XI. Energy Efficiency Program Interface

The Energy Action Plan presents a "loading order" that is essentially a statement of how the state and its utilities should prioritize the state's energy resources. The loading order requires optimization of energy efficiency measures first, followed by demand response and renewable energy projects. Consistent with the EAP loading order, the CEC's 2005 Integrated Energy Policy Report recommends the state require new residential and commercial buildings to meet certain energy efficiency standards before qualifying for solar project incentives. Currently, neither the SGIP nor the CEC's ERP require energy improvements as a condition of receiving an incentive for a solar power installation. The staff report recommends projects installed on new structures that exceed energy efficiency standards by 10% or more receive a higher rebate. The staff report does not recommend requiring energy efficiency retrofits on existing buildings as a condition of receiving solar incentives. It does recommend solar incentives for existing buildings be conditioned on the completion of an energy audit.

PG&E supports the staff's proposal for an energy efficiency audit in existing buildings and suggests the Commission consider a requirement for retrofit of existing buildings. It raises concerns that providing higher incentives to new buildings with energy efficiency standards that exceed existing guidelines because it may not be cost-effective. ASPv/PV Now support higher incentives for energy efficient buildings, as staff recommends, but suggests the awards be monitored to ensure effectiveness.

SDREO believes a 25% bonus for new buildings with energy efficiency metrics that exceed 110% of requirements is too generous, observing that a $2.80 kw incentive would increase to $3.50. It suggests a 10% bonus. It also suggests the Commission consider providing a higher rebate to builders that include PV as a standard feature on new homes. SDREO supports the concept of requiring an audit as a condition of incentive payments to owners of existing buildings but raises a concern that this requirement could be subject to abuse and could present an administrative burden.

Environment California suggests the Commission dovetail energy efficiency programs with solar incentive programs. It agrees with the staff's report that requirements for specified energy efficiency standards as a condition of receiving solar incentives should apply only to new construction.

Discussion. Making energy efficiency improvements a condition of solar incentives makes sense for two reasons. If the structure is energy efficient, the solar installation can be smaller and more efficient. Moreover, energy efficiency improvements are almost always more cost-effective than solar installations given the current state of technology. For these reasons, we adopt staff's recommendations to require an energy efficiency audit in existing buildings as a condition of receiving any incentives. We also make solar rebates on all new structures contingent on a demonstration that the structure has met all energy efficiency standards. We do not adopt, at this time, an augmented incentive level for new construction that exceeds building standards by more than 10%. This issue warrants further exploration in workshops this year.

We are also interested in requiring retrofits in existing buildings as a condition of providing incentives to solar installations because of the superior cost-effectiveness of energy efficiency improvements and the easy availability of energy efficiency retrofits due to existing utility programs. Accordingly, we will direct staff to work with CEC staff in developing recommendations for making energy efficiency improvements in existing buildings a condition of solar incentive payments, and to address the following issues:

1. What if any energy efficiency retrofits or energy efficiency metrics should be required as a condition of owners of existing structures receiving solar incentive payments?

2. What other program elements are appropriate, for example, timing of retrofits, or customer type or size?

3. How should the program be integrated or coordinated with the existing energy efficiency programs?