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Energy EfficiencyLessons Learnt from the US
Arun MajumdarStanford University
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Data Source: EIA, Monthly Energy Review
Actual Path of US Energy Consumption
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Total Energy UnderPrevious Trend --0.55% per year less than GDP Growth
Actual vs No-Energy-Efficiency Trends
Energy Efficiency Impacts ($100s Billion)
US Energy use in 2014 same as in 2000, even though US economy grew 28%.
Data Source: EIA, Monthly Energy Review
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US Net Energy Imports: Actual vs w/o Supply or Efficiency Changes, from 1973
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Change in NI w/o Supply or Efficiency Changes
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Decomposition of Changing Net Energy Imports US Since 1973
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Energy EfficiencyChange in Fossil Fuel ProductionChange in NuclearChange in RenewablesStock Changes
Actual Change in Net Imports (NI)Change in NI w/o Supply or Efficiency Changes
Energy Efficiency
Energy Production
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Transportation
What has worked?• Price signal• Regulatory signal
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1975: RAISE IT FROM 12.5MPG TO 27.5MPG BY 1985
1986: REDUCE TO 26 MPG
1990: INCREASE TO 27.5 MPG
2009: INCREASE TO 54.5 MPG BY 2025
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1975: RAISE IT FROM 12.5MPG TO 27.5MPG BY 1985
1986: REDUCE TO 26 MPG
1990: INCREASE IT 27.5 MPG
2009: INCREASE IT 54.5 MPG BY 2025
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Annual Imported Crude Oil Pricedollars per barrel
Nominal Price Real Price (Jul 2015 $)
EIA Short-Term Energy Outlook, July 2015
$10/barrel2030405060708090
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Lessons Learnt
• Demand is inelastic - fuel price signals don’t work
• Regulatory signal is the only thing that works– Corporate average fuel efficiency (CAFE) standards
• Public transportation as a common good is not in the best interest of automobile and fuel companies
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Batteries & Vehicle Transportation
Cost has reduced 3 times between 2008-2015
Materials and packaging research and innovations
Mass-market all-electric cars
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Stationary Power Systems
Buildings
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Buildings Matter
Buildings use 72% of nation’s electricity and 55% of its natural gas.
Source: Buildings Energy Data Book 2007
Components• Heating & Cooling• Lighting• Appliances• Plug Loads
System• Whole Building
Use the most efficient components and try keeping them off as much as possible, while improving energy services and indoor environment
Utility bill about $400B/yr
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Haitz law for LED Technology
CFL ($2/klm)
Incandescent ($0.3/klm)
LED Lighting
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Arun Majumdar, LBNL/UCB
U.S. Refrigerator Energy Use
500 kWh/yr @ $0.15/kWh= $75/yr or $6.25/month
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Room AC
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Van Buskirk, Kantner, Gerke, Desroches, Chu Science (submitted) (2012)
Appliance Standards as Economic Drivers
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Behavioral NudgesEnergy Use Labeling
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Lessons Learnt• When operating cost is a small fraction of monthly income
and purchase is price is high, purchase price really matters.
• When purchase price is competitive, consumers will choose cleaner option (e.g. LED). LED prices becoming competitive because of technology, driven by display industry and very significant energy savings compared to CFL and incandescent bulbs
• When both purchase price and operating cost are small fraction monthly income, price signal is irrelevant. Regulatory signal (performance standards) matter, and if designed properly, they reduce both purchase price and operating cost.
• Behavioral nudges, voluntary programs and energy labeling matter
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Whole Bi• Insulation• Lighting• Heating, cooling, ventilation• Appliances• Design• Operations
Can we make them work together to reduce energy consumption and offer high quality energy services and indoor environment?
Building as a System
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Heating & Cooling in UPenn campus building
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Why is this building heating and cooling at the same time?
Cooling
Heating
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The SpreadEUI in kBTU/sq.ft.-yr
Analysis of 121 LEED-Rated Buildings Low-to-Medium Energy Use Intensity Buildings
Measured to Design Ratio
Towards Zero-Net Energy
M. Frankel, “The Energy Performance of LEED Buildings,”presented at the Summer Study on Energy Efficient Buildings, American Council of Energy Efficiency Economy, Asilomar Conference Center, Pacific Grove, CA, August 17-22, 2008.
Building codes are for Design Performance, NOT based on Measured Performance.
The Challenge
Gaps• Lack of Measurements & Policies Requiring it• Fragmentation of Process: Design, Build, Delivery,
Operation• Fragmentation of Market
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Fragmentation of Buildings Industry and Process
Courtesy: World Business Council for Sustainable Development (WBCSD) Report on Energy Efficiency in Buildings, July 2008
Need to: • Integrate process & communities• Integrate building system• Align incentives
Policy Innovation:
National Standards Based on Measured Energy and Indoor Environmental Quality Performance
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Barriers and Opportunities1. Value of energy efficiency is uncertain
and unappreciated2. Actual performance does not often
correlate to design intent 3. Buildings industry is fragmented4. Lack of systems integration in building
design and operation5. Lack of quantitative energy consumption
evaluation6. Incentives for energy efficiency are not
aligned (split incentives)
a. IT infrastructure for data gathering, processing, management
b. Building standards based on measured performance and organized by building type benchmarking statistics
c. Financial instruments, valuation and performance-based compensation
d. Align incentives – tax rebates & utility programs
A. Majumdar , “Reducing Energy Consumption in Buildings,” Testimony to US Senate Energy & Natural Resources Committee (SENR), February 26, 2009
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Cost & Finance• Upfront cost, financing, payback
period– Zero-net building at zero-net cost over X
years
• Energy service performance contracts– Bank financing– Take cut from energy savings
• Tax policy (rebates, cost of capital)
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Stock Market
Taxes
Energy Efficiency Projects
Real Estate Investment
Trusts (REITs)
Public Capital
Return 2
Return 1
Project Finance
Corporation
Pass through tax structureLowers cost of capitalPublic capital expands investor baseGenerally higher rate of return
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Whole Building System Benchmarking and Incentivizing
kWh/m2-yr
Office Building
kWh/m2-yr
Hospitals
Incentivize
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Utility Decoupling & Energy Efficiency Standards
D. Steinberg and O. Zinaman, “State energy efficiency resource standards: Design, Status & Impacts ,” NREL Report (2014)
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Summary• What is the signal – price or
regulation?• Technology, regulations, economics,
finance and behavior/decision making – each necessary, but not sufficient
• Informed policies to align and combine them to achieve energy efficiency at scale