Energy Efficiency Improvement and Future Potential: From Large-Scale Power Generation Efficiency to Consumer End-Use Efficiency

Energy Efficiency Improvement and Future Potential: From Large-Scale Power Generation Efficiency to Consumer End-Use Efficiency

Energy efficiency has been hailed as the single most promising method of reducing carbon emissions. The amount of energy wasted that could be captured and reused is staggering. From reuse of waste heat to capturing and reusing methane emissions from oil & gas systems, landfills, manure management facilities, and other systems, to building energy efficiency, new low energy designs to highly efficient consumer products, the potential is very large to optimize efficiency.

Power Generation Efficiency Improvements

Incremental efficiency improvements continue in new natural gas power plants, in the ability of solar panels to capture solar energy, in the ability of geothermal systems to transfer heat and cold, and in wind turbine technologies with higher towers and longer blades. Possibly the most significant improvements in terms of cost and reduction of carbon emissions and pollution are those of natural gas combined cycle power plants.

Combined Cycle Gas Turbines (CCGT) 

Several new state-of-the-art combined cycle natural gas power plants are being built as inexpensive gas continues to replace coal. One is in northeastern Ohio, the Lordstown Energy Center near Youngstown. It is expected to be up and running by the summer of 2018. Not only are this and similar plants more efficient than older gas plants but they are also cleaner: 

“The Flex-Plant technology Siemens is installing is designed to reduce start-up emissions by 95 percent, maintain low emissions during load following and maximize operational flexibility to reduce greenhouse gases and support the integration of renewables.” 

Forbes writer Jude Clemente notes that more than 80% of natural gas fired generation comes from combined cycle gas power plants. CCGT systems utilize waste heat from powering gas turbines transferred from exhausts to run steam turbines. This can make them up to 50% more efficient than simple cycle plants. He also notes that the ‘heat rate,’ or the amount of energy required to generate one unit of electricity, is one way to measure efficiency and that efficiency measured in this way from EIA data indicates avg. annual efficiency gains of around 1% compared to no improvements for coal, oil, and nuclear. He also notes that a 1% gain in efficiency can cut GHG emissions by 1-3%. He also notes that the average capacity factor of U.S. CCGT plants increased form 39% in 2010 to 56% in 2015. In 2000 1TCF of natural gas produced 115 TWh of electricity but in 2015 1TCF produced 140 TWh which is close to an 18% improvement over 15 years. These efficiency improvements will continue, he says, with 70% of new electricity generation slated to be from CCGT gas plants. This is also a major factor, or more accurately “the” major factor currently, in the decoupling of U.S. economic growth and carbon emissions. 

Cogeneration/Combined Heat and Power (CHP), Particularly Micro-Systems

Combined Heat and Power (CHP), also known as ‘cogeneration’ was widely implemented in larger generation systems from the 1980’s through about 2000. Since then its growth has stalled. Advocates say that there are still very good opportunities for CHP, especially in small systems. Some of the hurdles include dealing with the likelihood of ‘overgeneration” which to optimize it would require selling back to the grid in some sort of ‘net-metering’ arrangement. For this reason systems are often sized to not overgenerate when they would be more economical and much more efficient if sized for the existing heat loads rather than for system power needs. Gas micro-turbines as small as 25KW can be combined with thermal recovery for micro-CHP applications which could also be portable and mobile. When a boiler in a building needs to be replaced, small-scale CHP may be ideal in terms of cost and efficiency. Others don’t like CHP because it requires more system monitoring but with automated control systems that may be less of a requirement. When state and federal regulations for net-metering and distributed energy are more predictable the proper sizing of CHP systems can add value by increasing efficiency.

The Relationship of Energy Efficiency to Energy Cost and Subsequent Energy Usage

This is an interesting subject and some have argued that increased efficiency leads to lower cost which leads to greater energy usage. They refer to the “Jevon’s Paradox’ which basically says that the cheaper and more available a resource is, the more it will be used. They quote reliable past statistics to show that this is the case. The effect is now known as “rebound” and where increased consumption more than cancels out energy savings it is called “backfire.” There are also “frontier effects” such as the manufacture and use of many new power-using gadgets when a new technology becomes available. Efficiency advocates like Amory Lovins and Lee Schipper noted that rebound effects are trivial or are at least significantly less than efficiency benefits but researcher Harry Saunders disagreed. He and David Owen seem to suggest that increased efficiency nearly always leads to increased consumption. I am not so sure. Even so, I think that with increased consumer mindfulness of the importance of energy efficiency, of not wasting energy regardless of its monetary cost, this general trend will not continue and that increased energy efficiency has a real chance of ‘decoupling’ with increased energy usage. So I think the key to this decoupling is a collective heightened sense of attention and responsibility for reducing energy waste. Some have suggested suggestion itself as a means to encourage energy efficient habits and behavior. Suggestions that it's hip to be green or patriotic to be green can be seen as psychological means of motivating efficient behavior so that it becomes a sort of 'contagion.' On the other side of the coin one might discourage non-green behaviors, however, that side might be more manipulative and unfair. I favor encouragement as motivation but not discouragement as that might lead to demonization, especially since many arguments for energy use can be complex. However, if someone asked my opinion about whether they should install a coal furnace I would be sure to discourage it!

Increased attention to the virtues of EE is not likely to be the case in countries with energy poverty and there it would not be initially desired in the near-term. I do think it can happen in developed countries to reduce already high per capita energy consumption. I also think, however, that it does require specific focus on reducing energy use regardless of cost. There is already evidence that increased energy efficiency is lowering consumption and demand. In the U.S. electricity consumption has been flat for some time and is expected to stay that way and this is due mainly to energy efficiency (EE). Natural gas consumption and demand has also been held in check by more efficient power plants, more efficient furnaces, less peaker plant idling time and faster starts, and IOT home climate control smart tech. These trends will continue, so I think this decoupling of efficiency improvements and energy consumption will continue to build steam to a certain extent.

Energy Efficiency Investment Models

Investments in EE can have variable economics and payback times and each needs to be evaluated individually. EE has rightly been called the most cost-effective way to reduce energy costs in the long-term, for industries, buildings, and homes. However, there are issues. Different models have developed. Industries may employ engineers who specialize in energy efficiency since large cost-savings can be the result. Buildings and institutions may hire energy service companies (ESCOs) to design and implement EE measures. The ESCOs may operate the energy systems and take a cut of the cost-savings as payment. As distributed energy and smart technologies become more common this model may expand somewhat. Homeowners may also invest in EE for future cost-savings as well as reducing one’s carbon footprint. One problematic issue for houses is that many people rent and most that rent are low income people who cannot afford EE upgrades. Since the occupants typically pay the utility bills there is no incentive for landlords to increase EE. In addition, the low income people end up paying more for their utilities due to the inefficient systems. Eventually potential renters may increasingly consider energy costs when deciding to rent a place which would bring more incentives for EE upgrades.

Ultimately, the financial value of EE is dependent on the price of energy. If it is high the value of EE is high and vice versa. Thus more EE upgrades tend to occur when energy prices are high. There is also the decarbonization value of EE which is not dependent on energy prices. With carbon taxes and incentives to reduce emissions there is also some financial value to decarbonization. Lower fuel prices tend to undermine the incentives for EE investment so incentives to lower emissions may cushion that effect – but typically only slightly. Widespread efficiency improvements can also reduce overall energy demand which would keep energy prices low and lower the ROI of EE upgrades. However, one could also view EE upgrades as a hedge against future rising energy prices.

Efficiency Standards

Governments, communities, product manufacturers, and others have adopted various efficiency standards that require a certain degree of EE and less waste of energy. Energy waste is highly undesirable in a decarbonizing world so most agree that it should be disincentivized. Electric and natural gas bills now typically come with a comparison of one’s energy use to similar sized houses or buildings in specific areas so one can get a good idea of the efficiency of those systems. Power companies, government orgs, and ESCOs providing free energy audits may identify ways to increase EE in homes and buildings. EE investments can get incentivized by being required to get financing. Britain’s “Green Deal” effectively taxes all electric bills to finance EE improvements, presumably where needed based on audits and potentially could help the poor living in inefficient homes.

The Corporate Average Fuel Economy (CAFE) standards for U.S. cars and trucks are an example of moderately successful EE standards. Does greater MPG encourage more driving? Usually it does but typically it does not mean the driving makes the increased energy use exceed the improved MPG – so there will likely be rebound but not backfire.

  

Efficiency standards are typically enforced – there are penalties for not complying. Typically, higher standards mean higher costs so economists tend to favor market-based approaches over standards. Dieter Helm notes in his book, The Carbon Crunch that the big question is really: How big are the EE gains? While claimed gains can be enormous, in reality the gains can be quite small overall. Thus economic EE can be quite different than technical EE. He sees two flawed arguments in the role of EE in climate change policy: that EE will meaningfully reduce demand which he sees as questionable; and that EE investment will yield good returns which in reality is dependent on energy prices and future price assumptions. However, in another sense EE is intuitively desirable, even if demand reduction is less than hoped and returns are marginal.

Wind, Solar Energy, Battery Storage, and EV Battery Efficiency Improvements

Incremental efficiency improvements continue in the renewables sector with small improvements in capacity factor efficiency. Solar panel efficiency has improved slightly over the past few years but the more efficient panels cost more so it does not seem to equate to a cost improvement. Technology has improved wind energy capacity factor efficiency with longer blades, bigger rotors, and higher towers so that energy can be generated in lower wind conditions and take advantage of stronger winds higher up. Batteries for EVs and energy storage have shown incremental improvements as well, although costs are still a problem. For instance, as EVs increase their driving range per charge they need more battery power which translates to higher prices for the vehicle. One example is the significant cost increase of the new longer driving range Nissan Leaf.

End-User Efficiency

End-user efficiencies continue small incremental improvements in consumer products. Old business models that included “planned obsolescence” are no longer viable and durability is encouraged. If we end up with utility business models where the utilities are rewarded with higher profits for efficiency improvements then they will support end-user efficiency measures. Energy Star rated efficient appliances are now the norm. The Internet of Things (IOT) allows for further energy efficiency of appliances. With smart grid technology, “demand response,” also has the potential to optimize power usage and to shave energy peaks (lower the magnitude of energy use spikes due to weather) through charging different energy prices by “time of use.” Smart grid technology has a long way to go due much to the cost of implementation but overall it has great potential to reduce energy wastage. However, there are also some hidden costs with smart technologies in the form of increased data usage that requires more power to run data server centers. Another is the upgrade fever, or the need to upgrade products more frequently due to tech improvements which means more non-optimized use of products, premature discarding, and making cheaper ‘used’ products that are more inefficient.

Lighting and the LED Revolution

The widespread adoption of LED lighting technology is a great example of the power of end-user efficiency. The use of LEDs is expected to save a gigatonne of CO2 emissions by 2025 or 2030. LEDs are projected to take up 95% of market share for lighting by 2025. The initial revolution was aided by the mandatory phase-out of incandescent lighting technology but going forward consumer choice is set to be the main driver due to decreasing costs, longer life, higher quality, lower energy usage, and lower emissions. Thus LEDs seem to be a ‘no-brainer’ and a major win-win.

The Need for More Efficient Air Conditioners

As developing countries (most in hot areas like India and China) get more per capita wealth and as avg. global temperatures increase there will be more people buying and using air conditioners. Global projections are for more than 700 million new ones by 2030 and 1.6 billion new ones by 2050. U.S. Energy Secretary Ernest Moniz thinks a 25-30% increase in A/C efficiency is needed and is technically possible. Mini-split air conditioners are already 50% more efficient than standard models, although a bit more expensive. They are currently widely available and deployed in South Korea.  A/C also has another GHG issue with chlorofluorocarbons, CFCs, having been replaced quite a bit with HCFCs and HFCs (hydrochlorofluorocarbons and hydrofluorocarbons). While HFCs are less problematic for the ozone layer than CFCs they are significant greenhouse gases. Hydrocarbon refrigerants for A/C systems are a tried and true replacement for HFCs. Larger and industrial-sized A/C and refrigeration systems can also use CO2, ammonia, or CFOs, all of which have far less global warming potential (GWP) than CFCs, HCFCs, or HFCs. (although for CFOs it is only somewhat less). A/C usage on hot days is a major factor in power plant peaking and require backup “peaker” plants to be idled and run inefficiently to cover demand spikes. If A/C efficiency can be increased there should peaks of less magnitude.

  

References:

U.S. Natural Gas Electricity Efficiency is Always Improving – by Jude Clemente, in Forbes (Energy) – forbes.com, April 10, 2016

The Corundum: How Scientific Innovation, Increased Efficiency, and Good Intentions Can Make Our Energy and Climate Problems Worse – by David Owen (Riverhead Books, 2011)

The Carbon Crunch: How We’re Getting Climate Change Wrong – and How to Fix It – Revised and Updated-  by Dieter Helm (Yale University Press, 2015)

How Contagious is Energy Efficient Behavior? – by Arjan Haring, posted on LinkedIn, April 19, 2016

Natural Gas-Fueled Power Plant in Lordstown Will Be Showpiece – by Rep. Tim Ryan and Eric A. Spiegel, in Mahoning Valley Vindicator (vindy.com), May 22, 2016

The World is About to Install 700 Million Air Conditioners. Here’s What That Means for the Climate – by Chris Mooney and Brady Dennis, in the Washington Post, May 31, 2016

The Low Carbon Economy: Goldman Sachs SUSTAIN: An Equity Investor’s Guide to a Low Carbon World 2015-25 – by Goldman Sachs

Combined Cycle Power Plant – How it Works – by GE Power Generation (powergen.gepower.com)

Ductless Mini-Split Air Conditioners - @ energy.gov

Climate-Friendly Alternatives to HFCs and HCFCs – ec.europa.eu

Combined Heat & Power: The Grid’s ‘Best-Kept Secret?’ – by Robert Walton, in Utility Dive, June 8, 2016