Electrification is a trend transforming every significant corner of the industrial economy in the U.S. From power generation and transport to infrastructure and buildings, industry and businesses are seeking to become more efficient and resilient while producing fewer emissions. Policies and regulations driving this transformation are emerging at the state, local, and utility levels as well as from corporate commitments. Meanwhile, the technologies underpinning electrification are widely available and increasingly affordable.
Cleaning the grid
Despite the lack of a comprehensive national energy strategy, the U.S. electrical grid is becoming cleaner. Many states are setting their own clean energy standards and utilities are setting ambitious clean energy goals while shuttering coal-fired power plants. These policy shifts have allowed renewable and energy storage technologies to scale and their costs to fall, setting the price of a renewable kWh on a par with that of natural gas and well below that of coal. But, as more renewable energy comes online, sophisticated power conversion equipment is necessary to help the existing grid infrastructure transform it into usable electricity.
New York State and New York City are combining ambitious emissions goals and strong local laws bearing real financial teeth to try to quickly clean the region’s power grid. The Climate Leadership and Community Protection Act of 2019 established the following goals and directs state agencies to develop plans to achieve them:
- Limit statewide greenhouse gas emissions to 40% of 1990 levels by 2030 and to 85% by 2050;
- 70% renewable electricity by 2030
- 100% zero emission electricity by 2040.
Meanwhile, New York City passed the nation’s most aggressive building emissions law, Local Law 97 (LL97), which mandates emissions reductions for the city’s largest buildings and includes harsh financial penalties for noncompliance. Interestingly, LL97 focuses on emissions, not energy usage, forcing building owners to consider the source of their building’s electricity in their emissions calculations. This distinction could lead the city’s powerful commercial real estate industry to exert pressure on policy makers and utilities to expedite the shift to cleaner energy production.
Utilities, which own many of the power generation assets and the distribution infrastructure, are having the most profound impact on the electric grid. For example, Xcel Energy, which serves 3.6 million people across eight states, including Minnesota and Colorado, recently committed to going 80% carbon-free by 2030 and 100% by 2050, and is shuttering coal-fired power plants earlier than expected.
As the pace of adding renewable resources to power generation intensifies, the grid infrastructure is becoming more complex. Unlike traditional centralized fossil fuel generation, renewables and storage are often decentralized resources that provide energy in varying forms and from different sources. Sophisticated power electronics called smart grid converters are needed to transform the energy from various sources into power that the grid can use. These converters, coupled with application software, ensure power quality, grid code compliance, and robustness against load imbalances and grid disruptions. Without such power electronics infrastructure, the ongoing shift to a cleaner grid would not be possible.
In 2019, both New York City and Washington, D.C., passed landmark building emissions laws designed to jumpstart the market for energy-efficient retrofits. Although each city’s law offers different mechanisms, the result is the same: building owners must make their properties more energy efficient or face tough financial penalties. And other cities are clearly looking at these two laws as they craft their own climate plans.
New York’s law, which is currently more well defined than Washington, D.C.’s, sets increasingly stringent limits on emissions per square foot for buildings 25,000 square feet or larger. The limits begin in 2024, at which point the most carbon-emitting 20% of buildings will be affected; the limits that take effect in 2030 will likely affect the most carbon-emitting 75% of buildings. In all, nearly 60% of the city’s building area will be affected by 2030. The penalty for noncompliance is stiff: $268 per ton of CO2 emitted over a building’s limit. This could easily total in the millions of dollars for larger buildings.
While New York and Washington, D.C.’s laws target emissions from existing buildings, a spate of bans on natural gas installations from other local governments seek to limit emissions in new construction. These ordinances first emerged in Northern California cities like Berkley, San Jose, and Oakland and have since spread across the country to places like New Jersey and Massachusetts. These laws are causing issues for homebuilders, restaurants, and commercial kitchens that rely on gas stovetops and ovens as well as utilities that own gas infrastructure and those that would handle the increased electric load. In response to these local laws, the Arizona legislature passed — and the governor signed — a law pre-emptively outlawing natural gas bans. In Massachusetts, the state’s attorney general struck down Brookline’s natural gas ban, saying that while she “agrees with the policy goals behind the Town’s attempt to reduce the use of fossil fuels within the Town…the Legislature (and the courts) have made plain that the Town cannot utilize the method it selected to achieve those goals.”
Whether it’s building emissions laws targeting existing buildings or natural gas bans focused on new construction, these policies are pushing buildings away from fossil fuel-fired sources of heating like boilers and furnaces and toward technologies like electrically driven heat pumps. Heat pump technology utilizes natural sources of heat from the ground, water, or air to create heating, cooling, and hot water, and is one of the most environmentally friendly means of ensuring an optimal indoor climate. In colder climates like the Upper Midwest, however, some still question air-source heat pumps as reliable sources of indoor heating. As technology advances, though, even these climates are not out of reach. Specialized cold-climate heat pumps are currently available specifically for these markets and have performed well in tests. According to a report from the Rocky Mountain Institute, cold-climate heat pumps operate effectively even when ambient temperatures drop to -12 degrees Fahrenheit.
CONTINUED: Read more about electrifying transportation and marine markets here.