queenschamber.org THIS IS QUEENSBOROUGH INSURANCE FOR OUR ENERGY FUTURE BY JOHN STOKES Vice President, Energy Practice Leader Hartford Steam Boiler Inspection and Insurance Company As wind, solar and other forms of renewable energy make up a larger share of our power supply, insurance customers, agents, investors and carriers 6 will need to become more “energy savvy” about the role that insurance will play in our energy future. Investment in renewable energy remains strong in the United States and that trend is expected to continue as renewable generation costs continue to fall, particularly in photovoltaics. According to Bloomberg New Energy Finance, U.S. clean energy investment has averaged $54.3 billion since 2011, having grown from $10.4 billion in 2004 to $58.8 billion in 2016. U.S. cumulative non-hydropower renewable capacity (wind, solar, biomass and geothermal) has more than tripled installed capacity since 2008, expanding to 141 GW in 2016 from 41 GW. New technology and methods bring both new opportunities and new exposures, especially in locations that have never run power generating equipment or energy-saving equipment and systems. We need renewable energy to help meet the demand and protect the environment. And energy development needs insurance to succeed. Large-scale projects, such as wind farms, photovoltaic power stations and biomass plants, for instance, need innovative insurance and services so investors can be confident that equipment will operate and produce results as expected. Business owners, municipalities and home owners want coverage to help make sure energy efficiency upgrades reap the savings they require. The worldwide capacity for power generation is expected to increase dramatically over the next several years, and a significant part of that growth will come from renewables. Already, we’re seeing increased equipment and property insurance risks from renewable systems in homes, farms and commercial and public locations. Schools, businesses large and small, hospitals and apartment buildings are being heated and cooled with geothermal systems. Homeowners are installing rooftop solar panels. Farms use wind power and biomass from the crops they grow to generate electricity and run vehicles with biofuels. In order to finance high value, renewable energy projects, commercial energy producers want insurance that guarantees the performance of new equipment and technologies. Once built, they have a big exposure for breakdown, business interruption and other losses. Insurers are helping to protect renewable developers and convince investors and lenders. Some have coverage that guarantees a minimum amount of power generation revenue when the wind doesn’t blow and the sun doesn’t shine. Other programs back performance and technical warranties offered by manufacturers of solar panels and wind power plants. We can’t overlook the huge potential to reduce energy consumption and carbon emissions by improving energy efficiency. Energy savings insurance can help guarantee the owners of buildings and facilities will cut costs as expected when they undertake large energy retrofit projects of buildings and systems. As renewable energy assets grow, power producers are removing these installations from their master insurance policies and seeking special coverage to reflect different needs. They also want engineering and loss prevention expertise to manage complex renewable risks. Social awareness, climate change, economic growth and government incentives are some of the factors that will help drive the more sustainable management of our natural resources. Financing and entrepreneurs will be unleashed to look for fuel alternatives, including new technologies and innovations for renewable energy sources. The insurance industry will play an important role in shaping our energy future. BY GEORGE CRAWFORD Principal Green Partners There is a “perfect storm” brewing that will put pressure on the bottom line for most buildings. Recent negative trends for buildings with retail stores include the “Shop Until You Drop” syndrome. Shoppers are moving away from pounding the sidewalk to pounding a keyboard and checking out with a “Click” instead of a “Card Swipe” at a local store. Get ready for some sticker shock numbers and don’t forget to have your Tax Certiorari’s number at the ready. Now you need to add a newcomer to the list - your electric rates. Rates are about to increase in a big way. Why? Indian Point is shutting down and with it goes cheap power about to be replaced with not-so cheap power. Taxes up, rents down and utilities up – not a good story for any building--commercial or residential--hence a “perfect storm.” Do not allow your building’s bottom line to be blind-sided by these negative trends. Develop strategies to minimize the negative impact of building expense increases. Focus on remedial steps with a high probability of success that can be duplicated across multiple buildings. First address increases in Real Estate Taxes. Peter Blond, Esq. of Brandt, Steinberg, Lewis & Blond, LLP, advises that the Notices of Property Value are normally mailed out to property owners in mid-January. Then there is limited period of time to file a protest. For most buildings, the tax protest filing period closed on March 1, 2017. This Notice of Property Value will determine the amount of taxes due in the upcoming the tax bill: July 1, 2017. In terms of addressing (protesting) any assessment increases, quickly very quickly--engage a Tax Certiorari. Traditionally these firms charge based on their success, so interests are aligned. Next address the imminent increase in Con Ed electric rates. With the two Indian Point reactors scheduled to cease operations in 2019/2020 and no inexpensive replacement power “identified” (translation: not available), rates are going to rise, without question. Now is the time to offset these rate increases by introducing energy saving measures. Go to the recently issued report entitled “New York City’s Energy and Water Use 2013 Report.” This Report includes proven Energy Saving measures along with investment payback periods. Two of the measures included are both foolproof and have quick two year paybacks: 1) Stand-alone hot water production and 2) Upgrading to LED lighting. Stand-alone hot water production is efficient and will save on both fuel and electric. The savings will result in a two year payback in terms of covering the overall cost of the project. This measure will also allow the building boiler to rest off-season. Allowing a boiler to rest will result in less boiler maintenance and a longer useful boiler life. As for LED upgrades, any buildings utilizing fluorescent or incandescent lighting are good candidates for LED upgrades. In terms of payback periods, buildings with a combination of both incandescents and fluorescents will usually have a payback in about one year while buildings with only fluorescents will be in the two year range. Note as well that Con Ed has just updated its incentive funding programs for LED retro-fits for both multifamily and commercial buildings (including funding for smaller commercial buildings – previously not available). Work with a Con Ed Market Partner to access these funding rebates. For more information regarding energy saving measures to protect the bottom line of your building go to WWW. GreenPartnersNY.Com to access more articles on energy savings measures. Contact George Crawford at gcrawford@ greenpartnersny.com A PERFECT STORM
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