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Customer application May 10, 2023

Four Strategies for Decarbonization, Electrification in Commercial Buildings

Written by Bill Kosik

Tap into state efficiency programs to reduce energy consumption of air handling systems.

Learning Objectives:

  • Discover what role commercial buildings have in carbon dioxide emissions and the resulting impact on climate change.
  • Understand how state energy plans are structured and learn about energy-efficiency incentive programs.
  • Get a more in-depth understanding of the different approaches on using technical resources manuals and the energy-efficiency measures.
  • Learn about specific energy-efficiency measures used in incentive programs for air handling systems and equipment.

Energy efficiency insights

  • Commercial buildings account for 35% of all electricity use in the U.S and 16% of carbon dioxide (CO2) emissions. And according to the U.S. Environmental Protection Agency, 30% of the energy used in commercial buildings is wasted.

  • Furthermore, in commercial office buildings the heating and cooling systems, a majority of which consists of air-handling equipment, more energy for air conditioning is consumed than any other building type.

Decarbonization efforts are a critical part in meeting the goals pledged by President Biden during the 2021 Leaders Summit on Climate — reducing the nation’s greenhouse gas emissions 50% by 2030 and net-zero by 2050 (2005 emissions as basis).

The U.S. Department of Energy decarbonization roadmap is a set of strategies including energy efficiency, clean energy supply, clean fuel sources and direct air capture of carbon. Of these strategies, energy efficiency is the “beginning of the pipe,” improving efficiency which reduces the need for clean energy and fuel and results in lower carbon emissions. Energy efficiency is vital in the world’s journey to net zero and keeping global warming at 1.5 degrees Celsius. The International Energy Agency (IEA), nicknamed it “the first fuel.”

To develop actional processes and to reinforce the importance of energy efficiency, the New Building Institute (NBI) published the “Existing Building Decarbonization Code.” According to the NBI, the code is “… a new way for jurisdictions to reduce carbon emissions and meet Climate Action Plan and public health and equity goals. The need to address existing building stock is great, with 5.9 million existing commercial buildings in the U.S. comprising 97 billion square feet”.

Electrification of buildings

Electrification is a strategy that falls under the decarbonization umbrella. It can play a major role in reducing the carbon emissions from commercial buildings when the source grid is sufficiently clean. In 2020, the American Council for an Energy-Efficient Economy produced a study that showed commercial buildings that replace their gas-burning heating systems with electric heat pumps could reduce their total greenhouse emissions by 44%.

Commercial buildings account for 35% of all electricity use in the U.S and 16% of carbon dioxide (CO2) emissions. And according to the U.S. Department of Energy (DOE), 30% of the energy used in commercial buildings is wasted. Furthermore, in commercial office buildings, the heating and cooling systems, including air handling equipment, consume more energy for air conditioning than any other building type.

The good news is that energy use in commercial buildings continues to drop. The data show that from 2018 the energy use intensity has decreased by 12% (see Figure 1).

Electricity Consumption.png

Figure 1: In the reference case, commercial buildings will expand by 34% on a square footage basis. Office buildings consume more energy for air conditioning than any other building type, accounting for 25% of the energy consumed for air conditioning in the U.S. commercial sector in 2050. Courtesy: Bill Kosik

Energy consumption of air conditioning in buildings

Air conditioning systems are one of largest electricity consumers in commercial buildings. Across the buildings sector, purchased electricity accounted for 94% of delivered energy for air conditioning in 2019. These systems range from central built-up systems to packaged rooftop units. Breaking down a typical heating, ventilation and air conditioning (HVAC) system into smaller categories, ventilation, cooling and heating systems are the largest energy consumer of all the other sub-systems. When building owners are looking for ways to reduce energy consumption, implementing energy efficiency measures (EEM) specifically for air handling equipment can yield significant savings.

Small- and medium-sized businesses may have difficulty finding capital funds or using cash reserves for HVAC system upgrades, but there are options for funding that can reduce the need for securing loans. Most states have energy efficiency policies, which are generally managed by the state’s public utility commission. Electric and natural gas utilities are responsible for developing a ratepayer funded energy efficiency program.

The programs are designed to incentivize residential, commercial and industrial customers as they implement energy reduction projects. Depending on the scope of the customer’s project, the incentives can provide a significant funding source for capital-intensive air-handling unit (AHU) upgrade projects.

Regulatory energy policy

Regulatory policy can have a significant impact on investments for improving energy efficiency in commercial, institutional and industrial buildings. Electric and natural gas utilities have a key role in making sure the end use of the energy is efficient, with the goal of lowering energy demand (electricity and natural gas). State utility regulators use a variety of incentives to address the inherent conflict that exists — lowering energy use can have an adverse financial impact on the utility. Policies enacted by the state encourage the utility to play a role in lowering overall energy consumption and set a foundation for implementing cost-effective EEM.

The state public utility commission (PUC) is responsible for the developing and updating the technical reference manual (TRM). The technical parameters and calculation steps in the TRM are essential for state regulators, utilities, program administrators and implementation teams for estimating and validating the energy and demand savings of end-use EEM. TRMs can be used exclusively by a state, by utilities or shared with other states and alliances.

Some TRMs include requirements to validate nonenergy impacts (such as water use and secondary CO2 emissions). Some measures include processes and calculations to validate the cost-effectiveness of a measures focusing on the useful life of equipment intended to be replaced.

The state PUC approves the TRMs, giving it a legal framework. For example, in Illinois, the PUC approves the contract of an independent third-party organization whose primary responsibility is administering the TRC. In this scenario the third-party organization works for and is paid by the utility. But ultimately, the PUC has the final say.

In simple terms, the TRM is the “rulebook” for ratepayer-funded energy efficiency programs. When examining different EEMs, many are straightforward with little math required. Others are more complex using a series of calculations that include multiple variables such as age and capacity of existing equipment, type of flow control, location of project, operating characteristics and others. All these details ensure that requirements are consistent and fair since the different utilities may use the same TRM for programs in other service areas.

Figure 2: Air handling systems can have wide variances in energy consumption based on climate and system type. Illustration based on data from Commercial Building Energy Consumption Survey (CBECS) Table C16. Electricity expenditures by census region, 2018. Courtesy: Energy Information Administration