1 • Subtitle
New SV Clean Energy
PowerPoint Template
GreenStart and GreenPrime
Evaluating and Confirming Changes for 2024
Executive Committee Meeting
October 2023
Item 3
PRESENTATION
2 What we will discuss today
• Overview of SVCE standard product offerings
• Challenges with carbon-free energy procurement in 2024 • Short-term options to achieve 100% clean or alternatives • GreenStart
• GreenPrime
• Longer-term pathways to achieving our mission and offer customer valued clean energy products
Item 3
PRESENTATION
3 SVCE Product Offerings
GreenStart –
100% Clean
Standard offer
~50% from Renewables
~50% Carbon-free (large
hydro and nuclear*)
GreenPrime –
100%
Renewable
Opt-up premium
product
100% Renewable and Green-e
Certified
$0.008 premium
*currently only PG&E allocations of Diablo Canyon
GreenPrime Direct – Available to only certain commercial industrial customers
Other:
Item 3
PRESENTATION
4 Product Mix
GreenStart GreenPrime
Clean Energy
Standard
100% Clean Energy measured annually 100% Renewable Energy or RPS measured annually
Product Content RPS above California’s RPS or ~50% via
Power Purchase Agreements (PPA) and Short-term PCC1 RECs +
Balance from Carbon/GHG-free non-RPS
resources
100% RPS and Green-e Certified via PPA and
Short-term PCC1 RECs. PCC3 RECs only used
if necessary to meet increased participation
requirements.
Eligible Resources RPS: CEC defined, solar, geothermal, biomass, small hydro, and wind
Carbon-free: Large Hydro and nuclear
allocations
Wind and Solar which meet Green-e
certification requirements.
Rate Set at discount to PG&E GreenStart rate + $0.008 premium Customers 90-95% of retail load 5% of retail load
Emissions Low to zero zero
Item 3
PRESENTATION
I
5 SVCE must balance all mission goals
SVCE & State
Goals
Ambitious decarbonization
and climate goals are
increasing costs in the short-term until barriers to scaling supply are addressed.
Mission: Reduce dependence on fossil fuels by providing carbon-free, affordable, and reliable electricity and innovative programs for the SVCE community Item 3
PRESENTATION
6 Renewable Energy Credits (RECs) are trading at
all-time highs
Contributors to REC Price Increase
$14.49 $12
$47 $45
$25 $18.76
$14 $12
$70
$80
$64
$58
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
$90.00
2021 2022 2023 2024 2025 2026
Change in PCC1* Market Prices
(2023 – 2026)
PCC1 Budget PCC1 Price
1 The CARB Cap and Trade auction shows settled prices
doubling between 2021 - 2023
Offsets are settling at $35/ton ($15/MWh), double from 2021 2 Large corporations have become influential REC buyers 3 Supply chain issues (raw materials, labor, etc.) and interest rates
4 Interconnection delays
REC Budget ≠Prices
*PCC1: Portfolio Content Category 1, renewable resources verified to be scheduled into the California Balancing area. 5 End of Renewable Portfolio Standard (RPS) compliance
period driving up demand and prices
Green-e certified RECs particularly difficult to find
Item 3
PRESENTATION
7 Carbon free prices are increasing
Contributors to Carbon Free Price
Increase
$4.50 $5
$9 $8 $7 $6.00
$4.50 $5
$20
$25
$7 $7
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
2021 2022 2023 2024 2025 2026
Change in CF Market Prices
(2023 – 2026)
CF Budget CF Price
Carbon Free Prices High in
2024
3 Large corporations have become influential CF buyers
Amazon has procured more than 12.4GW since 2015, 34% of domestic PPAS by tech companies
1 Pacific Northwest States have introduced clean targets, reducing available hydro supply for CA.
WA launched its own Cap-and-invest program in Jan 2023
2 The Pacific Northwest had a very poor water year (2022- 2023)
Could take 2 years to dig out
4 Electricity demand in the PNW is growing at the fastest rate in decades
The PNUCC expects electricity demand in the PNW to increase by
2.5% annually throughout the next decade, driven by industry Item 3
PRESENTATION
8 GreenStart: budget impact & opportunity cost
$30M could fund:
• 11,000 incentive rebates for heat pump water
heaters, or
• 7.5% discount to customers, relative to PG&E, or
• 4,500 L2 ports for EVs
Under current
market
conditions it is
expected to cost
$30M above
budget to fill
clean position
for GreenStart
just in 2024.
Item 3
PRESENTATION
Annual HPWHs Needed to Replace all
9 GreenStart: Options for 2024
Option Description Benefits Drawbacks
#1 Maintain 100% Carbon Free for 2024
Expected reportable emissions on Power
Content Label: 74 lbs of Co2*
• Maintains SVCE’s
historic product offering
• May not be feasible
• Expensive
• Limited emissions
reductions for grid
#2 Maintain 100% Carbon Free for 2024
with nuclear purchases
Expected reportable emissions on Power
Content Label: 74 lbs of Co2*
• Same as above, plus at
lower cost
• Same as above, but
requires board
approval
#3 Stick with current Carbon Free position
(~78%-85% in 2024) which assume
PG&E Large Hydro allocations.
Expected reportable emissions on Power
Content Label: ~170 lbs of Co2
• Lower power supply
cost, which helps
maintain SVCE reserves,
discount and/or
program funding
• May create concern
from customers,
especially GreenStart
customers with
Climate Action Plans
*emissions associated with Coso Geothermal renewable resources Item 3
PRESENTATION
10 GreenPrime Challenges
• Green-e Certification
• Cost of short-term Renewable Energy products
• Participation uncertainty, resource and cost allocation Item 3
PRESENTATION
11 Sales of GreenPrime currently total 190 GWh/year,
~5% of total SVCE volume.
• GreenPrime customers and primary motivations . . .
o large C&I customers – 90 GWh
- voluntary programs, e.g., US EPA Green Power Partnership, USGBC LEED-Certified Buildings o member agencies – 95 GWh
- community leadership and municipal GHG targets, US EPA GPP o ~2,000 residential customers – 5 GWh
• SVCE supplies GreenPrime by purchasing RECs annually from projects that are ‘Green-e Certified’ o independent audit verifies RECs meet strict standards, plus CARB emissions allowances o considered a ‘gold standard’, recommended by EPA GPP, LEED Background
Item 3
PRESENTATION
12 GreenPrime: Competitive Considerations
PG&E offers 100% RE
via competing ‘Solar
Choice’ program, at a
$0.011 – $0.023/kWh
premium.
• Regionally sourced solar
from dedicated projects
• Premium varies significantly
by rate class, averaging
~1.65 cents/kWh
• Green-e Energy certified
• Enrollment limited to 272 MW
• New subscriptions waitlisted
pending PfM ruling
Note: current SVCE
GreenPrime premium
is $0.008 / kWh
Item 3
PRESENTATION
RESERVATION
Sacramento
Santa Rosa
Tonopah
San Francisco
San Jose
Fresno
CALIFORNIA National Parks Death Valley'
National Park
ovisalia
Tulare
Sequoia &
Kings Canyon
Eldorado
National Forest
Sequoia
National Forest
Stanislaus
National Forest
Yosemite
National Park
Mammoth
Lakes
Sierra National Bis£op
Forest
Ridgecrest
San Luis Baku^^d Obispo
Solar Choice Premium
Residential $ 0.0233
Bl Small Comm $ 0.0204
BIO Med Comm $ 0.0108
B19 Large Comm $ 0.0163
B20S Industrial 0.0202
weighted avg: $ 0.0165
13 GreenPrime: CCA comparisons
100% Renewable Energy Programs at Local CCAs
SVCE PCE MCE CPSF EBCE SJCE
Product and
Sourcing
(2022 PCL)
GreenPrime:
- 100% wind
ECO100:
- 50% solar
- 50% wind
Deep Green:
- 50% solar
- 50% wind
SuperGreen:
- 50% solar
- 50% wind
Renewable
100
- 50% solar
- 50% wind
TotalGreen:
- 100% wind
Certification Green-e Green-e WREGIS
(No
certification)
Green-e WREGIS
(No
certification)
Green-e
Premium/kWh $0.008 $0.01 $0.01 $0.01 $0.0075 $0.01
CCAs generally offer 100% Renewable Energy or RPS programs but are starting to move away from Green-e certification.
Item 3
PRESENTATION
14 GreenPrime: Discontinuing Green-e in favor of ‘self-certification’ will reduce key supply/pricing pressures. GreenPrime Certification and Proposed Changes • Complete Green-e noticing processes and certification for CY 2023 • Discontinue Green-e for CY 2024
Self-Certification:
• Establish REC ‘self-certification’ processes that meet LEED and US EPA GPP req’ts • Leverage WREGIS reporting, and possible high-level 3rd party verification, BOD attestation • Communicate changes, and establish annual SVCE report-out to GreenPrime customers •
Green-e:
Benefits:
• Significantly increases available supply in the marketplace • Eliminates potential need to buy CARB allowances
• Allows for possible future sourcing of GreenPrime RECs from general SVCE PPA/REC portfolio, without increasing risk of SB350 non-compliance Item 3
PRESENTATION
15 Calculating
the incremental cost
of GreenPrime vs.
GreenStart
(utilizing marginal REC
and CF costs for 2024)
GreenPrime: Utilizing current market prices, an updated cost premium for 2024 would be ~2.5 cents/kWh
Formula:
0.5 x (REC price less carbon-free price)
2024 adder calculation:
0.5 x ($75 - $25*) assumes GS stays as is
$25, or 2.5 cents/kWh
:
- illustrative - -
Item 3
PRESENTATION
16 GreenPrime: Options for 2024
GreenPrime Rate Change Alternatives
Status Quo Directional
Price Increase
Price at Standard
Discount to PG&E
Price at SVCE 2024
Cost Recovery Rate
Price /
Change to Customer
$0.008/kWh
No change
$0.012/kWh
50% increase for 2024
~$0.016/kWh (avg)
100% increase for 2024
~$0.025
200% increase for 2024
Competitive
Positioning
~50% discount to PG&E ~25% discount to PG&E 1-4% discount to PG&E (std discount policy)
50% premium to PG&E
Annual Bill Impact
Res (6000 kWh) /
C&I (10GWh)
N/A – no change +$24 / +$40,000 +$48 / +$80,000 +$102 / +$170,000 Impact to 2024 SVCE
Reserve Contribution
< ~$3.2M > < ~$2.5M > < ~$1.7M > No impact (unless opt-outs) Pro’s - No customer disruption
- Affordable alternative if GS
no longer carbon-free
- Price signal to customers
- Possible alternative if GS no
longer carbon-free
- Unlikely to result in opt-outs
- Price still discounted to PG&E
- No impact to reserve
contribution
- No 2024 cross-subsidy
Con’s - Significant impact to 2024
reserve contribution
- Significant cross-subsidy in
2024
- Some customer disruption,
opt-downs likely
- Impact to reserve contribution
- Some cross-subsidy in 2024
- Significant customer disruption,
opt-downs very likely
- High-priced alternative to GS
- Some cross-subsidy in 2024
- Significant customer disruption;
many opt-downs likely
- Opt-outs possible
- Unlikely alternative to GS
Item 3
PRESENTATION
17 Request of Executive Committee: GreenStart
Staff's recommended path for 2024:
1. Continue to seek carbon-free resources within budget parameters for calendar year 2024
2. Approve the procurement of nuclear carbon-free resources, provided allocations from PG&E are not available
3. If carbon-free resources are not available within budget, adjust 100% Clean goal for 2024 to current position of ~78% Clean – Option #3 – Slide 9
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PRESENTATION
18 Request of Executive Committee: GreenPrime
Staff's recommended path for 2024:
1. Discontinue Green-e Certification for 2024
2. Re-price GreenPrime premium for 2024 from $0.008/kWh to $0.012/kWh, reflecting underlying cost increases but
maintaining 100% RE/CF GreenPrime as a viable alternative to GreenStart
3. Communicate GreenPrime rate and process changes to
customers in December 2023
Item 3
PRESENTATION
19 Long-term picture
New build required by 2045 estimated to exceed
180,000 MWs
SB100 means
SVCE’s current
clean goal will
become all LSEs
compliance
obligation.
What is SVCE’s
long-term value
proposition?
Item 3
PRESENTATION
Decarbonizing the Grid by 2045
Renewables targets:
60% by 2030
90% by 2035
95% by 2040
100% by 2045
^vACARB
New electricity resources needed
180,000
160,000
140,000
120,000
5*100,000
u
<u
80,000
u
I
60,000
z
40,000
20,000
0 Demand Response
Battery Storage
Solar
Out-of-State Wind
Geothermal
Hydrogen Combustion Turbine
Pumped Storage
Customer Solar
Offshore Wind
Wind
Biomass
2023 2030 2045
20 SVCE’s clean energy trajectory
SVCE expects to meet a 75% RPS target by 2030. Availability from non-RPS, Carbon-free resources such as large hydro and nuclear is highly uncertain.
Item 3
PRESENTATION
21 Opportunity to set a new course
SVCE’s mission is durable. Shifting market and policy conditions will necessitate a deeper look at how SVCE balances "clean", "affordable" and "innovative programs“. • Clean Energy Pathways
• 100% RPS
• 24/7 carbon-free
• Google CFE for full portfolio
• Shift focus to incremental clean projects
• Carbon abatement policy to achieve sustainable reductions • Programs to expedite the energy transition
• Load modification to help ensure affordability and feasibility of carbon neutral economy
• Alignment and/or enhancements to opt-up and custom product offerings Item 3
PRESENTATION
22 Request of Executive Committee: Long-term
Staff's recommended path for beyond 2024:
1. Return with recommended overall Clean target for CY 2025- 2030 as part of 2024 Integrated Resource Plan and 2045
Pathway to Carbon Neutral discussion
2. Re-assess GreenStart and GreenPrime offerings holistically with consideration for findings from above analysis including product value proposition, cost allocation, hedging and price premium
Item 3
PRESENTATION
23 Next steps and timeline
Decision for 2024 Clean target and needs to happen soon
1. November Board:
1. Possibly seek Board approval to change clean target for GreenStart for 2024
2. Possibly seek Board approval for changes to GreenPrime for 2024
2. December Board:
1. Expected rate proposal for GreenStart and GreenPrime including discount to PG&E’s rate
3. Q1 2024: Clean energy futures paper
1. Pathway to 100% Carbon Neutral/Clean by 2045
2. Pathway to 24/7 - Strategic Focus Area
4. Q2 SVCE's 2024 Integrated Resource Plan Scenarios developed
1. Plan to achieve GHG reduction and reliability requirements Item 3
PRESENTATION
24 • Subtitle
New SV Clean Energy
PowerPoint Template
Questions & Discussion
Item 3
PRESENTATION
25 Glossary
• CARB: California Air Resources Board is the California agency charged with protecting the public from the harmful effects of air pollution and developing programs and actions to fight climate change.
• Cap and Trade Auction: The Cap-and-Trade Regulation establishes a declining limit on major sources of GHG emissions throughout California, and it creates a powerful economic incentive for significant investment in cleaner, more efficient technologies. • PCC1 RECs: Renewable resource with a first point of interconnection within the California grid. Allows for some firm imports to also be counted. PCC 1 RECs are generally considered more valuable than PCC 2 or PCC 3 RECs.
Item 3
PRESENTATION
1 New SV Clean Energy
PowerPoint Template
Subtitle
Net Billing Tariff (NEM 3.0)
Implementation Proposal to
Executive Committee
Peyton Parks
October 27, 2023
Item 4
PRESENTATION
2 Agenda
• Background on Net Billing Tariff
• Differences between NEM 2.0 and NBT
• Drivers behind the change
• SVCE Position and Future Potential
• Potential levers for program improvement
• NBT Program ‘Unknowns’ and options
• Staff Recommendation for 2024
• NEM 3.0 – Colloquial term
for Net Billing Tariff
• Net Billing Tariff – PG&E
and SVCE internal
terminology
• Solar Billing Plan –
Customer-facing term used
for bill presentment
• Avoided Cost Calculator
(ACC) – The hourly
determinate of solar export
pricing
Key Terms
Item 4
PRESENTATION
3 Background
• After earlier proposal revisions, in December 2022 CPUC approved major changes to Net Energy Metering in CA
• SVCE provided comments to the proceeding in favor of the changes, which incentivize solar with paired storage over stand-alone solar installations • Solar interconnection applications filed with PG&E on or after April 15, 2023 are subject to new rules. Existing NEM customers are unaffected until end of 20-year NEM agreement
• Beginning December 15, 2023 Net Billing Tariff calculations will go live on customer bills.
• Staff proposes following PG&E export pricing and billing structure for first year
Timeline and Highlights
2023
2024
2022
2022 December, NEM 3.0 passes
CPUC
2023 April 15, last day to file
NEM 2.0 application
2023 December 15, NEM 3.0
billing goes live
2023 October 27, Strategize
NEM 3 implementation with Exec
Committee
2023 November 08, BOD approves
recommended NEM 3.0 strategy
2024 Study customer performance,
make additional BOD rec’s
Item 4
PRESENTATION
4 Background - Key Differences NEM 2.0 vs NBT
Feature NEM 2.0 Net Billing Tariff Comments
Rate
Requirement
Any TOU Rate E-ELEC TOU rate designed for electric appliance households (heat pump, EV)
Export
Compensation
Retail minus Non-bypassable chargeAvoided Cost
Calculator (ACC) +
Adders
Intended to match export value more
closely with wholesale energy value;
early adopters auto-enrolled with ‘adder’
Billing
Settlement
Annual Monthly Export values offset charges, accrued
charges will not carry forward to True-up
System Size
Limits
<= 110% Annual
Usage
<= 150% Annual
Usage
Additional sizing intended for future
electrification efforts
Average System
ROI
6 Years 9 Years* *Assumes system paired with battery
storage
Greatest
Customer Value
Export, Self-ConsumptionSelf-Consumption kWh consumed, or stored for later consumption, provides greatest value
New solar installations since SVCE inception in 2017 have fallen under NEM 2.0 rules Item 4
PRESENTATION
5 Background – Three Drivers of Change
Equity
Grid
Stewardship
Export
Valuation
Alignment
• Solar exports that offset T&D charges absolve solar
customers of paying for fixed grid costs
• These costs get shifted to non-solar customers that
don’t have solar on their roofs.
• The Avoided Cost Calculator (ACC) values NBT solar
exports near the hourly wholesale grid price
• This is intended to be a better reflection of the
exports’ value to the grid compared to retail pricing.
• NBT strongly incentivizes customers to pair storage
with their solar to achieve the best ROI
• This functions as a price signal to increase the
number of dispatchable batteries on the grid
Item 4
PRESENTATION
Net Load- March 31
£
o
o
28,000
26,000
24,000
22,000
20,000
18,000
16,000
14,000
12,000
10,000
0 12 a.m. 3 a.m. 6 a.m. 9 a.m. 12 a.m. 3 p.m. 6 p.m. 9 p.m.
Hour
6 Important Reminder!
Net Billing Tariff is ONLY applicable to NEW Net Energy Metering applications received by PG&E AFTER April 15, 2023
Existing NEM 1.0 and NEM 2.0 New NBT Customers
• NOT affected by NBT decision
• Will continue to export kWh at the retail rate
• No value proposition or ROI change
• After end of 20-year Net Metering Agreement
term, customers transition to NEM 3 or then-applicable tariff • New solar installations in 2023 and onward
• Rate of uptake slowed due to industry-wide
push to install under NEM 2.0
*Exact number of customers to be confirmed via
PG&E update to customer attribute file in 2024
35,510 < 500*
Item 4
PRESENTATION
7 SVCE Position and Potential
SVCE’s Position on NBT is in Alignment with PG&E
• SVCE believes the move to NBT is ‘directionally correct’ in reducing the export rate paid to solar customers and promoting battery storage installation
• Solar is already heavily incentivized by tax credits and most likely does not need the rich incentive of retail exchange credits to continue its high adoption rates
• Self-generation is repeatedly shown to be a vital part of electrification, helping homeowners who electrify to avoid the rising cost of electricity prices
• Electrified homes with solar + storage tend to look more like efficiency measures, reducing total load from the grid with no/minimal exports.
NBT appears to be a step in
the right direction for a
number of measures:
• Right-sizing of solar systems,
limiting export
• Battery installation
• Enabling future electrification
• Carbon-free self-generation
However, it may be possible
to customize the Net Billing
Tariff to further advance
SVCE’s interests in a
number of distinct ways
Item 4
PRESENTATION
8 Levers for Program Customization
Export Rate Adders and ‘Bonus’
VPP or DR Enrollment
CARE/FERA Incentives
Battery Rebates/ Programs
Potential to create SVCE’s own
variable or fixed/flat export pricing
calculation for entire year
$/kWh additional compensation to
incentivize exports at strategic hours,
or less to optimize charging
Flat adders or bonuses to make solar
more attractive to low-income
customers, above and beyond PG&E’s
existing compensation
Provide custom DR incentives to
piggy-back on existing programs or
create our own
Design and implement rebates for
battery storage pairings to provide
best customer value under NBT
Item 4
PRESENTATION
kxxvAx
9 Options for NBT Rollout December ‘23
Option 1: Option 2: Option 3: Option 4:
Course of Action
Follow PG&E ACC Follow PG&E ACC
with ‘Sweetener’
Set an SVCE
‘Custom’ Rate (flat
for all hours)
Set an SVCE ‘Custom’
Rate (swings
dramatically, deeply
incentivize storage)
Implementation
Effort Easy Hard Medium Hard
Implementation
Cost Free
Custom Rate,
charged by
Calpine
Free, staff time only
to develop 8760
rate sheet
Free, staff time only
to develop 8760 rate
sheet
Incremental cost
to bottom line? TBD TBD TBD TBD
Alignment with
‘Spirit‘ NBT:
Storage
High Medium/Low Medium High
Benefit to
customer? Medium, ACC
makes ROI difficult
to determine
High, Provides
additional value
for exported kWh
Medium, Provides
little/no extra value,
but makes export
rate predictable
VARIES! Provides
little/no extra value,
makes export rate
unpredictable.
Without battery no
benefit
Program ‘Unknowns’ Program Options
At this time there are critical
pieces of information that have
not been made available to SVCE
that might influence its decision-making
• Customer enrollment
volume
• Finalized 2024 ACC pricing
sheet
Item 4
PRESENTATION
10 Staff Recommendation - NBT Rollout December ‘23
Option 1: Follow PG&E ACC for 2024
• Staff recommends that SVCE follow PG&E’s NBT implementation model without modification for CY 2024.
• Staff proposes that the first 12 months of customer performance should be monitored and analyzed with the intention of making future recommendations to customize the program.
• Staff will return to the board in Q1 2025 with additional recommendations
• Reminder: This decision will not affect currently-enrolled NEM 1.0 and NEM 2.0 customers.
Item 4
PRESENTATION
Option 1:
Course of Action
Follow PG&E ACC
Impiementation
Effort Easy
Impiementation
Cost Free
Incremental cost
to bottom line? TBD
Alignment with
'Spirit1NBT:
Storage
High
Benefit to
customer? Medium, ACC
makes ROI difficult
to determine
Questions/Comments?
11 Item 4
PRESENTATION
SILICON VALLEY
CLEAN ENERGY
12 Avoided Cost Calculator (ACC)
Item 4
PRESENTATION
2022 ACC
Hour Ending (Standard Time)
Methane Leakage
Losses
Ancillary Services
Distribution Capacity
Transmission Capacity
Generation Capacity
Energy
GHG Adder & Rebalancing
Cap and Trade
• Subtitle
New SV Clean Energy
PowerPoint Template
Item 5
PRESENTATION
Item 5
PRESENTATION
Presentation Objectives
1. Establish Background
2. Present Program Overview and Schedule
3. Obtain Executive Committee Input
Item 5
PRESENTATION
Significant Emission Sources
Most emissions in our region come from buildings and transportation Approximated emission proportions based
~40%
on internal SVCE analysis
~50% 3
Item 5
PRESENTATION
You took first critical step toward pollution-free and future¬ ready buildings with new construction reach codes.
$0 replacement cost
50,000 annual MT carbon
2022 State code With adopted reach codes
0 MT carbon pollution
from new water heaters
^10,000 more families with
reliable home EV charging
~$85M savings at the
time of construction
$0 savings at the
time of construction
^SOk homes with heat pump
water heating
10,000 families without
access to home EV charging
50k homes with gas water
heating
$25M locked-in replacement
cost from gas to electric
illustrative
example showing
the impact of
building RHNA
required housing.
Item 5
PRESENTATION
Now it is time to ramp up the transition in
existing buildings.
= 100HPWHs/yr
HPWH Installs Under Current
SVCE Programs (Annual)
2019 - 2022 2023 2024 - 2025 Per year, from
2027-2037
5 Item 5
PRESENTATION
Member agencies have the power to
make it easier for communities to
upgrade to clean, healthy homes
by modernizing permitting processes
and implementing sensible policies.
Item 5
PRESENTATION
Good local policies can help us from 100s to
1,000s of upgrades a year.
=100HPWHs/yr
Annual HPWHs Needed to be
Installed Under BAAQMD Rule
HPWH Installs Under Current
SVCE Programs (Annual)
2022 2023 2025*
illustrative
benefits of
policies
Per year, from
2027-2037
7 Item 5
PRESENTATION
SVCE and Member Agency Partnership
SVCE rebates and federal tax credits can reduce the financial cost of electrification. Local codes and permitting can increase adoption at the best time and with less friction.
SVCE is launching two complementary programs to provide our member agencies $4M in technical resources and grants to enable sensible local policies and smoother local permitting. 8 Item 5
PRESENTATION
Resources to Help Member Agencies Advance
Available
to All
Available
to
Leadership
Cohort
Resources Available Permit
Modernization
Policy
Experimentation
1:1 consultation w/SVCE staff (Board member & agency
staff) X X
Tailored action plan for each jurisdiction
X X
Technical, legal, and staff support resources
X X
Access to national-level climate change trainings
X X
Stipend for part-time, one-year fellow
X X
Expanded consultant support to implement leading-edge
initiatives X X
9 Item 5
PRESENTATION
Example Approaches
The leadership cohort must bring at least one leading practice to the council for a vote within 18 months to receive access to expanded resources
Foundational Improved Leading
Permit Modernization Streamlined
applications
Virtual inspections Contractor self¬
certification program
Policy Experimentation Time of sale disclosure
requirements
Electric readiness at
remodel
Incentives for
electrification at
remodel
A comprehensive list of approaches is available in the appendix; may be added to over time 10 Item 5
PRESENTATION
Implementation Path
Develop
communications
materials,
recommendations,
list of available
resources (Oct ‘23)
Meet 1:1 with
Directors and
Alternates
(Nov ‘23)
Develop agency¬
specific plans
(Jan ‘24)
Work w/each agency
to take the steps
they want totake
(Feb ’23 and on)
For meetings with Board Members and some staff we will combine messaging on permit modernization and policy into one comprehensive package. 11 Item 5
PRESENTATION
We can’t make this transition on our
own or all at once. But working
together, step-by-step, we will get
farther faster.
Item 5
PRESENTATION
Item 5
PRESENTATION
Program Backgrounds
1. Both programs address member agency innovation and “readiness” to accommodate BAAQMD Regulations
2. Both relate to SVCE Strategic Plan Goal 10 to “Accelerate deployment of currently adopted decarbonization strategies and goals...”
3. Permit Modernization: ($3.2M budget, updated March 2022) “...simplify general electrification by providing free technical support, offering grants to cities to commit staff resources towards this effort and potentially offering an award for cities able to get their processes to meet certain outcomes (e.g., low fees, quick turnaround time). These efforts will enable future policy by reducing friction in customer electrification process and improving cost-effectiveness.”
4. Policy Experimentation: ($1.9M budget, updated March 2022) “support interested agencies in exploring policies targeting existing buildings through free technical analysis, an award for agencies who adopt innovative policy and potentially a tailored incentive program to pair with the policy if necessary...”
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Immediate Next Steps
September MAWG
October Executive Committee
Start Procurement Processes for Consultants
November Board Info Item
Active Implementation
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2021 % Emissions by Source % Total Emissions How many machines need to be electrified? We need to electrify "400K heaters in
SVCE territory alone.
DRAFT ANALYSIS
Non-Residential
Buildings Natural
Gas
Residential
Buildings Natural
Gas
Electricity
Commercial On-Road Gasoline
Commercial
On-Road
Diesel
Non-Commercial
On-Road Gasoline
Non-Residential
Buildings Electricity
Off-Road Not
Specified
(CARB)
6.5k water heaters
7k furnaces
Covered under
BAAQMD Rules
(?) cooking & other equipment
Covered under
165k space heaters
230k water heaters BAAQMD Rules
125k stoves
80k dryers
15k fireplaces
10k spa/pool pumps
Switch 4% of accounts from DA/PG&E
100% carbon-free electricity sources
Electrify 100% Commercial VMT from MDHD Vehicles
Electrify 100% Commercial VMT from Diesel-Fueled MDHD Vehicles Electrify construction & mining equipment, agricultural equipment, lawn care tools, and other industrial equipment
400,000 light-duty vehicles
Source: SVCE 2021 GHG Inventory
16 What happens when the power goes out?
Heat Pump
Space Heating
Gas furnaces require
electric fans, but
fireplaces still work.
Heat Pump
Water Heating
Gas water heaters
require electronic
ignition or pumps
Induction
Cooking
Some gas stoves will
work without
electricity, but it’s
unsafe
Electric Clothes
Dryer
Gas dryers use electric
motors to run the
tumbler
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Appendix-Part 2
Permit Modernization Recommendations
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Supporting Recommendations
Description Problem to Solve Solution
Staff training Lack of familiarity with electrification technologies (especially HPWH and
EVI) delays plan reviews and
inspections. This lack of understanding
can result in unneeded panel
upgrades.
Provide both in-person (roadshow) and on-demand (pre-recorded) training sessions for City staff to become more familiar with
electric appliances and installs. Convene
specific trainings on EVI rules, technologies,
and best practices -particularly on
calculating load requirements.
Pre-application
support materials
Many jurisdictions lack some or most
pre-application support materials to
help prepare applicants and reduce
kickbacks for missing information
Develop a master template for different
permit types and work with one jurisdiction to
customize and integrate it into their
processes
Identify electrification
permitting
disincentives
Building electrification solutions can be
harder to permit than gas solutions -
commonly for water heaters
Work with all jurisdictions to ensure that
HPWH permits are as easy to obtain as gas
water heater permits
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Supporting Recommendations (pg. 2)
Description Problem to Solve Solution
Virtual inspections Inspections require contractors to wait onsite for inspectors to arrive. In-person
inspections can lead to other issues
getting flagged outside of the permit
scope.
Virtual inspections can be streamlined and
faster to schedule due to reduced City staff
efforts. They may also help reduce potential
of other issues getting flagged. (Note: best
suited for straightforward, residential permit
applications) Work with one jurisdiction to
pilot this project by providing training and
equipment
Free permit pilot Some customers view permit costs as a major disincentive to not get a permit
Fund free electrification permit pilot projects
in 1-3 jurisdictions
Permit concierge Some customers don’t know how to
prepare a permit application and view
getting a permit as too difficult
Fund 3rd party permit concierge to assist
customers in getting permits + offer 3rd
party support to permitting agencies to
expedite review
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Inflecting Recommendations
Description Problem to Solve Solution
Remove permit
requirements for
some appliances
Permits for some simple appliances
(cooktops, water heaters, etc.) do
not significantly enhance public
safety and consume valuable staff
bandwidth that could be redirected
to higher-value activities
Initiate a pilot project with one agency to
eliminate the need for permits under
certain circumstances. SVCE to work with a
law firm on liability-release language to
safeguard a City in removing permits (e.g.,
"we release the City from all liability...")
Distribute pre¬
approved permits
cc «
Instead of removing permit requirements
as above, initiate a pilot project to send
pre-approved permits to customers fitting
certain circumstances.
Facilitate permits for
certified contractors
a CC Pilot a contractor certification program in
which confirmed and vetted contractors
could complete work with a pre-approved
permit
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Inflecting Recommendations (pg. 2)
22 Description Problem to Solve Solution
Best practices in
planning for building
electrification
technologies (Note:
this element merges
with policy
experimentation)
Well-intentioned local regulations
(noise, aesthetics, etc.) may prevent
the efficient siting of electric
appliances.
Develop best practices guidance for
tangential issues (not health and safety)
like undergrounding requirements, noise
restrictions, etc. in order to support
agencies in considering the electrification
impacts of otherwise well-intended
regulations
Inspections with
blinders on
Inspectors coming for an electric
appliance may notice existing
unpermitted work and require
remedies, increasing customer
reluctance to obtain permits
Evaluate related legal issues and
potentially establish legal shield for
focused inspections without adding liability
to agencies. Initiate a pilot project with one
agency.
Provide added
home value
Getting permits adds complexity,
cost, and time for residents, with
very little added value
Provide a certificate of quality inspection
that can be listed on the Multiple Listing
Service during resale
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Monitoring Recommendation
Description Problem to Solve Solution
Agency benchmarks Information about the status of agency efforts is not published and made
available to local leaders.
Create a Red-Yellow-Green scoring system
for agencies on the implementation of permit
modernization for building electrification
performance, (very similar to Go Biz’s system
for EVI) Example measures to evaluate
include single permits for HPWH, reduced or
virtual inspections for HPs, over-the-counter
permitting, etc.
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Appendix-Part 3
Policy Experimentation Details
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Policy Experimentation
1. 13 separate projects - meet each member agency where they are to develop customized action plans
2. Start with idea “packages” for agencies to consider and adapt
3. Provide comprehensive resources for all member agencies - draft codes, regular meetings, educational events, etc.
4. Coordinate a leadership cohort of three jurisdictions willing to step forward and provide expanded resources to support
faster and deeper actions
25 Resources for Innovative Policy
Experimentation (RIPE)
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26 TRC will remain our technical consultant preparing ordinances customized with the particular regulations each agency desires. A community, for example, may want to mandate that rooftop package units be all-electric after a certain date and that home air conditioning units be exclusively heat pumps after a different effective date. In this instance, TRC would start with the agency’s existing municipal code and develop an ordinance that would specifically introduce these regulations as desired.
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TRC Code Development
27 As the 9th Circuit’s decision indicates, the road to decarb nirvana is lined with legal potholes. We have nearly completed hiring a law firm to provide specialized legal services addressing the many aspects and ramifications of policy issues that local agencies may want to explore.
The firm will be experts on local government law with experience on a range of relevant issues.
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Special Counsel Services
SVCE staff and consultants will provide comprehensive resources for ALL member agencies.
• Meet with Boardmember, Alternate, and (when desired by agency) Key Staff to gauge what each agency’s interests are in evaluating, developing and introducing innovative decarbonization policies. These meetings will pivot off of the agency’s climate action plan, BAAQMD rule implementation, and other policy guideposts • Develop a customized plan with each agency reflecting its wants, needs, political realities, and resources (what, when, how, who). While there will undeniably be commonalities, these will essentially be considered 13 separate initiatives • Work closely with each agency in implementing their plan by providing staff support, resources, data, and direct implementation assistance
• Create Leadership Cohort for agencies in the lead
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RIPE Planning
29 While the actual resources desired by each agency are still be determined, ideas for discussion include:
• High-level building stock information
• Standard messaging framework
• Active community engagement by contracted community engagement firm • Funding for temporary agency staff, intern, or fellow specifically dedicated to implementing work identified in the plan developed with the agency. • Consultant hours to assist with conducting specific research, drafting staff reports, and implementing innovative policies
Since program resources are not unlimited, all of these potential resource offers will be balanced with the agency’s aspirations and the overall value they represent to decarbonization.
What else should we offer?
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RIPE Resources
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Leadership Cohort Concept
SVCE will provide deeper levels of resources to an Agency Leadership Cohort of three agencies. The Leadership Cohort will demonstrate policy viability and pave the way for other agencies to follow in their footsteps.
To join, an agency must commit to pursuing three or more decarbonization or permit modernization initiatives. The City Manager (County Executive) must send a letter directing staff to participate and commit to bringing at least one policy to vote within 12 months.
In addition to being eligible for more of the RIPE resources listed on slide 14, Cohort agencies would be eligible for leadership training, conference scholarships, and recognition.
What else should we offer?
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Menu of Cohort Activities (Initial List)
New Deeper Reach Code
Required energy storage
Capturing additional remodels
Existing Building Ordinance
Replace on Burnout Early (pre-BAAQMD)
Commercial RTU heat pump requirements
BAAQMD Backstop
Neighborhood Upgrade Initiative
Induction Cooking Push
EVI Siting Facilitation
Permit Modernization Inflecting Actions
32