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Waking the Sleeping Giant
Kristian PetrickIEA-RETD Operating AgentWorld Sustainable Energy Days, Session:Nearly Zero Energy BuildingsWels, Austria, 27 February 2015
Next Generation Policy Instruments for Renewable Heating & Cooling in commercial Buildings (RES-H-NEXT)
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The mission of IEA-RETD is to accelerate the large-scale deployment of renewable energies
• Created in 2005, currently 8 member countries: Canada, Denmark, France, Germany, Ireland, Japan, Norway, UK.
• IEA-RETD commissions annually 5-7 studies bringing together the experience of some of the world’s leading countries in RE with the expertise of renowned consulting firms and academia.
• Reports and handbooks are freely available at www.iea-retd.org.• IEA-RETD organizes workshops and presents at international events.
RETD stands for “Renewable Energy Technology Deployment”.
IEA-RETD is a policy-focused, technology cross-cutting platform (“Implementing Agreement”) under the legal framework of the International
Energy Agency
Background IEA-RETD
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Agenda
• RES-H/C is the sleeping giant of renewables
• Next generation policies can wake the giant
• Policymakers can (and should) act now
• Conclusions
Waking the Sleeping Giant: RES-H-NEXT
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Next generation policy instruments for renewable heating and cooling in the commercial sector
Waking the Sleeping Giant: RES-H-NEXT
Objective
Empower policy makers to implement new and innovative (next generation) policies to develop RES-H/C in the commercial sector
IBMeister Consultants Group, USA
Time July 2014 – January 2015
Scope
• Solar thermal, geothermal, electric heat pumps (air / ground source), sustainable biomass, combined heat & power
• EE measures are considered• Existing commercial buildings in IEA-RETD countries
Approach
• Investigate and prioritize RES-H/C policies• Describe and evaluate innovative ones• Derive policy recommendations
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RES-H/C is the sleeping giant of renewables
Take-Off ConsolidationInception
Mar
ket
Gro
wth
JP, CA
DK
34% 40%
NO
37% 43%
FR
17% 33%
DE
12% 16%
IE
5% 12%
UK
2% 12%
Renewables share of H/C market (2011) Projections for 2020
• Historic lack of innovation and commitment to RES-H/C policy.
• Policymakers must move RES-H/C markets along the curve to achieve energy and climate goals
So far IEA-RETD countries are only in the inception or take-off phase
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The commercial building sector offers potential for high impact and cost efficient RES-H/C development
RES-H/C is the sleeping giant of renewables
• Encompasses building types with large floor spaces and thermal loads, e.g. restaurants, warehouses, office, hospitals, educational and public institutions.
• Represents a significant source of carbon emissions. Example UK: Commercial buildings responsible for 18% of total carbon emissions
• Is expected to grow in the future. IEA estimates that commercial / institutional floor area will almost triple by 2050.
• Offers advantages for policy administration. Compared to residential sector, fewer entities (building owners) to regulate. Compared to industrial sector, H/C systems less complex.
The commercial building sector:
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To succeed, RES-H/C policy must address a number of persistent barriers
RES-H/C is the sleeping giant of renewables
Lack of Demand and Awareness• Lack of demand and awareness of RES-H/C• Lack of confidence in system performance & fuel availability
Financial Constraints • Inadequate ROI• Capital constraints
Misaligned Decision-making Processes• Misaligned ownership priorities and decision-making barriers• Low refurbishment rates• Split incentives
Training and Operational Barriers • Insufficient local contractor base• Operations staff training requirements
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Agenda
• RES-H/C is the sleeping giant of renewables
• Next generation policies can wake the giant
• Policymakers can (and should) act now
• Conclusions
Waking the Sleeping Giant: RES-H-NEXT
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Four policy areas have been identified that can drive help uptake of RES-H/C
Synthesis
Info & awareness campaigns
Loans Rebates-> still valid!
1. Plans & Mandates
2. Performance Based Incentives
3. Soft Cost Reductions
4. Innovative Financing
Integration of RES-H/C, RES-E and storage
Low energy building requirements
District heating networks
“Conventional” policies Coming up…
Next generation policies
New and innovative in the RES-H/C sector Address one or more market barrier Enable RES-H/C for mainstream deployment
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Developing long-term plans for RES-H/C
1.A Plans and Targets
• Goal and formal commitment that guides policy-making and investment decisions in a region
• Increase Investor Confidence. • Transform Country Energy Portfolios
Description Benefits
• Germany: 14% building heat by 2020• Thailand: 100 solar thermal, 1,000
biogas, 8,200 biomass (all ktoe)• India: 15 million m2 solar thermal by
2025
Examples• Early stage markets: Plans needed to
generate confidence.• As markets progress: Continually
update plans to address market, technology, cost developments.
• Plans/targets to be clear, ambitious, credible, backed by predictable support environment.
Important Points
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RES-H/C building mandates are somewhat more common than targets but mainly focus on new construction
1.B Mandates
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Establishing RES-H/C mandates for existing buildings or utilities
1.B Mandates
• Obligation to develop RES-H/C placed on building owners, utilities, others
• Integrate RES-H/C into existing building stock
• Address landlord-tenant issues• Provide commercial building owners
with awareness and impetus to install RES-H/C systems
Description Benefits
• New Hampshire (US): utility mandate• Baden Württemberg (Germany):
building mandate when replacing heating system
Examples
• Mandate trigger : sale, lease, renovation, age of building, replacement of heating system, regular audits
• Utility mandates:• Utility compliance• Calculation of Useful Heat Production• Eligible technologies• Eligible counterfactual fuels
Important Points
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Designing and implementing performance-based incentives for RES-H/C
2. Performance Based Incentives
• Generators are compensated (or incentivized) for the energy (or commodities) they produce.
• Maximize quality of installation• Maximize ratepayer value• Support mature market development
Description Benefits
• UK: Renewable Heat Incentive• Massachusetts: Alternative Portfolio
Standard
Example• Approach to Setting the Payment Rate:
admin. set, competitive bid, tradable credits, hybrids
• Payment duration• Interconnection and Commodities
transferred• Useful Heat Requirements• Heat Metering Standards: accuracy,
maintenance, meaningful readings
Important Points
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The UK Renewable Heat Incentive (RHI) scheme is the most advanced RES-H/C policy in the world
Example Performance Based Incentive
Nov 2011
Jan 2012
Mar 2012
May 2012
Jul 2012
Sep 2012
Nov 2012
Jan 2013
Mar 2013
May 2013
Jul 2013
Sep 2013
Nov 2013
Jan 2014
Mar 2014
May 2014
Jul 2014
Sep 2014
Nov 2014
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
0.0
200.0
400.0
600.0
800.0
1,000.0
1,200.0
1,400.0
Non-domestic Renewable Heat Incentive Applications (per month)and installed capacity (cumulative)
Number of full applications (by date of first submission)
Cumulative installed capacity
Month
# of
App
licati
ons
(per
mon
th)
Cum
ulati
ve in
stal
led
capa
city
(MW
)
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Opportunities to integrate next generation policies into comprehensive energy plans
Energy Planning – Outlook
• RES-H/C and Thermal Storage for Electric Grid Management• RES-H/C and thermal storage strategies to integrate variable
resources into the grid
• RES-H/C and Low Energy Buildings• Trend towards low or zero energy buildings, especially in
Europe• RES-H/C is desirable low or zero carbon option for heating low
energy buildings
•RES-H/C and District Energy• RES-H/C can integrate into fourth generation (low temperature,
low pressure) district energy systems• New tariff / regulatory models to enable building RES-H/C
systems to feed into district heating
RES-H/C and Integrated Energy Planning
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Agenda
• RES-H/C is the sleeping giant of renewables
• Next generation policies can wake the giant
• Policymakers can (and should) act now
• Conclusions
Waking the Sleeping Giant: RES-H-NEXT
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Next generation policies move markets (and sleeping giants) along the deployment curve
Policymakers can (and should) act now
Develop long-term plan for RES-H/C
Public buildings & new construction All buildings – new & existing
Continuously refine and update RES-H/C plan and targets
Inception Take-off Consolidation
Utility mandates
Pilot PBIs & metering standards Refine incentive levels downward (degression)
New tariff and regulatory frameworks for district heating
Conduct soft cost studies and track performance of RES-H/C systems
Local permitting & customer acquisition programs
Lender and contractor education Standardization to encourage securitization
Incentives and programs reduce development costs
Plans / Targets
Mandates
Performance Based
Incentives
Soft Cost Reductions
Innovative Financing
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The report provides detailed recommendations per policy area
Policymakers can (and should) act now
• Assess suitability of performance based incentive for local jurisdiction
• Determine duration and amount of payments• Clarify transfer of commodities• Establish “useful heat” and metering
requirements
Implement PBIs
• Assess suitability of turnkey business models• Determine need for enabling policies• Assess potential for securitization
Develop innovative financing
• Develop clear plans for RES-H/C development• Assess suitability of building mandates• Determine compliance triggers and RES-H/C
eligibility• Determine measurement and verification
requirements• Assess suitability of utility mandates• Determine utility obligation and RES-H/C
eligibility• Clarify eligible counterfactual fuels• Clarify calculation requirements for “useful heat”
Develop plans, establish mandates
• Conduct Detailed RES-H/C Soft Cost Analysis• Address Customer Acquisition Costs• Streamline RES-H/C Permitting• Track Performance of RES-H/C Systems
Drive down soft costs
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Agenda
• RES-H/C is the sleeping giant of renewables
• Next generation policies can wake the giant
• Policymakers can (and should) act now
• Conclusions
Waking the Sleeping Giant: RES-H-NEXT
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A renewable transformation of H/C in the commercial sector is possible – but it requires innovative (next generation) policies
• RES-H/C is essential to achieve energy and climate goals
• New and innovative policies are needed to rouse the RES-H/C market
• Policymaker should take action in the commercial sector to drive deployment
• RES-H/C should be integrated into comprehensive, ambitious energy plans
Conclusions
