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Energy-Efficiency Funds and Demand Response Programs, California

Updated July 2007

What public-purpose-funded energy efficiency programs are available in my state?

California's restructuring law provides funding for energy efficiency programs through a non-bypassable Public Goods Charge. The California Public Utilities Commission approved energy-efficiency programs for 2006-8 in November 2005. Over these three years, $1.7 billion is being spent on electric energy-efficiency programs—about 40% funded by the Public Goods Charge, and the rest is to be recovered through electric rates. An additional $300 million will be spent on natural gas efficiency programs, funded through gas rates.

Public-purpose-funded energy efficiency programs are administered by the state's investor-owned utilities (IOUs): Pacific Gas and Electric (PG&E), Southern California Edison (SCE), Southern California Gas (SoCal Gas), and San Diego Gas and Electric (SDG&E).

In 2006, PG&E reorganized its energy efficiency program offerings, combining its commercial-scale initiatives into the Large Commercial and Institutional Program. In addition to standard rebates for energy-efficient equipment, the program includes on-site energy audits, project financial analysis, incentives for custom energy-efficiency retrofits and new construction, incentives for demand response retrofits, commissioning and retro-commissioning, and various other services.

SCE, SDG&E, and SoCal Gas jointly offer the following programs:

  • The Standard Performance Contract (SPC) Program, offered by SCE and SDG&E, provides performance-based incentives for energy efficiency retrofits, including lighting, HVAC, motors, VSDs, controls, and custom projects. Incentives are $1.00/therm for gas energy efficiency projects and range from $0.05/kWh (lighting measures) to $0.14/kWh (most air conditioning and refrigeration measures).
  • The Express Efficiency Program, offered by SCE, SoCal Gas, and SDG&E provides rebates to non-residential customers for specific energy-efficient products including lighting, air conditioning, refrigeration, motors, and natural gas-fired equipment, such as boilers. Customers can receive rebates up to a maximum of $350,000 per service agreement, per fuel (electric or gas), each year. Check with your local utility for eligibility requirements.
  • The Savings by Design program provides incentives for energy efficiency measures in new construction and major renovations. The program offers building owners and their design teams a range of services, including design assistance, "owner incentives" to help offset the costs of new energy-efficient buildings, and "design team incentives" to reward designers who meet ambitious energy efficiency targets. For further details, contact the applicable IOU for your region.

In addition, SCE and SDG&E are offering the following programs:

  • SCE's RCx program provides retro-commissioning services to large customers.
  • SDG&E's Energy Savings Bid Program provides incentives for electric or gas efficiency projects that save at least 500,000 kWh or 25,000 therms annually. The incentives range from $0.07 to $0.20/kWh for electric measures and gas projects are paid at $0.80/therm saved.

SoCal Gas offers the following additional natural gas efficiency programs:

  • The Commercial & Industrial Incentive Program provides incentives for the replacement of heat recovery equipment, the installation of high efficiency furnaces, kilns, ovens and industrial dryers, or other specialized applications. Incentives are 30% of project cost, or $0.80/therm saved.
  • The Gas Engine program pays 30% of the cost of replacing a natural gas engine, or $0.80/therm saved, whichever is lower. Incentives are capped at $25,000 per year.
  • The Business Energy Efficiency Program (BEEP) provides incentives for gas efficiency projects in four areas. Federal customers may be interested in the process equipment replacement and customer process improvement programs, which offer incentives of up to $25,000, and the energy efficiency grant program, which funds larger projects up to $300,000.

California's two largest municipal utilities, the Los Angeles Department of Water and Power (LADWP) and the Sacramento Municipal Utility District (SMUD), each offer their own set of energy efficiency programs.

  • LADWP's Commercial Lighting Efficiency Offer (CLEO) program provides per-unit rebates for efficient lighting products ranging from compact fluorescent lamps to high-intensity discharge fixtures.
  • Similarly, SMUD offers rebates (generally, for 30% of a project or up to about $30,000, depending on product type) for qualified efficient lighting, packaged air conditioners, process improvements, refrigeration, motors, and "cool" roofs.
  • SMUD also provides a custom incentive of $0.08 to $0.14 per kWh saved in the first year (up to the lesser of $35,000 or 30% of project cost) for savings achieved in process, refrigeration, and control systems, as well as other permanent load reductions.

The California Energy Commission (CEC) maintains a database of California programs that provide rebates and other forms of assistance for energy efficiency, load management, and distributed generation.

What utility energy efficiency programs are available to me?

For information on utility energy efficiency programs, see the previous section.

What load management/demand response options are available to me?

California's electric IOUs offer a variety of demand response programs that may be of interest to federal customers:

  • The Demand Bidding Program (DBP) provides incentive payments of up to $0.10/kWh beyond market price (the maximum incentive is $0.35/kWh) for day-ahead curtailment commitments. The utility activates a DBP event on a day-ahead basis when the California Independent System Operator (CAISO) issues an alert notice or the next day's forecasted load exceeds 43,000 MW. When notified of forthcoming events, participants have the option to bid the amount of electric load they can reduce, and the hours for which they are willing to reduce this load. Bids must cover at least two consecutive hours. Compliance with curtailment requests is voluntary.
  • The Critical Peak Pricing program offers lower electricity rates in return for setting a rate 3 to 5 times higher than the regular rate on up to twelve "Critical Peak" afternoons during the summer. Customers are notified of CPP days on a day-ahead basis. A bill protection option is available that prevents participants from paying more than they would have under their previous rate during their first year of CPP participation. Participants may also opt for technical assistance to help them better take advantage of the program, and receive cash incentives for doing so.
  • The Base Interruptible Program allows participants to nominate a level of "firm" service (the amount of electricity necessary to meet operational requirements during an interruption) that is below their historic average maximum demand. They receive a monthly incentive payment based on the size of the remaining, curtailable portion of their load, in return for committing to reduce to the firm level when called upon by the utility. The incentives are typically about $7 per committed kW per month for curtailment of 15% of load when called by the utility with 30-minute notice, with a minimum drop of 100 kW per event. PG&E and SDG&E, however, offer a longer, 3-hour, notice in exchange for a lower incentive option ($3/kW). Curtailment requests cannot exceed one per day (of up to four hours), ten per month, or 120 hours per year (90 hours for the lower incentive options). Penalties apply for customers that fail to reduce load as requested-the amount depends on the utility and the incentive option.
  • SCE and SDG&E offer summer air conditioner cycling programs to their commercial customers (the Summer Discount Plan at SCE and Summer A/C Saver at SDG&E). These programs provide a credit on participants' summer season electric bills in return for allowing the utility to cycle air conditioners when needed during the months of May to September. Customers can choose among several options regarding the frequency and duration of curtailments, each with corresponding remuneration levels.
  • The Optional Binding Mandatory Curtailment Program provides customers with exemption from rotating outages if they can reduce their circuit load during Stage 3 Emergencies. Participants must reduce their power consumption by 5-15% for the duration of every rotating outage event. The penalty for failure to reduce as requested is $6.00 per kWh for energy use that exceeds an established baseline.

For further details and information on additional demand response programs not covered here, contact your electric utility: PG&E, SCE, or SDG&E.

The California Energy Commission's Enhanced Automation Program assists customers in the design and optimization of controls systems to help them manage their loads and participate in demand response programs in the state.

The California Consumer Power and Financing Authority (CPA) offers the Demand Reserves Partnership Program. Participants in the program agree to reduce their electricity load (or operate on-site generation) upon notification, for at least 2 hours, and up to 24 hours per month or 150 hours per year. Customers receive a monthly reservation payment as well as a performance payment for each load curtailment event. Load reduction commitments can be customized for each hour of the year, and participants can choose the amount of advance notice they require. Individual customers typically participate in the program through a designated "Demand Reserves Provider."

What distributed energy resource options are available to me?

The Database of State Incentives for Renewable Energy (DSIRE) provides detailed information on a large number of programs that provide incentives for renewable distributed generation in California.

  • Rebates are available for distributed generation equipment from photovoltaics and wind turbines (30 kW min. capacity) to diesel engines through the Self-Generation Incentive Program, administered by PG&E, SCE, SoCal Gas, SDG&E, and the San Diego Regional Energy Office. Incentives and eligibility requirements vary depending on the distributed generation technology, ranging fromrenewable fuel cells ($4.50/watt) to internal combustion engines and large gas turbines ($0.60/watt). Systems can be up to 5 MW, though only the first MW of capacity is eligible for incentive payments. For program specifics, contact the applicable administrator for your region: PG&E, SCE, SoCal Gas, SDG&E, or the California Center for Sustainable Energy.
  • Federal customers may also be interested in the state's Emerging Renewables Program. Rebates are based on the size and type of the renewable technology. The emerging renewable energy system must be permanently interconnected to the electrical distribution grid of the utility serving the customer's electrical load. The customer must receive electrical distribution service from PG&E, SCE, SDG&E, or BE. Fuel cells (less than 30 kW) using renewable fuel qualify for $3.00/W, and wind turbines less than 50 kW may qualify for $2.50/watt for the first 7.5 kW ($1.50/watt for system sizes > 7.5 kW and < 30 kW).
  • The California Solar Initiative offers photovoltaic incentives starting at $2.50/watt for systems < 1 MW in size and a pay-for-performance incentive structure to reward high-performing solar projects. All electric customers of PG&E, SCE, and SDG&E are eligible to apply for incentives. If a municipal natural gas customer takes electric service from PG&E, SCE, or SDG&E, that customer is eligible for solar incentives.

A number of additional utility-funded rebates are also available. Up to $50,000/site is available for PV in LADWP, Anaheim, and Palo Alto's service territories. Sacramento and Burbank offer smaller incentives for solar installations.

In California, DG systems of less than 1 MW that are net metered and eligible for CPUC or California Energy Commission incentives for being "clean" and "super clean" are fully exempt from any utility exit surcharge.

Are there energy efficiency programs sponsored by the state government?

There are energy efficiency opportunities for federal customers through the Public Interest Energy Research (PIER) program, which is administered by the California Energy Commission and focuses on research, development, and demonstration programs. Federal agencies may propose their own programs to PIER for funding or may apply for incentives, technical assistance, and other aid through programs already established.

What additional opportunities are available to me?

Federal customers whose utilities have area-wide contracts with GSA and, by extension, all other federal agencies (e.g., PG&E, SDG&E, SCE, SoCal Gas, City of Alameda), may take advantage of additional energy efficiency opportunities. Federal facilities should contact their account executive to determine the level of participation by their local utility.