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Holland Working on Community Energy Plan

State help with some utility rules could help meet financing challenges

Power to Change | February 4, 2014 | By Jim Dulzo

About the Author

Jim Dulzo is the Michigan Land Use Institute’s senior energy policy specialist. Reach him at jimdulzo@mlui.org.

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HOLLAND—The polar vortex was in full, bone-chilling bloom when Dave Koster, director of Holland’s municipal utility, noticed cars in the farmers market lot as he motored down Pine Street.

The cars belonged not to shoppers—the market is closed until spring—but to runners and walkers, happily striding along on some of the driest, snow-free pavement in town.

The market is in Holland’s popular snowmelt district—the downtown blocks where waste heat piped in from the city’s coal plant warms sidewalks and streets, keeping snow, ice, slush, wet shoes, and slip-and-fall lawyers at bay.

“A lot of people use it in the winter for being outside and getting some exercise,” explained Koster, general manager of the Holland Board of Public Works, which supplies electricity, water, and broadband services.

Those hardy exercisers will have more snow-free room to move—and Koster’s muni will have some very different roles to play—if the city and its municipal utility continue moving forward with Holland’s pioneering Community Energy Plan. It aims to keep local energy costs down, attract new residents and businesses, halve its per capita greenhouse gas emissions, and sharply cut other pollutants.

Koster, other officials, and dozens of residents are working to implement the CEP after the city began approving work groups for the effort in August 2012. The 147-page CEP, would, among many other things, expand the snowmelt district and channel waste heat to nearby commercial buildings. The 40-year strategy calls for cutting the community’s energy consumption by up to 60 percent and moving HBPW to cheaper, cleaner natural gas and non-polluting wind and solar power.

The CEP—produced by efficiency consultant Garforth International LLC in league with HBPW and the city—has few step-by-step instructions. But it does call for five specific “scale projects” to get things started.

Now, with seven task forces, Holland is doing better than that. Facilitated by HBPW and city staff, residents are wrestling with how to rate and label buildings’ efficiency; advance home efficiency retrofits; accelerate commercial and institutional retrofits; expand snowmelt to include district heating; sell industrial energy services like steam; oversee the design of a new gas-fired generation plant; and build support for the forward-looking plan among Holland’s 36,000 residents.

Bethany Beckman, who moved to Holland four years ago after earning a mechanical engineering degree, is on the labeling task force. Like the city and muni staff, she waxed enthusiastic about meeting the project’s many challenges, even though progress often seems slow.

“Since Holland is trying to be a leader, there isn’t a lot of information for us to draw on yet,” she said. “I always hoped I could have the opportunity to get involved in projects likes this, working with the community on sustainability projects.”

Although CEP participants see themselves as pioneers, several said some state and federal help would be welcome—including changing laws to make certain kinds of municipal utility participation in financing legal, and partnering on national efficiency marketing research.

Stepping Beyond Coal

The power generation group’s task is moving right along; it provided community input on the 114-MW, gas-fired power plant the city council approved two years ago. Last month HBPW released a rendering and site plan based on suggestions from the group, which Koster said included “15 representatives from the City of Holland, Holland Township, Holland BPW, as well as community planners and neighbors of the site, such as Hope College and the Macatawa Greenway.”

For many, the new plant is a welcome step away from Holland’s dependence on coal. The CEP favors natural gas; last month, facing continued litigation by Sierra Club and Natural Resources Defense Council, HBPW dropped longtime plans for new coal power and said it would retire all coal burners by 2024, starting in 2016.

The gas plant, to be completed in 2016, will have a rain-absorbent living roof, water-permeable parking lots, and material recycled from on-site demolition; many trees on the 26-acre site will be preserved. HBPW signed a modest, 20-year wind power contract with a facility in Ithaca last March.

Other work groups are gathering information and seeking best paths forward.

Greg Robinson, Holland’s assistant city manager, says the building-efficiency labeling group he facilitates is “taking longer to prepare than we would have hoped for,” largely because so little definitive work has been done in the U.S. on measuring and rating buildings’ energy consumption, much like rating vehicle gas mileage.

“We want to keep it as simple as possible, so the general public understands it. We will go with labels that are out there now, from the Department of Energy or other agencies,” Robinson said.

The challenge is paying for analyzing buildings. A basic evaluation might cost several hundred dollars, but a deep analysis to prepare for cutting a building’s overall energy use by half—the goal of the residential retrofit group—could cost $1,000. Robinson’s group is looking at incentives, grants, public funds, and building-owner investments.

“Let’s say an efficiency audit costs $300 for a smaller home,” Robinson said. “Should the city contribute $100? $200? What incentive works? This is an experiment.”

Robinson said business labeling encounters skepticism, but the “best way to work through that is by creating some positive experiences. So we are being careful about how we roll this out. We want to have a good story to tell, and we want it to be easy.”

Robinson’s group will focus initially on schools, city facilities, and institutions. It also stays in close contact with City Manager Ryan Cotton’s home retrofit group, which is readying a pilot program that meshes with labeling.

Bringing It Home

The home retrofit group’s initial goal was 100 homes, but as members delved into financing and payback options, they dialed it back to 50.

Cotton sees strong interest in home retrofits; announcements sent via civic, church, and other channels netted 250 responses—a big help to the labeling group, which will rate all retrofitted buildings plus its own recruits.

“It is a daunting project,” Cotton observed of deeply analyzing homes and financing the extensive work they’ll need to cut energy use. One estimate, from Don Triezenberg, who chairs the Holland Community Sustainability Committee, pegs the total investment for retrofitting all Holland’s homes at $100 million.

The task force is working with Schneider Electric, a global energy services firm. Schneider prepared a detailed proposal for the pilot project covering home analysis, financing, contracting, and results. The firm would guarantee a 50-percent drop in energy use for retrofitted homes.

“We’ve got people already interested in that kind of one-stop shopping guarantee,” Cotton said. “The hard part is the capital. These kinds of projects can cost $20-30,000 dollars. Garforth suggests retrofitting all 7,000 homes in Holland to help reach our goals.”

The state could help, Cotton said, not by paying for the retrofits, but by legalizing “on-bill financing”—paying back very low-interest, long-term loans via HBPW’s monthly bills, which would still be lower because of the saved energy. The group is working with Michigan Saves, which provides such loans for work done by certified contractors on properly analyzed buildings, and Holland is considering buying down the agency’s low rates.

The city manager said that he’s not sure just how far the pilot program will be able to go, given its initial $50,000 budget.

“But it’s very important just to get a pilot off the ground. The program can then be modified to find the right nexus between homeowners’ needs, the potential savings, the CEP’s goals, and the resources available,” he said.

Commercial Break

Koster said financing is also a challenge for the snowmelt expansion.

With one of the city’s three small coal units shutting down when the much larger gas plant opens, snowmelters anticipate five times as much waste heat. So they are surveying buildings along a likely waste-heat pipe route. The additional heat would expand the snowmelt and warm some buildings along the way—a practice known as district heating.

“It’s not a quick payback,” Koster said. “Even though waste heat is cheap, it requires large capital for the pipes. We need to offer the customer a real advantage for doing this, because this is a 20- or 30-year commitment. But if they no longer need to operate a small boiler or maintain or replace it, that is a strong incentive.”

Anne Saliers, HBPW’s conservation manager, facilitates the commercial and institutional efficiency group. She agrees: The bottom line is crucial.

Saliers already manages HBPW’s mandated energy optimization efforts, which focus on industry. In 2012, Holland slightly exceeded its EO goal, saving enough energy to supply 800 homes for a year. She said the C&I group formed because “a lot of businesses are smaller in size and their focus on efficiency is not as keen as with industrial businesses.” Offices, restaurants, and health care facilities fit that description; churches, she said, are another possibility because they present unusual challenges and opportunities with their architecture and infrequent use.

“We would like to identify two or three segments and do about 15 in-depth energy audits in each, see what we learn, then start putting together a strategy of education and retrofits.”

Saliers said her group also hopes to link up with a Department of Energy pilot project targeting medium-sized businesses.

“We’ve said we would like to be part of it,” she said. “DOE looks at efforts to streamline retrofits, and there are some packages that would guarantee at least 20-percent savings, where businesses would not have to go through an energy analysis first. Lending institutions would likely participate because of the research behind the program, perhaps at a lower interest rate. That could be where Michigan Saves comes in.”

She added that the C&I group’s 12 to 15 businesspeople want to keep financing as local as possible. Michigan Saves is working with a local credit union on residential financing, and the city may buy down the agency’s already low rate. The group is also discussing a community-based energy trust.

“When you get down to the analysis to determine payback on these initiatives, getting the funding lined up, how intertwined everything is, you see it is not easy and can feel like a slow boat,” she observed.

Saliers, like others working on the CEP, is challenged, but not overwhelmed: “I like the progress that’s been made; I like the inclusiveness and transparency being used, and I like the doggedness of people sticking at it and trying to figure out how it can work,” she said. “Nobody’s throwing in the towel, and that is to be commended.”

Jim Dulzo is the Michigan Land Use Institute’s senior energy policy specialist. Reach him at jimdulzo@mlui.org.

1 Comment

3807 days ago, 9:52pm | by frank | Report Comment

The new 114-MW HBPW natural gas plant will produce electricity for roughly 9 cents /kWh. However, the price of natural gas is volatile and has skyrocketed 160% since Holland made their decision. Some say shale gas production will peak as early as 2017 and then NG prices will really start go up.
The price of wind is stable and even declining. Holland already bought wind energy funder contract for 20 years starting at less than 4.5 cents a kWh. Energy efficiency can save electricity for 1 to 2 cents per kWh and electricity can be bought from other utilities today for about 4 cents /kWh.
The plan is for Holland to reduce electric demand by 60% over the next 40 years. And, the Governor’s report says 30% renewable energy is very doable by 2030.
So, if Holland’s electric need of 260 MW is reduced by 60% (156 MW) because of efficiencies and 30% of the remaining need is generated by renewable energy, Holland may need only 73 MW of natural gas capacity in about three decades.

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