Potential efficiency improvements and their impacts on end-use energy demand

In 2010, the residential and commercial buildings sectors used 20.4 quadrillion Btu of delivered energy, or 28 percent of total U.S.

energy consumption. The residential sector accounted for 57 percent of that energy use and the commercial sector 43 percent.

In the AEO2012 Reference case, delivered energy for buildings increases by a total of 9 percent, to 22.2 quadrillion Btu in 2035, which is modest relative to the rate of increase in the number of buildings and their occupants. In contrast, the U.S. population increases by 25 percent, commercial floorspace increases by 27 percent, and the number of households increases by 28 percent.

Accordingly, energy use in the buildings sector on a per-capita basis declines in the projection. The decline of buildings energy use per capita in past years has been attributable in part to improvements in the efficiencies of appliances and building shells, and efficiency improvements continue to play a key role in projections of buildings energy consumption.

Existing policies, such as Federal appliance standards, along with evolving State policies, and market forces, are drivers of energy efficiency in the United States. A number of recent changes in the broader context of the U.S. energy system that affect energy prices, such as advances in shale gas extraction and the economic slowdown, also have the potential to affect the dynamics of energy efficiency improvement in the U.S.

buildings sector. Although these influences are important, technology improvement remains a critical factor for energy use in the buildings sector. The emphasis for this analysis is on fundamental factors, particularly technology factors, that affect energy efficiency, rather than on potential policy or regulatory options.

Three alternative cases in AEO2012 illustrate the impacts of different assumptions for rates of technology improvement on delivered energy use in the residential and commercial sectors (Figure 20). These cases are in addition to the Extended Policies and No Sunset cases discussed earlier, and they are intended to provide a broader perspective on changes in demand-side technologies. In the High Demand Technology case, high-efficiency technologies are assumed to penetrate end-use markets at lower consumer hurdle rates, with related assumptions in the transportation and industrial sectors. In the Best Available Demand Technology case, new equipment purchases are limited to the most efficient versions of technologies available in the residential and commercial buildings sectors regardless of cost. In the 0

15 20 25

2010 2015 2020 2025 2030 2035

Reference 2011 Demand Technology

Best Available Demand Technology High Demand Technology

Figure 20. Residential and commercial delivered energy consumption in four cases, 2010-2035 (quadrillion Btu)

2011 Demand Technology case, future equipment purchases are limited to the options available in 2011 (“frozen technology”), and 2011 building codes remain unchanged through 2035. Like the High Demand and Best Available Demand Technology cases, the 2011 Demand Technology case includes all current Federal standards.

Without the benefits of technology improvement, buildings energy use in the 2011 Demand Technology case grows to 23.4 quadrillion Btu in 2035, as compared with 22.2 quadrillion Btu in the Reference case. In the High Demand Technology case, energy delivered to the buildings sectors only reaches about 20 quadrillion Btu for any year in the projection period, and in the Buildings Best Available Demand Technology case it declines to 17.9 quadrillion Btu in 2026 before rising slightly to 18.1 quadrillion Btu in 2035.

Background

The residential and commercial sectors together are referred to as the “buildings sector.” The cases discussed here are not policy-driven scenarios but rather “what-if” cases used to illustrate the impacts of alternative technology penetration trajectories on buildings sector energy use. In a general sense, this approach can be understood as reflecting uncertainty about technological progress itself, or uncertainty about consumer behavior, in that the market response to a new technology is uncertain. This type of uncertainty is being studied through market research, behavioral economics, and related disciplines that examine how purchasers perceive options, differentiate products, and react to information over time. By varying technology progress across the full range of end uses, the integrated demand cases provide estimates of potential changes in energy savings that, in reality, are likely to be less uniform and more specific to certain end uses, technologies, and consumer groups. Specific assumptions for each of the cases are summarized in Tables 6 and 7.

Results for the residential sector

To emphasize that efficiency is persistent and its effects accumulate over time, energy use is discussed in terms of cumulative reductions (2011-2035) relative to a case with no future advances in technology after 2011. An extensive range of residential equipment is covered by Federal efficiency standards, and the continuing effects of those standards contribute to the cumulative reduction in delivered energy use of 12.3 quadrillion Btu through 2035 in the Reference case relative to the 2011 Demand Technology case. Electricity and natural gas account for more than 85 percent of the difference, each showing a cumulative reduction greater than 5 quadrillion Btu over the period. Energy use for space heating shows the most improvement in the Reference case, affected by improvements in building shells and heating equipment (Figure 21). Televisions and PCs and related equipment use 1.9 quadrillion Btu less energy over the projection period, as devices with energy-saving features continue to penetrate the market, and laptops continue to gain market share over desktop PCs.

Cumulative savings in residential energy use from 2011 to 2035 total 31.6 quadrillion Btu in the High Demand Technology case and 56.2 quadrillion Btu in the Best Available Demand Technology case in comparison with the 2011 Demand Technology case.

Electricity accounts for the largest share of the reductions in the High Demand Technology case (49 percent) and the Best Available Demand Technology case (51 percent). In addition to adopting more optimistic assumptions in the High Demand Technology and Best Available Demand Technology cases for end-use equipment, residential PV and wind technologies are assumed to have greater cost declines than in the Reference case, contributing to reductions in purchased electricity. In 2035, residential PV and wind systems produce 23 billion kilowatthours more electricity in the Best Available Demand Technology case than in the 2011 Demand Technology case.

In the High Demand Technology and Best Available Demand Technology cases, energy use for residential space heating again shows the most improvement relative to the 2011 Demand Technology case. Large kitchen and laundry appliances claim a small share of the reductions, as Federal standards limit increases in energy consumption for those uses even in the 2011 Demand Technology case. Light-emitting diodes (LED) lighting provide the potential for further savings in the High and Best Available Demand Technology cases beyond the reductions realized as a result of the EISA2007 (Public Law 110-140) lighting standards.

Results for the commercial sector

Like the residential sector, analysis results for the commercial sector are discussed here in terms of cumulative reductions relative to the 2011 Demand Technology case, in order to illustrate the effect of efficiency improvements over the period from 2011 to 2035. Buildings in the commercial sector are less homogeneous than those in the residential sector, in terms of both form and function. Although many commercial products

TVs, PCs, related equipment energy consumption relative to the 2011 Demand Technology case, 2011-2035 (quadrillion Btu)

Table 6. Key assumptions for the residential sector in the AEO2012 integrated demand technology cases

Assumptions Integrated 2011 Demand

Technology Integrated High Demand Technology^a Integrated Buildings Best Available Demand Technology^a

distribu-tion; varies by end-use technology. All energy efficiency investments

evaluated at 7-percent real interest rate. All energy efficiency investments evaluated at 7-percent real interest rate.

Building shells Fixed at 2011 levels. New buildings meet ENERGY STAR specifications after 2016. Efficiency

PV and wind costs based on Advanced Case in EIA Technology reports.^b Learning rates adjusted for all technologies.

PV and wind costs reduced by twice the difference between the Reference and High Technology costs. Learning rates adjusted for all technologies.

Personal computers ENERGY STAR sales and enabling rates; LCD and laptop shares fixed at 2011 values.

ENERGY STAR sales and enabling rates.

LCD and laptop shares higher than in the Reference case.

ENERGY STAR sales and enabling rates. LCD share approaches 100 percent. Laptop share higher than in the Reference case.

TVs, cable boxes, and satellite systems

Fixed at 2011 values. Unit energy consumption (UEC) values are average of Reference and Best Available Demand Technology cases.

Per-unit consumption levels reduced to ENERGY STAR specifications.

Miscellaneous

electricity end uses Unit energy consumption (UEC)

values fixed at 2011 values. Most efficient equipment selected after

2014. Most efficient equipment selected in

all years.

aAll changes from the Reference case start in 2012 unless otherwise stated.

b U.S. Energy Information Administration, Photovoltaic (PV) Costs and Performance Characteristics for Residential and Commercial Applications, Final Report (August 2010), and The Cost and Performance of Distributed Wind Turbines, 2010-2035, Final Report (August 2010).

Table 7. Key assumptions for the commercial sector in the AEO2012 integrated demand technology cases

Assumptions Integrated 2011 Demand

Technology Integrated High Demand Technology^a Integrated Buildings Best Available Demand Technology^a

evaluated at 7-percent real interest rate. All energy efficiency investments evaluated at 7-percent real interest rate.

Building shells Fixed at 2011 levels. 25 percent more improvement than in

the Reference case by 2035. 50 percent more improvement than in the Reference case by 2035.

PV and wind costs, CHP cost and performance based on Advanced Case in EIA Technology reports.^b Learning rates adjusted for advanced technologies.

PV and wind costs reduced by twice the difference between the Reference and High Technology costs. CHP based on Advanced Case in EIA Technology reports.^b Learning rates adjusted for advanced technologies.

LCD and laptop shares higher than in the Reference case.

ENERGY STAR sales and enabling rates. LCD share approaches 100 percent. Laptop share higher than in the Reference case.

Non-PC Office

Equipment Same as Reference case except for elimination of data center efficiency

aAll changes from the Reference case start in 2012 unless otherwise stated.

b U.S. Energy Information Administration, Photovoltaic (PV) Costs and Performance Characteristics for Residential and Commercial Applications, Final Report (August 2010), The Cost and Performance of Distributed Wind Turbines, 2010-2035, Final Report (August 2010), and Commercial and Industrial CHP Technology Costs and Performance Data (June 2010).

are subject to Federal efficiency standards, FEMP guidelines, and ENERGY STAR specifications, coverage is not as comprehensive as in the residential sector. Still, those initiatives and the ensuing efficiency improvements contribute to a cumulative reduction in commercial delivered energy use of 4.1 quadrillion Btu in the Reference case relative to the 2011 Demand Technology case (Figure 22). Virtually all of the reduction is in purchased electricity. Increased adoption of DG and CHP accounts for 0.4 quadrillion Btu (115 billion kilowatthours) of the cumulative reduction in purchased electricity in the Reference case. Commercial natural gas use is actually slightly higher in the Reference case because of the increased penetration of CHP. Office-related computer equipment sees the most significant end-use energy savings relative to the 2011 Demand Technology case, primarily because laptop computers gain market share from desktop computers.

Commercial heating, ventilation and cooling account for almost 50 percent of the 17.1 quadrillion Btu in cumulative energy savings in the High Demand Technology case relative to the 2011 Demand Technology case. The more optimistic assumptions for end-use equipment in the High Demand Technology case offset the additional energy consumed as a result of greater adoption of CHP, resulting in a cumulative reduction in natural gas consumption of 0.9 quadrillion Btu. The increase in distributed and CHP generation contributes 0.8 quadrillion Btu (231 billion kilowatthours) to the cumulative reduction in purchased electricity use.

Technologies such as LED lighting result in almost as much improvement as space heating and ventilation in the Best Available Demand Technology case relative to the 2011 Demand Technology case. Significant reductions are seen for all end-use services, with a cumulative reduction in energy consumption of 24.6 quadrillion Btu. Even when consumers choose the most efficient type of each end-use technology, the more optimistic assumptions regarding technology learning for advanced CHP technologies result in more natural gas use in the Best Available Demand Technology case relative to the 2011 Demand Technology case.

In comparison to a case that restricts future equipment to the efficiencies available in 2011, the alternative cases show the potential for reductions in energy consumption from the adoption of more energy-efficient technologies. In the Reference case, technology improvement reduces residential energy consumption by 12.3 quadrillion Btu—equivalent to 4.1 percent of total residential energy use—from 2011 to 2035 in comparison with the 2011 Demand Technology case. In the commercial sector, energy consumption is reduced by 4.1 quadrillion Btu—equivalent to 1.7 percent of total commercial energy use—over the same period. With greater technology improvement in the High Demand Technology case, cumulative energy savings from 2011 to 2035 rise by an additional 6.4 percent and 5.5 percent in the residential and commercial sectors, respectively. In the Best Available Demand Technology case, the cumulative reductions in energy consumption grow by an additional 8.2 percent and 3.1 percent in the residential and commercial sectors, respectively. In the Reference case, a cumulative total of 16.4 quadrillion Btu of energy consumption is avoided over the projection period relative to the 2011 Demand Technology case. That reduction is roughly equivalent to 80 percent of the energy that the buildings sectors consumed in 2010. In the Best Available Demand Technology case, cumulative energy consumption is reduced by an additional 64.3 quadrillion Btu from 2011 to 2035.