Weekly Brief

Renewable Heating and Cooling as a Strategic Asset

Chris Beebe, CEO, BEAM Engineering

Chris Beebe, CEO, BEAM Engineering

Current dialogue about energy in the United States is centered on electricity and transportation. However, a third element is missing from this discussion: the massive amount of thermal energy that is used for heating and cooling our buildings, our homes, business, and factories. The residential, commercial, and industrial sectors spend over $270 billion annually on heating and cooling which account for 44 percent of all energy related expenditures in the United States. This growth places pressure on utilities to constantly expand and upgrade electric and gas infrastructure to provide for this additional capacity and meet their obligations for reliable operations.

Energy is literally raining down on us every day of our lives - the sun makes some places hot and some places cold, this makes the wind blow, the wind makes waves that travel across oceans and crash on our shores. The sun is stored in the ground as heat, evaporates water to power rainfall, and is stored as chemical bonds in plants and vegetables. A small portion of the plants decompose underground in the presence of great pressure and heat, and create fossil fuels. In this way, renewable thermal harvesting technologies and the natural gas and electric infrastructures are inextricably linked.

Somewhat counter intuitively, by embracing distributed renewable heating and cooling technologies, utilities can more effectively manage their operational costs as energy demands grow, infrastructure ages, and their customers begin to seek increased environmental stewardship from businesses. For example, solar heating and cooling technologies possess a wide range of applications, including domestic water heating, space heating, air conditioning, and process heating which when intelligently deployed can provide strategic value to utilities, including peak load demand reduction, load factor improvement, and increased system reliability. Furthermore, effective load management can reduce clearing prices in deregulated power markets which again have the end result of decreasing energy and operational costs across the board.

Although these positive impacts will vary widely by utility, geography, and climate, demand reduction can be one of the key benefits provided to utilities. For example, summertime peak cooling continues to be one of the fastest growing sources of in the U.S., requiring new generation plants and transmission infrastructure. Hot and sunny summer days are ideal for solar cooling, which has the potential to reduce peak energy demand and potentially defer the need for utility’s to spend money on expanding distribution lines and substations. In most areas in the U.S., renewable heating and cooling can be an effective part of the energy supply equation, providing both heating and cooling to critical infrastructure, such as hospitals and government centers, while simultaneously reducing demands on the electrical grid and natural gas distribution system.

Renewable thermal technologies are generally simple to deploy (no grid interconnection), and are thus an excellent first-line option for utilities looking to strengthen their distribution systems. A conservative estimate puts potential grid benefits through deferred upgrades and increased reliability at upwards of $19.1 billion dollars annually. This cost savings is then typically passed on to the ratepayers, which allows for lower consumer rates and thus easier navigation for the utilities as they negotiate with regional or state oversight commissions.

It's a well-known fact that after China, the U.S. is the world’s second largest emitter of greenhouse gases, including carbon dioxide (CO2). These emissions are contributing to rapid climate change and subsequent severe health, environmental, and economic impacts over the short- and long-term, with burdens of efficiency deployment and a shift to cleaner fuels often falling on utility providers. These numbers are not negligible - Sandia National Laboratory estimates a net GDP loss of $1.9 trillion dollars to the U.S. between 2010 and 2050 due to climate change-induced drought. That's not including other health and environmental remediation costs that are currently being studied, which will further compound the need for action.

Interestingly, there are currently targets for renewable transportation fuels at both the federal and state levels, and thirty-seven states have renewable electricity targets. However, despite the fact that nearly half of all energy consumed in the United States is for heating and cooling there are very few targets for renewable thermal energy. As seen with the rapid expansion of electric renewable portfolio standards, thermal renewable portfolio standards are inevitable and it is recommended that utility providers are proactive in planning for these upcoming regulations lest penalties begin to accrue when targets are not met.

In California for example, the California Solar Thermal Initiative is a utility-run program that has allocated $350 million over an eight year period to drive renewable thermal adoption. The goal is to expand on the economic and infrastructure benefits recently generated with the rapid deployment of solar photovoltaic installations, a renewable electric technology. The Solar Energy Industry Association (www.seia.org) has recently partnered with the USH2O Group which represents 107 utilities across the country that dedicate personnel to work with their peers to develop best practices on strategies to integrate solar heating and cooling into Utility incentive programs and infrastructure planning.

Given the infrastructure, public relations, and regulatory adherence burdens, it's an exciting time for Utilities to make an investment in the burgeoning renewable heating and cooling industries. There is a unique opportunity for Utilities to create a sustainable, safe, and prosperous future fueled by forward thinking infrastructure approaches, smart deployment of complementary technologies, and of course, a little bit of sunshine!