ASHP vs GSHP and The Importance of SEER and EER in Utility Air Conditioning Demand Side Management Programs

Update: this article does not include the new regional efficiency standards that took effect on Jan 1, 2015. See this article on furnacecompare.com for updated definitions.

The following post is by Mark Faulkenberry, Manager Marketing & Communications and Kalun Kelley, Commercial and Industrial Marketing Manager, both with Western Farmers Electric Cooperative. 

The post was originally published on Geoexchange, but because it’s so awesome, and uses specific data, I wanted to republished it on HeatSpring Magazine. This post goes into very useful data that the geothermal industry must use whenever speaking with municipal and co-op utilities about their HVAC rebate programs, especially because even Northeast utilities are peaking in the summer. It was reprinted with the authors permission.

Enter Mark

The Seasonal Energy Efficiency Ratio (SEER) has been the federal efficiency metric for residential air conditioners since the late 1980s.  On January 23, 2006 new federal standards increased the minimum (SEER) requirement for central air conditioning equipment from 10 to 13.  These revised standards required air conditioning equipment manufacturers to build their new units to the higher SEER rating level and also created a marketing race to develop units that exceed the minimum standards.  Because the Federal standard is based on SEER many utilities have also based their efficiency program incentives on SEER.  Manufacturers have responded by focusing their efforts on building units that have high SEER ratings.  Unfortunately, this has resulted in overlooking the Energy Efficiency Ratio (EER) which provides a more accurate measure of the peak demand impacts of cooling equipment.

Seasonal Energy Efficiency Rating (SEER) based utility demand side management incentive efforts including loans and rebates provided for residential central air conditioners and heat pumps to encourage improved cooling efficiency may directly hurt utility load factor by reducing kWh sales without a corresponding reduction in peak demand.  This is because SEER provides a reasonable measure of seasonal energy efficiency but it does not reflect efficiency (and related peak demand) on peak load days driven by above average temperatures.  In fact, it is not uncommon that air conditioning units with the highest SEER ratings have lower efficiency (and higher peak demand) at high outdoor temperature than units with lower SEER values.  If a utility’s goal is to reduce air conditioning kWh consumption without regard to peak demand, SEER is a useful tool.  However if the utility’s goal is to reduce peak demand from air conditioning loads, the utility planner must look at the Energy Efficiency Ratio (EER) of air conditioning units at the expected summer peak weather (outdoor air temperature) condition.

It is also important to note that When ARI certifies the SEER rating of an air conditioner; it does so for specific indoor and outdoor unit combinations, which are designated as “matched assemblies.” If some combination other than the ones ARI has tested is installed, the SEER rating will not be known.

Introduction to SEER, EER, and COP

SEER (Seasonal Energy Efficiency Ratio)

SEER was developed to provide a proxy for the expected average efficiency of an air conditioner or heat pump throughout an average cooling season in the U.S.  It is a calculated value that uses the estimated Btus that will be provided for cooling over the year divided by the estimated watt-hours that will be used to provide this cooling (Btus/watt-hours).  The formula for this calculation is based on measurements of a unit’s performance at several different operating conditions/temperatures in a testing lab.  The resulting data points are then used to calculate the SEER rating using an established Department of Energy (DOE) protocol.  This calculation protocol was developed to represent the expected total cooling energy delivered by the unit during an average cooling season and the total electric energy that would be consumed to deliver the cooling over the course of the season.  Because it is a calculated value based on a few measurement points, SEER does not measure peak load efficiency and it cannot be used to predict a unit’s peak demand requirements on the hottest days of the year.  It can only be used to estimate the unit’s annual cost of operation against other units with different SEER ratings.

EER (Energy Efficiency Ratio)

The Energy Efficiency Ratio was developed to indicate the cooling performance of an air conditioner or heat pump at a single, fully loaded operating point (outdoor air temperature).  EER is calculated by dividing the cooling output of a unit in Btus over the course of one hour (Btu/hour) by the peak electric energy (watt) used to deliver the cooling ((Btu/hour)/watt).  Consequently, EER represents the peak cooling capacity divided by the electric power input during steady state continuous operation.  EER is typically measured and reported at standard test conditions of 95°F outdoor and 80°F indoor dry bulb temperatures using the Air Conditioning and Refrigeration Institute’s (ARI) test procedures.  It is important to note that the published EER data does not represent the peak demand conditions on an individual utility’s system.  Many utilities have peak conditions above 95 degrees and many consumers keep their homes well below 80 degrees.  Consequently, industry EER ratings are good for comparing the relative peak performance of different cooling equipment but the EER rating of a unit at the expected indoor and outdoor air temperatures must be used to calculate the true expected peak demand of the unit on the utility’s peak load condition.  It is possible to estimate the actual peak demand of a unit using published EER values.  For every 1°F change in outdoor temperature above 95°F the EER drops by approximately 0.1 (an outside temperature of 105°F would drop the published EER of a unit by 1.0 point below the listed EER value).  An accurate EER can only be developed by testing a unit at the expected indoor and outdoor air temperatures.

SEER and utility rebate programs

SEER based utility program incentives including loans and rebates for central air conditioners and heat pumps can directly hurt a utility’s financial position by inadvertently ignoring peak demand impacts.  Because air conditioning is often the biggest component of a utility’s summer peak, it is important for utilities to consider the peak demand impacts of its demand side management programs.  If peak capacity is not an issue for the utility, SEER is a good measure for efficiency programs.  If demand reduction is important to the utility, using SEER can result in utility program investments that do not provide peak load reductions because SEER provides a reasonable measure of seasonal energy efficiency but does not reflect peak demand when load is driven by above average temperatures.  In fact, it is not uncommon that the units with high SEER ratings have lower efficiency at high outdoor temperature than units with lower SEER values.  Efficiency programs promote SEER because it is the basis of the Federal efficiency standard and the rating data is readily available.  These efficiency efforts were not developed to focus on the peak load issues that are becoming a critical issue for utility resource planners. 

EER and Utility Rebate Programs

If demand reduction is an important consideration for a utility’s Demand Side program, the utility must specify the equipment EER it requires at its peak load/outdoor air temperature condition to be eligible for loans, rebates, or other program incentives.  Manufacturers of air source equipment are often reluctant to provide this information.  While Manufacturers are not required to certify the EER values of their equipment, most do publish their standard EER values in their central air conditioner and heat pump catalogs.  Fortunately, the California Energy Commission also publishes a directory that lists both the SEER and EER for many, but not all, air source cooling equipment.

EER and Ground Source Heat Pumps 

Ground source heat pumps (GHPS), also called geothermal heat pumps or GeoExchange systems, are a unique heating, cooling and water heating technology that use the steady state ground temperature for their operation.  These systems combine the compressor and energy distribution components associated with air source heat pumps with a ground loop that dissipates the heat removed from a building into the earth (where it can later be used for winter heating). Their cooling efficiency is measured in EER at an established entering water temperature.  Because the ground is always cooler than the surrounding air during peak air conditioning loads, GSHPs will always provide a higher EER and lower peak demand per unit of cooling energy delivered vs. air source equipment.  This is one of the reasons GHPS are the most energy efficient, environmentally clean, and cost-effective space conditioning systems available, according to ENERGY STAR (a U.S. Department of Energy and Environmental Protection Agency initiative).  The heat captured from air conditioning using a GSHP can also be transferred into the domestic hot water system, further increasing the EER of the system.

Western Farmers Electric Cooperative as a Case Study

The Western Farmers Electric Cooperative (WF) has been operating for nearly 70 years as a generation and transmission cooperative that provides essential electric service to 19 member cooperatives in Oklahoma, 4 cooperatives in New Mexico and the Altus Air Force Base.  WF supplies the electrical needs of more than two-thirds of the geographical region of Oklahoma, part of New Mexico, as well as small portions of Texas and Kansas.

By the end of 2012, over 15 percent of WF’s total annual electricity production will come from power purchase agreements with wind farm generators in Oklahoma.  WF also has five natural gas and coal generating facilities with a total power capacity of more than 1,700 MW including some purchased hydropower. WF owns and maintains more than 3,600 miles of transmission line to more than 265 substations.

To balance its supply portfolio, WF established an aggressive goal of avoiding the construction of 30 MW of new generating capacity by 2017, through peak demand savings.  The G&T staff was provided a$1,000,000 annual budget to meet this goal.  While this budget is large by any measure, the 30 MW of new generation is expected to cost $1,850/kW, or $55,500,000.  This value does not include interest costs, O&M costs associated with the generation, and the capital costs of the related transmission and distribution needed to serve the additional load.    Because WF does not operate under mandates to meet reduced kWh “conservation” requirements, its efforts are focused on reducing peak capacity requirements and improve their overall system load factor and efficiency.

WF’s management was clear in establishing that they wanted a reasonable ROI that would take into account the net difference between reduced energy sales, capacity reduction and the value of numerous other factors including carbon offset, long term interest expense, and consumer and member cooperative value calculations.

Given these directions, WF established a rebate program for both air source and ground source equipment.  They looked at program development like sighting in a rifle. They would load it … start shooting … and zero in as they went.  Their initial rebate effort relied on EER for ground source and SEER for air source.  However it didn’t take them long after evaluating the results of their 2010 program to understand that they had to drastically modify their program if they hoped to achieve their peak reduction goal.  Their original savings projections per ton of equipment installed are shown below:

Original results projections                                       ASHP                        GSHP

Projected kW reduction per ton rebated               0.33 kW                  0.66 kW

2010 results kW reduction/ton rebated                0.16 kW                  0.65 kW

Their 2010 program results analysis also revealed the following:

• Approximately 80% of rebates where on Air Source equipment and 20% were on Ground Source
• 92% of rebates where on replacements (equipment failure) and new construction
• 8% of rebates were on planned retrofits (pre-failure)
• The original rebate program had an extremely long ROI on Air Source rebates compared to a relatively short ROI on Ground Source rebates. In several cases the ROI on air source installations exceeded the expected life expectancy of the air source equipment
• In many cases the new (rebated) air source equipment had decreased energy sales without reducing peak capacity requirements

As WF probed to understand why their air source demand reductions fell so short of the expected results in 2010, it became apparent that the negative result was due to the difference between the equipment’s actual Energy Efficiency Ratio (EER) on peak load days when compared to the published Seasonal Energy Efficiency Ratio (SEER).  What really opened their eyes was that the EER on even the higher SEER systems was horrible compared to those on Ground Source systems, which met their expected EER on peak load days.  The WF analysis, based on a sample of measured data, showed that the high SEER rated equipment had a poor EER during the record breaking heat of the 2010 Oklahoma summer when temperatures were over 100 degrees for days on end and hit 110 degrees in the middle of August. This got them to adjusting their program design rifle scope!

For 2012 (and beyond)  WF thought about completely eliminating their Air Source rebates due to the low peak contribution obtained from this type of cooling equipment, but opted instead to abandon SEER as a program rebate metric and to increase the EER requirement of rebate eligible air source equipment.  While they would have preferred to have this EER based on 100 + degree (f) outside air to reflect peak load conditions, the inability to find this data forced them to continue to look at EER at 95 degrees.  They will reevaluate this decision based on 2012 unit performance under the new EER requirement.  WF also came to the conclusion that if were to achieve their 30 MW peak demand reduction goal, they would have to focus on flipping the 80/20 Air Source to Ground Source installation ratio experienced in 2010 to 80% Ground Source.  Their 2013 demand reduction Business plan will also focus on addressing the following hurdles that must be covered to achieve that ratio flip mentioned above.

1. Ground Source System Retrofit Costs
2. Commercial and Residential Member Education
3. Addressing Urgency Issues (time needed to address system failures)
4. Changing the Target Market for Ground Source by Making it a Common Retrofit Opportunity

In conclusion, Western Farmers Electric Cooperative has learned a few things over the last couple of years regarding HVAC efficiency ratings (SEER vs. EER).  Based on the wisdom acquired through the first two years of the program , they plan to continue to provide rebates and other member incentives for their Energy Efficiency Rebate Program (EERP) going into 2012 for all Distribution Cooperatives (Co-ops) in Oklahoma and New Mexico. This program was designed to promote efficient use of energy with the long-term goal of reducing approximately 30 megawatts (MW) of future capacity.  A few changes have been made for 2012, including a focus on peak day cooling equipment performance based on EER, an increased focus on increasing peak equipment performance awareness, and improved ways to educate their member Co-op’s consumers and promote energy efficiency.  Their initial focus, centered on heating, ventilation and air-conditioning (HVAC) equipment with rebates being offered for the installation of both Ground Source Heat Pumps (GSHP) and Air Source Heat Pumps (ASHP) that meet specified efficiency ratings will continue.  They also want to continue the support for education and incentive opportunities for the installation of proven technologies, such as the Ground Source Heat Pumps, that also provide “Green” environmental benefits.  Continuing this effort will help improve the heating and air conditioning energy efficiency of their Residential and Small Commercial rate classes, while reducing peak demand costs.  They will also work closely with each of their member Co-op’s to gather the data needed to justify and modify the program as it moves forward so that it will benefit the entire WFEC family.