Renewable Thermal Metrics: Accelerating Market Growth

Renewable thermal energy is increasingly seen as critical to a low-carbon future in the northeastern US. Residential and commercial buildings are currently responsible for roughly one-third of regional greenhouse gas (GHG) emissions, representing a considerable market opportunity for low-carbon solutions.

This blog post is to start a conversation around which metric, when openly accessible and consistently defined and measured, would best facilitate growth in the market for renewable thermal technologies (RTTs). The focus includes metrics that would stimulate capital markets and new financing products to fuel the RTT market, entrepreneurs to build new business models, and governments to release efficiency policies. We started by canvassing stakeholders in the renewable thermal space; we summarize their responses below.

The Patchwork of Interests

Different stakeholders have different interests in renewable thermal energy; the relevant metric depends on these interests.

Customers want clear information for comparing options. In the residential, commercial, and industrial market, RTTs tend to suffer from a deficit of customer awareness when compared to conventional solutions. Easily accessible and comparable information on features such as costs, performance, environmental impacts, and co-benefits of these technologies would present valuable metrics to customers.

The capital market wants metrics for measuring risk. Lenders, investors, and insurance underwriters see promising prospects in RTTs, a perspective informed by successful experience from the solar PV market; but an immature market creates a higher risk of losses. Renewable thermal energy lacks consistent categorization of metrics and methods to measure risks. Building this consistency would allow analysis and pricing of risks, diversified portfolios, and new financial products, including aggregation and securitization.

Program administrators want metrics to measure opportunity and impact. The efficiency arms of utility companies, Green Banks, and State Energy Offices are mandated to promote energy efficiency and clean energy solutions. These program administrators need metrics to design, manage, and evaluate opportunities for and impacts of market interventions. While program administrators in the Northeast offer programs to support renewable thermal energy, the metrics available from these programs are generally not consistent across state borders, discouraging information sharing and comparative analysis.

Policymakers want metrics that measure progress. Policymakers are responsible for the design and implementation of policies supporting federal, state, or municipal goals. State goals in the Northeast typically target a low-carbon economy characterized by low energy costs and sustained job growth in support of a reliable and resilient energy system. Policymakers and regulators need objective and reliable metrics to evaluate the potential and actual effects of policies, mandates, and regulations towards these goals.

Utilities need metrics to design efficient rates, evaluate alternative investments to grid upgrades, and secure safe and reliable energy distribution. Several states have suggested electrifying heating as a strategy to reduce GHG emissions. While this is an opportunity to sustain electricity sales and develop new business models in the non-regulated part of the sector, it also has implications for the electric and gas grids. Metrics are necessary to analyze the consequences of electrifying heating and generally deploying RTTs at a large scale.

The renewable thermal industry wants metrics to analyze opportunities, evaluate risks, segment markets, and build new business models. These interests are particularly acute in a nascent market with low awareness. Public support, through incentives and policies, is an industry concern, as are access to enough qualified installers, competitiveness with conventional energy sources, and an efficient utilization of equipment, both geographically and over time.  

A Consistent Framework Helps Map Need for Action

By asking various stakeholders to name renewable thermal metrics they care about and that serve their interests, we developed a framework that addresses the shared need for metrics across stakeholders. This framework can help map gaps in data availability and metric quality.

In June 2017, the Task Force on Climate-related Financial Disclosure (TFCD)[1] published a report categorizing climate-related risks and opportunities in the corporate sector. The TFCD-framework signals which disclosures the capital market needs to effectively evaluate financial impacts of climate change. As such, it presents a context within which renewable thermal metrics can be systemized. Because our analysis includes stakeholders who are interested in non-financial (as well as financial) impacts, the metric framework has also been designed to evaluate non-financial impacts. The metrics following the stakeholder analysis can be grouped into two main categories:

• Risks related to the transition to a low-carbon future and the physical impacts of climate change;
• Opportunities related to new products, services and markets, resource efficiency, resiliency, and reliability.

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More details on the renewable thermal metrics can be found in this overview.

The framework suggests a total of 22 metrics to evaluate risks and opportunities in the renewable thermal energy markets across stakeholders. The quality of the metrics depends on the extent to which they are openly accessible, verifiable, reliable, objective, consistently defined, and measured across states and time. Several of the metrics identified currently do not satisfy these principles. Particularly:

1. Discussions through the Renewable Thermal Alliance have revealed high demand for renewable thermal performance metrics. Given low adoption rates, the evidence on how RTTs perform after installation is lacking. Nor have consistent metering and monitoring methods been implemented. Access to consistent thermal performance metrics should be a high priority to scale RTTs as a low-carbon solution for the future. An initiative to establish a renewable thermal data clearinghouse—oTherm—has been proposed to address this issue.  
2. With a high share of fossil fuels used for heating in the Northeast, few customers are aware of RTTs. Metrics allowing customers to compare alternatives in an easy and understandable manner will increase awareness and reduce inertia. A standardized heating and cooling cost indicator similar to miles per gallon can simplify the customers’ decision process. 
3. Policies and strategies targeting renewable thermal energy in the Northeast have recently been drafted.  States are now designing programs and implementing campaigns such as Solarize for thermal. However, to be able to design and evaluate programs, key metrics are required; harmonization of metrics across states will facilitate comparison and learning.

We are still soliciting opinions on the RTT metrics that would be most useful to different stakeholders. We would greatly appreciate 5 minutes of your time on the following survey.

Acknowledgments

The project "Feasibility of Renewable Thermal Technologies in Connecticut" was supported financially by the Connecticut Green Bank, Yale University, United Illuminating, and Eversource, through the CT Energize initiative. The Connecticut Department of Energy and Environmental Protection (DEEP) served as an advisor.

A team of students has contributed by interviewing stakeholders and researching market data: Ryan Li, Annie Guo, Philip Picotte, Ellen Abramowitz, and Nathan Grady.