Energy Usage Estimates for 100 million properties across the United States

Energy Usage Estimates for 100 million properties across the United States

Governments, utilities and companies face growing pressure to invest in carbon-reducing projects

Over the next few decades, climate models suggest that the severity and frequency of extreme heat, drought, and weather events will increase in many parts of the world. Climate-related events are already affecting millions of people: Typhoon Haiyan hit the Philippines as one of the strongest storms ever recorded in 2013; wildfires have burned millions of acres in Canada, Australia, and the United States over the last few years; and droughts in east Africa are causing major food shortages. The scale of climate-related losses have led many in the global community to seek a transition to a low carbon economy, a large-scale shift that will reduce the likelihood of worst-case climate outcomes but require significant investment from public and private actors alike.

In the United States, residential energy use is a major contributor to greenhouse gas emissions. By some estimates, it accounts for as much as 20% of the country's annual footprint.1The fact the federal government has pledged to reduce net greenhouse gas emissions to 50-52% of 2005 levels by 20302suggests that residential energy use may become the target of greater regulation. The impacts of this kind of regulation could be profound, with implications for lenders, insurers, homeowners, and investors. At the same time, municipal and state governments, utilities, and corporations in related industries may face increased pressure to target investment towards carbon-reducing projects.

To gain insight into the challenges facing these stakeholders, it is important to understand the geographical patterns of residential emissions across the country. The first step towards understanding emissions patterns for households across the country is to understand their energy usage. Below, ICE Sustainable Finance presents energy usage estimates for over 100 million individual properties across the United States, followed by a discussion of the tools that power the estimation approach.

How much energy do U.S. households use?

Across the United States, ICE Sustainable Finance estimates that the median single-family household uses about 30,000 kilowatt-hours (kwh) of energy annually (Figure 1). For context, pedaling a bike at a reasonable pace for eight hours a day for thirty days generates less than one thousandth of this amount (24 kwh)3. In most households, this energy goes towards a combination of heating and cooling, and powering appliances like dishwashers, dryers, televisions, and refrigerators, and lighting.

This median estimate is based on an ICE Sustainable Finance analysis of over 100 million single family residences in ICE's property data records via the acquisition of Black Knight.4

Seen in map view (Figure 1) there is a clear geographic pattern in estimates of single-family household energy use: households in the western and southern United States use significantly less energy than houses in the Northeast and Midwest. The differences are most pronounced at the extremes: ICE Sustainable Finance's estimates suggest that the median household in counties with "very cold" climates (the Northern Midwest, northern Maine, and parts of the Rockies; Figure 2) uses more than twice the total energy of the median household in counties with hot climates.

There are likely to be several reasons for this geographic pattern. First, winter temperatures in places like Minnesota and Wisconsin tend to be more extreme relative to desired indoor temperatures than summer temperatures in places like Florida and Alabama.5On a 20ºF day in Minneapolis in the winter, for example, homes would have to be heated by 50ºF relative to an outdoor temperature to be a comfortable 70ºF, while a home in Florida on a 100ºF day in summer would only have to be cooled by 30ºF. In addition, it typically takes much less energy to cool a home by 1ºF than to heat by 1ºF; the average air conditioner is about four times as efficient as the average furnace or boiler because air conditioners transfer rather than generate heat. By one estimate, climate control for homes in Minneapolis requires 3.5 times more energy than climate control for homes in Miami.6Home heating accounts for as much as 42% of residential energy consumption so differences in heating needs translate to large differences in total energy usage.7

The median U.S. household's energy use sourced from electricity is 13,500 kwh, but electricity reliance varies because residential properties across the country tend to use different heat sources. Fuel oil is commonly used for home heating in New England and Alaska; propane and natural gas dominate in the Midwest; wood is most prominent in parts of California and the Pacific Northwest; and electricity is commonly used for home heating in the Southeast. Over the past few decades, lower electricity prices and mild winters in the Southeast made electricity particularly attractive for residential buildings, while buildings in colder states had greater heating needs and often faced higher electricity prices, a double-whammy that historically made electricity seem like a less attractive option than fuel oil, propane, and natural gas.10

These trends lead to a surprising pattern: though the total energy needs of households in cold states are higher than their southern counterparts (Figure 1), households in warmer states tend to use more electricity (Figure 3).

The tools that power this analysis

To estimate energy usage for residential properties, ICE Sustainable Finance combined property records data for over 107 million households with models developed by the Energy Information Administration (EIA) National Renewable Energy Laboratory (NREL). The NREL models are based on a suite of variables, including residential characteristics like the presence or absence of a basement, climate zone, heat fuel source, temperature set point, and vacancy.11,12In total, there are over 500,000 unique simulations based on current residence characteristics.

To move from modeled energy usage to estimates of real energy use, ICE Sustainable Finance matched properties with the most appropriate NREL simulation. Property records are difficult to collect and there are often data missing for specific properties, but the more characteristics that can be used in the match, the greater the confidence in the representativeness of the energy simulation. The buildings attributes used in the match between properties and simulations include building size, the year of construction, number of stories, construction type, state, climate zone, and heating fuel (e.g. electricity, natural gas, propane, fuel oil, etc.). To do this match effectively, ICE Sustainable Finance created a series of unique 'match keys'-specific sets of characteristics to try to match models to real buildings-to ensure that every match is done based on the most complete set of building characteristics possible.

In Part 2, ICE Sustainable Finance will describe how these energy usage estimates are converted into emissions estimates.

Continue to part 2