$3 Billion For Energy Efficiency in California

September 27th, 2009 by Susan Kraemer

The CPUC has just approved the largest energy efficiency program in U.S. history, authorizing $3.1 billion in consumer rebates and efficiency programs over the next three years, bringing the state closer to implementing AB32, according to Lara Ettenson, director of California Energy Efficiency Policy at the NRDC.

Ettenson told me that the funding comes from the part of the budget that California’s regulated utilities may use to invest in conventional electricity. This may include “negawatts”or energy efficiency measures. This is not just cheaper than building new plants and transmission, but also easier to implement, as it is not subject to the NIMBYism and transmission issues that has impeded development of utility scale solar and wind projects that California utilities must add to meet RPS requirements of getting 20% of its energy from carbon-free sources by 2010. Currently it is at 14%.

This giant leap in funding could jump-start the new low-carbon economy in California; helping grow all the businesses that create cutting edge efficiency in cooling and heating, lighting, building materials, windows, insulation, appliances and smart grid technologies that reduce energy use.

Ettenson gave me some examples of uses for the funding in practical terms:

Municipalities would get funding so they could offer low-cost financing for energy efficiency improvement projects within the city.
Apartment complexes would get rebates to upgrade appliances with energy efficient replacements.
For all new buildings, builders or homeowners would get money for incorporating 15% better energy savings than is already required by California’s stringent Title 24 Energy code. To do this they would need to incorporate cutting edge efficiency in windows, insulation, lighting and more efficient water heating and cooling systems.
Retailers would get funding to bring down the cost of LED and CFL lighting, and more efficient computers and TVs.
Homeowners would get direct rebates for highly efficient appliances like Energy Star refrigerators, washers and dryers; and rebates for recycling old appliances.

The NRDC’s Ettenson says “The total benefits to California’s economy will substantially exceed the $3.1 billion in investments.” The funding comprises the most comprehensive effort ever to retrofit 130,000 homes in the state, and it includes design and technical assistance for local governments.

If you thought that the California Solar Initiative solar rebates succeeded in creating a solar industry here, imagine what this much, much higher level of investment is going to do for the energy efficiency industry.

For comparison the total budget for the California Solar Initiative was just $2,167 million. CSI is extremely effective. It is on target to add 3,000 MW of solar to the grid just using individual rooftops.

The electric utilities in the state administer the CSI funding to homeowners and businesses that install solar arrays. The rebate amounts are based on independent calculations of the expected performance from each array installed. Each rebate is awarded based on the angle, tilt, and location for each installation.

This performance-based funding has ensured that California is getting its money’s worth of electricity from every solar array installed on every roof. Utilities and ratepayers benefit, because they don’t have to spend to install new transmission. Efficiency can get our energy needs down to where adding solar can be extremely affordable, with these CSI rebates and with the 30% off that we all get nationwide now from the Feds, under The Recovery Act.

The $3 billion is expected to reduce climate change carbon pollution by 3 million tons each year. The energy cost of that energy saved as the years go on multiply exponentially, every year into the future, as energy costs rise 6.7% a year. The more that our energy costs are reduced the more prosperous we become as a state. For example; each home that can cut its use of utility-bought energy to zero by buying a solar array instead, can save $72,000 to $300,000 over 25 years. After that they have no energy costs. Multiply that by everyone in the state and this is a huge move for California.

A key step in making solar affordable is to first greatly reduce the energy requirements of buildings with highly efficient appliances, heating and cooling, and windows and lighting. With investment on this scale, this is now a real possibility.

About the Author

Susan Kraemer writes at CleanTechnica, CSP-Today, PV-Insider , SmartGridUpdate, and GreenProphet. She has also been published at Ecoseed, NRDC OnEarth, MatterNetwork, Celsius, EnergyNow, and Scientific American. As a former serial entrepreneur in product design, Susan brings an innovator's perspective on inventing a carbon-constrained civilization: If necessity is the mother of invention, solving climate change is the mother of all necessities! As a lover of history and sci-fi, she enjoys chronicling the strange future we are creating in these interesting times. Follow Susan on Twitter @dotcommodity.

http://www.churnerelectric.com Emily

Enjoyed reading your article. Thanks for the info!
http://www.churnerelectric.com Emily

Enjoyed reading your article. Thanks for the info!
http://www.elrst.com Edouard Stenger

Excellent news Susan, thanks !

It more and more seems that America – and the whole world for that matter – is going greener each day more !

Energy efficiency is the very basis of a more sustainable future, it’s nice to see large energy companies are understanding this.

Keep the news coming !
http://www.elrst.com Edouard Stenger

Excellent news Susan, thanks !

It more and more seems that America – and the whole world for that matter – is going greener each day more !

Energy efficiency is the very basis of a more sustainable future, it’s nice to see large energy companies are understanding this.

Keep the news coming !
Susan Kraemer

We have 3 or 4 utilities whose money jointly pays for this, not just PG&E.
Susan Kraemer

Our utilities have lots of money,(PG&E made $4.5 billion in profits out of $11 billion income in 2005) and make more the less they sell because their profits are “decoupled”. The $3 billion is part of their electricity-purchasing money.

Their purchasing is controlled by the California Public Utility Commission which ensures that our regulated utilities spend their money to build or buy the new sources of electricity needed, based on what is in the best public interest.

Think of the CPUC as the CFO of the utility company: the CFO found “negawatts” (energy efficiency) are the cheapest (certainly easier!) and decided that’s what will be purchased.
Ken

I view it more as changing the allocation of existing spend, not “new money.”
Ken

I view it more as changing the allocation of existing spend, not “new money.”
http://www.cleanfamilyenergy.com Clean Family Energy

Where does California keep finding money to fund all of this? I understand that this is to help utility companies meet the carbon emission standard for 2010 (through cutting back on electricity consumption), but do we really have money to spend on this project?
http://www.cleanfamilyenergy.com Clean Family Energy

Where does California keep finding money to fund all of this? I understand that this is to help utility companies meet the carbon emission standard for 2010 (through cutting back on electricity consumption), but do we really have money to spend on this project?
Susan Kraemer

We have 3 or 4 utilities whose money jointly pays for this, not just PG&E.
Susan Kraemer

Our utilities have lots of money,(PG&E made $4.5 billion in profits out of $11 billion income in 2005) and make more the less they sell because their profits are “decoupled”. The $3 billion is part of their electricity-purchasing money.

Their purchasing is controlled by the California Public Utility Commission which ensures that our regulated utilities spend their money to build or buy the new sources of electricity needed, based on what is in the best public interest.

Think of the CPUC as the CFO of the utility company: the CFO found “negawatts” (energy efficiency) are the cheapest (certainly easier!) and decided that’s what will be purchased.