The California Model

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The California Model

Why can’t all states adopt California’s approach to energy efficiency?

Posted on May 25 2018 by Martin Holladay

Here in the U.S., it’s hard to generalize about residential new construction standards. In parts of Massachusetts and California, many residential builders pay close attention to air sealing details, and the use of blower doors is common. Meanwhile, in Kansas and Wyoming, few builders pay much attention to air sealing.

These disparities are due to a variety of factors. But the most important explanation concerns differences in regulations. Massachusetts and California have stricter building codes, and do a better job of enforcing those codes, than Kansas and Wyoming.

To achieve their energy-efficiency goals, states like Massachusetts and California use both carrots and sticks: regulators offer incentives for good practices while making bad practices illegal.

The American Council for an Energy-Efficient Economy (ACEEE) highlights how states address energy efficiency by publishing an annual report called the “State Energy Efficiency Scorecard.” According to its most recent report, the four states at the top of the list are Massachusetts, California, Rhode Island, and Vermont. The four states at the bottom of the list are Kansas, Wyoming, South Dakota, and North Dakota.

California is a leader

California has done an excellent job of implementing policies that encourage energy efficiency:

  • California has a strict energy code for buildings, and does a better-than-average job of enforcing it.
  • California has adopted appliance efficiency standards that are more stringent than federal standards.
  • California has an aggressive Renewables Portfolio Standard that will require utilities to use renewable sources such as wind, solar, and geothermal to generate 50% of the state’s electricity by 2030.
  • The California Public Utilities Commission sponsors a variety of programs to encourage the adoption of electric vehicles.

According to most analysts, California’s carrot-and-stick approach — a mixture of subsidies and regulations encouraging energy efficiency — explain why the increase in per capita electricity use in California (up about 22% since 1979) is smaller than the increase in other states (where per capita electricity use is up about 52% since 1979).

A net-zero mandate for new homes?

Ten years ago, regulators in California announced an ambitious target: beginning in 2020, all new homes in California would be required to be net-zero-energy. (The target was first announced in California’s Long-Term Energy Efficiency Strategic Plan of 2008.)

The target date is less than two years away. Recently, it has become clear that regulators have backed away from a net-zero mandate. Instead, beginning in 2020, a new single-family home in California will be required to have a PVPhotovoltaics. Generation of electricity directly from sunlight. A photovoltaic (PV) cell has no moving parts; electrons are energized by sunlight and result in current flow. system rated at between 2.5 kW to 4.0 kW. Homes that are shaded by nearby trees or buildings will be exempt from the requirement.

Many new California homes will continue to use natural gas for space heating and domestic hot water — an approach that undermines efforts to build net-zero-energy homes. Although the recent decision by code authorities in California to back away from their net-zero target is disappointing to some energy-efficiency advocates, the new PV mandate still puts California ahead of other states when it comes to the energy performance of new homes.

A net zero mandate isn’t as easy as it sounds

Why did California regulators back away from mandating that new homes be designed for net-zero energyProducing as much energy on an annual basis as one consumes on site, usually with renewable energy sources such as photovoltaics or small-scale wind turbines.? There are several reasons:

  • California’s Renewable Portfolio Standards requires electric utilities to generate at least 50% of their electricity from renewable energy sources by 2030. Because of this goal, regulators have decided there is less urgency for California homeowners to offset their electricity consumption with rooftop PV.
  • The legislation that granted statutory authority to the California Energy Commission — the Warren-Alquist Act — requires that any energy-efficiency provisions mandated by Title 24 (California’s energy code) be cost-effective. This requirement puts an upper limit on the size of a PV array that regulators can mandate.
  • A homeowner in California who owns a PV system that produces more electricity on an annual basis than is consumed on site is not reimbursed by the utility for the extra electricity at the retail rate, so oversized PV systems generally aren’t as cost-effective as systems that are sized to barely meet a home's annual electricity usage. The California Energy Commission explains the situation this way: “Because the grid is cleaner and residential rooftop solar customer compensation for over-generation is very limited, it is critical that rooftop solar generation does not substantially exceed the home’s electricity use.” Mandating large PV systems might be seen as a violation of the law requiring energy-efficiency measures to be cost-effective.
  • Some lobbyists argued in favor of the continued use of natural gas for water heating and space heating. Because of this lobbying, the net-zero goal won't be reached as quickly as hoped. As Pierre Delforge, a senior scientist at the Natural Resources Defense Council, noted, “Zero-net electricity falls short of zero-net-energy and more importantly of zero-net-emissions. The new code doesn’t fully address one large remaining source of energy use in homes: the direct, onsite combustion of fossil fuels like natural gas and propane for space and water heating, which represent more than one-third of emissions in the building sector.” A home that uses natural gas for water heating and space heating generally uses less electricity than an all-electric home, which is one more reason why regulators decided to scale back the PV mandate.

What the current proposal mandates

The new mandate for PV is part of an upgrade of the Title 24 energy code called the 2019 Building Energy Efficiency Standards (called “the 2019 standards” for short). In addition to the new PV mandate, the 2019 standards include more stringent requirements for lighting efficiency and building envelopes (increased insulation levels and better windows). While the 2019 standards aren’t yet final — they still have to be approved by California’s Building Standards Commission at a scheduled December 2018 meeting — approval is expected to be routine and swift.

The new 2019 standards are also “expected to take steps that remove historical preference for natural gas-based space and water heating, dating back from the 1990s and early 2000s.”

Implementation. The new 2019 standards will take effect on January 1, 2020.

PV array size. Regulators came up with a formula for PV array sizing that scales with the size of the home. PV arrays that meet the new requirements are sized to cover expected cooling loads, lighting loads, electrical appliances, and miscellaneous plug loads, but not space heating or hot water loads.

Builders are permitted to meet the PV mandate with individual rooftop arrays, individual ground-mounted arrays, or with a large PV system that serves several homes. Builders can meet the mandate by providing PV systems that are owned by the homeowner or by providing access to a leased PV system.

New homes that are shaded by trees or nearby buildings are exempt from the PV mandate.

Expected energy savings. Homes meeting the new 2019 standards are expected to use 53% less grid electricity than homes meeting the existing California code.

Cost. The average incremental cost associated with implementing the new standards is estimated at $9,500. Over 30 years, the new standards (including the mandated PV) are expected to save $19,000 for the average homeowner.

The increased cost will raise the typical mortgage payment by about $40 per month, while saving $80 per month on utility bills.

Time-of-use issues need to be addressed

California utilities are developing technical solutions to the problems associated with the intermittency of wind and solar power sources. If battery costs continue to drop, as many experts predict, batteries are likely to be part of the solution.

The California Energy Commission notes, “Looking beyond the 2019 standards, the most important energy characteristic for a building will be that it produces and consumes energy at times that are appropriate and responds to the needs of the grid, which reduces the building’s emissions.”

So why can’t all states be like California?

California is taking aggressive steps to address climate change. Reducing CO2 emissions is obviously good for the planet, but it’s also good for consumers. Once California’s new building standards are enacted, buyers of new homes will pay $40 more each month for their mortgage, but will save $80 each month on energy bills. What’s not to like?

Meanwhile, in the lagging states — a group that includes not only thinly populated states like North Dakota and South Dakota, but also relatively populous states like Louisiana, Georgia, Ohio, and Indiana — builders continue with business as usual, building leaky homes that fail to follow best practices. As a result of lax regulation, home buyers in these states won’t get the long-term financial benefits that are made available to California home buyers.

I’ll paint a picture of what’s likely to happen. Let's imagine a family who buys a new home in Georgia, and let's imagine that the new home happens to have monthly utility bills of $150. The family visits cousins in California who happen to live in a new home with monthly utility bills of $50. At that point, the Georgia cousins are going to wonder, “Why can’t builders in Georgia make houses like they do in California?”

So why can’t all states be like California? The answers, of course, are cultural as well as political. But while some of the disadvantages of our current cultural path — in which the country is being fractured into two Americas, a red America and a blue America — are merely social or cultural, other disadvantages are existential.

Unfortunately for all of us, our planet can’t wait for the lagging states to catch up with California. The climate change timeline is too short for that.

Martin Holladay’s previous blog: “Ensuring Fresh Air in Bedrooms.”

Click here to follow Martin Holladay on Twitter.

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Image Credits:

  1. California Energy Commission

May 25, 2018 5:28 PM ET

Good intent, but CA is a failed model for housing
by Mitchell Costa

Judging as an end user, some of the results in energy efficiency are great, but the overall permitting, taxes and fees involved when building a house in CA create such a burden, that many, including myself, are unable to build an affordable house at all. The lack of affordable housing is a problem in many states, but CA leads the way amongst that particular problem.
It's not that better energy efficiency reqts are too much of a burden, but more that so many other CA reqts add heavy burdens to the building process. At the now standard $275-300 per sq ft to build a new house in my area, I haven't yet been able to find a way to get construction financed - and the end pricetag for a moderate home is certainly more than I can readily afford. I have enough construction experience, engineering knowledge, and determination that I'll eventually find a way to build, and more affordably, but it will require more time and effort than the average person can dedicate.
Bottom line is be very careful in modeling CA building requirements and enforcement - there is a lot that doesn't work about the CA system which needs to be separated from that which does work.

May 25, 2018 5:39 PM ET

Response to Mitchell Costa
by Martin Holladay

My endorsement of California's measures to reduce CO2 emissions is not an endorsement of all California regulations. I agree that California needs to take steps to make housing more affordable. Some of the necessary changes -- particularly the need to allow greater density in neighborhoods with single-family homes -- may be unpopular, but that doesn't make the steps less necessary.

May 30, 2018 3:47 PM ET

Edited May 30, 2018 3:47 PM ET.

by Jim Clabaugh

I've lived in California my whole life, 63 years in the Landscape Construction industry. I built my home here in Northern California 35 years ago and am currently building a small home in Western North Carolina. Typical building permits for a single family home in our town are between $70,000 - $90,000. That's just for the permit and fees. My building permit in North Carolina was $587.00 total, with no plans required. It took three days to get the permit. My son still lives here but is trying to get out, he'll never afford a house here. My two other daughters left as well. Nice dry climate (or drought ?), super overcrowded, expensive and over regulated.

May 30, 2018 3:53 PM ET

Response to Jim Clabaugh
by Martin Holladay

Like Mitchell Costa, you're justifiably worried about over-regulation and housing affordability. I agree with both of you that these issues need to be addressed in California.

I doubt whether permit fees of $70,000 to $90,000 are entirely due to energy efficiency rules. It wouldn't be hard to find communities in New England that have above-average energy efficiency standards, yet still maintain reasonable permit fees. We need to peel the California onion to discover the reason for the high fees you mention.

May 31, 2018 6:11 PM ET

"California has an aggressive
by Gustave Stroes

"California has an aggressive Renewables Portfolio Standard that will require utilities to use renewable sources such as wind, solar, and geothermal to generate 50% of the state’s electricity by 2030."

I have read that utilities can get around this rule by purchasing non-renewable electricity from OR, NV, AZ etc, which is not counted towards the 50% renewables total.

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