Scenarios to decarbonize residential water heating in California
Introduction
California is an important test bed for national and international climate policies having already implemented some of the most ambitious climate regulations in the country. California Assembly Bill 32 (AB 32) was passed in 2006 and mandated that statewide emissions in 2020 should not exceed those in 1990. For the year 2050, California Executive Order (EO) S-3–05 sets an ambitious goal to reduce the economy wide emissions by 80% below the 1990 level. More recently in 2016, California's climate commitment has been strengthened by the passage of California State Bill 32 (SB 32), requiring that annual greenhouse gas (GHG) emissions in 2030 be 40% below 1990 level. Moreover, in 2016, the state set a 40% reduction target for hydrofluorocarbon (HFC or “F-gas”) refrigerants in 2030 from 2012 levels (CA SB 1383).
In 2014, California's statewide GHG emissions were led by the transportation sector at 37% of overall emissions, followed by the industrial, electricity, building heating, and agriculture sectors at 24%, 20%, 11%, and 8%, respectively. For the state to achieve an economy-wide emissions reduction of 80% of 1990 level by 2050, a first order goal would be to achieve 80% emissions reduction in emissions from each sector, although some sectors and end-use applications may be more difficult to decarbonize than others. For example, heavy-duty transportation and high temperature industrial heating are typically viewed as relatively more difficult to decarbonize than the electricity sector.
Decarbonizing the building heating sector follows the general paths of achieving high energy efficiency in the building shell (e.g., attic, wall, floor insulation), installing energy efficient appliances and decarbonizing the energy supply (e.g., transitioning to lower carbon electricity sources) and/or lower carbon fuels for equipment with onsite combustion (e.g., directed biogas for space heating or water heating). Coupling decarbonized electricity supplies with fuel substituting of heating demand from natural gas to electricity has great potential for building decarbonization (Wei et al., 2013a, Wei et al., 2013b; Munuera, 2013; Dennis, 2016). In Europe, the effects of electrification of buildings and efficiency retrofits such as heat pumps on emissions reductions have been highlighted in several studies (MacLean, 2016; Kelly, 2016; ETIP-SNET, 2017). The role of decarbonized pipeline gas fuels and electrification of end-uses to achieve deep-decarbonization in California has been examined by E3 (2015). Given the limited bio methane availability in the state, the E3 scenario assumes the share of methane derived from solid biomass blended into the pipeline increases. However, there is uncertainty in the costs associated with biomass supply, gasification and methanation costs (E3, 2015).
While California's existing decarbonization policies address sectors such as light duty vehicles and electricity generation, policies do not directly address fuel substituting in buildings. In fact, for many regions in California without large-scale industries, transportation and building heating are already the two largest sources of GHG. Here we focus on building heating electrification with much lower carbon electricity supply as the primary pathway for building decarbonization. In order to develop more actionable plans and potential policies in decarbonizing buildings, a comprehensive analysis of scenarios for each of the building heating subsectors is required.
Residential water and space heating sectors made up about 34% and 25%, respectively, of total building end-use natural gas consumption in 2014 (CA IEPR, 2015; RAAS, 2009). With tighter building shells and a warming climate, energy demand for space heating may decrease in the future. Thus, the focus in this paper is on residential water heating, and we present a detailed lifecycle comparison of available water heating technologies and develop technically feasible policy scenarios to reduce 2050 emissions by over 80% below 1990 level.
Several studies have established the cost effectiveness and emissions savings of heat pump-based water heating (Franco et al., 2010, Northwest Energy Efficiency Alliance (NEEA, 2015, Nadel, 2016, SMUD, 2012). In addition, performing active demand response can help in reducing costs of electric resistance and HP-based water heating (Patteeuw et al., 2015). The U.S. National Energy Modeling System (NEMS) models a range of water heaters amongst other household appliances to project residential energy consumption by fuel type and end-use (United States Energy Information Agency (US EIA), 2014). An earlier report by the Sacramento Municipal Utility District (SMUD, 2012) projects scenarios for decarbonization building heating and transportation in the Sacramento municipal district. To achieve an 80% emissions reductions, this study recommends building electrification and the adoption of heat pump based water heater (HPWH) to begin before 2030. Our model is a more detailed statewide model than earlier work. It includes a wider range of water heating technologies and considers refrigerant global warming potential (GWP) and GHG emissions due to refrigerant leakage. We develop technically feasible scenarios with gradually phasing in electrification of water heaters. Further, the portfolio of future stock of water heaters includes advanced heat pump technology and solar thermal with heat pump back up.
While a couple of the scenarios developed here reduce 2050 emissions by over 80% below the 1990 level, the 2030 emissions fall short of the 40% reduction target. However, the 2030 emissions target can be achieved with a 25% reduction in hot water demand from current levels. Our estimates of the net present value of the incremental cost of these pathways is not onerous, an estimated 7−30% higher than the business as usual case (Table 5). This analysis demonstrates that fuel substituting to electricity without the forced retirement of existing equipment cannot wait beyond 2020 for California to achieve the 2050 emissions goals.
The paper is structured as follows: Section 2 provides a background on the status of water heating sector in California and water heating technologies. Assumptions on equipment costs, fuel and maintenance along with other assumptions on current and future appliance efficiencies, fuel carbon intensity, and refrigerant GWP can be found in Section 3. Section 3 also provides an overview of the model methodology. Section 4 presents analysis and results. Finally, Section 5 presents conclusion and some policy implications.
Section snippets
Background
The vast majority (about 90%) of California's households use natural gas for water heating, resulting in annual GHG emissions of about 14 million tons (Table 6) (RAAS, 2009; CA-IEPR, 2015). Efficiency gains in water heaters, lower GHG intensity fuel sources and lowering hot water consumption can all help bring down these emissions. Electrification of heating accompanied with the adoption of market ready high efficiency electric heat pump (HP) technologies can lower the emissions further
Model overview
The model starts with the current natural gas dominated business as usual ‘frozen’ scenario with current appliance efficiency standards held fixed into the future and where the electricity generation meets 50% renewable portfolio standards by 2030 per California law SB 350. Water heaters are replaced only on natural retirement and the transition to alternative technologies is phased in gradually over time. The technology-fuel type and efficiency of the replacement WH are dependent on the
Results and discussion
In Section 4.1, we compare energy usage, emissions and the costs associated with the various water heating technologies. In Section 4.2, we describe scenario assumptions that lead to lower emissions in 2050 and that can be achieved by the adoption of supporting policies. We then compare the emissions and costs associated with each of the scenarios. Note that these scenarios are meant to be illustrative and to provide a range of options and possible technology and potential costs for
Discussion
None of the above scenarios meet California 2030 target of 40% emissions reduction in the residential water heating sector. For example, in the ‘NG+EE’ scenario, the share of storage based NGWH drops to 60% by 2030 while the more efficient instantaneous INGWH's share goes up to 30%, resulting in a modest 7.5% drop in 2030 emissions relative to 2016. Even with electrification phasing in 2020, as majority of the existing stock in 2030 will still be natural gas based, the emissions in 2030 can
Conclusion and policy implications
We have provided the first detailed stock modeling of water heating decarbonization on a statewide basis for California. We conclude that an 80% or above reduction in 2050 emissions relative to 1990 is technically possible resulting in an annual abatement of over 10 million tons of GHG emissions. We formulate a couple of representative pathways to achieve this deep decabonization. The cost range of the scenarios depends on energy and equipment costs, and hot water consumption. Adhering to a
Acknowledgement
We thank the California Energy Commission for support. This paper reflects the views of the authors and does not necessarily reflect the view of the California Energy Commission or the State of California. We would like to thank Jim Lutz, Edward Vineyard, Imran Sheikh and Christopher Jones for helpful discussions during the preparation of this paper. None of the authors have a conflict of interest for this work.
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