Energy Efficiency 2.0 – A New Definition Underway in California

Published: Mon 23 Mar 2015
A blog entry by Christine Hertzog

Contributed by:

Christine Hertzog
Managing Director
Smart Grid Library

Christine Hertzog's Blog

What does energy efficiency mean to you? Does it mean replacing old light bulbs with energy-stingy LEDs? Is it a remodeling project that installs double or triple pane windows? Does it include upgrading appliances like air conditioners and refrigerators to take advantage of Energy Star ratings and utility rebate programs? It means all of those things, and in states like California that employ aggressive energy efficiency (EE) policies and standards from widget to building envelope, it’s been a successful strategy to reduce per capita energy consumption.

Earlier this year the governor of California announced an energy policy, although he didn’t call it that at the time. One of the goals is to double EE savings in existing buildings by 2030. To get there, breakthrough innovations in EE policies, technologies, and financing are required. In other words, its time upgrade from EE 1.0 to EE 2.0, with a very heavy emphasis on building retrofits.

The Next Generation of Energy Efficiency Project at Stanford University aims to define EE 2.0. Led by Dian Grueneich, former Commissioner of the California Public Utilities Commission and now a Senior Research Scholar at the Precourt Energy Efficiency Center and the Hoover Institution, the project will create a series of whitepapers to help mobilize actions that deliver Governor Brown’s “doubled down” objective.

The first White Paper, to be issued this spring, will discuss some of the steps Ms. Grueneich has identified to define an EE 2.0 framework:

Articulate EE’s new role in terms of its increased value to economic, energy, and environmental security

Structure transparency and build awareness through annual performance reporting on EE gains

Revise state agency roles and processes to streamline policy and projects support

Align EE regulatory rules and policies with state climate goals

Improve customer-funded programs

  1. Investigate the state’s development and enforcement of codes and standards that can accelerate EE goals
  2. Identify and support innovations in technologies, policies, and financial products that contribute to EE savings

Technology innovations are abundant to retrofit existing buildings to higher EE savings. Much of that technology is relatively low tech too. Insulation and double pane windows aren’t rocket science. Of course, there’s exciting work in labs that will improve building envelope materials in the form of new paints as well as “smart” windows.

The pre-eminent challenges to creating the Next Generation of EE are in policy (including agency governance) and finance. Compare an EE investment in insulation upgrades to an investment in solar panels. Both have upfront acquisition costs with a promise of energy bill reductions enjoyed in the future. Homeowners have a range of options that include use of PACE programs to finance solar investments or partnering with firms that handle the upfront acquisition and installation costs and share in the production and tax benefits. Insulation upgrades lack the same diversity of financial programs and partnership options.  As Ms. Grueneich described at a recent session, “in energy efficiency thousands of different decisions made every day by individuals, organizations, and governments. We have to use our policies and the private market to set up similar models to solar that make efficiency easy and attractive, for both consumers and providers alike.”

Ms. Grueneich noted that EE 1.0 consists of “mostly single ‘widgets’ and low uptake by consumers and businesses.“ But there’s pent-up demand and new technologies that EE 1.0 doesn’t address. How many more decisions about energy efficiency could be made if only policies and financial instruments better supported them? The Next Generation of Energy Efficiency Project just may provide that answer.

Christine Hertzog
Smart Grid Library