Good practice package for buildings in United States (California)

California uses a co-ordinated package of measures in order to improve energy efficiency in new and existing buildings. Under the umbrella of a Long Term Energy Efficiency Strategic Plan, Minimum Energy Performance Standards, financial incentive programmes and information and motivation campaigns are interacting. As a consequence, per capita electricity consumption has remained stable in California since the 1970s, while it increased from 8,000 to 12,000 kWh/yr on average all over the USA.

Summary

The energy and cost savings recorded between 1975 and 2003 cumulate to 40,000 GWh/yr in electricity, which is about 15 % of California’s current electricity use, 12,000 MW in peak demand and US$ 56 billion in monetary savings achieved. About half of this is due to energy efficiency programmes targeting all sectors but mainly energy efficiency in buildings, the other half being divided almost equally between minimum energy performance standards for buildings and appliances (next figure).

Cumulative Energy Savings of California Standards and Energy Efficiency Programmes’ in GWh/yr

Source: Wuppertal Institute (2012), adapted from Desmond 2005, p. 7

Governance framework and measures for both new and existing buildings
In 2008, the California Public Utilities Commission (CPUC) adopted the Long Term Energy Efficiency Strategic Plan (LTEESP) as an umbrella measure. The Plan aims at significantly reducing energy use by 2020 compared to baseline projections and outlines a framework of targets and strategies and a clear roadmap for achieving this goal. In order to achieve this ambitious goal, California wants to have zero net energy homes by 2020 and zero net energy commercial buildings by 2030.
One of the most important measures are Minimum Energy Performance Standards (MEPS) for new and existing buildings (Title 24), which were introduced in 1978 and have been revised regularly. Between 2003 and 2013, California expects a further US$ 23 billion to be saved through the improvement of the building codes.
In order to promote buildings that exceed the minimum requirements, Californian investor-owned and also municipal public energy companies (called utility companies or utilities in the USA) offer incentive programmes for energy-efficient refurbishment of existing buildings, but also for new construction. Due to the larger potential of refurbishment (as there is not much new construction), most of the money is invested in the existing buildings market. Financial incentives for energy efficiency measures are provided via the Public Goods Charge levied on the electricity and gas prices. It is collected and used by the utility companies to fulfil their obligations to help their customers save energy, while achieving net economic benefits for society and the customers. Since 1976, more than US$ 5.6 billion has been invested in electricity and natural gas savings in buildings. The activities of the investor-owned utility companies are regulated by CPUC. Municipal utility companies also implement strong energy efficiency programmes.
These measures are complemented by information activities such as “Flex Your Power“, which is a “state-wide energy efficiency marketing and outreach campaign. [...] Flex Your Power is a partnership of California’s utility companies, residents, businesses, institutions, government agencies and non-profit organizations working to save energy” (FY Power). The campaign website provides comprehensive information about energy efficiency measures in California and customers can find incentive programmes suited to their needs.
Through the implementation of MEPS for buildings and appliances and the utility energy efficiency programmes, California has managed to keep its per capita electricity consumption constant since the 1970s, whereas the per capita consumption in the rest of the USA increased dramatically from 8,000 to 12,000 kWh (Desmond 2005).

Special measures for existing buildings

Residential Buildings

Multifamily Energy Efficiency Rebate Program (MEERP)

The California State-wide Multifamily Energy Efficiency Rebate Program (MEERP) promotes energy efficiency measures in existing multifamily complexes. In this programme, almost 30 million US$ were invested between 2004-05 (as an example) exceeding the set goals for energy savings (approx. 90 GWh/yr of electricity and 120 GWh/year of fuels) and demand reduction (12.6 MW). Detailed information about savings is shown in Table 1.

Residential Energy Conservation Ordinances (RECOs) (only applicable in San Francisco and Berkeley)

Not state-wide yet, but possibly an option for the future, are Residential Energy Conservation Ordinances (RECOs) by local governments, which set energy efficiency requirements for residential properties that are sold, transferred, or renovated on a large scale e.g. in Berkeley and San Francisco (City of Berkeley).

Property Assessed Clean Energy (PACE)

The Property Assessed Clean Energy (PACE) is an on-bill financing scheme, which assists building owners in financing energy efficiency improvements to their homes.

Public Buildings

Green Building Initiative (GBI)

In addition to the incentive programmes, California has launched the Green Building Initiative (GBI), a lead-by-example action setting the ambitious goal to reduce energy use in new and existing non-residential State buildings (i.e. facilities owned, funded, or leased by the state) by 20% by 2015 (as compared to a 2003 baseline), and explicitly prompting the private sector to follow-suit. The GBI was initiated in 2004, when former Governor Schwarzenegger signed Executive Order S-20-04, which also required compliance with the accompanying Green Building Action Plan in addition to setting the goal mentioned above. Under this Order and Action Plan, all new and renovated State buildings are required to achieve at least the “Silver” level of LEED standards. Furthermore, agencies are required to only lease office space in buildings with the Energy Star certification, to identify the most appropriate ways of achieving energy efficiency in their buildings, and to purchase cost-effective Energy Star products (DSIRE 2012). The GBI also pushed the California Energy Commission (CEC) to further strengthen the statewide MEPS (Title 24, 2005 version, which was adopted in 2003) for non-residential buildings (i.e. including commercial ones) such that the 20% reduction goal could be achieved, to include commissioning services in the standards, and to undertake enhanced enforcement efforts (Green Building Action Plan). Consequently, Title 24 was tightened in 2008, and will be again in 2013/2014.

Commercial and industrial buildings

Energy efficiency programmes for existing buildings in these sectors are a prominent part of the utility companies’ activities funded by the Public Goods Charge.

Special measures for new buildings

Residential Buildings

Residential New Construction (RNC)

California has also implemented several measures through its energy companies that especially target new buildings: The investor-owned utility companies’ (IOU) programmes for Residential New Construction (RNC) aim at promoting energy efficient construction in California.

California Advanced Homes Program (CAHP) (previously called “Energy Star New Homes”)

The California Advanced Homes Program , which is one part of the IOUs RNC programme, among others, focuses on the residential market. It tries to maximize potential energy savings and energy efficiency measures by approaching the house as a system and providing further incentives for very energy efficient construction, by which up to US$ 400/yr of energy costs can be saved per home. In 2005, Pacific Gas & Electric (PG&E) alone achieved annual gross savings of 1.03 million kWh/yr of electricity and 303,445 therms/yr (32,000 GJ / 8.9 GWh) of natural gas through the support of construction of 11,200 new ENERGY STAR homes. The statewide programme as a whole led to almost 52,000 ENERGY Star Homes completed in 2005.

Non-residential buildings

Savings By Design

The Savings By Design scheme by the five major Californian utility companies offers free assistance in the design process for new non-residential buildings in order to achieve maximum energy savings from the very beginning.

Public Buildings

The Green Building Initiative also includes energy efficiency requirements for new buildings.

Commercial and industrial buildings

Energy efficiency programmes for new buildings in these sectors are a prominent part of the utility companies’ activities funded by the Public Goods Charge.

Targets and planning

Policy roadmap and targets towards ultra-low energy buildings

California has long recognised energy efficiency improvement as the most important means available for mitigating energy-related greenhouse gas emissions. It has established energy efficiency as its highest priority energy resource by law. For example, a “loading order” has been established under legislations, which specified “first pursuing all cost-effective energy efficiency resources, then using cost-effective renewable resources, and only after that using conventional energy sources to meet new load” (ACEEE a). In 2008, the California Public Utilities Commission (CPUC) adopted the Long Term Energy Efficiency Strategic Plan (LTEESP) to approach energy efficiency, i.a. in buildings, more comprehensively. The Plan was updated in 2011. It is the first comprehensive energy efficiency strategy and was developed in a collaborative effort with the major energy companies and around 500 individuals. It aims at significantly reducing energy use by 2020 compared to baseline projections and outlines a framework of targets and strategies and a clear roadmap for achieving this goal. One of the ambitious goals in the Plan is to achieve zero net energy (ZNE) new construction in the residential sector by 2020 and commercial sector by 2030. In order to facilitate implementation of the plan, the CPUC developed action plans (APs) for each of the Plan’s focal areas, namely commercial ZNE buildings (September 2010), HVAC (June 2011), and lighting (July 2011), in collaboration with stakeholders. These areas were prioritized because of their large impact on energy consumption: the commercial sector is the largest electricity consumer in California; HVAC accounts for 30% of peak energy demand; and lighting represents 25% of statewide electrical energy consumption and (historically) 50% of utility programme portfolio savings. Action plans for ZNE buildings in residential and industrial sectors, as well as research and technology are to follow (Energy Division 2011).The wider policy framework and basis for the LTEESP is the “Climate Change Scoping Plan”, where the Government of California states its commitment to saving energy of at least 32,000 GWh and 800 million therms (84.38 PJ) by 2020, equalling 25 million metric tons of GHG emissions reductions. Consequently, “[r]educing greenhouse gas emissions to 1990 levels means cutting approximately 30 percent from ‘business-as-usual’ emission levels projected for 2020, or about 15 percent from today’s [2008] levels. On a per-capita basis, that means reducing our [i.e. California’s] annual emissions of 14 tons of carbon dioxide equivalent for every man, woman and child in California down to about 10 tons per person by 2020” (ARB 2008). On the other hand, following California’s electricity crisis in 2001, statewide energy saving goals have been set up for utility companies, so-callled Energy Efficiency Resource Standards (EERS) (ACEEE a):

2004 (Decision 04-09-060): the CPUC formalized the goals for the state’s IOUs , which called for electricity use reductions of 23 billion kWh in 2013 , peak demand reductions of 4.9 million kW from programmes operated over the period of 2004–2013., and annual natural gas use of 67 MMTh by 2013.
2008: the CPUC developed new energy saving goals for the period of 2012-2020, which call for a total of 16,300 GWh/yr of gross electric savings;
2010-2012 programme portfolios and budgets for the state’s IOUs: calls for gross annual electricity savings of almost 7,000 GWh and natural gas savings of approximately 150 MMTh (4,395 GWh).

Infrastructure and funding

Energy agencies

The California Energy Commission (CEC) is the state's primary energy agency and thus responsible for planning, managing and implementing California’s policy package for energy efficiency. The CEC was created in 1974 and has the following tasks related to energy efficiency:

Promoting energy efficiency by setting the state's appliance and building efficiency standards and working with local government to enforce those standards.
Supporting public interest energy research that advances energy science and technology through research, development, and demonstration programmes.
Developing and implementing the state Alternative and Renewable Fuel and Vehicle Technology Program to reduce the state's petroleum dependency and help attain the state climate change policies.
Administering more than $300 million in American Reinvestment and Recovery Act funding through the state energy program, the energy efficiency conservation and block grant program; the energy efficiency appliance rebate program and the energy assurance and emergency program.

Apart from these roles in directly supporting energy efficiency, CEC is also responsible for:

Forecasting future energy needs and keeping historical energy data.
Licensing thermal power plants 50 megawatts or larger.
Supporting renewable energy by providing market support to existing, new, and emerging renewable technologies; providing incentives for small wind and fuel cell electricity systems; and providing incentives for solar electricity systems in new home construction.
Planning for and directing state response to energy emergencies.

Within the CEC, there is a specific department for sustainable energy support, the Efficiency and Renewables Division, which is committed to making California's businesses, homes, and appliances more energy efficient. This commitment is achieved by:

Developing and implementing energy efficiency building standards that help ensure comfort and affordability
Identifying and developing ways to streamline energy use in agriculture, manufacturing, water systems, and processing functions
Letting Californians know that using energy wisely is a good investment in the economy and the environment
Assist Schools (K-12), Public Colleges & Hospitals, Local Government, and others to identify and implement energy efficiency measures.

Within this division, the Buildings and Appliances Office develops and manages building standards and brings them into effect. Apart from these functions, it also reaches out to Californians to inform them about energy efficiency (http://www.energy.ca.gov/).

Another state agency with an important role in energy efficiency policy is the California Public Utilities Commission (CPUC). CPUC is responsible for overseeing the energy efficiency programmes that are implemented by the Investor-Owned Utility companies (IOUs) to fulfil their legal energy saving obligation (the so-called Energy Efficiency Resource Standards, EERS, an instrument more commonly known as “energy efficiency obligations” (or white certificates) outside the US; see next section for more information). This means that the CPUC sets out key policies and guidelines, defines programme goals, and approves spending levels (ACEEE a).

Overall co-ordination and financing

Energy efficiency policy programmes have long been implemented in California, which date back to the 1970s and have evolved substantially since then. The most important mechanism for co-ordination and financing of programmes are the energy saving obligations of energy companies. Both investor-owned and publicly-owned utility companies administer energy efficiency programmes (ACEEE a). Since 2004, investor-owned utility (IOUs) are legally obliged to invest in energy efficiency measures. This is among the most important policy mechanisms to improve energy efficiency in California. Meanwhile, Senate Bill 1037 (2005 statutes) requires publicly-owned utility companies to implement all cost-effective energy efficiency mesasures before using further resources to cover energy demand (Desmond 2005). The efficiency programmes conducted by the IOUs are overseen by the California Public Utilities Commission (CPUC) .
Following California’s electricity crisis in 2001, statewide energy saving goals have been set up for utility companies, so-callled Energy Efficiency Resource Standard (EERS) (ACEEE a):

2004 (Decision 04-09-060): the CPUC formalized the goals for the state’s IOUs , which called for electricity use reductions of 23 billion kWh in 2013, peak demand reductions of 4.9 million kW from programmes operated over the period of 2004–2013, and annual natural gas use of 67 MMTh by 2013.
2008: the CPUC developed new energy saving goals for the period of 2012-2020, which call for a total of 16,300 GWh/yr of gross electric savings;
2010-2012 programme portfolios and budgets for the state’s IOUs: calls for gross annual electricity savings of almost 7,000 GWh and natural gas savings of approximately 150 MMTh (4,395 GWh).

In 2009, all utility companies budgeted almost $1 billion on their efficiency programmes (about 2.9% of their revenues), resulting in substantial energy saving (ACEEE c). For instance, one of the largest municipal utility companies, the Sacramento Municipal Utility District (SMUD), achieved 143 GWh annual energy savings along with 24.5 MW of peak load reduction in 2010.
Energy efficiency programmes conducted by the IOUs are primarily funded through Public Goods Charge (PGC) on customer utility bills —California’s name for a public benefits fund established in Assembly Bill 1890 in 1996. The PGC is about 0.48 cents/kWh, in which about 0.3 cents supports energy efficiency. The reminder are funded by additional funds for Low Income EE programmes and a portion of ratepayer charges that otherwise would have been used for energy procurement (ICER 2010). IOUs’ energy efficiency programmes can also be funded outside the budgets above.
Some programmes are also implemented by government agencies and budget. In 2009, the California Energy Commission (CEC) received $314.5 million under the federal American Recovery and Reinvestment Act (ARRA) for developing and administering energy-related projects and rebate programmes, in which $110 million has been spent on the Energy Efficiency Program to levarage investment. For instance, the energy efficiency retrofit projects in the public sector have leveraged $3 for every dollar invested (CEC 2010).

Eliminating distortions

Internalising external costs via emission trading

In 2008, the Air Resources Board proposed California’s Cap-and-Trade Program as a major measure to meet the government’s 2020 emission reduction target (saving at least 32,000 GWh and 800 million therms (84,38 PJ) by 2020) (ARB).
Six sectors with annual emissions equal to or exceeding 25,000 metric tons of GHGs and the respective businesses are comprised by the cap-and-trade systems. For example, these sectors are production facilities (e.g. cement, steel, petroleum refining), electricity generating facilities and importers and suppliers of natural gas.
The time until 2020 is subdivided into three “compliance periods.” In the first one, 165.8 million allowances will be issued. In the second period, running from 2014 to the end of 2017, the number increases to 370.4 million GHG allowances because a larger number of entities will be covered. At the end of 2020 only 334.2 allowances will be released (C2ES 2012).
California’s Cap-and-Trade Program is part of the Western Climate Initiative (WCI) including six American states and four Canadian provinces. Together these partner regions have developed individual cap-and-trade programmes (WCI).

Regulation of (natural) monopolies

So-called decoupling mechanisms (i.e. efforts to cut the link between utility sales and revenues, thus removing the “natural“ disincentive for energy efficiency) have been in place for many years in California and are an integral part of California's energy efficiency policy portfolio (ACEEE a).
To not only avoid disincentives but also create strong incentives for utility companies to expand their energy efficiency efforts, California has introduced a risk/reward incentive mechanism (also known as shared benefits or shareholder incentives) that allows utility companies to earn financial rewards for meeting or exceeding their efficiency targets and imposes penalties when targets are missed. This mechanism is designed to give utility companies (i.e. their shareholders) equal opportunities to make profit, whether they are investing in energy efficiency or supply resources to create a truly level playing field (CEC 2008). IOUs receive an award amounting to 9-12% of the net benefits achieved, if they realise savings of at least 85% of their target. The award is capped at USD 150 million per year. There is also a maximum penalty of USD 450 million over three years foreseen if targets are missed (less than 65% of target), however, there has been no need to impose it so far (ACEEE 2011, p.24).
In addition, innovative programme approaches are sought through competitive bidding, with new programmes delivered by non-utility administrators (ICER 2010).

Regulation

Minimum energy performance standards (MEPS)

→ New and existing buildings

California’s Minimum Energy Performance Standard

California’s energy code for the residential and non-residential sector has signfiicantly advanced energy-efficiency standards for buildings and equipment. It was introduced in 1978 and has since been updated regularly in order to keep up with progress in energy efficiency technologies and assessment methods. It is regarded to be the best enforced and most aggressive energy code in the USA. The latest code, which came into effect in January 2010, exceeds 2009 IECC standards for residential buildings and meets or exceeds ASHRAE/IESNA 90.1-2007 for commercial buildings (ACEEE d). It is worthy of noting that the local Ordinances even exceed the statewide code. As of 2012, 40 cities and counties in California had adopted more stringent MEPS than the statewide one (CEC a). On the other hand, the energy code in California also offers designees a certain extent of flexibility, because many specifications are performance-based. It is not possible to describe the building codes in detail here due to their complexity. The catalogue can be downloaded (http://www.energy.ca.gov). What needs to be noted is that the standards include measures for lighting, HVAC systems, Home Energy Rating Systems (HERS), roofing products, building envelope, fenestration, and also for appliances. They have a very comprehensive approach. In addition, in order to achieve a good compliance rate, education and training activities are a very important part of the Californian MEPS implementation. Several training opportunities are provided, such as an online learning centre (California Energy Commission’s Online Learning Center), among others. There are compliance forms for every type of action promoted in the standards (Residential Compliance Manual and Non-residential Compliance Manual). A list of recommended energy analysis computer programmes is also provided (CEC b).

Due to the novelty of the current version of the building code, there are no impact figures published yet, which is why information and figures from former versions of the code are used here. “It is estimated that between 1975 and 2003, the Building and Appliance Standards and California’s other energy efficiency programmes have saved close to 40,000 Gigawatt hours (GWh) of electricity and nearly 12,000 megawatts (MW) of peak demand, equivalent to more than two dozen 500 MW power plants. The Standards have saved the equivalent of over $56 billion in electricity and natural gas costs above the costs of compliance. The Energy Commission expects that the Standards will save an additional $23 billion by 2013” (Desmond 2005, p. 2).

Transparency and information

Energy performance certificates & equipment labels

→ New Buildings

Energy Star New Homes

The federal programme Energy Star New Homes, a voluntary building energy label, is applied in California. In order to receive the certificate, the new home has to be at least 15% more energy efficient than those built under California’s MEPS.
Financial incentives are provided on a performance basis. The more energy is saved (compared to MEPS homes) the higher the incentives per kWh one can obtain (see the next figure).

Source: CAHP
1 therm (US) ≈ 105,48 MJ

In the ENERGY STAR qualified homes, owners can save up to 400$/yr due to reduced energy demand for heating, cooling and water heating. In 2005, almost 52.000 ENERGY STAR New Homes have been built in California. PG&E alone incentivised 11.200 homes in 2005 and achieved gross savings of 1.03 million kWh/yr of electricity and 303,445 therms/yr (32,007.5 GJ ) of natural gas. The financial incentive budget for programme years 2006-2008 was $20 million (Pacific Gas & Electric, et al.).

Energy advice/audits & assistance during design and construction/retrofit

→ New non-residential buildings

Savings by Design

Savings by Design is an energy efficiency programme developed for non-residential new construction in California. It is funded and managed through the participation of five utility companies (PG&E, SMUD, SDG&E, SCE and SoCalGas). “Savings By Design encourages energy efficient building design and construction practices, promoting the efficient use of energy by offering up-front design assistance supported by financial incentives based on project performance” (Savings By Design 2012, p. 4). The design assistance is offered for free and financial incentives depend on the performance of the building after the finalization of the construction process. The current baseline is the MEPS (Title 24, Part 6) from 2008. Additionally, the programme offers an Enhanced Commissioning Incentive. “Non residential new construction projects participating in Savings By Design’s Whole-Building Approach that submit a comprehensive commissioning plan to verify that the building’s energy related systems are installed, calibrated and perform according to the project’s design and construction documents are eligible for an incentive calculated as 10% of the Owner’s Incentive” (Savings By Design 2012, pp. 17-18). The Owner’s Incentive is based upon the project’s estimated annual energy and demand savings (kW, kWh and therms).

Energy Audits

Although Californian utility companies are not required to offer energy audits, most firms provide audits if they are requested by their customers. For medium to large non-residential private consumers, customised on-site audits are provided. Others are offered standardised energy audits, meaning that the customer provides the necessary information via phone or internet and receives the results of the audit by mail or on-line (ICER 2010).
Energy audits are usually also performed (and subsidised) in public buildings under the California Energy Commission’s (CEC) Public Programs. However the related programmes are temporarily suspended since January 2010 due to workload constraints related to the activities funded by the federal American Recovery and Reinvestment Act (ARRA). (see also Public Sector Programmes)

Information centres

The Pacific Energy Center (PEC) provides Californians with “educational programs, design tools, advice, and support to create energy efficient buildings and comfortable indoor environments” (PCE a). Educational seminars, that are offered for free, are available for all the different market actors (households, industrial, commercial, public) who can chose from a range of foci such as “renewables”, “title 24” or “HVAC” (PCE a).
Noticeable is the online library that offers information about literature on energy efficiency (cf. PCE).

Demonstration buildings

The Sacramento Municipal Utility District (SMUD), a community owned electric utility, cooperated with the homebuilding industry to build a near zero energy community, called Premier Gardens. Buyers of these homes, that combine innovative construction and energy-efficient appliances with renewable energy systems, can save up to 60% on utility costs. Every home is certified with the Energy Star Homes certificate.
CEC states, that “[s]everal 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 utility companies will aggressively promote additional proof of concept pilots, including affordable housing elements in these pilots“ (CEC 2011 a, p. 15).

Others

→ Existing buildings

Flex Your Power

To complement the MEPS and the financial incentives, there are several other measures to promote energy efficiency in buildings. The website www.fypower.org (Flex Your Power) lists many measures helping to promote energy efficiency. The website distinguishes between the residential, commercial and industrial sectors. The residential measures include:

Summer saving tips where the residents are encouraged to follow energy saving measures on a no cost and low cost basis.
Changing habits like unplugging electronic devices if they are not in use.
A list of energy-efficient appliances to use at home.
Tips on how to upgrade one’s home in four steps from today, this week over this month and beyond.
Home energy audits, either to be completed personally or by a professional.
TV commercials to raise awareness of the topic.

These measures are supported by the rebates and incentives, but also by special services (such as technical assistance), and interested customers can find the right financial incentive or technical help for their needs in their region through the website. For the commercial and industrial sectors, the website provides a variety of tools which shall assist the reduction of energy consumption in facilities. This includes guidance to rebates and other incentives, product guides, best practice guides, energy saving tips and also demonstrations of how facilities can be upgraded.

Energy Disclosure Requirement

California has an energy disclosure policy for commercial buildings, which requires the release of information to the government and to buyers, lenders, and lessees consistent with an energy star rating system (ACEEE a). Even though the law had been enacted already in 2007, it will not become effective before 2013.

CEC’s Consumer Energy Center (http://www.consumerenergycenter.org)

The Consumer Energy Center is a webstite established in 1995 to offer latest information about technologies & policies of energy resource application and energy efficiency to consumers from residential, industry, transport, and public sector.

Statewide Marketing Education & Outreach (ME&O) Program

The ME&O Program aims to motivate consumers to take up energy efficiency/conservation measures and change their behavior by increasing their awareness and building up their capacity. It includes education and training, focused information provision, and energy advices and services. The Education and Training Programs are operated by investor-owned utilities (IOUs) at nine Energy Centers. Services are also provided to builders for constructing more efficient buildings and conducting energy efficiency retrofits (ICER 2010; California Advanced Homes).

Feedback/informative billing

Customers in California receive informative bills that include historical consumption compared to the current bill. Meanwhile, California also promotes the installation of advanced meter infrastructure (AMI). The California Public Utilities Commission(CPU) has approved the IOUs’ proposals to invest in AMI for the residential sector. The reason why this measure targets the residential sector is because the commercial and industry consumers already installed interval meters (ICER 2010). It will enable the IOUs to provide customers web-based information on their usage patterns and to establish different rate structures for the residential sector (e.g. peak pricing tariffs) in the future (ICER 2010).

Incentives and financing

Financial incentives

→ New and Existing buildings

Utility Energy Efficiency Programmes

The utility programmes also offer incentives for new construction, more efficient than required by standards, but retrofit actions in existing buildings are targeted more often due to the big opportunities. In California there are over 13 million existing buildings. Apart from the Investor-Owned Utilities’ (IOUs) Energy Efficiency Programmes, which are the biggest ones, there are also Municipal Utility Energy Efficiency Programmes. Since 1976 utility companies have spent more than 5.6 billion US$ on energy efficiency measures for electricity and natural gas use in buildings. 84% of the total investment has been placed in the existing buildings market. The next figure shows investment figures for single years from 1985 to 2004 split into retrofit and new construction projects.

Source: Desmond 2005, p. 3

The energy savings achieved through the IOUs’ investment for existing buildings vary between 626 and 1.661 GWh/yr between 1985 and 2004 (see the next figure).

Source: Desmond 2005, p. 4

→ Existing residential buildings

Multifamiliy Energy Efficiency Rebate Program

The Multifamily Energy Efficiency Rebate Program (MEERP) is offered by the IOUs PG&E, SDG&E, SCG and SCE in order to “promote energy efficiency and provide equipment rebates to owners and tenants of multifamily properties, including residential apartment buildings, condominium complexes, and mobile home parks, throughout the state” (ACEEE b, p. 15-2). In 2008, the programme offered up to 1,500$ per household for energy efficiency improvements or products. In the programme year 2004-05, for instance, the promotion had a positive impact on energy consumption across the state and exceeded its energy saving and demand reduction goals, as can be seen in Table 1. The incentives provided for the 2004-05 programme totalled to 29,978,050 US$ and reached 3,787 multifamily properties with 241,700 apartments. The programme grew further in 2006 and achieved electric and gas savings of 5,294 kW, 51,296,891 kWh and 1,072,478 therms (113,152,434.87 MJ / 31,423,605 kWh), paying incentives of 20,702,609 US$ to 3,285 multifamily properties with 168,537 apartments (ACEEE b, p. 15-3 f.).

Energy Savings for 2004-05 Program Year
	Goal	Achieved	Percent of Goal
Kilowatts	12,641	17,572	139%
Kilowatt-hours	88,290,888	89,870,312	102%
Therms	4,305,281	4,852,760	113%

Source: ACEEE b, p. 15-3

Energy Upgrade California (EUC)

The Energy Upgrade California (EUC) is a programme that provides substantial funding to Californians who decide to invest in energy saving projects. Investor-Owned Utility companies (IOUs) administer the programme. The fund is provided by the American Recover and Reinvestment Act (ARRA), California utility ratepayers, and private contributions.
Building owners who wish to participate in the programme can receive up to $4,000 utility incentives and city/county rebates for a sequence of individual advice and investment in implementing the actions proposed by the advisors. To be eligible, building owners have to get in touch with special EUC contractors who supervise the planning process. The cost is determined by the contractor the owner chooses (SDGE). As rebates depend on measures taken to improve energy efficiency, these contractors can find other energy saving opportunities and, thus, maximise rebates. In San Francisco County, for example, IOU-funding can be complemented with $5,500 (cf. EUC 2011).

Energy Savings Assistance Program

Under the California Low Income and Assistance Programs, the Energy Savings Assistance Program provides eligible low-income consumers free weatherization services, including attic insulation, energy efficient refrigerators, energy efficient furnaces, weatherstripping, caulking, low-flow showerheads, waterheater blankets, and door and building envelope repairs that reduce air infiltration.

→ New Buildings

Residential New Construction Programs (RNC)

The construction of energy-efficient new buildings in California is highly subsidised by Investor-Owned Utility companies (IOUs). There are evaluations of “residential, multifamily and non-residential programs as well as Codes and Standards programs for the 2006-2008 program years” (Stoops 2008, p. 1-1). The Codes and Standards programs promote upgrades of Title 20 Appliance Efficiency Standards and Title 24 Building Energy Efficiency Standards for energy savings and demand reduction. The IOUs support activities in order to promote the adoption of the new Codes and Standards (Stoops 2010, p. 1).
The evaluations found that most IOUs exceeded their estimated electricity savings and demand reductions for whole house single family RNC, but they failed in achieving their claimed gas savings. Due to incorrect ex ante calculations, the ex post results for electric and demand savings exceeded the calculations and the gas savings were lower than expected. Cooling energy was underestimated and heating energy use was overestimated.

Energy Star New Homes

Every IOU in California offers this programme and it “offers incentives to builders who construct energy-efficient homes that achieve long-term, cost-effective savings” (Pacific Gas & Electric et al., p. 16-2). It is also a key element of the RNC programmes. The programme focuses on the residential market and tries to maximize potential energy savings by approaching the house as a system. The builders who construct new homes which are at least 15% more efficient than California’s building standards receive financial incentives. In the ENERGY STAR qualified homes, owners can save up to 400$/yr due to reduced energy demand for heating, cooling and water heating. In 2005, almost 52,000 ENERGY STAR New Homes were built in California. PG&E alone incentivised 11,200 homes in 2005 and achieved gross savings of 1.03 million/yr kWh of electricity and 303,445 therms/yr (320,151,46.792 MJ / 8.890,9385 kWh) of natural gas. The incentive budget for programme years 2006-2008 was $20 million.

→ New and existing non-residential buildings

Local Government and Public Sector Technical Assistance and Audits

The Energy Partnership Program provides for cities, counties, and public buildings energy efficiency technical assistance up to $20,000 of their consultant costs. Typical assistance includes conducting energy audits, reviewing existing proposals and designs, developing equipment performance specifications (CEC c).

Personal Deduction for Interest on Loans for Energy Efficiency

In California, residential taxpayers are allowed to take a personal deduction equal to the full amount of interest paid on loans from publicly-owned utility companies, which are used to take up energy-efficient measures within the state of California. The measures covers lighting, chillers, furnaces, boilers, heat pumps, air conditioners, caulking or weather stripping, duct sealing, building insulation, windows, and advanced metering (ACEEE e).

Financing instruments

→ Existing buildings

Property Assessed Clean Energy (PACE)

PACE is an on-bill financing scheme that assists home improvement measures like weather-sealing, better insulation, solar installations or efficient HVAC systems. The programme is aimed at residential and commercial buildings and is funded through a private market solution to financing energy efficiency and renewable energy projects that does not require government subsidies or taxes (PACE). Owners who decide to use PACE will repay the costs for the measures taken over the property taxes, which does eliminate the barrier of high upfront costs. The repayment period can be up to 20 years and in the case of property sale, the repayment duties will be transferred to the new owner. The programme is not exclusively adopted by California, but by 24 states in the USA.

→ Existing Public Buildings

Energy Efficient State Property Revolving Loan Program

Using State Energy Program in American Recovery and Reinvestment Act (ARRA) funds, the Department of General Services (DGS) opened California’s first revolving loan programme for energy efficiency retrofit projects conducted in state-owned buildings. Loans are repaid from the energy savings (CEC 2010).

Energy conservation assistance act low-interest loans

The California Energy Commission provides $25 million loan for Energy Efficiency and Energy Generation Projects in the public sector. The maximum loan per application amounts to $3 million. The interest rate is 1% and is fixed for the term of the loan (CEC d).

Capacity building and networking

Education and training

Education and training activities are a very important part of the Californian MEPS implementation, in order to achieve a good compliance rate. Several training opportunities are provided, such as an online learning centre (California Energy Commission’s Online Learning Center), among others.
The California Association of Building Energy Consultants (CABEC) administers a statewide building energy standards certification programme - Certified Energy Plans Examiner (CEPE). The CEPE programme provides training for plan checkers, field inspectors and energy consultants in both the residential and non-residential sectors. Meanwhile, it also includes a test that objectively examines a professional’s expertise and skills for the California Energy Standards. A "Recertification test" will be necessary, if major changes take place in standards (CABEC).

Clean Energy Workforce Training Program

In 2009, the California government started the Clean Energy Workforce Training Program (CEWTP) , investing $75 million to train more than 20,000 new and transitioning workers for careers in energy efficiency, water efficiency, renewable energy, and clean transportation. The programme is funded by American Recovery and Reinvestment Act (ARRA) funds, public-private partnership, and state and local programmes. CEWTP is designed to target unemployed workers, especially those from the construction sector, low-wage workers, and those preparing to enter the workforce (C2ES).

Energy efficiency networks

For the time between 2009 and 2011, a network is to be launched that provides the exchange of information between buildings owners and builders.

Promotion of energy services

Energy Savings Performance Contracting (ESPC): Enabling Legislation

The legislation in California enables and promotes the usage of energy savings performance contracting (ESPCs) to attain energy savings. ESPCs for most state buildings are co-ordinated by the Department of General Services. The universities implement ESPCs on their own. Meanwhile, the government provides a list of prequalified ESCOs and a streamlined manual to performance contracting (ACEEE f).

Promotion of energy services

Energy Savings Performance Contracting (ESPC): Enabling Legislation

RD&D and BAT promotion

Public sector programmes

Green Buildings Initiative

In 2004 the Green Buildings Initiative was launched by Governor Schwarzenegger with Executive Order S-20-04 establishing California’s preference for energy and resource efficient high performance buildings, with the objective to “reduce energy use in both state-owned and other non-residential buildings by 20% by 2015” (Desmond 2005, p. 9). This is supposed to be achieved through high energy performance standards that are mandatory for the state’s buildings and have been revised regularly through the Energy Commission from 2005 onwards. Through the Executive Order, the Energy Commission is assigned with duties like the development of a benchmarking system for commercial buildings in the state, the development of commissioning and retro-commissioning guidelines for commercial buildings, the improvement of Title 24 in order to achieve the 20% saving in 2015 compared to 2003 through regular updates in 2008, 2011 and 2014 (CEC e). The goals are also set to encourage the private commercial sector to adopt the same goals on a voluntary basis. In addition, the Order also directs the Division of the State Architect to develop new green design guidelines for public schools. Furthermore, the Order is supplemented by California's Green Building Action Plan to achieve the goal for state/state-owned buildings:
• All new state buildings and major renovations should be designed, constructed, and certified at LEED-NC Silver or higher;
• All existing state buildings over 50,000 square feet (4645.2m²) should meet LEED-EB standards no later than 2015 (EPA).

Product Procurement

California Executive Order S-20-04 also requires all state agencies to purchase ENERGY STAR qualified electric equipment whenever cost-effective (ACEEE a; EPA).

Further public sector activities

California Energy Commission (CEC)’s Public Programs Office develops programmes that promote energy efficiency in the local government, schools, hospitals, agricultural, industrial, and water treatment sectors of California.
Their Efficiency Services and Loan Programs aims at developing and operating state and federally-funded technical and financial assistance programmes that target at energy efficiency of buildings and processes, mostly in public agencies. For example, the Bright School Programs support all publicly funded California K-12 school districts by providing energy efficiency technical assistance services up to $20,000 of their consultant's costs. The Energy Partnership Program offers the same support to cities, counties, and public buildings. Typical assistance includes conducting energy audits, reviewing existing proposals and designs, and developing equipment performance specifications.
Except for the technical assistance, the Office also provides low interest loans to qualified agencies for taking up the energy efficiency measures (CEC f).

RD&D funding

The Public Interest Energy Research (PIER) programme is the state's premier energy RD&D programme. It aims at advancing science and technology in the fields of energy efficiency, renewable energy, advanced electricity technologies, energy-related environmental protection, and transmission and distribution, and transportation technologies. Thus, PIER enlists businesses, energy companies, public advocacy groups, and world-class scientists at California's research institutes. In the field of buildings end-use energy efficiency, the programme explores advanced energy efficiency technologies suitable for retrofitting existing buildings and for building maintenance and commissioning . PIER also examines the lifecycle resource use of the built environment, human behavior and its effect on energy savings, and attempts to investigate and overcome barriers to energy efficiency deployment in residential and commercial buildings (CEC g).
The PIER Demonstration Program, also known as the State Partnership for Energy Efficient Demonstrations (SPEED), helps technologies to realize full commercialization, evolves California energy codes, and encourages manufacturers to use PIER specifications to make competitive products. It provides education, case studies, construction-ready specifications, and information on how to use PIER technologies for LEED credits and emerging technologies incentive programmes (CEC h).
Meanwhile, California has also initiated the Energy Innovations Small Grant (EISG) Program that offers up to $95,000 for hardware projects and $50,000 for modeling projects to small businesses, non-profits, individuals and academic institutions to conduct research on innovative energy concepts. Research projects must fall into one of the PIER R&D areas and address an energy problem in Califorina (CEC i).

Competitions and awards

Flex your power award

“Flex Your Power Award” is a part of the statewide energy efficiency marketing and outreach programme “Flex Your Power”. The Award includes following categories: energy efficiency, media and education, innovative products and/or services, peak demand response, and water conservation/efficiency. The winners will be acknowledged for their achievements through Flex Your Power-developed case studies and various Flex Your Power media. However, it has been on hold since 2009 due to budget constraints (FY Power a).

Title	Status	Description
Policy roadmap and targets for Ultra-Low-Energy Buildings	Implemented	Climate Change Scoping Plan and Long Term Energy Efficiency Strategic Plan Updated 2011
Energy agencies	Implemented	Buildings and Appliances Office in the California Energy Commission More a co-ordinating role; setting of MEPS and outreach
Energy efficiency funds	not implemented	None Relevant policy examples Energy Efficiency Utility Program of Vermont (EV)
Energy saving obligations for energy companies	Implemented	Public Goods Charge collected and used by energy companies under regulatory oversight; budget for California Energy Commission Has been in place since the 1980ies
Government agencies and budget	Implemented	2009: CEC received $314.5 million under ARRA for developing and administering energy-related projects and rebate programmes
Removal/reform of subsidies to end-user energy prices and on energy supply	Planned	Greenhouse gas emissions cap and trade programme planned for 2012/2013
Minimum energy performance standards (MEPS)	Implemented	Minimum energy performance standards (MEPS) for buildings
Mandatory energy performance certificates & equipment labels	Implemented	There are the Energy Star label for new homes and appliances labels All of these were introduced by the federal government of the USA
Energy advice & assistance during design and construction	Implemented	Savings by Design programme for new non-residential buildings Relevant policy examples Energy Efficiency Utility Program of Vermont (EV)
Energy audits & advice & assistance during retrofit	not implemented	None Relevant policy examples Energy Efficiency Utility Program of Vermont (EV)
Provision of information	Implemented	E.g., Pacific Energy Centre as a part of the PG&E. (no state-wide network structure) Relevant policy examples Energy Efficiency Utility Program of Vermont (EV)
Financial Incentives for ULEB and deep retrofits	Implemented	Utility energy efficiency programmes for new and existing buildings; some state-funded programmes Most important policy instrument in California for energy efficiency in buildings, together with the MEPS Relevant policy examples Energy Efficiency Utility Program of Vermont (EV)
Financing	Implemented	Property Assessed Clean Energy (PACE) programme A multi-state programme (24 states of the USA)
Education & training	Implemented	Integral part of MEPS implementation
Funding for research, development and demonstration (RD&D) projects	Implemented	Public Interest Energy Research (PIER) programme
Public sector programmes	Implemented	Green Buildings Initiative for state-owned buildings Save 20% between 2004 and 2015

Authors

Aydin, Vera (Lead author)
Xia, Chun (Author)
Thomas, Stefan (Reviewer)
Kiyar, Dagmar (Reviewer)
Andritzky, Paul (Author)

References and further reading

American Council for an Energy-Efficient Economy (ACEEE) (2011): Hayes, Sara; Nadel, Steven; Kushler, Martin; York, Dan: Carrots for Utilities. Providing Financial Returns for Utility Investments in Energy Efficiency. January 2011. www.bigee.net/s/bdasg3
American Council for an Energy-Efficient Economy (ACEEE a) : State Energy Efficiency Policy Database, California Utility Policies: www.bigee.net/s/ty9515
American Council for an Energy-Efficient Economy (ACEEE b): California State-wide Multifamily Energy Efficiency Rebate Program. www.bigee.net/s/mj9djc
American Council for an Energy-Efficient Economy (ACEEE c): Utility Policies. www.bigee.net/s/f17y2d
American Council for an Energy-Efficient Economy (ACEEE d): State Energy Efficiency Policy Database, California Building Codes. www.bigee.net/s/n6fa98
American Council for an Energy-Efficient Economy (ACEEE e): State Energy Efficiency Policy Database, California Financial Incentives. www.bigee.net/s/dnv1df
American Council for an Energy-Efficient Economy (ACEEE f): State Energy Efficiency Policy Database, California Lead by example initiatives. www.bigee.net/s/w73rep
California Advanced Home: Participant Handbook And Program Agreement For Single-Family And Multi-Family New Construction Projects. www.bigee.net/s/13mhzf
California Association of Building Energy Consultants (CABEC): CEPE (Certified Energy Plans Examiner) General Information. www.bigee.net/s/rz5hdt
California Energy Commission (CEC) (2008): 2008 Update. Energy Action Plan. February 2008. www.bigee.net/s/utrdf6
California Energy Commission (CEC) (2010): ARRA funded energy program: invested in California's energy future. www.bigee.net/s/diimec
California Energy Commission (2011): Public Interest Energy Report 2010 Annual Report, in: www.bigee.net/s/7fjnhr
California Energy Commission (CEC) (2011 a): Energy Efficiency Strategic Plan. January 2011 Update. www.bigee.net/s/38kmp3
California Energy Commission (CEC a): Local Ordinances. Exceeding the 2008 Building Energy Efficiency Standards. www.bigee.net/s/95epm8
California Energy Commission (CEC b): List of Approved Computer Programmes for the 2008 Building Energy Efficiency Standards. www.bigee.net/s/ugeysd
California Energy Commission (CEC c): Energy Partnership program: www.bigee.net/s/dj45qv
California Energy Commission (CEC d): Energy Efficiency Financing. www.bigee.net/s/kta24c
California Energy Commission (CEC e): Green Building Initiative State of California Executive Order – S-20-04. www.bigee.net/s/it37ka
California Energy Commission (CEC f): The Public Programs Office. www.bigee.net/s/i951g7
California Energy Commission (CEC g): Research, Development, and Demonstration - Looking Toward the Future. www.bigee.net/s/5q2zjm
California Energy Commission (CEC h): Buildings End-Use Energy Efficiency Technology Demonstrations. www.bigee.net/s/1vig3x
California Energy Commission (CEC i): Energy Innovations Small Grants - Electricity Research Program. www.bigee.net/s/sih3k3
California Environmental Protection Agency – Air Resources Board (ARB) (2008): Climate Change Scoping Plan. A framework for change. December 2008. www.bigee.net/s/ib2une
California Environmental Protection Agency – Air Resources Board (ARB): Cap-and-Trade Program. www.bigee.net/s/dz3y8j
Center for Climate And Energy Solutions (C2ES) (2012): California Cap-and-Trade Program Summary. November 2012. www.bigee.net/s/izjbp8
Center for Climate And Energy Solutions (C2ES): Clean Energy Workforce Training Program. www.bigee.net/s/mvtib8
City of Berkeley: Residential Energy Conservation Ordinance (RECO). www.bigee.net/s/2zzzju
Database of State Incentives for Renewables & Efficiency (DSIRE) (2012): Green Building Action Plan for State Facilities. www.bigee.net/s/upd2m8
Desmond, Joseph; Pfannenstiel, Jackalyne; Blevins, B.B.; Hall, Valerie; Pennington, Bill; Trenschel, Dale; Hussey, Elaine (2005): Commission Report: Options for Energy Efficiency in Existing Buildings. CEC-400-2005-039-CMF. December 2005. www.bigee.net/s/46kce6
Energy Division (2011): CA Energy Efficiency Strategic Plan. Strategic Plan Progress Report. October 2011. www.bigee.net/s/96mj69
Energy Upgrade California (EUC) (2011): Overview. www.bigee.net/s/mn2ub2
Environmental Protection Agency (EPA): State and Local Climate and Energy Program: www.bigee.net/s/2kqh9j
Flex Your Power (FY Power): About us. www.bigee.net/s/hbv6im
Flex Your Power (FY Power a): Award Details. www.bigee.net/s/7z2nyr
International Confederation of Energy Regulators (ICER) (2010): A Description of Current Regulatory Practices for the Promotion of Energy Efficiency.
Pacific Gas & Electric, et al.: Residential New Homes Programs-Exemplary Program-Energy Star New Homes Program. www.bigee.net/s/3pibeb
Pacific Energy Center (PCE): Welcome to the Energy Resource Center. www.bigee.net/s/ysb2wi
Pacific Energy Center (PCE a): Welcome to the Pacific Energy Center. www.bigee.net/s/8vzv8b
Property Assessed Clean Energy (PACE): About Page. www.bigee.net/s/kbs28u
San Diego Gas & Electric (SDGE): Energy Update California-getting started. www.bigee.net/s/3znqm9
Savings By Design (2012): 2010-2012 Program Cycle Participant Handbook – Policies and Procedures – For Participation in the State-wide Savings By Design Program. www.bigee.net/s/9i5q3b
Stoops, John (2008): Residential New Construction (RNC) Programs – Impact Evaluation Volume I – California Investor-Owned Utilities’ Residential New Construction Program Evaluation for Program Years 2006-2008, KEMA Inc. www.bigee.net/s/sxccpj
Stoops, John (2010): Codes and Standards – Programs Impact Evaluation- Volume III – California Investor Owned Utilities’ Codes and Standards Program Evaluation for Program Years 2006-2008, KEMA Inc.
Western Climate Initiative (WCI): The WCI Cap & Trade Program. www.bigee.net/s/rgnjyk
Further information:
California Energy Commission (CEC): Building Energy Efficiency Program. www.bigee.net/s/iqv8dz
California Energy Commission (CEC): California Energy Commission’s Online Learning Center. www.bigee.net/s/86kv3q
California Energy Commission (CEC): Non-residential Compliance Manual For California’s 2008 Building Energy efficiency Standards. www.bigee.net/s/6h746x
California Energy Commission (CEC): Residential Compliance Manual For California’s 2008 Building Energy Efficiency Standards. www.bigee.net/s/jtvbui
California Public Utilities Commission (CPUC) (2011): Consumer Programs. www.bigee.net/s/riv18d
ZNE Stakeholders: Zero Net Energy – Action Plan: Commercial Building Sector 2010-2012. www.bigee.net/s/ep3tfe