Buildings consume a lot of energy. What can we do about it?
E360 is the Stanford Energy Club’s (SEC) quarterly seminar series, where a panel of experts are invited to discuss a critical topic in energy. The 2019 Spring quarter topic of discussion was “Living in Energy-efficiency: Designing Energy-efficient Buildings for Tomorrow”. The panel featured Peter Rumsey, CEO and co-founder of Point Energy Innovations and lecturer in Stanford’s Civil and Environmental Engineering Department, Hedi Razavi, COO and co-founder of Keewi Inc., and Jen Wang, alumnus of Stanford’s Emmett Interdisciplinary Program in Environment and Resources. The discussion was moderated by Kirsten Stasio, Adjunct Professor in Stanford’s Civil and Environmental Engineering Department.
Energy efficiency can be considered a resource, much like wind, solar, oil, or gas, with the exception that energy efficiency subtracts from the amount of primary resource required. Energy efficiency is therefore a zero emissions resource. Examples of energy efficiency in practice include using more effective insulation, replacing incandescent lightbulbs with LED, and using technology to reduce wasteful building heating and cooling loads. Energy efficiency will play a critical role in meeting climate change mitigation targets. According to the Intergovernmental Panel on Climate Change (see TS-10), energy efficiency is the second most important short term mitigation measure (in the long term, measures related to economy-wide decarbonization become more important). The focus of the 2019 Spring E360 was energy efficiency as it relates to the building sector. According to the U.S. Energy Information Administration, buildings (commercial and residential) accounted for 39% of U.S. 2017 energy consumption. The majority of this energy is delivered by electricity and is used for space heating and cooling in residential spaces and computers, office equipment, and refrigeration in commercial spaces.
Early in the discussion, the panelists focused on the importance of getting buy-in at all levels. Given that this requires everyone from the CFO to the building occupant, Peter stressed how big a challenge this is in implementing energy efficiency. Later, Peter discussed this in the context of his work with Infosys, a large company in India. One of the founders had reached out to Peter to help design a new building to be the most energy efficient in India. Despite having carte blanche (the support of the founder), Peter was met with resistance within the organization, and only half of the building followed Peter’s energy efficiency directives. In the end, the half that followed Peter’s directives used ~40% less energy compared to the other half, and Peter’s trust was earned for future projects.
Plug loads describe the energy usage of anything connected to an AC electrical outlet. In 2017, the US department of energy estimated the energy consumed by plugged devices accounts for 40% of total energy use in commercial buildings in the US, and is expected to rise to 49% by 2040. Hedi and her company, Keewi Inc., have developed a solution which involves upgrading electrical outlets to measure and collect data on the energy consumption of plugged devices. This data is then analyzed by an AI engine which predicts the optimal time to operate such devices. Keewi Inc. is working with the Los Angeles unified school district, the second largest district in the US, to drive down the energy consumption in one thousand schools. The energy bill of the school district is about one hundred million dollars per year, expected to increase 3% every year for the next five years. By managing plug loads alone, Hedi and her team can slash the energy bill of the LA school district by 17.5%.
Jen emphasized the importance of energy-efficient buildings through a thought experiment. If you think about the lifetime of a building (all the years and challenges it took to build it!), no matter who the occupants are, the building will still be there. Consequently, energy-efficient forward thinking plays a key role in constructing building for future generations. However, Jen also emphasized that “you can’t just provide the infrastructure and expect people to flock”. Building codes are important in getting the proper infrastructure built, but companies like Keewi are also important in improving occupant engagement. In the end, you need to combine both.
A unifying theme of the panel was the role of top-down (e.g., policy driven codes and standards) versus bottom-up (e.g., cost savings) in motivating energy efficiency implementation. Is government policy intervention really required if homeowners and businesses can benefit from a 50% smaller energy bill? The situation is complicated and depends on a number of factors. However, after discussing this question further with Peter and Jen after the panel, it is clear that codes and standards are absolutely still required. The most important reasons for this have to do with the interplay between split incentives and time scales. Time scale is important because energy savings technologies are typically more expensive upfront but pay for themselves over time (see here, for lightbulbs). Rather than rely on the fiscal prudence of its citizens, California recently introduced a lightbulb efficiency standard. Split incentives exist because the developers constructing the buildings aren’t the ones paying the energy bills. Developers are likely to be more concerned with getting the space built on budget and on time. Finally, even for large companies involved in construction, energy may not be that big a line item on their budget sheets (compared to, for example, worker salary). This is why, as of 2016, only 4.7% of commercial office buildings are LEED certified.
The SEC’s Spring 2019 E360 panel gave student’s the opportunity to learn about a topic less commonly discussed, energy efficiency. Though energy efficiency in the building sector may not be as sexy a topic as batteries or solar panels, it clearly will play a very important role in energy transition.