Fortunately, progress is being achieved anyway. The Edison Foundation (EF) estimates that 8 million smart meters are already being used by utilities across the United States. This number is expected to rise to 60 million by the end of the decade.  An Edison Foundation report, Why Are Energy Prices Rising, provided additional incentive to stakeholders when it outlined a slough of competing demands that will raise the cost of electricity.  Coupled with legitimate environmental concerns and an aging power grid, it is clear that extensive investment in this sector is critical for our national security and economic recovery.

Validating industry concerns, the Associated Press reported recently that a researcher discovered security holes in all five of the ‘smart’ meters tested by his company.  Of course, the good news is that the utilities submitted their equipment for testing voluntarily, so that problems identified could be resolved.  The AP article did state, however, that:

The [grid] attacks could be pulled off by stealing meters – which can be situated outside of a home – and reprogramming them. Or an attacker could sit near a home or business and wirelessly hack the meter from a laptop, according to Joshua Wright, a senior security analyst with InGuardians Inc.

The security analyst found the smart meters tested used effective encryption to scramble information, but the keys to that encryption were improperly stored.  The Smart Grid design – and the two-way technologies they need to perform - make it easier for hackers to intercept and manipulate the power grid.  In fact, the greatest concern is that unless security is improved, these smart meters could present an opportunity for others to remotely turn our power on and off.

According to InGuardians, Inc., at present it would be difficult for most utilities using smart meters to even know if they have been hacked.  Of course, these problems are not insurmoutable or even unexpected.  Similar problems plagued the Internet for years and it is hoped that those security fixes will provide a  good blueprint for tackling the smart meter issues.  The National Institute of Standards and Technology (NIST) has been developing hundreds of standards for our power systems with hopes of detering this criminal behavior. Standardizing communication between meters ensures practicality, but the challenge is to make the systems fully resistant to abuse.  As researchers identify more weaknesses of the smart grid they are confident engineers can develop interoperability standards that block unauthorized access.  Still, they had better hurry.

The American Recovery and Reinvestment Act of 2009 (ARRA) included $11 billion to stimulate investment in this bigger and smarter electrical grid.  It is expected these funds will be used to create 3,000 miles of modernized transmission lines and put 40 million smart meters into our homes. Incidentally, although many urban areas have experienced brown-outs during peak hours, the idle capacity of our power grid is big. The Department of Energy has estimated it could supply 70% of the energy needed to power all of our cars and small trucks if they were charged during the off-peak hours. Of course, this gives a little extra ‘ummph’ to the appeal of the electric plug-in vehicles expected to become more available at year end.

We could choose to panic over the smart grid and counter-technology, but perhaps a smarter approach is to control what is actually within our power.  Candidly, the majority of homes and apartments are already vulnerable to criminal attack as both power and telephone lines are generally outside. Also, as the level of technological sophistication grows within the energy sector, so will that of criminals and hackers. One could hope that without the need for a meter-reader, power boxes can move inside buildings, but in existing buildings this involves expense.  This won’t solve the wireless access problem either, but at some point an outside power box may be as inviting to a criminal as an unlocked door.  Best practices? Stay alert and try to be smarter than your local criminal opportunitists.  Protect your power supply with a few good habits:

• Lock doors to electrical boxes and systems
• Lock up keys and restrict key access to necessary personnel
• Store all building system plans out of sight
• Do not provide service companies with keys
• Reinforce door frames and use good locks to discourage the criminal who ‘loves him’ a crowbar
• Remove shrubs and install lighting and motion sensors around power boxes and phone lines
• Guard the power system components like a safety deposit box - two locks with separate keys required
• Notify tenants when there will be a change in maintenance, pest or landscaping companies
• Provide utility power outage and emergency numbers to residents
• Make sure your security system is wired to alert you for system failures
• Use a video security system that is functional with digital recording stored offsite
• Cell and cordless phones may not work in an outage, so keep that landline for emergencies

Building energy usage may be lower when the smart grid is operating but the cost of electricity used will not.  Rising electricity rates and power security both serve to reinforce the concept that becoming an energy-producer should get a second look.  The use of solar hot-water heaters, rooftop photovoltaic systems, wind power and other alternative systems can assure future energy independence and additional security.  It also gives management control over power production and guarantees power access even during peak times.

Upfront costs of systems no longer need to be a barrier either.  In some areas (like California, Texas, Arizona and Oregon) manufacturers are leasing and financing systems for owners.  For example, SolarCity’s program is structured to allow for the installation of solar photovoltaic arrays which use the anticipated energy savings to determine the monthly payments.  With government tax incentives, available utility rebates and documented energy savings, these systems can substantially increase future property resale values.  Become that independent energy producer and in the process increase the value of your property, rents and bottom line.

Other Articles of Interest:

• Net-Zero Begins With You
• From Consumers to Producers
• Marketing Suburban-to-Urban Converts
• The Last Tango in Profitable Energy Delivery

Buildings in San Francisco are estimated to generate almost 50% of the city’s greenhouse gas emissions, but urban planners’ efforts to address this issue have been impeded by a lack of viable financing for building upgrades.  Extensive up-front expenses for design, engineering, equipment, labor and materials are simply too costly for the average property owner to pay out-of-pocket.

With the recession’s effect on liquidity, money has not been made available from traditional lending sources either.  Complicating matters further, lenders do not recognize or consider the life cycle benefits as adding present value for property appraisals as the benefit often enures to the tenant or a future owner.

The GreenFinanceSF program was developed to finance these private residential and commercial property building upgrades when targeted for energy efficiency, water efficiency and renewable energy systems. Following the structure of similar programs developed in other cities, GreenFinanceSF will allow repayment of project costs (plus interest and administration) as an added-line item on the property’s tax bill during the loan’s term.

Providing terms of up to 20 years for some improvements is designed to make it practical to service the debt through the immediate savings achieved by energy and water efficiencies.

If the building is sold or title is transferred, the debt remains with the property, essentially allowing the new owner to ‘assume’ the balance.  From initial indications, any size energy or water efficient retrofit will be eligible for consideration, with improvements ranging from retro-commissioning to full re-commissioning.

Retro-commissioning is generally not an expensive endeavor, because it doesn’t replace any major systems or parts.  The process could be equated to giving the building a needed ‘tune-up’.   It focuses on incorporating better controls, management training and proper maintenance, but don’t let that fool you.

Researchers at the Lawrence Berkeley National Laboratory (LBNL) studied 150 large buildings across the country in 2004 and determined that retro-commissioning costs averaged about 27 cents a square foot. The same LBNL study determined that the savings from retro-commissioning averaged 15% of a building’s energy use. Crunching the numbers showed the average retro-commissioning effort pays for itself in less than one year.

One advantage of  providing loans rather than grants or rebates is that the program becomes a self-perpetuating, revolving source of funding for future projects.  Initially funded by a combination of private capital and grants received through the American Recovery and Reinvestment Act, here is a quick summary of what has been announced to date:

• A special tax district will be created (Mello-Roos Special Tax District).
• Property owners will need to ‘opt’ in to become eligible to receive loans.
• The City of San Francisco is the ‘lender’ and loans will have a fixed interest rate and term at funding.
• Residential and commercial buildings of all types and sizes are eligible
• Loan approvals will consider the value of the property, existing debt and repayment history with additional criteria still in development.
• Owners will be able to deduct interest paid on their tax returns
• Whole home energy performance audits will be required and used to match the useful life of proposed improvements with financing terms
• Energy efficiency improvements will be required prior to financing the more expensive retrofits - such as solar photovoltaic projects
• Energy auditors and contractors must be pre-certified by the program

Specific improvements that will be eligible are not fully defined but are expected to include:

• Retro-commissioning
• Efficiency upgrades – such as adding insulation, replacing windows, and upgrading heating systems
• Water efficiency upgrades – such as installing low flow toilets
• Installation of renewable energy generation on buildings – such as solar arrays
• Full-bodied re-commissioning

With such a quick return-on-investment, it would seem unpatriotic and perhaps even reckless not to take advantage of the program.