SUMMARY DOCUMENT
The Cambridge Energy Alliance (CEA) is a $100 million initiative to implement massive energy
efficiency and clean energy generation throughout the city of Cambridge. The goal of CEA is to
reduce the city’s electricity demand by 50 megawatts, or 15 percent of the peak load, and to reduce
annual consumption of electricity, fossil fuels, and water by 10 percent citywide by 2011. CEA will
seek to reach a participation rate of 50 percent in each sector of the community. It is partnering with
the city of Cambridge, the Cambridge Health Alliance, NSTAR (the local electric and gas utility),
Harvard University, Massachusetts Institute of Technology (MIT) and other major community
institutions and organizations.
Cambridge, Massachusetts is a multicultural community of slightly over 100,000 people located
within a 6.5 sq. mile area, directly adjacent to Boston. The city is characterized by a unique mix of
cultural and social diversity, intellectual vitality, and technological innovation. It is home to
renowned universities and the city has become a major center for biotechnology with over 100
companies, and is nurturing a growing cluster of businesses focused on energy innovation and
entrepreneurship.
Taking Action
Climate change is a global challenge, but local decision makers have many opportunities to act in
meaningful ways. As a member of ICLEI-Local Governments for Sustainability since 1999,
Cambridge benchmarked its heat-trapping gas emissions and set a 2010 goal of reducing them by
20% below 1990 levels. In addition Cambridge seeks to acquire 20% of its municipal power from
renewable sources by 2010. The City Council is firmly committed to reducing municipal carbon
emissions and recognizes that there are multiple benefits to the community including the potential for
new jobs, economic development, stabilized energy costs, and reduced pressure on the grid that
supplies electricity to the New England region.
Partnership Approach
The Henry P. Kendall Foundation, a family philanthropy based in Boston with an organizational
commitment and focus on climate and energy, was an early partner with the city to develop the
concept of the Cambridge Energy Alliance, a new nonprofit organization. The Kendall Foundation
and the Barr Foundation (also located in Boston) each committed $250,000 for technical and
financial expertise to create the organizational and financial structure for the CEA and the City
Government provided a strong staffing component.
Innovations
The creation, development and implementation of the CEA involved many innovations related to
selling, delivering and financing energy efficiency.
 Massive Energy Efficiency model
Over 80% of greenhouse gas emissions in Cambridge come from building energy use, and about 2/3
arises from the commercial, institutional and industrial sectors. The primary strategy to reduce
emissions is to address the existing building stock, but many of the city’s programs are not aimed at
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this sector. The CEA fills a need at addressing existing buildings of all sizes by offering a model of
massive energy efficiency.
Massive energy efficiency includes traditional conservation measures such as lighting retrofits and
better insulation, but it also goes much deeper. Other measures include:
• Achieving high penetration rates in commercial, industrial, government, and residential
sectors
• Obtaining critical mass for financing, and reducing marketing and transaction costs
• Emphasizing retrofits on existing buildings, including homes, and also engaging builders to
build high efficiency measures into new construction
• Using all possible conservation measures including lighting, HVAC and control systems,
appliance standards and building practices
• Installing distributed generation (renewable energy and combined heat & power facilities –
also known as cogeneration) wherever possible and implementing demand response to reduce
peak electricity use
• Creating a high profile public campaign that demonstrates strong and sustained government,
private sector and citizen leadership.
 City as Aggregator/Partner
A city is a natural aggregator of energy demand, public incentives and private investment. The city
uses its “brand” to rally businesses, institutions, and residents to reduce energy use, reduce carbon
emissions, and reduce reliance on foreign energy sources. Stakeholders – e.g., citizens, businesses,
educational institutions – have a trusted relationship with the City and the City has the authority to
deal with all sectors.
 Financial Innovation
New England cities and towns have a unique opportunity to leverage public funds through ISO-New
England, the regional electricity grid. To make sure that electricity capacity can meet the region’s
rising demand, ISO-New England has created a first-in-the-nation capacity market that not only pays
generators for continuing to offer a reliable supply of power, but also recognizes and rewards the
contributions of energy efficiency and demand resources. Conservation of electric energy, peak load
reductions, renewable energy and combined heat and power are now on a level playing field with
electricity suppliers and can compete for a share of the region’s $1 + billion annual program. The
CEA’s financial model empowers it to access this new market to secure funding for reductions in
energy demand.
The CEA finance plan is being tailored to meet specific needs of the end user: state and municipal
buildings, a school system, hospitals and universities, commercial and industrial sectors, and
residential consumers. The CEA is working with Bostonia, an investment firm in Boston, to
assemble a revolving line of finance up to $70 million in private capital for large projects.
o $60-70 million in senior debt will be raised from pension and annuity providers, banks and
life insurance companies that are accustomed to providing energy efficiency financing.
o $2.5-3 million is being raised as working capital through foundation-related and private
investments.
o Approximately $15 million from public and utility-related sources of energy efficiency
funding will be captured from program implementation and results.
Because savings are paid into a revolving fund, it is anticipated that $100 million in energy efficiency
implementation will result over five years.
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Municipalities are natural aggregators of energy demand and can leverage public incentives such as
the ISO-New England program and System Benefit Charge funding, with private investment vehicles.
In fact, local governments possess certain levers that no other entity has including credibility in
marketing and investment, the authority to deal with all parties, and relationships with all consumers
through such mechanisms as water bills and property taxes. However, no municipal funds are
directly involved.
 Service Delivery Model
The Cambridge Energy Alliance is providing a full range of engineering, technical, installation,
project management, monitoring and financial services. A stable of private energy service
companies and contractors has been pre-qualified and contracted to perform energy assessments and
implement energy-saving measures. Independent engineers will monitor and verify the work of the
Energy Service Companies (ESCOs) and contractors. A revolving loan fund will be used to finance
work and customers will pay for the measures through energy savings. Retrofitting will be
emphasized. The financing mechanisms will enable consumers to take measures with longer
paybacks, e.g. combined heat and power and photovoltaic and solar hot water installations.
ESCOs are the services delivery agent. The CEA aims to offer one-stop shopping for customers,
with ESCOs prequalified for four market sectors – small and large residential, and small and large
commercial and industrial properties. Large customers will be able to choose from two different
ESCOs. The CEA will provide marketing assistance with a public campaign that will involve the
city. CEA inspections of completed work will bolster customer confidence.
 Public Campaign
To date the most successful traditional energy efficiency programs run by utilities achieve
participation rates of 5-7%; the CEA aims to achieve a participation rate of 50% in each sector. To
motivate consumers to sign up, it must deliver compelling messages tailored to key segments of
consumers. To deliver this message and reach its ambitious signup targets, an integrated marketing,
communications and community organizing program will be developed to raise awareness, generate
word-of-mouth communications and mobilize volunteers in all Cambridge neighborhoods. Using a
combination of outreach techniques, such as campaigns aimed at Community Leaders, door-to-door
canvassing by volunteers and paid campaigners, online organizing, paid and earned media, and City
of Cambridge support initiatives, this goal can be reached.
Current Status of Cambridge Energy Alliance
The CEA is incorporated and has an active Board of Directors, which meets regularly. Pilot
engineering assessments have been completed and a set of early commercial and residential projects
are under negotiation and will start this spring. The CEA is coordinating with NSTAR on marketing
and incentives and forming new partnerships with universities, property owners and managers,
businesses and citizens.
ESCO proposals were reviewed competitively and five companies were selected to serve as CEA’s
Energy Services team. Similarly, financial services for residential and small commercial customers
were competitively bid and three lending institutions have been chosen to serve these markets. CEA
expects to launch a full array of services in winter 2008. Finally, a search was conducted for a
President/CEO. Technical consultants, key in shaping the initiative, continue to support the
operations, along with a part-time Project Manager.
For further information on CEA, please visit: www.cambridgeenergyalliance.org.
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