Portfolio Enhancements

Definition

This technology 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.

Research Initiatives

Research Initiatives	Performance Validation	Market Analysis	Measure Development	Program Development
Cost-effective electrification, load flexibility, and control strategies
Lagging market sector electrification research and tools
Beneficial electrification policy and program strategy alignment
Technology gaps for all market sector and application electrification

Opportunities

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). 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 the Inflation Reduction Act (IRA) tax credits and rebates that encourage higher-efficiency products and electrical upgrades. However, additional innovation and market assessments are 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.

For broader scale electrification it is imperative to assess the cost, barriers, benefits, and effectiveness of technology solutions and load flexibility controls comprehensively at the individual end use, building, and utility level. For example, targeted high priority electrification areas like HVAC and water heating have competing solutions that prioritize benefits to the customer either in improved performance, reduced installed or operational costs, or alternatively to the utility for mitigating the impact to the grid; all of which are often achieved with different degrees of complexity, cost, and required market and contractor engagement.

Additionally, historically lagging market sectors like small and medium businesses 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.

Another area of importance is zonal electrification, where the most cost-effective way of scaling will need to be researched and analyzed. Insights on appliance controls, distributed energy resources (DER) vs demand response (DR) vs home management, will provide programs with different control strategies and inform the level of compatibility of the various load flexibility solutions.

Barriers

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 the potential need to replace expensive electrical panels and utility service upgrades in homes and businesses to accommodate new electrical loads.

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.

Definition

Disadvantaged communities (DAC) and hard-to-reach (HTR) communities often face multiple barriers to accessing energy efficiency (EE) and decarbonization programs. These barriers include financial constraints, lack of program awareness, language isolation, and substandard housing. The objective of this technology family is to identify barriers requiring new portfolio solutions and policies and proposing tailored strategies that ensure equitable access to emerging technologies1, energy efficiency, and electrification programs. Addressing the unique energy burdens and challenges of DACs and HTRs in integrating electrification technologies and real-time load management strategies is critical to both the energy savings and the grid stability needed to advance California’s decarbonization goals.

Research Initiatives

Research Initiatives	Performance Validation	Market Analysis	Measure Development	Program Development
Evaluate DAC and HTR barriers to energy efficiency and electrification program participation. The goal is to identify, classify, and quantify obstacles such as financial constraints, limited program awareness, language isolation, and property ownership complexities, e.g., the challenges faced by renters versus property owners.
Assess financial and nonfinancial co-benefits of EE programs, electrification, and load flexibility programs in DACs and HTR communities
Investigate the costs, feasibility, and technical challenges of retrofitting substandard housing in DAC and HTR communities preventing installation of advanced energy efficiency and electrification measures in older buildings.

Opportunities

DAC and HTR communities offer significant opportunities for targeted energy efficiency and electrification initiatives. Focusing on direct install programs, real-time load management, and culturally relevant outreach can maximize the positive impacts in these underserved areas. DAC and HTR communities are disproportionately affected by energy inefficiency and face barriers such as lack of program awareness, language obstacles, and financial constraints. Addressing these issues through dedicated programs will not only improve energy efficiency but also reduce energy costs, improve indoor air quality, and generate local job opportunities.

Programs focused on DAC and HTR households offer the potential for significant co-benefits, including health outcomes from improved indoor environments, increased resilience to climate impacts, and economic opportunities through local job creation in energy efficiency and electrification efforts. These efforts can also help bridge the gap between urban and rural communities and address the unique energy burdens that affect low-income households.

By integrating real-time load management technologies into DAC and HTR programs, these communities can reduce energy consumption during peak hours, stabilizing the grid while offering the best chance at cutting operating costs and providing long-term affordability. Programs that combine demand response, time-of-use rates, and smart home technologies provide immediate opportunities for households to engage with their energy use. These strategies also enhance resilience during peak demand periods.

Barriers

Despite the significant opportunities in DAC and HTR communities, barriers continue to hinder widespread participation in energy efficiency and electrification programs.

Many DAC and HTR customers face financial constraints that prevent them from investing in energy-efficient technologies or participating in programs requiring upfront costs. Substandard housing and older buildings in these communities often prevent the successful implementation of energy efficiency measures, making upgrades more costly or technically challenging.

In DAC and HTR communities, where renting is common, split incentives between tenants and landlords discourage energy efficiency and electrification upgrades. Landlords often bear the costs of retrofits, but tenants reap the cost savings, leading to reluctance among property owners to invest in improvements.

In many HTR areas, a lack of skilled contractors and workforce limits the ability to deliver electrification and EE measures at scale. There is also a need for training a culturally competent workforce to better serve diverse communities.

Awareness and understanding of real-time pricing, demand response programs, and load-shifting opportunities are often low in DAC and HTR communities, limiting participation. Many DAC and HTR households lack access to smart technologies that enable real-time load management. High upfront costs for smart devices, such as smart thermostats and home energy management systems, can prevent participation in grid-responsive programs. Some DAC and HTR areas may lack the necessary grid infrastructure, such as advanced metering infrastructure (AMI), required to fully participate in real-time load management programs.

Definition

This technology 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 lower-GWP alternatives.
• Aligning refrigerant emissions reductions calculations within the Total System Benefit (TSB) metric with current practices in the field.
  
  

It will complement the approaches within the HVAC, Water Heating, and Process TPMs to reduce leaks in existing refrigerant systems and drive active recovery, reclamation, and destruction of high-GWP refrigerants. The framework also emphasizes the need for clearer definitions for Lifecycle Refrigerant Management (LRM) within the California EE portfolio and incentive structures, which are needed for more cost-effective, impactful incentives and program interventions. LRM broadly refers to refrigerant leak prevention, detection, and repair during the operational life of equipment and refrigerant recovery and reclamation or destruction at equipment end of life, all with the goal of eliminating refrigerant emissions, given these are primarily gases with GWP values thousands of times higher than CO₂.

Research Initiatives

Research Initiatives	Performance Validation	Market Analysis	Measure Development	Program Development
Market study of industry strategies to improve refrigerant reclamation rates, including targeted incentives for certified end of life refrigerant recovery.
Market study and performance validation of scalable ALD, and analytical, predictive alternative monitoring options.
Market study of California contractors’ existing equipment installation practices and characterization impact of technician certification and training on quality installs, including zero-leak fitting and joining as a low-cost simple DI program solution and O&M requirement under California’s eTRM to ensure safe handling of A2Ls/A3s as required by state code.
Revise and recommend updates to TSB assumptions and equipment categories to more accurately reflect refrigerant charge size, leak rates, reclamation rates.

Opportunities

The California energy efficiency portfolio programs have taken a big step toward recognizing the GHG benefits of mitigating refrigerant leaks in 2024 with the adoption of the Total System Benefit (TSB) metric, but many aspects of how the EE portfolio considers and handles refrigerants can be further optimized to achieve the state’s emissions reductions goals. Utility efficiency programs are traditionally valued for their energy savings, but they also offer a cost-effective platform to expand services focused on emissions reduction. With established customer relationships, administrative systems, and technical expertise, utilities are well-positioned to promote the adoption of ultra-low or zero GWP refrigerant options and accelerating market awareness and importance of effective refrigerant management. Since refrigerant emission reductions often align with energy savings, LRM efforts collectively can seamlessly integrate into existing programs, and deliver both direct energy savings and indirect cost and emissions savings benefits to customer across all sectors. Utilities will need to prioritize refrigerant management in the wake of new federal regulations under subsection (h) of the AIM Act. As part of this prioritization exercise, utilities must take a more comprehensive approach to integrating LRM strategies that support the transition to lower-GWP refrigerants. A transition to an LRM approach to calculating the refrigerant emission impacts will enable programs to more accurately measure lifetime CO₂e savings, and in so doing, enhance the effectiveness of their efforts.

Barriers

While market awareness and adoption of natural refrigerants in commercial refrigeration have grown significantly across the California market in recent years — driven by SB 1206 and 1383, CAFRIP and programs like EPA’s SNAP — in contrast the HVAC sector has faced notable challenges. A primary obstacle has been the lack of harmonization between US national codes and international safety standard regarding natural refrigerants. Additionally, misaligned efficiency and emissions metrics, misuse of EPA SNAP guidance for HFC alternatives, and limited project data have contributed to perceived barriers around the viability of available technologies. Compounding these issues is a persistent shortage of skilled HVAC technicians and the lack of supportive infrastructure to recover refrigerants cost-effectively given the lack of financial incentive and low enforcement rates. Both barriers hamper the effective implementation of utility programs designed to promote innovative technology adoption and ensure refrigerant management compliance. With significant numbers of HVAC field technicians lacking formal training, there may be significant gaps between portfolio assumptions and current practices in system sealing and refrigerant reclamation.

Definition

This technology family is focused on increasing awareness and understanding of the market and policy constraints and opportunities created by use of Total Resource Cost (TRC) and Total System Benefit (TSB) as EE portfolio metrics to select and implement measures. While California has a rich and diverse set of delivery approaches to measures, including deemed, custom, and normalized metered energy consumption (NMEC), as well as 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. By shedding light on some of the barriers, research needs, and tools to enhance awareness and uptake for TSB, NMEC, and other methods, this topic will support and validate a more robust energy efficiency (EE) portfolio.

Research Initiatives

Research Initiatives	Performance Validation	Market Analysis	Measure Development	Program Development
How does TSB impact measure prioritization, selection and implementation?
How TSB and TRC create dual hurdles for EE measures?
What are the barriers and untapped opportunities to increase NMEC solutions and program participation?
What are the barriers to increasing use of unused or underused EE measures in the EE Portfolio?
What are the barriers and opportunities for addressing waste heat and departing loads?
Simplifying Measure Permutations: are there ways to hybridize measures and optimize the balance of assumptions vs. program data collection?

Opportunities

The adoption of TSB as a primary EE metric creates a natural opportunity to promote awareness of its use, benefits, and constraints. Collected information from interviews with targeted EE stakeholders, available secondary information on TSB and an understanding of implementers and administrators’ awareness of TSB may yield insight on opportunities to address gaps in the EE Portfolio. Additionally, TSB is currently captured as utility benefits, and increasingly to contractors as well, but has offered limited direct benefits to customers due to lack of awareness and customer education on TSB, its definition and use as an operating metric.

Identifying potential co-benefits, e.g., non-energy benefits or other benefits such as job creation and training, as well as waste heat recovery and the implications for utilities of departing loads could also inform this work. This research could include the barriers, costs, and action steps needed to incorporate these co-benefits as part of TSB or their impacts on EE program delivery as well as the incremental costs of measurement and verification.

Barriers

Current discussions with EE stakeholders suggest a limited understanding of how to optimize TSB despite increasing awareness of TSB as an operating metric. Stakeholders have highlighted the interaction between benefit metrics like TSB and cost-benefit ratios, currently in California the TRC (Total Resource Cost), with a poor value in either causing a measure to be dropped. Stakeholders have suggested more interest in flexibility around TRC, for example where certain infrastructure-heavy electrification measures could be much more successful by incentivizing above current deemed Incremental Measure Cost (IMC) values, despite the resulting TRC value. 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: for example, limitation of NMEC in the industrial sector to only Strategic Energy Management may hinder program participation by customers interested in site-specific NMEC opportunities. Likewise, EE policies that limit fuel switching incentives for wood or propane to electricity hinder interventions against these emitting fuels. Changes may be needed to achieve state policy goals and realize increasing program participation, especially in light of diminished EE program participation in important sectors.

Definition

This technology family is focused on adaptation in the EE portfolio to maximize decarbonization 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. Load shifting, demand management, and demand response have been excluded from EE measures. With TSB now the primary metric for EE programs, there is a framework for including demand management in EE program benefits, and EE savings and costs are more dependent than ever on the time of day and month of year energy impact. This technology family will research 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	Market Analysis	Measure Development	Program Development
Research and creation of additional load shapes for EE Measures
Evaluate network enabled load flexing functionality of heat pumps, thermal storage, and thermal upsizing for impact on TSB
Measure characterization and Market Study of EE measures with added demand flexibility costs and benefits
Examining policies separating Demand Response, Grid Resiliency, and Energy Efficiency Measures, and balancing benefits for customer, utilities and society
Cost-effective and future-proof program implementations for various degrees of connectivity

Opportunities

The 2024 transition from kWh to TSB as the primary metric for savings accounting in the EE Portfolio creates enormous opportunity to identify new benefits from load flexibility and demand management, and to set new policy direction to realize these benefits. A measure-by-measure analysis of the eTRM has been published, but more work needs to be done to match measures to more accurate load shapes and publish additional load shape variations based on peak-avoidance, load-shifting, and demand management strategies. There is a menu of possible demand measures to be considered for each measure, including passive demand flexibility, connected demand flexibility, and new specification opportunities like upsizing thermal storage.

As recent CPUC policy also encourages NMEC measures in the EE portfolio, these and other TOU 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 CA may also provide useful user data for analysis.

Since the adoption of the California eTRM, a significant number of EE measures have sunset due to a lack of cost-effectiveness. With the hourly and monthly valuations now a default, sunset measures, as well as creative new decarbonization measures can restrengthen the EE portfolio.

Barriers

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 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, schedule relative to DEER updates, and what is necessary in EE measure development to capture changing peak values. In addition, 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 TOU 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 technology family is focused on determining pathways to integrate embodied carbon metrics within the EE portfolio while simultaneously identifying opportunities to reduce costs, energy use, and lifecycle emissions for identified building materials.

Research Initiatives

Research Initiatives	Performance Validation	Market Analysis	Measure Development	Program Development
Building Materials Production: Identify opportunities to reduce Embodied Carbon in low EC building materials production
Building Materials Procurement: Identify opportunities to reduce Embodied Carbon via demand/procurement of low EC building materials
Integration with Energy Efficiency Programs: Examine opportunities to align Embodied Carbon market activities with existing Energy Efficiency programs and/or utilize Energy Efficiency resources to support Embodied Carbon goals
Increasing Embodied Carbon Awareness: Identify general market awareness and needs for low EC building materials
Building System Retrofit vs. Replace: Conduct market studies to understand market actors approaches to mitigate Embodied Carbon emissions by considering the retrofit opportunities vs. replacement of existing buildings

Opportunities

Embodied carbon is an area of increasing policy focus, especially from a total carbon reduction strategy perspective. However, it is currently underexplored as a source of mitigating GHG emissions by utilities and the EE industry. There is a significant opportunity for CalNEXT to bridge this gap by beginning to explore the implications of addressing embodied carbon and its potential future integration with the EE portfolio. Potential market activities to reduce embodied carbon include:

Building Materials Production: Opportunities exist to explore whether upstream incentives can lead to the manufacture of lower-carbon building materials such as concrete and cement, steel, insulation, glass and glazing, finished materials, and mechanical, electrical and plumbing (MEP) materials. There is growing interest to establish embodied carbon incentives for the cement and concrete sectors, e.g., AB 2109 for industrial process heat recovery, including CARB’s recent workshops on embodied carbon as well as CalTrans research on newer, low-embodied carbon materials.

Building Materials Procurement: Current activities to create more demand for lower-carbon building materials include Buy Clean California (BCCA) by the California Department of General Services (DGS). However, there is little to no research on activities to stimulate market demand amongst private market actors, including through incentives. Opportunities exist on both the new construction and retrofit of buildings to reduce embodied carbon emissions without sacrificing cost or EE.

Integration with EE Programs: Currently, embodied carbon is not included in Total Systems Benefit (TSB) and therefore, not considered in EE incentive programs due to its classification as a non-energy benefit. However, embodied carbon includes production energy used in the manufacture of building materials (lifestage A3), and changing the amount or type of production energy used through EE would directly reduce embodied carbon. Yet, similar treatment and barriers existed for low-Global Warming Potential (low-GWP) refrigerants until a Refrigerant Avoided Cost Calculator (RACC) enabled these benefits to be captured among EE program activities. Likewise, existing EE programs like California Energy Design Assistance (CEDA) new construction program could be a viable means for educating architects, builders and structural engineers about total carbon reduction strategies with funding for midstream incentives. Future research should consider examining potential synergies between embodied carbon and existing EE programs.

Increasing Embodied Carbon Awareness: Limited general awareness exists about embodied carbon. There is a need for developing a broader suite of Environmental Product Declaration (EPD) forms and conducting Whole Building Life Cycle Analyses (WBLCAs) 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 is a crucial first step.

Building System Retrofit vs. Replace: There is a need to encourage building owners to consider the entire lifecycle carbon impacts of their buildings, not just operational energy use. This includes the replacement of 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.

Barriers

As a relatively underexplored topic with low market awareness, there are a significant number of barriers to addressing the large amount of GHG emissions from embodied carbon. Barriers include:

• Limited policy mechanisms beyond SB 596, AB 2246, and AB 43, which are primarily focused on distribution chain solutions to reduce embodied carbon in the manufacturing of building materials. However, virtually no policy mechanisms exist for the creation of market development activities, such as how AB 1477 provided funding for BUILD and TECH to launch the state’s new construction and retrofit decarbonization programs.
• 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 (EPD) forms across product categories and a need for increased awareness of embodied carbon impacts via Whole Building Life Cycle Analyses (WBLCAs).
• There is a need for increasing 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 (IRA) provides limited federal funding opportunities ($250 million) for assistance with the development of EPDs, virtually no funding exists for embodied carbon program designs or market interventions.