Energy Productivity and the “Fifth Fuel”

McKinsey and & Company released a report in May titled Curbing Global Energy Demand Growth: The Energy Productivity Opportunity. The report documented how we could reduce the world wide annual energy demand growth rate between now and 2020 from about 2% to around 1%, simply by improving energy productivity.

Not surprisingly, the report states that the “… most substantial productivity improvement opportunity is in the global residential sector, which is also the world’s largest consumer of energy with 25 percent of global end-use demand. By implementing available technologies such as high-insulation building shells, compact fluorescent lighting, and high efficiency water heating, the sector’s energy demand growth would more than halve, from 2.4% a year to only 1.0% a year.”

The report also states that:

“Consumers lack the information and capital they need to become more energy productive, and tend to make [decisions based on] comfort, safety, and convenience priorities. In addition, a range of policies dampen price signals and reduce incentives for end users to adopt energy productivity improvements.”

The report argues that policy changes will be necessary before consumers will take significant action to improve the energy efficiency of their homes. In other words, nothing will happen without leadership from our policy makers

In an example of enlightened leadership, Duke Energy filed a request (also in May) with the North Carolina Utility Commission proposing regulatory authorization to be rewarded for investments in energy efficiency much like they would for a new coal fired electrical plant. I don’t often use enlightened and Duke Energy in the same sentence, but their Save-a-Watt program represents an exciting new business paradigm and addresses the some of the policy issues outlined in the McKinsey report. This is a promising new development that could help pave the way to a more sustainable future.

The following bullets are a summary of benefits Duke sees is this new business model for consumers, themselves, and by extension other electric utilities

• Allows for the treatment of energy efficiency as a “Fifth Fuel”
• It would displace a portion of the electricity otherwise needed to meet it customers’ energy requirements with zero air emission conservation, and also reduce the amount of new generation that would otherwise be required
• It would lower costs for customers, when compared to the costs that result would from the addition of new electrical generation resources.
• It would offer the potential to substantially lower costs for customers who participate in energy efficiency programs (PV, solar hot water etc.).
• Would provide customers the opportunity to lower their environmental footprint through direct participation in energy efficiency.
• The program would provide more choices and options that help customers manage their energy costs in an environment of rising energy prices
• The program would create new energy efficiency service jobs in order to implement energy efficiency programs.
• The program would provide the Company with an incentive to make significant, sustainable investments in energy efficiency and rewards the Company for the results produced and the risks taken.

The filing by Duke explains this new “energy efficiency” business model as follows:

“The Save-a-Watt approach will encourage and compensate the ultility for investments in energy efficiency at 90% of the avoided supply-side costs. Under traditional regulation, a utility is allowed to recover the depreciation and operation costs for a new plant and also earn a return on the un-depreciated plant. Under the save-a-watt regulatory approach, the utility would be allowed to recover 90% of the depreciation and operating costs avoided by not building the new plant and also earn a return.”

“The Company assumes some risk in the proposed save-a-watt approach. Revenues collected through the proposed energy efficiency rider are intended to cover program costs and the financial impact of lost sales, but will be based on actual results achieved. Lost sales occur when energy efficiency programs reduce energy consumption, thus reducing the revenues available to cover fixed costs between rate cases (e.g. investments in utility infrastructure).”

In perfect accord with the McKinsey report, Duke goes on to say that:

“…customers are unlikely to sacrifice comfort and convenience to participate in energy efficiency. In addition, the initial capital outlay associated with some programs could be a significant barrier to customer participation.”

In addition to addressing capital outlay hurdle for consumers, some of the elements of proposed Save-a-Watt program include:

• discounted or free Compact Fluorescent Lamps
• discounted energy efficient air conditioning and heat pump units
• remote power management of air conditioning and heat pump units
• PV and solar hot water systems free to the consumer (pilot program)
• energy efficiency capital cost financing through Duke (pilot program)
• monthly billing statements correlated with historical usage and weather data to facilitate ongoing improvement

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The Road to Energy Zero Homes – Understanding Your Energy Baseline

If you’re setting out to convert your home to a “zero energy” building standard, then it’s a good idea to know your baseline. In other words, where does the energy go in a typical home?

As you might expect, especially for heating cooling requirements, it depends on where you live, the age of your home, and to some extent (since the wealthy tend to consume more) how much money you make. However, one thing is clear, the bulk of the energy used in a home is for heating and cooling. According to the DOE, Energy Information Administration’s 2001 Residential Energy Consumption Survey anywhere from 38% to 70% of a homes energy consumption is spent on heating and cooling. The average values across all home sizes, home ages, and climate zones from that survey are shown in the following pie chart.

To give you and idea of how the energy consumption varies by where you live, the following charts show consumption by climate region for the United States.

The key point of all this data is that heating and cooling consumes the bulk of a home’s energy, and all of that energy is exchanged through the home’s shell or envelope. As a result, the starting point for any attempt to convert an existing home to a zero energy building standard must be an upgrade of the building envelope. In general, energy losses through the envelope are evenly divided between infiltration (air leaks), windows & doors, and conduction through the wall, ceiling, and floor. I’ll cover each of those in later posts.

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The Road to Energy Zero Homes – Metrics

“All healing is essentially the release from fear.”- A Course in Miracles

If you’ve been my reading previous posts you know that I believe that “sustainable” in the context of “home”, can only mean “net zero” or “energy zero” construction. What that means in practical terms, is that the thermodynamics of the building design (insulation levels, window performance, tightness, solar gain, etc.) must be good enough to allow the reasonable application renewable resources like solar or wind power to render the building a net zero energy consumer. By net zero, I mean that the home may have PV system that uses the grid as a storage device and although it may draw power from grid at times, on average the home delivers at least as much power to grid as it consumes.

The HERS Index is a good metric to help quantify the design performance required to meet this standard. I my opinion, the design of the home prior to the application of renewables, to be “good enough”, must have a HERS Index score of 25 or better to be “net zero ready”.

Unfortunately of the million or so homes built every year, my guess is that less than a thousand (perhaps less than 100) meet this standard. These are the hardy souls that build Earth Ships or are determined enough to find the few professionals who know how it’s done, regardless of the climate or any bias toward a specific building system. But in the long run it’s not the new homes that will be the challenge, it’s the over 100 million existing homes that grace the HERS Index scale from 130 to 150+. Some of these will of course be lost causes, economically not worth the effort, however the vast majority can be reasonably retrofitted, if not to 25 threshold, at least to below 50.

Stay tuned, I’ll be writing a series of “Zero Energy Home” posts that will cover the thermodynamic basics and strategies for retrofitting our existing housing stock.

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Energy, Carrying Capacity, and Sustainable Building

“By their own follies they perished, the fools.” – Homer, The Odyssey

The growth of civilization has been intimately linked to our ability to harness energy since man’s discovery of fire. Our reliance on biomass (wood) and eventually, the wind and hydro power of mills would limit our growth until the use of coal and the invention of the steam engine would launch the industrial revolution. However, it was the discovery of energy dense, crude oil in 1859 that would catapult us into a whole new age of growth, mobility, and abundance.

What is “sustainable” is based on carrying capacity, and every human advance in the use and amount of available energy would serve to increase both the population and economic carrying capacity of the earth. The shear abundance of cheap oil over the last 150 years would change the face of architecture and our built environment. Architects and building designers no longer had to consider local climate conditions, they could let their imaginations and ego’s run wild (or lazy) and rely on brute force heating and cooling to save the day. Architects like Phillip Johnson would build their design fame and fortune with glass homes in Connecticut and glass skyscrapers in Houston. Buildings that reply for their very existence on cheap and abundant energy.

Phillip Johnson – Glass House Connecticut

Phillip Johnson – Houston Skyscraper

Mass housing in the U.S. would follow a similar path. Not only would the buildings themselves be inefficient statements of style over substance and function, but the sprawling pattern of development based on cheap oil and the automobile, would create a formula for maximum energy consumption.

The OPEC engineered “oil shock” of the 1970’s would bring about some much needed building energy standards, but vested interests continue to play the “politics of energy codes” and keep us far from anything remotely sustainable. The recent Green movement is a positive step, but new standards such as Energy Star and LEED for Homes do nothing more than tweak the status quo in the direction of sustainability.

If we assume cheap and abundant energy will be with us forever, then the critical constraints to the carrying capacity of our current way of living and building are environmental degradation, water, and global warming. Observing the behavior of many our politicians and policy makers this would seem to be case. Unfortunately, because these issues are hard to economically quantify and the consequences can be conveniently be passed on to future generations, actions tend to come in tepid half measures like raising the CAFE standards to 35 miles/gallon over several years.

But what if cheap and abundant energy will NOT be with us forever? What if the critical constraint to the carrying capacity of our current way of living and building where the peaking and eventual depletion of fossil fuels like oil, natural gas, and coal? What if this constraint was not off in some nebulous, non-renewable resource future, but was now or very close to now? What if this where the eleventh hour? How would this change the way we build?

Based on data published by the Energy Information Administration (EIA) the worldwide production of conventional crude oil peaked in May of 2005 and is currently in an undulating plateau. If we add unconventional sources (deep water, oil sands, etc.) worldwide production peaked in February of 2006 and is also stuck in an undulating plateau. Matthew Simmons, advisor to the Bush administration, author of “Twilight in the Desert”, and investment banker to the energy sector, says that “Serious peak oil analysts all agree that peak oil is 0 to 10 years away.“

The U.S. production of conventional easy-to-get natural gas peaked in the early 70’s and we have only just been able to keep our supply versus demand heads above water with imports from Canada and Mexico and the aggressive exploration of unconventional, hard to get sources like shale and coal methane gas.

The International Energy Agency (IEA) projects that we will be facing a supply crunch sometime in 2010. Big oil executives, speaking in “peak oil code”, are now stating publicly that the “era of cheap oil in over”. There have been more than a half dozen Peak Oil related documentaries released since 2003 and Leonardo DiCaprio’s The 11th Hour documentary debuts this month.

Peak oil changes everything. It is a hard limit to carrying capacity to both population and economic growth. As consumption and depletion widens the gap between supply and demand, we will become supply constrained and as supply declines economic growth must follow. Building design will be climate driven and zero energy buildings will soon become a matter of necessity, not choice. Not in some nebulous green future, but by the end of this decade. This is the eleventh hour.

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Musings on the Meaning of “Sustainable” and “Green”

The current state of our green, sustainable building “movement” may amount to nothing more than rearranging the deck chairs on the Titanic.

Seeing the words “sustainable” and “green” used without much precision and diluted more and more as advertising adjectives, I’ve been a little obsessed recently with what these words really mean or should mean.

For me “sustainable building” speaks to the balance of inputs and outputs within a closed, and resource limited, eco-system, whether it be an island, a continent, or planet earth. It’s all about carrying capacity.

Sustainablity recognizes limits and in the context of our homes and built environment, it should be taken from the meaning of sustained yield used in forestry and agriculture. Used with precision, sustainability must mean capable of being sustained for millennia in the context of a closed eco-system, and limiting factors must include both population size and available resources.

It is usually only politically correct to speak of population growth as being a problem in the context of third world countries, but population growth in any country is eventually unsustainable and in the U.S. we have only been able to sustain our own growth by importing our “carrying capacity”. Economist Kenneth Boulding postulated an interesting and sobering set of theorems on population growth.

1st Theorem: “The Dismal Theorem” If the only ultimate check on the growth of population is misery, then the population will grow until it is miserable enough to stop its growth.

2nd Theorem: “The Utterly Dismal Theorem” This theorem states that any technical improvement can only relieve misery for a while, for so long as misery is the only check on population, the [technical] improvement will enable population to grow, and will soon enable more people to live in misery than before. The final result of [technical] improvements, therefore, is to increase the equilibrium population which is to increase the total sum of human misery.

3rd Theorem: “The moderately cheerful form of the Dismal Theorem” Fortunately, it is not too difficult to restate the Dismal Theorem in a moderately cheerful form, which states that if something else, other than misery and starvation, can be found which will keep a prosperous population in check, the population does not have to grow until it is miserable and starves, and it can be stably prosperous.

All this sounds more than a bit depressing, however commenting on the work of Thomas Malthus, Boulding puts the population issue in a more positive light. “… the [Malthus] essay, punctures the easy optimism of the utopians of any generation. But by revealing the nature of at least one dragon that must be slain before misery can be abolished, its ultimate message is one of hope, and the truth, however unpleasant, tends not to create despair, but activity of the right kind.”

In looking for other works that might inform my search for a better definition and understanding of sustainability for housing, I ran across the work of A. A. Bartlett. In his paper Reflections on Sustainabiity, Population Growth, and the Environment (2006), Bartlett postulates twenty some Laws of Sustainability. In the Bartlett Laws that follow, where appropriate, I’ve added my own sustainable housing corollary in italics.

First Law: Population growth and/or growth in the rates of consumption of resources cannot be sustained.

U.S. urban sprawl and the growth in home sizes and the associated energy and resource consumption is not sustainable

Second Law: In a society with a growing population and/or growing rates of consumption of resources, the larger the population, and/or the larger the rates of consumption of resources, the more difficult it will be to transform the society to the condition of sustainability.

Retrofitting over 100 million (mostly energy inefficient) homes in American to a condition of sustainability will be a monumental task.

Third Law: The response time of populations to changes in the human fertility rate is the average length of a human life, or approximately 70 years. (Bartlett and Lytwak 1995) [This is called "population momentum."]

Since our housing stock could easily double in 70 years, new and retrofitted homes should only be built to net zero energy standards.

Fourth Law: The size of population that can be sustained (the carrying capacity) and the sustainable average standard of living of the population are inversely related to one another. The higher the standard of living one wishes to sustain, the more urgent it is to stop population growth.

The size of population that can be sustained (the carrying capacity) and the sustainable average size and resource consumption of our homes are inversely related to one another.

Fifth Law: One cannot sustain a world in which some regions have high standards of living while others have low standards of living.

The U.S. cannot sustain average home sizes that are more than twice the average size of other developed country’s.

Sixth Law: All countries cannot simultaneously be net importers of carrying capacity.

Seventh Law: A society that has to import people to do its daily work (“we can’t find locals who will do the work.”) is not sustainable.

Eighth Law: Sustainability requires that the size of the population be less than or equal to the carrying capacity of the ecosystem for the desired standard of living.

The importation of such a large percentage of our carrying capacity makes the U.S. sprawling suburban style of living extremely vulnerable.

Ninth Law: ( The lesson of “The Tragedy of the Commons” ) (Hardin 1968): The benefits of population growth and of growth in the rates of consumption of resources accrue to a few; the costs of population growth and growth in the rates of consumption of resources are borne by all of society.

The benefits of suburban sprawl accrue to the developer and auto companies; the benefits of poor energy efficiency accrue to energy companies and utilities; but the costs are borne by us all.

Tenth Law: Growth in the rate of consumption of a non-renewable resource, such as a fossil fuel, causes a dramatic decrease in the life-expectancy of the resource.

Inadequate U.S. building energy standards are contributing to a rapid depletion of our natural gas and other fossil fuel resources.

Eleventh Law: The time of expiration of non-renewable resources can be postponed, possibly for a very long time, by:

• technological improvements in the efficiency with which the resources are recovered and used
• using the resources in accord with a program of “Sustained Availability,” (Bartlett 1986)
• recycling
• the use of substitute resources

Net zero building energy standards will be necessary to slow the depletion of fossil fuels in a post peak oil and gas world.

Twelfth Law: When large efforts are made to improve the efficiency with which resources are used, the resulting savings are easily and completely wiped out by the added resources that are consumed as a consequence of modest increases in population.

The retrofitting our existing housing stock to a much higher energy standard will be completed negated by even a modest growth rate in new homes, however energy efficient those new homes may be.

Thirteenth Law: The benefits of large efforts to preserve the environment are easily canceled by the added demands on the environment that result from small increases in human population.

Smart growth is an oxymoron.

Fourteenth Law: (Second Law of Thermodynamics) When rates of pollution exceed the natural cleansing capacity of the environment, it is easier to pollute than it is to clean up the environment.

Fifteenth Law: (Eric Sevareid’s Law); The chief cause of problems is solutions. (Sevareid 1970)

Sixteenth Law: Humans will always be dependent on agriculture.

Building should restricted on agricultural land. The highest and best use of land is for agriculture.

Seventeenth Law: If, for whatever reason, humans fail to stop population growth and growth in the rates of consumption of resources, Nature will stop these growths.

Energy shortages due to peak oil and gas will stop housing growth and force the transformation of our existing housing stock.

Eighteenth Law: In local situations within the U.S., creating jobs increases the number of people locally who are out of work. (Newly created jobs in a community temporarily lowers the unemployment rate (sayfrom 5% to 4%), but then people move into the community to restore the unemployment rate to its earlier higher value (of 5%), but this is 5% of the larger population, so more individuals are out of work than before.)

Nineteenth Law: Starving people don’t care about sustainability.

People living in slums don’t care about sustainable housing.

Twentieth Law: The addition of the word “sustainable” to our vocabulary, to our reports, programs, and papers, to the names of our academic institutes and research programs, and to our community initiatives, is not sufficient to ensure that our society becomes sustainable.

The addition of the phase “sustainable housing” or “sustainable development” or “green” to our vocabulary is not sufficient to ensure that our built environment becomes sustainable.

Twenty-First Law: Extinction is forever.

The current state of our green, sustainable building “movement” may amount to nothing more than rearranging the deck chairs on the Titanic.

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