How to draw system boundaries with care?

System boundaries are a matter of choice. For behind-the-meter energy use, we can identify three major categories of extension: the extended product, the functional system, and the entire building or factory. These can further be subdivided in various ways.

Setting the system boundary is achieved by balancing the required effort with the potential gain. The wider the boundaries are drawn, the greater the potential energy savings, but the systems approach also becomes more complex faced with the following increasingly significant drawbacks:

  • Dispersed decision making — the heat pump and the electrical installation feeding the compressor are likely to be designed and installed by different parties;
  • Asynchronous decision making — an architect may determine a house’s orientation and fenestration long before heating and cooling system specifications are decided;
  • Data gathering difficulties — it can be a complex task gathering all the necessary data for a detailed energy flow diagram covering an entire building or factory;
  • Areas of substantial uncertainty in the data — it can be difficult to predict the load of an electrical installation over the next 25 years;
  • Limited reproducibility — while the extended product approach can still be replicated in many similar cases, the entire building or factory will always be unique.

The optimal system boundary is where the additional benefits begin to be overshadowed by the effort involved in implementing it.

With this trade-off in mind, a report by the US Alliance to Save Energy advises focusing primarily on the functional level of electrical, HVAC, and lighting systems among others. Optimizing energy efficiency at (extended) product level would merely lead to missed opportunities, but optimising energy efficiency at the level of the whole building would involve too many areas of uncertainty, leading to an excessive gap between predicted and measured results. The report puts forward the additional argument that the major focus of energy efficiency efforts should be on renovation projects, for which optimisation at building level is even more complex than that for entirely new buildings.


Setting the system boundary is achieved by balancing the required effort with the potential gain.