Navigant Research Blog

Changing Building Codes Are the Latest Proof of the Distributed Energy Revolution

— March 8, 2018

The distributed energy resources (DER) revolution is underway, and there are signs all around us. Readers of this blog have seen discussion of distributed PV, energy storage, microgrids, and similar technologies grabbing ever wider bandwidth in trade journals, social media, and popular news outlets.

Building codes just may be the latest proof of the dramatic shift to distributed energy. The 2017 version of the National Electrical Code (NFPA 70), the most widely adopted electrical construction standard on the planet, has a total of five new articles (or sections)—and four of those five are directly related to DER, as shown in the table below. Since the code’s key purpose is for electrical safety and fire protection, the addition of these articles reflects the need for setting safety standards among these fast-deploying technologies.

The addition of four articles is significant. Over its 120-year history, the code had accumulated eight articles related to DER (including generators, fuel cell systems, EVs, and the like), so this adds a notable 50% increase. Watch for changes to existing articles and more hybridized, interactive DER, and standard DER-related articles in subsequent versions.

New Articles Added to the National Electrical Code 2017

(Source: National Electrical Code)

Going beyond Code Requirements

Beyond just making safe and code-compliant equipment, DER vendors need to proactively address the concerns of building officials, fire marshals, and other authorities charged with protecting public safety. Since many codes are updated on a 3-year cycle—an eternity in the current wave of innovation—some products are invented and may have multiple generations before technical committees can officially weigh in. This author has heard an initially skeptical building official consider approving a fuel cell on a parking structure express concerns with “the thermal power plant on the roof” (the project was approved). Lithium ion battery storage installers (and lead-acid before them) have spent years educating fire officials on safety measures and operating procedures for their equipment. Vendors of newer technologies often learn from those that went before. But in most cases a proactive, trailblazer approach pays dividends.

One example of a DER technology overcoming safety concerns is the case of distributed PV in California. While not strictly building code related, California’s Rule 21 interconnection requirements were recently significantly updated to reflect growing trust of grid-tied inverters like those used in PV systems. Whereas inverters were formerly required to immediately shut off at the slightest sign of grid trouble or outage (for safety reasons), new smart inverters are allowed and able to stay operational under a much wider set of circumstances. This was as much a function of increased trust of the technology as it was a need to not have megawatts worth of generation going offline after each slight blip in frequency or voltage.

Industry Recommendations

Codes and similar regulations are important—they can encourage or limit technology deployment, effect installation costs, and even determine the number of hours a system can provide usable power (e.g., California’s Rule 21 for PV). Thus, it pays for vendors to take an active approach in educating city officials and first responders, and to be active in code development cycles. The relative infancy of the DER revolution means more growing pains likely lay ahead. Since DER are not yet truly ubiquitous, a proactive approach by vendors is a wise investment.

 

Despite Bleak Chinese Construction Outlook, Still Hope for Green Buildings

— July 27, 2015

According to second quarter gross domestic product (GDP) data released by China, the miraculous decades-long growth of the Chinese economy is continuing. In reality, though, China’s GDP figures range in the territory of unreliable to laughable. As publicly traded companies announce their second quarter earnings, a picture of a more stagnant Chinese economy is emerging, and for construction, that picture is bleak.

How Low Can You Go?

United Technologies’ share price tumbled on July 21 (before receiving a little bit more bad news) as net sales and net income fell and performance failed to meet analyst expectations. The company’s Otis elevator and escalator products were projected to experience a 5% increase in orders in China for the year. Instead, the company recorded a 10% decline. The fall in elevator orders is a direct result of the fall in Chinese construction.

Unfortunately, construction in China does not appear to have a bright future. China’s government-led construction drive gobbled up massive amounts of commodities. In 2014, the country accounted for 40% of the world’s copper consumption, despite having just 20% of the world’s population. In just 3 years, China used more cement than the United States did in the entire 20th century. But, commodity prices have dropped, highlighting China’s cooling construction market. The Bloomberg Commodity index has fallen to its lowest level since 2009.

Darkest before the Dawn

Despite these construction headwinds, there is hope in high-performance buildings. The Chinese government is pushing green buildings, in part as a response to the country’s urban air pollution problem. Even though the construction boom has faded, advanced controls and building energy management systems are still poised for growth. As the focus shifts from completing construction to ensuring efficient operation, there is an opportunity for wider adoption and more sophisticated systems.

Other players in the building space are viewing China as a growth opportunity. Johnson Controls noted increased revenue on market expansion in China. Indeed, the company is investing in the Chinese market in anticipation of significant growth opportunities. Honeywell’s Automation and Controls Solutions (ACS) experienced double-digit growth in China in the second quarter of 2015. As China’s construction market continues to mature, the break-neck growth that has been characteristic has slowed substantially. The focus is shifting from more buildings to better buildings, creating opportunities for solutions that improve operational efficiency.

 

Greek Construction Booming … In the United States

— May 19, 2015

Today’s outlook for construction in Greece is bleak. A standoff between the country’s Syriza government and its European creditors could spark a default of government debt and potentially lead to an exit from the European Union, and the Greek economy is in shambles after 6 years of recession. Furthermore, the head of one of Greece’s largest construction companies was arrested on charges of tax evasion.

Greek construction activity has fallen more than 95% from its pre-crisis peak and, in all likelihood, has little chance of rebounding any time soon. Across the Atlantic, though, Congress is considering a bill that could have a profound effect on a different type of Greek construction—the Greek-letter fraternity and sorority houses across the country.

Currently, a donation to a college or university Greek organization for housing provides a tax deduction of 30% of the donation amount (and, perhaps, a feeling of giving back). However, the Collegiate Housing and Infrastructure Act would allow donations to Greek groups to be fully tax deductible. The Fraternal Government Relations Coalition, a group representing 100 fraternities and sororities, is urging Congress to pass the bill. The group says that $1 billion in construction and renovation projects could begin if the bill is passed. Some of the buildings date to the 1930s, and some have seen few if any upgrades in the past several decades. The impact of $1 billion toward renovations on aging housing could have huge ramifications on energy consumption.

From Frat House to Green House

Improvements to the building envelope, more efficient HVAC equipment, better lighting, and, importantly, smarter controls could not only reduce operating costs but also improve the comfort of building occupants. Navigant Research’s Energy Efficiency Retrofits for Commercial and Public Buildings provides insight into the major technical and market trends related to these types of projects. Indeed at some universities, fraternities and sororities are already leading on energy improvements. The Kappa Alpha Order chapter house at the University of Maryland installed ceramic film on their windows as part of a sustainability initiative. Also, the Beta Theta Pi fraternity of University of Florida installed solar panels on the roof of its campus fraternity house. Broader Greek construction may have an impact positive enough to counteract all of that other stuff fraternities do.

 

New Home Bundles Energy Technology for High Efficiency

— June 4, 2014

There are numerous examples of highly energy efficient homes on the market, all featuring various types and combinations of technologies.  For instance, Garbett Homes and Vivint have created a net-zero home in Utah that features a zero rating on the Home Energy Rating System (HERS) Index.  Builder KB Home has completed a house in Lancaster, California that is designed to use net-zero energy and zero freshwater for irrigation.

Similarly, Sacramento Municipal Utility District (SMUD) has been involved in net-zero residential projects for several years.  Also, Meritage Homes offers net-zero homes at several of its communities in Arizona and Nevada.  In addition, automaker Ford has partnered with several companies for its MyEnergi Lifestyle initiative that aims to demonstrate how homeowners can lower electric bills and reduce carbon emissions with a combination of solar photovoltaic (PV) panels, smart appliances, and plug-in electric vehicles.

AC Included

A new custom home in Houston, Texas offers another angle on residential energy efficiency that leverages the relatively low cost of natural gas as a way to lower electricity costs.   The spec home features a micro-trigeneration system that is the first of its kind available for the residential market, according to the manufacturing company, M-CoGen.  At the heart of the home’s energy production is a natural gas-powered unit, which operates with a traditional micro combined heat and power (microCHP, also called residential CHP, or resCHP) system and adds cooling and storage capabilities.  The system can reduce overall electricity use by up to 70%.  By adding cooling functionality, the system carries a new moniker: micro combined cooling, heat, and power (microCCHP).  The system also incorporates a battery bank for energy storage and provides power management controls to enable the home to shed load and make decisions on time-of-day usage.

While this microCCHP system does not bring the home to net-zero functionality, it does provide homeowners with another alternative to the traditional one-way consumption model, particularly in markets where natural gas is plentiful and relatively affordable.  Whether this particular generation solution will scale to thousands of new homes remains to be seen.  Over time, though, this and the other combinations of onsite generation, storage, and energy management technology have a chance to disrupt the residential energy market, as rooftop solar PV systems have been doing for a number of years.

 

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