Appalachian Kentucky, where coal has long been king, is a region looking for new economic engines. An unconventional mix of energy efficiency upgrades, creative financing and unprecedented partnerships is now bringing low-income residents, utility companies, shopkeepers, community service agencies and local firms to the same table to save energy and money while creating jobs and generating wealth for the region.
Appalachian transition. Eastern Kentucky is a region riddled by poverty and marked with the effects—good and bad—of the coal industry. For generations, coal mining supported area families and communities. But times changed. Cheaper natural gas and coal became available elsewhere, and the cost of mining the remaining coal grew. Less mining meant fewer jobs: 7,000 Kentucky coal jobs have been lost since 2011, a 55 percent decrease. New economic opportunities to help low and moderate-income families were essential.
Energy conundrum. Historically, energy prices in coal-rich Kentucky were the 5th lowest of any state. That low cost, combined with highly inefficient housing and buildings, helped make Kentucky the 19th highest state in electricity usage. Repairs and upgrades to conserve energy seemed unneeded because of energy’s low cost.
This easy-come, easy-go approach worked until the past decade. Electricity rates increased by 10.3 percent from 2013 to 2014, possibly the highest annual increase ever. Making buildings more efficient now mattered. Energy was seeping out through window cracks and rooftops, taking cash along with it.
Trusted community development innovator. Navigating the energy sector fault lines in Kentucky is complicated. It requires a trusted leader with a strong community economic development mission. The Mountain Association for Community Economic Development (MACED), a 40-year-old, multi-strategy organization working in Appalachian Kentucky, fit the bill. MACED brought dedication to sorting through options, building unlikely relationships, and fashioning a way forward. MACED’s leaders started bringing together homeowners, rural electric cooperatives (RECCs), businesses, shopkeepers, researchers and policymakers. They found ample interest in trying something new that could weave into a “value chain” of mutual-win results.
Coal-fired power plants currently generate 92% of Kentucky’s electricity—and a host of adverse environmental impacts.
Photo courtesy Daniel Boyd via Creative Commons license
Coal-fired power plants currently generate 92 percent of Kentucky’s electricity—and a host of adverse environmental impacts. Many eastern Kentucky homeowners, besides wanting lower energy bills, were increasingly interested in cleaner energy.
Utility companies faced several pressures. As energy bills rose, so did customer frustration—and delinquency in paying bills. And the cost of providing power during periods of peak usage necessitated finding ways to reduce peak demand. Faced with aging infrastructure, consumer pressure and potential regulatory changes, eastern Kentucky RECCs, and some investor-owned utilities, were open to considering renewable energy and energy efficiency. But they needed help identifying locally appropriate options and best practices.
Elected officials and state regulators also felt the heat from consumers and environmental groups to move toward cleaner energy. Others stood to gain as well. Community agencies providing energy assistance to low-income families foresaw stretching their limited funds further. Contractors saw new business potential in energy-efficient upgrades for homeowners. And with real area unemployment at 40 percent, workers hoped for more secure jobs, plus maybe some new ones for their friends and neighbors.
MACED’s conclusion? Clean energy was a niche worth developing. It could provide better livelihoods for low-income firms and families, and generate a wealth of positive outcomes for the region.
Despite knowing that more energy-efficient homes would save them money, many homeowners—particularly low-income families—simply couldn’t afford the upfront costs of energy retrofits. With roughly two-thirds of the region’s population qualifying as low- and moderate-income, MACED and its growing set of partners set out to solve this conundrum.
Another source of demand was commercial, particularly grocery store owners, who are important employers and resources in small towns. Food stores have high, round-the-clock energy usage to keep their lights on and perishables refrigerated. Most operate so close to the margin that money saved by reducing energy consumption can make enough difference to keep their people working and their doors open.
Adding to the mix were new federal dollars available for investing in renewable and energy efficiency infrastructure and practices. The region’s utilities wanted to tap these resources to lower costs and risk, but applying for federal grants was new territory.
The first source of demand for cleaner energy was residential.
Photo courtesy ©Kertis Creative
With key players in place, MACED began looking to answer two key questions: What connections could be made to engage utilities in increasing residential and commercial energy efficiency? What state policy changes could support the growth of clean energy?
To unlock residential demand, MACED adapted programs from Kansas and South Carolina. They created How$martKY™, which enables residents to apply future savings to pay for immediate retrofit upgrades. MACED or its partners conduct an energy assessment of the home, identify options for improving energy efficiency, and then oversee and test the retrofits. The homeowner is assigned a fixed monthly charge on their bill that pays for the upgrade over time—a practice called “on-bill financing.” With no upfront cost, even low-income residents can afford a retrofit.
To make that happen, the four participating RECCs had to file for permission from Kentucky’s Public Service Commission to charge consumers a “tariff”—the on-bill financing charge. With all the partners in place to support it, the tariff pilot was approved.
Just as important—and with more visible benefits to policymakers—was a way to jumpstart commercial demand. For this, MACED created the Energy Efficient Enterprises (E3) program. E3 provides small businesses with technical support—energy audits and billing analyses, consultation on efficiency or renewable energy systems, connections to utility rebates and other incentives, and analysis of the impact of upgrades on cash flow. If needed, MACED provides capital for financing energy retrofits.
But more was still needed. The region lacked the infrastructure for this work, particularly energy efficiency contractors. And policy work was needed to level the energy playing field. So, the Kentucky Sustainable Energy Alliance (KySEA) was born, with 55 members, 40 percent of which are small businesses. Most of their efforts are directed toward moving the state from requiring “least cost” energy generation toward a mandate that includes a Renewable and Efficiency Portfolio Standard, as many other states have done.
Utility partners conduct an energy assessment of the home, identify options for improving energy efficiency, and then oversee and test the retrofits.
Photo courtesy ©Kertis Creative
With six rural electric cooperatives in the (now permanent) How$martKYTM program, 468 residential assessments and 238 retrofits have been done, many for low-income homeowners, saving households an estimated average of $592/year in energy costs. Likewise, with E3’s assistance, 126 commercial retrofits are saving local businesses $1.4 million each year. In the last five years, both E3 and How$mart™ have created or saved 35 clean energy jobs in Appalachia Kentucky.
KySEA has drafted legislation, educated legislators, secured 10 bill sponsors, and participated in legislative hearings. Small business members who benefited from energy efficient retrofits became effective advocates for renewable and energy efficiency standards. In late 2013, the on-bill financing tariff was made permanent, enabling Kentucky utilities to more easily take advantage of on-bill financing across the state.
A thriving clean energy sector is a pathway toward a more prosperous future in Kentucky. According to a study conducted by Synapse Energy Economics, if a Renewable and Efficiency Portfolio Standard passes, within a decade the state’s energy requirement would be offset by 10 percent through energy efficiency and 12.5 percent with the added inclusion of renewable energy. That would translate into 28,000 net new jobs, $1.1 billion in new local income, and $1.5 billion growth in gross state product—plus lower utility bills and greater protections against future rate hikes.
For low-income families, more energy-efficient homes mean increased home values, lower utility bills, and money freed up for health care, education and other wealth-building endeavors. It also means new opportunities for low-income entrepreneurs and workers. The infrastructure has been built, the policy environment seeded, and moving this sector to scale is now full of…energy.
With just four rural electric cooperatives, the pilot effort saved consumers and local businesses upwards of $2.5 million in energy costs—and created jobs.
Photo courtesy ©Kertis Creative
Kentucky’s Clean Energy Value Chain is focused on building a range of capital today that creates a better economy tomorrow. Here’s a list of future-building results so far.
Specialties: Local Food, Placemaking, Renewable Energy
States served: Minnesota
Additional details: Enhancing the vitality and quality of life in Cass, Crow Wing, Morrison, Todd and Wadena counties is the mission of Region Five Development Commission. Resiliency, inclusion and collaboration are guiding concepts in achieving mutually shared goals that continue to evolve with local municipalities, state, federal, philanthropic, non-profit and social advocacy agencies.
Contact: Cheryal Lee Hills, 218-894-3233
200 1st Street NE, Suite 2
Staples, MN 56479
Alternative contact: Dawn Espe, 218-894-3233
Specialties: Food, Forestry/wood products, Tourism
States served: Idaho, Oregon, Washington
Additional details: RDI was formed in 1991 in response to the timber industry crisis facing the Pacific Northwest. Our nationally recognized programs and services help communities help themselves with effective and results-oriented training and resources necessary for individuals living in rural communities to build and sustain a better future in their communities. Our work is based upon our genuine commitment to build rural capacity through Leadership Development programs and strengthen Rural Economic Vitality through moving capacity into action.
Contact: Amy Hause, (541) 255-9590
Rural Development Initiatives
91017 S Willamette St
Coburg, Oregon 97408
Alternative contact: Heidi Khokhar, (541) 684-9077 ext. 7011
Specialties: Food, Forestry/wood products, Housing, Tourism
States served: Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, Wyoming
Region details: RCAC serves 13 western states including: Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming. We also work in the U.S. territories of the Marianas Islands, Marshall Islands and the U.S. Virgin Islands.
Additional details: RCAC Value Chains, economic development and Wealth Works are embedded in RCAC’s Building Rural Economies program. With over 10 years of experience in these arenas we technically assist communities who wish to envision and create their future.
Carol Cohen, 435-671-7068
3120 Freeboard Drive
West Sacramento, CA 95691
Alternative contact: Ellen Drew, (575) 421-0261
Specialties: Energy efficiency
States served: Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, South Dakota, Wyoming
Additional details: Midwest Assistance Program (MAP) has been helping communities and tribal nations find solutions to their infrastructure and development needs through information, resource management, expertise, and technical assistance since 1979.
Contact: Chris Fierrros, 660-562-2575
303 N Market Street, Suite 2
Maryville, MO 64468
Specialties: Bio-energy, Food
States served: Arkansas, Louisiana, Mississippi, Oklahoma, Tennessee, Texas
Region details: Communities Unlimited serves seven southern states: Arkansas, Mississippi, Tennessee. Texas, Oklahoma, Louisiana and Alabama. This is an area that includes 60% of this country’s persistently poor counties, including large percentages of African Americans, Hispanics, and Native Americans.
Additional details: Communities Unlimited has 40 years of community economic development experience in the South. It seeks to move rural and under-resourced places toward prosperity by identifying a community’s assets and the market demand for the products or services created from those. We then build value chain collaboratives based on WealthWorks principles to create new economic opportunities. Since 2013, we are demonstrating the success of this approach through a farm-to-fuel value chain in the Arkansas Delta.
Martha Claire Bullen, 479-443-2700
3 East Colt Square Drive
Fayetteville, AR 72703
Alternative contact: Debbie Luther, 870-509-1331
Specialties: Arts, Food, Forestry/wood products, Tourism
States served: Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island, Vermont
Additional details: Community Roots, LLC is a Vermont firm specializing in rural community and economic development consulting. Melissa Levy of Community Roots, LLC has been working with the WealthWorks framework over the past several years. She’s been a trainer, coach, workshop facilitator, and presenter in the WealthWorks community.
Contact: Melissa Levy, 802-318-1720
Location: Hinesburg, VT
Specialties: Arts, Energy efficiency, Food, Forestry/wood products, Manufacturing, Tourism
States served: Kentucky, North Carolina, Ohio, Tennessee, Virginia, West Virginia
Additional details: The Central Appalachian Network is a regional network of six anchor organizations that pursue collective sustainable economic development strategies across the Appalachian region of Ohio, West Virginia, Kentucky, Virginia, and Tennessee. CAN builds regional partnerships and also works deeply at the sub-regional level around sectors and opportunities including local food value chains, forestry, new energy, small business development, social enterprise, recycling/upcycling, implementation-focused research, advocacy, and organizational capacity-building. CAN’s members are Appalachian Center for Economic Networks (ACEnet), Appalachian Sustainable Development (ASD), Coalfield Development Corporation, Community Farm Alliance (CFA), Mountain Association for Community Economic Development (MACED), Natural Capital Investment Fund (NCIF), and Rural Action.
Contact: Leslie Schaller, 740-592-3854
1456 C Patton Avenue
Asheville, NC 28806