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California's energy future

California targets for energy savings for the years 2012 through 2020 for its regulated utilities.

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In July 2008, the CPUC redoubled its own energy savings efforts by establishing new targets for energy savings for the years 2012 through 2020 for its regulated utilities.

Within IOU service areas these goals are expected to save over 4,500 megawatts, the equivalent of over 9 major power plants, and over 16,000 GWh of electricity savings and 620 million therms. Combined with recent goal-setting by the State’s publicly-owned utilities under AB 2021, these goals provide an aggressive contribution to statewide energy savings targeted under AB 32.

A number of recent policies, such as AB 1109, which requires defined reductions in energy usage for lighting, and the Federal Energy Independence and Security Act of 2007, which contains many provisions for new minimum efficiency standards and research, have dramatically altered the landscape for energy efficiency activities in California.16 Ensuring the continued effectiveness of public purpose efficiency programs, for instance, will require

To achieve these goals, all actors must work collaboratively over the long-term to fundamentally transform the way Californians use energy at home and at work.

In practice, however, utility programs in California have naturally tended towards measures which produce readily-quantified, lowcost, near-term savings which offer the opportunity to “buy” load reduction in easy, wellpackaged measures with limited market impacts. There has been little incentive for utilities to engage in measures with a longer-term orientation – those very measures which produce meaningful market transformation.

This Plan seeks to move utilities, the CPUC, and other stakeholders beyond a focus on short-term energy efficiency activities into a more sustained long-term, market transformation strategic focus.

The market transformation strategies covered in the Plan are built upon one or more of the following policy tools employed to “push” or “pull” more efficient products or practices to market:

  • Customer Incentives including rebates; innovative or discounted financing; and/or non-financial support to consumers are the “carrots” that help pull consumers into choosing the efficient option.
  • Codes and Standards which mandate minimum efficiency thresholds for buildings, appliances and/or equipment, removing the less efficient choices from the marketplace are the “sticks” that push builders and manufacturers to provide efficient goods and services.
  • Education and Information through marketing, education and outreach inform market actors about energy efficiency opportunities. These programs often include labeling; benchmarking; internet-based comparisons; professional and trade materials; school curricula; peer-to-peer exchanges; and other resources.
  • Technical Assistance helps to ensure that knowledge barriers on the part of customers, installers or retailers are not unnecessarily hampering the progress of critical efficiency initiatives.
  • Emerging Technologies rely on research, development, demonstration and/or deployment to move energy-efficient products and developments from the laboratory into the commercial marketplace.


In order to guide market transformation in a number of key sectors, this Plan embraces four specific programmatic goals, known as the “Big Bold Energy Efficiency Strategies,” established by the CPUC in D.07-10-032 and D.07-12-051.These goals were selected not only for their potential impact, but also for their easy comprehension and their ability to galvanize market players.

1. All new residential construction in California will be zero net energy by 2020;

2. All new commercial construction in California will be zero net energy by 2030;

3. Heating, Ventilation and Air Conditioning (HVAC) will be transformed to ensure that its energy performance is optimal for California’s climate; and

4. All eligible low-income customers will be given the opportunity to participate in the low income energy efficiency program by 2020.

This Plan does not specifically address three important elements of energy efficiency. These are the evaluation and measurement and verification of energy savings; transportation; and the water-energy “nexus.”


Residential energy use will be transformed to ultra-high levels of energy efficiency resulting in Zero Net Energy new buildings by 2020. All cost-effective potential for energy efficiency, demand response and clean energy production will be routinely realized for all dwellings on a fully integrated, site-specific basis.

In 2008, energy demand for California’s 12.6 million households was over 25,000 MW. The residential sector represents approximately 32% of total state electricity consumption and 36% of its total natural gas consumption. Electricity demand is expected to grow to almost 31,000 MW by 2018

Approximately one-third of all households live in multi-family structures, and two-thirds in single family homes. The balance of renters to homeowners is about 42% to 58%, respectively. Most or all of these households qualify for utility energy efficiency programs targeting residential customers.24 About one-third (approximately 4 million) of these households qualify for additional low income energy efficiency (LIEE) programs extended to households with annual incomes less than or equal to 200% of Federal Poverty Guidelines.

VISION | Lighting

Over the past two utility program cycles (2004/2005 and 2006/2008), the utilities have focused heavily on residential lighting, which accounts for the largest electricity end use in the residential sector. As a result, the bulk of residential efficiency savings has come from lighting programs such as measures that encourage the use of compact fluorescent light (CFL) bulbs. In the past few years, the CFL market has undergone a major transformation, as evidenced by the ubiquity of CFL products in the retail market and recent energy measurement and verification studies.

A major transformation of the lighting market will be completed through the passage and implementation of AB 1109, the 2007 California Lighting Efficiency and Toxics Reduction Act.27 AB 1109 requires a 50% increase in efficiency for residential general service lighting by 2018 through phased increases in the Energy Commission’s Title 20 regulations, with the first phase of the standards taking effect by January 1, 2010.28 These changes in the lighting market provide will allow opportunities to redirect utilities’ residential energy efficiency resources towards new lighting technologies and other innovative programs focused on whole-building efficiency measures.

Goals: New construction will reach “zero net energy” (ZNE) performance (including clean, onsite distributed generation) for all new single and multi-family homes by 2020.

Home buyers, owners and renovators will implement a whole-house approach to energy consumption that will guide their purchase and use of existing and new homes, home equipment (e.g., HVAC systems), household appliances, lighting, and “plug load” amenities.

Plug loads will be managed by developing consumer electronics and appliances that use less energy and provide tools to enable customers to understand and manage their energy demand.

The residential lighting industry will undergo substantial transformation through the deployment of high-efficiency and high-performance lighting technologies, supported by state and national codes and standards.

Transformation of markets for new multi-family homes can be achieved through strategies targeting the Commercial or Residential sectors or a combination of both, since rental buildings are commercial enterprises as well as dwelling units. In this first Plan, with the exception of the approximately 50 percent of LIEE-eligible households living in multi-family housing, there is no specific focus on strategies to upgrade efficiency in existing multi-family dwellings. This is a recognized shortcoming and strategies for this market must be addressed in greater detail in the next iteration of this Plan.

Housing: The United States Department of Energy (DOE) and the United States Environmental Protection Agency (EPA) play critical roles in residential energy efficiency efforts. Moreover, significant attention must be directed towards manufactured (or “prefabricated”) housing, a substantial and growing component within new housing stock, which is built under federal code set by the United States Department of Housing and Urban Development.

Extensive R&D efforts and partnership programs will push the market further. For technological advances in buildings, appliances and plug loads, the IOU’s Emerging Technologies program and the Energy Commission’s ratepayer-funded Public Interest Energy Research (PIER) program must work cooperatively with the national laboratories and private industry to achieve the advances envisioned in this Plan.

Building Innovation: Drive continual advances in technologies in the building envelope, including building materials and systems, construction methods, distributed generation, advanced metering infrastructure, and building design, and incorporate technology advances into codes and standards.

Comprehensive Solutions: Develop, offer and promote comprehensive solutions for single and multi-family buildings, including energy efficiency measures, demand management tools and real-time information, and clean distributed generation options in order to maximize economic decision-making and energy savings.

Customer Demand: Create high levels of customer demand for progressively more efficient homes through a coordinated statewide public education campaign and targeted incentive programs.

Statewide Solutions: Coordinate and collaborate with State agencies and private organizations to advance research and development and to align State efforts on buildings.

Financing: Work with the financial community to develop innovative and affordable financing options for energy efficient buildings and retrofits.

Codes and Standards: Adopt aggressive and progressive minimum energy codes and standards for buildings and plug loads, effective code compliance and enforcement, and parallel, tiered voluntary energy efficiency standards that pull the market along and set a higher bar for subsequent standards.

Zero Net Energy New Homes

A wide range of design features may be considered to achieve zero net energy, including building orientation (relative to the daily and seasonal position of the sun), window and door type and placement, insulation type and values of the building elements, weatherization, the efficiency of heating, cooling, lighting and other equipment, as well as local climate. Heating and cooling loads are lowered by using high-efficiency equipment, added insulation, high-efficiency windows, in addition to passive solar and other design elements; water heating loads can be alleviated by using heat recovery units and high-efficiency water heating equipment; lighting energy needs are reduced by daylighting and fluorescent and LED fixtures; while plug loads are managed by efficient appliances and minimized standby power.

As part of this effort, California will establish a “Path to Zero” campaign sponsored by the CPUC, State agencies, utilities, the building industry, and others. This campaign will feature real-world experience and data on emerging technologies, practices, and designs that deliver zero net and ultra-low energy buildings, alongside mechanisms to demonstrate their effectiveness and create demand in the marketplace for high-performance buildings coordinated with marketing tactics and financial incentives. A first step will be convening a task force of key stakeholders committed to zero net energy buildings.

California’s Title 24 should continue to be progressively updated and tightened on a triennial basis along a planned trajectory leading to achievement of goals for the year 2020. Mandatory standards of Title 24 should be linked to one or two tiers of voluntary, beyond-code standards such that the single mandatory and one or two voluntary levels comprise a bronzesilver- gold approach to residential efficiency performance.

In July 2008, California’s Building Standards Commission (BSC) adopted a first-ever set of Green Building Standards that apply to commercial and residential construction statewide.31 The standards will take effect on a voluntary basis in 2009, and will likely be adopted as mandatory standards by 2012. the Energy Commission’s Public Interest Energy Research (PIER) and other research organizations (Lawrence Berkeley National Laboratory (LBNL), National Renewable Energy Laboratory (NREL), Building Industry Research Alliance (BIRA) to assess and provide the foundation for recommendations, including monitoring and measurement approaches.

This Goal also requires a major transformation in the construction, design and usage of residences through a combination of mandates and voluntary actions. The technical feasibility of ZNE homes is in early stages of demonstration through the pioneering efforts of the Sacramento Municipal Utility District (SMUD), NREL, and home designers and builders. DOE’s Building America effort, for instance, has put ZNE research to work in homes across 34 states. These demonstrations also provide a forum for continual research on optimizing performance of homes with ZNE elements.

Several ZNE residential projects, such as SMUD’s project in Roseville, CA, are already underway and others are in the planning or conceptual phase. In the near term, the utilities will aggressively promote additional proof of concept pilots, including affordable housing elements in these pilots.

Significant additional resources will be required to scale these efforts up to for full-scale production and sale at affordable prices. In an effort to marshal private, public, academic, corporate, and entrepreneurial resources towards this objective, a prominent philanthropy organization will soon announce an Energy Free Home Challenge: to achieve net zero energy at net zero cost. Launching in fall 2008, the prize will award $20 million in cash prizes both for enabling technology innovation and whole-home innovation.

California will need new, cost-effective technologies for home building materials and fabrication techniques, and “smarter” home operating systems, such as visual displays of real-time (or near real-time) energy use. In addition, the energy efficiencies of household equipment and appliances must increase. (In this regard, see Strategies 2 and 3 below and the Heating, Ventilation & Air Conditioning Chapter.) These innovations must be accompanied by a strong education, outreach and marketing effort to increase consumer demand for efficient homes, including the use of energy or carbon benchmarks and labels. Affordability is a key consideration in California, where the cost of housing is a serious, long-term issue.

Edited by Carolyn Allen
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