International Forum & Expo on Sustainable Cities Panama City, July 2015

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Collaboration Rocky Mountain Institute Transfoming global

1 International Forum & Expo on Sustainable Cities Panama City, July 2015 Erik Fowler Manager, Research & Collaboration Rocky Mountain Institute Transfoming global energy use to create a clean, properous, and secure low-carbon future.

2 Rocky Mountain Institute Who we are Rocky Mountain Institute

transforms global energy use to create a clean, prosperous,

What we do RMI advances market-based solutions, engaging

2 2 Rocky Mountain Institute Who we are Rocky Mountain Institute (RMI) is an independent, non-partisan nonprofit that transforms global energy use to create a clean, prosperous, and secure low-carbon future. What we do RMI advances market-based solutions, engaging businesses, communities, and institutions to cost-effectively shift from fossil fuels to efficiency and renewables.

3 3 Topics 1 An energy revolution mega-opportunity is under way 2 RMI experience with leading U.S. community energy strategies 3 Report: Next Generation Energy Management for Corporate Real Estate

4 An energy revolution is brewing creating large opportunities 4 Financial Markets Consumers Large Corporations Regulators & Policy Makers Entrepreneurs Cities & Regions

5 Fueled by interest -> 5 commitment -> experience -> diffusion -> lower prices... Solar PV and Li-ion batt -> experience curve Historical prices (USD/W, USD/Wh) Crystalline Si PV module H Li-ion EV battery pack ,000 10, ,000 1,000,000 10,000,000 Cumulative production (MW, MWh)

6 6 This transition will accelerate Trends pushing down the cost of solar, other renewables, and energy efficiency Increasing technical innovation Synergistic solutions increasing the value of renewables Data and internet of things increasing integration Innovative business models increasing customer bases Innovative financing reducing cost of capital Examples New battery chemistries New solar PV technologies Solar PV + battery storage IT and storage for peak shaving Sensors Predictive software Demand response automation No upfront costs Funnel analysis Value beyond energy Third-party financing Green bonds YieldCos

7 Creating a clean, prosperous, and secure energy future TM

8 A community perspective: 4 big 8 impact areas Electricity & Energy Supply: Incorporate central, large-scale renewables Incorporate distributed, small-scale renewables (includes community microgrids) Building Efficiency: Increase efficiency across the portfolio of buildings (residential, commercial, industrial, municipal) Transportation: Reduce vehicle miles traveled (VMTs) and improve vehicle performance (MPG, km/l) Encourage alternative, low- or no-emission fuels such as renewable or biofuels, and fleet electrification Other Efficiency: Improve process and end-use efficiency in industry, assess opportunities for combined heat and power (CHP) and efficient district energy systems, and assess improved water efficiency (extraction, process and use) for water-intense uses From RMI s Community Energy Planning & Resource Guide (release

9 Major steps in a community energy action plan Build the leadership team Plan and hold a community energy workshop Create a vision & set goals Analyze the energy landscape Assemble a small group of individuals from a variety of backgrounds with a shared interest in advancing a community energy action plan Secure the support of a few key leaders and seek third-party guidance Organize a collaborative workshop for key stakeholders to coalesce around a vision, strategies, goals, and next steps Create a vision statement that captures the community s local character, priorities, and aspirations Set goals to achieve this vision Understand the current energy use, energy expenditures, and associated greenhouse gas emissions, investment and job opportunities Map related initiatives in order to leverage and to build upon success 9 Select strategies and tactics Create a plan and mobilize Adopt and implement Measure progress and share results To achieve the community s goals for its energy future, select sector-based strategies and tactics Establish a plan that will empower the community to achieve the envisioned energy future Adopt plan via appropriate avenue (city council vote, business commitments, county commissioner vote, or another appropriate avenue) Execute strategy and tactics within the specified timeframe Monitor progress and periodically release results to the community and other interested parties

10 10 Assessing the current energy landscape and communicating it well is critical 2005 Source: Ft. Collins Climate Action Plan Framework 2013

Assessing the current energy 11 landscape and communicating it well FORT COLLINS is essential FIRST SOUGHT TO UNDERSTAND THE BENEFITS OF ACCELERATING ITS GREENHOUSE GAS EMISSIONS REDUCTION GOALS Fort

below 20 years 2005 levels) Net 20 benefit years of $265 million Net benefit for the of $265 community million for the community Reduce Reduce annual annual cash cash outflows outflows from from the

11 Assessing the current energy 11 landscape and communicating it well FORT COLLINS is essential FIRST SOUGHT TO UNDERSTAND THE BENEFITS OF ACCELERATING ITS GREENHOUSE GAS EMISSIONS REDUCTION GOALS Fort Collins, Colorado, first sought to understand the benefits of accelerating its greenhouse gas emissions reduction goals Accelerate carbon goals Accelerate (80% carbon below goals 2005 levels) (80% below 20 years 2005 levels) Net 20 benefit years of $265 million Net benefit for the of $265 community million for the community Reduce Reduce annual annual cash cash outflows outflows from from the the community to pay for coal community to pay for and natural gas fuel by coal and natural gas fuel close to $50 million by close to $50 million Increase local investment Increase by $30 million local per year investment jobs by $30 million per year jobs 7

12 RMI suggestions from U.S. community engagements 12 Begin with end in mind; allow ambitious goal setting Assess what s possible first, then do the right analytics - as needed - with the right people and at the right time Seek a catalyst project or pressing need Create a sense of urgency Identify practical next steps and have people and organizations own them Prioritize the means to engage with the private sector toward goals Examples: Collaborative goal setting with industry Voluntary private sector goals as part of plan Public-private partnerships & public demonstration pilots Rewards for top achievers or innovators

13 Creating a clean, prosperous, and secure energy future TM

14 RMI resources for commercial real estate stakeholders Retrofit Capital Costs 2. Non-energy operating costs 3. Tenant Revenues 4. Sales Revenues 5. Retrofit Risk Analysis Value Elements

15 U.S. commercial market trends suggest efficient &/or green buildings are here to stay

16 EE/RE adoption drivers among U.S. Fortune 500 companies Customer demands Shareholder demands Attracting and retaining Millennial employees (born 80s to 2000s) Brand/Image: keeping up with other companies National regulatory requirements Local regulatory requirements

17 Enabling innovations More cost-effective solutions available Growing value of healthy and productive buildings Workplace transformation Smart technologies New finance mechanisms Increase in customer choice Local leadership

18 Many U.S. companies are tracking toward bold sustainability goals. 59% of the Fortune 100 have set greenhouse gas emissions reduction commitments 18

19 Strategies include... efficiency before renewables or offsets 19 Deutsche Bank: maintaining carbon neutrality in operations since 2013

20 Investing in smart building management Tesco: using smart technologies to reduce energy costs and enhance maintenance productivity 20 Reducing energy intensity 50% by 2020 along the way to 2050 carbon neutrality goal

21 Emphasizing strategies for health and productivity 21 Daylight & Personal Lighting Control Thermal Comfort Fresh Air Occupant Health & Engagement Biophilia Google: leveraging energy efficiency measures to improve employee health and productivity

Utilizing available external funding options 22 Promising capital finance options: Energy service performance contracts Energy service agreements Power purchase agreements Operating

22 Utilizing available external funding options 22 Promising capital finance options: Energy service performance contracts Energy service agreements Power purchase agreements Operating leases Property Assessed Clean Energy (PACE financing in U.S.) Incentives and subsidies Traditional capital sources Hilton: making profitable deep retrofit investments with (U.S.) PACE financing

23 Working with landlords to 23 accomplish energy goals The most important lease clauses to address include: Building and tenant space construction Maintenance and tenant operations Operating cost pass-throughs PwC: working with building owners to reduce emissions 30% by 2016

Taking a holistic and value-driven 24 approach Benefits include: Improved employee health, productivity, and satisfaction Superior sustainability leadership

24 Taking a holistic and value-driven 24 approach Benefits include: Improved employee health, productivity, and satisfaction Superior sustainability leadership and reputation Improved risk management Reductions in non-energy operating costs AT&T: integrating energy efficiency s multiple benefits into decision-making

25 Deep Retrofit Value: counting beyond energy cost savings.

26 Deep Retrofit Value: counting beyond energy cost savings. 26

27 THANK YOU! Erik Fowler Research & Collaboration, Manager Q&A Doug Miller Research & Collaboration, Sr. Associate

Solutions within, and across, the four energy sectors. We work in communities at all levels campuses, cities, states, regions, the military and

1 2 Solutions within, and across, the four energy sectors. We work in communities at all levels campuses, cities, states, regions, the military and entire countries In our work, we emphasize market based