June 18, 2019

June 18, 2019

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June 17, 2019

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Building Efficiency Big Now – District Energy Could Make It Grow Even Bigger

The advanced energy industry produced $199.5 billion in revenue in the United States in 2014 (and $1.3 trillion world-wide; this post, however, focuses on U.S. economic impacts) according to a new Advanced Energy Economy report. Navigant Research prepared the report.

The building efficiency segment of the advanced energy industry weighs in at $60.1 billion in revenue. That represents a 12 percent increase year-over-year and a 43 percent growth rate over the last four years. District energy and combined heat and power (CHP) stand as relatively minor contributors now but could contribute to significant growth of the sector in the near future.

Industries Involved in the Building Efficiency Segment

The building efficiency segment includes building design, building envelope, HVAC, water heating, lighting, appliances, electronics, enabling IT/demand response, and district energy and CHP. The report identifies the largest contributor to building efficiency gains as lighting (see page 8) with $103.6 billion of the total. The next largest contributor in the building efficiency segment is the building envelope sub-segment at $18.7 billion, which the report indicates is driven by commercial and residential energy efficient retrofits and zero net energy buildings.

The revenue from district energy, including CHP, stood at $850 million in the U.S. (see page 29). While the 2014 figures were down slightly from the prior year, the sub-segment still demonstrated 32 percent growth since 2011 (global percentage increase – the report specified no U.S.-only percentage increase).

District Energy and CHP Poised for Growth

Presently, lighting and building envelope improvement revenues clearly outpace district energy and CHP revenues. The gap between the sub-segments may shrink, however, with greater customer knowledge and adoption about district energy and CHP systems.

As I have written before, district energy and CHP are core building blocks for microgrids. (For a good read on district energy and microgrid implementation and project delivery methods, check out this MIT master’s thesis written by Genevieve Rose Sherman). Current projections for the microgrid market range from a low of $25 billion by 2022 to a high of almost $60 billion by 2020. This growth will obviously be spurred in part by more district energy and CHP projects coming online.

Apart from microgrids, as district energy and CHP projects gain acceptance amongst governments and developers, those parties will gain knowledge about and comfort with district energy and CHP systems. Certainly, the emissions reductions and infrastructure resiliency gained from district energy and CHP will buttress their adoption in more and more projects. Also, as the comfort level and knowledge base increases, more systems will be developed and existing systems will expand, thus further feeding the growth.

While the lighting and building envelope sub-segments of the advanced energy industry make up the bulk of the revenue in the sector right now, look for district energy and CHP to make strides over the years to come as these efficient, resilient and environmentally sustainable applications are deployed in more and more settings.

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About this Author

Dave McGimpsey, Lewis and Roca Law Firm, Energy Attorney
Special Counsel

Dave McGimpsey represents utility, energy, government, and private clients in regulatory and transactional matters. His core practice includes representing energy and water/wastewater utilities in regulating proceeding and transactional matters. He has been involved in over 1,700 MW of renewable energy development and has counseled energy clients on a wide spectrum of issues including tariff matters, regulatory proceedings, and other transactional matters. Dave has lead counsel experience in rate, financing, service area certification, asset transfer cases, and other regulatory...