The era of publicly mandated GHG emissions restrictions in the United States has begun with recent legislation in California and seven northeastern states. Commercial and industrial buildings can improve the carbon-efficiency of end-use energy consumption by installing technologies such as on-site cogeneration of electricity and useful heat in combined heat and power systems, thermally-activated cooling, solar electric and thermal equipment, and energy storage -- collectively termed distributed energy resources (DER). This research examines a collection of buildings in California, the Northeast, and the southern United States to demonstrate the effects of regional characteristics such as the carbon intensity of central electricity grid, the climate-driven demand for space heating and cooling, and the availability of solar insolation. The results illustrate that the magnitude of a realistic carbon tax ($100/tC) is too small to incent significant carbon-reducing effects on economically optimal DER adoption. In large part, this is because cost reduction and carbon reduction objectives are roughly aligned, even in the absence of a carbon tax.

The first major paradigm shift in electricity generation, delivery, and control is emerging in the developed world, notably Europe, North America, and Japan. This shift will move electricity supply away from the highly centralised universal service quality model with which we are familiar today towards a more dispersed system with heterogeneous qualities of service. One element of dispersed control is the clustering of sources and sinks into semi-autonomous mu grids (microgrids). Research, development, demonstration, and deployment (RD3) of mu grids are advancing rapidly on at least three continents, and significant demonstrations are currently in progress. This paradigm shift will result in more electricity generation close to end-uses, often involving combined heat and power application for building heating and cooling, increased local integration of renewables, and the possible provision of heterogeneous qualities of electrical service to match the requirements of various end-uses. In Europe, mu grid RD3 is entering its third major round under the 7th European Commission Framework Programme; in the U.S., one specific mu grid concept is undergoing rigorous laboratory testing, and in Japan, where the most activity exists, four major publicly sponsored and two privately sponsored demonstrations are in progress. This evolution poses new challenges to the way buildings are designed, built, and operated. Traditional building energy supply systems will become much more complex in at least three ways: 1. one cannot simply assume gas arrives at the gas meter, electricity at its meter, and the two systems are virtually independent of one another; rather, energy conversion, heat recovery and use, and renewable energy harvesting may all be taking place simultaneously within the building energy system; 2. the structure of energy flows in the building must accommodate multiple energy processes in a manner that permits high overall efficiency; and 3. multiple qualities of electricity may be supplied to various building functions.

The on-site generation of electricity can offer building owners and occupiers financial benefits as well as social benefits such as reduced grid congestion, improved energy efficiency, and reduced greenhouse gas emissions. Combined heat and power (CHP), or cogeneration, systems make use of the waste heat from the generator for site heating needs. Real-time optimal dispatch of CHP systems is difficult to determine because of complicated electricity tariffs and uncertainty in CHP equipment availability, energy prices, and system loads. Typically, CHP systems use simple heuristic control strategies. This paper describes a method of determining optimal control in real-time and applies it to a light industrial site in San Diego, California, to examine: 1) the added benefit of optimal over heuristic controls, 2) the price elasticity of the system, and 3) the site-attributable greenhouse gas emissions, all under three different tariff structures. Results suggest that heuristic controls are adequate under the current tariff structure and relatively high electricity prices, capturing 97 percent of the value of the distributed generation system. Even more value could be captured by simply not running the CHP system during times of unusually high natural gas prices. Under hypothetical real-time pricing of electricity, heuristic controls would capture only 70 percent of the value of distributed generation.

On-site energy production, known as distributed energy resources (DER), offers consumers many benefits, such as bill savings and predictability, improved system efficiency, improved reliability, control over power quality, and in many cases, greener electricity. Additionally, DER systems can benefit electric utilities by reducing congestion on the grid, reducing the need for new generation and transmission capacity, and offering ancillary services such as voltage support and emergency demand response. Local aggregations of distributed energy resources (DER) that may include active control of on-site end-use energy devices can be called microgrids. Microgrids require control to ensure safe operation and to make dispatch decisions that achieve system objectives such as cost minimization, reliability, efficiency and emissions requirements, while abiding by system constraints and regulatory rules. This control is performed by an energy manager (EM). Preferably, an EM will achieve operation reasonably close to the attainable optimum, it will do this by means robust to deviations from expected conditions, and it will not itself incur insupportable capital or operation and maintenance costs. Also, microgrids can include supervision over end-uses, such as curtailing or rescheduling certain loads. By viewing a unified microgrid as a system of supply and demand, rather than simply a system of on-site generation devices, the benefits of integrated supply and demand control can be exploited, such as economic savings and improved system energy efficiency.

On-site cogeneration of heat and electricity, thermal and electrical storage, and curtailing/rescheduling demand options are often cost-effective to commercial and industrial sites. This collection of equipment and responsive consumption can be viewed as an integrated energy system(IES). The IES can best meet the sites cost or environmental objectives when controlled in a coordinated manner. However, continuously determining this optimal IES dispatch is beyond the expectations for operators of smaller systems. A new algorithm is proposed in this paper to approximately solve the real-time dispatch optimization problem for a generic IES containing an on-site cogeneration system subject to random outages, limited curtailment opportunities, an intermittent renewable electricity source, and thermal storage. An example demonstrates how this algorithm can be used in simulation to estimate the value of IES components.