Elsevier

Energy and Buildings

Volume 77, July 2014, Pages 112-129
Energy and Buildings

Regional analysis of building distributed energy costs and CO2 abatement: A U.S.–China comparison

https://doi.org/10.1016/j.enbuild.2014.03.047Get rights and content

Highlights

  • DER potentially competitive in both economic and CO2 emissions abatement terms.

  • DER more competitive in commercial buildings, in warmer areas of the U.S.

  • Structure of electricity/NG tariffs drive DER attractiveness, more so than climate.

  • High spark spreads lead to increased economic attractiveness of DER.

Abstract

The following paper conducts a regional analysis of the U.S. and Chinese buildings’ potential for adopting Distributed Energy Resources (DER). The expected economics of DER in 2020–2025 is modeled for a commercial and a multi-family residential building in different climate zones. The optimal building energy economic performance is calculated using the Distributed Energy Resources Customer Adoption Model (DER-CAM) which minimizes building energy costs for a typical reference year of operation. Several DER such as combined heat and power (CHP) units, photovoltaics, and battery storage are considered. The results indicate DER have economic and environmental competitiveness potential, especially for commercial buildings in hot and cold climates of both countries. In the U.S., the average expected energy cost savings in commercial buildings from DER-CAMs suggested investments is 17%, while in Chinese buildings is 12%. The electricity tariffs structure and prices along with the cost of natural gas, represent important factors in determining adoption of DER, more so than climate. High energy pricing spark spreads lead to increased economic attractiveness of DER. The average emissions reduction in commercial buildings is 19% in the U.S. as a result of significant investments in PV, whereas in China, it is 20% and driven by investments in CHP.

Introduction

The transition from a centralized and fossil-based energy paradigm towards the decentralization of energy supply and distribution has been a major subject of research over the past two decades. Various concerns have brought the traditional model into question; namely its environmental footprint, its structural inflexibility and inefficiency, and more recently, its inability to maintain acceptable reliability of supply. Under such a troubled setting, distributed energy resources (DER) comprising of small, modular, electrical renewable or fossil-based electricity generation units placed at or near the point of energy consumption, has gained much attention as a viable alternative or addition to the current energy system.

In 2010, China consumed about 30% of its primary energy in the buildings sector, leading the country to pay great attention to DER development and its applications in buildings. During the 11th Five Year Plan1 (FYP), China has implemented 371 renewable energy building demonstration projects, and 210 photovoltaics (PV) building integration projects. At the end of the 12th FYP, China is targeting renewable energy to provide 10% of total building energy, and to save 30 metric tons of CO2 equivalents (mtce) of energy with building integrated renewables. China is also planning to implement one thousand natural gas-based distributed cogeneration demonstration projects with energy utilization rates over 70% in the 12th FYP. All these policy targets require significant DER systems development for building applications. China's fast urbanization makes building energy efficiency a crucial economic issue; however, only limited studies have been done that examine how to design and select suitable building energy technologies in its different regions.

In the U.S., buildings consumed 40% of the total primary energy in 2010 [1] and it is estimated that about 14 billion m2 of floor space of the existing building stock will be remodeled over the next 30 years. Most building's renovation work has been on building envelope, lighting and HVAC systems. Although interest has emerged, less attention is being paid to DER for buildings. This context has created opportunities for research, development and progressive deployment of DER, due to its potential to combine the production of power and heat (CHP) near the point of consumption and delivering multiple benefits to customers, such as cost savings, increased energy security, environmental improvements, market competition, innovation, and active engagement by consumers. Prevailing DER technologies include CHP-ready reciprocating engines (ICE), microturbines (MT), fuel cells (FC) and various renewable sources, such as PV panels.

Due to an increased focus on R&D and widespread pilot project validation, the installed costs of DER have been going down significantly during the last decade. Fig. 1 shows this trend, based on past estimates and on Energy Information Administration's (EIA's) price forecast for 2025. Additionally, as a result of technological advances in exploration and production of natural gas, gas prices have been going down, making it an increasingly attractive and affordable energy source for the commercial and residential sectors, where electricity use still dominates [5]. Most DER units that operate on natural gas are able to capture and utilize waste heat from electricity generation, increasing its potential penetration in buildings.

Currently, the common approaches to evaluating an individual technology's potential for building energy efficiency impacted by on-site generation are ineffective and rarely find the global optimum. To tackle climate change, government policies often promote clean technologies, such as PV or FC, and provide incentives for their adoption irrespective of how the technologies are applied. In both China and the U.S., the current strategy for promoting ultra-low energy buildings relies heavily on dispersed renewable technologies combined with (by current standards) extreme efficiency measures. The cost effectiveness and energy saving potential from these technologies are highly sensitive to building energy services requirements, usage patterns, tariffs, and incentives. To holistically achieve the most cost or carbon effective building energy efficiency and on-site generation combination, multiple technology options and their operating schedules need to be optimized simultaneously in order to choose the best technology combination for a particular building.

DER adoption modeling requires the following inputs: the building's end-use energy load profile, the city's solar radiation data, the local electricity and natural gas tariffs, and the performance and cost of available technologies. The methodology and key assumptions followed are addressed in the next section.

Section snippets

Methodology

The Distributed Energy Resources Customer Adoption Model (DER-CAM) optimization tool has been used in this study. DER-CAM has been in development by Lawrence Berkeley National Lab (LBNL) for over 10 years, and has been widely used to assess DER alternatives, to find optimal results, and for energy-economic assessments [6], [7], [8]. Fig. 2 shows the energy flows modeled by DER-CAM.

DER-CAM finds optimal supply technology combination and its operating schedules. The tool can solve the entire

Results and discussion

Table 6 shows the optimal DER-CAM selected technologies for U.S. commercial buildings. The results show the optimal technology selections considering the annualized technology investment costs, the energy consumption costs, the energy conversion performance and renewable energy harvest. Fig. 12 illustrates the commercial building energy cost optimization results and their CO2 abatement potential, expressed in terms of energy and emissions intensity. For each city, there is a baseline

Conclusions

The present study analyzed from the economic and environmental standpoints the expected viability of distributed energy resources (DER) in 2020–2025 in selected cities of the U.S. and China. In U.S. commercial buildings, average energy cost savings from suggested investments in DER is 17% were found, whilst in Chinese buildings it is 12%.

If technology characteristics are fixed, the structure and prices of electricity tariffs along with the cost of natural gas represent the most important

Acknowledgments

This work was supported by the Assistant Secretary for Energy Efficiency and Renewable Energy, Building Technologies Program, of the U.S. Department of Energy under Contract No. DE-AC02-05CH11231, U.S.-China Clean Energy Research Consortium (CERC), and Energy Foundation China Sustainable Energy Program. The authors acknowledge the funding by Fundação para a Ciência e Tecnologia (FCT) PTDC/SENENR/108440/2008 and MIT Portugal Program.

Glossary

ASCC
Alaska Systems Coordinating Council
ASHRAE
American Society of Heating, Refrigerating and Air-Conditioning Engineers
CERC
Clean Energy Research Consortium
CHP
Combined heat and power
DER
Distributed energy resources
DER-CAM
Distributed energy Resources customer adoption model
DOE
(U.S.) Department of Energy
EIA
(U.S.) Energy Information Administration
EUI
Energy use intensity
FC
Fuel cell
FCT
Fundação para a Ciência e Tecnologia
FRCC
Florida Reliability Coordinating Council
FYP
Five Year Plan
GHG
Greenhouse gases
HVAC

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