Four strategies for decarbonization, electrification in commercial buildings

Tap into state efficiency programs to reduce energy consumption of air handling systems.

By Bill Kosik, PE, CEM, Oak Park, Illinois May 10, 2023
Courtesy: Bill Kosik


Learning Objectives

  • Discover what role commercial buildings have in carbon dioxide emissions and the resulting impact on climate change.
  • Understand how state energy plans are structured and learn about energy-efficiency incentive programs.
  • Get a more in-depth understanding of the different approaches on using technical resources manuals and the energy-efficiency measures.
  • Learn about specific energy-efficiency measures used in incentive programs for air handling systems and equipment.

Energy efficiency insights

  • Commercial buildings account for 35% of all electricity use in the U.S and 16% of carbon dioxide (CO2) emissions. And according to the U.S. Environmental Protection Agency, 30% of the energy used in commercial buildings is wasted.
  • Furthermore, in commercial office buildings the heating and cooling systems, a majority of which consists of air-handling equipment, more energy for air conditioning is consumed than any other building type.

Decarbonization efforts are a critical part in meeting the goals pledged by President Biden during the 2021 Leaders Summit on Climate — reducing the nation’s greenhouse gas emissions 50% by 2030 and net-zero by 2050 (2005 emissions as basis).

The U.S. Department of Energy decarbonization roadmap is a set of strategies including energy efficiency, clean energy supply, clean fuel sources and direct air capture of carbon. Of these strategies, energy efficiency is the “beginning of the pipe,” improving efficiency which reduces the need for clean energy and fuel and results in lower carbon emissions. Energy efficiency is vital in the world’s journey to net zero and keeping global warming at 1.5 degrees Celsius. The International Energy Agency (IEA), nicknamed it “the first fuel.”

To develop actional processes and to reinforce the importance of energy efficiency, the New Building Institute (NBI) published the “Existing Building Decarbonization Code.” According to the NBI, the code is “… a new way for jurisdictions to reduce carbon emissions and meet Climate Action Plan and public health and equity goals. The need to address existing building stock is great, with 5.9 million existing commercial buildings in the U.S. comprising 97 billion square feet”.

Electrification of buildings

Electrification is a strategy that falls under the decarbonization umbrella. It can play a major role in reducing the carbon emissions from commercial buildings when the source grid is sufficiently clean. In 2020, the American Council for an Energy-Efficient Economy produced a study that showed commercial buildings that replace their gas-burning heating systems with electric heat pumps could reduce their total greenhouse emissions by 44%.

Commercial buildings account for 35% of all electricity use in the U.S and 16% of carbon dioxide (CO2) emissions. And according to the U.S. Department of Energy (DOE), 30% of the energy used in commercial buildings is wasted. Furthermore, in commercial office buildings, the heating and cooling systems, including air handling equipment, consume more energy for air conditioning than any other building type.

The good news is that energy use in commercial buildings continues to drop. The data show that from 2018 the energy use intensity has decreased by 12% (see Figure 1).

Figure 1: In the reference case, commercial buildings will expand by 34% on a square footage basis. Office buildings consume more energy for air conditioning than any other building type, accounting for 25% of the energy consumed for air conditioning in the U.S. commercial sector in 2050. Courtesy: Bill Kosik

Figure 1: In the reference case, commercial buildings will expand by 34% on a square footage basis. Office buildings consume more energy for air conditioning than any other building type, accounting for 25% of the energy consumed for air conditioning in the U.S. commercial sector in 2050. Courtesy: Bill Kosik

Energy consumption of air conditioning in buildings

Air conditioning systems are one of largest electricity consumers in commercial buildings. Across the buildings sector, purchased electricity accounted for 94% of delivered energy for air conditioning in 2019. These systems range from central built-up systems to packaged rooftop units. Breaking down a typical heating, ventilation and air conditioning (HVAC) system into smaller categories, ventilation, cooling and heating systems are the largest energy consumer of all the other sub-systems. When building owners are looking for ways to reduce energy consumption, implementing energy efficiency measures (EEM) specifically for air handling equipment can yield significant savings.

Small- and medium-sized businesses may have difficulty finding capital funds or using cash reserves for HVAC system upgrades, but there are options for funding that can reduce the need for securing loans. Most states have energy efficiency policies, which are generally managed by the state’s public utility commission. Electric and natural gas utilities are responsible for developing a ratepayer funded energy efficiency program.

The programs are designed to incentivize residential, commercial and industrial customers as they implement energy reduction projects. Depending on the scope of the customer’s project, the incentives can provide a significant funding source for capital-intensive air-handling unit (AHU) upgrade projects.

This article has four primary purposes:

  1. Provide examples of processes developed by state energy efficiency programs used to estimate and validate energy savings required by ratepayer funded, utility managed incentive energy programs.

  2. Present high-level technical information based on the state efficiency measures, used to reduce energy consumption by improving the efficiency of air handling units.

  3. Provide an overview of how a proposed energy savings project is vetted and validated. This includes examples of engineering analysis and calculations developed by state or territory energy programs that are specific to AHUs.

  4. Discuss the important role of federal and state government in developing and funding programs that incentivize end-users to implement energy efficiency improvements.

Regulatory energy policy

Regulatory policy can have a significant impact on investments for improving energy efficiency in commercial, institutional and industrial buildings. Electric and natural gas utilities have a key role in making sure the end use of the energy is efficient, with the goal of lowering energy demand (electricity and natural gas). State utility regulators use a variety of incentives to address the inherent conflict that exists — lowering energy use can have an adverse financial impact on the utility. Policies enacted by the state encourage the utility to play a role in lowering overall energy consumption and set a foundation for implementing cost-effective EEM.

The state public utility commission (PUC) is responsible for the developing and updating the technical reference manual (TRM). The technical parameters and calculation steps in the TRM are essential for state regulators, utilities, program administrators and implementation teams for estimating and validating the energy and demand savings of end-use EEM. TRMs can be used exclusively by a state, by utilities or shared with other states and alliances.

Some TRMs include requirements to validate nonenergy impacts (such as water use and secondary CO2 emissions). Some measures include processes and calculations to validate the cost-effectiveness of a measures focusing on the useful life of equipment intended to be replaced.

The state PUC approves the TRMs, giving it a legal framework. For example, in Illinois, the PUC approves the contract of an independent third-party organization whose primary responsibility is administering the TRC. In this scenario the third-party organization works for and is paid by the utility. But ultimately, the PUC has the final say.

In simple terms, the TRM is the “rulebook” for ratepayer-funded energy efficiency programs. When examining different EEMs, many are straightforward with little math required. Others are more complex using a series of calculations that include multiple variables such as age and capacity of existing equipment, type of flow control, location of project, operating characteristics and others. All these details ensure that requirements are consistent and fair since the different utilities may use the same TRM for programs in other service areas.

Figure 2: Air handling systems can have wide variances in energy consumption based on climate and system type. Illustration based on data from Commercial Building Energy Consumption Survey (CBECS) Table C16. Electricity expenditures by census region, 2018. Courtesy: Energy Information Administration

Figure 2: Air handling systems can have wide variances in energy consumption based on climate and system type. Illustration based on data from Commercial Building Energy Consumption Survey (CBECS) Table C16. Electricity expenditures by census region, 2018. Courtesy: Energy Information Administration

Deemed energy savings method

When comparing AHU measures from different TRMs, weather data and hours of operation are two common values used in calculating savings. The TRM provides instruction on how to obtain these and other variables. For outside sources, the measure lists the technical reference that must be used (e.g., ASHRAE). In other cases, the values are defined in the TRM.

The TRM measures discussed in this article are classified “deemed” or “partially deemed.” Typically, deemed measures are thoroughly vetted and reviewed on a regular interval by the utility’s third-party evaluator and the utility commission and updated as necessary. The authors of the measures are required to use reliable and transparent data sources and established analytical methods to calculate energy savings. Some of the measures (such as lighting upgrades) have minimal calculations and might use fixture count to determine energy savings, as an example.

Deemed savings measures have different components:

  • Deemed variables: Examples of a deemed variable included weather assumptions and hours of operation

  • Deemed factors: These include factors are dependent on the measure, such as measure cost and effective useful life.

  • Deemed calculations: These include stipulated calculations for determine the economic aspects and energy impacts of the measure.

However, measures for HVAC efficiency upgrades use different methods to calculate energy savings. These types of measures generally use a more detailed approach to determine energy use reduction. Some of these measures are used for straightforward efficiency projects such as one-for-one equipment replacement – AHUs, chillers, pumps, split-system A/C units and motors are some common examples.

Partially deemed and custom measures

Deemed measures are used to ensure uniformity in documenting energy efficiency. As such, the engineer uses a pre-defined roadmap that determines the energy savings. This method allows the use of the TRM across cities, states or regions and creates a level playing field when determining incentives for the building owner.

Measures for more complex AHU efficiency upgrades, depending on the jurisdiction, require the engineer to demonstrate savings using a pre-defined set of calculations and assumptions. These measures are defined as partially deemed. Although these require deeper analysis, the measures contain pre-defined specific calculation steps and requirements for documenting savings. Although this method to generate savings is more clear-cut, the engineer must understand what the calculation steps mean and if the energy savings is realistic base on the project criteria.

Although not discussed in this article, custom measures require fully documented energy savings calculations with little guidance from the TRM compared to a deemed measure. Custom measures are calculation-intensive and the engineer must define (and defend) their approach in detail.

It must be noted that TRMs present challenges that must be overcome. TRMs do not eliminate the need for applying fundamental engineering principals and investigation of the data presented in the TRM. Also, the energy savings generated from the calculations in the TRM must be validated to ensure accuracy.

State TRMs and EEMs for air-handling equipment

For air-handling equipment and systems, the measures in the TRMs apply to replacing existing equipment with high-efficiency systems, mostly for packaged AHUs. Additionally, there are measures for each item such as economizers, airflow control and advanced control strategies. Depending on the situation, more than one of these measures can be used to determine energy savings. Also, energy-efficient products with low market penetration are used to stimulate the marketplace and stay ahead of future codes that require efficiency increases.

Knowing that a measure can span several pages in a TRM and include very detailed energy efficiency compliance requirements, the data presented here is a summary only. The reader is encouraged to review a specific TRM for more information. To illustrate how measures are structured, examples relating to AHUs and ancillary equipment are outlined in this article.

Figure 3: Packaged rooftop units and air handling equipment with compressors. Courtesy: Bill Kosik

Figure 3: Packaged rooftop units and air handling equipment with compressors. Courtesy: Bill Kosik

TRM procedures and documentation

In general, the measures from different TRMs have a similar structure, but there are differences. The content will vary based on state- and region-specific factors such as policy, location, climate, economy and utility involvement. These items have an impact on the current and recommended practices because each state or territory has a different energy efficiency baseline.

There is not one uniform energy efficiency program across the U.S. And the programs that are in place also will vary considerably from state to state. There are also programs that cross multiple states and territories and have a governing body that represents the member-states. In this case, a state government will play a different role than it does with a state TRM.

Another common approach used in developing a TRMs for an energy-efficiency program is to reference other state’s TRMs. This happens quite frequently and allows for a small degree of consistency among the TRMs.

The items listed below, taken from various TRMs, are an example of the basic structure, content and methodology of an EEM.

  • Ancillary fossil fuel and electricity savings impacts.

  • Baseline efficiencies for electric heating and cooling air-handling equipment (like ASHRAE 90.1 equipment efficiency tables).

  • Calculations/algorithms.

  • Coincidence factor definition.

  • Compliance efficiency to determine incentive amount (10% above code as an example).

  • Data sources and basis for terms and variables.

  • Definitions of terms and variables used in calculations.

  • Example calculations.

  • Guidelines on early retirement of equipment and remaining useful life.

  • Measure description.

  • Method of calculating annual energy and summer peak coincident demand savings.

  • Operating hours (typical listed in TRM appendix).

  • Procedures for determining energy savings including reference to mandated codes and standards.

  • Same baselines for HVAC, but for natural gas heating air-handling equipment.

  • References (mainly U.S.DOE, California DEER, AHRI, ASHRAE and published university research).

State energy efficiency programs are location specific. Certain measures from a state’s TRM are not applicable to other states. In states that have a cold climate, there is a focus on improving insulation in residences and commercial building and improving efficiency of heating systems. These climates, especially in a residential application, improving efficiency of air conditioning system may not be a priority.

AHU building blocks and EEM

An AHU is an integrated collection of components that are sized to provide the required heating and cooling based on the relevant building code, engineering calculations and the design requirements of the end user. Some examples are peak demand cooling/heating load, filtration, volumetric flow rate, temperature and moisture levels.

The term “air handling unit” encompasses equipment for many different applications. AHUs range in size and complexity from small, rooftop-mounted units providing HVAC to a shop or small office. This type of equipment has basic components for heating/cooling and controls: dampers, filters and a fan with little or no control other than a wall-mounted thermostat.

In contrast, AHU equipment serving buildings such as hospitals, data centers, laboratories and specialized manufacturing facilities have extremely precise setpoint parameters, multiple levels of filtration, redundant fans and motors and very complex control and instrumentation systems.

The type of air-handling systems will determine which (if any) EEM can be used to calculate energy savings.

  • AHU type (rooftop unit, heat pump, packaged indoor AHU).

  • Heating source (electric resistance, direct/indirect gas, hot water, reverse cycle).

  • Type of cooling (compressors, chilled water, reverse cycle).

Measures don’t have to apply to the entire AHU. Many are written for sub-systems of the air handling equipment, for example:

  • Integrated control of dampers for optimizing discharge air temperature, demand-controlled ventilation and outdoor air economizer:

  • Outside air damper: Damper for bringing outside air; depends on control strategy for ventilation, pressurization and economization.

  • Return air damper: Damper for controlling airflow back to the AHU.

  • Exhaust damper: Damper to control amount of exhaust air.

Based on the existing type of filtration, there could be opportunities to reduce pressure drop across the filter section:

  • Filtration: Study the feasibility to remove existing filters and install low-pressure drop filters using polarized media.

  • Investigate application of advanced controls (especially for rooftop units) to control fan speed, damper positions, indoor air quality and optimized start-stop:

  • Supply fan: Ensures proper airflow rates.

  • Return or return/exhaust fan: Works in conjunction with supply fan to return/exhaust.

  • Exhaust fan: A dedicated fan to extract air from the building to maintain ventilation and pressurization requirements.

While the items listed above are presented as induvial items, some measures are based on an integrated approach, taking many of the elements in total. It just depends on the measure.

Compressors are the primary component in the refrigeration cycle. They are used are used in residential, commercial, institutional and industrial cooling processes. Yet all AHUs that rely on compressorized systems are based on the same basic concept. A compressed refrigerant cools air or other fluids as required by the specific process. The outdoor temperature and relative humidity have a big impact on the energy use of the process and will vary considerably depending on the climate zone.

In hot climates (dry and humid) air conditioning is one of the primary energy consumers especially in commercial buildings. Energy-efficiency programs in these states have a much greater focus on air conditioning systems including compressor power and fan energy. This is an opportunity for end-users to apply for utility programs and get partial funding for system upgrades.

Installing heat pumps can result in lower heating and cooling costs. This technology hinges on the climate and the savings will differ depending on the location of the installation. A measure that is based on replacing packaged AHUs with heat pumps may be applicable to warmer climates and locations due to the ambient limitations of heat pumps.

Other measures impacted by climate

There are other measures use in the efficiency programs that do not involve compressors.

  • Demand-controlled ventilation: The goal of this design strategy is to provide the appropriate amount of outside air to a facility as the occupancy demands, typically based on measuring CO2 In this application CO2 is a proxy measure for people in the building or a certain room within the building such as a large conference or meeting room.

  • Outside air economizer: This is another very effective strategy found in many TRMs. Generally, package AHUs have fixed amount of outside air regardless of the outdoor temperature and humidity. Even in the cooler weather, the AHU will maintain a fixed outdoor air and compressors will continue to operate to maintain the required setpoints. An outside air economizer will bring in more outdoor air, based on temperature and humidity, to cool the building using less compressor horsepower. It is akin to opening a window on a mild day and turning off the air conditioner.

While the energy used by compressors in AHUs is a large part of the overall consumption, the energy required to drive fans can be equal to or greater than the compressors. The fans use energy to drive the air to the end use and return it back to the AHU. Different air-handling equipment have different types and arrangements of fans, for supply, return and exhaust air.

There are several ways to reduce fan energy that are used as a deemed measure in TRMs:

  • Matching the fan operation to the required air flow: This is accomplished using variable speed drives or electronically commutated motors. This is a common measure in many TRMs because it can be implemented with minimal down time and little reconfiguration of the AHU. This can also be accomplished replacing a packaged AHU with a higher efficiency model that uses variable airflow.

  • Advanced control systems: This type of system looks at the AHU in its entirety and makes decisions to change parameters that effect energy consumption (and indoor air quality). This system is the master controller of fan speed, air temperatures and humidity (indoor and outdoor), damper positions, economizer functions, etc. It can be a part of implementing other measures, such as economizer, fan speed, compressor power and demand-controlled ventilation.

  • Low-pressure drop filtration: Filters in AHUs can incur a considerable pressure drop as the air flows through the filters. As the filter becomes loaded with particulate, the pressure drop will increase. The pressure drop has a direct impact on the fan energy use. Using filters that have a lower initial pressure drop and last longer between cleaning or replacement, will reduce energy consumption of the fans.

Data can define the outcome

Incentive-based, ratepayer-funded energy efficiency programs are at the core of motivating building owners to take a close look at the energy consuming parts of their facility. Trying to understand the magnitude of energy consumption of air handling equipment, owners can make informed decisions based on utility-provided energy audits. The data provided in the audit will clarify the costs associated with the building systems.

Based on the outcome of the audit and the building owner’s situation, the next step is to determine the types of financial incentives that are available to partially offset the cost of upgrading components or replace the equipment entirely.

In energy efficiency programs, individual building owners have a tremendous opportunity to receive capital funds to replace inefficient, outdated equipment. This is a first cost and an operating cost benefit to the building owner.

However, there is a much broader and overarching principle — energy efficiency programs reduce energy use, which allows for lower energy generation, in consumption and demand. This can result in less reliance on inefficient sources of electricity generation.

Finally, energy efficiency improvements are a key piece to decarbonization, which includes electrification building systems. Ultimately all these strategies will increase the demand and generation capability of renewable energy sources.

Federal energy policy vis-à-vis state energy-efficiency program funding:

  • There are 56 state and territory energy offices that are accountable to their respective governors or legislatures. Projects under the state and territory energy offices are funded by both state and federal appropriations. The energy policies and programs developed by the energy offices are designed to increase energy efficiency, improve economic conditions (especially in under-served communities) and to demonstrate the value of renewable energy, both environmentally and financially.
  • State energy directors and their offices are deeply involved in energy efficiency and renewable energy programs. Each year, the S. Department of Energy’s State Energy Program (SEP) allocates a portion of the funding derived from ratepayers and state appropriations to the state energy office.
  • The SEP allocates the funding directly to the governor-designated state energy offices for use in efficiency, renewable and alternative energy demonstration activities.

Author Bio: Bill Kosik is a senior energy engineer and an industry-recognized leader in energy efficiency for the built environment with an expertise in data centers. He is a member of the Consulting-Specifying Engineer editorial advisory board.