EDF Climate Corps Proves its ROI for Private Equity Firms

As summer officially gets underway, the 2015 EDF Climate Corps fellows are already off to the races seeking out energy and cost-saving opportunities for some of the world’s largest companies and organizations. Among those participating, we are pleased to place 13 fellows with private equity firms and their portfolio companies, the largest such cohort in a single summer, besting last year’s record of 12 fellows. This brings the grand total up to 57 EDF Climate Corps fellows who have worked in the private equity sector (including with portfolio companies) to date.

EDF Climate Corps fellows Yien Huang (left) and Jiamu Lu (right) collaborating at the fellow training

EDF Climate Corps fellows Yien Huang (left) and Jiamu Lu (right) collaborating at the fellow training

Since 2008, EDF has worked with the private equity sector to drive environmental results, beginning with a partnership with KKR & Co. L.P., and later with The Carlyle Group and Oak Hill Capital Partners. Resulting from this work was a suite of free tools designed to help firms identify and manage environment, social and governance (ESG) issues. EDF Climate Corps offers private equity firms a powerful resource that continues to deliver environmental benefits alongside real financial returns.

This year, as in past years, we continue to see a diverse range of participating companies and projects:

  • In 2015, we welcome new hosts Guitar Center, NBTY (vitamin/food supplement supplier), Ortho Clinical Diagnostics (medical equipment manufacturer), Pharmaceutical Product Development, and Gelson's Markets (a grocery chain in southern California).
  • Among returning companies, we’re excited to welcome back Floor & Décor, Philadelphia Energy Solutions, Avaya, and Caesars Entertainment, the last of which was featured in episode 7 of the Showtime series Years of Living Dangerously (now available on Netflix, Hulu and Amazon Prime), which profiled the efforts of EDF Climate Corps.
  • HCA Healthcare will also be returning, marking the company’s sixth straight year of participation.
  • KKR & Co. L.P., Carlyle Group, and Hellman & Friedman will have fellows working at the firm level this year.

The work that these fellows will engage in this summer ranges from energy benchmarking and efficiency upgrades to demand response assessments and green revolving loan fund design. We’ve written previously about the myriad ways that fellows can add value both at private equity firms and portfolio companies and we’re excited to see new stories unfold this summer. Watch this space as well as our Climate Corps-specific blog, where fellows across a variety of sectors will share their experiences and accomplishments.

The Role of Buildings in a Low-Carbon Future

Zpryme talked with Ellen Bell, Senior Specialist, Environmental Defense Fund, for her thoughts on the role of buildings in a low-carbon future, the rise of microgrids, and how graduate students in EDF’s Climate Corps program get her excited about energy.

ZP: What do you look forward to the most in your business day?

ellen_bell287x377Bell: We’re tackling something big—creating a new, low-carbon energy system—but we’re doing the practical, “in-the-weeds” work of doing it in individual buildings. Because of that, I look forward to two things: 1) working with great people—like building management and their engineering staffs, and 2) implementing our approach of finding the business case for operational efficiencies in energy management.

ZP: How does EDF fit into the Midwest energy ecosystem?

Bell: The Midwest has a large and thriving energy ecosystem of technology entrepreneurs, dedicated academics, innovative non-profits, utility partners, etc. While this network can be complex to navigate, all of these stakeholders are dedicated to working together to make the right decisions that will shape energy use in our changing world. EDF is proud to be a part of this alliance and dedicated to bringing our expertise through the Clean Energy program and our boots-on-the-ground talent in the form of EDF Climate Corps. We’re all about driving market adoption of the most effective solutions.

ZP: What is the role of commercial real estate in smart energy?

Bell: Buildings account for approximately 70% of all emissions in the City of Chicago, so focusing on decreasing those emissions makes environmental sense. But the infrastructure changes that lead to reductions also lead to fiscal savings that can impact how a building is marketed, how it interacts with its tenants and what those tenants may share with other offices across the country. So the commercial real estate industry has a unique opportunity to bring together the right stakeholders with the newest technology and best practices in energy management and tenant engagement—all of which can influence audiences with unparalleled reach.

ZP: Where do you see microgrids going in the next five years?

Bell: Because of concerns about reliability and the desire for more clean distributed generation, microgrids are poised for rapid expansion. Within the next five years, developers will experiment with a variety of business models that enhance the grid’s flexibility and efficiency.

ZP: What individuals (i.e. thought leaders) get you excited about energy?

Bell: Personally I am inspired every year by the brilliant graduate students who sign up to be part of our Climate Corps program. Individually they are all incredibly different, they come from diverse backgrounds that include degrees in everything from mechanical engineering to finance to urban planning, but they share a dedication to the desire to change the world through understanding how energy efficiency and making the business case for advanced energy management will transform not only the organizations where they spend the summer but the world at large. They apply a unique perspective to the questions at hand and I think of each of them as thought leaders because their fresh approaches to the issues and opportunities that face the energy industry drive the innovations that change the world.

Ellen Bell will be speaking at Zpryme’s ETS@chicago event, July 22-23 in Chicago. To learn more about the ETS@chicago and all of its speakers, please visit ets-chicago.com or contact info@zpryme.com.

This post originally appeared on Zpryme's Energy Thought Summit blog.

The Business Case for Hiring an Energy Manager

by Jacob Robinson, Program Coordinator, EDF Climate Corps

Here’s a provocative thought: energy managers are worth more than their weight in gold.

We often use that expression in a figurative sense—in this case, to emphasize the value of a dedicated energy manager, whose sole mission is to find financial and environmental efficiencies in a strategic way throughout an organization’s operations and mission. But could it be literally true?

Jacob Robinson

Jacob Robinson

Doing the math

With the average global body mass of a person being 62 kilograms and the current price of a 1 kilogram gold bar hovering around $39,000, an individual’s weight in gold is roughly $2.4 million dollars.

As part of EDF Climate Corps, graduate-level fellows spend 10 to 12 weeks uncovering opportunities for smart energy management, identifying an average of $1 million dollars in savings per fellow. Considering what a year-round employee could do, the annual value to an organization might top $4 million.

Making the case for management

If you’re putting together a budget request for an energy manager (or integrating energy responsibilities into existing positions) and drawing up a job description, this calculation is just a starting point. The business value of energy managers and integrating energy management into existing positions can be fruitful year over year, regardless of an organization’s maturity level at which they are addressing energy management.

Further, new technologies, funding mechanisms and incentives are constantly entering the market, requiring a dedicated set of eyes to analyze the most strategic opportunities.

Read more

Are Energy Managers Making Progress? Introducing a Tool to Help

Energy management can be complicated, and the projects that organizations must tackle run the gamut: from small-scale lighting and HVAC upgrades to whole building retrofits, from baselining energy consumption to data analysis of enterprise-wide energy management systems and from volunteer employee engagement programs to executive-level goal setting.

So if you’re an energy manager, there’s no doubt that you are busy! But, when you’re deep in the middle of so many “weeds,” what’s often not so clear is this: Is your organization making real progress to improve the way it thinks about and manages energy? What does real progress look like?

virtuous-cycle-blog

The Virtuous Cycle of Strategic Energy Management

Several years ago, Environmental Defense Fund (EDF) and partner MIT started to address these questions through the  development of a framework for strategic energy management that showed the dependency of truly successful programs on a holistic and multi-faceted management approach—one where five focus areas work in concert to create a virtuous cycle of continuous improvement:

This year, we’re taking this work a step further by addressing another question that organizations frequently have: where are we on the journey?

To that end, EDF Climate Corps is proud to announce the launch of a simple and free benchmarking survey called the Smart Energy Diagnostic, designed to help energy managers assess the overall health and progress of their energy management programs. Read more

New Case Studies in Energy Management Show the Path from 'Why' to 'How'

Business leaders have long agreed on the “why” of environmental management: seeing the value in increased profits, reduced waste and a smaller carbon footprint. But the “how” has often been the stumbling block.

Two case studies released today from adidas Group and the Housing Authority of the City and County of Denver (DHA) help to answer that question, detailing energy management strategies that deliver tremendous value and are great examples for other organizations to follow.

Material Handling Equipment at adidas Group

The adidas Group tackled the dual challenge of improving efficiency in existing distribution centers as well as when specifying material handling equipment in new facilities. Recognizing that only reducing upfront costs during design won’t optimize efficiency over the long term, the adidas Group is now analyzing the lifecycle cost of conveyer belts and other equipment. See the full case study here.

Meanwhile, DHA tackled the challenge of expanding renewable energy resources despite limited capital funds. The solution: an innovative power purchase agreement that enabled the installation of a 2.5 megawatt solar project with minimal upfront costs and a stream of lease payments to benefit DHA. If the 3,300 housing authorities in the U.S. duplicated Denver’s success, their rooftops could produce enough solar energy to power more than 1 million homes. See the full case study here.

Solar installation at DHA

Today’s announcement comes on the heels of the recently released case studies of JLL and Urban Innovations, which have risen to the City of Chicago’s challenge to reduce commercial building energy consumption by 20 percent in the next five years. By focusing on education, automation and data, JLL and Urban Innovations each took leaps forward in energy efficiency.

EDF is thrilled to share these case studies as scalable solutions that companies across a wide range of industry sectors can adopt. Together, they show the diversity of organizations that benefit from EDF Climate Corps, and whet our appetite for the projects on tap for the summer of 2015, including Verizon, Shorenstein Properties and Hill+Knowlton Strategies.

We are seeing the dawn of a new era for EDF Climate Corps, as our eight years of partnerships bear new and interesting fruit, with the potential to save energy in hundreds – or even thousands – of organizations. We are eager to hear how you are making the transition from “why” to “how” in energy management, and how EDF can help. Contact us at info@edfclimatecorps.org.

EDF Climate Corps Continues to Drive Results for Private Equity Firms

The results are in. As my colleague Victoria Mills wrote recently, this year’s cohort of EDF Climate Corps fellows found $130 million in potential energy savings across 102 organizations.

Among the engagements, 12 fellows worked with private equity firms and portfolio companies on a diverse set of projects. Each engagement offers its own story, but we’d like to showcase a few examples demonstrating the value the Climate Corps program can bring to firms of all sizes and at all stages of understanding of energy management.

Energy audits and retrofits for a major manufacturing company

amiHellman & Friedman’s portfolio company Associated Materials, which specializes in exterior building products, hosted two fellows this past summer, its first year with the EDF Climate Corps program.

Fellow Karunakaren Muthumani Hariharan audited two of the firm’s 11 manufacturing locations to identify opportunities for energy efficiency, including lighting upgrades, process equipment upgrades and manufacturing process modifications. He suggested improvements with potential net present value savings greater than $1.4 million and reductions of greenhouse gas emissions by approximately 2,700 tons per year. Hariharan also proposed funding the energy efficiency projects through a new Green Energy and Sustainability Fund.

Krishna Chaitanya Vinnakota analyzed Associated Materials’ total expenditure on energy, over $15 million, and focused on energy saving opportunities in the company’s supply centers, including an approach that could result in energy expenditure savings of 20 to 50 percent in some supply centers. He also suggested strip doors as a simple but effective way of conserving energy during winter. It’s a project that could save the approximately half a million dollars per year if rolled out across the company’s 125 supply centers and 11 manufacturing plants. Read more

EDF Climate Corps Fellows Finding Gold in the Value Chain

Energy efficiency is a goldmine, but not everyone has the time or resources to dig. That’s why for the past seven years, over three hundred organizations have turned to EDF Climate Corps for hands-on help to cut costs and carbon pollution through better energy management. And every year, the program delivers results: this year’s class of fellows found $130 million in potential energy savings across 102 organizations.

But this year we also saw something new. In addition to mining efficiencies in companies’ internal operations, the fellows were sent farther afield – to suppliers’ factories, distribution systems and franchisee networks. What they discovered demonstrated that there is plenty of gold to be found across entire value chains, if companies take the time to mine it.

Here are three places where EDF Climate Corps fellows struck gold: Read more

From the inside-out: Warburg Pincus and EDF Climate Corps’ recipe for replication

Since 2008, EDF has worked with private equity firms to integrate environmental, social and governance (ESG) management into their practices. Leveraging our EDF Climate Corps program is a key strategy for replicating our work and we have now placed 44 EDF Climate Corps fellows among private equity firms and portfolio companies, to date. To learn more about how a particular firm has benefitted, I recently spoke with representatives at Warburg Pincus to hear how the EDF Climate Corps program has enhanced their continued efforts to share ESG-related best practices with Warburg Pincus' portfolio companies.

warburg1

This summer, Warburg Pincus hosted an EDF Climate Corps fellow for the second year in a row, and again chose to place the fellow at the firm level, rather than with a single portfolio company. “Running this process from the center allowed us to identify different opportunities, across our portfolio and coordinate work on each of them,” Warburg Pincus Vice President Michael Frain told me.

From speaking further with Frain and Daphne Patterson, Warburg Pincus’ first EDF Climate Corps fellow and newly minted associate, four key themes emerged:

Read more

The First U.S. City to Run Out of Water?

by Rachel Finan, student at the Johns Hopkins University School of Advanced International Studies

Experts predict that by 2025 Sana’a, Yemen will become the first capital city to run out of water. They predict that by 2030 India will need to double its water-generation capacity or face the same fate, and water supplies in Istanbul, one of the world’s largest cities, is at just 28 percent. Yet before any of those cities run dry (in far off developing countries that most people in the United States associate with water scarcity issues), it could be a U.S. city that runs out of water. And it’s not just the usual suspects in the Southwest who face increasingly serious water concerns. Miami, FL is the second-most vulnerable U.S. city in a drought according to a University of Florida Environmental Hydrology Laboratory study. Cities such as Cleveland, OH; Chicago, IL; and New York, NY follow not far behind.

Rachel FinanJust last February, California state officials announced that 17 communities and water districts could run out of water in as little as 100 days. In Texas, that number more than doubles. Earlier this year state officials reported 48 communities were within 90 days of water interruptions; as of August 20th, there are 27 communities on that list. One small town in TX reportedly already has run dry.

This begs an obvious question; what are we doing about it? Additionally, what should we be doing about it – not just as a temporary fix, but as a long-term, strategic response? What would you do if water stopped coming out of your tap? Imagine if your town was one of the California or Texas communities with only 90 days of water left. As an EDF Climate Corps fellow, I’ve spent the last several weeks contemplating these questions and identifying opportunities for Texas-based institutions to not only conserve water, but to save money while doing so. I’ve been inspired by many examples throughout the state.

Read more

Corporate Buyers Demonstrate Demand for Renewables. Now it’s Time for the Market to Catch Up.

Last month, twelve major corporations announced a combined goal of buying 8.4 million megawatt hours of renewable energy each year and called for market changes to make these large-scale purchases possible. Their commitment shows that demand for renewables has reached the big time.

We're proud that eight of the twelve are EDF Climate Corps host organizations:  BloombergFacebookGeneral MotorsHewlett PackardProctor & GambleREISprint and Walmart. The coalition, brought together by the World Wildlife Fund and World Resources Institute, is demanding enough renewable energy to power 800,000 homes a year. And while it's great to see these big names in the headlines, they're not alone in calling for clean energy: 60 percent of the largest U.S. businesses have set public goals to increase their use of renewables, cut carbon pollution or both.

Companies want renewable energy because it makes good business sense:  it’s clean, diversifies their energy supply, helps them hedge against fuel price volatility and furthers their greenhouse gas reduction goals. Renewables are now the fastest-growing power generation sector, and by 2018, they’re expected to make up almost a quarter of the global power mix. Prices of solar panels have dropped 75 percent since 2008, and in some parts of the country, wind is already cost-competitive with coal and gas.

Read more