day - 300W/day
3. as well as another 27 watt Cfl in a desk lamp say 3 hours a day - 81W/day
4. 224 + 300+ 81 W = 605W/day, at 30.5 days/ mo = 18.5 kWh at ca 33 cents/kWh = $6.11/mo

But now I changed my 2 50W PAR20 floods to 2 8W R20 LEDs, and the pattern changes

1. Ceiling Light 2x 14W Cfl - 3 hours a day = 84W/day
2. Floodlights 2x 8W 8 hrs/day = 128W/day
3. Desk lamp 27W 3 hrs = 81W/day
4. 84 + 128+81 = 293W/day times 30.5 days =  8.94 kWh/mo at 33 cents = $2.95/mo.

The savings therefore are $3.16/mo and the bulbs cost me $16.08 including tax or $32.16 total, and my payback at this rate is 10 months. And that calculation does not even take into account they have an expected 30,000 hour life span, versus an average expectancy of 10,000 hours or so for CFl bulbs.

In short, this is a winner. And actually, now that I'm switching to the fixture with the two PAR20 lamps for my main 'background' lighting, I'll probably have them running at 30% most of the time and at full strength perhaps no more than two hours a day. So if that's the case, the floodlights will use 64W/day instead of 128W/day, for 229W total per day and the monthly number becomes  6.98 kWh at $0.33 for $2.30 total monthly cost.

If you can see little opportunities like that, saving energy is actually fun. I better start buying some energy guzzling equipment soon, for I'm already at the top of my class of residence, averaging 218 kWh/mo even before this change. I also just signed up for the CoolNYC program (www.coolnycprogram.com), which should reduce my A/C bills this summer, Plus, you get $25 for participating. You get a bonus for saving money. Cool! Literally.

Of course the above is also the way energy companies and equipment manufacturers would like you to make all your energy decisions, and while this is fine for a renter, and fun to do, it is not the way you should look at things as a building owner. If you own the building, your business purpose is definitely not to figure out how you become a more efficient customer of your local utility or oil company. And if they try to convince you to invest in energy efficiency, let them do it, as long as you realize that they are investing in you as a customer, so their objective is maximizing their profits, not maximizing the value of your property. If they can get you fool enough to actually invest your money in becoming a more efficient customer of theirs, they have the best of all things: a customer retention program, financed by the customer!

As a building owner you should look at maximizing building value in the long term. That requires a vastly different approach, for if you follow the methodology used here, you'll be frittering away your money over time and doing exactly what I described: investing your own money in a (volunteer) customer retention program for your utility.

Power Options or Why Deregulation Misses the Mark

While the country is still charging ahead with energy de-regulation, it seems at times dubious if it has been really conducive to solving any problems that we know of, particularly in an area like NYC, where the Transportation & Distribution portion of your power bill is 60-70% of the bill, and set to increase faster than inflation as far as the eye can see. Deregulation probably garnered lots of political donations, safe to say. Be that as it may, at least some of the innovations that have resulted from deregulation are helpful, in particular green power, and perhaps in some cases fixed rate pricing options.

The larger accounts have mostly moved to independents, but smaller accounts, and residences in particular have barely switched, largely because there is little real incentive, and to the extent an ESCO can make a difference, it is well within the margin of error. It is easy enough to understand, large accounts consuming perhaps millions of kWh per year can make a real difference in their bottom line with a better price, but an average household does not have that option. A 1 cent price swing on the average household account of 900 kwH/mo is $9/month, but if the total all-in rate is ca 25 cents per kwH, that is still only a 4% price swing on a $225 bill. In short, this is not a life-style changing event, and hence it is not worthy of attention. In NYC a penny on the rate of such an average household is the equivalent of four subway fares.


People are made to believe they can save money by switching, but the difference, if any, is lost in the shuffle, and can never be proven, or worse the market moved up significantly, and then the new company gets the blame, when often it had nothing to do with it. Even if the macro-economic effect is true that competition brings the rates, down, it would mean we're going down in the aggregate, and unless you are a large user, it makes no sense to spend time finding lower prices. And in some cases companies indeed took advantage of people, and misled them. One of the frequent misrepresentations was that their sales people made customers believe that they were from ConEdison. This is no longer permitted. So the reps are finding new ways of misrepresenting themselves, as I experience with some frequency with reps from various energy companies that call door to door in my building.


In many respects however, the independent energy providers (ESCOs) have been their own worst enemies, by often times marketing things they cannot deliver, and/or either allowing, or even encouraging their reps to lie. One prominent example is fixed rate pricing. Fixed rates are about risk management, not about beating the market, but most reps will make customers believe that they are going to beat the market, or 'save' money with a fixed rate. Nope. If you are more afraid of the market going up than of overpaying a little, a fixed rate may be warranted. Having the fixed rate option is arguably an improvement, but it is often sold in the wrong way. And failure to set the right expectations leads to unhappy customers.

Another tricky area is the issue of 'saving' money in general. Here also the ESCOs cannot deliver. Sometimes they will, sometimes they won't. Here in NY, ConEdison bills on a daily basis, after the fact. It is a pure pass along to them. If the rate is 6 cents, they charge you that, and if it's 15, they charge you that, including whatever the markup is they take. You can never be sure in advance, because you cannot buy a monthly, quarterly or yearly rate from ConEdison. So it's like with the strawberries at the supermarket, that were priced at $3.49/lb this week, but last week there was a special at $1.49/lb. It won't help me when I go to the cash register and try to buy strawberries at last week's price.
So, if last month ConEdison billed 8 cents per kwH for the month as a whole, and I was on an ESCO pricing that is a one month variable rate at 10 cents, I was above ConEdison's daily market rates, but it's a moot point, for there was no place to ever buy that rate. By the same token if my company has locked me in at 10 cents/kwH for the month and there is a plant outage or a heat wave, ConEd customers may end up paying 15 cents per kwH, while I'm still only paying 10 cents, because it was bought in advance. Over time the variability of a one month variable rate should be less than with daily pricing, or I may have an option to procure fixed rates and lock in my pricing for a year or even multiple years. Just like the strawberries, electricity does not keep too well. So it probably does not pay to buy 10 lbs when they are $1.49/lb. You'll merely end up throwing out a lot more strawberries, and as far as electricity is concerned, batteries are very expensive.

To apply that argument to power, particularly in the ConEdison area, we might observe that only in retrospect can we judge if last year ConEd's rates were lower than with our favorite ESCO. But if with the ESCO we are buying monthly, quarterly, or yearly pricing, the natural tendency will be for those prices to be flatter over time, whereas with ConEd's pass-through daily pricing a few events that cause rate spikes could drive our costs with ConEdison up unexpectedly at any time. So, just because last year I did not have an accident with my car, and I arguably could have saved myself the collision insurance, does not mean that this year I can do without. Over time the day rates might show greater variability, and some form of monthly or quarterly, or yearly rates might be preferable to most people. Knowing in advance what you'll be paying has some value here.

In general, if we are saving money with deregulation it is not because we can all go out and negotiate market beating rates. That remains for the big boys with the millions of kWh. Perhaps the overall price levels come down because of deregulation, at least that was the economic theory. But when history gets written, and proper research done, it may well be that deregulation worked only for a few large players and made no difference whatsoever for the average consumer. Reducing consumption and energy efficiency are much more important.

An agonizing fact of life is that because the utilities have a fairly unwieldy infrastructure, and it takes three months to switch, so just like cannot buy flood insurance at the time of the flood, when you think it would be smart to switch to a fixed rate, it is already too late. This is not day-trading where you can get in and out, and take your profit whenever you want. In short, don't bother switching providers to save money, unless your current provider is a bad apple, and they are really taking advantage of you.

The last innovation of the ESCO's is Green Power, and that for the most part is straight forward, except most ESCO's don't have a clue how to market it, but it could be a worthwhile consumer movement, if it ever gets going.

Green Power Explained

There are no green electrons, nor can we change the supply sources at will, but we can purchase green power to varying degrees, by incorporating Renewable Energy Credits (RECs) into our electricity mix, or by generating your own clean electricity. The point of the exercise is that for consumers Green Power is a way of voting with your dollars, and signaling a preference for clean energy technologies. In short: RECs are a financial mechanism to support clean power, and credits are awarded to producers of clean renewable energy, and by buying those certificates, the consumer can stimulate development of such resources. RECs can be built into the rates by your provider or purchased independently. In the links section there are a whole range of information sources on Green Power and RECs.

If you look at the Corporate Top 50 Green Power purchasers, you see that Intel buys 88% Green Power, with a mix of on-site generation and recs from Sterling Planet and others. Starbucks buys 52% Green Power, Whole Foods 100%, and Lockheed Martin 15% , Wal-Mart 8%, etc. So it is pretty much a matter of how much you want to do in this area as a matter of corporate policy.

What it means for your rates. 100% Green Power typically adds some 2 cents per kwH to your rates. The typical household uses an average of 900 kwH/mo, so on average to "go green" should cost you ca $18/mo on your rates if you happen to be such an "average" household.

With my own household, I was with one supplier for a few years, and with the benefit of hindsight, I paid ranging from 0.5 cents to 4.00 cents per kwH extra for my 100% Green Power, so over time it averaged out ca 2%. Green power is a conscious choice to make a difference. Green power is about empowerment, about choice, about making a difference. It is a lifestyle choice, not an energy purchasing decision, and that is why most ESCOs fail in the mission of marketing Green Power.

On the Marketing of Green Power

The power industry by and large has failed to understand the potential of Green Power. Years ago, when I was attempting to design a Green Power marketing program for an ESCO (Accent Energy), I was arguing with the founders of that company that Green Power was different, and ultimately would require a separate company to market it.

Essentially, my analysis of the situation was that the mindset of the power industry was about price competition, and Green Power broke the mold, because to the power people it was power for 2 cents more, and that made no sense to them. Seen in that light the market place for Green Power was limited to some fringe cases, and was not worth worrying about. The power people therefore were incapable of understanding it, and I pointed out to them that selling Green Power rather meant promoting empowerment, and energy independence, not selling power.

Power is a negative, and people feel dis-empowered, because they have to pay that bill anyway, never mind whose name is on the bill. Moreover, they don't understand de-regulation, and it is somewhere between hard and impossible to verify the various claims, and many ESCOs have proven to be somewhat less than ethical in their dealings.

One of the major features of differentiation in the power market place has been often misunderstood and sold the wrong way: fixed rates. People think they are buying fixed rates in the illusion that they're going to beat the market, which is not so. Now, if you are responsible for a budget, and you'd like to fix one element of your cost, and you can rationalize that the cost is historically reasonable, well... perhaps you should consider the fixed price option. If you think you're going to beat the energy market, you probably should buy a lottery ticket instead. And, you are paying extra for the pleasure of having fixed rates.

All in all the ESCOs don't know what to do with themselves to differentiate their product. And in the direct sales model this inevitably leads to reps who will tell any lies necessary to get the deal, and in spite of codes of ethics that try to rein in the abuses, the results are a joke. In the last few months I've had more reps from power companies at my door than I can shake a stick at and almost all of them lie, although they've now been trained to not say they represent ConEdison, for then they could get fired. But they all violate the spirit of the law. From my time in the industry it was always clear that the system is rife with abuse, and that invariably the reps who lie the most make the most money. It is time to break the mold...

Fundamentally the justifications for de-regulated energy markets are not valid. Price competition is no solution to the nations energy problems. Instead it roots us in the illusion that we can beat the system, when in reality we can't. Here in NYC it is particularly evident. The real issue is transportation, for the T&D portion of your bill is 65%, and going up ahead of inflation as far as the eye can see. The real answer therefore is renewable energy generation at the building level, for these are investments that gain in value over time and therefore are conducive to appreciating real estate values. Their value goes up with every energy price hike, and with every rate increase for ConEdison.

Economically also, the utilities will have a long term economic interest in encouraging growing diversification of markets, because it is a proven fact that the overall system often becomes more reliable when the grid serves as a backup, as we have seen in energy intensive buildings like data centers, where reliability counts. Today's renewable technology is enabling this model for large groups of buildings, and it is part of the solution on a lot of levels. By the same token economic competitiveness, public safety and national security all gain from greater energy independence.

Especially in the urban environment the economics of energy are now solidly favoring the local production model in a growing number of cases. From the standpoint of economic modeling with T&D at 65% of the bill, and energy at only 35% of the bill, a 10% better energy rate is a 3.5% difference in the bill, and the arguments of de-regulation soon become laughable. Energy efficiency, demand management, and renewable production are where it's at because they gain on the T&D problem. As long as the incentive systems are done right, it should end up with both better utilization of the grid, and with greater energy diversification.

Thus, if we take the average household consumption of 900 kwH, at typical rates in NYC, of ca. 25 cents/kwH, of $225, a savings of 3.5% is ca $7.88 per month, or about 3 subway fares at current rates. Thus besides generating campaign contributions for the politicians that voted for it, financially it is not very meaningful. However if Green Power is an innovation that rides the back of de-regulation, it may be worth it after all. Watch the ratings of the largest corporate users of Green Power here:

http://www.epa.gov/greenpower/toplists/top50.htm

When Energy Efficiency is a Trap

Massive new programs for energy efficiency are being deployed all around, and however wonderful they are, when they are applied in the right places, it remains equally true that under certain circumstances, they can be disastrously wrong.

As pointed out throughout this site, there is a huge class of buildings in New York, in the form of the City's old-line apartment buildings which because of their size and proportions make excellent targets for deploying renewable energy, yet they are caught up in the energy efficiency craze, and in the process destroying their renewable energy potential with tax payer subsidies.

The key insight is that the two investment strategies energy independence and energy efficiency of existing infrastructure are mutually exclusive, and progressively so. In other words if your building at the outset had a reasonable potential do switch to a largely renewable infrastructure, then every investment you make unthinkingly in energy efficiency of your fossil-fuel based infrastructure makes it harder financially to switch to the renewable energy strategy.

Successive investments in energy efficiency do not cumulatively add up to energy independence, on the contrary, they act to postpone energy independence indefinitely, and perpetuate your building, as a consumer of fossil fuels, albeit an ever more efficient one, and from that point of view they are customer acquisition programs for the fossil fuel based economy. In short, if there is an alternative, to unthinkingly commit more and more money to becoming simply more efficient in consuming fossil fuel based energy, is a bit like a junkie learning to 'manage' his habit.

The current spate of programs that are geared to achieving an 15% reduction in energy usage across the board, becomes a self fulfilling prophecy, as in the process there are thousands of buildings that would have been capable of 60-80% reduction of fossil fuel based energy usage, but they will never make that change, because of a whole system of incentives and programs that encourage them to make small incremental changes in usage, in lieu of radical re-engineering their energy systems and achieving deep energy change.

How to Stop Government Sponsored Capital Destruction

The indiscriminate push for energy efficiency over energy independence based on Renewable Energy results in a growing number of cases in missed opportunities for developing renewable infrastructure, which could have a wide range of beneficial effects in the long run, not least of which is the greater profitability of buildings, and their long term economic viability, and thus also building preservation.

We declared July 4th, 2011 Energy Independence day, by publishing our report DaBx PlaNYC2020 as a partial alternative to the PlaNYC2030 which the City has proposed, and we offered our report to the Mayor. Aside from that I felt that it was appropriate to also write to the Secretary of Energy, since ultimately many of the relevant policies originate at the federal level.

Whenever Energy Efficiency is pursued first, without examining the Energy Independence/Renewable Energy alternative first, some unfortunate outcomes result which are to the detriment of real estate values in the long run. In essence it is particularly the city's older apartment buildings which often offer the right economies of scale for the alternative, and there are very likely plenty of investors to be found who are interested in serious Green investments that produce long term steady income, so even if current owners are not interested, different investors could come into the market.

In order to get attention for the policy changes that are needed, we wrote to the Secretary of Energy:

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August 13, 2011

U.S. Dept. of Energy
Attn. Dr. Steven Chu,
Secretary of Energy
1000 Independence Avenue SW
Washington, DC 20585

Dear Mr. Chu

Re: DaBx PlaNYC2020 – A Paradigm Change

Attached we are sending you a copy of our alternative plan for energy independence in multi-family housing in NY, which was published on July 4^th, 2011 – Energy Independence Day, as I like to think of it.

We have provided the plan to NYC, and to Mayor Bloomberg specifically as a partial alternative to the PlanYC2030, which is now in its second generation. We are hopeful eventually to find both existing building owners and investors who see the opportunity. This is an area rife with opportunity for private/public partnership, and there are plenty of funds that would be interested in financing buildings that implement renewable energy, and reduce fossil fuel use in all forms by 60-80% as we think is possible.

In the meantime however, as a nation we are suffering a terrible case of group think, and it is driving us all, and this class of buildings in particular, straight off the cliff into the next energy crisis, not to mention that it's aggravating a long list of infrastructural risks and liabilities which could be solved by going the renewable energy route directly instead.

The point is this: there is a very large group of buildings in NY – the same no doubt applies for many other cities – which offer the right economies of scale for a holistic, integrated approach to renewable energy, where it can be economical today, not twenty years from now, and which will result in a massive improvement in the economics of those buildings, and the economic competitiveness of the cities. With that we will see asset values rise, and Freddie Mac and Fanny Mae, and FHA should all become supportive, once they understand the value adding capability of this radical investment strategy.

All the building blocks to the methodologies we propose are available today, and the only significant obstacles are government policies that prevent it from happening, some minor regulatory hurdles that could be improved, and the fact that all current official guidance, programs, incentives, seem to be based on the pat assumption that renewable energy is not (yet) economical, and thus it is never given serious thought, causing an indefinite postponement instead.

The whole situation is a classic example of a paradigm shift, the major problem is that by and large the unexamined assumptions that cause the present conundrum are based on evaluations of renewable energy in a fossil fuel driven context. Contrary to that, what is needed to make renewables pay is a strategy of complete re-engineering and rethinking the energy infrastructure of existing buildings, and since in NY there is already a program on the books for eliminating high viscosity fuels, there is a tremendous opportunity to do that extra step and do renewable energy now, not later.

Given that there is a group of buildings where renewable energy would be economical now, present practices, which are only becoming more and more entrenched, amount to nothing else but massive case of capital destruction with taxpayer money, or if you would, a government sponsored customer retention program for the oil and utility industry, at the expense of real estate values. Often it boils down to short term fixes financed with long term money, insuring that buildings will be under water again at the merest sign of the next energy crisis. Taken together, current policies also create an energy monoculture around natural gas, and a huge and growing threat to national security.

Our alternative plan, which we've published under a Creative Commons-Attribution-NonCommercial-ShareAlike 3.0 Unported License in furtherance of public discourse, proposes essentially that once the engineering integration is understood, renewable energy projects which individually might not be attractive investments, could generate compound returns, and thus taken together could be highly attractive, and result in rapidly increasing building values. Simply put, the same building that might be 30% more efficient with today's best practices in energy efficiency, could reduce fossil fuel use by 75%, and be off the grid for common areas, as well as supplying car charging station, or some of their tenants. Current energy efficiency programs are fighting the last war, when the winning insight was that a dollar spent on demand reduction was worth more than a dollar spent on increasing supply.

To make it even clearer, because there is no second act in energy efficiency investments, due to arithmetically diminishing returns to a limit that is well above 50% of usage, the currently dominant regime of energy efficiency to the detriment of energy independence also will lead to slum formation on a large scale, as it will massively erode the economic viability of buildings within the next 20 years. Following our design strategies, many old buildings could reduce fossil fuel usage by 60-80%, and be commercially viable for the next 50 years.

Because the two investment strategies – energy efficiency vs. energy independence - are mutually exclusive, the current practice of plunging into energy efficiency investments without thorough examination of the energy independence alternative, condemns buildings to what may be a sub-optimal strategy, if they would have been capable of significantly utilizing renewable energy.

Meanwhile, this country's infrastructure crisis is such that e.g. here in NY the Transportation and Delivery portion of energy bills is already 65%, and rising ahead of inflation indefinitely, and the renewable strategies we are advocating could speed the way towards the smart grid, not to mention accommodate electrical cars without causing congestion on the grid. Thus transportation and delivery cost are the real issue in the renewable energy strategies on the demand side which we are proposing.

Lastly, we emphasize that our multi-dimensional strategy recommendation (looking again at NYC, our home market) includes strong beneficial impacts in a wide range of related areas that are frequently overlooked:

• Clean Air: short route for NYC to meet Clean Air Act standards
• National Security: reduction of dependence on foreign oil, diversification of energy inputs: these buildings will stay lit in the next blackout
• Transition to the smart grid: these strategies provide an accelerated transition to a smart grid, by evolving micro-grids that will be semi-independent.
• Public Safety: Buildings staying lit in a blackout, survivable in case of failure of the gas grid, and can provide unlimited backup for cell towers.
• Public Health: Better indoor air quality in the Asthma capital of the world, a.k.a. the South Bronx.
• Defense: The emerging Natural Gas monoculture is a huge new liability, diversification should have high priority.
• Economic competitiveness: Thousands of old apartment buildings could be upgraded into some of the most Green and energy efficient modes of city living. The outer boroughs would benefit most. In the near term it means jobs.

Because of the importance of these issues at this critical junction in our nation's energy policy and future, I am sending you this letter as an open letter, which will be published on my blog at http://nycgreenapple.blogspot.com, as well as copies being sent to a number of relevant officials and business people.

Yours sincerely,

Rogier Fentener van Vlissingen

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