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Unintended Consequences

Posted by Charley Cormany, EFCA Executive Director

There is no doubt the electrification trend is taking hold in California. As reducing greenhouse gases (GHG) becomes the most important goal for energy policy, it makes sense to shift end uses of energy away from the limited resource of fossil fuels to the electric grid. Recently, the increase in renewable generation has quickly made electricity our least impactful energy source, and the grid will continue to get cleaner over time.

The transportation sector sees the handwriting on the wall. Transportation is slowly migrating from fossil fuels to electricity. Electrification of the transportation system is critical, as this is the single largest source of GHG emissions in California. Electric vehicles outperform their internal combustion counterparts and can be powered from emissions-free sources, something that is not an option with internal combustion engines. As a bonus, electric vehicles are far more efficient than their internal combustion counterparts and require little to no maintenance, which makes them significantly cheaper to operate. The arguments are favorable for an all-electric transportation system. The next step is to educate consumers to the value and benefits of electric transportation.

To meet the legislated targets we need will need to reduce GHG emissions from buildings too. According to the California Energy Commission, buildings represent 26 percent of total GHG emissions in the state, which makes a pretty strong case for electrifying buildings as well. We are starting to see some movement in this direction. Building codes now require on-site generation (PV) and electric circuits for all appliances, making it easy to convert to all-electric if desired.

However, the majority of GHG emissions from buildings are from pre-existing structures. To be effective, electrification needs to address existing buildings and the monumental challenge of retrofitting them to reduce GHG emissions.  Current efforts, such as incentive programs encouraging property owners to go all-electric and cities implementing outright bans on the use of natural gas, might be reasonable first steps. But meeting our goals will require exploring all options.

Fundamentally, I agree with an all-electric approach, as electric appliances are the most efficient option. That said, I think the “electrify everything and damn the cost” attitude is a bit of a simplistic. I suggest we use caution and consider the unintended consequences of electrification. We need to be deliberate and strategic in our efforts to reduce GHG emissions. As with most things, there is no “silver bullet” or single solution to the problem. If we don’t manage loads and drive blindly towards an all-electric future, we may inadvertently increase GHG emissions.

The Time Of Day Challenge For Electrification

The time of day when demand occurs has a dramatic effect on GHG emissions. If we add load in the middle of the day, when solar generation is at its peak, we have shifted to the cleanest energy source available. However, if we increase the load in the evening, we might be making GHG emissions worse.

Unfortunately, currently, most utilities charge the more during peak load periods, typically between 4:00 pm to 8:00 pm. The result is that the price of electricity is highest when electrical generation is the cleanest. This means that for most consumers, it makes sense to use electricity at night as it costs less. Electric vehicle owners are programming their cars to charge at night to take advantage of off-peak electric rates. Another tactic is to do laundry or dishes after 8:00 pm to avoid peak adding to peak load and to take advantage of cheaper utility rates.

The problem is that these new evening loads are forcing some utilities to fire up fossil fuel-powered “peaker plants,” to meet the additional evening demand. Peaker plants are frequently older power plants kept on standby to meet peak loads. From a grid perspective, they are valuable as they can ramp up fast. However, they are a very dirty source from a GHG perspective.

At the same time, with the increase in utility-scale production by photovoltaics on large solar farms, utilities often have more clean electricity than they can use, especially late in the afternoon on a sunny day. Utilities are forced to curtail (shut off) this GHG free energy supply to avoid overloading the grid. Essentially this means at certain times of the day we are throwing away clean energy.

Utility rate structures can even create backward incentives for people who are trying to do the right thing. I recently had a conversation with a friend who had just added battery storage to their home. The logic was that they had already maxed out their rooftop solar and wanted to reduce their impact further. They were pretty excited about the results, as they had reduced their utility bill to virtually nothing. They went on to tell me they were saving money by charging the battery at night to take advantage of the lower electric rates and then discharging the battery during the day to provide energy for the house. This process is called arbitrage and is precisely the opposite of what we should be doing with storage. To take advantage of the excess solar production, the battery should be charged during the middle of the day and used at night after the sun goes down. As more storage comes online, arbitrage may force the utilities to add peaker plant hours in the evening, which increases GHG emissions.

Taking an “electrify everything” approach without considering the grid impacts is not a complete solution. To achieve the desired effect, you need to look at the whole picture, including where and when electrification increases demand, and what impact rates have on consumption.

The Importance Of Efficiency

In our rush to electrify, it’s also critical that we don’t forget the value of energy efficiency. Efficiency doesn’t get the respect it deserves. There are not a lot of shiny objects or even visible signs that distinguish an efficient building from an energy hog. Insulation and shell improvements are not visually obvious, and optimized heating and cooling systems are not nearly as sexy as solar panels. Energy retrofits are not new or cutting edge and don’t rely on a single technology or approach. Without efficiency though, it’s going to be much harder to meet our emissions goals.

California has seen rapid growth over the past forty years, and yet our per capita energy consumption has remained relatively flat. In other words, we have added lots of people, but we are using the same amount of energy to support this population. The plateau in energy consumption is a direct result of adding energy efficiency to the building codes in 1978. Some estimates show that energy efficiency has eliminated the need to build 17-20 new power plants over the past 40 years. Think about the GHG impacts of not building and using 20 power plants for decades.

Sure, in some cases, if you have the footprint and budget, you could offset your consumption by adding lots of solar panels with some storage and skip energy efficiency upgrades altogether. But for most people, budget and affordability are real concerns. If you consider the cost, it is impossible to ignore the value of energy efficiency upgrades. It has been proven time and time again that energy efficiency is the lowest cost option of any clean energy strategy.

I believe that as we transition to an all-electric future, the value of energy efficiency will increase. Building shell improvements save energy over the entire day, which means they are beneficial to the grid as they reduce overall loads. Energy-efficient buildings can be pre-cooled or pre-heated which allows them to “drift”–basically not use heating or cooling through periods of high load such as the afternoon peak. As we make buildings more efficient, the amount of energy needed to heat or cool them decreases. Energy-efficient buildings have lower heating and cooling loads, which reduces emissions. New advances in smart controls will further reduce energy needs while increasing comfort at the same time.

Electrification and energy efficiency go hand in hand. Energy efficiency reduces the total amount of energy you need, and electrification reduces the GHG impacts of the energy you use.

In short, while electrification may be a good overall strategy for achieving the GHG goals mandated by the state, it won’t work without taking other factors into consideration, including the overall capacity of the grid, the role of storage, electric rates, the impact of EVs, smart controls, and how energy efficiency fits into the equation. Like most things in life, there is no single solution. Success will require multiple strategies working together to achieve a common goal. The goal is attainable. We just need to be smart, consider all aspects, and play well together to get there.

Charles Cormany
Executive Director
Efficiency First California