For a building owner, building decarbonization has myriad benefits: lower utility bills, lower maintenance, healthier and more comfortable living. But the barriers to reaching those benefits are large, particularly the high upfront costs and complicated renovation process (many inspections, many permits, coordinating with many contractors). Scale up to trying to decarbonize every building in a city, and the problems scale up, too – each building has its unique challenges to decarbonization, based on location, age, state of repair, and use. But – it turns out that by decarbonizing buildings on a city level, the solutions can scale up, too.
In this final installment of our three-part series examining Ithaca, New York’s road to full building decarbonization, we are joined by the team of people who are identifying solutions to these pain points in Ithaca. We will explore how bulk purchasing power, streamlined contracting, and development of communal clean energy infrastructure can clear the pathway to the city’s net-zero goals, and how these principles might serve as a blueprint to other cities in the U.S.
“There’s parts [of decarbonization] that really fit well for cities and communities to handle, right?: convening, setting rules, getting everybody excited about everything.
And then there’s parts that fit for companies to handle: designing things, scoping things, working with manufacturers, going door to door to folks.” - Cullen Kasunic, BlocPower
Summary
If you’re in planning or at a city government, you’re going to want to listen to this episode!
00:00 News Segment: How SVB’s collapse relates to climate, the #stopwillow project, and banning gas furnaces in San Francisco
00:9:42 Beginning of our interview segment: we pull from excerpts of our live event in Troy, NY last fall with Luis Aguirre-Torres, Cullen Kasunic, and Sue Dougherty about how to decarbonize a city. Luis tells us how they estimated the City of Ithaca’s GHG emissions and where they came from. That’s how they decided to focus on decarbonizing the built environment first.
17:34 Cullen Kasunic from BlocPower explains their role once they won Ithaca’s RFP to manage the full-city building decarbonization project.
25:00 Cullen explores the different business models that could work to develop thermal energy networks, from utility-run and owned to community owned.
26:00 What is the role of utilities in supporting full-city decarbonization?
Transcript
James Lawler: [00:00:00] Welcome to Climate Now, a podcast that explores and explains the ideas, technologies, and the practical on the ground solutions that we’ll need to address the global climate crisis and achieve NetZero future. I’m James Lawler, and if you like this episode, please leave us a review wherever you get your podcasts.
Share this episode with your friends, or tell us what you think at contact@climatenow.com. We really love to hear from our listeners. Today’s episode is the final one in a three-part series on how cities can become carbon neutral. These episodes are based on three live events that climate now held in 2022 in partnership with the Future Small Cities Institute.
In the first episode, we introduce you to Ithaca, New York, a town of 30,000 people in the Finger Lakes region of the state that adopted its own Green New Deal. An ambitious plan to address climate change, economic inequality, and racial injustice. And we talked through the creative financing they use to make building retrofits affordable for more people.
In the second episode, we talked about how the city is engaging the whole community, in this transition through workforce [00:01:00] development and social justice. And today’s episode, which is our final installment, we get into the how-to of full city decarbonization. What are the steps cities can take? What are the technologies that are available? What are the new business models that might emerge?
But first, our news segment this week in Climate News, and this week I’m joined by Dina Capiello from RMI. Dina, great to see you again. How’s your week been?
Dina Capiello: Yeah, so I spent my morning today speaking to a fourth-grade class about climate change, and there were really, really good questions from these kids. I was like, so impressed.
James Lawler: What did they ask?
Dina Capiello: Listen, they, I think what blew me away is how, I mean, when I was in fourth grade, we weren’t talking about climate change at all. And getting into a classroom where they’re not only talking about it, but they’re so knowledgeable about it. So let me give you an example.
There was this, we, we started the talk off. There was also another guest speaker who works for Rio Tinto, the mining company, so very [00:02:00] interesting. And he was kind of talking about the use of critical minerals in renewable energy, which is a wonderful message for them. And he showed this video about mining for renewable energy, and it was, it showed some mining in the Democratic Republic of Congo.
And so, I got up there and I was, I asked the students, I was like, what were your thoughts on that video? One girl in the front row raised her hand and she got into like the whole issue of equity. She’s like, well, yeah, but I was thinking about these people in the Democratic Republic of Congo and, and how they benefit from this.
Like where does what their mining go and do they get any benefits from it or is it just taking their natural resources? And I was like, wow, this is like super heavy for fourth grade. So yeah, it was amazing. And you know what our, one of them, [00:03:00] I was talking about methane and one kid was like, yeah, cows emit methane.
And I was like, what? What are you reading? Like, I wrote that for AP, like, but you know, it’s fourth grade, so I guess they had to get like burps and farts in there somehow. So, they did, and it is a net source of methane. It was really interesting, but I’m just so amazed, you know, walking into a classroom of fourth graders.
James Lawler: Yeah, no, that’s great. So, unless you’ve been under a rock, you will know that the financial system has been facing some challenges with the collapse of SVB and then Signature Bank and the close monitoring and capital infusions happening. What does this mean for climate?
The New York Times reports on March 12th that the bank worked with more than 1500 technology firms that are working on solar, hydrogen, and battery storage projects, and had extended to those projects, billions of dollars in loans. Community solar [00:04:00] projects in particular, appear to have been especially hard hit by the bank failure.
Silicon Valley Bank said that it led or participated in about 62% of financing deals for community solar projects. Bloomberg reports that clean energy developers with smaller projects often received a welcome reception from SVB, they didn’t get in Manhattan based giants like Morgan Stanley, JP Morgan, Chase, and others.
Some analysts have said that what this probably means is less service, less accommodation for companies that are in the space of these smaller scale renewable energy projects and a higher cost of capital. But it’s probably too early to tell.
Dina Capiello: Yeah, so I think this is really, was a really interesting kind of, you know, development and, and how quickly it went to climate I thought was also interesting.
I mean, this bank, yes, it did fund and support a lot of climate tech, about 1500 different startups. Some of them actually among the ones that [00:05:00] we have supported through our climate tech accelerator, third derivative. But as two of my colleagues wrote to the New York Times in a letter to the editor, which we’re hoping gets printed, that this really wasn’t a story about climate tech.
I think it became politicized so quickly about, this is about ESG and about woke capitalism and, and kind of a judgment on climate tech. And as they point out in this short article, in response, a climate tech is attracting investors because of the strong, durable market signals. It’s unfortunate that there were a bunch of climate tech startups that were affected, but I don’t think, you know, as one of my colleagues said, this is not let’s take this out of Silicon Valley and, and talk about the globe. And the momentum is there and it’s picking up speed. And climate tech will continue to be a good investment [00:06:00] after this SVB collapse.
James Lawler: Mm-hmm. Certainly, the other big piece of climate news this week was the Willow Drilling Project in Alaska. So you may have seen if you’re on social media, the Stop Willow hashtag, which was all over the place, which was not enough to stop the Biden administration from approving this controversial drilling project.
Conoco Phillips will develop three approved sites that could include up to 199 wells and producing 180,000 barrels of crude a day. I believe there’s something like 600 million barrels that are thought to be possible to extract, although that would take years to do. In terms of emissions that this development could have, those emissions would be equivalent to more than 1 million homes.
So why did they approve it? The New Yorker reports it was politics and making energy more affordable. PBS reports, this is not likely to be the last word. There are two complaints that were filed, one on Tuesday, one on Wednesday from the [00:07:00] Environmental Law Group, Earth Justice, and the law firm Trustees for Alaska, which argued that the Biden administration’s environmental analysis violates federal law, including the National Environmental Policy Act. The groups are arguing that the analysis, that the, that concludes that the project won’t have a major impact on the environment is seriously flawed. So, a lot to talk about there. Dina, what do you make of that development?
Dina Capiello: There is a ton to talk about here. A lot of this coverage, I think obviously the social media campaign helped. Um, it also was sort of a turnabout for the Biden administration, which was, which was caught by reporters. We, I’ve been obsessed with this, these, these two words lately, we’re in the messy middle, right? It’s not a reality to say that we can turn off oil and gas overnight right now, as much as we might have to.
James Lawler: Mm-hmm.
Dina Capiello: And I think there’s other things we need to consider. And I’m not for this project [00:08:00] personally, and, and RMI, doesn’t really have any position on this project. But the sense is where else would we get our oil? And are those places secure? Are those places allies? Are those places harvesting the oil in environmentally friendly ways? Going back to my experience in fourth grade, earlier today, there are no easy solutions. Right. It’s not-
James Lawler: That’s right.
Dina Capiello: There’s not, it’s not black and white.
James Lawler: Mm-hmm.
Dina Capiello: So, I just think that that’s something always to have at the back of our minds.
James Lawler: Right. Right. Any other stories jump out at you this week, Dina?
Dina Capiello: Well, there was a huge, a huge decision, 3-16 out of the San Francisco Bay area. So, air quality regulators there you know, made a landmark decision that will basically ban the sale of nitrogen oxide, [00:09:00] NOx, emitting natural gas water heaters in 2027 and prohibit NOx emitting, that’s nitrogen oxides again, furnaces in 2029 and large commercial water heaters in 2031.
So, this is a huge, huge step in the right direction in terms of electrifying and getting gas out of buildings. And all told, you know, buildings across the US account for about 10% of greenhouse gas emissions.
We’ve talked on this program before about gas stoves, and that wasn’t covered by this decision, but other gas appliances were. And was overall seen as a huge win by people at RMI as well to actually start to fully electrify buildings and, and deal with the carbon emissions, largely fueled by natural gas that contribute to climate change.
James Lawler: And that in fact is a great segue into our episode [00:10:00] this week, which is the final of three episodes on Ithaca, New York’s plans to decarbonize their city. Let’s recap where we’ve been so far. Ithaca, New York has a plan to become carbon neutral by the end of the decade. It’s planning to decarbonize equitably by training and employing a robust local workforce and attacking the whole city at once to take advantage of scale to reduce the costs.
Luis Aguirre-Torres, the former Director of Sustainability for Ithaca explains in a panel the steps Ithaca took to start its decarbonization journey.
Luis Aguirre-Torres: It’s really hard, and I think a lot of us do this for a living, and you know, we get so immersed in our little world that we forget how difficult, how complicated, and how connected everything is.
But the very first thing that you need to do is like you’re thinking about decarbonization, and you are doing it either because you know everybody’s very progressive and woke like in Ithaca or there is a state mandate, or simply you, you see an economic opportunity there. But at the end of the day, you are talking about decarbonization.
That is, you need to remove carbon emissions and you need to identify where the [00:11:00] hell the carbon emissions come from. So, the first thing that you need to do is to do a greenhouse gas inventory. And you know you can do it in so many different ways. You can follow the World Resource Institute protocol to do it, or you can actually do some modeling and save some time.
So, what we did in Ithaca was actually that. We looked at, you know, all the available information that we had, and we extrapolated from there and we identified that, you know, we had 400,000 metric tons of CO2 equivalent. Now we, after a year, we actually completed the protocol base greenhouse gas inventory.
And I can tell you that we were off by 20%, but you know we were okay with that number because, you know, when you are talking about net zero full decarbonization at the beginning, all you need is direction. Right? And precision has to come later for sure. But initially you need to know where you’re going.
So, we knew it was this many emissions from buildings, transportation, waste, and electric grid. And I think at the end of the day, you know, if you take into account old towns that are under a hundred thousand people in America, that is 90% of the country it’s gonna be very similar. So, it’s not that [00:12:00] complicated to do a greenhouse gas inventory.
James Lawler: So, you started with the inventory and then once you knew, you know, you had a total picture of emissions and you knew roughly what the breakdown was by sector and you named building stock, energy system, transport, and waste as your kind of principle sectors. What next?
Luis Aguirre-Torres: Well, when we started looking at this we, you know, traditionally, you would go like on a vertical sector basis, right?
So, you start thinking about, you know, each different industry and then you tackle that. But we had seven years, you know, this ridiculous deadline that they put on me. But, you know, so we started looking at, you know, like, how – what is it that you need to do? And instead of thinking buildings, transportation, et cetera, we’re thinking about reducing energy intensity, and then reducing carbon intensity and then reducing carbon emissions.
James Lawler: And now I want to stop you because people might not know what those things are. Could you define each of those things?
Luis Aguirre-Torres: I don’t know if I can, man, but I don’t know. No, like in terms of energy intensity, you know, you need to think about this as also an economic development opportunity. So, it cannot affect negatively the [00:13:00] economy.
James Lawler: Mm-hmm.
Luis Aguirre-Torres: . So, what you wanna do is to reduce the amount of energy that is needed to produce every unit of economic output. So that is energy intensity. And then you need to make sure that you use as little carbon as possible for every unit of energy. So that is carbon intensity. And then once you have reduced energy intensity, carbon intensity, then you try to get rid of emissions as a whole.
So, when you think about it that way, what that means is you’re taking a complete economic approach to the problem. And what that means is, you need to think in terms of market instruments. So, so what we decided to do in Ithaca we’re like, okay, we’re to deploy a market instrument that would help us reduce energy intensity and carbon intensity, and eventually reduce carbon emissions, where can we focus?
So, you know, the options were buildings, transportation, et cetera. But if you think about buildings, they are the very core of the whole thing, you know, because you know, buildings can be more efficient, you know, you can work on them, retrofit them, and then make them thermally efficient. And then there’s a lot of thermal loads in a building.
You know, we use, you know, space heating, water heating, water cooking, [00:14:00] drying clothes. So you could replace those thermal loads with electric alternatives. But, you know, if you made them efficiently and you replace those, then you start thinking about economic benefits of co-deploying certain technologies.
Now, for example, you’re gonna have a heat pump for clothes drying. That might be the same electrical installation that you need for an EV charging station. And if you’re doing this, you know, like 30% of the cost of solar goes to the engineering around, you know, the project. So, we’re already intervening in the building so we can actually, you know, co-deploy solar energy.
So, then we started thinking, and that’s a way of decarbonizing the grid, a way of achieving maximum levels of energy efficiency. And we could replace thermal loads. So suddenly we realize like we need to go after buildings. So that’s where we started.
James Lawler: So now, once you’ve decided that you want to go after the building stock, Ithaca has something like 6,000 buildings, right? So that’s a lot of buildings.
Luis Aguirre-Torres: I know.
James Lawler: A lot of different kinds of buildings, right? And a lot of different things I’d imagine that, you know, these different types of buildings need, sounds like a huge amount of complexity and cost. Where is the [00:15:00] appropriate starting point once you’re at that place? What do you need to do first to start to tackle that?
Luis Aguirre-Torres: Yeah, about that. So, like, you know, the problem is huge and it’s huge for so many reasons, you know, but when we thought about this, you know, we’re like, okay, we need to do this experiment. We, like we were to, you know, tackle one single building and we chose this one single family home from 1920 that was pretty much run down, and we did this experiment.
What do we need to do to turn this into the most efficient house in Ithaca. And we realized that what we needed was $40,000 to do that. Right. And if you think about it, and the people living there were below you know the 80% of the area median income. That means, you know, these are considered low-income people.
They are not expected to have to pay for this. So, then we had a problem in our hands, and then we saw that, you know, this is too expensive and you think about the entire city, you know, this is gonna be a very expensive operation and we cannot expect people to pay for it, so we need to find some money. But before we did that, we [00:16:00] actually looked at what makes it expensive.
James Lawler: Mm-hmm.
Luis Aguirre-Torres: And you know, when we did that just in Ithaca, one we don’t have all the contractors that we need for that locally.
James Lawler: Right.
Luis Aguirre-Torres: So, some people need to come from other places. And then so many needed to come, like we needed like 16 different contractors for everything that we needed to do. And all of them had different, you know, profit profiles and all of them had a different type of service.
And some people could come this week and other people in six months. So it was, it was a nightmare. And then we don’t have that much sophistication. Towns like Ithaca are secondary markets for heat pumps, not primary markets. And that makes it really complicated and expensive.
James Lawler: What do you mean by that?
Luis Aguirre-Torres: There is a cost associated with bringing this stuff to Ithaca. You know and there are some key contractors that work with the main heat pump manufacturers, but them themselves are tied to just one brand. So initially when we wanted to do this, we didn’t have that much to choose from.
James Lawler: Mm-hmm.
Luis Aguirre-Torres: Uh, so we saw that we need to increase market sophistication. Ideally, if we had like 20 different manufacturers, you know, it would make it cheaper. So we have those two, [00:17:00] and then we started thinking about like, can we do this at scale?
Can we do the entire city and then take advantage of bulk purchasing, for example? And then what happens with the infrastructure? We start thinking, okay, if I electrify the city, you’re increasing, you know, electricity demand, and we’re actually tripling the demand, you know, and that’s with our source hitting, you know.
When we thought about that and it was like, this is a nightmare. And then workforce development, I was like, okay, I’m quitting tomorrow. So, like all of those were the main points that we needed to solve. By thinking about this in scale, we, you know, we started doing the numbers and we started talking to, you know, some manufacturers and we realized that if we don’t do at least a thousand buildings, we’re not gonna get really the benefits of scale.
And, you know, it’s 6,000 buildings. Like, ah, what the hell? So let’s go for the whole thing. And also as government, we saw that by having an RFP we could force industry consolidation.
James Lawler: Okay.
Luis Aguirre-Torres: We had an RFP, we’re actually asking for consortiums to come back to us so we could have a program manager that could actually you know, help us with the entire project and that helps to facilitate cost. And that’s a good segue anyways.
James Lawler: So Cullen is basically the recipient of this [00:18:00] RFP that you create. And so Cullen, tell us about BlocPower. What is BlocPower’s model? How does BlocPower then become engaged with the city of Ithaca and what exactly are you doing there?
Cullen Kasunic: Sure. So I mean, I’ll, I’ll start out really when the RFP was coming and, and came out and, and I met Luis and we really started just thinking about what does it take to electrify a whole city? What are all of these pieces? And I think we called out a lot of them, right? There’s technology, there’s community, there’s manufacturers, there’s workforce, there’s the grid, right?
And we said, wow, there’s a lot that needs to be handled here. Right? And it seemed really ripe for a partnership. And at BlocPower, that’s really how we think of it, right? The city has a real large part of this responsibility, and we can take on another large part of this responsibility, and there’s parts that really fit well for cities and communities to handle right? Convening, setting rules, getting everybody excited about everything.
And then there’s parts that [00:19:00] fit for companies to handle. Designing things, scoping things, working with manufacturers, going door to door to folks. And so we really started splitting things up that way. And, you know, I think it’s, I think it’s worked well.
If, if any folks are samiliar with the concept of solarized campaigns, I think that was an early part of what was in our mind, right? It’s bringing a community together, bringing a group of people together for bulk buying, for bulk education, so that you could go into a place and leverage a lot of contractors, talk to manufacturers and say, hey, look, we’re gonna bring you 6,000 buildings of heat pumps, right?
And that could be 10,000 heat pumps that could be 20,000 heat pumps, right? Because some multi-family buildings, commercial buildings, they need a lot of them. And in doing that, you get scale, and you drive down cost. And so you know, splitting things up this way I think has enabled us to really take the problem and pick it apart so that we can really address [00:20:00] it.
James Lawler: So, from the standpoint, so essentially then, you know, the work on the ground, the work of actually going building to- building by building falls on BlocPower to do. And if, let’s say that I’m the owner of a building, and I know there’s many different kinds of building owners, so the approach may be different.
But if there’s sort of a, you know, prototypical building owner, what would my relationship be with BlocPower? How would you engage with me? What is the value proposition for me to engage with you?
Cullen Kasunic: Sure. So let’s think first about maybe some of the first building owners that may get engaged, right? So think about schools, think about churches.
And this is actually what we did is we did an inventory and we used data from Cornell and we used data from Oak Ridge National Laboratory, and we used data that we’d gathered over the years, right? It’s a lot of what we’ve done at BlocPower has built this sort of building data set and we looked at the buildings in the city to say, okay, where are the right technical opportunities?
And then we compared that to where are the right motivational opportunities and we [00:21:00] started to develop a set of folks who have a good opportunity to upgrade their building, from the data we have, matched up with folks who are interested in doing it. And so when we start talking to someone, a building owner, really the first step is to gather information about their building and compare it to what we’ve seen works well in the past and what other buildings, look like theirs.
And then we can develop a scope of work, and it starts with a draft scope of work, right. At BlocPower, we figured out a way to be able to come up with a good estimate without having to go on site. So that’s another thing that helps with scale. The more buildings you do, the more you can understand without having to actually send people to the site just to figure out if someone even wants anything.
James Lawler: Beyond building by building retrofits, transitioning the network of natural gas pipelines going to each of our homes to what’s called a thermal energy network, could radically reduce building emissions. Sue Dougherty, Senior Project Manager for Clean Heating and Cooling at the New York State Energy Research and Development Authority, abbreviated NYSERDA, has been working on thermal energy networks. [00:22:00] Here she tells us what they are and how they could play a major role in reducing city greenhouse gas emissions.
Sue Dougherty: Yeah, so I’ll start out with Luis’s idea of thinking about how we need to decarbonize. So in 2019 the Climate Leadership and Community Protection Act was signed in the law.
So we have to reduce our emissions in New York State by 85% by 2050, which is a huge amount. So we have to start figuring out what are those different levers we can pull to reduce emissions? And we know that buildings are a big contributor to emissions in New York, and we know heating and cooling is responsible for at least a third or more of emissions in New York State.
So my team at NYSERDA, I’m on the Clean Heating and Cooling team and we’ve been focused on decarbonizing heating and cooling and using heat pumps. And if we want to reach the goals that we’ve set forth, then we need to move a lot more rapidly. So, if we were to think about the number of buildings that we have in New York state right now, which is [00:23:00] over 6 million buildings, and we think about putting a heat pump in each one of those, or we think about how we have to electrify each one of those buildings between today and 2050.
We’re – we can’t have our heat pump contractors sitting around here in a panel because we have to, we have to electrify over 400 to 500 buildings a day to do it. So, John, get to it and, uh, so the one, one approach to that that I think is a very elegant solution, and it’s actually not a new concept, is networked thermal systems.
So think of a steam system, that’s just an earlier generation network, thermal system. You know, down in New York City, there’s a steam system that supports millions of customers and other examples on campuses around the state. And what we’re thinking about and what we’re evaluating are lower temperature systems.
So the way we can reach scale is to start transitioning away from our natural gas pipelines [00:24:00] and start using water as a thermal medium to exchange heat. But if you have a cluster of buildings, and they all have different end uses and they’re using energy in a different way so you have a building that needs heat and you have a building right down the line that needs cooling.
James Lawler: Mm-hmm.
Sue Dougherty: This is a pretty common scenario. Why wouldn’t you just exchange the heat with that building? So, if we start to aggregate these buildings together and lay out a thermal network that’s using water as a thermal medium, that people can take the heat when they need it, and they can give the heat when they have it. And this can be a huge, efficient way to cut down on energy and greenhouse gas emissions.
Heat pumps are not a new technology. Everybody, even if they, maybe they don’t realize it, but most people have a heat pump in their home already. It’s your refrigerator. It’s just moving heat from one place to another, and it does it very efficiently, especially when you’re using efficient resources like a ground loop.
So a ground loop heat exchanger where you’re exchanging heat with the [00:25:00] ground that stays at a pretty constant temperature all year round, and you can take advantage of other thermal resources. Now I can get more into the work that we’re doing at our, in our program right now, we’re funding over 40 feasibility studies throughout New York State and each, you know, wide breadth and depth of different project types, evaluating different thermal resources. But you can really, some people maybe don’t love this term, but scavenge heat from anywhere.
James Lawler: Mm-hmm.
Sue Dougherty: So if you have surface water, Or, um, in New York City, for example, the MTA, the Mass Transit Authority pumps water out of the subway station and dumps it into the ocean. So, you have this thermal energy or this opportunity to extract or reject thermal energy that’s passing right by building.
We’re running a program called the Community Heat Pumps Systems Program, where we’re funding projects to evaluate, design, and build thermal energy networks. [00:26:00]
James Lawler: How is that paid for?
Sue Dougherty: So we draw from the Clean Energy Fund. The Clean Energy Fund comes from most of the folks in this room. So, for anybody who pays their utility bill, thank you.
There’s a surcharge on there called the Systems Benefit Charge, and that goes into the Clean Energy Fund, which we can then give back to these energy efficiency projects.
Luis Aguirre-Torres: This particular opportunity, I think it’s evolving very differently from everything else. So, you know, the technology’s been there, we’ve been doing this for a while.
We know how to drill, we know how to set up these networks, and then policy just caught up. Finally, right? I mean, finally the governor directed the Public Service Commission to allow utility companies to participate. And that’s a huge enabler, but the financing is still complicated.
James Lawler: Mm-hmm.
Luis Aguirre-Torres: And I think that’s, you know, we have talked about, you know, like real estate investment trusts and different ways of financing this. And it’s tricky. And I think what’s the good thing that’s gonna come out of all of these feasibility studies is that we’re gonna stand better how to finance these very complicated projects.
James Lawler: And people who can finance will become more comfortable with risk [00:27:00] profiles and what, what exactly they’re funding.
Luis Aguirre-Torres: Yeah. Yeah. The problem with a lot of the crap that we’re doing is that there is not enough transactional history.
James Lawler: Right.
Luis Aguirre-Torres: So, so that means it’s risky. And from a financial point of view, that means it’s expensive. So we need to have more of these so we can create more history and then bring the cost of capital down.
Cullen Kasunic: That’s a great other additional point to make on scale. Right? You know, solar has scaled up a lot. It’s become a lot more, it’s been a lot more accessible to folks. The same thing is happening will happen with HVAC and with energy efficiency in the same way, but it takes the first projects to make them happen.
And it takes the first financial structures to try it out. And, you know, having the communities involved in these ground loops, I think is critically important. I mean, one option could even be that the communities run it like a, like another utility, like the water department.
Or it could be owned and you could be like ConEd does with the steam system, you could purchase some access to it, like you could [00:28:00] sell the B.T.U.’s. All of these are business models that then once you have a consistent cash flow stream, you can layer on a financing structure that just says, oh, okay, we have a 10-year contract that’s gonna pay this and we can trust that these people are going to pay it. Great. We’ll give you money to build it.
And so it’s about having enough and seeing enough and trying enough to get track record and then the more of them you do the cheaper it gets.
James Lawler: So, we have a question from the audience. Let’s get you a microphone first so everybody can hear you.
John Ciovacco: John Ciovacco, Aztech Geothermal.
Just some thoughts maybe about what you, especially with the Utility Thermal Energy and Jobs Act, what do some of you think that the utilities should do or, or how the utilities need to change?
Cullen Kasunic: What I hope utilities do is use their market strength and their extraordinarily low cost of capital to install a bunch of infrastructure at a low cost. And I’d also hope that the utilities [00:29:00] don’t then abuse that and sell it back at a high cost. Right? So I think that’s the role of regulation in that whole process, in that they are regulated utilities and given this utility privilege in that they are providing a public benefit and so you know, that’s, that’s the hope.
So if they are installing these systems, if they do say, okay, we’re gonna pull out the gas pipelines, we will now own community heat loops, then great. That’s another thing that they can own. If they decided that they wanted to own solar farms and they’re going to be able to offer solar energy very cheap, that’s great. We’ve seen less of that in terms of actually owning the generating assets, but I think that’s more along the fact that the utilities have seen that the more- the money’s in the distribution, not in the generation for them, so.
Luis Aguirre-Torres: You know, I mean, we, municipalities we’re brutes. I mean, at the end of the day, you know, we know how to do very few things and we don’t know how to do most [00:30:00] things and it’s very, very complicated for a municipality that is, you know, over-leveraged already, you know, with a lot of debt, and that has very little capacity to do anything other than planning, you know to take on this. And for that reason, I mean, I have heard a lot of the time that you know, municipalities take should take on this, and it does make sense if we were able to increase budget for municipalities, but we can’t.
And what you have is you know, the utility company that I insist, they make more money when they deploy money than anything they charge for electricity. So what you are trying to do is to really have them deploy money in the right place and have that money to be, as Cullen says, low cost of capital.
But I think at the end of the day, what we get, when we get the most from a utility is when they don’t deploy anything. So, we need to figure out a way of choosing non-wires and non-pipes alternatives so we can actually, you know, reduce the influence that has the utility company, which is causing this market failure.
[00:31:00] And if we do that, then we have solutions that can be implemented by the community. I’m not sure about the municipality, but I think community owned thermal networks, you know, makes sense.
James Lawler: Well, that wraps up our final podcast episode based on last year’s three-part event series on NetZero Cities in Ithaca.
We’re not done yet on the topic. Climate Now will be holding additional NetZero city events in person in 2023. Each NetZero City event will provide a platform to foster relationships between homeowners and vendors, community groups, project developers, investors, and policy makers to focus on the issues that matter most for each city to achieve a NetZero future.
If you’d like to nominate your city, for a NetZero City event, reach out to us via our website, climatenow.com. This episode was made possible by a number of organizations that supported Climate Now’s Net-Zero City series of conversations in the fall of 2022. Those organizations were BlocPower, which is a Brooklyn-based climate technology company, greening American [00:32:00] cities.
Any interested home and building owners should fill out a few brief questions about their property@upgrade.blocpower.io to see if they’re eligible and to schedule a call with a representative. If you’re a municipal or utility leader, you can reach out to BlocPower through their website.
blocpower.io/partner-with-blocpower. This episode also receives support from the Yale Center for Business and the Environment. Their 10-month certificate program on financing and deploying clean energy trains working professionals to accelerate the deployment of clean energy worldwide. Through this program, participants can connect with Yale expertise, grow their professional networks and deepen their impact toward a clean economy.
Finally, the episode was supported by the Connecticut Green Bank, mobilizing money for clean energy and creating jobs in Connecticut while reducing the energy cost burden for Connecticut families, businesses, and nonprofits.
That’s it for this episode of the podcast. For more episodes, videos, to sign up for our newsletter or register for an upcoming event, visit climatenow.com. We hope you’ll join us for our next conversation.[00:33:00]
Climate Now is made possible in part by our science partners, like the Livermore Lab Foundation. The Livermore Lab Foundation supports climate research and carbon cleanup initiatives at the Lawrence Livermore National Lab, which is a Department of Energy applied science and research facility. More information on the foundation’s climate work can be found@livermorelabfoundation.org.
Decarbonizing a city with heat pumps and thermal energy networks