CASE STUDIES CASE STUDIES CASE STUDIES. Clean Energy Works Portland: Broadening Home Energy Retrofit Efforts

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1 CASE STUDIES CASE STUDIES CASE STUDIES Clean Energy Works Portland: Broadening Home Energy Retrofit Efforts

2 CASE STUDIES Clean Energy Works Portland: Broadening Home Energy Retrofit Efforts The Clean Energy Works framework is strong way to deliver on the 3 E s of sustainability: Environment, Equity and Economy. - Jeremy Hays, Green For All Mission Clean Energy Works Oregon (CEWO) is a non-profit program established to reduce energy waste by encouraging homeowners to take direct action. CEWO is transforming the old into new, restoring our communities and reviving our economy. CEWO s plan is to transform at least 6,000 homes in only three years. Exemplary practices described in this case study: Achieving greater impact through partnerships across public, private and nonprofit sectors guided by High Road Agreements Stimulating consumer demand for retrofits through creating a seamless, supported customer experience Utilizing a three-legged stool for implementing workforce strategy: incentives, supports and requirements for participating contractors. Unique to this case study: A blend of policy, financing and programmatic offerings to achieve goals Use of utility on bill repayment to simplify the process Key Services and Programs Financing for energy retrofits of existing homes o The pilot phase of Clean Energy Works Portland completed with 500 homeowners taking out long-term low-cost loans to retrofit their homes between Spring 2010 and Spring 2011 Standards of participation guided by a High Road Agreement o The pilot phase of Clean Energy Works Portland led to the creation of 66 new jobs o The Community Workforce Agreement was developed and endorsed by a multi-sector group of stakeholders, a portion of whom later guided its implementation as the Mayor-appointed SEIC: Stakeholder Evaluation and Implementation Committee. 2

3 Outreach to both prospective clients as well as those who could participate in the training o Clean Energy Works Portland did extensive public awareness campaigns in targeted neighborhoods to inform people of the opportunities presented by the program What Makes the Project Green? Making homes more energy efficient reduces the amount of energy used, which reduces the amount of pollution created by the production of energy The messaging of the program raises awareness of the importance of energy conservation and efficiency Challenges How can CAPs operating Weatherization Assistance Programs capitalize on such a model to realize broader success among residents, contractors and job seekers? How can the standards of the High Road Agreement be met in a meaningful way, without raising unreasonable costs from monitoring compliance? (NOTE: while Clean Energy Works Oregon is now a statewide program, the majority of this case study is about lessons learned during the Portland city-wide pilot, which retrofitted 500 homes.) History and Background Question: What city had the first carbon reduction plan, consistently places at or near the top on sustainable city lists, and a high density of locally produced food (and beer)? Answer: Portland, Oregon. However, along with attaining green credentials the city has struggled with a persistently high unemployment rate and striking inequality, even before the recession of 2008 began. To address this issue, and to enhance their environmental protection goals, local leaders from the city, nonprofits and private sector decided to develop a new project. Recognizing that buildings are a major source of carbon pollution, the idea arose to spur the energy retrofits of homes, which would lead to more jobs and less carbon. This was a good idea, but how to find the needed $50M investment to support the growth of this new market was another question, said Andria Jacob, Manager of Clean Energy Programs at the City of Portland. Fortunately, it was not much later that ARRA (American Recovery and Reinvestment Act of 2009) was passed, which provided Portland with $5.6M, a significant portion of the seed funding we were seeking. The next challenge was to design a comprehensive framework that would seamlessly generate demand for energy retrofits, be user-friendly, and create good jobs at the same time. Key partners helped take on this design challenge, including Enterprise Cascadia, a CDFI with triple-bottom line investment as a priority. Triple-bottom line investing includes social and environmental returns along with financial returns in potential investment opportunities. The Energy Trust of Oregon an independent nonprofit organization dedicated to helping utility customers benefit from saving energy and generating renewable energy also became involved to facilitate the work between homeowners and contractors. Additional investment came from the City of Portland s Development Commission and Workforce Investment Board. Lastly, numerous training and advocacy organizations came together to build the job-training and job-access components of the program, including Green For All, LiUNA, the Pacific Northwest Carpenters Institute, Oregon Tradeswomen, Inc, Portland Youthbuilders, and other community-based training programs. 3

4 Exemplary Practices: High Road Agreements Connecting people to jobs is an arduous policy challenge. Over the years a variety of agreements between communities, organized labor, and contractors have emerged that seek to equitably connect people with jobs: High Road Agreements: are multi-stakeholder agreements that lay out specific goals related to the quality and accessibility of economic opportunities associated with a particular project, investment, or initiative. The Agreements typically lay out strategies for advancing the goals and establish a collaborative mechanism for implementing the agreement, and evaluating progress toward the goals. The Agreements are usually the products of local stakeholder process often brokered by the local government. Key metrics are: o Wages and benefits o Job access o Training quality o Workforce and business diversity, and o Environmental benefits Community Benefits Agreements: Often take place in the land use development context. They are usually private contracts between community groups and developers that secure standards for local hiring, wages, training, and other amenities or mitigations associated with the development Community Workforce Agreements (aka Project Labor Agreements or Project Stabilization Agreements) are collective bargaining agreements between one or more labor unions and employers that establish the terms under which work takes place on a specific construction project. CWAs lay out job quality standards as well as plans to increase job access through targeted hiring, training, and outreach for low-income communities. The Clean Energy Works pilot operated under a High Road Agreement that included a number of specific strategies and standards for increasing the quality and access of economic opportunity. The fundamentals of the agreement were determined by a multi-stakeholder process brokered by the Portland Mayor s Office and facilitated by Green For All, which set standards for who was eligible for the work and how local and/or disadvantaged groups could have an opportunity for gaining employment. The implementation of CEW s High Road Agreement was managed by the Stakeholder Evaluation and Implementation Committee (SEIC). The SEIC consisted of contractors, unions, training organizations, public agencies, and community groups who meet regularly to decide on appropriate standards and procedures and to assess the progress and development of the program. Exemplary Practice : A streamlined customer experience The creation of Clean Energy Works was guided by a belief that the program should be built to best serve the customer - the homeowner. Putting the homeowners needs first meant that the financing and payment, the understanding of the benefits of retrofits, and the actual work getting done should be as clear and simple as possible. Below is the breakdown of the different programmatic components that work together to achieve this goal. Financing of Energy Retrofits Enterprise Cascadia already prioritized triple-bottom line investments for their portfolio, meaning projects that yielded not only financial returns, but also social and environmental (see Green Jargon below). Clean Energy Works has been a perfect fit for their mission. Since 2009, with public funds providing a small buffer against risk, Enterprise Cascadia has originated over $8,000,000 in financing for retrofits. The financing is structured in such a way as to balance credit quality and household income with the project s ability to generate deep energy savings. Enterprise Cascadia s customers are underwritten not so much on the basis of traditional loan underwriting mechanisms like loan to value or debt to income ratios. Rather, EC borrowers are primarily approved based on 4

5 their track record in paying their relevant utility bill, and their projected level of energy savings expected from the retrofit project. Focusing on these qualities has allowed EC to extend credit to borrowers that would not qualify for traditional mortgage products. Yet, to date, EC s loan loss rate is 0.01%. The next piece of the puzzle was designing a simple way for loan repayment. With the help of the local investorowned utilities (Portland General Electric, Pacific Power, and NW Natural), homeowners in the program who were eligible for financing are able to make monthly payments directly through their energy bill, using a system known as Utility on bill repayment. Understanding the benefits and process of retrofits The Clean Energy Works team understood that developing the market for energy retrofits would take time, messaging and education. To ensure that participating homeowners understood the process and the benefits of retrofitting, Energy Advocates are assigned to potential participants. The Energy Advocate is a third party facilitator between the retrofit contractor and the consumer, responsible for advising on the likely Return On Investment of retrofitting work, and how the process works. Finding and hiring contractors Clean Energy Works established a pool of qualified contractors to provide services through the program. Contractors applied through a competitive process to gain entry to the pool. To achieve the triple bottom line returns, qualified and experienced contractors agreed to hiring from designated training programs (described below under High Road Agreement), as well as to working with the Energy Advocates to make the retrofitting process transparent. Through the Portland pilot 16 contractors participated in the pool that conducted 500 home retrofits. Exemplary Practice: Three-Legged Approach to Workforce strategy The economic and social-inclusion intent of the High Road Agreement are ambitious. To help ensure that the standards are met, Clean Energy Works frames its strategy with three tools: incentives, supports and requirements. If you just have incentives, then those without capacity are left out. If you just have supports, then it is hard to achieve impact. And, if you just have requirements then there is little leverage to bring people to the table, said Jeremy Hays of Green For All. Contractors who sign on to participate in the High Road program are then given access to support and incentives to meet the requirements. A couple of examples: To ensure that the retrofitting work is being done at a high level of quality, contractors must have at least one worker who is BPI certified (Building Performance Institute). However, some contractors have weatherization experience, but are not certified, and do not have the resources to get certified. In such a case, Clean Energy Works can connect contractors with resources to cover that cost so that the quality standard is met. Clean Energy Works provides small credit opportunities to contractors who may experience cash-flow issues due to the payment requirements of the program. Lastly, contractors have access to a variety of additional technical assistance offerings related to contracting and customer service so that the chances for success are even higher. 5

6 Challenges A challenge with any initiative that is building the green economy during the ongoing recession of 2008 is to accurately assess what impact a green jobs program will likely have. This is particularly challenging in an industry sector like construction, which has had significant job losses from By setting very realistic goals for job development and related training a program will be better equipped to address critics of workforce development in general, and green economy efforts specifically. Another challenge for Clean Energy Works (CEW) is managing the ambitious scope of services involved in such a comprehensive program. The managers of the program have noted the specific challenge of keeping up with strong quality assurance. It has been challenging to pull together the monitoring necessary to fully assess compliance with the High Road Standards, said Clean Energy Works Workforce Specialist, Kelly Haines. We also must improve the criteria by which likely success of the retrofits is measured, said Andria Jacob.. The Clean Energy Works framework also provides potential insights for the challenges that managers of Weatherization Assistance Programs face who are looking at ways to address post-arra budget cuts and continue their workload. WAP providers have experience and systems that are of use to the market-rate sector. Partnering with or participating in programs like CEW that finance retrofits could also add value to WAP by facilitating lowcost ways for low-income households to make energy improvements beyond the allotted Weatherization Assistance grant amounts. Programs similar to CEW are underway in scores of communities around the country, and could be an opportunity for WAP groups to participate or merge services. In many places, where no such program exists, WAP groups could pioneer a market-rate program. There has also been a lot to learn from the different strengths and values that are found in the Weatherization community and the Home Performance community, said Haines. Both have great knowledge of making homes more efficient, yet also differentiate on the driving goal for why to do this work. For us this has created a diverse pool of qualified contractors, but also pushed us to refine our values as a program and better understand the different certifications that are available. As Clean Energy Works Oregon evolves into a statewide program these challenges are being turned into learning points for future success. Before you start, have you considered? If you are considering such an effort as Clean Energy Works, there are many key questions to consider first, according to Andria Jacob: Is there a market for retrofits? Is there a deep housing stock for this work? Is there a stock of highly trained, credible contractors? Can you start with at least one full time employee to manage the program? Additionally, if you are a WAP manager, have you considered the various restrictions on your funding, and how to build a customer base from new markets? From a Participants Perspective: Contractor Marshall Runkel of EcoTech LLC is one of the local contractors working on these retrofits. At a recent Green For All event, he talked about how Clean Energy Works Portland has af fected his business and his experience as a small business owner. [The program] requires me to hire 100% of my new employees from qualified training programs. I hired a young guy a couple of weeks ago, a young African American guy, 20 years old, two kids, his mom is incarcerated, never had a job. And this guy is kicking [butt] every day, I ve got to tell you. It s going to 6

7 make me cry. It s an enormous opportunity, and it really felt great to do. One of the joys of this business is really providing those kinds of jobs and those kinds of opportuni ties for people. (From High Road Outcomes in Portland s Energy Efficiency Upgrade Pilot from written by Stacy Ho and Jeremy Hays.) From a Participants Perspective: Worker Marenda Chamberlin was hired at Verde (a participating CEW contractor) in October of 2010 after a summer and many years of managing backcountry youth trail crews. Here is part of her story in her own words: I completed the Oregon Tradeswomen Inc. Pre-apprenticeship class that spring. They were instrumental in opening my eyes to what it s like being women in the trades and how many different trades are out there that I could seek as a career. My specific interests were/are in green building and energy efficiency. After returning from the woods last fall, I contacted Oregon Tradeswomen Inc. and they steered me in the direction of the Green Careers Pathways grant with Hacienda. My paper work cleared with the grant and that same day there was a job opening with Verde Energy as a Weatherization Technician. Working for Verde is an amazing opportunity and I constantly see myself growing both professionally and personally. I am now the Crew Superintendent managing jobs for both Verde and other CEWO contractors when that service is needed. I have building science certifications including PTCS (Performance Tested Comfort Systems), Lead RRP (Renovation, Repair and Painting), half my BPI certification and am working on the second half because of the opportunities Verde has provided me. For the first time since moving out of my of parents house, I have full health and dental benefits, paid vacation and sick time. Working with Verde has been a fantastic experience and I am excited to see where the next couple of years takes me. Green Jargon Triple bottom-line: A metric for measuring success that takes social and environmental impacts. Often the framework is described with the terms People, Profit and Planet or Economy, Equity and Environment. Energy Retrofit: Changes and alterations to an existing structure that improve the energy efficiency of its power use. Utility on bill repayment: a financing tool through which the borrower repays loans through their existing utility bills. The products of this project were created by the National Association of Community Action Agencies - Community Action Partnership in the performance of the U.S. Department of Health and Human Services, Administration for Children and Families, Office of Community Services, expansion supplement to Grant Number 90ET0424. Any opinion, findings, and conclusions, or recommendations expressed in this material are those of the author(s) and do not necessarily reflect the views of the U.S. Department of Health and Human Services, Administration for Children and Families. 7