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Overview of California’s Policy & Funding Resource Commitments to Energy Efficiency. Reference material for October 12, 2012 Governor’s Office Energy Efficiency “Big Think” Forum. Comprehensive Policy Approach. Clear Policy “EE is #1 in resource loading order”
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Overview of California’s Policy & Funding Resource Commitments to Energy Efficiency Reference material for October 12, 2012 Governor’s Office Energy Efficiency “Big Think” Forum
Comprehensive Policy Approach • Clear Policy • “EE is #1 in resource loading order” • Linked to resource plans & procurement • Firm Standards • Statewide EE building codes & and appliance standards • Adequate Utility Financial Motivators & Funding • Decoupling sales from revenues • Performance-based incentives/penalties • Non-bypassable EE surcharge • Rigorous Evaluation, Measurement, and Verification (EM&V)
California Energy Agency Roles • CEC ROLE • Regulate minimum standards for building energy efficiency and work with local building departments to oversee enforcement • Regulate minimum energy efficiency standards for appliances sold in California • Implement a comprehensive program to reduce energy consumption in existing buildings • CPUC ROLE • Establish direction for investor owned utility (IOU) energy efficiency programs • Approve and monitor IOU’s implementation of the their efficiency programs • Independently evaluate IOU program energy savings and establish shareholder incentives based upon program performance 3
Energy Savings Achieved both from Utility Efficiency Programs and CEC Standards 1 – 2% of electric bill
CPUC and CEC Coordination on EE Programs & Activities • Codes & Standards (C&S) • C&S advocacy; Codes & Standards Enforcement (CASE) studies • Compliance Enhancement – Training, tools, outreach to building departments • Emerging Technologies Program (ETP) • Commercialization focus; coordinate with PIER through Emerging Technologies Coordinating Council (ETCC) • AB 758 • Financing assessment underway in anticipation of coordinating with CEC on program design • Energy Upgrade California (EUC)* • IOU-administered activities funded by ratepayers - $110M • “Whole-house retrofit” incentives, marketing, training, quality assurance • CEC-administered activities funded by ARRA / SEP - $52M • Marketing, website, financing support, training, (limited) local government incentives • Local government-administered activities funded by ARRA block grants / DOE “Better Buildings” - $40M • (Limited) local government incentives, innovative marketing • ARRA appliance rebates & IOU rebates • Evaluation coordinating group (CEC / CPUC staff) • Lending CPUC expertise / resources to CEC’s limited ARRA evaluation budget • Ensuring no double-counting of savings * Note: EUC is residential and commercial buildings retrofit program and brand. Initially, the program was focused mostly on single-family residential. $ figures are for residential sector only. Slide 5
CEC Role on Energy Efficiency Policies and Regulations • Appliance Standards: Title 20 • Requires Minimum levels of energy efficiency for appliances and equipment sold or offered for sale in California • SB 454 authorized Energy Commission to levy fines for violations • Building Standards: Title 24 Part 6 • Standards for newly constructed buildings, additions and alterations • Title 24 enforced by local building departments • Up to 90% of HVAC retrofits fail to pull permits • SB 454 (Pavley, 2011) directed IOUs to not provide rebates unless permits are pulled 6
Additional Legislative Action on Energy Efficiency Policies and Regulations Existing Buildings : • SB 1922 (Lewis, 1994): Home Energy Rating System (HERS) Regulations • AB 549 (Longville, 2001): Recommendations of energy use disclosure regulations • AB 1103 ( Saldana, 2007): Benchmarking and disclosure of EE for commercial buildings • AB 758 (Skinner, 2009): Comprehensive EE program for existing buildings (see next slide for detail) 7
AB 758 (Skinner, 2009) • Calls for a comprehensive program to achieve energy savings in California’s existing buildings • CEC must develop and implement program, in collaboration with all stakeholders, particularly the CPUC. • Proceeding open and underway 2012-2013. • Program Components: • Energy Assessments • Energy Use Disclosures • Building Energy Use Ratings and Labels • Financing Options • Cost Effective Efficiency Improvements • Public Outreach and Awareness Campaign • Workforce Development 8
CA Building Efficiency Standards and Appliance Efficiency Standards saved more than $65 billion in electricity, natural gas costs since 1978
Energy Efficiency is a Resource • Generation Benefits • Saves capacity and energy • Lowers fuel costs • Reduces required reserves • Transmission and Distribution Benefits • Defers new investment • Improves reliability • Resource Benefits • Promotes Integrated Resource Planning • Environmental Benefits • Paves the way for sustainable growth • Reduces GHG emissions
California’s History of Energy Efficiency Action – Utility Program Perspective IOU administration restored; new incentive mechanism; AB 2021 requires POUs to set targets SB 1037 makes EE top priority and requires POU reporting Utilities’ resume portfolio management; PGC takes effect IOU decoupling restored; CPUC sets aggressive 10-year targets Energy Action Plan makes EE top priority Deregulated market begins Electricity Crisis Decoupling for electric Decoupling for gas Source: Natural Resources Defense Council (NRDC), as modified by Energy Division 4/25/2011
Aggressive California EE/GHG Goals California Air Resources Board Scoping Plan EE Target (Nov, 2008): • 32,000 GWh and 800 MMTherms/year • 19.5 MMT CO2E in 2020 • Utility programs, codes & standards, voluntary action • EE and solar water heating 15% of AB32 Plan • (Cap and trade target is 20% of Plan) CPUC 2020 interim “Total Market Gross” EE goals (July, 2008): • 16,000 GWh and 620 MMTherms/year • Equal to nine or ten power plants avoided
CPUC EE Goals Through 2020 Goals set for CPUC-regulated utilities from 2004 through 2020, in accordance with best available data on energy efficiency potential. • Does not take into account potential within Publicly-Owned Utility Service Areas • Based primarily on existing technologies and rates of adoption
The AB 32 Challenge While California efforts in EE have contributed to stabilized per capita emission levels, California’s long-term goals will require dramatically redoubled efforts and success.
Challenges to California’s EE Programs Declining IOU Portfolio Cost Effectiveness over time 2010-2012 Funding Source Public Goods Charge* Benefit / Cost (TRC) Procurement Funds Portfolio Cycle 3 yr total= $3.1 Billion (excluding Low Income EE Programs) * Replaced by utility procurement funds for 2012 due to sun-setting of PGC statutory authority
EE Potential by End Use (Illustrative) Source – Itron 2008 Potential Study as exhibited in Southern California Edison Testimony, Application for Approval of Low Income Assistance Programs and Budgets for Program Years 2009-2011, pg. 32.
Long-Term Energy Efficiency Strategic Plan In September 2008, Strategic Plan established a roadmap for energy efficiency through 2020 and beyond. Updated 2011. Features: • A long term vision to achieve market transformation. • Engaged wide-ranging stakeholders including builders and designers, operators & managers, manufacturers & distributors. • Workforce development viewed as vital issue. • Marketing, education and outreach effort recognized as critical to create demand for efficiency solutions.
2010-2012 Investor-Owned Utility Planned Efficiency Resource Program Savings Slide 19
2010-12 Investor-Owned Utility Energy Efficiency Budget by Program • Local government partnerships ($233M); institutional partnerships ($95M) included • Third-party programs + Local Government Partnerships ~ 1/3 of portfolio spending by non-utility entities
Composition of 2010-12 IOU Efficiency Programs Portfolio Statewide Programs [63%] • Heating, Ventilation, Air Conditioning • New Construction • Emerging Technologies • Codes & Standards • Marketing, Education & Outreach • Workforce Education & Training • Integrated Demand-side Management • Lighting Market Transformation • Residential • Commercial • Industrial • Agricultural Utility “Local” Programs [3%] Third-Party Programs [20%] State & Local Gov’t Programs [10%] PG&E (7) PG&E (50) PG&E (25) SCE (4) SCE (31) SCE (30) SDG&E (6) SDG&E (14) SDG&E (14) SCG (5) SCG (18) SCG (17) [%] = Percent of total portfolio budget ($3.1 billion) (#) = Number of individual programs Note: Evaluation, Measurement & Verification is 4% of total portfolio budget
Looking Ahead…Issues for EE • Market Transformation • Need to distinguish market transformation (MT) from “resource acquisition.” Consider statewide administration of MT approaches? • Innovation • Many promising technologies. How to bring to market and scale-up faster? • New business models for EE program deliverers. How support these to flourish? • Competition • Increase competition for highly effective programs to access ratepayer funds in some way? • Utilize 3rd-party program solicitations to drive new program approaches and scaling? • Financing • California needs to find market-specific solutions for EE financing. CPUC is guiding ratepayer $ involvement and support. • Need solutions that allow cost repayment by successor owners or tenants (“transferability” or “tied to meter”. Solutions, structures, risk TBD. Slide 22
EE Market-Place Challenges • Market strategies need to extend beyond utility programs, leverage private resources, capture economic value • Promote the business potential, capital investment opportunities • Mobilize bold action and create a "movement" for EE and other demand-side actions, behavior, investment: • Achieve deeper action – 20%, 40 %, 70% efficiency gains • Pull consumer and business demand; call on comparative benchmarks • Marketing to reflect understanding of market segments, motivations,... • Expand knowledgeable and trained providers who can successfully sell and deliver results • Innovate effective financing mechanisms – long amortization terms and transferable to successive owners/occupants (OBF, PACE, ...)