It's not just for enviros any more.
Green building. It's a trend that means newly constructed buildings consume 10 to 50 percent less energy than traditionally constructed buildings, yet cost only a small percentage more than standard construction. And it's a trend that is rapidly gaining a foothold with large residential and commercial builders. No wonder utilities of all sizes across the country are paying attention.
Green building doesn't require expensive metering, complicated new technology, constant load monitoring, or indeed much post-construction effort by customers to achieve significant energy savings. Instead, the work is up front, in the design phase of new construction. Energy savings come from integrated building design, putting together an energy-efficient combination of windows, building siting, lighting, and heating, ventilation and air conditioning (HVAC) systems, among other elements.
Green buildings can cost more than traditional construction, but according to the U.S. Green Building Council (USGBC), that's not always the case. The price for a Johnson Controls green building in Milwaukee was equivalent to that of a similar standard building, though it possessed high-tech features like personal temperature controls. In fact, due to increased energy efficiency, expensive elements like mechanical and electrical systems sometimes can be downsized, leading to a lower overall building cost.
When green buildings cost more, it's usually not by a large amount. Russell W. Duncan, energy efficiency supervisor at Progress Energy Carolinas, pegs the average cost of residential green buildings at around 1 percent more than traditional homes in his area. Green building isn't just for more expensive commercial and residential buildings, either. Habitat for Humanity uses green building techniques in many of its projects throughout the country.
There's no doubt that interest in green building is up sharply. Membership in the USGBC has jumped from around 200 in 1999 to more than 2,500 in 2003, according to a spokeswoman for the council. And certification under the council's LEED program (Leadership in Energy and Environmental Design) is expected to jump from the current level of 44 buildings to nearly 700, as LEED-registered buildings become certified upon their completion.
While LEED certification encompasses all aspects of green building-site sustainability, water consumption, materials selection, and indoor air quality-much of the focus is on energy efficiency. That aspect, of course, is the most interesting to utilities.
What's in It for Utilities?
The sharp rise in air conditioning use in Ft. Collins, Colo.-from around 5 percent of homes in the area 20 years ago, to nearly half of all new homes there today-made Ft. Collins Utilities (FCU) keenly interested in finding ways to cut the need for so much peak kilowatt consumption, since it was causing large losses for the utility (see Figure 1). After some investigation, Doug Swartz, energy services engineer at FCU, says the utility found that much of the cooling load increase was due to the poor energy design of new residences.
Swartz is careful not to blame builders for most homes' lack of energy efficiency. Builders, he says, are going to spend money on areas where buyers pay attention-and it's not on energy efficiency. In part, that's because buyers generally assume that if a building meets the minimum standards for the local energy code, energy efficiency is taken care of. But a June 2002 study of new home construction in Ft. Collins shows that simply is not the case there.
The study documented numerous cases in which vapor barriers were lacking, ductwork leaked excessively, and insulation was improperly installed in homes built from 1994 to 1999. Indeed, in one case a 1999 home completely lacked attic insulation, due to builder oversight-and cost the owner $150 more in energy costs over six months, until city officials discovered the problem after three failed visits from the builder.
According to Swartz, another part of the problem is that many popular architectural features, such as cantilevered floors and living space over garages, can be highly inefficient from an energy perspective (see Figure 2). Those features can be incorporated into a green building project, but the builder needs to ensure that construction methods don't unintentionally cause energy loss, through improper insulation techniques and the like. Also, Swartz notes, many builders pay little attention to the solar orientation of a house, even though a vast expanse of glass facing south can lead to significant solar heat gain-driving up the need for air conditioning during the summer.
The desire to decrease peak kilowatt demand is what drove FCU to start its green building program, along with the municipal utility's interest in the well-being of the community they serve, Swartz says.
Meeting Conservation Goals
Over time, green building programs can indeed shave peak demand significantly. Xcel Energy started its program in Minnesota a decade or so ago, when it was Northern States Power Co. Over the last 10 years, the company has avoided 62 MW of peak demand-the size of two to three small peakers, says Julia Gauthier, product portfolio manager at Xcel in Minnesota.
Xcel's program focuses solely on commercial-type buildings, particularly those 50,000 square feet and over. The company offers free design assistance to its commercial customers, sending representatives from an energy consulting firm to meet with the building owner, architect, and engineer to review the initial design plans. After evaluating aspects of the initial building design such as shape, size, orientation toward the sun, and windows, the energy consultants predict the energy usage of the initial design, including annual energy costs and peak kilowatt demand. Along with this energy modeling comes a number of suggestions for altering elements like lighting technology, window type and glazing, adding more daylight, and using lighting controls.
Typically, the energy consultants present three bundles of options for changes, with three price tags and impacts on energy savings. Once the building owner and design team select the options they want to pursue, Xcel calculates the peak kilowatt savings. For those buildings that will save up to 28 percent in energy consumption over standard energy code, Xcel pays the owner $170 per kilowatt-hour saved. To provide additional incentive, the utility offers bigger rewards to those building owners that exceed the 28 percent energy savings mark. Xcel pays builders up to $275 per kilowatt-hour saved if the building exceeds the 28 percent mark, up to 50 percent energy savings.
For a utility like Xcel, the motivation to encourage green building stems from its interest in meeting conservation standards imposed by regulators. Minnesota has fairly rigorous conservation standards. All utilities there must spend a percent of gross operating revenues on energy conservation-electric utilities spend 1.5 percent, and natural gas providers pay 0.5 percent. Xcel Energy spends 2 percent, due to an agreement with the state over spent nuclear fuel storage.
While she acknowledges that Xcel's main motivation is meeting Minnesota standards, Gauthier also points to other benefits for the company from promoting green building among its commercial and industrial customers. Reducing the kilowatt demand on the hottest days, she says, is better for the environment, is better for Xcel's system, and keeps operating costs down and rates lower.
Despite a drop in participation rates in the green building program, Gauthier says there is heightened interest in Xcel's program. New construction rates have dropped even more precipitously than program participation rates, she explains, and customers are paying increasing attention to building costs past the opening of the front door of a new facility.
Serving the Customer
For other utilities, like Southern California Edison (SoCalEd), involvement in green building programs grows from customer demand-hardly surprising after Californians paid headline prices for power in 2000 to 2001. Yet for some segments of the California market, the crisis isn't the only motivating factor.
Gregg Ander, chief architect for SoCalEd, says schools are interested due to demonstrable gains in student performance when they're taught in green buildings. In addition, he says, retailers have noticed that stores in green buildings have higher sales throughput, and companies like the Gap, Target, and Wal-Mart are using green building techniques in their stores in California and across the country. According to the Rocky Mountain Institute, productivity of workers in green buildings can rise between 6 and 26 percent. And, executive orders from both the Clinton and Bush administrations to improve federal facility energy consumption means that military bases, post offices, and General Services Administration buildings are all utilizing green building design.
SoCalEd's involvement in green building all boils down to customer service, Ander says. The company is "passionately involved" in customer service, he says, and sees offering energy efficiency services as a great way to work with the utility's customers. Also, he points out, it benefits SoCalEd if customers remain profitable and stay within the utility's service territory, rather than relocating due to high energy costs.
Progress Energy Carolinas, formerly Carolina Power & Light, has been promoting energy efficient construction since the country's first energy crisis in the 1970s. Currently, the company offers a 5 percent discount on its kilowatt-hour price to customers who build EnergyStar homes.
Although the Environmental Protection Agency's EnergyStar program is well known when it comes to appliances and electronics, many consumers are less aware that homes can be EnergyStar rated. To receive the rating, homes must be 30 percent more energy efficient than homes built to the standard energy code. While existing homes can qualify for EnergyStar, retrofitting is much more expensive than building with an initial design that is energy efficient.
Progress' Duncan compares an EnergyStar home rating to a Good Housekeeping seal of approval. In a competitive housing market, he says, the rating is something builders can use to differentiate their offerings. While consumers often don't know to demand an EnergyStar rating, Duncan thinks there will be increasing demand for such homes as energy costs climb. In addition to the discounted electricity rate, Duncan emphasizes that a 1 percent additional building cost on a $200,000 home will be more than repaid within two years, between the discount and the decrease in the home's energy use. And, he says, if a customer stays in the home for 20 years, she will over time save the equivalent of one year of power bills.
The major costs of Progress' program are the training it offers to builders throughout its service territory, plus the bill inserts for the company's 900,000 or so customers.
The payback for Progress is something that Duncan doesn't like to put into dollars and cents. "If you can tell me how much a pound of customer satisfaction sells for on the open market, and how I can weigh that," then he says he could come up with a figure. Instead, he points to the positive feelings that customers who participate in the green building program have toward the utility, and that customers also feel like they are doing something to help the environment. In the end, Duncan says Progress views money spent on its green building program to be an investment, rather than an expense.
Whatever the reason for utility participation in green building, it's a trend that utilities are certainly not ignoring.
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