Energy Efficiency and District Heating

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Energy Efficiency and District Heating

• Meredydd Evans
• Baltic Clean and Green Energy Conference
• October 14, 2009, Tallinn

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Overview

• Why is energy efficiency important?
• How can governments promote energy efficiency?
• DOEs role and international cooperation
• How can businesses get value from energy
  efficiency?
• Spotlight on district heating

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Why is energy efficiency important?

• Climate change
• Economic recovery and competitiveness
• Energy security

4
Some points of departure

• Energy accounts for vast majority of greenhouse
  gas emissions
• Energy efficiency is not captured today to the
  extent that is economically or financially
  optimal
• Many opportunities for improvement
• Energy systems have long life-spans, so change
  requires time
• Countries with
• fast growth in energy demand
• new infrastructure long-lasting

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Reference Emissions Scenarios
But technology alone will not solve the climate
challenge.
Global CO2 Emissions
CO2 Concentrations
Allowing expansion of nuclear reduces emissions
in the reference. The same would be true for
renewable sources.
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Why is energy efficiency important?

• Climate change
• Economic recovery and competitiveness
• Energy security

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Energy Efficiency Generates Jobs

• American Council for an Energy-Efficient Economy
  (2008) finds
• 20 efficiency gain by 2030 generates an
  estimated 800,000 jobs
• Berkeley Study (2008) finds
• Over 1972-2006 period, energy efficiency policies
  in California lead to a reduction in electricity
  per capita requirements of 40 below national
  average allowing households to redirect
  expenditures toward other goods and services and
  creating jobs

Source American Council for an
Energy-Efficiency Economy. 2008. Positive
Returns State Energy-Efficiency Analyses Can
Inform U.S. Energy Policy Assessments. Roland-Hols
t. 2008. Energy Efficiency, Innovation, and Job
Creation in California. Center for Energy,
Resources and Economic Sustainability.
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8
Energy intensity by GDP per capita (2003)
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Many missed opportunities for clean energy

• Vattenfall/McKinsey

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Policies to Encourage Efficiency Help Mitigate
Impact of PricesExample Difference in
Electricity Investment in the IEA WEO Alternative
vs. Reference Scenario, 2004-2030
1 000
500
0
billion dollars (2000)
- 500
-1 000
-1 500
-2 000
Additional investments on the demand side are
more than offset by lower investment on the
supply side
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U.S. Building Energy Codes Program

• Energy savings of nearly 1 billion per year
• Improved energy efficiency for 280 million m2 of
  new commercial floor space and 4 million new
  households
• By 2030
• Annual savings of 5.3 billion in energy costs
  for consumers
• Annual reduction in carbon emissions of 13.2 MMton

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Why is energy efficiency important?

• Climate change
• Economic recovery and competitiveness
• Energy security

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Energy Demand and Savings IEA -11Energy
efficiencys role in energy balance
Without energy savings achieved since 1973 energy
demand in 1998 would have been 50 higher
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Decline in Natural Gas Production A Looming
Supply Gap
bcm
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Russias Energy Strategy

• Exports stable
• Demand grows
• Production grows
• But is it realistic? Based on policy goals.
• Production growth seems challenging
• Demand growth to date, exceeded projections

Production
Export
Russian demand
Optimistic/baseline scenarios
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Energy efficiency a bargain in Ukraine
How would energy security be different if Ukraine
had dramatically lowered its energy intensity 10
years ago?
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How can governments promote energy efficiency?

• Information
• Standards
• Market transformation
• RD

Policy can help address barriers to
cost-effective energy efficiency technologies,
encourage deployment
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California Policy can have a measurable impact
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Policy Comparison Drop in Energy Intensity,
1996-2004

20
Information Impact of refrigerator labels in EU
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Standards

• Building energy codes
• Appliance standards

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Climate scientists and architects say that no
single policy change could do more to save energy
over the long run and reduce the nations
contribution to global warming than building
codes that make saving energy the law.
Clifford Krauss New York Times July 2009
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New Construction and Building Energy Codes

• Energy codes increase likelihood of cost and
  energy savings (up to 50 in U.S.)

• Buildings last 30-50 years.
• Most cost-effective to install efficiency
  measures at construction

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Appliance standards force deploymentof
energy-efficient technology
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Market transformation

• Demand-side management
• Bulk procurement

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What is market transformation?

• Strategic interventions that attempt to cause
  lasting changes in the structure or function of a
  market or the behavior of market participants,
  resulting in an increase in the adoption of
  energy efficient products, services, or practices
  (American Council for an Energy Efficient
  Economy, ACEEE)
• Key elements address market barriers,
  opportunities
• Seek to effect lasting change, building on market
  trends

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Impacts pre-2001 programmes in CA
40,000
14 of Annual Use in California in 2001
35,000
30,000
25,000
Utility Programs at a cost of 1 of Electric
Bill
GWH
20,000
15,000
10,000
Building Standards
5,000
Appliance Standards
0
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
Public Interest Energy Strategies CEC 100-03-12F
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Example US DOE Sub-CFL Procurement

• 1998-1999
• No subsidies
• Addressed two market barriers price and size
• Two products already in the market met
  specifications
• Two RFPs issues for two phases
• Multiple awards were given
• New products entered the market during both
  phases
• Winners products advertised through DOE website
• One year warranty

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Spotlight on DOE EERE Technology Portfolio

• Geothermal
• Solar
• Wind
• Hydropower Advanced Water Power

• Biomass
• Fuel Cells
• Advanced Vehicles

• Buildings
• Industrial
• Federal Energy Management
• Weatherization and Intergovernmental

Mission Statement
To develop cost competitive technology,
facilitate commercialization and deployment to
the marketplace
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Building Technologies Goal

• Net-Zero Energy Buildings by 2025
• Net-Zero Energy Homes by 2020
• Low incremental cost

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Capacity from Buildings for Transportation

• Energy efficient appliances and lighting save
  electricity and natural gas to free up capacity
  for bridging fuels.

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EU - USA Collaboration

• US bilateral work with EU countries and joint
  collaboration through the IEA
• Areas of mutual interest retrofit opportunities
• Financial mechanisms to accelerate implementation
• Building systems designed for the retrofit market
• Possible collaboration on test procedures,
  standard development, policy formulation and
  management
• Solid state lighting
• Building integration - appliance and plug loads
• Smart grid and interaction with hybrid plug-in
  (transportation)
• Building envelope systems

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International Partnership for Energy Efficiency
Cooperation (IPEEC)

• A high-level forum for discussion, consultation
  and information exchange with other countries
  regarding energy efficiency measures
• Secretariat hosted at IEA, launched in 2009
• Countries join on a voluntary basis and
  participate in specific annexes that reflect each
  countrys greatest interests
• Selected examples of planned activities (or
  annexes)
• Sustainable Buildings Network (SBN)
• Improving public and private sector methods for
  Measuring and Verifying Energy Efficiency
  Improvements

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How can businesses get value from energy
efficiency?

• Improve competitiveness through lower costs
• New business creation
• Energy efficiency equipment
• ESCOs
• Financing

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Examples

• Dow Chemical 1.9 million annual savings through
  steam system repairs in single plant
• Gostomel Glass Plant Energy Alliance
• New businesses to audit and retrofit buildings

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Steps toward energy efficiency

• Conduct energy audit
• Develop financing plan
• Implement project
• Track results and tell customers
• Replicate results corporate energy or
  sustainability team

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National Account Partnerships

• DOE national labs teamed with 23 companies to
• Build one new building at 50 less energy than
  ASHRAE Standard 90.1.
• Retrofit at least one existing building at 30
  less energy.
• Labs provide technical assistance to biggest
  names in retail, commercial real estate, and
  financial sectors.

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Some resources for companies

• DOEs Industrial Technologies Program
• www1.eere.energy.gov/industry/technologies/index.h
  tml
• EBRDs industrial energy efficiency financing
• www.ebrd.com/industrialenergyefficiency
• Whole Building Design Guide www.wbdg.org/design/b
  uildingtypes.php
• DOEs Building Technologies Program
• www1.eere.energy.gov/buildings/

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District heating

• The importance
• Some challenges
• Improving and growing district heating

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DHs Share in Space Heat Market ()
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District Heating as of Total Energy
Use(without distribution losses)
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District Heat Consumption Trends
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District Heat Consumption Trends OECD
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District heating in Eastern Europe A few facts

• DH supplies up to 70 of residential heating in
  transition economies
• Over 1/3 of energy use is for heat in some
  countries
• Improving generation efficiency to Western levels
  can save equivalent of over 80 bcm gas per year
  (Germany uses 90 bcm/year)

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Challenges
Source CENEf
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Estonian district heating distribution losses
Source Hlebnikov and Siirde, 2008
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District heating as a clean energy
integrator CHP share 68, renewable share 14
Sources Werner and Ecoheatcool
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Combined heat and power production reduces
emissions
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Key Challenges with District Heating
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Promoting District Heating Importance of
Customer focus

• Key to improving business, finances
• In many cases, customers do not even know they
  have DH hard to make it a premium service
  without recognition
• DH companies tend toward technical customers
  just want convenient, reliable and inexpensive
  service
• Companies can do more to boost customer awareness
  and appreciation, and improve customer relations

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Policy and Heat Markets

• Countries with competition for heat have seen
  strongest growth in DH (i.e., FI, S)
• Countries with clear, well-defined heat policies
  also show growth (Nordic, Baltic countries,
  Korea)
• Where district heating successful, it is usually
  integrated into larger energy policy

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DH Policy Recommendations

• Policy balance re. supply and demand
• Encourage demand-driven business practices
• District heating tariffs should cover ALL costs
• Independent regulator, least-cost planning and
  full cost coverage key if regulate
• If have competition, make sure it is fair
• Competition between heating methods can bring
  down prices and boost efficiency

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Conclusions

• Energy efficiency can help stabilize climate,
  promote economic growth and energy security
• Success with clean energy often depends on how
  energy decisions are made (not just cost or
  technology) policy can help promote energy
  efficiency
• Businesses can also gain from focusing on energy
  efficiency
• District heating presents unique opportunities
  for low-carbon heating
• Policy framework and company focus on customers
• E-mail m.evans at pnl.gov