Look to Alaska for Energy Efficiency

Eureka! I have discovered a huge new source of clean energy in Alaska that can create green jobs too. Well sort of.

I’m not the first to strike gold, but lately I’ve been describing the potential of energy efficiency like hitting the jackpot. Efficiency is a clean, domestic energy source that would add, in the next decade, $1.2 trillion dollars to the economy. The big numbers (like saving 9.1 Quadrillion BTUs in Two Minutes) get people’s attention. If the kind of economic impact we could gain from energy efficiencies was a natural resource buried in the ground, you can bet that every level of government would be trying to dig them up.

Instead, the job is really about aligning interests, stimulus dollars, and great ideas to capture as much of that potential energy savings in the economy as possible. And that takes time. But Alaska, a state very familiar with taking natural resources out of the ground, has a great model for stoking the demand among homeowners for retrofitting their homes—and tapping this new energy source I’m talking about. The program is just the kind of example that is worth looking at when problem-solvers set out to get green jobs right in their jurisdictions.

The Home Energy Rebate Program is run by the Alaska Housing Finance Corporation (AHFC) and provides homeowners up to $10,000 in rebates for retrofits that will produce significant energy savings. It works like this:

Homeowners contact the AHFC to sign up for an audit, and with the auditor identify where the biggest savings might be. The improvements can range from insulation to water heater replacement, whatever creates the biggest improvement on the scorecard used by the auditor. The homeowner has to pay for the work and can only be reimbursed for the materials and the audits before and after the work. Once the homeowner has an estimate the AHFC will earmark funds for approved work and hold it for 18 months. Once the work is done and a follow up audit is complete the funds are released.

Don’t have money for the work? For those who qualify AHFC provides financing for everything. And the program has had a lot of takers.  A recent report in the Alaska Journal of Commerce  cites some pretty impressive numbers.

Since May of last year there have been 1,675 approved rebates with an average cost of about $9,000 for each project. Of that, the program paid out an average of $6,100 in rebates per project, or about two thirds of the projects’ costs. Of the $160 million appropriated by the Alaska legislature, about $110 million has been set aside for the program and about $20 million has already been paid out. The average savings per household so far has been gauged at more than $500 per year, meaning that for those average retrofits, payback for the owner’s investment should take about 6 years.

Where is all this money coming from? Alaska experienced huge increases in its oil tax revenue, and they have used $200 million of those dollars for energy efficiency programs like this one.

Another thing this program has going for it is the jobs it is creating. The AHFC estimates that the rebate program, along with weatherization, has directly created 2000 jobs. Some of the jobs are efficiency raters for the before and after audits. There were 30 qualified raters when the program started, now there are more than a hundred, enough to fill more than 6 pages.  For a frame of reference, there are 7 in Wasilla alone—population: 10,256.

This program scores big in my book because it does many of the things that are critical for getting it right on both energy savings and green jobs. There is an audit at the beginning and the end of each project, with the biggest savings incentivized (not just fancy new windows—but whatever humble improvements that may prove to be the biggest bang for the buck).  There is financing available and AHFC has consolidated all the information in one place, not quite an energy concierge, but darned close. And all of this is funded with oil tax dollars. Not the most sustainable source of funds, but a use that would complement comprehensive cap and trade legislation well. As the cost of oil goes up, that revenue can be turned into efficiencies and alternatives to help us get off the fossil fuel rollercoaster.

I plan on digging into this program more. Members (a Republican and a Democrat) of the Alaska Legislature’s energy committee have issued a report recommended adding $150 million more dollars to the program next year. Senator Bill Wielechowski, one of the authors of the recommendations, had this to say about the report.

This report is a call to action. Alaska’s energy future depends on what we do now. With oil prices on the rise again, Alaska is at a crossroads. We need to invest now for Alaska’s long-term benefit. This plan is an effort to shine the light on one of Alaska’s most pressing needs and offer solutions that can move Alaska forward for decades.

The committee is accepting public comment until next week, November 15th.

We are trying a new way of measuring energy efficiency programs in the region. The check mark indicates which of the most important elements a particular program includes and that they are doing it well. A red dash means the program doesn’t address the element or isn’t addressing it as effectively as it could. Each of these indicators emerged from careful review of dozens of energy efficiency programs in the region. You can find a full description of each of them in our one pager Green Collar Jobs: Realizing the Promise—Energy Efficiency. Let us know if you have a program you’d like us to review.