Prepared for NASEO by Kara Saul Rinaldi, Elizabeth (Lizzie) Bunnen, and Sabine Rogers
The AnnDyl Policy Group has prepared this report for the National Association of State Energy Officials (NASEO), in cooperation with the National Association of Regulatory Utility Commissioners (NARUC), and with support from the U.S. Department of Energy.
This report aims to provide insight into the challenges and opportunities associated with advancing grid-interactive efficient residential buildings and the policies and research needed to enable homes to play an important role in managing U.S. energy demand and support a resilient, sustainable, and dynamic grid of the future.
The authors thank NASEO, the U.S. Department of Energy, NARUC, and the many practitioners, researchers, policymakers, stakeholders, and innovators who gave their time for discussions and formal interviews with the authors.
Energy efficiency and renewable energy have permanently changed – and will continue to change – the future of the electric grid. In some states, renewable energy generation is creating new imbalances between energy production and demand, where variable renewable energy and customer demand do not match up, and new need for utilities to manage demand to align with least-cost energy generation. Energy efficiency can play a key role in helping address new grid challenges, but we need to break down the silos between energy efficiency, renewable energy and the growing number of behind-the-meter distributed energy resources (DERs)1, and employ new technologies, strategies, and policies to ensure efficiency and renewables are deployed in mutually supportive ways, when and where they are needed most, to ensure energy affordability and grid reliability.
Grid modernization efforts across the country are focused on supporting resilient infrastructure and reducing energy costs while also driving broader environmental goals. States are looking to decarbonize the power sector by ramping up renewable generation, and other significant changes are underway with the increasing penetration of DERs, such as rooftop solar, electric vehicles, grid-interactive efficient appliances, and smart load-controlling technologies in homes. The grid is evolving from a linear system with one-directional energy flow to an increasingly complex and interconnected system through which energy and data flow to and from various entities (homes, utilities, third-party service providers). With this emerging grid of the future, new challenges to balance supply and demand and maintain grid stability are arising, along with new opportunities to fully integrate buildings and distributed energy resources into an electric system that is cleaner, more efficient and can better meet customer needs.
Buildings are not only large energy consumers; they also are part of the grid infrastructure. Buildings—and the residential sector in particular—can be enabled to play an important role in managing demand to support efficiency and resiliency for the grid of the future. The U.S. Department of Energy (DOE) Building Technologies Office (BTO) has defined a “Grid-interactive Efficient Building” (GEB) as “an energy efficient building with smart technologies characterized by the active use of DERs to optimize energy use for grid services, occupant needs and preferences, and cost reductions in a continuous and integrated way.”2 This report focuses on residential buildings, primarily single-family homes, and opportunities for GEB solutions in this sector.
Residential GEBs can be part of larger strategies to create a more reliable, affordable, and cleaner power system. Policy and regulatory measures that advance grid-interactive efficient homes can support grid modernization and resiliency, while working hand in hand with energy policy goals, such as Energy Efficiency Resource Standards, Renewable Portfolio Standards, Clean Peak Standards3, and strategic electrification that aim to reduce emissions and create a new need for demand-side flexibility.
- This report has adopted NARUC’s definition: “A DER is a resource sited close to customers that can provide all or some of their immediate electric and power needs and can also be used by the system to either reduce demand (such as energy efficiency) or provide supply to satisfy the energy, capacity, or ancillary service needs of the distribution grid.” Available at: https://pubs.naruc.org/pub/cfm?id=19FDF48B-AA57-5160-DBA1-BE2E9C2F7EA0.
- Monica Neukomm et al., “Grid-interactive Efficient Buildings: Overview,” April 2019, U.S. Department of Energy.
- Each of these policy goals is discussed in greater detail in Section 4: Policy Opportunities.