Combining Electrification and Deep Retrofits to Decarbonize Canada’s Buildings

In the face of the climate crisis, organizations are looking to electrification and renewable energy as a way to get buildings, energy systems, and vehicles off of fossil fuels. But fears abound that plugging too many things into the grid could overwhelm the system and lead to blackouts.

Over the past two years, Rocky Mountain Institute, SSG, and whatIf? Technologies explored this challenge as a part of a consulting project for the Government of Canada to create a pathway to reduce its operational emissions in the National Capital Region to net zero by 2050. Our analysis suggests that by combining electrification with deep energy efficiency retrofits, we can stave off an increase in building-level electricity demand and demand peaks on the electric grid.

Why the Canadian Government Needs to Fuel Switch

In order to decarbonize, the Government of Canada needs to switch away from natural gas for heating buildings. In 2016, the federal government’s operations in the National Capital Region (NCR) emitted 370 kilotons of CO2e (carbon dioxide equivalent). More than 60 percent of emissions from the federal government’s operations come from buildings, most of it from burning natural gas for heating.

 

Emissions by fuel from federal operations in the NCR, 2016. (Designer: Naomi Devine/SSG)

Federal buildings tend to be old, drafty, and overdue for an upgrade. Nearly 50 percent of the government’s building floor area is classified as “in poor or critical condition”. The low emissions intensity of the electricity in Ontario and Quebec—which is powered by hydro—makes electrification paired with high-performance building envelope upgrades an ideal solution to simultaneously upgrade and decarbonize buildings.

Modeling shows that the cost to decarbonize the federal building stock is just 4 percent above what must be spent to maintain the current building stock over the next three decades, as they fall into further disrepair.

The Promise of Heat Pumps

The government’s building upgrades can include switching from natural gas to electric heat pumps that use ambient air, water, or ground temperature as a heat source, or sink, to heat buildings in the winter and cool them in the summer. While building professionals once thought heat pumps to be ineffective in colder climates, the technology has improved by leaps and bounds. A wide range of heat pumps are now available for colder climates and commercial-scale use.

To help the Canadian government figure out how to use heat pumps in more than 2,000 buildings in the Ottawa-Gatineau region, RMI used its Portfolio Energy Optimization modeling approach. Portfolio Energy Optimization aggregates buildings across the portfolio while customizing the energy models per building to represent existing conditions in each facility. We considered different types of heat-pump applications bundled with high-performance thermal envelope and energy efficiency upgrades tailored to residential, commercial, and mixed-use buildings. The results were then fed into whatIf?’s and SSG’s CityInSight model to assess energy consumption and emissions across the entire building portfolio out to 2050, accounting for changing costs, emissions factors, and portfolio-wide asset management plans.

This modeling demonstrated that decarbonizing the federal government building portfolio in the NCR is technically and economically feasible over the next three decades. If combined with deep energy efficiency retrofits like building envelope upgrades, heating electrification of nearly all of the building stock would cost $850 million more than planned building upgrades between 2020 and 2050, while saving about $700 million in energy costs and nearly eliminating emissions. The net cost of $150 million is a drop in the bucket compared with how much the government already spends on building operations. The Canadian National Capital Region has a pivotal opportunity to transform its federal buildings portfolio while minimizing the impact of demand growth on the electric grid.

Building Decarbonization and Electric Demand

The grid can manage large-scale electrification of heating only if it’s paired with measures that manage demand peaks. That’s where building envelope retrofits—upgrading windows, walls, and roofs—come in. Together, these strategies change the profile and timing of building electricity consumption by limiting peak demand.

For buildings on the Ottawa side of the NCR, envelope upgrades can reduce peak demand by limiting heat gains and losses through insulation and lower air infiltration, while electrification may shift these peaks from the summer (cooling demand) to the winter (heating demand). Our models suggest that the heat pumps and envelope upgrades, along with other efficiency measures, will lead to a post-retrofit winter peak that is not much higher than the original summer peak. The net impact of retrofitting modeled buildings in Ottawa with high-performance envelopes and heat pumps on the electricity demand profile is illustrated in the figure below.

On the Gatineau side, most buildings are already heated with electricity, and electricity demand peaks in the winter. Retrofitting these buildings with envelope upgrades and heat pumps does not change the demand load profile through the year, but it reduces the total peak on the electricity grid by up to 25 percent.

Hourly electricity demand for federal buildings in Ottawa (top) and Gatineau (below), before and after retrofits with electrification. (Designer: Naomi Devine/SSG)

Our analysis shows that, when combined with efficiency retrofits, electrification of buildings using heat pumps can shift the time that electricity demand peaks and may even reduce annual electricity demand. As organizations and utilities plan for the future of electrification, efficiency is a critical way to minimize peak demand and make the transition to zero-carbon buildings viable.


For more insights on how to build a carbon-free future, sign up for the monthly SSG Newswire and updates from the Rocky Mountain Institute’s Carbon-Free Buildings Team.

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Lauren Malo has worked on energy and emissions plans across Canada and was a lead analyst for the Roadmap for Low-Carbon Operations in the National Capital Region. She is a former Consultant at SSG. 

Sheldon Mendonca is a Manager with Rocky Mountain Institute’s buildings practice, where he leads projects with the Portfolio Energy Optimization initiative. Sheldon manages work with building portfolio owners across multiple sectors including federal and city governments, real-estate owners and large corporations. He has in-depth experience in net-zero carbon roadmap planning and deep energy retrofits in the commercial and multi-family building sectors.

How Industrializing Retrofits Can Decarbonize Canada’s Buildings

Old, leaky buildings are a climate problem. And, for organizations with large building portfolios, this challenge is paramount to reducing emissions. Luckily, industrialization and mass customization can take energy efficiency retrofits to scale.

In fact, this process could be a pivotal opportunity for the Government of Canada’s corporate building stock in the National Capital Region. In a study titled Roadmap to Low-Carbon Operations in the National Capital Region, SSG, Rocky Mountain Institute, and whatIf? Technologies explored the potential of this new approach to enable the federal government to decarbonize all its floorspace by 2050.

The Problem With Custom Retrofits

According to the United Nations Environment Programme, buildings and construction account for 36 percent of final energy use and 39 percent of process and energy-related carbon dioxide emissions. Building retrofits, therefore, represent a pivotal opportunity for emissions reductions to limit warming to 1.5°C. Despite some technological gains in new construction, the net emissions impact from buildings has been on the rise since 1990 and less than 1 percent of buildings globally are retrofitted each year.

The wide variety of buildings with different construction types, end uses, and heating and cooling systems is a key barrier to scaling up building retrofits. One-off retrofits, which are the norm in the building retrofit market, do not capture economies of scale. Each retrofit is treated like a snowflake and costs quickly add up. For large organizations, another barrier to deep energy retrofits is the disruption to daily operations, which can take up to five years to implement per building.

These are core challenges for the Government of Canada, which has pledged to reduce its corporate emissions by 80 percent by 2050. Sixty percent of carbon dioxide emissions from federal government operations in the National Capital Region are generated by natural gas heating in the 2,250 buildings the government owns and leases. Almost half were built between 1940 and 1980, and nearly 50 percent of the floor area is currently classified as in poor or critical condition.

Federal buildings, by condition and floor area. Source: Directory of Federal Real Property. (Designer: Naomi Devine/SSG)

The condition of the existing building stock and the pledge to reduce carbon emissions provide the federal government with a unique opportunity to upgrade critical building infrastructure while reducing emissions over the next few decades.

A Mass, Customized Industrialized Solution

The Government of Canada has 2,250-plus federally owned and leased buildings in Ottawa-Gatineau, which are managed by over 33 departments, agencies, or crown corporations. When retrofits are occurring at scale, finding enough swing space for all affected employees is a make-or-break consideration.

Industrialized retrofits, an approach pioneered in the Netherlands, can help solve the challenge by bringing retrofits to scale. In an industrialized approach, buildings can be aggregated across the portfolio into groups based on similar component upgrades, like windows, walls, roof, heat pumps, lighting, and controls, over a set period of time to increase the speed and scale of retrofits.

In the process, the portfolio owner can access bulk pricing to reduce costs. The industrialized process can also alleviate swing space pressures because several elements of the phased approach can occur while tenants are still occupying the building. This cuts down the length of time a building will need to be vacant during the retrofit, which, in turn, reduces how much swing space is needed.

In our recommendations to the Government of Canada, we applied the portfolio approach while addressing the uniqueness of each building. We call it a “mass customized approach.” By assessing the end use type, existing heating and cooling system, and the age of building components being replaced, we grouped buildings in a way that ensures their unique needs and features are considered throughout the upgrades.

Savings From Industrialization and Decarbonization Over Time

Bundling buildings across the entire portfolio not only increases the speed with which retrofits are carried out, but also enables access to bulk pricing. This can reduce the Government of Canada’s costs by up to 25 percent, according to regional cost projections. This approach can be designed to target specific retrofit measures, such as envelope and windows, HVAC system upgrades, plug loads and lighting, and space modernization fit-up.

Furthermore, using planned building upgrades as triggers for deep energy retrofit packages can minimize the cost of deep energy retrofits while greening the federal government building portfolio over time. Using an industrialized and zero-over-time approach in our recommendations to the federal government, we project that the additional cost of maximizing emissions reductions adds $1.3 billion to the $4.04 billion price tag of expected energy-related upgrades between 2020 to 2050. This is a 24 percent premium on the total energy-related retrofit costs, or a premium of less than 5 percent over the cost to upgrade all federal government buildings in the National Capital Region over the next 30 years.

Furthermore, by including space fit-ups into the industrialized process, the final space can accommodate more employees per area. Over time, this means the amount of floor space needed by the Government of Canada can decline considerably, resulting in significant operating cost reductions.

Perhaps most importantly, business-as-usual planning for building emissions is no longer an option. We have less than a decade left to limit global warming to 1.5°C. Buildings must be transformed en masse to create a low-carbon future. It’s a large-scale problem that demands a mass-customized, industrialized solution.

For more insights on how to build a carbon-free future, sign up for the monthly SSG Newswire and updates from the Rocky Mountain Institute’s Carbon-Free Buildings Team.

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Lauren Malo has worked on energy and emissions plans across Canada and was a lead analyst for the Roadmap for Low-Carbon Operations in the National Capital Region. She is a former Consultant at SSG. 

Sheldon Mendonca is a Manager with Rocky Mountain Institute’s buildings practice, where he leads projects with the Portfolio Energy Optimization initiative. Sheldon manages work with building portfolio owners across multiple sectors including federal and city governments, real-estate owners and large corporations. He has in-depth experience in net-zero carbon roadmap planning and deep energy retrofits in the commercial and multi-family building sectors.

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