Throwing out the Batteries with the Bath Water

For the last few decades, there has been a gradual shift in understanding that the end of the fossil fuel era is at hand, and not necessarily because we run out - although there are of course vested interests who would like to sell us every last drop of oil, and every last lump of coal, not to mention whatever gas remains. The paradigm shift however, is about understanding that the fossil fuel era is at an end because of diminishing returns. In short the unintended consequences like CO2 emissions and other problems are the manifestations of that shift. The cost of the commodities themselves is going up because of increasing scarcity, and the cost of the various nefarious side effects are weighing more heavily all the time as well.

The other side of the shift is the increased creativity in the development of alternatives, both in terms of the technologies and in the complete frame of reference in which we operate with energy. However this process is nowhere near complete, and in the transition sometimes ridiculous misalignments come into play. One example of this is the storage of Domestic Hot Water which I have been writing about on this site. We are only just starting to understand that renewable energy means that that buildings can generate some or all of their own energy, and that the most typical renewable sources, wind and solar, are both of the peak load variety, i.e. they produce power when the weather is favorable, not necessarily when we turn on the switch. Therefore energy storage is an absolutely crucial design element in harnessing these sources. This issue has been part of the smart grid conversation for years, and we continuously hear how expensive batteries are.

Meanwhile the buyers of tank-less hot water heaters (unless as a backup heat source), are throwing out the batteries with the bathwater, or, to be more precise, by eliminating storage of Domestic Hot Water (DHW), they are eliminating the cheapest form of energy storage available in residential living, and one that is of crucial importance if we ever want to make our buildings energy independent with renewable energy. The focus in this case is on eliminating the BTU loss from hot water storage, never mind the fact that with modern insulation, these losses are negligible, and yes some space is being reclaimed. This however ignores the fact that hot water is the most natural energy storage solution, which we get practically "for free," if we realize that with various renewable technologies it is cost justifiable as part of the hot water provisioning for the premises.

This particular issue is quite absurd in its consequences. There are super efficient tank-less hot water heaters, with Energy Star labels, and they are marvelous, if heating hot water were the problem, except it is not, and therefore tank-less hot water heaters are not the solution. Rather, they are the problem. The absurdity becomes complete when we realize that there are tax incentives for tank-less hot water heaters, which means that the US government thus provides a subsidy for the postponement of our renewable energy economy by another twenty years or so, and building owners are torpedoing their best options for making their buildings energy independent. In short the very concept of the super efficient tank-less hot water heater, is of value primarily if the only option for a residential building is in consuming energy, and economizing by consuming less of it. This is the utility model, and the utility companies, gas and electric, as well as the oil companies represent this economic model, and the traditional incentives are all geared to energy efficiency more so than to energy independence.

The new model however is that energy is becoming a technology business, and buildings can increasingly generate their own energy locally, at the building level. As a result the economic value of DHW storage is now as an energy store, which enables the use of peak-load generating technologies like wind and solar. This solves the storage problem only in the form of heat, which is the largest energy demand in residential construction. In as far as the demand is for electricity, some form of battery is unavoidable if you want to rely on peak power, and come either partially or wholly off the grid.

As I have seen demonstrated over and over, the plumbers of the world do not understand that Hot Water is now going to be a freebie, and a happy by-product of this shift in energy infrastructure, in which buildings increasingly produce their own energy. This shift is particularly dramatic in existing residential construction, but   that is exactly where the greatest economic opportunity is. Accordingly, if the government wants to achieve energy independence, the incentive programs, from tax incentives to special finance programs (such as the Multi-family Performance Program from NYSERDA was one), need to take the new realities into account.

The mere accumulation of energy efficiency, which seems the only option in the utility model, is also the best guarantee that we stay in the fossil fuel economy forever, and therefore would be disastrous. Yet almost all incentive programs, with the best intentions, make this totally self-defeating assumptions. Energy independence does not happen unless you plan for it. The renewable energy economy and the utility model are two radically different economic constructs, and "energy efficiency" as a goal remains the child of the utility   model, and will prevent us from ever getting to energy independence and a renewable economy. As a dear friend pointed out recently: "You cannot cross the Grand Canyon in two easy steps." We are now at the point that we need to wean the baby from the breast of the utility companies and the oil companies, and the baby will cry at first, but to become independent, it is absolutely necessary. And there is money to be made from this energy conversion, once it is properly understood as a business opportunity.

Official Correspondence regarding Tank-less Hot Water Heaters

To the Secretary of Energy, Mr. Steven Chu:

quote

Subject: Misuse of Energy Star Label in "legititmate" applications
Date: Sun, 28 Mar 2010 09:09:24 -0300

Dear Mr. Chu:

Besides some of the outright hoaxes under the Energy Star label, there are occasionally problems of disastrous misuse of the label, which may seem perfectly legitimate on the surface.

Perhaps the biggest "legitimate" hoax under the Energy Star label is the oxymoron of a Tankless Hot Water Heater with Energy Star Rating, which qualifies for tax incentives to boot, but which positively undermines the
architecting of a renewable energy future.

The problem here is one of sub-optimization, and is in this case quite disastrous in nearly all applications of Hot Water Heaters. Namely, DHW storage is the cheapest most effective form of Energy Storage imaginable,
and switching to a tankless system is a ruinous decision from an energy management standpoint, since it means throwing out nearly "free" batteries, that would allow a property to harvest cheap energy, be it off-peak grid power, via time-of-use metering, or peak-load power such as wind or solar.

Conversely tankless water heaters may be quite valuable as backup power, in situations where renewable peak power is used, however in that case the Energy Star models should not be used, as they introduce needless maintenance issues if they only fire up a few times a year. So for that application, actually the non-energy star models are preferred, because they will last longer and are therefore dollar for dollar more effective and likely to be more reliable.

This issue is big enough that it deserves top level attention. There are geothermal heatpumps which can generate DHW with 400% efficiency, and as long as you design water storage large enough for intra-day use during peak power, you can run these off-peak on the grid, or alternatively with peak loads such as wind or solar, and have "free storage," and I'm using "free" advisedly, for the analytical point is that the water storage is cost justifiable from the DHW application alone.

Even large organizations, like NYC Housing Authority, have used stimulus funding to install tankless hot water heaters, and thus undermine their own long-term renewable energy future. It is time for this fallacy to stop.

Of course more generally there is always a risk of sub-optimization, if the attention becomes focused on the component level. Thus there is need for wide use of system-level Energy Star ratings, which could offset the
type of abuse of the rating here. It is too silly that stimulus money should be used to prolong the carbon intensive energy economy, instead of enabling the renewable energy future.
unquote

To which the unfortunate reply was:
quote

EXEC-2010-005700

Dear Rogier Fentener van Vlissingen,

Thank you for contacting the U.S. Department of Energy.  I understand you have concerns about ENERGY STAR qualified tankless hot water heaters.

ENERGY STAR is a joint program of the U.S. Department of Energy (DOE) and the U.S Environmental Protection Agency (EPA) designed to help all consumers save money and protect the environment through energy efficient products and practices.  In an effort to ensure that only products meeting the program requirements can receive an ENERGY STAR label, the EPA and DOE are further strengthening the certification process.  For an outline of these steps, please view:

ENERGY STAR
News and Announcements
EPA, DOE Announce Changes to Bolster ENERGY STAR Program (April 2010)
http://www.energystar.gov/index.cfm?c=news.nr_news&news_id=http://www.energystar.gov/cms/default/index.cfm?LinkServID=E77FB9F2-96D9-EAAD-6B3C6ECF0D9E4808#c_B4A3256E-188B-36F7-215E56FDB1D2450C

If you have further questions about ENERGY STAR product ratings, please contact ENERGY STAR directly through the contacts listed on the following web page:

ENERGY STAR
Contact Us
http://www.energystar.gov/index.cfm?c=contact.ct_index

You may be interested in reviewing rulemaking activities and regulations regarding energy efficiency for residential water heaters available through the DOE Office of Energy Efficiency and Renewable Energy’s (EERE) Building Technologies Program:

U.S. Department of Energy
Office of Energy Efficiency & Renewable Energy (EERE)
Building Technologies Program
Appliances & Commercial Equipment Standards
Residential Water Heaters
http://www.eere.energy.gov/buildings/appliance_standards/residential/waterheaters.html

The federal tax credits for energy efficiency are congressionally mandated. Products that qualify as a federal energy efficiency tax incentive were set forth in the Energy Policy Act of 2005. On October 3, 2008, former U.S. President George W. Bush signed into law the Emergency Economic Stabilization Act of 2008 to extend many of the energy efficiency tax incentives first enacted in 2005 that expired at the end of 2007, or that were scheduled to expire at the end of 2008. On February 17, 2009, Congress passed the American Recovery and Reinvestment Act of 2009 which includes several provisions modifying and expanding the scope of the energy efficiency and renewable energy incentives:

The Tax Incentives Assistance Project (TIAP) Legislative Language & Pending Updates
http://energytaxincentives.org/general/legislative.php

To inquire about possible changes to the list of eligible products, please contact your local congressperson.

For information on how energy related stimulus funds are being implemented in the state of New York, you may wish to contact your state energy office or view New York’s recovery website.  Below you will find your state’s energy office contact information as well as a link to your state’s Recovery Act website:

New York State Energy Research and Development Authority
Energy Efficiency Services
17 Columbia Circle
Albany, NY 12203-6399
Phone: (518) 862-1090
http://www.nyserda.org/

Recovery New York
http://www.recovery.ny.gov/

As you mentioned geothermal heat pumps, you may be interested in viewing  the following websites:

U.S. Department of Energy
Office of Energy Efficiency and Renewable Energy Energy Savers
Geothermal Heat Pumps
http://www.energysavers.gov/your_home/space_heating_cooling/index.cfm/mytopic=12640

Geothermal Heat Pump Consortium
The Consortium is a national non-profit trade association of the geothermal heat pump industry.
http://www.geoexchange.org/

U.S. Energy Information Administration (EIA)
Geothermal Heat Pumps
http://www.eia.doe.gov/cneaf/solar.renewables/page/heatpumps/heatpumps.html

Western Area Power Administration
Geothermal Heat Pumps
www.wapa.gov/es/pubs/fctsheet/GHP.pdf

Sincerely,

Amy Foster Parish
EERE Information Center
Office of Energy Efficiency & Renewable Energy (EERE)
U.S. Department of Energy
http://www.eere.energy.gov

unquote

Oh well, so off I go, now to write to the Energy Star program directly... to be continued.

On Sub-optimization with Energy Star

The Energy Star program is getting a lot of scrutiny lately, and no doubt that is helpful to make the program better and a more meaningful rating of actual performance of equipment we buy. However, there is another aspect to Energy Star, where it can be seriously misleading, even if all the performance data are correct. Collectively we are still a dysfunctional family when it comes to achieving a workable renewable energy economy, in lieu of merely extending our fossil fuel dependence in the name of "energy efficiency."


The example is similar to the issues we have recently seen on Wall Street. If incentive systems are such that they reward short term claims of profit, on investments on which the profits are in the distant future and by no means assured, the sales incentives of the "bankers" and "traders," really boil down to a modern version of "après nous le déluge," or, if you will: "Take the money and run." It boils down to sub-optimization where one party can game the system. I saw some examples of the same at the time of the build-up of MCI-Worldcom, when some of the sales people in that organization were able to collect double commissions, because the internal sales tracking systems were not integrated. It seemed, looking from the outside in, as if that company was in no hurry to correct the situation, while their sales people were drinking up their ill-gotten gains. Later it dawned on me that these double bookings of course perversely supported an inflated stock price, which it seems was the goal of management.


Similar issues of misaligned incentives happen with Energy Star, and it comes to light in some cases when you are designing systems based on integrating many components. It comes to light in strange ways. One of the strangest may be the case of tank-less Hot Water Heaters, which are wonderfully engineered, and highly efficient devices, and there have been a lot of them installed with moneys from the ARRA (Recovery Act), with the tax-incentives which are available in this area, and yet in almost all cases does this choice undermine a long term green energy strategy, and it boils down to a needless prolonging of burning fossil fuels to heat water. 


One of the central problems with generating energy from peak load capacity, such as solar- and wind-energy, is the problem of storage, and in any residential construction, you usually have daily usage of very predictable volumes of hot water. Thus a renewable energy solution becomes vastly more economical when it supplies all or part of the hot water for a building, thus allowing the storage of energy. The entire concept of the smart grid revolves around solving the energy storage problem and the very concept of tank-less hot water heaters runs counter to that trend, moreover a well insulated water tank is now so efficient, that the loss of BTUs from storage is insignificant, whereas its value for harvesting and storing energy in this fashion is extremely high, and strategically crucial if we want to solve our energy problems any time soon. 


Arguably a tank-less heater could make a good backup if hot water comes to depend on peak load capacity such as wind or water, but in that case the condensing, modulating high efficiency models are not worth the extra cost which gets them their energy-star rating. The greater complexity of those designs brings maintenance problems with it, which are aggravated if the equipment runs very infrequently, and so the Energy Star label is exactly what you don't want.


In short, high efficiency, Energy Star-rated tank-less hot water heaters are more likely part of the problem set, and not part of the solution set when it comes to solving the energy problems of residential living, be it in apartment houses, hospitals, dormitories, etc. as they undermine the achievement of building-level energy independence, and gratuitously postpone a renewable energy economy by another twenty years. They are however the best friends of your local gas company. You may even win awards for your energy efficient building. Economically however, you will have shot yourself in the foot with a bazooka. It is high time we bring out a proper understanding of marginal economics to this area of endeavor. Maybe installing these systems should require a very expensive license, to make sure all feasible renewable alternatives were exhausted first. OK, that was tongue in cheek, I guess.