Portfolio Enhancements

Definition

This research family is focused on supporting electrification, fuel substitution from regulated fuels, and fuel switching from nonregulated fuels, as well as identifying critical barriers and developing consistent and effective solutions. Beneficial electrification involves use of the most efficient conversion or fuel substitution strategies, switching from a carbon intensive fossil fuel source in buildings and transportation end-uses to electricity generated from a clean renewable energy source. Electrification is commonly achieved with individual end-uses but often requires a broader assessment of impact on the building, community, or utility infrastructure. Associated impacts can include necessary upgrades to a building and utility electrical infrastructure to accommodate the higher electric demand associated with increased electrification of building energy, transportation, and process loads in California homes and businesses as well as the incorporation of onsite renewable energy and energy storage.

Electrification of the California’s buildings, end-uses and transportation will be essential to meet California goals to be carbon neutral by 2045, reducing carbon emissions by 85 percent from 1990 levels (AB 1279, statutes of 2022), and requiring 100 percent of electricity by 2045 to be from renewable energy and zero-carbon resources (SB 100, statutes of 2018). In addition, South Coast and the Bay Area air quality management districts have passed new rules regulating emissions from space and water heating appliances, which will be a significant driver of electrification.  California is making significant investments in building electrification through statewide and regional efficiency programs, large heat pump market transformation efforts such as TECH Clean California, and other rebates that encourage higher-efficiency products and electrical upgrades.

Research Initiatives

Research Initiatives	Performance Validation Needs	Market Analysis Needs	Measure Development Needs	Program Development Needs
Scaled and targeted cost-effective electrification, load flexibility, and control strategies
Commercial, industrial, and agricultural market sector electrification research and tools
Beneficial electrification policy and program strategy alignment
Technology gaps for all market sectors and application electrification

Opportunities

A higher-level market assessment needed to improve policies, program strategies, tools, and technology solutions to maximize the overall impact of funding investments and reduce the financial burden of electrification of buildings on owners and tenants. The team identified the following opportunities:

• Assess the cost, barriers, benefits, and effectiveness of technology solutions and load flexibility controls comprehensively at the individual end-use, building, and utility level.
• Targeted high-priority electrification areas—like heating, ventilation, and air conditioning (HVAC) and water heating—have competing solutions. These solutions prioritize benefits to the customer, either in improved performance or reduced installed or operational costs; alternatively, these benefits may go to the utility for mitigating the impact to the grid. These solutions are often achieved with different degrees of complexity, cost, and required market and contractor engagement.
  • Historically lagging market sectors, like small and medium businesses (SMB), require targeted research and tools to support successful electrification strategies. In addition, identifying specific technology gaps and appropriate solutions is necessary to achieve comprehensive electrification in California.
  • Identify, research, and analyze the most cost-effective way of scaling electrification, e.g., zonal electrification.
• Insights on appliance controls—distributed energy resources (DER) versus demand response (DR) versus home management—will provide programs with different control strategies and inform the level of compatibility of the various load flexibility solutions.
• Partner with and capture insights from utility pilot electrification programs to inform new technology and programmatic research needs to accelerate electrification.

Barriers

The primary barriers to building electrification are the complexity, cost, and time associated with the replacement of existing fossil fuel end uses with electrical solutions.

• Gaps in availability of simplified electrification solutions and increased burden of building code, permitting, and program requirements significantly impact scaled electrification.
• Unplanned building electrification can also lead to potentially replacing expensive electrical panels and utility service upgrades in homes and businesses to accommodate new electrical loads. In addition to cost escalation, increased permitting and complexity of electrification projects can overly burden small contractors and homeowners.
• Increasing peak electric demand also leads to increased grid infrastructure requirements, such as replacement of transformers, distribution wires, and additional generation, increasing future costs for all ratepayers.
• The cost of electrical upgrades, especially for lower income households and small businesses, can pose a significant barrier to scaling electrification in California.
• The diversity of water and space heating needs, complexity of owner and tenant decision making, and spilt cost and benefits in small and medium businesses can limit rates of adoption of electrification.

Definition

Disadvantaged communities (DAC) and hard-to-reach (HTR) communities often face multiple barriers to accessing energy efficiency (EE) and decarbonization programs, which include financial constraints, lack of program awareness, language isolation, and substandard housing. The objective of this research family is to identify barriers requiring new portfolio solutions and policies, as well as propose tailored strategies that ensure equitable access to emerging technologies, energy efficiency, electrification, and decarbonization programs. Addressing the unique energy burdens and challenges of DACs and HTRs face when integrating electrification technologies and real-time load management strategies is critical—both for energy savings and establishing the grid stability needed to advance California’s decarbonization goals.

Research Initiatives

Research Initiatives	Performance Validation Needs	Market Analysis Needs	Measure Development Needs	Program Development Needs
Identify and quantify DAC/HTR program participation barriers
Assess EE program co-benefits in DAC/HTR communities
Evaluate retrofit challenges for DAC/HTR older housing

Opportunities

DAC and HTR communities present significant opportunities for impactful energy efficiency, electrification, and decarbonization initiatives. By prioritizing direct installation programs, real-time load management, and culturally tailored outreach, positive impacts can be maximized in these underserved areas—addressing barriers such as lack of awareness, language, and financial hurdles. Below are some examples, although this is not an exhaustive or exclusive list:

• Direct Install Programs: Promote easy adoption of energy-efficient technologies through installation support.
• Real-Time Load Management: Implement simple and durable control strategies to shift the largest loads during peak periods, stabilize the grid, and lower operating costs.
• Culturally Relevant Outreach: Develop targeted communication strategies to overcome language and awareness barriers.
• Energy Cost Reductions: Lower utility bills for households facing disproportionate energy burdens.
• Improved Indoor Air Quality: Enhance health outcomes by upgrading inefficient systems.
• Local Job Creation and Skilled Workforce: Generate economic opportunities through energy efficiency and electrification job growth together with a skilled workforce able to meet local DAC and HTR community electrification needs.
• Increased Climate Resilience: Boost community resilience against climate impacts via efficient, electrified, and decarbonized homes.
• Urban-Rural Equity: Bridge energy efficiency gaps between urban and rural low-income households.
• Smart Technologies Adoption: Engage households with demand response, time-of-use rates, and smart home tools to promote energy savings and resilience.

Barriers

While DAC and HTR communities offer meaningful potential for energy efficiency, electrification, and decarbonization, several persistent barriers continue to limit their widespread participation. Financial, technical, structural, and awareness challenges, as well as issues related to workforce and housing dynamics, hinder the adoption and effectiveness of these programs. Some examples include:

• Financial Constraints: Limited ability to invest in energy efficient technologies due to high upfront costs.

• Substandard and Older Housing: Structural issues and outdated buildings increase costs and complexity of energy upgrades.

• Rental Housing and Split Incentives: Landlords pay for improvements, but tenants typically benefit from cost savings, reducing owners’ willingness to invest.

• Shortage of Skilled Workforce: Insufficient numbers of qualified contractors and need for culturally competent training limit deployment at scale.

• Low Program Awareness: Limited understanding of real-time pricing, demand response, and load-shifting opportunities hampers engagement, as does limited capacity to actively engage with load-shifting opportunities on an ongoing basis.

• Technology Access Barriers: High initial costs for smart devices and lack of access to technologies like smart thermostats obstruct participation in advanced programs.
• Inadequate Grid Infrastructure: In some areas—e.g. PG&E’s Yolo County, which includes Davis, Woodland, West Sacramento—the absence of advanced metering infrastructure prevents effective participation in real-time load management programs.

Definition

This research family focuses on technology strategy and policy frameworks that could impact multiple end-uses. The objectives include:

• Creating an actionable framework for reducing refrigerant emissions across end uses.
• Examining barriers to replacing refrigerants with low and ultra-low alternatives.
• Aligning refrigerant emissions reductions calculations within the Total System Benefit (TSB) metric with current practices in the field.
  
  

Reducing leaks in existing refrigerant systems will complement the approaches within the HVAC, Water Heating, and Process TPMs, which will also drive active recovery, reclamation, and destruction of high-GWP refrigerants. This framework also emphasizes the need to expand consideration of disruptive innovations, such as non-vapor compression systems that avoid refrigerants entirely, eliminating the risk of leakage and the need for refrigerant management. It will also be important to more clearly define Lifecycle Refrigerant Management (LRM) within the California EE portfolio and incentive structures, which will create more cost-effective, impactful incentives and program interventions.

LRM broadly refers to the full lifecycle of refrigerants—from system selection and installation to refrigerant leak prevention, detection, and repair—during the operational life of equipment, as well as refrigerant recovery and reclamation or destruction at equipment end of life. LRM’s goal is to eliminate the GHG impact from refrigerant emissions, given these are primarily gases with global warming potential (GWP) values thousands of times higher than CO₂.

Research Initiatives

Research Initiatives	Performance Validation Needs	Market Analysis Needs	Measure Development Needs	Program Development Needs
Improve refrigerant recovery rates, including targeted incentives for end-of-life refrigerant recovery
Automated Leak Detection (ALD), and alternative monitoring options
Equipment selection and installation practices including natural refrigerant systems and lower system leak rates
Data collection and analysis on refrigerant charge size, leak and recovery rates to inform TSB assumptions
Evaluate non-vapor compression technologies for HVAC and Refrigeration

Opportunities

The following are some examples of opportunities in Lifecycle Refrigerant Management and Emissions Reductions:

• The TSB metric recognizes GHG benefits from mitigating refrigerant leak emissions
• Despite some progress, further work is needed regarding how EE portfolios handle refrigerants to meet utility regulatory requirements and state emissions reduction goals.
• Utility efficiency programs, traditionally valued for energy savings, can also serve as cost-effective platforms for refrigerant emissions reduction.
• Refrigerant emission reductions often result in energy savings, allowing:
  • Seamless integration of LRM efforts into existing programs.
  • Delivery of both direct energy savings and indirect cost/emissions savings across sectors.
  • Promotion of ultra-low GWP refrigerant-based systems.
• Transitioning to an LRM-based approach for calculating refrigerant emission impacts will:
  • Enable more accurate measurement of lifetime carbon dioxide equivalent savings.
  • Enhance program effectiveness.
• A comprehensive approach to LRM includes equipment selection, installation best practices, leak monitoring and repair, and proper disposal of refrigerants at equipment end-of-life.
• Commercial and industrial refrigeration’s largest opportunity is to replace existing systems with high GWP refrigerants, while residential and small commercial HVAC’s largest opportunity is recovery of refrigerant at decommissioning
• Accelerating the adoption of emerging non-vapor compression technologies will help California meet key climate policy deadlines while also delivering significant cost savings across multiple sectors.

Barriers

The following barriers should be considered:

• Though substantial progress with natural refrigerants has been made in commercial refrigeration, the HVAC sector faces several challenges:
  • Lack of harmonization between US national codes and international safety standards for natural refrigerants.
  • Misuse of Environmental Protection Agency Significant New Alternatives Policy guidance for hydrofluorocarbon alternatives.
  • Misaligned efficiency and emissions metrics.
  • Limited project data, leading to perceived technology viability issues.
• A shortage of skilled HVAC and refrigeration technicians.
• Low rates of refrigerant recovery due to:
  • Added time and cost to achieve compliance.
  • Lack of financial incentives and low enforcement rates.
• Concern by utilities that recognizing current conditions with LRM may erode existing savings.
• Lack of ultra-low GWP products for many product categories, e.g. mini-splits.

Definition

This technology family is focused on increasing awareness and understanding of the market and policy constraints created by dual use of Total Resource Cost (TRC) and Total System Benefit (TSB) as EE portfolio metrics, as well as the opportunities to consider new metrics for measure selection. While California has a rich and diverse set of delivery approaches to measures, including deemed, custom, and normalized metered energy consumption (NMEC)—in addition to recent policy changes that encourage innovation under the TSB metric and NMEC solutions—overall measure utilization remains low. Some measures have inherent barriers to adoption and implementation. Shedding light on some of these barriers, research needs, and tools can enhance awareness and uptake for TSB, NMEC, and other methods, which will also support and validate a more robust EE portfolio.

Research Initiatives

Research Initiatives	Performance Validation Needs	Market Analysis Needs	Measure Development Needs	Program Development Needs
What measure-level impacts might follow from adoption of a new cost-effectiveness test?
Are there additional potential value streams for EE Portfolio to consider enhancing TSB value?
What are the barriers and untapped opportunities to increase NMEC solutions and market participation?

Opportunities

Rethinking how we measure success by looking at EE through the lens of TSB and TRC creates some natural opportunities to promote the awareness, use, and benefits of these metrics:

• Increasing awareness of TSB and TRC as primary metrics of the EE Portfolio
  • Initial feedback from stakeholder interviews and research indicates a limited understanding for the drivers of TSB and TRC, as well as their interactive effects.
• Addressing potential gaps in the EE portfolio, such as identifying potential co-benefits or non-energy benefits.
  • Some potential non-energy benefits include health and safety comfort from fuel sub measures, job creation, and waste heat recovery, as well as implications for departing loads. Identifying potential gaps, such as opportunities to incentivize market activities for demand management, load flexibility, and other system benefits in TSB.

Barriers

Current discussions with EE stakeholders revealed the following barriers:

• A limited understanding of how to optimize TSB despite increasing awareness of TSB as an operating metric.
  • There is a general need for broader awareness for the drivers of TSB, such as long-lived measures (long, effective, useful lives) and their potential trade-offs with market uptake if these measures typically require higher capital investment, which may impact market participation. There is a limited understanding for the interaction between TSB and TRC. TSB replaced kilowatt-hours (kWh) and kilowatts (kW) as a primary goal but did not replace TRC for cost-effectiveness. Some stakeholders have mistaken TSB as a replacement cost-effectiveness metric for TRC.
  • There is also an increased interest in but limited understanding for the flexibility around TRC.
• Some stakeholders have noted that while TRC captures all participant and program costs, it does not capture all participant benefits, such as health and safety benefits associated with fuel-substitution measures. Also, cost-effectiveness is currently addressed in multiple regulatory proceedings—e.g., R.22-11-013 for DER Program Cost-Effectiveness, Data Access and Use, and Equipment Performance Standards, as well as in the new EE proceeding, R25-04-010.
• Certain infrastructure-heavy electrification measures could be much more successful by incentivizing above current deemed incremental measure cost values due to inherent system benefits, despite the resulting TRC value.
• Some stakeholders suggest that other cost-benefit metrics should be explored for use in California.
• EE policies left over from years or decades past may no longer be serving California’s decarbonization goals well.
  • A recent State of California Auditor’s Report of Energy Efficiency programs highlighted that the current TRC calculation does not include certain non-energy related benefits—as accounted for by other states—despite including participant costs. This result could discourage utilities from implementing certain EE programs or not achieving cost-effective program portfolios.
  • Existing EE policy restricts some NMEC opportunities, such as limiting NMEC to strategic energy management programs in the industrial sector, or cases where site-specific NMEC resembles large commercial buildings. EE policy also restricts fuel switching from non-regulated fuels, e.g., wood or propane, to regulated fuels, e.g., electricity or natural gas. Recently, strategic energy management has expanded in California beyond the industrial sector; however, further study of additional untapped markets could yield new program pathways for the EE portfolio.

Definition

This research family is focused on adaptation in the EE portfolio to maximize decarbonization and TSB benefits by properly considering the time-dependence of energy consumption within the day and year. Currently, EE savings are attributed based on a limited set of load shapes, and load shifting, demand management, and demand response have been excluded from EE measures. Because TSB is now the primary metric for EE programs, there is a framework for including demand management in EE program benefits. This also means EE savings and costs are more dependent than ever on the time-of-day and month-of-year energy impacts.

This research family will investigate ways to incorporate demand flexibility, demand management, and load-shifting attributes in EE measures, along with the necessary policy updates critical to support successful decarbonization programs. In this category, we will research ways to incorporate demand response and load shifting benefits from EE measures and identify and evaluate cost-effective ways to improve TSB benefits of measures with load shifting capabilities.

Research Initiatives

Research Initiatives	Performance Validation Needs	Market Analysis Needs	Measure Development Needs	Program Development Needs
Research and creation of additional load shapes for measures
Evaluate TSB and cost-effectiveness of current measures versus policy alternatives that incorporate more load shift and demand flexibility
Measure characterization and market study of measures with added demand flexibility costs and benefits
Cost-effective and future-proof program implementations for various degrees of connectivity

Opportunities

In 2024, TSB replaced kWh as the primary metric for savings accounting in the EE portfolio, which created the following opportunities:

• There is potential to evaluate and identify new benefits, such as load flexibility and demand management.
• Matching measures and creating more accurate load shapes and load shape variations based on peak-avoidance, load-shifting, and demand management strategies.
• Studies for potential measures to address system needs, such as demand flexibility measures, time-of-use benefits to customer, and grid resilience.
• Researching new technologies and applications, such as upsizing thermal energy storage, passive demand flexibility, and connected demand flexibility.
• As recent CPUC policy also encourages NMEC measures in the EE portfolio, these and other meter-based measurement activities may create a data source for the identification of specific measure opportunities and the creation of new load shapes.
• IOU smart water heater programs and market transformation activities, like TECH Clean California, may also provide useful user data for analysis.
• Since the adoption of the California eTRM, a significant number of EE measures have been removed due to a lack of cost-effectiveness. With the hourly and monthly valuations now a default, sunsetted measures—as well as creative new decarbonization measures—may benefit the EE portfolio.

Barriers

The team identified the following barriers for using time-of-use and load flexibility:

• The existing eTRM load shapes are out of date and inadequate for calculating TSB value. With the adoption of TSB, load shifting for demand management and peak price avoidance are more clearly incorporated into EE benefits.
• • Updates to measures and program policies may be needed to address the overlap of demand management and EE. As the hourly cost of energy embedded in the TSB calculation is constantly shifting, it is unclear how the eTRM impacts shift and schedule relative to the Database for Energy Efficiency Resources updates, and what is necessary in EE measure development to capture changing peak values.
  • A lack of definition related to the valuation of DERs in EE measures poses barriers to assessing the benefits of new technologies, like 120V induction stoves with batteries and comparison of thermal and electric energy storage benefits.

• Cost-effectiveness and valuation of load flexibility is significantly different at the utility, vendor, contractor, and customer level.
  • Developing solutions and assessing their cost, complexity, and benefit is needed to strengthen the case for broader time-of-use and load flexibility adoption.

Definition

The materials used to construct and maintain buildings contribute significant GHG emissions over the lifetime of a building. This concept is referred to as embodied carbon, defined by the California Energy Commission as the greenhouse gas emissions “resulting from the extraction, manufacturing, transportation, installation, maintenance, and disposal of building materials.” This research family is focused on determining pathways to integrate embodied carbon metrics within the EE portfolio and with building decarbonization programs while simultaneously identifying opportunities to reduce costs, energy use, and lifecycle emissions for identified low embodied carbon (EC) building materials.

Research Initiatives

Research Initiatives	Performance Validation Needs	Market Analysis Needs	Measure Development Needs	Program Development Needs
Identify opportunities in the production and supply of low EC building materials
Identify opportunities for low EC building materials via demand-side programs
Identify ways to harmonize EC with EE and/or building decarbonization programs and policies
Increase EC market awareness
Increase adoption of adaptive reuse and circular economy approaches

Opportunities

This research family includes, but is not limited to, the following opportunities for study:

• Exploring upstream incentives to promote the manufacture of lower-carbon building materials, such as concrete; cement; steel; insulation; glass and glazing; finished materials; and mechanical, electrical, and plumbing materials.
• Identifying market mechanisms to encourage the adoption of low-embodied carbon in cement and concrete sectors, e.g. Assembly Bill 2109 for industrial process heat recovery, CARB’s recent workshops on embodied carbon, CalTrans’ research on newer low-embodied carbon materials, and/or low-embodied carbon building material selection in new construction projects.
• Researching opportunities to stimulate market demand among market actors for low-embodied carbon building materials, similar to Buy Clean California by the California Department of General Services.
• Integrating EC with EE programs:
  • Increasing the awareness of EC in the design of buildings could dramatically reduce EC while also achieving EE benefits. Existing EE programs, like the California Energy Design Assistance new construction program, could provide additional education to architects, builders, and structural engineers about EC and existing EE design practices.
  • Increasing embodied carbon market awareness. It is necessary to develop a broader suite of Environmental Product Declaration forms and conduct Whole Building Life Cycle Analyses to inform builders, contractors, and customers about total carbon footprint of buildings.
• Educating stakeholders, including utilities and implementers, on how they can begin to voluntarily incorporate embodied carbon into their messaging will be a crucial first step.
  • Future research should consider examining potential synergies between embodied carbon and existing EE programs, such as the creation of an Embodied Carbon Avoided Cost Calculator—similar to how the Refrigerant Avoided Cost Calculator unlocked GHG potential for low-GWP HVAC refrigerants.

• Increasing awareness about circularity principles, such as retrofitting buildings rather than replacing them. It is important to encourage building owners to consider the entire lifecycle carbon impacts of their buildings, not just the operational energy use impacts.
  • This includes education about replacing existing systems, appliances, and equipment, as well as demolishing and reconstructing new buildings, which will add to the entire carbon footprint of the city or local community.
  • Education and improved measurement tools would provide a needed service to building owners interested in addressing their carbon footprint.
• There is increasing convergence of embodied carbon with wildfire mitigation and impact on low-income communities, as seen in recent CARB research focus—as well as potential convergence with advanced building design approaches, such as passive house.

Barriers

As a relatively underexplored topic with low general market awareness, there are several significant barriers to addressing the large amount of GHG emissions from embodied carbon, including:

• Limited market development policies to encourage adoption of low-embodied carbon building materials. Current policy mechanisms—Senate Bill 596, Assembly Bill 2446, and Assembly Bill 43—are under development and are primarily focused on supply chain solutions to reduce embodied carbon in the production of building materials rather than encouraging demand and adoption of low-embodied carbon building materials.
• Limited market knowledge and awareness of the urgency for addressing total building carbon emissions, as well as understanding the embodied carbon building materials costs and cost-effectiveness relative to other carbon mitigation solutions.
• Gaps in the availability of Environmental Product Declaration forms across product categories and a need for increased awareness of embodied carbon impacts via Whole Building Life Cycle Assessments.
• It is critical to increase general embodied carbon awareness among mainstream architectural firms, builders, and engineers, especially those in larger firms with a clientele that are likely more knowledgeable about embodied carbon practices and are focused on sustainability principles.
• Limited funding mechanisms to support market interventions for embodied carbon within or outside of EE programs. Although the Inflation Reduction Act provided limited federal funding opportunities of $250 million for assistance with the development of Environmental Product Declarations, this funding has diminished under new administration changes, and virtually no funding exists for embodied carbon program designs or market interventions.