Posted by Charley Cormany, EFCA Executive Director
Home performance hasn’t changed much over the past 30 years. The process typically begins with a test-in, where data is gathered to provide a baseline reference. This information is used to generate a report based on existing conditions. Using this report, the contractor proposes a work scope based on a variety of standard measures such as air sealing, insulation, new HVAC systems, etc. The client agrees to the solution then the contractor completes the work. Once everything is done, another series of test is performed (test-out) to confirm the results. Of course, there are variations on this theme, and over the years the list of measures has changed, but overall the process has been pretty consistent.
Recently though, a few big things have started to change in the world of energy. These changes, which are already impacting home performance, are likely to accelerate. Contractors need to be aware of what’s happening and why, in order to prepare, adapt, and take advantage of new opportunities.
Overall Savings Isn’t Everything Anymore
In the past, the primary goal of energy retrofits and stricter energy codes for new construction was to reduce overall energy consumption in buildings. This made a lot of sense when the majority of energy was produced from dirty fossil fuels.
While it’s still true that saving as much energy as possible makes sense, in a world where a growing portion of energy production comes from renewable sources, the timing of when savings happen is more important than overall reductions.
The Duck Curve
As the number of solar installations has soared over the past few years, California has started overproducing clean electricity in the middle of the day. This has led to the now infamous “duck curve”.
The duck curve refers to a graph that plots the difference between electricity demand and the amount of solar available over the course of a day. Plotted out, the shape of this imbalance bears a strange resemblance to a duck (see the illustration below).
During the middle of the day when the sun is shining, solar power shaves off a good portion of the demand that would normally be met by traditional fossil fuel generation. Frequently, so much solar is produced that utility operators have to “curtail” or not use all of this clean energy.
When the sun goes down and folks come home from work and turn on lights, grid operators have to quickly ramp up traditional sources of power to meet evening demand. This is the neck of the duck. When the solar contribution drops off altogether, the capacity levels off. This is the head of the duck. When the sun is down, most of the electricity on the grid is from non-renewable sources.
A fat belly is not a good thing for humans or the electrical grid. Without the renewable contribution the grid the duck curve would have little or no “belly”.
Too Much Solar Can Be Bad?
The irony is that if we overproduce solar in the middle of the day, there comes the point where we can’t effectively use all of this clean energy. A big part of the problem is that it takes time, sometimes hours, for power plants to ramp up to produce electricity. Another challenge is that most of the belly of the duck (overproduction) is a result of large-scale solar production by the utilities themselves, not residential rooftop solar as most people assume. Eventually, large capacity electrical storage solutions will help, but it’s going to take time–as in years—before a large-scale storage can play a significant role.
Energy Loads On the Grid
But storage isn’t the only solution. If you have overproduction during the day, it makes sense to shift some of your loads to “absorb” this extra capacity. For example, you might want to charge your car during the belly portion of the day or use an electric water heater to store this energy for later use. Using water heaters for electric storage is a cost-effective and proven technology. Another idea is to “pre-cool” your house with A/C—in other words, crank up the A/C when the overproduction occurs and then shut it off and “glide” as the solar contribution goes away.
Shifting loads to match the duck curve and other strategies such as demand response are examples of how we will be using our electrical grid in new ways in the future. As equipment gets “smarter” and solar production increases, we’ll need to have some control over when these devices are in use. There’s a whole new industry emerging out of this desire to control which appliances are being used and at what time of the day. Building energy management (BEM) systems, sophisticated software solutions for monitoring and controlling loads, are getting a lot of attention these days.
This situation will get more complicated in 2019, as the utilities switch to a time-of-use pay structure. Time-of-use (TOU) pricing means that electricity rates will change during the day to match grid capacity and loads. If demand is high, electricity will cost more. As demand falls off at night, costs will go down. There will be some real losers in this situation.
Why the Duck Curve Matters to Contractors
It’s easy for contractors to think that this is all high-level stuff and it doesn’t really affect them. In many ways that is true, for the moment. But moving forward there will undoubtedly be more emphasis on reducing the duck curve by shifting use to take advantage of the overproduction of solar during the day. For building performance folks, this means some of your measures will have more value than others when you consider their grid impacts.
For example, crawlspace treatments are great. We encourage improving crawlspaces with vapor barriers, as this improves the indoor air quality of the building. The problem is that vapor barriers have little to no impact on overall energy consumption and don’t contribute to reducing energy loads during the day.
Air conditioning systems, on the other hand, have a direct correlation to grid loads. Peak demand for electricity frequently occurs when it’s hot outside, and everybody turns on their air conditioners at the same time. If you install higher efficiency air conditioning systems and add the capability for them to be turned down a bit during high demand (using demand response or DR), you have now provided a valuable load reduction solution.
Where Do We Go from Here?
There are a couple of things that really stand out to me about the changing energy frontier in California. First off, there is a considerable shift from simply focusing on energy savings to reducing emissions.
If the objective is achieving overall energy savings, fossil fuels such as natural gas are not the best choice, as electric solutions are typically more efficient. A shift of focus from savings to emissions will put even greater pressure to eliminate fossil fuels and electrify.
This means we will see a shift away from natural gas and other fossil fuel appliances. Gas water heaters and furnaces will be replaced with heat pump water heaters and space conditioning. Smart homes will play a big part in this shift, as we need these high-efficiency electrical devices to play well together to provide even more savings at the right times of the day.
And finally, fixing the building envelope will be more important than ever, because not only do tight, well-insulated buildings with better envelopes need less overall energy for heating and cooling, they’re also able to “glide” for longer periods of time. This means you can turn the A/C down during periods of high demand with DR (Demand Response) controls and the building will stay comfortable.
How Can You Use This Information?
Knowledge is power. These changes are real, and they are happening fast. It might be time to review your business model and determine if you are prepared to take advantage of this new paradigm. Shell improvements plus electrification would be the right place to start. Do you need to reevaluate your target market? Areas with large A/C loads and crappy old houses would be better potential clients for you than newer homes with no A/C.
When TOU rates come into play, building owners will have a new interest in knowing when their electric loads are occurring and from what source. Are you providing or including energy monitoring as a product or service? When you install new electric appliances, are they DR compatible? For example, there are many heat pump water heaters on the market today. But you might have to pay a bit more to get a water heater that’s DR capable. Given the changes that are coming, it’s in your clients’ best interest to make sure that as many improvements as possible are DR compatible, whether that’s smart thermostats, heat pump water heaters, energy management systems, etc. And finally, I suggest exploring adding solar PV to your offerings as well.
The key takeaway is that the energy landscape in California is changing and changing fast. Several new bills have been recently signed into law with the intent of reducing emissions by supporting the transition to clean electricity from renewable sources. You should take the time to evaluate your target market and the services and products you are offering. Incentives will likely follow this trend, which could have an impact on your business. Be smart, pay attention and look forward so you can position yourself to take advantage of this opportunity.
Efficiency First California
Image from iStock