Cost and environmental impact of building HVAC systems: Understanding site versus source energy

BY Burns Mechanical IN Construction, Energy

In our last post we showed how the relative cost of fuels can cause a building using less energy to have higher utility costs than a building utilizing more energy with a less expensive fuel. In the example an all-electric geothermal heat pump system using 40,000 BTUs per square foot per year was more expensive to operate than a less efficient gas-fired heating system using 50,000 BTUs per square foot per year. When faced with that reality our client asked a common question, “But isn’t the geothermal system still better for the environment?”

The answer was a surprising, “No.”

The reason is that, from an environmental perspective, the source energy is of greater importance than the site energy. Geothermal heat pumps are very efficient because they take advantage of the constant temperature of the earth. However, geothermal systems operate using electricity generated mostly using fossil fuels and then delivered to the site from a remote location.  So, while geothermal systems are efficient at their location (site), when considering the environmental impacts of electricity production and transmission over long distances (source), they may not always be the best option.

A Primer on Source Energy

Site energy refers to the energy used at the building location. Source energy refers to the total amount of energy that is consumed from production to distribution to final end use, from a global environmental perspective. In Pennsylvania, grid electricity is produced largely by nuclear and fossil fuels (mostly coal and natural gas), and then transmitted fairly inefficiently over long distances.

sources of electricity generation in Pa.

For this reason, grid electricity is considered a “secondary” fuel source. Only about one-third of the energy consumed to produce electricity makes it to our buildings. The average published source – site energy ratio for grid electricity in the U.S. is 3.34.

Natural gas is a primary energy source because it’s burned directly on site. The source – site ratio for gas is less than 1.05, meaning that less than 5% of its initial energy is lost prior to delivery to the building site. For a thorough explanation of source energy use as it relates to building energy, refer to EPA Energy Star resources such as this this link.

The site – source energy factors, electrical grid constraints, and current cost gap between natural gas and electricity are three factors driving a re-emergence of on-site power production and combined heat and power (CHP) systems.