California is changing the way energy efficiency is rated to go beyond resource conservation

Diving letter:

  • California is changing its approach to energy efficiency, and on Thursday the state’s Public Utilities Commission (CPUC) passed new rules to provide benefits beyond economic energy savings. and adopted a new Total System Benefit (TSB) metric to encourage conservation at high quality times and places.
  • With the The decision is made by the PUC A new approach to budgeting for non-resource tranches for energy efficiency, including projects aimed at equity and market development, said Mohit Chhabra, a senior scientist in Natural Resources Defense Council Climate and clean energy program that helped develop the metric.
  • “I’m happy to say that this is one of those decisions that didn’t cause much dismay,” said Chhabra. There is a two year glide path to the implementation of the TSB. After that, it will be the main metric for evaluating the portfolios of utility energy efficiency programs.

Dive Insight:

California has been a leader in efficiency for years, and as a result, it is running out of typical “low hanging fruit” to meet a growing number of resource, stock, and market goals, experts say.

“There have been some very inexpensive measures in the past, such as LED light bulb programs,” Chhabra said. “In the past few years, when we’ve achieved a lot of energy efficiency and caught up with codes and standards, it has been difficult to see energy efficiency as a purely economic resource.”

The proposal takes a new approach in which the portfolios of energy efficiency programs are broken down into programs whose main purposes are resource acquisition, market support or equity. A cost-effectiveness threshold is applied to resource acquisition programs and the budget allocated to market support and equity programs is in most cases limited to 30% of the total budget.

“Energy saving goals alone are important, but they do not capture all political goals and benefits of energy efficiency,” the supervisory authorities concluded.

The contract requires an overall resource cost ratio of at least 1.0 – which means that programs generate a benefit of at least $ 1 for every dollar spent – but regulators stated that this doesn’t mean that every single resource acquisition program must be cost effective own. “

“Program administrators can balance their resource acquisition programs within the resource acquisition segment of their portfolio to ensure that the segment as a whole meets the 1.0 criteria,” the order states.

The budget for evaluation, measurement and review remains limited to 4% of the budget of the efficiency portfolio.

According to the proposal, the TSB will combine and optimize energy and peak savings targets, “along with the greenhouse gas benefits of energy efficiency, in a metric that can be forecast and tracked”. The TSB also promotes “high quality” load reduction and energy savings over time while being fuel independent.

Efficiency programs in California are funded through customer bills and managed by utility companies, although they outsource up to 60% of the programs to third parties through tenders, Chhabra said. The decision “really prepares these programs for success,” he said.

The CPUC’s decision also aims to improve the “alignment and stability of the processes for setting, approving and evaluating goals of the energy efficiency program” by replacing the current 10-year business plan and annual submissions from utility companies through a 4-year The application cycle to be replaced contains a strategic planning component.

The supervisory authorities ordered the state energy suppliers to submit new applications for efficiency programs by February 2022, which should come into force by January 2024. The CPUC also announced that the Commission will be reviewing new energy efficiency targets this summer and will “add additional details” to the efficiency program Changes to efficiency programs.

The changes made will help maintain California’s leadership in energy efficiency, CPUC Commissioner Genevieve Shiroma said in a statement, “by resolving the conflict between cost efficiency and other equal or greater policy goals that address equity and provide market support for our energy efficiency. is reduced. ” Programs. “

According to Shiroma, the decision also maximizes efficiency measures “for extended greenhouse gas emissions reductions to support our integrated resource plan and achieve grid benefits.”

While utilities have asked for clarification on a few points, the state’s IOUs support the changes to the efficiency program.

“We believe that moving to this new measure of success will enable energy efficiency to continue to support the grid, our customers and California’s climate goals,” said Pacific Gas & Electric, the state’s largest utility company, in a statement.

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