Sep 26, 2016

Renewable Thermal is the New Cool

Solar photovoltaics and wind are often spotlighted when we talk about renewable energy. Electricity production, though, is only one part of the energy system where renewable sources bring value and environmental benefits. Buildings’ demand for heating and cooling—a largely unrecognized energy hog—offers another important avenue.

The use of energy for heating water and both heating and cooling space, referred to collectively as thermal energy, accounts for roughly one-third of the total energy consumed in the U.S. Sixty-five percent of total residential energy delivered in 2012 went toward heating; the average single-family U.S. household spends about 53% of its energy budget on heating and cooling.  

Since currently fossil-based fuels, in particular fuel oil and natural gas, provide the bulk of thermal energy, renewable thermal technologies (RTT) present an opportunity to deliver a cheaper, cleaner and a more reliable energy future. In Connecticut, under Governor Malloy’s plan to reduce greenhouse gases by 80% by 2050, the Feasibility of Renewable Thermal Technologies (FORTT) team has taken on the task of quantifying the technical and economic potential of renewable thermal while investigating market mechanisms that can streamline investments. (FORTT is based at the Yale Center for Business and the Environment and is part of a larger coalition that includes the Connecticut Department of Energy and Environmental Protection, Eversource Energy, the United Illuminating Company and the Connecticut Green Bank.)

RTTs harness renewable energy sources to provide space heating and cooling, domestic hot water, process heating, and cooking. The technologies are not new and are well recognized in Europe. Shortly before Brexit, the UK Department of Energy and Climate Change analyzed leaders in the market—Austria, Denmark and Germany, where renewable energy accounted for 32.8%, 33.3% and 11.1% of space heating and cooling respectively in 2012. But despite these being proven technologies, RTTs are far underutilized in the U.S., and significant challenges remain before renewable heating and cooling can be delivered at scale. In order to better understand the barriers and drivers to the market, the FORTT team performed a field-study across Connecticut, interviewing installers, customers, program administrators and local government representatives to find out more about the issue.

On the supply side of RTT, there is a general shortage of installers who offer a suite of technologies. The removal of financial incentives for ground-source heat pumps, as well as low public awareness about renewable technologies such as solar thermal systems also make these options obscure for the general customer. The study hints at a lack of cooperation across different technologies, too.

Part of the solution to scale RTTs is to increase demand for the technologies. A key concern for both residential and commercial customers is often the prohibitively high investment cost. Without innovative financing mechanisms and measures to bring down costs, renewable thermal installations tend to have long paybacks. In addition to their cost, RTTs are “stuck in the basement”: unlike rooftop solar panels for energy generation, most RTTs are not visible and the behavioral diffusion effect of solar has far less influence on consumer decisions.

Despite these barriers, there are many policy mechanisms, financing products and communication campaigns that can be borrowed from the renewable energy world to raise awareness about RTTs and their potential. Integrating best practices from successful campaigns, such as Solarize CT, can bring down high upfront costs and lead to increased market penetration.

In addition to this field study, the FORTT team conducted rigorous analysis and modeling to estimate the total thermal demand in Connecticut across the residential, commercial and industrial sectors. Exploring different scenarios of fuel switching between conventional sources and RTT options, the study calculated the financial viability and the greenhouse gas emissions reduction of various technologies. Examples of technologies included in the study are air source heat pumps, ground source heat pumps, solar thermal hot water and biomass heating.

Building codes, retrofit rates and energy efficiency measures all proved key in the transition to a clean energy future. While climate change and modified weather patterns through 2050 are expected to decrease overall thermal demand, cooling is a service that will continue to grow in significance. Fundamental RTT technologies such as air and ground source heat pumps will become essential. Thermal demand will be considerable also in 2050, and fuel switching is necessary: energy efficiency alone will not bring us to the 80% reduction target.

The FORTT research has sparked a broader conversation on renewable thermal across New England and New York State. It is exciting to see Connecticut standing among other regional champions of clean thermal energy. Crowdsourcing efforts to align standards and boost demand for RTTs will hopefully make the Northeast a leader in implementation.

As I reflect on my experience working under the FORTT initiative, I am mostly thrilled to see the synergy between academia, policy makers, financiers and utilities. Having come from Eastern Europe, where policy is often dissonant with business opportunities, and where investment decisions are far less informed, it is rewarding to see how open dialogue in search of a long-term thermal solution can create a new market that contributes to combating climate change.