California is at a critical time of energy transition. With the bold objective to decarbonize the grid by 2040, it will take all hands on deck with regulation structured to both protect energy consumers and encourage the needed scale-up of business model and technology innovation with private investment.
The potential and goals framework for energy efficiency is an important link for meeting the state’s decarbonization goals. However, the existing construct for establishing potential, setting goals, and implementing energy efficiency programs needs to be overhauled to meet these goals in an efficient, streamlined manner. California needs to recalibrate its myriad of historic policies and well-intentioned initiatives to ensure that all are properly valuing demand flexibility resources in order to support a reliable, decarbonized grid.
The CPUC's bold questions recognize that the energy efficiency industry is at a critical transition point - and new solutions are ready for deployment.
Re-orienting the potential and goals toward a more meter-based framework to understand the changes in consumption will enhance and bolster the integration across DERs in addition to making them more accessible for local system planning.
In mid-March, the California Public Utilities Commission (CPUC) solicited comments from stakeholders on questions related to optimizing energy efficiency in the Commission’s Integrated Resource Plan (IRP) proceeding and issues related to energy efficiency portfolio cost-effectiveness. In this ruling, they posed several foundational policy questions surrounding the Energy Efficiency Potential and Goals framework. Recurve was pleased to provide our perspective on how efficiency and demand flexibility can evolve to help California meet its ambitious decarbonization goals.
The potential and goals study provides the foundation for energy efficiency forecasting in procurement planning, establishes energy savings targets, and sets the groundwork for designing cost-effective energy efficiency portfolios. California's potential and goals framework looks very similar to those used across the country. Savings are based on a sum of incremental averages from installing discrete devices and adjusted for consumer adoption based on incentive levels, with additions for codes and standards. Even though it represents only energy efficiency, in recent years the framework has faced increased complexity--even as so many other clean energy initiatives have emerged in the state.
The current framework has been a useful model in a data-poor world when abundant and relatively discrete incremental cost-effective savings could be achieved from just installing a light bulb. But in today's data rich AMI based clean energy grid, quantifying the time and locational value of demand-side interventions is critical. At best, the historic potential frameworks for energy efficiency fail to adequately capture this value; at worst the results they provide are actually misaligned with it.
Potential and goals analyses must be adapted to ensure they are motivating targeted investments that can drive the greatest value and have a meaningful impact on system planning and grid operations.
The CPUC's bold questions recognize that the energy efficiency industry is at a critical transition point. Recurve greatly appreciates the new level of urgency this conversation has taken on at the Commission and we have found that stakeholders have been thrilled to take up the discussion. In many thoughtful conversations over the past months, we have worked together to craft a new way forward for energy efficiency in California (even if meaningful points of disagreement remain to be worked out in the regulatory process). California is ready to take bold action on this challenge.
Recurve is excited to contribute to this potential policy (r)evolution. As an industry leader in meter-based demand flexibility, Recurve supports resource planning and facilitates performance-based transactions, and we encourage market-based solutions for decarbonization. Re-orienting the potential and goals toward a more meter-based framework to understand the changes in consumption will enhance and bolster the integration across DERs in addition to making them more accessible for local system planning.
In our response, we recommended both a number of systemic changes and immediate modifications to the goals process that we believe are necessary to enable meaningful progress toward California’s decarbonization goals.
Our proposed systemic changes include segmenting the current portfolio, establishing a common resource valuation methodology, and optimizing meter-based demand flexibility by load-serving entities. As we make this bigger transition, our recommendations for immediate modifications to the energy efficiency proceeding are to use normalized metered energy consumption (NMEC) as the foundation for tracking impacts toward goals, update reporting structures to accommodate actual metered load shape impacts, and to maximize competitive procurement of energy efficiency resources from third parties.