Sustainable Energy Utility

Sustainable Energy Utility (SEU) is a community-based model of development based on energy conservation and the use of renewables, seeking to permanently decrease the use of source materials, water, and energy.^[1] The model prescribes the creation of independent and financially self-sufficient non-profit entities for energy sustainability through conservation, efficiency, and end-user based decentralized renewable energy in an effort to address concerns about climate change, rising energy prices, inequity of energy availability, and a lack of community governance of energy development.^[2][3] The SEU model was developed by Dr. J. Byrne at the Center for Energy and Environmental Policy, University of Delaware.^[4][5][6] The Foundation for Renewable Energy and Environment (FREE) is implementing versions of the model.^[1]

In the US, the SEU model was first implemented by the State of Delaware,^[7] the District of Columbia,^[8] Sonoma County in California,^[9] the California Statewide Communities Development Authority (CSCDA),^[10][11] and the Commonwealth of Pennsylvania.^[12] International application of SEU is being investigated by the City of Seoul (South Korea)^[13][14] and the City of Thane (India).^[15] The SEU is recognized by the U.S. White House and the Asian Development Bank as a viable platform to spur sustainable energy investment while driving local economic development.^[16][17]

Sustainable energy

Sustainable energy is energy obtained from non-exhaustible resources, serving the needs of the present without compromising the ability of future generations to meet their needs as well.^[18] Technologies that promote sustainable energy include renewable energy sources and also technologies designed to improve energy efficiency. Renewable energy is generally defined as energy that is collected from resources which are naturally replenished on a human timescale, such as sunlight, wind, rain, tides, waves, and geothermal heat.^[19] Renewable energy often provides energy in four important areas: electricity generation, air and water heating/cooling, transportation, and rural (off-grid) energy services.^[20]

History of the SEU Model

The SEU model was a result of efforts by Dr. J. Byrne to realize a model of energy-environment-society relations which could reflect Amory Lovins’ promise of the negawatt and the philosophical tenets of Amulya K. N. Reddy’s DEFENDUS.^[3][21] While working as an author with the Intergovernmental Panel on Climate Change, Byrne was influenced by the philosophical framework of the discourse on political ecology and environmental justice. He and his team worked on calculating the amount of greenhouse gas emissions which eliminate climate change, leading to an energy-sustainable future. Their study concluded that a target of 3.3 tons of emissions per capita per year would be sustainable emissions. In response to this finding, Byrne’s team worked on designing an energy system model that would use a commonwealth economy and community trusts to achieve this goal; the result was the SEU.^[3][22] SEUs currently in practice in the U.S. are the Delaware SEU.,^[7] the Washington D.C. SEU,^[8] the SCEF Program by the Sonoma County Water Agency (SCWA) in California,^[9] California’s Sustainable Energy Bond Program by CSCDA and FREE^[10][11] and the Sustainable Energy Bond Program by Pennsylvania Treasury and FREE^[12]

Principles

Paradigm shift

The SEU aims to achieve a four-fold paradigm shift: shifting from carbon intensive energy sources to carbon free energy sources, from viewing energy as a commodity to viewing energy as a service provision, from supply oriented energy architecture to demand oriented energy architecture, from a centralized energy system to a more distributed energy infrastructure.^[23] In addition, SEU is guided by three main principles: establishing civil society based energy governance, increasing reliance on savings and environmental benefits of SEU investments to build out a sustainable energy future, and continued evaluation of performance determined by environmental factors, affordability, and local economic impact.^[2]

Departure from traditional utilities

An SEU departs from the traditional model of energy supply and expansion, as well as the traditional efficiency models for power plants and utilities. An SEU is focused on permanently lowering overall energy use and limiting supply to renewable energy sources.^[2] Rather than slowing the rate of energy market expansion or improving the efficiency of energy services, the SEU cuts energy requirements based on sustainability defined constraints; notably, the need to adhere to an annual 3.3 ton per capita emission budget for greenhouse gases released, expressed in a CO2 equivalent.^[22]

Community utility

An SEU functions as a 'community utility' directly accountable to the local community it serves as it seeks to deliver sustainable energy services.^[2][3] SEUs do not report to stockholders or utility regulators. SEUs can be organized by communities of almost any scale (towns, cities, or regions) seeking to gain independence and agency in their energy development pathway. As a community utility, the success of the SEU rests on the participation of local stakeholders, namely individuals, businesses, farms, localities, etc., and is directly answerable to these entities. The SEU itself remains independent.^[23]

Sustainable Energy Bond (SEB) Program

Concept

The Sustainable Energy Bond (SEB) Program was pioneered by Dr. Byrne to build a clean energy infrastructure from guaranteed savings earned by participants. The SEU uses bonds at a scale which allows a city or a region to treat conserved and renewable energy as primary sources rather than the current situation in which fossil and nuclear energy sources dominate. Historically, tax-exempt bonds were used to underwrite investments in public goods and services and, for this reason, SEBs are seen as a critical tool for SEUs to serve their communities. An SEU can be given bond issuing capacity which allows it to sell tax-exempt bonds in order to treat sustainable energy as an infrastructure scale investment.^[3][24]

First implementation

In 2011, the Delaware SEU issued a statewide tax exempt bond for SEUs, the first of its kind in the U.S., acquiring $72.5 million for capital investments in sustainable energy measures. Targeting about 4% of Delaware's total state owned or managed building stock, the SEU bond issue included contractual guarantees of $148 million in savings which cut energy use in participating buildings by more than 25% for 20 years. The 2011 bond issue average payback period was almost 14 years and the longest maturity was 20 years, while average performance guarantees were greater than 20 years.^[1][25]

Challenges

SEUs present a different paradigm in energy governance, and they can present unique challenges. One of the greatest challenges SEUs face is empowering the community to break away from the existing paradigm of top-down energy supply. Sometimes local initiatives have wide support at the outset, but as time passes, active participation is limited to a smaller core group. Adding to this situation is the problem of limited resources at the local level, making it challenging for the SEU movement to institutionalize and maintain momentum.^[26][27]

Another area of concern is solvency: financial sustainability of the initiative is vital to its long term success,^[28] and the appropriation and allocation of funding can determine the longevity of the SEU itself. Depending on its organizational structure and funding source, the SEU can encounter problems when some of its dedicated funds are re-allocated to fill general obligation gaps in, for instance, the state budget;^[29] the New Jersey Clean Energy Program has encountered such a difficulty.^[30] Another hurdle could be the low hanging fruit offered by a single-year or short-term projects that de-incentivize funding allocations for multi-year projects, such as occurred with the Washington, D.C. SEU.^[31]

Finally, the political context is an important determining factor of an SEU's success. Support from local government and the possibility of collaborating with other available government schemes and programs can substantially increase success.^[27][28]

New developments

City 2.0 movement in Seoul

The mayor of the Seoul, South Korea, Park Won-soon, launched a citizens’ campaign in April 2012 to reduce city greenhouse emissions 25% by 2020 and 40% by 2030. The city cut its emissions by 11.9% in two years, and was designated as the 2015 Earth Hour Capital by the World Wide Fund for Nature. The Seoul Metropolitan Government signed a memorandum of understanding with FREE on June 16, 2015, where both parties pledged to cooperate to design climate-sensitive, sustainable, and equitable energy policies for Seoul using the SEU model.^[32]

References