Saving Money on Energy Without Saving Energy?

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One of the most mystifying aspects of calculating the LEED Optimize Energy credit (aside from the energy model with 1000s of moving parts!) for most people is the fact that your energy reduction for LEED is not measured in kilowatt hours or therms, but rather in cost of energy saved. Why is that? Well, the driving factor is that there is a real difference in efficiency with electricity, which is produced off-site and can be very inefficient and plagued with transmission losses, and gas which has essentially no transmission losses and is much less expensive per therm of heating than electricity. Consequently, the use of cost awards the efficiency of using gas as a fuel source over electricity. There are, however, additional strategies that take advantage of the use of cost as a metric:

  1. Using energy cost gives credit for “free” on-site renewable energy
  2. Using cost as the metric allows projects to get credit for using reduced cost, off-peak energy

The first reason is pretty easy to digest (see yesterday’s post here if you’re confused about what LEED counts as on site renewable energy). The second reason becomes a little more complicated and requires at least a basic understanding of demand energy rate structures. While the term “demand energy rate” can vary a little bit from utility company to utility company, the basic idea is energy used during times of high or “peak” energy use costs more than energy used during times of lower or “non-peak” energy use. The goal here is that utility companies want to come as close as possible to constant energy use levels and shave off peak demand times when they will likely have to operate older, less efficient power plants to meet the increased demand, which drives up the utility company’s cost of producing energy. Consequently, if you are able to devise a strategy for your building where you use as little “peak” energy as possible by shifting energy use to “non-peak” times, you can often noticeably cut your energy costs without decreasing your energy use at all.

My beloved Bearcats (of the University of Cincinnati) give us a great example of this exact strategy. The Bearcats have a brand new two field football practice facility set to open this Fall. As part of the smaller, 70 yard practice field, the university has decided to construct a four million gallon chilled water storage tank (the tank is under the smaller, uncovered field shown above). Each morning, 42 degree chilled water will be pumped out of the tank and circulated through buildings around campus as chilled water cooling. In the evening, a return loop will dump the water that has been used for cooling, which is now at about 54 degrees, back into the storage tank. The university will than take advantage of off-peak energy rates overnight to re-chill all of that returned water for use the following day. The university expects to save $750,000 to $1,000,000 annually from the chilled water storage tank. Because the power plants that serve night time demand in this area are the newest, cleanest, most efficient plants our utility company operates, this strategy is also likely significantly reducing carbon emissions as well as also reducing the actual amount of energy produced to meet the need as a result of using more efficient systems for the energy production.


4 thoughts on “Saving Money on Energy Without Saving Energy?

  1. I never thought of off-peak cooling in terms of LEED credit because the energy model now offers …19 points. Lowering the energy cost by shifting the peak load could mean the difference of LEED silver and LEED gold or gold to platinum.

    Is the Cincinnati stadium going for LEED status?


    1. I don’t think these projects are going for LEED certification- there’s not a lot of building to go with the fields, so it would be tough. I’m just glad they realized the opportunity to add a system that will serve the campus onto a project that was slated for construction!


  2. Actually, neither of the 2 reasons you give are why LEED uses cost as the basis. Basically buildings use 2 kinds of energy, that used directly (gas-fired boiler for hot water or heating) and energy that is produced off-site: electricity. Since the efficiency of the electric grid is only about 30%, we needed something easy– that owners could relate to–that captured the systemic inefficiency and that was price. If you look at the cost of fuel per million Btus, you’ll find that electricity compared with on-site gas is ta da! about 3x more expensive. So rather than go through the problems of evaluating the generating mix for a utility where a building is (very complicated, take my word for it) the easiest thing to do is use the readily available price figure. Also, the off-peak grid system is about 15% more efficient thermodynamically than on-peak so peak shifting not only saves money, it saves energy, too.


    1. Thanks for the comment Rob. I’ve always known that the difference in fuel types is a driver for a cost basis as well, but here in the Midwest, we are much more likely to chose strategies for renewable energy and off-peak energy as strategies for “optimizing” our impact on the Optimize Energy credit, so that is where my mind immediately goes. We are actually in a very interesting position in Ohio where our electric provider gives our school clients a discount rate for using “all electric” instead of gas, so many of our clients are very unwilling to give up this discount rate. It’s very interesting to learn about the history of the credit creation, though, and great that LEED now encourages use of on-site renewable energy and off-peak demand as strategies for optimizing this credit as well. I’ll revise my post to stress that price difference and efficiency of gas vs. electric are very important as well!


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