Why California’s New Efficiency Law Is So Important

CaliforniaLast month the California legislature adjourned, but not before passing a handful of important energy efficiency bills. Among the pile of bills sent to the governor, Assembly Bill 802 passed largely unnoticed. While AB 802 failed to garner much attention, it’s a truly important piece of legislation for those of us on the front lines of energy efficiency measurement.

AB 802 requires the California Public Utility Commission to update the rules for the measurement of energy efficiency so that measurement is based on “normalized metered energy consumption.” At EnergySavvy, we call this “metered savings” and it means measuring what happens at the meter as a result of an energy-efficiency upgrade performed on a home, building or other facility.

Measuring savings in this way involves looking at weather-normalized energy consumption before and after an energy-efficiency upgrade and accounting for the difference between consumption from pre-usage to post-usage. Measuring at the meter, while making adjustments to account for outliers, is important, because it’s a true accounting of how energy efficiency impacts the grid and provides value for ratepayers.

Across the industry, we’re seeing a general shift toward the use of meter data for measurement. Utilities are recognizing that measuring savings at the meter allows many programs to remain cost-effective, and regulators want an accurate accounting of energy efficiency measurement, instead of deemed savings. (Deemed savings are a set of standardized savings values for commonly used energy-efficiency measures that are developed and maintained by state or regional bodies.)

And while in many cases, measuring energy savings at the meter occurs during the course of the evaluation process, it’s groundbreaking to see it codified in statute as a policy mandate for a state. California has a history of leadership in energy efficiency with more than three decades of energy conservation programs, and California is once again leading a change that many states are likely to echo.

As with any policy change, the details will matter. AB 802 requires the California Public Utilities Commission (CPUC) to develop the new measurement standards by September 2016. The CPUC will have to address several issues through the development of the new rules, such as how net savings are measured, how attribution is addressed for complex multi-measure programs and how to account for the persistence of savings. These are all important details that will need to be hashed out by the the CPUC and stakeholders, but starting from a place of measuring savings at the meter is likely to lead to better measurement practices for California’s energy-efficiency programs.

As California is leading the way with new policy, the industry is meeting the challenge with new savings measurement software tools. Often referred to as “EM&V 2.0” technology, savings measurement software is made possible by advancements in cloud computing, parallel processing and data analytics to reduce the cost and time constraints that have traditionally hindered measuring metered savings.

These savings-measurement software tools empower utilities to measure savings at the meter, transmit savings data in a continuous manner and analyze the various factors that drive program performance outcomes to optimize programs.

Policy changes cannot happen in a vacuum. The industry has to be ready to meet the requirements set forth by the California legislature and the CPUC. In this case, modern software is capable of meeting those needs. In fact, while accounting for net savings will be a significant challenge that the CPUC needs to address while writing the new rules for measurement, savings-measurement software can measure net savings through the use of robust comparison groups that span entire service territories.

The arrival of savings measurement software will be a crucial enabling tool to meet the requirements set forth by AB 802.

Measuring savings at the meter is an important stepping stone for the energy efficiency industry. As energy efficiency is called on to address climate change, serve as a compliance mechanism for the Clean Power Plan, and deliver cost-effective savings for ratepayers, we need to measure energy savings in a way that meets those challenges.

Additionally, the growing calls for market-based energy-efficiency programs will require reliable measurements of savings and savings measurement software that can produce accurate results fast enough for a market to find useful.

For all of these reasons, energy-efficiency advocates and industry leaders should be cheering for California and AB 802, and other states should begin to follow the lead of the Golden State. With the recent arrival of savings-measurement software, accounting for metered savings is now cost-effective, simple and accessible. There is no reason why 2016 can’t be the year we move to measuring savings at the meter and capturing the true and full impact of energy efficiency.

By: Jake Oster, Senior Director of Regulatory Affairs