IN-24-C030 - The Value of Building Envelope Retrofits in a Deeply Decarbonized New York State

To achieve federal and state climate goals in the US, building electrification is a consistent pillar in decarbonization roadmaps across the country. However, electrifying equipment without managing the peak load would necessitate substantial grid upgrades and investments, especially in cold climates where the dramatic increase in space heating demand from electrification shifts system peak from summer to winter. Strategic demand-side investments in building envelope retrofits provide valuable load reduction during the coincidence peak - some of the most challenging hours to decarbonize in the electricity system, reducing the required grid-side infrastructure upgrades and the associated costs. This paper investigates the true system-wide value of residential building envelope retrofits in New York State. We systematically analyze the impacts on load profiles in future-looking scenarios of building, vehicle and industrial electrification, in combination with electricity system decarbonization that achieves New York State’s 2040 zero-emission electricity target. A holistic decarbonization approach that pairs building envelope retrofits with electrification is compared to an electrify-only scenario for the residential building sector. The electricity system value of reduced load from envelope interventions is quantified inclusive of distribution, transmission, and generation capacity value. Additional value of reduced cost of electrification from a smaller heat pump is also quantified. We find that investing in building envelopes can directly hedge against uncertainty and risk of expensive clean firm generation in the future. Power system buildout in New York State could be reduced by upwards of 27% through residential envelope investments. Clustering building envelope retrofits on high-value distribution feeders may deliver avoided costs, but this opportunity is likely quite small in the context of transportation and commercial electrification. We estimate building envelope retrofits can generate system-wide value of $15.8k per dwelling unit (in 2020 dollars) in retrofit costs.