overview of california’s policy & funding resource commitments to energy efficiency
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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” - PowerPoint PPT PresentationTRANSCRIPT
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
3
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
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
1 – 2% of electric bill
Annual Energy Savings from Efficiency Programs and Standards
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,0001
97
5
19
76
19
77
19
78
19
79
19
80
19
81
19
82
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
GW
h/y
ear
Appliance Standards
Building Standards
Utility Efficiency Programs and Market
Transformation
~15% of Annual Electricity Use in California in 2003
Energy Savings Achieved both from Utility Efficiency Programs and CEC Standards
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
Decouplingfor gas
Deregulated market begins
Utilities’ resume portfolio management; PGC takes effect
Electricity Crisis
Energy Action Plan makes EE top priority
IOU decoupling restored; CPUC sets aggressive 10-year targets
SB 1037 makes EE top priority and requires POU reporting
IOU administration restored; new incentive mechanism; AB 2021 requires POUs to set targets
California’s History of Energy Efficiency Action – Utility Program Perspective
Decouplingfor electric
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
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 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
14.313.3 13.3
9.6
5.8
3.4
1.4
427452
522
422
284
185
85
0
5
10
15
20
25
1990 2000 2010 2020 2030 2040 2050
Em
issi
ons Per
Cap
ita
0
100
200
300
400
500
600
Statew
ide E
mission
s
Emissions Per Capita Statewide Emissions
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
2010-2012 Funding Source
3 yr total= $3.1 Billion
ProcurementFunds
2.16
2.67
1.141.47 1.36
0
0.5
1
1.5
2
2.5
3
2002-2003 (Reported) *
2004-2005 (Reported)
2006-2008 (Evaluated)
2009 (Evaluated)
2010-2012 (Forecast)
IOU EE Portfolio Cost-effectiveness
Ben
efi
t /
Co
st (
TR
C)
Portfolio Cycle
Declining IOU Portfolio Cost Effectiveness over time
(excluding Low Income EE Programs)
PublicGoodsCharge*
* 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.
Identifying Strategies to Fill in the “White Space”
IOU Programs
BBEES
Huffman Bill
Economic
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Cu
mu
lati
ve G
Wh
Sav
ing
s
T24+Fed StandardsCurrent Goals
(gross equivalent)
Current Goals (net)
savings eligible to
be partially claimed by
IOUs
naturally-occurring
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
StatewidePrograms
[63%]
•Residential•Commercial•Industrial•Agricultural
•Heating, Ventilation, Air Conditioning•New Construction•Emerging Technologies•Codes & Standards
•Marketing, Education & Outreach•Workforce Education & Training•Integrated Demand-side Management•Lighting Market Transformation
PG&E (7)
SCE (4)
SDG&E (6)
SCG (5)
PG&E (50)
SCE (31)
SDG&E (14)
SCG (18)
PG&E (25)
SCE (30)
SDG&E (14)
SCG (17)
Composition of 2010-12 IOU Efficiency Programs Portfolio
[%] = Percent of total portfolio budget ($3.1 billion)(#) = Number of individual programs
Utility “Local” Programs[3%]
Third-Party Programs[20%]
State & Local Gov’t Programs
[10%]
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, ...)