Energy Upgrade California is Not Sustainable

Those might be tough words to hear to those of you that have ignored the warnings and built your business around a rebate program, but it’s true. Energy Upgrade California in its current configuration is not sustainable.

Our state's effort to build an effective incentive program to stimulate residential energy efficiency has by and large been a failure. The EUC incentive program is complicated, overly burdened with paperwork, and not effective. The implementation costs have gotten out of hand, with over one dollar spent on administration for every dollar paid out in incentives.

The program relies on energy models to create deemed savings and incentives are paid out based on these predictions. Only one software modeling tool has been authorized for rebate submissions and it turns out that Energy Pro is far from accurate. All of these factors combined have led to a system that predicts and rewards much higher savings than it is actually producing. It’s ironic especially when you consider the fact that the mantra of the home performance industry is to test-in and test-out, effectively measuring savings, and yet the rebate program that supports the industry is relying on computer generated guesstimates. How long can this continue before someone pulls the plug and shuts the whole thing down?

In it’s current configuration the Energy Upgrade California rebate program is using rate payers funds to pay for savings that are not being realized. As you might imagine this is not a sustainable model and it can’t go on forever.

New Changes Coming

The good news is there is change on the horizon and it’s happening fast. EFCA has worked collaboratively with PG&E and others to bring new software options to the program. Contractors now have multiple options for software and a system that improves their accuracy over time. As a result, EUC has decided to “sunset” Energy Pro, as the developer is not willing to upgrade it to meet the program's new requirements. As of February,1st 2016 Energy Pro will no longer be accepted for rebate submissions.

In October of 2015 the state legislation passed a new law that requires incentive programs to measure actual energy savings. It might seem like a basic idea to require measured savings for incentives but it is not as simple as it appears. First off how do you measure the savings? The second challenge is behavior is now allowed to be part of the solution, something that has never been accepted before. This represents a huge paradigm shift in the industry.

Solar vs. Energy Efficiency

Solar has it easy, you can watch the meter spin backward and account for savings. Energy efficiency is significantly more complicated than solar as it uses multiple measures to achieve savings. The ability to quantify savings has always been the missing link in energy efficiency. Until recently it has been very difficult or expensive to effectively quantify energy savings.

The state of California has invested over 2 billion dollars in smart meter technology. By accessing the smart meter data, we can leverage the technology to accurately measure energy savings. This in effect creates an Energy Efficiency meter that measures savings, just like the solar industry. Using EE Meter technology we can now meet the state's requirement to measure actual energy saved and provide incentives based on those savings. This Pay for Performance model has multiple benefits over the existing deemed or predicted savings model currently in place.

With a shift to measured savings, the end result becomes energy saved. Quality installations will be rewarded by higher savings. Contractors will be free to develop new and creative business models, some of which will likely include behavior as part of the solution. Interested third parties will be allowed to develop their own incentive programs allowing contractors to choose which rebate structure best fits their business model. In general, the future will have many more choices and a focus on saving as much energy as possible. This is the kind of creative and innovative thinking we need to bring energy efficiency to the masses and it  is happening now as we speak, faster than you might imagine.

Our goal: Provide Valuable Information

It is our goal to provide contractors with up to date information about measured savings and the changes it will bring to the industry. There are Pilot programs currently in place with more to come in the next few months. It is a time of change in the energy efficiency industry and we are excited about the potential and believe this may be what it takes to finally bring real scale to our industry.

Stay tuned and watch your email for notices as we will be presenting webinars and updates on the status of measured performance and what it means to your business.

Charles (Charley) Cormany, Executive Director

Comments

Way to go Charlie!

Only through a "come to God" honest evaluation and acknowledgement of failures and what has been done wrong can these mistakes be corrected and left behind.

Accuracy don't come from software. It will come from tracking outcomes, providing timely feedback loops to contractors, and giving them the flexibility to adjust/calibrate their future predictions based on the understanding gained from introspective understanding of strengths and weaknesses of their processes as well as modeling and design.

Energy Upgrade California Program is Not Sustainable

Bravo ! your straight forward honesty is refreshing and eye opening. As a home owner struggling to make ends meet in this economy, i applaud your efforts, The last thing we want is for programs such as this disappear due to mismanagement and inefficiency. I wish you well !

Energy Upgrade California is being wrongly bashed

In 2012, the CPUC migrated the whole-home rebate program from the Energy Upgrade CA name to the Home Upgrade and Home Upgrade Advanced programs. Energy Upgrade CA has moved into a general sustainability-focused "education into action" campaign. Home Upgrade falls under the Energy Upgrade CA umbrella, so I can see how it may be confusing, but it is frustrating after so much time that the industry is still misrepresenting the brand, to no fault of the the author.

EUC Umbrella

David
In the future I will try to remember to speak to Home Upgrade vs. Energy Upgrade California.
It' s unfortunate that millions of dollars of branding were spent on EUC for Home Performance and then abandoned after 2 years. In my experience the new messaging for EUC and Home Upgrade has been confusing to contractors and homeowners. Many in the industry still associate Energy Upgrade California with Home Performance upgrades, even at the program manager level.
I will try to remember that Home Upgrade is now just a small part of the new EUC umbrella. Thanks for your comments.

Good read. HUP and AHUP have

Good read. HUP and AHUP have been slammed by media plenty of times because of the very things you wrote about. Anyone know how find out how much incentives were paid vs. energy actually saved for the last 5 years (website or report)?

Dear Anonymous, What you are

Dear Anonymous,
What you are asking for is the realization rates for these programs. This information exists but is very difficult to obtain. What I do know is that the required energy modeling software over predicted energy use and over predicted savings, by 50% or more. The real concern is how long can we keep paying out Rate Payer dollars without solid results? This is one of the reasons we believe measured performance and paying for actual savings, know as Pay for Performance, is a much better solution than the current program.
Thanks for you comments.

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