Background
Participation & Benefits
BACKGROUND
What is the Cambridge Energy Alliance?
The Cambridge Energy Alliance (CEA) is a city-sponsored non-profit organization that is creating a groundbreaking program to significantly reduce energy and water use in Cambridge, Massachusetts. CEA is reaching out to residents, businesses, institutions, and other organizations with a host of programs to reduce the use of electricity, natural gas, heating oil, and water in Cambridge. CEA is also promoting efforts to install clean energy (such as solar panels) and dual use heat and power units at facilities throughout Cambridge. Over the next five to six years, CEA seeks to serve 50% of all Cambridge buildings and reduce electricity demand by 15%, with comparable reductions in heating and water use.
CEA participants will pay for efficiency and clean energy projects either directly or through CEA-arranged financing for a term of up to ten years such that loan repayments are matched or exceeded by annual energy bill savings. Participants will receive whatever NSTAR rebates are available for electric and gas measures. These projects will be designed to complement and amplify the existing efficiency efforts of NSTAR. No upfront costs will be required for such installations, and there will be no cost to Cambridge or state taxpayers.
What makes this program unique?
The Cambridge Energy Alliance seeks widespread participation from all energy users in the city. It is the first-ever program to offer comprehensive energy and water efficiency measure coverage, and offer one-stop customer service to achieve the high participation levels we anticipate. By working closely with the City of Cambridge, CEA will achieve a greater participation rate for smaller customers than current efficiency programs, making this program the most comprehensive of its kind in the country.
CEA offers independent expertise, project management, flexible financial assistance, centralized coordination of services, and other assistance that will keep program costs low. The CEA program is designed to maximize results and minimize hassle for participants.
Further, CEA is partnering with NSTAR, the utility delivering electricity and natural gas to Cambridge, to maximize the reach of its programs. The combination of the comprehensive proposals of CEA with NSTAR’s extensive energy expertise and community involvement will provide a powerful platform for success.
Who created this program?
Spearheaded by leaders from the City of Cambridge, the Henry P. Kendall Foundation, and professional staff and consultants, the CEA core design team has been working collaboratively with NSTAR and a group of key advisors including large energy users and other experts to develop and launch the Cambridge Energy Alliance. Going forward, CEA will consist of a small professional staff, while also relying on industry experts and trusted energy service firms, financial institutions, and other trusted contractors to implement the program. The program is overseen by a Board of Directors that includes City representatives and others. Eventually, CEA hopes to establish an advisory committee composed of a wide range of community stakeholders to provide guidance to CEA as it develops.
Why do this now?
One of the most pressing issues of our time is global climate change. Studies continue to show that investments to cut energy use are the most effective way to cut global warming emissions. Cities are a natural place to achieve the greatest benefits from energy efficiency because they have high concentrations of homes, businesses, government facilities, and institutions. Over 80% of the greenhouse gas (GHG) emissions in Cambridge are the result of energy use in buildings. The program will reduce annual GHG emissions from the city by 150,000 tons (10%) in the first 5-6 years.
What are the program’s goals?
Through a combined investment of over $100 million over the next five years in improvements that reduce energy waste, the Cambridge Energy Alliance expects to save 164 million kiloWatt hours of electricity (10%) annually and to cut the demand for electricity at peak use times by 50 MWs, or roughly 15% of the use today. The project will also cut demand for natural gas, heating oil, and water. To achieve this, CEA seeks participation by a majority of participants in every sector: residents, businesses, institutions, and others.
What are the program’s benefits?
The benefits of this city-wide aggregation of energy efficiency include:
- Saving participants money through lower energy bills,
- Improving living and working environments,
- Creating new jobs and growing the city’s economy,
- Achieving a substantial reduction in the “carbon footprint” of the entire city,
- Reducing emissions of other pollutants,
- Stabilizing energy costs at a time when energy demand is growing, and
- Increasing energy security and reliability.
The Cambridge Energy Alliance will track and aggregate the benefits to maximize the impacts of the program.
What is the role of energy service companies (ESCOs)?
The Cambridge Energy Alliance is working with national and regional energy ESCOs with decades of experience to create a one-stop service to participants. In 2007, CEA issued a competitive procurement to seek the best companies for each of four building categories. Based on qualifications and experience, we selected one ESCO each for the small market sectors and two each for the large market sectors.
- Small residential buildings (fewer than 50 housing units): Conservation Services Group;
- Large residential buildings (50 housing units or more): RISE Engineering and AMERESCO;
- Small commercial and industrial buildings: DMJM Harris;
- Large commercial and industrial buildings: ConEd Solutions and AMERESCO.
The two small market ESCOs are also the designated vendors for NSTAR in those markets, selected by NSTAR in a separate competitive procurement in 2007.
The ESCOs will provide energy audits of your facility or home, recommend cost-effective energy efficiency and renewable measures, provide information about CEA’s financing options, specify the work to be done, hire contractors and supervise their work. The ESCOs will also access NSTAR rebates for eligible electric and natural gas measures.
CEA will inspect many completed installations, approve ESCO fees, handle complaints, and monitor the savings associated with the improvements installed.
How is NSTAR involved?
NSTAR is a co-sponsor and is supporting the Cambridge Energy Alliance in several ways, including:
- Providing financial incentives for eligible electric and gas measures as currently available in its service territory;
- Providing customer usage and cost data for CEA participants;
- Permitting its vendors to modify service offerings to meet the CEA program design;
- Assigning a staff liaison to facilitate communications and policy resolutions between the two organizations; and
- Producing and distributing joint promotional materials for the program.
How will the results be measured and reported?
The Cambridge Energy Alliance will be tracking pre and post-installation electric, gas and water data in two ways:
- We will be comparing the citywide consumption for these utilities on a monthly basis by customer class: small residential, small commercial and industrial, large residential, and large commercial and industrial.
- We will be tracking consumption of electricity, gas, heating oil, and water on a monthly basis for each participant participating in the program.
Quarterly, we will report the results of the consumption trends by utility class and for each class of participant on the CEA website. We are currently investigating a cost-effective strategy for tracking and reporting heating oil savings.
How much money will the project save consumers?
Given estimates of the future price of energy, the value of the energy savings achieved is expected to be roughly $160 million over the next 10 years. Some of the money from the energy savings will be used to pay back the costs of the energy saving investments. Once the costs of the installations are paid off, all of the energy bill savings will go to participants.
What are the long terms goals of the Cambridge Energy Alliance?
Residents and business leaders have an opportunity to be part of a unique effort that will create significant economic benefits for the city while maximizing their efforts to address climate change. Looking beyond the boundaries of Cambridge, it is our intention to create a model of community collaboration that other cities and towns can use to develop their own energy efficiency programs.
PARTICIPATION AND BENEFITS
Is the Cambridge Energy Alliance now serving residents?
Over the past several months, we have begun some pilot projects with residential and commercial participants. We expect our program to be fully operational by late Spring 2008. Initially, we will begin by contacting people who have signed up through our website. CEA envisions a peak in the number of annual efficiency and clean energy projects within 4-5 years.
How much will it cost to participate?
A key purpose of the program is to save residents and businesses money. How this happens will vary, depending on whether people are owners or renters, what kinds of efficiency opportunities their buildings offer, and whether it makes sense for them to pay outright for measures or finance them through a loan.
A homeowner investing in a cost-effective package of measures addressing heating, cooling, insulation, water use, and lighting can typically save 20-30% of his or her current utility bills. For a homeowner spending $3,000 annually for electricity, gas, oil and water, the annual savings would be $600-1,000. For businesses, the savings are comparable, although the mix of measures would be different.
The CEA project incorporates innovative financing techniques that could be used to develop similar energy efficiency projects in other Massachusetts communities and across New England. Some participants will have the ability to finance investments in efficiency themselves. Other projects may include measures that qualify for incentives through NSTAR’s efficiency programs. But for many participants, efficiency investments will initially be paid for through simple, short-term loans. CEA has arranged for a simplified loan process with pre-selected banks for small commercial and residential participants. Large commercial participants will have several options, including arranging for a loan through a private investment company.
Loans can be structured so that the amount saved on electricity, heating, or water bills will cover the loan payments. Once the loans are repaid, people will pocket all the savings. Since energy costs are likely to continue to rise, the profits from taking action are likely to rise as well. We are working with local banks to make the loan process easy and keep rates low. We don’t have the funds to provide any direct grants, but we are creating resources to make the program especially easy and affordable for homeowners with low incomes.
Can I take a loan out from my bank or do I have to use CEA’s financing process?
You are welcome to use your own bank, or if you are a resident, you can apply for an unsecured Energy Efficient Home Improvement Loan with East Cambridge Savings Bank. Citizens Bank will offer low interest loans with interest rates ranging from 1-3% to participants with incomes less than 80% of the Area Median Income or whose homes are located within areas designated under the Community Redevelopment Act. CEA is also developing an affordable loan option specifically geared toward low-income homeowners.
Small businesses have a similar opportunity to use their own banking institution or participate through a loan program with CEA's business financing partners, Wells Fargo or Key Equipment Finance. CEA can help you determine your best option.
Why is there a service charge for CEA services to homes and businesses?
The service charge helps to pay for CEA’s marketing campaign, program administration, and quality assurance services.
Additional support for CEA services will come from state and regional incentive programs recently established to promote energy efficiency, power reliability, and environmental improvements. Because CEA is able to aggregate these new incentives, it can provide comprehensive services for participants.
Are there participation benefits beyond a more efficient home or business?
Investing in energy efficiency and renewable energy measures has many benefits, including: saving money, improving the value, safety, and comfort of homes and offices, cutting pollution, creating local jobs, reducing our reliance on foreign oil, and increasing real estate values.
How will CEA provide quality assurance to participants?
Quality assurance is a key element of CEA’s program. CEA has competitively selected lenders and ESCOs to assure the lowest rates, best terms, and most comprehensive services from our financing and ESCO partners. CEA has assigned account managers to oversee the marketing and delivery of services to each market segment in the City. CEA also manages the relationships between NSTAR, ESCOs, and participants.
CEA provides two additional quality assurance functions:
- Tracking of utility savings; and
- Engineering inspections of completed work.
We will closely monitor energy and water consumption data for all participants for water, gas and electricity before and after projects occur and provide regular updates on progress. Our independent engineers will inspect completed work of all large-scale projects and review a strong sample of small-scale projects. Where inspections or participant feedback reveals issues with the quality of workmanship or materials, CEA’s program managers and independent engineers will ensure the ESCOs remedy the issues and help to satisfactorily resolve any outstanding concerns.
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