Navigant Research Blog

California Calculates the Value of Time in Energy Efficiency

— July 22, 2014

The 2013 update to California’s Title 24 building energy efficiency standards went into effect on July 1, 2014.  In addition to increasing overall building efficiency requirements over the 2008 standards, this update set out more stringent lighting requirements for both residential and non-residential buildings.

The 2013 update also includes changes to California’s time dependent valuation (TDV) calculation.   Used only in California, TDV is a tool to gauge the value of energy efficiency measures.  Unlike other metrics, such as site or source energy (measured in kBtu), TDV includes the cost to provide energy based on time of use, as well as other variations in cost due to climate, geography, and fuel type.

TDV was developed in 2005, and was updated in both 2008 and 2013, to help California meet the energy efficiency goals established in Title 24.  In the 2013 update, the California Energy Commission (CEC) changed the TDV calculation to account for climate sensitivity by separating California into 16 different climate zones.  This alteration helps reflect differences in energy costs driven by climate conditions, which vary considerably throughout California.

Finer Grained

One of the key barriers to wider TDV adoption is developing values for each climate zone.  As stated above, California alone has 16 climate zone values.  Another limitation is that many state officials are unaware of it: California is the only state that uses TDV, whereas metrics such as site and source energy are much more commonly employed both nationally and internationally.  Further, TDV does not account for the potential grid modernization costs necessary to export excess electricity back to the grid.

But since TDV accounts for differing energy costs based on a range of factors, it more accurately captures the societal cost of energy consumption that’s missed in assessments based only on source or site energy parameters.

In the coming years, as California tries to build more zero energy buildings (ZEBs), TDV will play an important role in determining whether a building meets the required energy use intensity to qualify as zero net energy.  The forthcoming Navigant Research report, Zero Energy Buildings, will provide an update to the 2012 iteration, and look further into the benefits and challenges associated with TDV as a metric.

 

Emissions Reduction Efforts Gather Steam

— July 2, 2014

Over the past month, worldwide efforts to reduce global carbon emissions have intensified.  On June 2, the U.S. Environmental Protection Agency (EPA) released a proposal to cut emissions using state-by-state targets (read more on the proposed rule and its implications in previous blogs by my colleagues Brett Feldman and Ryan Citron).  As states begin to explore different compliance options, regional cap-and-trade programs, such as the Northeast’s Regional Greenhouse Gas Initiative (RGGI), have gained traction.  Outside of the United States, The World Bank recently reported that more than 60 carbon pricing systems are either operational or in development worldwide.

Cap-and-Trade Considerations

Despite opposition to the EPA’s proposed rule, some states have already begun to embrace the change by exploring a variety of compliance options.   Washington state and Pennsylvania, among others, see cap-and-trade as a possibility to achieve their state’s target for emissions cuts.  John Podesta, a senior adviser to President Obama, told the Financial Times that a market-based solution to achieve emissions cuts would be “the most cost-effective way that states might come together to get the reductions that will be required.”  Many Democratic governors have already indicated that they will draw on the success of the RGGI and California’s statewide market to achieve compliance with the new targets.

Not to be outdone, the National Development and Reform Commission (NDRC) of China laid out plans to establish a national carbon market starting in 2018.  If it comes to fruition, the national model will take into account outcomes from seven regional pilot programs that launched in 2014 (the last of which was scheduled to launch in June).  The pilot schemes, scheduled for evaluation in 2016, cover around one-third of China’s gross domestic product and one-fifth of its energy use.  If successful, these programs will not only shape the development of a national carbon market, but also help meet the national goal to reduce carbon intensity by 40% to 45% by 2020 from 2005 levels.

Is a U.S. Carbon Market Realistic?

Realistically, such legislation would be extremely unlikely in the immediate future.  National cap-and-trade legislation has failed on several occasions since President Obama took office, with opponents citing economic harm as the primary concern.  However, if China implements a national carbon market that achieves economical emissions cuts, it could provide the impetus to spur federal legislation in the United States.  Additionally, with the United Nations Climate Summit approaching in September, progress from United States and China may help further global efforts to curb emissions.

 

LEDs Get a Makeover

— June 2, 2014

My colleague Jesse Foote noted in a blog earlier this month that high prices, formerly one of the major obstacles to consumer adoption of light-emitting diodes (LEDs), have begun to fall.  In 2012, LED bulbs cost about $40 apiece; now, the price has fallen to around $10.  Price aside, another remaining barrier to LED adoption is aesthetic: consumers dislike the harsh, bluish light emitted by LEDs.  Large lighting manufacturers as well as startup companies have responded to consumer preferences by releasing a variety of LED bulbs that mimic the light emitted from a traditional incandescent bulb.  Particularly as the U.S. incandescent phase-out continues, lighting manufacturers have begun to produce a more diverse set of LED bulbs for different lighting sectors.

Warm and White

Last March, Cree became the first company to produce a LED bulb for residential use that mimics the warm, white light of an incandescent bulb.  The TrueWhite bulb has also drawn customers due to its price (less than $10 per bulb) and design.

Since then, other lighting manufacturers have come out with their own versions of LED bulbs that look like incandescents.  Philips introduced a $12, 25,000-hour bulb in April 2014, and General Electric’s 60-watt equivalent Reveal bulb provides a dimmable LED option.  Ushio also offers a decorative LED lamp that gives off a warm glow.

The variety of players in the incandescent-like LED field is bound to continue growing as manufacturers recognize the market potential for visually appealing LEDs.  Recently, The New York Times ran a feature on a small company called Finally. The startup has developed its own bulb that looks like an incandescent, but is actually a refined form of induction lighting.

To the Streets

In early May 2014, the commercial sector saw the emergence of Cree’s LED T8 lamp.  By bringing down the cost of commercial LED lamps, this product captured some of the fluorescent-dominated market.  However, price remains a large barrier in commercial LED lighting, with the Cree T8 running around $30 per bulb, almost 10 times more than traditional fluorescent lamps.

The forthcoming update to Navigant Research’s Smart Street Lighting report will address the use of LED bulbs in street lighting, a move that has already saved cities around the world millions of dollars on electricity per year.  The emergence of LED bulbs that look like incandescents holds particular promise for more decorative street lighting applications.  Companies like Sternberg Lighting offer traditional decorative fixtures that are LED-compatible and offer a solution to installing energy efficient lighting fixtures in a nonresidential setting.

 

In Asia Pacific, Green Buildings Gain Ground

— April 29, 2014

Recently, the World Green Building Council launched the inaugural Asia Pacific Regional Network Leadership Awards in Green Building.  The awards program will recognize organizations in the region committed to sustainability and green building.  Navigant Research’s report, Energy Efficient Buildings: Asia Pacific, found that the Asia Pacific region is home to about 40% of the world’s building stock, with great potential for both energy efficiency retrofits and more efficient new construction.

Across the region, individual policies and incentives exist to promote energy efficient development.  Additionally, a number of regional and bilateral programs have formed to share best practices and conduct joint projects.

Already, country-level energy reduction targets bolster the implementation of energy efficient building technologies throughout the region.  For example, after successfully achieving a 19% reduction in energy intensity between 2006 and 2010 under the 11th Five-Year Plan, China’s 12th Five-Year Plan targets an additional 16%  reduction between 2011 and 2015.   Similarly, the government of Japan announced a goal to reduce greenhouse gas emissions 30% from 2005 levels by 2020.  These ambitious goals encourage companies and other entities to retrofit or build more efficiently from the start.

Regional Efforts

In addition to individual goals, Asia Pacific nations have formed various regional and bilateral partnerships to promote energy efficient development and modernization.

Founded in 1990, the Asia Pacific Economic Cooperation (APEC) Energy Working Group promotes energy investment and clean energy technologies and policies.  In 2007, the group resolved to work toward a collective goal of reducing energy intensity by at least 25% by 2030.

There’s no question that both individual and group efforts are beneficial in that both increase the total stock of energy efficient buildings, but is there a way to use these congenial relationships to further motivate countries to build more efficient buildings?

Challenge Accepted

The U.S. Better Buildings Challenge, which my colleague Eric Bloom covered in a previous blog post, and Northern California’s Best Buildings Challenge provide examples.  These programs set energy reduction targets and participating companies commit to pursue those reductions.  The motivation to join can vary drastically, depending on the organization – from the desire to promote sustainability to the bottom-line savings offered by more efficient buildings.  The Better Buildings Challenge targets a 20% increase in energy efficiency by 2020, equivalent to about $58 million in energy savings each year.

A countrywide, or regionwide, challenge to meet an aggressive reduction target could help increase the energy efficient building stock in Asia Pacific.  In particular, developing countries seeking advice on best practices or technological implementation could capitalize on such an opportunity, as they go through high periods of building and construction.   The World Green Building Council’s Asia Pacific award could serve as such a forum for collaboration and leadership that will spur energy efficient building and development throughout the region.

 

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