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