Energy Efficiency Lessons Learnt from the US Arun Majumdar Stanford University

3 Data Source: EIA, Monthly Energy Review Actual Path of US Energy Consumption

4 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

5 US Net Energy Imports: Actual vs w/o Supply or Efficiency Changes, from 1973

6 Decomposition of Changing Net Energy Imports US Since 1973 Energy Efficiency Energy Production

Transportation What has worked? Price signal Regulatory signal

1975: RAISE IT FROM 12.5MPG TO 27.5MPG BY : REDUCE TO 26 MPG 1990: INCREASE TO 27.5 MPG 2009: INCREASE TO 54.5 MPG BY 2025

1975: RAISE IT FROM 12.5MPG TO 27.5MPG BY : REDUCE TO 26 MPG 1990: INCREASE IT 27.5 MPG 2009: INCREASE IT 54.5 MPG BY 2025 $10/barrel

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

Batteries & Vehicle Transportation Cost has reduced 3 times between Materials and packaging research and innovations Mass-market all-electric cars

Stationary Power Systems Buildings

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

Haitz law for LED Technology CFL ($2/klm) Incandescent ($0.3/klm) LED Lighting

Arun Majumdar, LBNL/UCB U.S. Refrigerator Energy Use 500 $0.15/kWh = $75/yr or $6.25/month

Van Buskirk, Kantner, Gerke, Desroches, Chu Science (submitted) (2012) Appliance Standards as Economic Drivers

Behavioral Nudges Energy Use Labeling

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

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

Heating & Cooling in UPenn campus building Why is this building heating and cooling at the same time? Cooling Heating

The Spread EUI 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, 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

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

Barriers and Opportunities 1.Value of energy efficiency is uncertain and unappreciated 2.Actual performance does not often correlate to design intent 3.Buildings industry is fragmented 4.Lack of systems integration in building design and operation 5.Lack of quantitative energy consumption evaluation 6.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, 2009Reducing Energy Consumption in Buildings

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)

Stock Market Taxes Energy Efficiency Projects Real Estate Investment Trusts (REITs) Public Capital Return 2 Return 1 Project Finance Corporation Pass through tax structure Lowers cost of capital Public capital expands investor base Generally higher rate of return

Whole Building System Benchmarking and Incentivizing kWh/m 2 -yr Office Building kWh/m 2 -yr Hospitals Incentivize

Utility Decoupling & Energy Efficiency Standards D. Steinberg and O. Zinaman, “State energy efficiency resource standards: Design, Status & Impacts,” NREL Report (2014)

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

Combined Heat and Power & Thermal Storage Time Energy Demand Electricity Heating Cooling Power Load Gur, Sawyer, Prasher, Science 335, 1454 (2012)

Integrated Campus-wide Heating/Cooling Stanford Energy and Climate Action Plan (2009) –High-efficiency standards for new buildings; –Efficiency improvements for existing buildings; –Stanford Energy Systems Innovations – SESI –SESI plus solar/geothermal power procurement anticipated to reduce use of conventional fuels and thus reduce carbon emissions about 68%. Hot Water, Cold Water Tanks Electric Chillers Heat recovery in campus buildings; hot and cold water Chillers/ Boilers

31 Consumption Trends Changed In All Sectors of the US Economy

32 Reductions in Energy Use Per Dollar of GDP Pre-Energy-Crisis, low prices, no policy: 0.55% per year decline Energy-Crisis, high prices, much policy: 2.7% per year decline Post-Energy-Crisis, moderate prices, moderate policy: 1.7% per year decline 14 in in 2014 Data Source: EIA, Monthly Energy Review