The Influence of a CO₂ Pricing Scheme on Distributed Energy Resources in California's Commercial Buildings

The Ernest Orlando Lawrence Berkeley National Laboratory (LBNL) is working with the California Energy Commission (CEC) to determine the potential role of commercial-sector distributed energy resources (DER) with combined heat and power (CHP) in greenhouse gas emissions (GHG) reductions. Historically, relatively little attention has been paid to the potential of medium-sized commercial buildings with peak electric loads ranging from 100 kW to 5 MW. In our research, we examine how these medium-sized commercial buildings might implement DER and CHP. The buildings are able to adopt and operate various technologies, e.g., photovoltaics (PV), on-site thermal generation, heat exchangers, solar thermal collectors, absorption chillers, batteries and thermal storage systems. We apply the Distributed Energy Resources Customer Adoption Model (DER-CAM), which is a mixed-integer linear program (MILP) that minimizes a site's annual energy costs and/or CO₂ emissions. Using 138 representative mid-sized commercial sites in California, existing tariffs of major utilities, and expected performance data of available technologies in 2020, we find the GHG reduction potential for these buildings. We compare different policy instruments, e.g., a CO₂ pricing scheme or a feed-in tariff (FiT), and show their contributions to the California Air Resources Board (CARB) goals of additional 4 GW CHP capacities and 6.7 Mt/a GHG reduction in California by 2020. By applying different price levels for CO₂, we find that there is competition between fuel cells and PV/solar thermal. It is found that the PV/solar thermal adoption increases rapidly, but shows a saturation at high CO₂ prices, partly due to limited space for PV and solar thermal. Additionally, we find that large office buildings are good hosts for CHP in general. However, most interesting is the fact that fossil-based CHP adoption also increases with increasing CO₂ prices. We will show service territory specific results since the attractiveness of DER varies widely by climate zone and service territory.