Homeowners expecting to begin energy efficiency projects are now delayed since an announcement by the Federal Housing Finance Agency (FHFA) suspended efforts by 23 states to implement the Property Assessed Clean Energy (PACE) program. PACE, a national program that requires state approval, was designed for local governments to allow energy efficiency projects to be financed through property taxes. In California, AB 811 enabled the creation of CaliforniaFIRST. In fact, PACE has roots here in the Bay Area as it was modeled after the BerkeleyFirst program.

The PACE program was designed as an incentive for homeowners as it would provide the necessary funding for energy saving projects upfront, making costly retrofits more affordable. The homeowner would then be responsible for making monthly payments towards the loan until completely paid off.

Fannie Mae and Freddie Mac raised concern over the program because if a home were to go into foreclosure the PACE loan would be repaid first. This possibly could mean a risk for financial institutions like Fannie and Freddie, even though the amount would be a very small portion of the total value of the home. The good news is that the PACE program does include safeguards to prevent lending to high-risk homeowners which makes foreclosures highly unlikely.

As a result of the FHFA decision, California Attorney General Jerry Brown filed a lawsuit claiming that the agency’s actions to prevent homeowners access to the PACE program is breaking California laws. In an attempt to find a compromise, the U.S. Treasury Department has handed down a mandate to banks to decrease homeowner’s line of equity to account for any financial risks posed by PACE.

The decision by the FHFA to prevent mortgage lenders from participating in the PACE program might send homeowners a confusing message. In October 2009, the White House released a policy framework for PACE and President Obama allocated $100 million through the American Recovery Act to support the program. Governor Schwarzenegger expressed his concern for FHFA’s decision by saying that “this decision not only puts at risk millions of dollars of Recovery Act funds but sends a message to local governments and private businesses that energy independence is not a priority.”

California Congressman Michael Thompson (D-CA1) introduced H.R. 5766, “The PACE Assessment Protection Act of 2010,” which if approved would require lenders to support PACE. Grassroots organizations like PACENOW are encouraging community members to reach out to congressional representatives to vote to support PACE. In the end, the future of PACE will either be in the hands of Congress or the courts.

With the increasing success of renewable energy - 24 states have renewable portfolio standards - there is a growing understanding that meeting the goals set out in those standards will require greater sophistication in our electrical grid and better management of existing demand - energy efficiency - needs still greater attention.

And out of that interest the vendors see opportunity.  Cisco's new product and initiatives by the Silicon Valley Leadership Group and Joint Venture Silicon Valley Network look to help advance the space.

Cisco Systems aims to be a player, most recently launching a "Home Energy Controller"

This entry now competes with Google's SmartMeter and Microsoft's Hohm and others.

Cisco’s home energy product enters a market with a whole lotta players. Silver Spring Networks has its own home energy management software it acquired when it bought Greenbox, GridPoint has its own home energy software, which it grabbed though an acquisition of Lixar SRS, meter management company eMeter launched its own energy software service, and startups like Tendril have been building businesses around this market. And those are just some of the utility-focused plays — there’s many startups (like EnergyHub and People Power) that have launched consumer-focused energy devices.

Despite the wealth of players, the home energy management market is actually quite small right now, if not non existent. Consumers aren’t directly buying these products yet, and only a handful of utilities are trialling these devices in the pilot stage. But a variety of industries, from telcos and cable operators, to utilities to startups — and now Cisco — are trying to get into the market early.

This is all early positioning, currently a novelty item.  But it is reasonable to expect that eventually all homes will have these tools.

Parallel to these products are broader initiatives to advance broad based smart grid efforts.  The Silicon Valley Leadership Group has launched with PG&E and the City of San Jose the "Smart Grid Taskforce"

The group, which will focus specifically on California, will start out by creating a research report around the economic impacts of the smart grid and members of the force include Oracle, Cisco, Nanosolar, Control4, Coulomb Technologies, Silver Spring Networks and OPower. The task force isn’t the first group like this, and earlier this year 10 companies including IBM, Control4, the Gridwise Alliance, and General Electric, launched the Smart Grid Consumer Collaborative (SGCC), which focuses on consumer education across the U.S.

The group will also look to ramp-up public education on the benefits of smart grid and advance legislative initiatives to support smart grid.  This is in part an effort to restore public confidence following the challenges with the PG&E Smart Meter program which has significantly weakened support for this important solution.

Another initiative is that of Joint Venture: Silicon Valley Network's Climate Prosperity program is looking to create a smart grid demonstration project in the Mountain View's Moffett Field where multiple big development plans are in the works such as the new research and education center with NASA and local universities.  This presents a a special opportunity due to the confluence of needs including desire to improve energy supply dependability and quality, energy cost reduction by major consumers, increase in renewables, best practices development, new product opportunities and more.  The context of developing a region currently with no legacy infrastructure with numerous high volume users such as NASA, NetApp, Juniper Networks, Lockheed and others makes the opportunity compelling.  Storage, "virtual" on-demand power, source switching, pooled sourcing, transmission level pricing, all are part of the discussion.

Another city in the Bay Area and the first in Napa County adopted last Tuesday new green building standards, or as it is now called “High Performance Building Regulations”. Over a year ago, the City of Napa adopted the LEED Silver standard for non-residential construction greater than 30, 000 ft². The recent ordinance now calls for new residential and non-residential construction to comply with the new green building standards. Unlike many other cities in the Bay Area adopting LEED or Build It Green guidelines and standards, Napa will follow the CalGreen Code with additional amendments particular to its city.

Some Napa standards include:

Residential construction will have to achieve a 20 percent water reduction over today’s standards, while commercial projects will have to cut back by 30 percent. [Moreover,] builders whose projects consume 15 percent less energy than the state standard will be get a 25 percent reduction in the cost of their building permit, officials said.

Water conservation is also accelerating in other buildings and cities. Dual-piping for use of recycled water such as the San Rafael Rite-Aid building is one key strategy. While one pipe carries drinking-quality water, the other one uses “highly treated wastewater from the Marin Municipal Water District's Las Gallinas plant”, which is supplied to restroom stalls. An 82-unit condo complex, currently under construction, will use a similar system.

Other cities and water districts soon to follow San Rafael’s example are San Francisco, the town of Winsor in Sonoma County, San Jose and Santa Clara Water Districts. All of these new recycling water projects will decrease the amount of water supplied from the Sacramento - San Joaquin River Delta, Tuolumne River, Hetch-Hetchy Reservoir and others, thus, conserve our clean water sources.