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UV Lighting and Indoor Air Quality – TMT

Video Transcript

With people returning to the office, kids going back to school, and others remaining in their residential buildings, everyone is concerned about keeping shared spaces safe. One solution you may be hearing about is UV radiation in air ducts to improve indoor air quality and kill germs.

If you’re getting questions on this or it’s something you may be looking into in the near future, then this Two-Minute Tuesday video is for you. We’re going to talk about 3 things you need to know before looking into UV solutions.

1) Does it work?

The first thing you need to know is, does it work?

And the short answer is: yes. The right type of UV lighting can kill many germs, bacteria, and viruses. It can even help with mold spores and odors in the air.

Now according to the FDA, UV radiation — specifically UVC — has been shown to destroy proteins in other coronaviruses, ultimately leading to deactivation of the virus. Early findings support that it could be equally effective for COVID-19.

Which takes us to the second thing you need to know.

2) Not all UV lights are the same, and not all UV radiation is the same.

While UVA and UVB can kill some germs and bacteria, there is a specific wavelength of UVC that was used to successfully inactivate other coronaviruses, such as H1N1 and SARS.

Enough exposure to UVC-254 damages DNA so viruses can’t replicate. However, direct exposure is also dangerous to people, damaging both skin and eyes. This is why the strongest equipment has been used in medical applications for years, and why it’s installed in air ducts and not in the lobby.

When you’re evaluating UV lights themselves, make note of the type of UV (A, B, or C) and check the light rating. That’s an indication of its effectiveness.

Overall, the effectiveness is based on dose and duration, so power is important. Handheld wands, for example, have a very low dose, and it’s not enough to immediately damage a bacteria or virus. This means it would take prolonged exposure in order to render a virus inactive.

3) Work with an HVAC professional.

The last and most important point: this is NOT a DIY upgrade. You need to work with a professional.

You can buy lights on your own, and in some applications it may seem like an easy install. But there are a lot of ramifications throughout your building that can easily be overlooked. If adequate adjustments are not made to your HVAC system, you can overwork existing equipment or cause condensation issues throughout the entire building.

Be sure to consult an HVAC professional. They can:

  • Tell you whether your current HVAC system can handle UV radiation,
  • Identify the best types of lights that will work with your existing system, and
  • Make the necessary adjustments after they have been installed.

 

These are just a few quick things you should know in case you’re asked about UV lighting. Our November webinar will dive deeper into this topic. So if you’re getting questions or have further questions yourself, please share them in the comments section below, and we’ll be sure to address them in that webinar.

Take care, and thanks for watching!

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Technology and Energy Strategy – TMT

Video Transcript

By this point, the impact of COVID-19 has permeated our lives in almost every conceivable way. With the changes you’re facing, you’ve had to adapt to a world where almost everything is now online, including managing your energy strategy.

In this week’s Two-Minute Tuesday, we’re going to talk about a couple of ways you can leverage technology to save you time and money in the energy purchasing process.

Video Conferencing

The first way seems obvious, but it’s worth mentioning: digital communication and data exchange. In this day and age with so many ways to communicate, we are continuously surprised by how impersonal energy procurement can be. There’s nothing like meeting in person, but video conferencing is the next best thing.

Zoom, GoToMeeting, and Microsoft Teams all provide excellent platforms to see each other during meetings and to share and review data. Not only are video communications more personal, but they’re also more productive. More accomplished in less time means more time for you to dedicate elsewhere.

E-Signature

Speaking of saving time, e-signatures are next on our list, and they have skyrocketed in popularity for documents that require signatures. If you’re tired of negotiating with the scanner like me, e-signatures are going to be your best friend.

Reverse Auction

Another way we’re leveraging technology is with a reverse auction. If you’ve never heard of it, you’re going to want to take some notes.

The completely online procurement event has suppliers log in and compete against one another in real time in an online platform. The streamlined event can produce results up to 10 percent better than a traditional sealed bid. Couple that with a 15-minute time limit, and you save time and money all online.

Our workplace is definitely different than it was in January of this year, but that doesn’t mean that your productivity has to suffer. Our mission remains the same: make energy easy to make you successful.

If you’d like to learn more or just want to chat, hit me up and I’ll send you a Zoom invite. Thanks for watching!

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Off-Site Renewable Assets: Two-Minute Tuesday

Video Transcript

Say your company has just instituted some lofty sustainability goals, where 20 percent of generated electricity should be from solar or wind energy. But, you don’t have the land space for a wind farm or you don’t have the roof space for solar panels.

In today’s Two-Minute Tuesday, we’re going to talk about off-site renewable assets and how this might be a solution for your company.

What is an off-site renewable asset?

An off-site renewable asset is a structure deal, usually in the form of a Power Purchase Agreement (PPA), that involves a commitment to take power from a dedicated asset — usually a green one, such as a solar field or a wind farm.

Who’s a good fit for this?

There are three general parameters for someone who’s a good fit for an off-site renewable asset.

  1. You want to make sure that the site that you’re picking has planned longevity (think 10-15 years).
  2. The location doesn’t have the ability to house a green asset like solar panels on the roof or enough land for a wind farm adjacent to the facility.
  3. Your company or organization has sustainability goals.

A recent example of this is General Motors. Obviously, they’re a very large energy user and they had a sustainability goal of having 20 percent of their electric energy generated through a renewable source. They picked the HillTopper Wind Farm in Logan County, Illinois, to provide 100 percent renewable energy to their Ohio and Indiana facilities.

These facilities have been around a long time, and they’re going to stay around for quite awhile. So, they committed to the HillTopper Wind Farm to provide the 100 percent renewable electricity, and they met their sustainability goals. They did this through a Power Purchase Agreement.

Economic Considerations

Let’s talk about the economics behind an off-site renewable asset. In the General Motors example, they signed a Power Purchase Agreement and agreed to take a percentage of their power from that asset (in this case the HillTopper Wind Farm) at a designated rate.

The good news is these rates are usually below what “brown” power is and gives your location budget certainty for many years to come. These Power Purchase Agreements are sometimes 10, 15, or even 20 years or longer, so the longevity of your site is very important.

If there are any residual energy needs, say that facility increases usage and needs to take more, that’s typically pulled from the grid.

Want to learn more?

That’s just a brief overview of off-site renewable assets, who might be a good fit for them, and the economics behind them. If you’d like to engage in further conversation about this or just green energy in general, I’d love to hear from you. If you found this video helpful, please like, share, or comment below.

Thank you for watching!

 

 

TMT: How Oil Impacts Natural Gas Prices

Video Transcript

The coronavirus has had a huge impact on the price of commodities, with oil being the primary media focus in recent months. But did you know that approximately 16 percent of natural gas harvested in the United States comes from oil wells?

In this week’s Two-Minute Tuesday, we’re going to talk about how the relationship between oil and natural gas drives domestic energy prices and give you some tips to control your risk.

How are oil and natural gas related?

If a company produces crude oil in the United States, chances are they also produce natural gas. The two commodities are related because natural gas can be a byproduct of oil drilling. This is called associated gas — otherwise known as natural gas that’s associated with oil production.

With a nationwide average of 16 percent of natural gas (and as much as 40 percent in some areas of the country) coming from oil, it is safe to say that a good chunk of domestic natural gas production is reliant on oil.

What happened with oil prices?

Oil prices absolutely plummeted because of a perfect storm in March and April of this year. Plunging demand due to the coronavirus coupled with an OPEC disagreement on production cuts cause the collapse of oil prices.

There are two consequences of low oil prices as they relate to natural gas:

  1. The immediate impact is it’s no longer profitable to harvest oil domestically and the associated natural gas that comes with it. Oil drillers in the US have higher operating costs and a higher break-even point than drillers elsewhere in the world. The 16 percent value of natural gas coming from oil is reduce or, in some extreme cases, eliminated.
  2. In a longer-term view, sustained low oil prices will cause future development of oil and associated natural gas resources to be cancelled or postponed. This is really a balancing effect of supply and demand. So the longer oil remains low, the larger the potential impact it will have on future supply levels of natural gas.

We’ve seen oil demand come back here in July, almost reaching the same levels as 2019. The Wall Street Journal is also reporting that the worst effect of the coronavirus on global oil demand have passed but will continue to echo throughout the rest of 2020 and beyond. With resurgent cases we’re seeing in the south and talk of additional business closures, this remains to be seen.

How does this impact you?

So, what should you do with this information?

If your natural gas agreement is expiring within the next 18 months, you should absolutely be reviewing your options for renewal. Prompt month prices hit 25-year lows in early July 2020.

If you’re locked farther out, I would also encourage you to review options for extending your natural gas agreement. With the historical low point we’re currently at coupled with risks to long-term production, now may be the time to take some of that risk off the table.

Thanks for watching! If you’d like to review your options for natural gas, my team and I would be happy to help. If you enjoyed this video, please like, comment, and share below.

TMT: 3 Factors Impacting Your 2021 Energy Budget

Video Transcript

Hi! It’s Calvin, back with another Two-Minute Tuesday. It’s budget season, so this week we’re going to take a look at three macro factors that may impact energy budgets for Illinois customers in 2021.

Budget Factor 1: COVID-19

The first and most obvious factor is COVID-19 and the potential for a second wave later this year.

Initially, with stay-at-home orders, we were in a shoulder period when there wasn’t significant usage for heating or cooling. If there’s a second wave, it’s likely going to come during the heating season. So there’s a big potential for staying at home to increase usage, thus driving up natural gas costs.

Budget Factor 2: Clean Energy Legislation

The second major factor is Illinois clean energy legislation.

There’s legislation on the table right now that includes Northern Illinois being removed from the PJM market. What this means is Illinois residents and businesses will be paying a completely different structure for their capacity costs. The goal of this is to support renewable generation, which historically is higher cost, so it could lead to dramatically higher rates for capacity and overall electricity costs for Northern Illinois customers.

Budget Factor 3: Oil Prices

The third major factor, hot off the presses, is oil prices.

Over the weekend, OPEC announced that they are considering increasing production. They’re meeting tomorrow, July 15, to have discussions and potentially vote on increasing production starting in August. This means that they consider the market to be recovering or demand to be increasing in the future. It could just be wishful thinking on their part, but if they’re correct, then we could see a continuing increase in oil cost and, ultimately, energy rates for 2021.

 

So to recap, the three big things to keep an eye on for next year: COVID wave two, Illinois energy legislation, and OPEC’s discussion to increase production.

If you have questions on this or are looking for additional guidance in your budget planning for 2021, please feel free to reach out to us! You can give a call or email info@naniaenergy.com.

We thank you again for tuning in to another Two-Minute Tuesday, and if you found it helpful please like or comment below.

TMT: Is Now a Good Time to Buy Energy?

Video Transcript

Hello everyone! Welcome back to another Nania Energy Advisors’ Two-Minute Tuesday. I’m AJ Brockman, Nania Energy’s Content Marketing Manager. And today we will be talking with Senior Energy Advisor Mike Zaura.

We’ve seen a lot more market volatility recently, which has led to some clients asking us, “Is now still a good time to buy?” And that’s what Mike and I will be talking about in today’s video.

Recent Market Movement

AJ: So Mike, most states started putting COVID-19 measures in place in early March. What have the energy markets looked like in these past two months?

MZ: Thank you, AJ, for the question. Yes most states started those in early March, but we started seeing energy markets go down as early as the end of February. And as the chart shows here, you can see the steady decline.

Source: ino.com, New York Mercantile Exchange Natural Gas 3 month history

So that coincided with equity markets. As we all know, stocks went down quite a bit and everybody felt the pains of watching that happen.

But energy markets went down quite a bit as well. Now, while stocks and equity markets have recovered, the energy markets have not. They’ve recovered a little bit, but a lot slower than the equity markets.

So, while the energy markets are still down, there’s a lot of volatility still out there right now. A good example of this is what happened a couple Mondays ago. There was a pipeline explosion in Kentucky, and overnight and going into Tuesday morning gas markets spiked about 8.5 percent.

Now that’s volatility that’s not COVID-related, but it gives you an idea of some of the spikes that can occur and how the market recovers after that.

Is Now a Good Time to Buy Energy?

AJ: Okay Mike, let’s answer the question that’s on everybody’s mind. Is now a good time to buy?

MZ: An excellent question, and yes it is a good time to buy.  But, more importantly, it’s a better time to explore your options. A lot of the questions we’ve been getting recently are “With all the volatility going on, should I even think about buying? Should I wait? What should we do?”

If you explore your options, that’s one of the best things you can do right now. This puts you in a position to at least see what’s out there — you can see what rates and term options are available to you. Regardless of when your agreement is up, whether it’s a few months from now or the end of 2021, exploring your options now gives you ability to make a good decision on whether to buy now or wait.

What Do You Recommend?

AJ: What would you recommend to your clients today?

MZ: Exactly what I touched upon a little bit earlier: explore your options. In addition to looking at what’s available now, it also sets you up if you do decide to wait. If you’re willing to wait and are a little less risk adverse, then you are set up to take advantage of a little volatility in the market.

To give you an example, say the market goes down 3-5 percent on a given day. If you did explore your options, you’re already set up with suppliers with your account information and they have everything they’re looking for. If the market goes down, you can easily jump on an opportunity to grab those savings. You wouldn’t be able to do that if you weren’t set up earlier than that.

So exploring your options is the best recommendation. Maybe you’d see 10-15 percent savings right now, maybe 20 percent savings. What kind of impact could that have on you and your bottom line during these times? So you can act now by exploring. If you like what you see, great. If you have a little more time to wait on your agreement, that’s even better. You can take on a little more risk if you have the appetite for it and then jump on the market opportunity when it presents itself. Those would be my recommendations right now.

AJ: Well thank you so much, Mike, for all of that awesome information. And thank you to you all for watching! If you found this video helpful, please like, comment, or share below, and be on the lookout for next week’s Two-Minute Tuesday video.

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Pass-Through Product: An Alternative to Fixed All-In

Video Transcript

Hi everyone! I’m AJ Brockman, Nania Energy Advisors’s Content Marketing Manager. For today’s Two-Minute Tuesday, I’m going to be talking with Senior Energy Advisor Calvin Cornish.

With the effects of COVID-19 and everything else that’s going on right now, suppliers are starting to offer the Fixed All-In product less frequently. And so today, Calvin and I are going to talk about a product that is a good alternative to Fixed All-In.

What is a Pass-Through Cap & Trans Product?

AJ: So Calvin, what exactly is a pass-through cap and trans product and how is that different from fixed all-in?

Calvin: With a fixed all-in product, you have one set rate for all of your energy components. Your total energy supply cost is actually made up of several different components besides just the physical energy itself. The energy makes up about 60 percent of that total cost.

When you start to break those pieces apart, you take capacity and transmission (which are demand-based charges) and pass those through at their actual realized cost.

What are Capacity and Transmission?

AJ: Can you go into a little more detail about what capacity and transmission are?

Calvin: Absolutely. So capacity and transmission are dollars that are collected to incentivize the generation of electricity and taking care of the network. They are demand-based charges, which basically means that they’re based on your peak load usage over time as opposed to how much you use every day. So think of $10 per day as opposed to $.02 per kWh.

How Risky is a Pass-Through Product?

AJ: From a risk perspective, obviously with Fixed All-In and having all your components under one rate offering the most budget stability, where on that risk spectrum does a pass-through product fall?

Calvin: Well, when you’re passing through just capacity and transmission, it’s only slightly more risk than a fixed all-in product because those charges, as we mentioned, are flat dollar per day charges. They don’t change frequently, so we’re able to predict them with a lot of accuracy for the upcoming year. They change on an annual basis than, for example, energy supply which changes on an hourly basis.

AJ: So it still gives you that budget stability that you’re looking for without having your demand charges as part of your fixed rate.

Calvin: Yes, and in some cases it’s almost more budget stability because when you lock them in as part of the all-in rate, then your entire cost is affected by your usage. So you can’t control them.

When you pull out capacity and transmission, they’re no longer factors of your usage. And so those costs are actually going to be more dead-on with the predicted calculation.

What are the Benefits of a Pass-Through Product?

AJ: So besides budget stability, how does a pass-through cap and trans product benefit the clients who choose to use it?

Calvin: Well one of the benefits of passing through those demand-based charges is that they potentially can go down over time. If you improve your efficiency by doing a lighting project or some other way that reduces your peak load, then in the following year you’ll see a lower peak load factor. That factor is what is multiplied by your capacity rate. So you can reduce those costs over time by improving your efficiency.

What are the Drawbacks?

AJ: Are there any drawbacks to this product type?

Calvin: Well, the flip side of that coin is if your efficiency were to decrease over time. There is the potential for your capacity rate to go up. And as we mentioned, rates are fluctuating less for capacity and transmission, but they do change on an annual basis. So there’s a different rate each year.

Historically, especially in the ComEd market for example, those rates are known up to 3 years in advance, so we do still have a lot of stability there. But that is something that can change over time, so you could possibly see a different rate every year.

Who’s a Good Fit for a Pass-Through Product?

AJ: Finally, is there any customer type that you would recommend a pass-through cap and trans product to more over another type?

Calvin: I’d have to say that customers with a very predictable load, like a residential building or an office building, are good clients to pass those charges through. Additionally, clients looking for a high level of budget stability like schools who want their costs to not fluctuate as much as possible and be able to predict those costs. I think those are the best clients for this product.

A manufacturing facility or someone that has a lot of variation in their usage may have changing peak loads and may require a little more attention. They may actually want to pass through even more components to give themselves more flexibility to match up with their needs.

 

AJ: Gotcha. Well thank you very much, Calvin, for all of the great information! And thank you to all of you for tuning in to our Two-Minute Tuesday today. If you have any questions about pass-through products or any other product types, feel free to reach out to us and let us know. And if you found this video helpful, please like, comment, or share below.

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Wall Street and Natural Gas

By Michael DeCaluwe, CEM

This winter, natural gas rates have continued their fall below the $2 per dekatherm price point. Weather and decreased production typically create a floor to gas prices. However, neither has been able to slow our run to historically low gas prices.

What’s Wall Street’s role in the market?

Typically, Wall Street’s venture capital firms invest in a company and assume an eventual payout.

  • For example, think of Amazon, which lost money for many years even while its stock price went up. Wall Street was investing in the potential of the company to eventually make money.

Investors applied the “loss leader” strategy to the energy sector, but they haven’t seen the same results. Venture capital firms invested heavily in shale during the post-2008 boom. Yet natural gas rates have continued to decrease, and so have the returns from energy companies.

Debt-riddled and highly leveraged, many natural gas producers have been unable to produce a return for investors.

How did Wall Street get it wrong?

The biggest aspect of the natural gas market that investors didn’t consider is the decline rate in production at the well head.

Gas Well Decline Rates

A decline rate is the decrease in the amount of gas a well is expected to produce year over year. For instance the amount of gas that a shale gas well produces declines by an average of 70 percent in Year 2 versus Year 1.

Natural Gas Decline Rate

Production and Royalty Declines in a Natural Gas Well Over Time — Source: geology.com

The chart above illustrates why the loss leader approach to investing in the natural gas industry has led to big losses.

If these wells aren’t making money in Year 1, the rate of decline means they surely won’t be profitable in future years.

Producers have had to drill new wells to keep production and cash flow up to repay their creditors. This, coupled with the lower domestic gas demand, has created a vicious cycle that has resulted in today’s sub-$.20 gas pricing.

What happens now?

The party might be over for the natural gas industry.

Investors are starting to pull their money out of energy companies, and natural gas rates are at 20-year lows. Shale producers decreased spending by six percent in 2019 and are forecasted to decrease by another 14 percent in 2020.

The number of natural gas-directed wells also decreased by over 35 percent in 2019.

In spite of this decrease in investment and rig counts, gas rates have continued to fall in 2020. It could take a year (or more) of decreased investment in the market to affect natural gas supply.

How This Impacts You

As a buyer, it’s important to understand Wall Street as a market factor. Here are some articles that explain this concept in more detail:

If you’d like to learn about other macro factors affecting the markets, check out our February Chronicles of Nania or feel free to contact me.

 

About the Author

Michael has served as the Senior VP of Commercial & Industrial Sales at Nania Energy Advisors since 2007. He believes that listening to and understanding clients’ energy needs is vital to becoming a thought leader in the industry and forming a mutually beneficial business relationship. In his spare time, Michael enjoys being a dad, staying active, and playing basketball.

Michael can be reached at mdecaluwe@naniaenergy.com or via phone at (630) 225-4552.

TMT: Benefits of a Reverse Auction

Video Transcript

What’s the difference in electricity and natural gas supplied to you between one supplier or another?

The answer? None. They’re both commodities. There’s absolutely no qualitative difference if your supplier is Constellation, Direct Energy, or any of the other dozens of retail energy suppliers.

So, what does matter? Making sure that you’re getting the best effort from all qualified suppliers to provide your organization with the best results.

In this week’s Two-Minute Tuesday, we’re going to talk about how a reverse auction for energy procurement can compress supplier margin and drive energy savings for you.

How does a reverse auction work?

In a reverse auction, all qualified energy suppliers are invited to compete against each other in a live event that you can watch through an online portal.

With each bid, suppliers attempt to win your business by under-bidding one another. They can’t see who the lowest supplier is, but they can see the price to beat. This gives each supplier “last look” and dramatically improves the level of competition.

What happens when the auction ends?

At the conclusion of the auction, when no supplier is willing to go any lower, you’re left with the supplier who was willing to put their money where their mouth is. And the lowest possible energy rates achievable.

You’ll also have a report with time and date stamped bids from all suppliers during the auction.

Consider using a reverse auction for your procurement.

For commodity procurement, there is no more efficient and transparent platform than the reverse auction. But it’s important to note that the auction is just one tool in your energy management toolbox. You aren’t guaranteed the best results just by virtue of using one.

Your consultant or broker should also be:

  • Helping you develop an RFP that defines your energy goals and assists you in making the best decision
  • Monitoring the market for you to advise on the timing of your purchase, and
  • Partnering with you directly to meet the reporting needs of your organization.

When you’re considering options for your upcoming commodity agreement, check out a reverse auction. It might provide some valuable competition you might be missing from your process.

Thanks for watching! If you found this video helpful, please like, comment, or share below.

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TMT: Liquefied Natural Gas

Video Transcript

Did you know that natural gas can be turned into a liquid?

In today’s Two-Minute Tuesday, we’ll be talking about why liquefied natural gas (or LNG) is an important factor in the cost of energy in the US.

Liquefied Natural Gas: Fast Facts

Liquefied natural gas, or LNG, can be exported on ships.

At export terminals, natural gas is cooled to about -260 degrees Fahrenheit, at which point it becomes a liquid. It’s then shipped using special ocean tankers to import terminals. There, LNG is heated and returned to its gaseous state.

Historically, the United Stated imported LNG, so most of our ports are designed to heat LNG to turn it into a gas.

However, recently we’ve seen a rise in shale fracking and an increase in our natural gas production. This led to the opening of the first US LNG export facility in February 2016.

Since then, we’ve added five more export facilities, with more scheduled to come online in the coming years.

Why is Liquefied Natural Gas important?

LNG can affect the price of natural gas both domestically and internationally.

Historically, the price for gas in Europe and Asia has been 80-100% above the cost of gas in the US. This matters because of how it impacts our supply market.

Domestic natural gas producers can get a higher return for their natural gas in the international market versus the US market.

Although we only export a small amount of LNG right now, our exporting capacity could increase because gas producers are driven to capitalize on the market differences. Could this siphoning of supply cause the cost of gas in the US to rise to the level of the international market?

The Future of LNG

The future of LNG exports has a lot riding on the upcoming election. Depending on who wins this contest, the US LNG market could continue to expand or could be cut back. Regardless of the election, LNG exports will continue to influence domestic energy prices for both natural gas and electricity, and its expansion is a factor to watch over the next decade.

Thanks for watching this Two-Minute Tuesday, and look forward to future videos! If you found this video helpful, please like, comment or share below.

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