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How will Title 24 affect energy efficiency programs moving forward?

This author no longer works for DNV GL.

On July 1, 2014, California’s Energy Commission dropped a regulatory bomb on the energy efficiency industry. Its name is Title 24, a set of aggressive building standards that aims to reduce energy usage by drastically changing the baseline for new construction and existing building retrofits. For turnkey energy efficiency programs, this change could spell the end of an era. Before 2012, implementing a lighting project for a small or medium sized business was a relatively straightforward affair. Savings were calculated based on the wattage delta between the existing and replacement measures.

Prior to the Title 24, some utilities proactively changed the base case for linear fluorescents, with T8s becoming the standard assumption for savings calculations, regardless of whether a facility used higher-consuming T12s or not. Title 24 takes that model and vaults over it, by raising the bar for the baseline significantly for all fixture types, in addition to standardizing the linear fluorescent change. No longer can an implementer look at the existing fixtures to calculate claimable savings, and by extension, incentive amounts. Title 24 has aggressive baselines in terms of equipment eligible for installation and requires sensors for most lighting projects.

So what does this mean for the average small or medium business interested in energy efficient retrofits? What does this mean for the implementers in California who have made it their business to work in this market, where customers have low capital and require both a high level of hand-holding and utility incentives to get to installation? For smaller customers, lower claimable savings mean lower incentives available, and more money out of pocket. Permits, acceptance testing and compliance calculations are now required for simple projects, adding another layer of labor and additional costs that will likely get passed down to the customer.

In 2006, most turnkey programs could provide low to no-cost lighting projects to their customers. In 2014, the market has changed significantly. No-cost lighting projects are like celebrities at the airport; everyone talks about them, but nobody actually sees them get on the plane. LEDs are coming down in cost, but are not cost-effective options for all. In the end, implementers must decide whether to stay, hunker down and invest, or to pick up stakes and try something new. But if implementers leave the market, who will look out for the small and medium business customer? Will code simply force them to upgrade eventually? Or will we still find facilities with old stockpiled T12s in 2020?

Considering the energy savings potential and inherent controllability, maybe it’s in everyone’s best interest for incentives to be higher to offset more of the LED cost until the technology becomes more mainstream and affordable. Other solutions could include financing or simplified templates and/or projects to clarify the process for contractors and building professionals.

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