How is a city or regional energy plan made?

Count Prairie City’s emissions, pick measures from a cost curve, test the plan against budget, winter peaks and who benefits, and see where the curve misleads

Analyst lesson A18 of Energy Systems, Step by Step: build a city’s emissions inventory by scope, set a target, pick measures from a marginal abatement cost curve, test the plan against an up-front budget, substation limits on the coldest morning and who benefits, and see where the curve misleads: interactions, order and lock-in, the baseline, static costs and measures that save money but do not happen by themselves.
  • Analyst · L2
  • 30 min guided · about 30 min practice
  • After F9 and A1

Prairie City's cost curve, 2026 to 2035: six measures, each alone, cheapest first

Measure Tonnes CO₂ a year by 2035 Cost per tonne Up front
1 · Heat-pump water heaters 19,206 t −$266 per t $18.4M
2 · Efficiency programmes in shops and offices 33,562 t −$137 per t $42.7M
3 · Condensing gas furnaces 11,337 t −$92 per t $20.1M
4 · Weatherize homes built before 1980 20,280 t $153 per t $125.4M
5 · Rooftop solar on homes 37,978 t $159 per t $284.1M
6 · Heat pumps instead of gas furnaces 42,329 t $212 per t $157.5M

The inventory: 2,766,098 t of CO₂ in 2025; scope 1 (burned in the city) 1,418,605 t, scope 2 (grid electricity, not rooftop solar used on site) 1,282,744 t, scope 3 (losses on the wires) 64,749 t.

Alone, the six bars add to 164,692 t; together they cut 150,854 t (5.5% of 2025), because measures overlap.

Heat pumps alone put the suburbs 10.8 MW over their 230 MW substation limit on the cold design day; with all six measures every district stays within its limit.

With JavaScript on, you sort the inventory, set a target, build the plan from the curve and test it.

Prairie City is fictional; its numbers are illustrative. Its inventory, districts, days, prices and household groups are the course's shared Prairie City data, anchored to Wichita and Kansas.

Real costs, one price year. Equipment from EIA (2022 dollars), shops and offices from LBNL (2012), weatherization from ORNL (2008). All are in 2025 dollars, converted with BEA's GDP deflator (NIPA Table 1.1.9).

Money and CO₂. A 4% real rate, as in lessons 7 and 13; energy at Kansas's 2025 retail prices. Grid electricity at eGRID2023's SPP North rate plus 5% wire losses; rooftop solar used on site has none.

Set for teaching. Each measure's potential by 2035, two lives (weatherization 20 years, shops 12), the two cleaner grids, the programme's 40% share and who takes part.

About 30 guided minutes in ten steps. Helpful first: F9, what a city runs on and who controls what.

What you just did, as diagrams

Inventory
Count first, by scope: what the city burns (scope 1), the grid electricity it uses (scope 2) and the losses on the wires (scope 3).
Curve
Each bar is one measure alone: its width the tonnes it avoids, its height the cost per tonne. Below zero it saves more than it costs.
Tests
A plan also needs money up front, room at each substation on the coldest morning, and a fair answer to who gains and who pays.
Where it misleads
Measures overlap and compete, order and lock-in matter, the baseline and prices move the bars, and a saving on paper does not install itself.
Who decides
The city counts and adopts; the utility runs programmes and supply; the state regulator approves the utility's parts; owners make most choices.
Go deeper · AnalystA city's inventory under the GPC
  • The standard. The Global Protocol for Community-Scale Greenhouse Gas Emission Inventories (GPC), by WRI, C40 Cities and ICLEI, final version December 2014.
  • Scopes (Table 3.2, p. 31). Scope 1: sources inside the city boundary. Scope 2: grid-supplied electricity, heat, steam or cooling used inside it. Scope 3: other emissions outside the boundary caused by activities inside it.
  • Rooftop solar. Power from panels used where they stand is not grid-supplied, so Prairie City’s scope 2 leaves it out: the homes’ and businesses’ electricity less their rooftop share.
  • Two reporting levels (Box 4.1, p. 36). BASIC: scopes 1 and 2 of stationary energy and transport, and waste. BASIC+ adds industrial processes (IPPU), agriculture and land, trips across the boundary, and losses on the wires.
  • Prairie City’s subtotals. Scopes 1 and 2: 2,701,349 t. With the losses (scope 3): 2,766,098 t, the inventory the targets use.
  • Not BASIC or BASIC+. They count CO₂ only (the GPC asks for seven gases, p. 30), leave out waste and do not split out the fertilizer plant’s feedstock: teaching subtotals, not GPC reporting totals.
  • Farm machinery. Tractors and other farm machinery go under stationary energy, agriculture (Table 6.5, p. 62), not transport.
  • Feedstock. Fossil fuel used as a feedstock, like the gas the fertilizer plant turns into hydrogen, goes under IPPU (p. 56). This data does not split it from the gas the plant burns.
  • Each year. The GPC recommends updating the inventory every year to track progress (p. 12).
Go deeper · AnalystHow one bar is priced

\[\text{cost per tonne} = \frac{\text{extra capital} \times \mathrm{CRF} + \text{extra upkeep} + \text{change in energy bills}}{\text{tonnes of CO}_2\text{ avoided a year}}, \qquad \mathrm{CRF} = \frac{r}{1-(1+r)^{-n}}\]

  • Symbols. \(r\) is the real discount rate (4% a year); \(n\) the item’s life in years; CRF the capital recovery factor, which spreads an up-front cost into equal yearly payments. Money in 2025 dollars, a year.
  • Heat-pump water heaters. The heat pump costs $810 more than a new electric heater in 2022 dollars, $884.58 in 2025 dollars. By 2035, 20,777 homes heated with electricity replace theirs: $18.4M up front.
  • A year. That capital × CRF (4%, 15.1 years) = $1,645,017. The homes save 46,781 MWh, $6,755,228 at 14.44¢ per kWh, and avoid 46,781 × 0.391 × 1.05 = 19,206 t.
  • The bar. (1,645,017 − 6,755,228) ÷ 19,206 = −$266 per t: it saves more than it costs.
Go deeper · ModelerFrom a curve to a planning model
  • A curve ranks measures one at a time. A planning model chooses them together: each measure’s level is a decision between zero and its potential.
  • Rules a curve cannot hold. The heat balance links weatherization and heat pumps; each district’s highest hour must stay under its substation limit; the up-front money must fit a budget; the cut must reach the target.
  • The goal. The least net annual cost that meets every rule.
  • Overlaps. A heat pump in a weatherized home saves less. A planning model must represent such overlaps explicitly; M12 introduces suitable formulations.
  • Next. M12 builds such a city energy hub, SB3 lets you run one, and C3 asks for Prairie City’s 2040 plan.
Go deeperWhat this lesson leaves out
  • Transport, 31% of the inventory, the industrial park and the grid's own plan: none has a bar here. The grid's change still counts toward the target (step 8).
  • Rebound, comfort, health and the soft costs of taking part.
  • How lower sales move rates for every customer, and energy burden: A13.
  • The cost of a bigger substation, and furnace fans at the peak hour.
  • Cooling when a heat pump replaces an air conditioner: counted as unchanged.

Check yourself

Myth or fact? “A city decides its own electricity emissions.”

  • Myth
  • Fact
Answer

Myth. Prairie City's 1,282,744 t of scope 2 follow the regional grid's rate. In step 8 the much cleaner grid alone cuts 830,547 t a year of scope 2 and the losses' scope 3.

Cities influence demand, and some run their own utility, as Los Angeles does; the regional supply's emissions involve utilities, markets and public policy.

Myth or fact? “A measure below zero on the curve will happen by itself, because it saves money.”

  • Myth
  • Fact
Answer

Myth. Its cost leaves out the time and hassle of taking part, and a landlord who pays gets none of a tenant's savings. Programmes, rules and financing exist for that gap.

Myth or fact? “Adding up the bars you pick gives your plan's cut.”

  • Myth
  • Fact
Answer

Myth. Alone, the six bars add to 164,692 t; together they cut 150,854 t. Heat pumps and condensing furnaces compete for the same furnaces, and weatherized homes need less heat.

Myth or fact? “New rooftop solar lowers Prairie City's highest hour of the year.”

  • Myth
  • Fact
Answer

Myth, here. Each district's highest hour is 07:00 on the cold design day, before the sun is up enough: 60 MW of new panels lower it by under 0.1 MW.

A measure costs $300 a year more to own and saves $100 a year of energy. It avoids 2 t of CO₂ a year. What is its cost per tonne?

  • $100 per t
  • $150 per t
  • −$100 per t
  • $200 per t
Answer

$100 per t: (300 − 100) ÷ 2. The energy saved is subtracted before dividing.

$150 per t forgets the saving; −$100 per t gets the sign of the saving wrong.

Numbers, sources and what’s next

Numbers to remember

Number What it means Source
$0.046 per kWh Average total cost of saving electricity through U.S. utility customer-funded efficiency programmes, 2009 to 2013: programme and participants together, in 2012 dollars. LBNL, Table 1 · April 2015
$8,620 and $3,690 Installed cost of the most efficient air-source heat pump and of a minimum-efficiency gas furnace, in 2022 dollars. EIA, AEO2026 Residential Demand Module, Table 2 · April 2026
22.5 years Average life of a gas furnace in the northern U.S.: one bought in 2026 is expected to run past 2045. EIA, equipment costs, Appendix A, p. 10 · March 2023

Keep going

Back to the course map

In the real world

New York City. Over two thirds of the city's greenhouse-gas emissions are attributed to buildings. Local Law 97 of 2019 sets emissions limits for most buildings over 25,000 square feet from 2024, with stricter limits from 2030.

For 2024, the first compliance year, about 95% of the 19,963 properties required to report filed (NYC Department of Buildings, 2026).

Los Angeles. In 2016 and 2017 the City Council passed motions directing its city-owned utility, LADWP, to study a 100% renewable power system; NREL ran the LA100 study (March 2021).

Peak demand grows in all its projections, but more slowly than annual electricity use (LA100 executive summary, p. 20).

Los Angeles peaks on hot afternoons. In a cold city, heat pumps can put the peak on the coldest morning, as step 5 showed.

Sources and further reading

Spotted an error, or stuck? Write to hlli@ksu.edu. Corrections are made in place and dated here.

Text licensed CC BY 4.0, code MIT: teachers and students may reuse and adapt it, with credit to Honglin Li.