A City Blazes Its Clean Energy Trail

In September, the City of Philadelphia introduced its roadmap to dramatically reduce carbon emissions and move to 100% renewable energy. Philadelphia’s plan is a step toward fulfilling its commitment to lowering its carbon footprint, and comes as cities across the United States have moved to act on climate change as the federal commitment to address global warming has withered.

Adam Agalloco, Philadelphia’s Energy Manager, outlines Philadelphia’s new Municipal Energy Master Plan, the means available to cities that aim to act independently to address climate change, and the costs of doing so.

Adam Agalloco is Energy Manager for the City of Philadelphia and lead planner for Philadelphia’s Municipal Energy Master Plan, the city’s roadmap to reduce carbon emissions and adopt renewable energy.

Full Transcript

Andy Stone: Good day and welcome to Energy Policy Now podcast from the Kleinman Center for Energy Policy at the University of Pennsylvania. I’m Andy Stone. In September, the city of Philadelphia introduced it’s plan to dramatically reduce carbon emissions and move to 100% renewable energy. Philadelphia’s plan as a step toward fulfilling its commitment to shrinking its carbon footprint and comes as cities across the United States have moved to act on climate change as the federal commitment to address global warming is withered.

Today’s podcast takes a look at the details of Philadelphia’s plan and the means available to cities to change their energy consumption as they look to address climate change. And as cities struggle to fund basic services, we will look at the cost of lowering emissions. Here to talk about Philadelphia’s new energy plan is Adam Agalloco, energy manager for the city of Philadelphia. Adam, welcome to the podcast.

Adam Agalloco: Thanks for having me.

Stone: Adam is the lead planner for Philadelphia municipal energy master plan, the city’s road map to reduce carbon emissions in adopt renewable energy. Adam again welcome to the show. I wanted to ask you to start out about the background to the energy masterplan. What has led Philadelphia to its current effort to cut its emissions?

Agalloco: Sure, so for a long time and really under the Nutter Administration, we started off with a Greenworks Philadelphia the city’s sustainability plan. That plan is now evolved and now we’re looking at Mayor Kenney’s spin which is Greenworks Sustainable Vision for Philadelphia. So we’re kind of falling under a slightly different framework in terms of how we approach this work.

The municipal energy operations have been a long standing part of municipal government. The energy office kind of got a boost in the Nutter Administration, carried forward into the Kenney Administration and for a long time we had goals that fell under Greenworks but we didn’t have really truly a framework for operations and a framework for what we should be doing with our own operations.

So we felt that was a need, we felt like especially given giving him the ambitious goals that Mayor Kenney had around 80% reduction and carbon emissions by 2050, that it would be a good idea to sort of reset and say okay well how does city buildings fit into this and what kind of interim goals and measures do we need to be prioritizing as a city.

Stone: Let’s take moment to talk about Greenworks vision. Can you tell us a little about that? That’s just the larger sustainability vision for the city.

Agalloco: Yes, so Greenworks again more recently reframed and focused around eight different vision areas. So it’s not just covering energy and climate we’re looking at waste, were looking at transportation and really kind of the ideas is making this really accessible and talking about the benefits of sustainability not the kind of metrics that got us there.

And so if you look at the original Greenworks it was really talking about vehicle miles traveled or VMT, it was talking about waste diversion rates and things like that. All really important aspects of sustainability but what people really want to know when they’re talking about transportation is they want safe, accessible transportation. When they’re talking about waste, they want clean streets, they want low waste and high recycling and high reuse this.

So it’s really about reframing sustainability again to what do residents get. And we felt like it like that gives us a broader audience and again makes this plan just more accessible. And also with a spin on equity and trying to look at okay so let’s make sure that the benefits of sustainability and the benefits of the work that our offices are doing is doing in that other city departments are doing really touches all Philadelphians and is not just kind of focused on those folks that are kind of uber green and really kind of already on board.

Stone: So now you’re looking to tackle energy and carbon emissions, specifically. What impacts are we seeing in Philadelphia at this point if any related to a warming climate?

Agalloco: So I always mess up kind of the idea of talking about climate and weather separately so I’m not going to necessarily say about the weather impact. If you look at the recent history in Philadelphia we have seen warmer weather but I can’t really speak to is our climate is changing, I’m not a climate scientist.

But what I can say is that we did hire climate scientists to look at how the climate will change and future carbon emissions and different features of different emissions types and different intensities. The punchline of that is that Philadelphia is going to be warmer and wetter and so were looking at trying to understand, and we also looked at basically how it’s going to be warmer and wetter. So is that just going to be a higher temperature during the summer? Or is it can be warmer winters as well? When we talk about wetter this is going to be more increasing frequent rain or is it going to be more of the Seattle type kind of rain where it’s just always sort of doing something?

And it looks like it’s going to be more intense storms and we’ve kind of, I think we’ve seen some of that, but again you don’t want to mix up climate and weather too much. All the information that we’ve gathered on our climate adaptation is available on our website. There’s a useful climate science for Philadelphia that lays the groundwork as to what assumptions we made and how we got to these assumptions and we also have a ‘Growing Stronger Plan’ which is really focused on having municipal assets adapt to it and what risks do our own assets have. That’s kind of our first level of climate planning, we’re working to do more climate planning as well in the future

Stone: Jumping specifically to the master plan itself, from I understand it covers about 600 city-owned buildings ranges from City Hall to the Art Museum to police stations and libraries etc. How does the city generally plan and manage energy use from such a wide range of spread out buildings?

Agalloco: Yes, the Energy Office, which is kind of a part of the Office of Sustainability that I work in, that’s really our job is to organize all of our bills and to organize all of our data to do procurement in a strategic way for all those assets. And also to guide energy conservation and energy efficiency programs.

So we’re a four person office, we’re a relatively small group but yeah we’re really kind of that the central hub for municipal energy management. The only other thing I’ll mention is that the Water Department also has a separate kind of energy team and energy work and energy initiatives and the airport’s working on the same type of a kind of framework. So all those together really come together to form what most folks think of as the city.

Stone: What’s the city’s energy mix today in terms of where that energy comes from? How it’s generated?

Agalloco: Yeah, so if we’re talking about electricity, its roughly 30% coal, 30% nuclear, 30% gas. And then kind of 10% mixed bag. That’ s some renewables, that’s some fossil fuels, kind of different types of generation sources.

Stone: And that’s tied to what the local electric grid has?

Agalloco: Yeah that’s all managed by PJM, the local transmission operator here, and then they kind of subdivide us what we consider the regional mix is called the Reliability First Council East, which is really just the way the EPA designates, their an organization, but that’s the way that they break out emissions and we fall in that area.

Stone: So one of the goals here of the plan is to move to 100% renewable electricity by the year 2030. Currently the city gets just about 4% of its electricity from renewables. How will it make that big leap in only 12 or 13 years?

Agalloco: Right and so I think that key thing is that we’re talking about supplier choice. When we say that the city’s going to make the choice to choose clean renewable electricity supply over other more conventional supply. And so every customer right now out there has a choice, you know. There’s a customer choice that came to the Philadelphia area about in 2011. The city’s been kind of doing its purchasing and various different ways. What we’re saying now is we need to prioritize through our purchasing renewables and clean energy sources. That’s not to say that we’re also not going to look at generation on our own assets. We have buildings that have great potential for solar and we’re studying that but first and foremost a big movement is we have a need to be able to purchase a cleaner supply.

Stone: So what are the economics of it? How is that going to work?

Agalloco: So we’ll see. That’s the real question we’ve got an RFP at that’s open right now, we just had a pre-proposal meeting earlier this week.

Stone: RFP, being a request for proposal?

Agalloco: Yes, sorry lots of acronyms in government. A request for proposal. And that is out there seeking a power purchase agreement or PPA for energy supply, for some portion of energy supply. We put out a request for information last year and that showed that the pricing was there about around what we’re paying right now and so we’re asking folks to do is to fix that supply and give it to us for an extended period of time. So were looking for twenty to forty percent of our supply in this first purchase. I’m hopeful that we’ll get prices that are really competitive.

And the other aspect of this is that, you know, this is risk mitigating for our future energy prices. So right now we’re out there making forward purchases because of unknowns as to what’s going to happen with energy costs. If we can fix a portion of that again, 20 to 40%, there’s predictability with that, that provides budget certainty which has a lot of benefits in the city government. You know, a couple years ago we had a polar vortex here in the Philadelphia region, natural gas prices spiked, electricity prices spiked. Folks that were not hedged took a hit and thankfully the city’s policy avoided us from doing that but we’re really talking about doing that from a from a longer-term perspective in this opportunity.

Stone: Reading through the plan, I noted that Philadelphia’s built environment, the energy cost for that built environment, totaled 42 million dollars in 2016. And that you’re planning on maintaining that level of energy spend going forward.

Agalloco: Or lowering it.

Stone: Ok or lowering it. You also talked about the risk mitigation that goes along with entering into these long-term power purchase agreements. Another thing that you point out in the report is that grid electricity is actually very cheap right now and I guess that’s due to a to abundance of low-cost natural gas. Does that create any additional challenges or economic challenges in making this successful?

Agalloco: For sure and I think if you’re seeing kind of a national conversation about energy supply and what the city should be or what the nation should be doing. And yeah we’re just a part of that, natural gas prices are driving prices in this region down. There’s also additional pipe lines coming into this area and there’s a potential for those pipelines to kind of raise prices because we’re no longer going to be, folks will have places to get that natural gas out of the region.

So you know what that’s again why the uncertainty and why were saying maybe it makes sense to sort of look at a hedge and a fixed purchase for a portion of our electricity and of course then to prioritize kind of the cleanliness and the renewable aspects of that because we really see that is as crucial to the region and the regional grid changing to a cleaner grid.

Stone: Just want to talk about the state as a whole and Philadelphia’s role within the state for just a moment. Pennsylvania has a lot of natural gas and has benefited tremendously in the last 2 years from the Marcellus Shale gas drilling. Also has a lot of coal. Generally, Harrisburg, which is the capital, has been very favorable to those industries. This is a promise from the city of Philadelphia to move away from those sources of energy. What’s the relationship, has there been any pushback from Harrisburg on this?

Agalloco: So we haven’t had any push back from Harrisburg and I should say I haven’t heard any push back. I’m kind of middle management of the Philadelphia government so it’s not something I would expect to hear. But we have heard from some local state legislators that are interested in hearing more about the plan why we’re trying to do this so I think we’ll see sort of what folks have to think about this in the long run from a state legislature perspective.

And we’re trying to use the tools that we have as a city to kind of drive change in the city as well as in the region and our purchasing power is one of those tools. So to kind of spin that around you know there’s a there’s obviously lack of federal leadership around climate, you could say similar things around the state. That it has not been prioritized so I think that again we’re trying to prioritize it and we’re using the tools we have which is the first and foremost are our purchasing power to try to move things along.

Stone: To what extent might the city go off the grid?

Agalloco: I think that there’s probably some limited applications for kind of those. I think more likely we’d focus on resiliency and say let’s not go off the grid but let’s make sure that our critical facilities can operate for an extended period of time in the event of an outage. I think that’s probably our first priority.

Stone: So the second part of the plan is to reduce energy consumption by 20%. How’s that going to be handled?

Agalloco: So we’re looking at existing projects and existing programs, and the investments we’re already making. And trying to hit a goal that we think is very much attainable. So right now the city’s in the midst of a rebuild, which is an investment, a once in a kind of a generation investment, in our Parks and Recreation and Library facilities. So we’ve been working with the Rebuild Team and working with the Department of Capital Projects to set some kind of guideline documents about what those investments should look like.

So its things that you would expect. We’re putting LED, we want to put in LED in every single rec center and library, we want to make sure that we’re putting in windows that are of a certain e-value, and a roof with a certain insulation value. Were looking at minimum efficiencies on our equipment as well and so making sure that you know any air conditioning or boilers have kind of efficiency built into them. So part of the plan is kind of tweaking those investments.

Part of the plan is also looking at large, smart investments in our own facilities. So the day that we announce the plan we did so on that the steps of the Philadelphia Museum of Art or where we’ve been working on an energy performance contract in that facility. That’s the single largest energy user for the for city government, municipal government, so we’re excited about that project and that’s going to be a lot of you know insulation, and a lot of controls, a lot of lighting that really kind of bring the infrastructure of that building up to a to a little bit more modern sense.

The nice part about these investments is that these investments that the city should be making anyway. We’re talking about investing in our facilities and there’s a lot of co-benefits whether you’re talking about comfort or you know better life quality better indoor air quality. So the Investments that we’re looking to do is not again trying to spend a ton of money. It’s really trying to say okay how do we tweak the investments were already making and then how do we take these kind of big facilities and really go deep in terms of infrastructure Investments that that ultimately pay for themselves with a savings they generate.

Stone: But there are some upfront costs and all this and how is the city going to fund that? 

Agalloco: The city today has a large energy performance contract for our downtown facilities. We did so through a bond issuance. And again the way that that project was structured is that the savings pay for the debt service. So the project, kind of on the books of the city, is really a net zero cost because, its, actually in that case, there was a net positive cash flow because the savings were about 1.4 million dollars. The bond, the debt issuances about 1 million.

It’s my office’s job to present and build more of those projects and then also make sure that we maintain the successes that we’ve had in those buildings. So far that project is done really well for City Hall and our other buildings. In the downtown we just got an Energy Star Certification on One Parkway buildings which were excited about, the city’s first Energy Star Building, the city government’s first Energy Star building, so we need to do a lot to maintain that.

Stone: There are so many buildings, again, in the city that you manage, are you going at them all at once? Or are you taking a certain slice and kind of moving along?

Agalloco: We’re trying to prioritize where we see opportunity and you know right now we’ve got a great program with our Department of Public Property, for example. They are going through and redoing a lot of the fire stations just because they wanted to do them anyway and our office is funding, with our really small amount of capital funds, the lighting for that. So it’s a good opportunity to get in and do that work.

The art museum, and we’re being a little bit opportunistic, they’ve got a new project there calling The Core Project and they’re doing a lot of infrastructure improvements and it’s the perfect time to sort of take a deep dive on energy efficiency and say okay well while you’re doing these infrastructure improvements what other types of things can we do, kind of all the walls are open. And investments that they wouldn’t necessarily retrofit like again, the steam installation and replacement of steam traps and you know one-off lighting things.

So it’s kind of trying to take advantage of those opportunities where they come up and then also looking after the kind of biggest users in the biggest energy hubs where we can and then prioritizing them.

Stone: Now Philadelphia is doing this right now and a number of other cities in United States are doing it.  As you mentioned earlier former Mayor Michael Nutter was an original founder of the Climate Mayors group. I think Eric Garcetti, Mayor of Los Angeles, was also one of the initial founders really looking to continue the city’s commitment to cutting emissions regardless of whatever was going to happen with the Paris Climate Agreement. Are the cities working together, sharing information, knowledge, learnings to make these energy changes happen?

Agalloco: Yes. Absolutely. We, actually three members of the Office of Sustainability, were just at a conference for the Urban Sustainability Directors Network. That’s where almost all the major cities in the United States and Canada get together talk about this work. They’ve got regular group sharing sessions and a website where people post RFPs and post kind of advice on different projects they’ve done, and successes they’ve had.

I could go there tonight and ask a question and you know by tomorrow I’ll have heard back from maybe a couple cities that have experience in those areas so yeah. I think that you are you’re seeing a lot of, for a while there’s a big competition among cities of who’s the greenest and I think what everybody sort of turn to is that we all need to just take this stuff seriously and I don’t think there’s a lot of credence given to those rankings anyway but we are trying to move past that really work collaboratively. And I think that’s always been the case just hasn’t always been portrayed that way.

Stone: A question I want to ask is, in a city that’s very very old like Philadelphia, is this a particularly onerous challenge given the age of the infrastructure of the buildings? May a city that’s out west, it may be more modern, find this easier to handle?

Agalloco: I think in some ways, when you talk about building energy specifically, I think yes, were at a little bit of a disadvantage to some extent. We’ve got older facilities, we’ve got a lot of facilities, you know so there’s that so here’s a lot of challenges that go along with that. But we also have a lot of other inherent benefits.

If you look at Philadelphia versus Phoenix, you know, and this is not again in that building energy aspects, but you talk about transportation systems. We’ve got pretty extensive mass transit in Philadelphia. We’ve got subway lines, we’ve got trolley lines, I was saying before, I got to Penn here in about 15 minutes after stepping out of my office, so it’s about a mile and a half away. So we’ve got a lot of benefits in some areas. Buildings we got an older building stock and there’s definitely some disadvantages to that. But overall, I think that there’s a lot of really positives from a dense urban city like Philadelphia.

Stone: San Francisco is another major city with a and energy plan and it’s interesting in their plan transportation figures very heavily. And also San Francisco, I forget this specific numbers, but puts a major portion of its energy use and its emissions, as related to transportation. Will there be a transportation plan for Philadelphia?

Agalloco: So the Office of Transportation and Infrastructure Systems is working on a transportation plan and that’s focused, going to be partially focused, on emissions and low-carbon kind of opportunities. I think what we’re trying to show in our municipal government work right now is just kind of where the city can lead by example. So we’re also looking at our own fleet, kind of a different form of transportation, but we’ve got trash trucks and police vehicles and all sorts of kind of things are run around on our streets and we’re trying to find opportunities to green them first.

Then I think OTiS is really going to take the lead to see what the future of transportation looks like in Philadelphia. I think the bigger challenge is there, is even more so than building energy, you’re seeing technology that really can disrupt that market. And I hate to use that word because it’s kind of over play but you’ve got transportation network systems like Uber and Lyft, you’ve got electric vehicles coming in, you’ve got compressed natural gas vehicles, and other kind of alternative fuel vehicles. There’s just a lot of things happening in that area that make, I think, their task a little bit harder than even ours.

Stone: The city-owned buildings that the government controls, just a small part of the buildings, actually in the city. Will this result in some sort of spillover or make it easier in some way for private business, homeowners, etc. to also become more efficient?

Agalloco: So I think I think it may, you know. I think we’re trying to grow that marketplace and if you look at an organization like the Philadelphia Energy Authority that has a really big job focused plan to use energy performance contracting and energy-efficiency and renewable-energy opportunities to grow the jobs in Philadelphia. So I think that’s one opportunity where it could.

I think for Philadelphia it kind of has a whole we’re also looking at in a 80 by 50 does not get there with government action, municipal government action alone. So we’ve got a new framework that’s coming out called “Powering Our Future Clean Energy Vision for Philadelphia” and that’s really kind of our response and our kind of framework for how we should be looking at citywide buildings. So not just kind of city government but you know homes, businesses, institutions, that are out there, how they can do their own work but also where they should focus their advocacy because a lot of this, the local government really only has so many levers and a lot of the bigger levers, as you know, exist at the state level, exist at the federal level.

So it’s not so much that we want to pass the buck but, we need help basically and in making sure that folks at those higher levels of government can kind of understand what it is that that we are kind of, at the ground for this work, need to reach our goals.

Stone: So this plan goes through 2030, I mean that’s when the goals are set for. Is there going to be another plan on coming along in the next few years or not till 2030 that takes us to the next step?

Agalloco: I think so. I think we kind of always intended to be sort of our first blueprint of work and you know whether it’s in 5 years, or 10 years, or 2030, that we sort of need to take the next step and reframe our work towards the future. But there absolutely will be. We don’t want to get too far ahead of ourselves with setting up a prescriptive path. Technologies are changing, and financing mechanisms are changing, staffings changing, the economy is changing. You know one of the challenges we had with the original Greenworks is that we put it out with all these great visions and there is a hope that there’s going to be a carbon tax and instead we got a recession.

 And so it’s really challenging to sort of plan sometimes when you go too far out in the future and we didn’t want to fall into that trap again. So we’re trying to take a chunk that really we feel comfortable tackling in an area of work that we think we can do. So I think it’s really achievable plan and I’m excited that we’re able to kind of get the support for it and excited to implement.

Stone: Final question, any lessons learned from what you’ve done thus far? Anything that’s harder or easier than you thought it would be?

Agalloco: I think a lot of it’s really hard. If you start looking and talking about this work, I think most of the listeners to your podcast are probably you know in the weeds but when you talk to kind of the man on the street about this work they’re really not that comfortable or familiar with what the energy challenges are so I think the biggest challenge we have is education, is how do we make this work kind of accessible to the everyday Philadelphians.

Stone: I guess you have to do internal education as well, right?

Agalloco: For sure yeah I’ll give another plug for the planning work that we’ve been doing, the energy planning, the clean energy vision that we’ve got coming out. That’s really going to kind of talk a little bit about what our policy priorities should be as a city and what kind of opportunities exist at the state and federal levels as well.

Stone: Adam, thanks for talking.

Agalloco: Thank you.

Stone: Today’s guest has been Adam Agalloco, Energy Manager for the City of Philadelphia. For more energy policy insights and for updates on research and events from the Kleinman Center for Energy Policy, subscribe to our Twitter feed @kleinmanenergy or visit our website at kleinmanenergy.upenn.edu. Thanks to listening to Energy Policy Now and have a great day.