Impact of energy pricing on buildings' energy design

Purpose – The aim of this paper is to discuss the impact of energy pricing on the implementation of low energy design principles in buildings. Design/methodology/approach – The problem of rising air-conditioning loads is not simply a matter of availability of power-plants, but also one of the limited time periods over which demand peaks occur. The relationship between the feasibility of technical solutions and pricing policies of electricity is examined by means of a Greek case study, which is representative for Southern Europe. Findings – The paper finds that in conventional air-conditioning systems the impact of the peak cooling demand on the building's capital expenditure is low, compared to the operational expenses over the buildings' life cycle. In that sense the latter's reduction lies in the interest of the building's user, rather than the investor. If, however, changes in the pricing policies were to be adopted, annual operational expenses would more than double, making energy saving measures far more attractive. Such a scenario would reflect the Californian experience of 2000. However, it is misleading to think only of covering the demand, which is a product of the building's characteristics. Passive cooling techniques are very efficient in reducing the building's cooling load. The challenge lies in the integration of such techniques and solar cooling technologies, resulting thus in feasible solutions. Practical implications – The evaluation of energy conservation techniques should be considered under the criterion of embodying the actual marginal operational cost of a utility to its rates, when providing peak loads. Originality/value – The paper rejects the false dilemma of passive vs active energy conservation approaches, and demonstrates that on the long run the “business as usual” way of keeping electricity rates fairly flat is not only impracticable, but also destructive for energy conservation as such.