Is California on Track to Meet SB 350 Goals?

Is California on Track to Meet SB 350 Goals?

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On August 20th, 2019, the California Energy Commission (CEC) released the draft 2019 Energy Efficiency Action Plan, which tracks progress towards California’s energy efficiency (EE) goals. In this report, the CEC shows that although the state is anticipated to deliver significantly less electricity savings than the goal, the natural gas savings are anticipated to drastically exceed targets, thanks mostly to codes and standards and utility programs in the residential sector. Figures ES-1 and ES-2 demonstrate projections of energy savings in California through 2030

Source: California Energy Commission draft 2019 Energy Efficiency Action Plan

In this forecast, electricity savings growth is projected to come almost entirely from codes and standards, while savings in the residential, commercial, industrial, and agriculture segment are anticipated to essentially flatten out in the foreseeable future.

The natural gas forecast is not as clear, as the CEC did not separate codes and standards savings from other activity in the individual sectors. That said, the state clearly anticipates aggressive market adoption of code measures for electricity and gas and a major expansion of natural gas savings in the residential sector starting next year.

To track progress towards the state policy goals, the CEC converted electricity (kWh) and natural gas (Therm) savings into a standard metric: British Thermal Units (BTUs). In Figure ES-3,  the CEC shows that the state will meet the SB 350 goals, and begin exceeding targets seven years early.

California Energy Graph Lincus Two

Source: California Energy Commission draft 2019 Energy Efficiency Action Plan

These savings are, again, largely attributed to electric codes and standards (over 25%) and residential natural gas (over 60%). The distribution of residential gas savings between anticipated codes and standards adoption and utility programs is not clear in the report, but the state clearly expects that at least half of energy efficiency savings will result from natural adoption of codes and standards.

Therefore, based on the anticipated impact of codes and standards, and the conversion to BTUs of anticipated natural gas savings, the state is on track to double energy efficiency by 2030.

When converted to equivalent Greenhouse Gas (GHG) emissions, however, our energy efficiency forecast paints a very different picture. Figure ES-4 shows the GHG impact of these anticipated energy savings reaching only 50% of targets.

California Energy Graph Lincus Four

Source: California Energy Commission draft 2019 Energy Efficiency Action Plan

The CEC report notes the importance of designing energy-efficiency programs that target the reduction of electricity during high-intensity GHG periods. Such programs will play a critical role in future grid balancing activities, particularly in light of the state’s total decarbonization objectives. The GHG content of energy savings can be increased in numerous ways; two mentioned in the report include:

·       Customers can target high-intensity GHG projects through specific energy-efficient technologies on operations that use energy at that time and location.

·       Customers with load flexibilities can shift load from high-intensity to low-intensity periods to maximize the use of overgeneration of renewable energy in certain regions at certain times.

To get there, implementers need better access to GHG intensity load profiles on an 8760 basis across various regions, and customers must be given a financial incentive to deliver high GHG savings, or at the very least be compensated for the additional costs of those interventions.

The simplest way to immediately achieve an increased delivery of GHG reductions to meet SB 350 goals is through traditional electricity and gas energy efficiency programs in the public, commercial, industrial, and agricultural sectors. The 2019 Energy Efficiency Potential and Goals Study, prepared for the California Public Utilities Commission (CPUC), shows a technical potential for energy efficiency of 23 TWh by 2030. These are technically available energy savings that could be targeted to deliver statewide GHG goals. Of this technical potential, about 40% are considered as economic potential; that is, they are cost-effective. California, however, sets energy efficiency goals based on market potential, which reduces the potential for savings based on assumptions about existing CPUC policies, market influences, and barriers. Figures B1 and B6, from the potential and goals study, demonstrate that goals are set at about half of the economic potential and only 20% of the technical potential for electricity. Natural gas market potential used to define goals is even lower.

Source: CPUC 2019 Energy Efficiency Potential and Goals Study

For California to meet GHG targets and double energy efficiency, policy should prioritize funding to reduce GHG by increasing energy savings for the end-user. At the very least, programs could double energy efficiency savings from programs by targeting the economic potential rather than discounted market potentials. Through state investments to target the technical potential, California could go even further in reducing GHG emissions and increase energy savings delivered through these programs by fivefold.  

With the impending threat of climate change and California’s policy desire to move towards a zero-carbon economy, we must prioritize greenhouse gases that are easy to abate and therefore maximize energy efficiency. We have the technical and economic capability to do so today.