On behalf of the team at 5, I am pleased to forward our market letter for the final quarter of 2017. I began our last quarter’s letter with a discussion of the correlation between extreme weather and energy prices. I noted that since the extreme cold in the Northeast in 2013/2014, and the extreme heat in Texas in 2011, the energy market had not been tested to see how it would respond to extreme weather. Consider the market tested: the chart below tells the story.

On behalf of the team at 5, I am pleased to forward our market letter for the third quarter of 2017. For many years, the energy market has seen a direct correlation between extreme weather events, high electricity prices, and regulatory changes. Q3 was different. It set records for extreme weather, but we did not see a corresponding increase in energy prices. Still we saw significant regulatory changes tied in part to weather events. In October, Energy Secretary Rick Perry, citing recent storms, announced new rules to compensate coal and nuclear plants for their ability to operate through adverse weather events. This letter focuses on the relationship between weather, energy prices and regulatory change.

The Scarecrow had enough sense to know that he needed a brain, but what about your building? The impending rollout of distributed energy resource (DER) tariffs and power pricing suggests that many facilities may soon need their own “transplants.”

According to the latest building survey data from the U.S. Department of Energy (DOE), almost 15% of U.S. commercial and industrial (C&I) facilities are equipped with some form of “energy management and control system” which refers to an energy management system (EMS), building management system (BMS), or building automation system (BAS). Several independent studies by agencies, such as the U.S. Environmental Protection Agency (EPA), have found that such systems help facilities cut their annual energy use by 10-20% relative to comparable sites lacking them.

Energy efficiency and renewable projects are no longer skipping down the same yellow brick road as they were this time last year. Similar to the Cowardly Lion, some are inching courageously forward despite doubts from customers and the industry, while others have stepped off the road until the way forward becomes clearer.

Changes at both the federal and state levels are creating a less certain future, but Dorothy assures me that the basic reasons for pursuing distributed energy resource (DER) projects remain viable, regardless of which federal policies remain intact.

The Wizard told Dorothy and her friends many tales of his amazing powers, but a strong breeze blew away his credibility when it pushed aside the curtain, revealing those tricks as little more than noise and smoke. Such may be the case with energy account auditors, they may claim savings based more on a customer’s misplaced trust of the auditor than on any real financial wizardry.

On behalf of the team at 5, I am pleased to forward our market letter for the second quarter of 2017. In our Q1 letter, we focused on how new technologies, particularly solar and wind generation, are transforming the power market and causing negative power prices in California. In this quarter’s letter, we focus on an old generation technology, nuclear power.

On behalf of the team at 5, I am pleased to forward our market letter for the first quarter of 2017. This quarter marks 5’s fifth anniversary. While I try to avoid marketing in this letter, I cannot help but mention our most recent award, being named the 2nd best place to work in the State of Texas. When added to our other awards, this speaks to the unique company we are all building at 5.

Weather conditions, such as occasional daily and annual variations in temperature and moisture, have obvious temporary effects on energy bills. Heating costs rise when it is cold and dry, while cooling costs rise when it is hot and humid. Weather changes associated with climate change are expected to have long-term permanent impacts on those costs by causing weather extremes and changes to how power is produced.

Climate change may gradually alter the landscape of energy production like tectonic shifts, but seasonal weather variations yield much shorter and obvious changes, a bit like riding a roller coaster. During the winter of 2015-16, much of the U.S. rode it to the warmest winter on record. In the Northeast, December 2015 had 27% fewer heating degree-days (HDD) than the 30-year average, while January-February saw HDDs 12-17% below normal. Two years before, we had the Polar Vortex winter, one of the coldest on record. Such short-term variations cause ripple effects on energy pricing that may be felt for a year or more thereafter.

With the election of Donald Trump, federal and state energy policies may sharply diverge in the near future. Some states, such as New York and California, are trying to reduce carbon emissions, while President-elect Trump appears to have other priorities.  Trump’s campaign proposals are preliminary, but a few general directions are clear. Here is how those divergent strategies and transition plans may impact energy policy.