Demand Management, Energy Efficiency, Sourcing Renewables - July 1, 2020 - By Jake Duncan, IMT
Stronger Together: Optimizing Renewable Energy
The momentum behind the renewable energy transition is unstoppable. To date, 162 local governments, 13 states and the District of Columbia, and 229 global companies have committed to 100% renewable energy. Thirteen more states have introduced legislation to get to 100% renewable energy and 50 utilities have publicly stated carbon or emission reduction goals. The will is there. The next step is getting it done.
To decarbonize quickly and affordably, renewable energy needs to be paired with energy efficiency and demand management at the level of both individual building and the larger energy grid. Right now, the U.S. has the capacity to generate a little more than 1,000 gigawatts (GW) of electricity. Solar and wind currently make up 130 GW of that electricity. The market research firm Wood Mackenzie estimates that we would need roughly 1,600 GW of renewables, plus a considerable amount of storage and transmission, to replace current fossil fuel generation with renewables (not accounting for increased load to due to electrification). They put the price tag for full decarbonization of the U.S. electric grid at around $4.5 trillion – nearly three times the global investment in energy in 2018. Additionally, the pace of change is currently far too slow as we expect to double electricity consumption by 2050.
This column explores how efficiency and demand management can smooth over some of the challenges of the renewable energy transition so that we can power an electrified society quickly and cost-effectively.
Maximizing Building-Level Renewable Energy
Buildings hold untapped potential to be part of the solution to climate, resilience, and community needs. We spend vast quantities of our time in buildings, which account for about 40% of the energy consumed in the US. As buildings electrifying and vehicle chargers are attached to building systems, it is increasingly important that buildings have access to clean electricity – both generated onsite through rooftop solar and delivered through the grid.
Hurdle: Roof Space Net-Zero buildings (buildings that produce as much energy as they consume on an annual basis) are becoming more of a reality. However, due to simple roof space limitations, it is logistically very difficult for commercial buildings to be fully powered with onsite clean energy. The National Renewable Energy Laboratory shows that most states can only meet 25%-45% of annual energy needs if every suitable rooftop had solar. If only large buildings (>25k sq. ft.) installed rooftop solar, we could only meet 8.2% of national annual electricity demand.
Solution: Pair with Energy Efficiency Powering 100% of building operations on an annual basis with renewable power is made much more achievable if the building lowers its electricity demand, which happens through energy efficiency. The Bullitt Center in Seattle illustrates the size of the solar array needed for a building in Seattle to achieve net-zero changes with different levels of energy efficiency. A typical commercial building could not fit anywhere near enough solar panels on the roof to become Net Zero and would have to depend on receiving clean energy from the grid. Increasing the energy efficiency of buildings means we can power more of our energy needs with the same amount of rooftop solar.
Hurdle: Energy Consumption Cycles However, Net Zero may not be enough. Renewable energy is inherently variable, based on when sun, wind, or other natural power sources are available, while buildings operate all of the time. This means even though a Net Zero building has produced as much renewable energy as it consumed over the course of a year, it may use electricity generated with fossil fuels to fill gaps in availability of renewable power from the grid.
To power building operations with renewable power 24/7/365, we have to be able to match energy consumption and renewable production so all occupant needs are powered with clean energy.
Solution: Pair with Demand Management Demand management allows building occupants to shift aspects of their energy consumption to times when renewables are plentiful, like midday solar, without interrupting normal activities. This can be done through many approaches, like pairing solar PV with battery storage and more advanced approaches that shift some building processes to different times of the day when renewables are plentiful. Together, energy efficiency and demand management lets individual buildings minimize the size of the solar array needed for the maximum carbon reduction impact.
A Holistic Clean Energy Approach Yields the Fastest Grid-Scale Transition
At the grid level, moving to a decarbonized society powered by a renewable-based power system means we have to do two things quickly and simultaneously: retire existing fossil fuel plants and add renewable energy – while simultaneously electrifying all sectors of the economy and modernizing our power grid.
Replacing fossil fuels with renewable power is more challenging than simply building more wind and solar because we cannot ramp production up or down to meet fluctuating demand with a simple switch like we can with a natural gas plant. It is possible to meet all our energy needs through renewables, but it requires new technical solutions and more active management of the grid.
To meet climate goals, we must add renewables fast enough to meet the demand currently supplied by fossil fuels and the anticipated demand from economic growth. One study by the Brattle Group showed that the northeast needs to add renewables up to eight times faster than they currently are to meet the demand of electrification. If, however, we reduce energy use through efficiency measures and maximize the use of renewables with demand management, we can make a full switch to clean energy much faster.
Solution: Clean Energy Portfolios Combining solar and wind with energy efficiency, demand management, and storage – known as a clean energy portfolio (CEP) – ameliorates many of the problems listed above. Focusing on energy efficiency means you need less variable power that needs advanced management. Using storage and demand management makes renewables more available upon demand like traditional fossil fuels so they can power buildings 24/7.
What’s more, an analysis by the Rocky Mountain Institute found that clean energy portfolios are cheaper to build and operate than most new and existing natural gas plants. The graph below shows the cost comparison of an optimized CEP that includes efficiency vs wind, solar, and storage alone against new and existing natural gas plants. This shows the power in taking a renewables with approach!
Enacting an “Efficiency with Renewables” Approach
The four cornerstones of building decarbonization: renewable energy, energy efficiency, electrification, and demand management must play to each other’s strengths to achieve rapid, cost-effective decarbonization. Here is what you can do to enact renewables with:
- Consider developing a Building Performance Standard (BPS) to drastically reduce energy consumption in existing and new buildings, alleviating grid constraints while providing long-term savings for building owners and occupants.
- Consider developing policies, programs, or incentives for renewable energy (like a Green Tariff) and energy efficiency (like a BPS) in tandem.
- Explore options to accelerate renewable installations, like expedited renewable permitting in NYC.
- Consider replacing fossil fuels with a clean energy portfolio through all-source procurement practices that consider proposals that include holistic combinations of renewables, storage, efficiency, and demand management.
- Ask your Public Utility Commission to incentivize clean energy portfolios through performance incentive mechanisms or performance-based regulation
- Real Estate
- Maximize the efficiency of your building to enable on-site solar to power as much of your building as possible.
- In today’s uncertain market, consider use both efficiency savings and onsite generation to lower overhead cost and exposure to volatile energy markets.
- Think of the installation of solar PV, EV chargers or any other project as an opportunity to also address efficiency measures like lighting, white roofs, retrocomissioning, and more.
- Take a leadership role in your community and demonstrate how buildings can prepare for beneficial electrification.
This column originally appeared as an IMT blog.
Jake Duncan, senior associate at the Institute for Market Transformation, supports IMT clients by establishing the economic and environmental foundations for energy efficiency policies, programs, and investments. He provides quantitative analysis and market research for IMT’s programs, applying previous experience in the energy and utility spaces. Jake holds a bachelor’s degree in economics from Georgia College and a master’s degree in Climate Science and Policy at Bard College’s Center for Environmental Policy.
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