Att 2 - Electrify San Mateo Sustainable Building Strategy — San Mateo City Council, July 28, 2025

July 2025
Draft
Electrify San Mateo

SUSTAINABLE

BUILDING STRATEGY
Table of Contents

1. Introduction ....................................................................... 1

2. Building Segmentation Analysis ........................... 6

3. Community Engagement ....................................... 17

4. Electrification Challenges and Solutions ...... 23

5. Policy Pathways ........................................................... 26

6. Community Electrification Resources ............ 33

7. Appendices .................................................................... 38 Electrify San Mateo Sustainable Building Strategy TOC

1. INTRODUCTION
The City of San Mateo Sustainable Buildings
Strategy provides a roadmap for the City of
San Mateo to decarbonize the buildings where
residents live, work, and play. Decarbonizing
buildings through electrification is a crucial
step in the City’s work to reach its

2030 and
2045 climate goals,
c
omply with future regional
air quality regulations, and provide

healthy
air

and living spaces

for all San Mateans.

This report provides a summary of what
building electrification is (Introduction), what
electrification looks like in the City of San
Mateo (Building Segmentation), the community
engagement completed as part of developing
this report (Community Engagement), and
the final policy recommendations selected for
further planning and eventual implementation.

WHAT IS ELECTRIFICATION
AND WHY IS IT IMPORTANT?

1. ht tps://gridworks.org/initiatives/cagas-system-transition/

2. About 72 per cent of residential new-construction line extensions were all-electric and 91 percent of non-residential projects were all-electric in 2024. https://www.cpuc.ca.gov/about-cpuc/divisions/ energy-division/building-decarbonization
The City of San Mateo is committed to reducing GHG emissions through the implementation of the Climate Action Plan. Residential and commercial buildings currently account for 38 percent of the City’s greenhouse gas (GHG) emissions, making them a critical area for climate action. To meet the City’s Climate Action Plan (CAP) targets and align with California’s statewide climate goals, reducing emissions from residential and commercial buildings is imperative. While electricity emissions are expected to decrease to zero by 2045 due to Senate Bill (SB) 100 and the renewable portfolio standard, natural gas emissions will remain relatively constant. In San Mateo, Peninsula Clean Energy (PCE) already provides electricity that is 50 percent renewable and virtually 100 percent carbon free and is committed to delivering 100 percent renewable and carbon free electricity by 2025. Due to the low cost and availability of carbon free electricity, building electrification has been identified as the most cost- effective strategy for reducing GHG emissions from our buildings. 1 Building electrification involves replacing fossil fuel-powered equipment – such as gas furnaces, water heaters, stoves, and dryers – with high- efficiency electric alternatives. These electric systems can be powered by clean, renewable energy, significantly reducing a building’s carbon footprint. The City of San Mateo and the State of California have already made significant strides in electrifying new construction and a majority of buildings constructed in the state today are already all-electric

2. Ho
wever, the City of San Mateo is already mostly built out, with a majority of buildings having been constructed before 1970 as shown in Appendix A. With new construction increasingly all-electric, nearly all the natural gas emissions in 2030 will be from buildings which exist today. About 48 percent of the City’s Climate Action Plans projected emissions reductions come Electrify San Mateo Sustainable Building Strategy 1
from the electrification of existing buildings. Transitioning these existing buildings to all-electric systems is essential for reducing dependence on fossil fuels and achieving the City’s climate goals.

THE BENEFITS OF BUILDING

ELECTRIFICATION
While electrification is a critical climate action strategy, GHG reductions are not the only reason to electrify buildings.

Electrification of buildings will improve health outcomes, increase energy efficiency, decrease utility bills, and provide additional resilience and comfort.

Health and Air Quality
Negative health impacts related to ambient air pollutants generated by the burning of fossil fuels in power plants, vehicles, and industrial operations are widely acknowledged.
3 By contrast,
sources of air pollution inside of buildings and related health effects are often overlooked. Commonly used natural gas appliances, including stoves, furnaces, and water heaters, emit substantial amounts of air pollutants, and if not properly ventilated can present significant indoor air quality impacts. Natural gas-powered appliances emit nitrogen dioxide (NO
2), nitric oxide (NO x), sulfur
oxides (SOx), particulate matter (PM), carbon monoxide (CO), and formaldehyde (CH2O). The potential health impacts related to combustion of natural gas can be serious but generally are not widely understood by consumers.
4 The United States Environmental Protection Agency (US EPA) concluded that long-term exposure to NO
2 is linked to the onset of
asthma in children 5. The US EPA has also reported that short-term exposure to NO 2 can also lead to respiratory complications and

3. ht tps://www.who.int/airpollution/ambient/health-impacts/en/

4. ht tps://ehp.niehs.nih.gov/doi/10.1289/ehp.122-a27

5. ht tps://cfpub.epa.gov/ncea/isa/recordisplay.cfm?deid=310879 2Electrify San Mateo Sustainable Building Strategy
trigger asthma attacks. A 2013 meta-analysis of prior research assessed the impact of indoor NO 2 pollution on asthma in children living in suburban and urban homes. Results demonstrated that children in homes with gas stoves have a 42 percent higher chance of developing asthma symptoms.
6 Increased Energy Efficiency
Building electrification presents an opportunity to significantly increase the energy efficiency of our homes and other buildings.

The development of electric heat pumps which move heat rath- er than create it, can heat our water and provide air-conditioned spaces with 400 percent efficiency.
7 This means that every 1 kWh of
electricity can provide 4 kWh of heating capacity. This increase in efficiency means that most homes will see on-bill savings after elec- trification when using PCE rates.
8 Recent NREL studies have found
that homes nationwide would see building energy use (natural gas and electricity combined) decrease by between 31 percent and 47 percent on average after installation of heat pump technologies. 9 Utility Bill Savings
Analysis of Peninsula Clean Energy buildings has identified that an average single-family home can save up to $30 a month on average after installing a heat pump water heater and HVAC unit. These sav- ings can be increased even further with the installation of solar and/ or building efficiency upgrades.
10 While making some homes ready
for electrification can carry increased upfront costs (Appendix A), when paired with available incentives these long-term cost savings can help offset upfront costs.

6. 1W eiwei Lin, Bert Brunekreef, Ulrike Gehring. International Journal of Epidemiology, Volume 42, Issue 6, December 2013, Pages 1724–1737, https://doi.org/10.1093/ije/dyt150

7. ht tps://www.technologyreview.com/2023/02/14/1068582/everything-you-need-to-know-about-heat-pumps/

8. See Appen
dix A for more details on costs

9. ht tps://www.nrel.gov/news/detail/press/2024/benefits-of-heat-pumps-detailed-in-new-nrel-report

10. ht tps://www.peninsulacleanenergy.com/news-releases/savings-switching-gas-to-electric/ Figure 1. Efficiencies of various space heating technologies (Rewiring America) Increased Resilience
Electrify San Mateo Sustainable Building Strategy 3
Increased Resilience
A city's resilience is defined by its community’s ability to survive, adapt, and thrive in the face of both sudden shocks and long-term challenges. All-electric buildings, especially when paired with solar panels and battery storage, can reduce the effects of power outag- es and utility-led Public Safety Power Shutoff (PSPS) events during periods of high fire risk. Natural gas appliances such as furnaces and water heaters also rely on electricity to function, making them no more resilient during extended power outages. In addition, switching to a heat pump that provides both heating and cooling can provide much needed protection against extreme heat which is becoming more common in San Mateo.11

THE POLICY CONTEXT OF

BUILDING ELECTRIFICATION
The City of San Mateo, the Air District, and the State of California have adopted legislation and policies which are driving electrifica- tion of new and existing buildings. The 2025 Title 24 Building Code will heavily favor all-electric construction due to the associated cost and energy savings associated with all-electric new construction.

11. https://cal-adapt.org/tools/extreme-heat/#lat=37.5519&lng=-122.3150&boundary=place&climv ar=Temperature

12. https://www.baaqmd.gov/en/community-health/building-appliances-rule-implementation Regionally, the Bay Area Air District (Air District) has developed zero nitrous oxide (NOx) standards for space and water heating applianc- es. Currently only electric appliances can meet the zero NOx stan- dard, meaning that the upcoming zero NOx rules will effectively re- quire all-electric water heaters to be installed in residential buildings by 2027 and all-electric HVAC units by 2029.12 Many of the strategies identified in the San Mateo Sustainable Building Strategy work in tandem with the Air District regulations to prepare San Mateo for these upcoming changes and save money over time.

Locally, the City Council has prioritized the decarbonization of exist- ing buildings and elimination of methane gas use by 2030, reinforc- ing the goals outlined in the CAP. CAP goals Building Electrification 1 and Building Electrification 2 call for all-electric new construction and decarbonization of existing buildings, respectively. These two actions represent the largest GHG reduction opportunity identified by the CAP, demonstrating electrification of existing buildings as the cornerstone of climate action in the City.
4Electrify San Mateo Sustainable Building Strategy4
In May 2023, the City launched Building for the Future: City of San Mateo Sustainable Buildings Strategy as part of the broader Electrify San Ma- teo initiative. This strategy outlines a long-term roadmap to electrify the City’s existing residential and non-residential buildings. The Sustainable Building Strategy conducted a variety of research into the types of policies and actions which could increase building electrification while man- aging costs and considering the equity impacts of building electrification as displayed in the timeline below. This report provides a summary of the building segmentation analysis, community engagement, analysis of primary challenges and solutions, and the final policy pathways completed as part of the City of San Mateo Sustainable Building Strategy.

Summer 2023
Development of Equity +
Effectiveness Criteria
Identify range of feasible
policy options
Building Inventory and
Market Segmentation
Analysis
Incorporation of
community feedback for
equity and effectiveness
criteria
Draft policies & pathways
list-community feedback
Plan Adoption
Phase 1: Outreach:

Effectiveness + Equity
Criteria Feedback
Results of building
inventory and market
segmentation
Draft prioritized
policies list
Phase 2: Outreach:

Community feedback
on policy pathways
Incorporation of
community feedback
in prioritized policy list
Drafting of Policy
Pathways
Fall 2023 Spring 2025
Winter 23-24 Summer 2025
Strategy Development Timeline
Electrify San Mateo Sustainable Building Strategy 5

2. BUILDING

SEGMENTATION

ANALYSIS
To inform policy development, the City
conducted an analysis of the existing building
stock and appliance types within the City.

This section summarizes the results of this
analysis including the number of residential
and nonresidential buildings as well as the
appliance types within the City. Additional
information on the analysis methodology
as well as additional results, are provided in
Appendix A.

RESIDENTIAL BUILDING

SEGMENTATION ANALYSIS
According to parcel data from San Mateo County, there are approximately 19,350 single-family and 2,350 multifamily buildings within the City of San Mateo. Figure 2 shows the number of single-family and multifamily build- ings by type.

Figure 2. Number of Single Family and Multifamily Buildings in the City of San Mateo
Data Source: San Mateo County Parcel Data
Electrify San Mateo Sustainable Building Strategy 6
To better understand the use of natural gas in these residential buildings, data provided by Peninsula Clean Energy based on the California En- ergy Commission’s Residential Appliance Saturation Survey (RASS)13 for Climate Zone 3 was used to analyze the prevalent fuel types of existing appliances in buildings (i.e., water heater systems, space heating systems, stoves, clothes dryers, pools). While appliance data specifically for the City of San Mateo was unavailable, data for San Mateo County is used as a proxy.

As shown in Figure 3, most of the residential water heaters in San Mateo County are standard gas-fired tank water heaters, especially in single family homes. These water heaters can be replaced with heat pump tank water heaters in most scenarios. Whole house tankless gas-fired water heaters are the next most common followed by standard electric resistance water heaters, tankless electric varieties, and then heat pumps.

13. California Energy Commission. 2019 California Residential Appliance Saturation Study (RASS). Available at: https://www.energy.ca.gov/ publications/2021/2019-california-residential-appliance-saturation-study-rass.

Figure 3. Number of Water Heater Systems by Residential Building Type in San Mateo County Data Source: Residential Appliance Saturation Survey (RASS) Electrify San Mateo Sustainable Building Strategy
7 Space heating in San Mateo County sees a broader range of fuel and appliance types, as shown in Figure 4. Gas-fired space heating systems are still the most common in single family owned and rented buildings while multifamily buildings, especially multifamily rentals and multifamily condos, use more electric space heating systems. While some propane and wood are used across the County, these fuels are likely limited to unincorporated regions without access to the natural gas system.

Figure 4. Number of Space Heating Systems by Residential Building Type in San Mateo County Data Source: Residential Appliance Saturation Survey (RASS) Electrify San Mateo Sustainable Building Strategy
8 Figure 5 shows the total number of residential stoves in San Mateo County by fuel type and building type. Gas stoves are most common in sin- gle family units while multifamily units tend to use electric stoves.

Figure 5. Number of Stoves by Residential Building Type in San Mateo County Data Source: Residential Appliance Saturation Survey (RASS) Most residential buildings in San Mateo County have a clothes dryer, especially single-family buildings. As shown in Figure 6, electric clothes dryers make up nearly 40 percent of all dryer use, while only 27 percent are gas. The remaining 34 percent of units do not have a dryer in the building.

Electrify San Mateo Sustainable Building Strategy
9 Figure 6. Number of Clothes Dryers by Residential Building Type in San Mateo County Data Source: Residential Appliance Saturation Survey (RASS) Lastly, pools are also a possible appliance type. While RASS data is not available on pools, according to Peninsula Clean Energy, approximately 849 residential buildings (i.e., four percent) have pools within the City of San Mateo. Pools in the City of San Mateo are likely to be heated using gas if they are heated at all.

Overall, natural gas consuming water heaters, stoves, and furnaces are the most common appliances of each type. However, a smaller yet sub- stantial portion of the community is already using electric equipment including heat pumps, demonstrating the feasibility of the technology.

Electrify San Mateo Sustainable Building Strategy
10 COMMERCIAL BUILDING SEGMENTATION ANALYSIS
According to parcel data from San Mateo County, there are approximately 1,244 commercial buildings within the City of San Mateo. Figure 6 shows the number of commercial buildings by type. The most common commercial building is office/professional building followed by retail building. Mixed use buildings, automobile sales and repair buildings, and warehouses make up the next most common building by total count.

Figure 7. Number of Commercial Buildings in the City of San Mateo Data Source: San Mateo County Parcel Data
Electrify San Mateo Sustainable Building Strategy
11 While data on the number of appliances by fuel type is unavailable for commercial buildings, Peninsula Clean Energy provided data on equip- ment prevalence for commercial buildings based on the California Energy Commission’s Commercial End-Use Survey (CEUS).14 Commercial Heating Ventilation and, Air Conditioning (HVAC) equipment types for San Mateo County are included in Figure 7. As shown, the majority of HVAC equipment are gas-powered packaged single zone (SZ) furnaces with cooling, which are also the easiest to electrify.

14. California Energy Commission. 2022 California Commercial End-Use Survey (CEUS): Final Report. Available at: https://www.energy.ca.gov/ publications/2023/2022-california-commercial-end-use-survey-ceus-final-report.

Figure 8. Commercial Space Heating Equipment Prevalence by Type in San Mateo County Data Source: Peninsula Clean Energy 2035 Decarbonization Plan Peninsula Clean Energy also provided information on commercial water heating. Water heating equipment is broken down into five catego- ries with a mix of both gas and electric appliances being present in commercial buildings within San Mateo County. Most of the systems are gas-powered tank water heaters, as shown in Figure 8.

Electrify San Mateo Sustainable Building Strategy
12 Figure 9. Commercial Water Heating Equipment Prevalence by Type in San Mateo County Data Source: Peninsula Clean Energy 2035 Decarbonization Plan 13Electrify San Mateo Sustainable Building Strategy

EQUIPMENT AVAILABLE

TO ELECTRIFY
The building segmentation analysis demonstrated that most of the water heating systems, space heating systems, stoves, and pools in the City of San Mateo are gas-fired. The following subsections sum- marize the types of electric equipment available to replace these gas-fired appliances.

Heat Pump Water Heaters
Most of the residential and commercial water heater systems in the City are standard gas-fired tank water heaters. These water heating systems can be replaced by heat pump tank water heaters in most scenarios. Rather than generating heat, heat pump tank water heat- ers use electricity to move heat from the surrounding areas into the appliance to heat the water in the storage tank. These heat pump water heaters can be two to three times more energy efficiency than conventional electric resistance water heaters. The second most common residential and commercial water heater system in the City is gas-fired tankless water heaters. These water heating systems can also be replaced with heat pumps—specifically geo- thermal heat pumps—which draw heat from the ground during the winter and from the indoor air during the summer to heat water.

These geothermal heat pumps achieve higher energy efficiencies and can provide the majority of hot water needs during the sum- mer.15
Heat pump swimming pool heaters are also available to replace gas- fired pool heaters. These devices use a small amount of electricity to transfer heat from the outdoors into the pool water.

While heat pump water heaters cannot heat a pool as fast as a gas- fired heater, they provide even and consistent heat, operating with less energy demand and providing energy cost savings.16

15. Department of Energy. Heat Pump Water Heaters. Available at: https://www.energy.gov/ energysaver/heat-pump- water-heaters.

16. Department of Energy. Heat Pump Swimming Pool Heaters. Available at: https://www.energy. gov/energysaver/heat-pump-swimming-pool-heaters.
14Electrify San Mateo Sustainable Building Strategy
Heat Pump HVAC Units
The most common residential and commercial space heating sys- tems in the City—gas-fired space heating systems—can be replaced by heat pumps as well. Heat pump HVAC units provide both heat- ing and cooling with one appliance.17 This means that one unit can replace both a gas fired furnace and electric powered air condition- ing unit. These heat pump space heating and cooling systems use electricity to transfer (or pump) heat from a cool space to a warm space to heat and cool buildings with up to 400 percent efficiency.18 Heat pump water heating and space heating and cooling systems can also be combined for further energy and cost efficiencies.19 Induction
Most residential stoves in the City are gas-fired. These stoves can easily be replaced by induction stoves. While traditional gas-fired stoves use a flame to radiate and conduct heat to cookware, induc- tion stoves use an electromagnetic field powered by electricity to transfer currents directly to the cookware placed on its glass surface.

These induction stoves only create heat through cookware surfaces.

As such, they are up to three percent more energy efficient than gas stoves and ten percent more energy efficient than electric stoves.20 They also provide faster cook times (i.e., up to 40 percent faster than gas and traditional electric stoves), do not cause burns like gas and electric stoves, and do not produce indoor air pollutants like gas stoves. While most stoves operate using 240v circuits, some new stoves utilize batteries to provide fast cooking while using a standard 120v outlet. This reduces installation costs and lowers grid impacts.

17. Peninsula Clean Energy. 2035 Decarbonization Feasibility Analysis and Plan. Available at: https://www.peninsulacleanenergy.com/wp-content/uploads/2022/01/2022.09-BOD-2035-De - carb-Plan-Complete-Analysis-Draft-Plan-1.pdf.

18. Department of Energy. Heat Pump Systems. Available at: https://www.energy.gov/energysaver/heat -pump-systems.

19. Department of Energy. Heat Pump Water Heaters. Available at: https://www.energy.gov/energysaver/heat-pump- water-heaters.

20. Department of Energy. Making the Switch to Induction Stoves or Cooktops. Available at: https://www.energy.gov/articles/making-switch-induction-stoves-or-cooktops.

Electric Resistance
Electric resistance appliances are also an option to electrify gas-fired appliances. These appliances convert incoming electric energy into heat. Electric resistance appliances, however, are not as energy effi- cient as heat pumps water and space heating systems or induction stoves which use electricity to move heat instead of create it. Thus, while they make up a considerable share of existing appliances in the City, they are not usually a preferable option for electrification.

Buildings with existing resistance heating may want to consider up- grading to a heat pump where feasible to gain considerable on-bill savings.

Electrify San Mateo Sustainable Building Strategy
15 ELECTRIFICATION IMPACTS ON ELECTRICAL INFRASTRUCTURE

21. https://www.sciencedirect.com/science/article/pii/S0301421524002581 One of the common concerns regarding electrification is the im- pact that increasing electrical demand has on a buildings existing wiring, electrical panel, and service line (which runs from the util- ityowned pole to the specific building). These important electrical components are shown in Figure 10.

Figure 10. Diagram of Building Electrical Equipment
While most natural gas equipment (including stoves, water heaters, and HVAC units) require 120v electrical connections, some all-elec- tric appliances require a dedicated 240v circuit. This means that a new electrical circuit needs to be installed and there needs to be space on the existing panel. This added circuit can cause space or capacity constraints on the panel and service line. However, new technologies and approaches are limiting the impacts of electrifica- tion on these electrical components. New “retrofit ready” appliances such as heat pump water heaters and HVAC units are now available that only use 120v and can be plugged into existing outlets. New induction stoves are also available that use batteries to provide fast heating while only using 120v power. These new appliances can also be paired with smart circuits and smart panels which only allow one load (for example an EV charger OR electric dryer) to operate at one time. These new approaches are allowing homes to electrify on panels of 100amps.

A recent study conducted by UCLA added more detail to the pro- portion of homes needing panel upgrades. The study found that only three percent of single family residential and ten percent of multi-family properties will need panel upgrades in order to fully electrify, while an additional 32 percent (single-family) and 59 per- cent (multi-family) will require further load management or watt diet approaches to electrify on their current panel.21

PG&E | Service Upgrades for Electrification Retrofits Study Final Report | NV5.COM | 1 Service Upgrades for Electrification Retrofits Study Final Report May 27, 2022

Courtesy of Emily Higbee, Redwood Energy Research Director The above image displays ownership of basic electrical service equipment that will be assessed by a n electrification retrofit contractor to complete an overhead Service Upgrade. All the components depicted in the diagram are within the scope of an electrical Service Upgrade discussed in the report except for new wires to the rest of the home.

CALMAC STUDY ID: PPGG&&EE00446677..0011

Electrify San Mateo Sustainable Building Strategy
16 3.

COMMUNITY

ENGAGEMENT
To guide equitable and practical policy creation,
the City conducted extensive community
engagement in two distinct phases reaching
over 350 constituents during 16 individual
engagement events. See Appendix B for a
full summary of the methodologies, events,
and results of the community engagement
conducted as part of the engagement process.

PHASE I ENGAGEMENT
During the first phase of community outreach, the City aimed to under - stand the goals and concerns of the community as they relate to San Mateo’s buildings and decarbonization. Outreach events included a meet - ing with the Sustainability and Infrastructure Commission, a City Coun- cil meeting, five General Plan Town Hall meetings, and an online survey.

Through the initial round of engagement, the City identified affordability, health and safety, resilience, and climate as the primary goals of the com- munity. Figure 10 shows the results of the survey question asking commu- nity members which qualities they value most from their buildings. Af - fordability was the most important attribute followed by health and safety, resilience, and sustainability.

Electrify San Mateo Sustainable Building Strategy 17
What qualities are most important to you in the San Mateo buildings where you live, work, and play? (Select all that apply) Climate and
sustainability
(e.g. energy...)
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Health, safety,
and comfort
(e.g...)
Modern and
upgraded
buildings
(e.g...)
Affordable
energy costs
(e.g. low co...)
Resilience
(e.g. 24/7 power
during...)
Functionality
(e.g. performance...)
Climate and sustainability (e.g. energy efﬁcient, zero carbon buildings) 43.00% 126 Health, safety, and comfort (e.g. Healthy indoor air quality, comfortable indoor temperatures, hire-safe buildings) 65.19% 191 Modern and upgraded buildings (e.g. New and highly functioning modern appliances like stoves and washers) 19.45% 57
Affordable energy costs (e.g. low cost of energy for electrical and natural gas service; energy efﬁcient buildings) 74.40% 218
Resilience (e.g. 24/7 power during power outages; building stock prepared to function during natural disasters) 58.70% 172
Functionality (e.g. performance of appliances, features such as connected/ smart appliances) 29.96% 79

ANSWER CHOICES RESPONSES
Figure 11. Survey Results Showing the Most Important Qualities of Buildings For San Mateans The largest concerns related to building
electrification were the potential for high-
er costs, increased energy bills, and a diffi-
cult installation process. These sentiments
are reflected in the survey responses for
the question of what are your biggest
concerns regarding electrification in San
Mateo as shown in Figure 11. The top two
biggest concerns were related to costs and
housing affordability with the third larg-
est concern relating to the complexity of
installing electric equipment.

Electrify San Mateo Sustainable Building Strategy
18 Figure 12. Survey Results Showing the Most Important Qualities of Buildings For San Mateans Based on this feedback and direction
from City Council, an initial list of potential
building electrification policies for the City
to consider was narrowed down to five
primary policy options. These policies were
chosen based on their effectiveness to
support the City’s GHG reduction targets,
their overall cost-effectiveness, and their
feasibility to implement. The five policy
pathways included:

1. Continue adopted reach codes and
focus on outreach and incentives (Busi-
ness as Usual)

2. Explore and adopt new reach codes to
encourage and require electrification

3. Require electric equipment upon re-
placement ahead of the Bay Area Air
District’s Zero NOx requirements

4. Establish Building Performance Stan-
dards for commercial buildings

5. Adopt an electric-first policy for City
facilities
What are your biggest concerns regarding electrifying
buildings in San Mateo (Select all that apply)
Access to
health and
safety benef...
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Increased
costs for
housing/rent
Loss of
housing due
to higher...

Installation
process for
electric...

Rebates and
incentives
will be too...

Economic
beneﬁts such
as new jobs...

Energy bills
could increase
after...

Building
electriﬁcation
will ignore...

Access to health and safety beneﬁts from electriﬁcation (e.g. concerns that safer indoor air quality and new electric appliance beneﬁts won’t be accessible to all; especially for renters and environmental justice, or low-income communities) 24.23% 71 Increased costs for housing/rent 6 1 . 0 9 % 179 Loss of housing due to higher rents/housing costs 30.72% 90 Installation process for electric appliances will be difﬁcult, confusing, or information is not available 52.22% 153
Rebates and incentives will be too difﬁcult to access 43.00% 126 Economic beneﬁts such as new jobs won’t be centered in San Mateo 12.63% 37 Energy bills could increase after electriﬁcation 63.82% 187 Building electriﬁcation will ignore other more important building upgrades that should be prioritized or conducted (e.g. solar installation, energy efﬁciency, building envelope upgrades, asbestos and lead abatement) 47.50% 138

ANSWER CHOICES RESPONSES
Electrify San Mateo Sustainable Building Strategy
19 PHASE II ENGAGEMENT
In the second phase of community outreach, the City presented the five potential policy pathways and aimed to get specific feed- back, concerns, and required support for each pathway. Phase II engagement included an in-person workshop and an additional virtual workshop for community members, a virtual information session on Building Performance Standards for commercial build- ing owners, a hybrid information session with the San Mateo United Homeowners Association, presentations and feedback from City Commissions and City Council, and an online survey.

A total of 25 residents attended the in-person workshop where they learned about the five potential pathways and participated in an exercise to discuss concerns and brainstorm solutions and required support to make building electrification feasible. Following the exercise, residents voted for which of the five policies they would be in favor of. Photos from the in-person workshop are shown in Figure 12. Overall, residents were excited about building electrifica- tion policy and were eager to see the City pursuing climate action, evident in the zero votes for the “Do Nothing” or “Business as Usual” options during the vote. Despite this, many residents still had con- cerns about cost, grid reliability, equity, technology and engineering challenges, and needed City education and support through the electrification process. To address these issues, residents said there should be continued education and technical support as well as connections to incentives and rebates to ease the potential cost im- pacts of electrification. This sentiment was echoed throughout the various engagement events throughout Phase II.
20Electrify San Mateo Sustainable Building Strategy
Figure 13. In-Person Community Engagement at the City of San Mateo Public Library In addition to the in-person and online workshops, the City con- ducted a survey which received 217 responses from a wide range of socioeconomic backgrounds. Generally, the survey demonstrated polarized responses with many supporters and opposers for each policy. While Policy Options 1, 4, and 5 received overall positive sup- port with more responses in support than not, Policy Options 2 and 3 were more polarized with almost equal numbers of supporters and opposers. Policy Option 3 was the only option where opposition outweighed support by a small margin.

The five policies were also presented to various interested parties including the San Mateo United Homeowners Association who were overall unsupportive of moving too quickly on building electrifica- tion due to the potential costs and challenges around electrical in- frastructure and grid resilience. Some attendees did express interest and/or support in low-cost opportunities for building electrification.

A Building Performance Standard focus group was also held with commercial building owners. Attendees were generally supportive of a building performance standard and provided ideas to make Policy Option 4 more feasible.

The policies were also presented to three City commissions/commit- tees (Senior Advisory, Sustainability and Infrastructure, and Com- munity Relations) who provided overall supportive feedback, but did note concerns regarding cost impacts. Several of the commissions/ committees identified infeasibility or hardship exemptions as a strategy to address the potential of uncertain costs impacts.

Finally, a summary of the engagement results and policy pathways were presented to City Council who expressed similar feedback to the general community with a desire to drive climate action and decarbonization, but with concerns over cost and feasibility. City Council provided direction to staff to include policy options 1, 2, 4, and 5 into the final strategy, but expressed the need for continued engagement and refining before final adoption of any policy. A more detailed engagement summary is available in Appendix B.

Electrify San Mateo Sustainable Building Strategy 21

PRIMARY OPPORTUNITIES

AND CHALLENGES
Through the robust community engagement process developed for the Sustainable Building Strategy the project team heard from a large cross section of community members and building owners.

Throughout the engagement process community members were polarized in their responses relating to the building electrification policies discussed. While most constituents care about addressing the climate crisis and agree that the City should pursue existing building electrification in some form, many residents also expressed concerns especially over cost.

The primary opportunities identified during Phase I and Phase II engagement that are motivating building electrification included:

The climate crisis is a priority issue
Health and air quality benefits of building decarbonization Urgent need for the City to act now
Availability of electric equipment incentives and rebates to support property owners
The primary concerns identified during Phase I and Phase II en- gagement included:

Upfront costs of electric equipment
On-bill or operational costs of electric equipment
Installation and electrical infrastructure challenges
Grid reliability and resilience
Lack of education surrounding electrification
These opportunities and concerns were driving forces behind the development of the final policy recommendations included in this Sustainable Building Strategy. The Electrification Challenges and Solutions section below highlights how community concerns were addressed through the policy development phase.
22Electrify San Mateo Sustainable Building Strategy

4. ELECTRIFICATION

CHALLENGES

AND SOLUTIONS
Based on feedback from the community,
the project team analyzed the potential
policy pathways to reflect constituent values
and address their concerns. The concerns
demonstrate common challenges involved
with building electrification implementation
including cost and grid impacts. However,
these challenges can be mostly addressed
through detailed policy development and
targeted exemptions. The policies which
have been included in the Sustainable
Buildings Strategy seek to address each of
these concerns specifically while setting the
City up for future success. Solutions for each
challenge are summarized below and covered
in more detail under each policy in the Policy
Pathways Section.

UPFRONT COSTS OF

ELECTRICAL EQUIPMENT
For many building owners, making the switch from natural gas to electric appliances results in higher upfront costs without additional incentives or rebates. This is due in part to higher equipment costs, but also due to ad- ditional electrical work including new electrical circuits, and in some cases electric panel upgrades, new sub-panels, or even a service upgrade. As shown in Appendix A, the upfront costs of electrifying individual applianc - es vary across appliance type and depend on the existing electrical equip - ment in the buildings. While rebates can cover up to 100 percent of these costs in some scenarios and for some appliances, rebates are not always available. Therefore, the City has targeted specific conditions under which electrification becomes highly cost effective while avoiding additional elec - trical infrastructure upgrades. While Appendix A provides detailed costs relating to several appliances, it should be noted that the policies ultimate - ly included in the Policy Pathways section do not trigger specific electrifi- cation upgrades and costs have been included for informational purposes.

More details about each proposed policy’s costs are included in the Policy Pathways Section.

Electrify San Mateo Sustainable Building Strategy 23

ON-BILL OR

OPERATIONAL COSTS
Ongoing operational costs (how much our monthly energy bills are) were another primary concern regarding building electrifi- cation. However, recent studies by Peninsula Clean Energy show that the cost savings from building electrification are increas- ing as natural gas rate increases outpace electricity rates. When paired with all-electric friendly rates from Peninsula Clean Energy, average savings were $29 per household per month after electrify - ing both water and space heaters. These savings are demonstrat - ed in Figure 14.

Operational cost savings for electrification are consistent across each policy based on the equipment electrified.

GRID RELIABILITY

AND RESILIENCE
Grid reliability and resilience concerns arose due to the perception that increased electrical use would put strain on the grid and that electricity was less reliable than gas. However, it has been nearly 20 years since California had a power outage due to lack of electrici- ty.22 Furthermore, the utilities, the CPUC, and the CEC, are all plan- ning for increased electricity usage over time. Integrated Resource Planning conducted at the state level now assumes a 27 percent increase in peak demand by 2035 due to electrification of buildings and vehicles and is expanding the grid to meet that demand. The CPUC has approximately 20,000 megawatt hours (MW) of new gen- eration resources currently under contract and in development.23

22. https://www.baaqmd.gov/~/media/files/community-health/building-appliance-implementation/grid-impacts-final-pdf.pdf?rev=14a3ea4d46704d19a48cf03e3984c 90e&sc_lang=en

23. https://www.cpuc.ca.gov/irp/
Figure 14. Average Monthly Bill Savings from Electrification $19
HPWH
Note: Results include savings from electric rate optimization which lowers costs for all home usage. Therefore, savings do not stack linearly.

HP HVAC HPWH + HP
HVAC
$20
$29
Average Monthly Bill Savings
from Home Electriﬁcation
(rates updated: 1/1/2025)
Electrify San Mateo Sustainable Building Strategy 24
In addition, cities and individual building owners play a critical role in limiting electrification’s impact on the grid. By limiting the number of panel upgrades through smart circuits and oth- er load management approaches, many buildings can electrify on 100amp panels or smaller. A recent study by Peninsula Clean Energy of over 700 all-electric homes found that 99% of homes never exceeded 100 amps during the course of a year. Limiting the number of service and panel upgrades will decrease strain on the grid and keep overall costs lower. 24
As noted above, neither gas water heaters nor most furnaces work without electricity, meaning gas appliances are no more resilient to power outages than their electric upgrades. On average, cus- tomers in PG&E’s peninsula territory suffer less than 1 outage per year which lasts less than 2 hours. 25 San Mateo County also did not experience one PSPS event in 2024. 26

LACK OF EDUCATION

SURROUNDING

ELECTRIFICATION
Another concern across every community engagement event was the need for additional education resources to clearly explain new technologies, guide building owners through the installation pro - cess, and connect residents to rebates and incentives. While elec - tric technologies like heat pumps are not new, they have histori- cally not been common in California due to low gas prices and an extensive natural gas system. This means that some of the appli- ance specific considerations around installing heat pumps is new for many San Mateans. This education gap is already being closed through several sources and this Strategy will direct the City to continue to build on the resources that are currently available to suit the needs of the community. Ongoing and adaptive engage - ment to contractors, homeowners, and other interested parties

24. Powerpoint Presentation

25. https://www.pge.com/assets/pge/docs/about/pge-systems/CPUC-2023-Annual-Electric-Reliability-Report.pdf

26. https://www.pge.com/assets/pge/docs/outages-and-safety/outage-preparedness-and-support/2024-post-season-report-1-narrative.pdf will be critical to the successful adoption of electric appliances.

The City has already started this process through the engagement efforts surrounding this Strategy as well as through their website and collaboration with the County of San Mateo to provide educa- tion to contractors on upcoming requirements. For more informa- tion on the resources currently available to San Mateans, see the Community Electrification Resources Section.

Electrify San Mateo Sustainable Building Strategy 25

5. POLICY

PATHWAYS
At the June 16, 2025 City Council meeting,
the project team presented policy analysis of
five potential existing building electrification
policy pathways and the community feedback
received on the five pathways. The City Council
directed the project team to include four of
the five pathways in the final Electrify San
Mateo Sustainable Building Strategy. Detailed
policy analysis can be found in Appendix C. The
following section outlines each of the policy
pathways and provides information on the
electric infrastructure impacts, GHG emissions
reductions, costs, implementation steps, and
timelines for implementation.

POLICY 1 - ELECTRIFY NEW

BUILDINGS AND INCREASE

EDUCATION, OUTREACH,

AND INCENTIVES
Policy Description
Policy 1 continues to implement the City’s adopted reach codes and identi- fies opportunities to incentivize the electrification process using education, outreach, and connecting the community to rebates and technical support.

The City’s adopted reach code requires energy compliance margins for new buildings will be effective through December 31, 2025, the end of the code cycle. As part of this policy option, the City would investigate options around continuing the new building electrification reach code through either an updated performance standard which complies with the 2025 building code, or a zero NOx standard for new buildings.

For example, this option could include an education campaign to encourage homeowners to prewire for water heaters and furnaces, so they are ready to make the switch once their appliance burns out. Another example incentive would be waiving permit costs for electric equipment upgrades.

Electrify San Mateo Sustainable Building Strategy 26
Electric Infrastructure Impacts
This policy focuses on new construction and voluntary upgrades to existing buildings. The 2025 California Building Code already re- quires pre-wiring for all appliances and sufficient electrical capacity for all-electric buildings in new construction. Due to the voluntary nature of the existing building upgrades, while some upgrades will likely be needed for some homes to electrify, it will not be a require- ment. Therefore, the electric infrastructure impacts of this policy are assumed to be low.

GHG EMISSIONS REDUCTIONS – 1,770 MT CO 2e per year by 2030 Policy Cost
This policy approach would continue to incentivize all-electric new construction and direct the City to expand outreach efforts with the community to increase voluntary existing building electrification.

New Construction reach codes have been shown to save money.

Research from the New Buildings Institute (NBI) highlights that all-electric homes save between $7,500 and $8,200 in construction costs compared to mixed-fuel homes.27 These cost savings are pri- marily due to avoiding installing fees for natural gas infrastructure like gas meters and pipelines. These homes also save money over time especially when paired with heat pumps and solar.

Outreach, education, and sharing incentives incur no cost to com- munity members and can help connect people to resources that will lessen costs for electrification. The City will need to provide adequate staff time to support building electrification engagement and other programs like peer-to-peer home tours for this approach to be effective. These engagement activities, when paired with other strategies listed below, can help the community feel more comfortable and informed on the benefits of electrification.

27. NBI. 2022. New Study on Electrification Costs Shows Benefits to Building Owners and Society. https://newbuildings.org/ new-study-on-electrification-costs-shows-benefits-to-building-owner s-and-society/ Implementation Steps and Timeline
Staff is in the process of evaluating reach code approaches while ensuring compliance with AB 130.

If there is a path forward to adopt a local reach code that meets the new state law, staff will bring updated new construction ordinances to Council for consideration as cost-effectiveness studies are made available.

Staff will develop an annual engagement work plan for outreach and engagement leveraging partnerships and other connections to reach the community.

Electrify San Mateo Sustainable Building Strategy
27 POLICY 2 – REACH CODES

FOR RENOVATION
Policy 2 includes the evaluation of reach codes during renovations of existing buildings. Reach codes are typically evaluated on a three-year cycle in alignment with the new Building Code. As part of Policy 2, the Strategy focuses on two priority existing building reach codes which include a Two-Way Air Conditioning (AC) reach code or a Flexible Path reach code. These policies could be adopted individ- ually or both adopted to complement each other.

Policy 2a – Air Conditioning
to Heat Pump
Policy Description
The Two-Way AC reach code requires all new central air condition- ing units to provide both heating and cooling through the installa- tion of a two-way heat pump or significantly increase the efficiency of a standard AC unit. A two-way heat pump is a versatile HVAC sys- tem that can both heat and cool a building by reversing the flow of refrigerant within the system. In heating mode, it extracts heat from an external source, such as outdoor air or the ground, and transfers it indoors. In cooling mode, it reverses the process, removing heat from inside the building and releasing it outside. This dual function- ality eliminates the need for separate heating and cooling systems which can save building owners money in the long term. Two-way heat pumps run completely off electricity and heat and cool spaces with high efficiency, making them a great way to reduce emissions coming from homes.

This policy would be adopted as part of a local amendment to the building code and would only affect installations of air conditioning units in new or existing buildings. Standard AC units would need to upgrade efficiency through duct work, air sealing, and other means.

While this code focuses initially on residential buildings, future work may also investigate the cost effectiveness of expanding the code to commercial buildings if feasible.

Electric Infrastructure Impacts
This policy only affects the installation of central AC units. AC units and heat pumps are structurally similar in their operations and foot- prints; this means that no additional building or electrical changes are necessary compared to a standard AC installation. No additional electrical upgrades beyond those needed for a standard AC unit would be required, so the potentially high costs of panel or service upgrades are not applicable to this policy.

GHG EMISSIONS REDUCTIONS – 2,200 MT CO 2e per year by 2030 Electrify San Mateo Sustainable Building Strategy
28 Policy Cost
The installation of a two-way heat pump is highly cost-effective as it can both cool and heat a space, effectively replacing both a central air conditioner and furnace within a home. This reduces the need for separate furnace replacements. According to Peninsula Clean Energy and statewide cost analysis, the cost difference between an AC and two-way heat pump ranges between no cost difference to $1,500. However, Peninsula Clean energy provides a $1,500 rebate to offset this cost. Peninsula Clean Energy also offers on-bill financ- ing through the Zero Percent Loan program28 to cover the up-front costs of installing a heat pump, which leads to utility bill savings over time due to appliance efficiency.

Implementing a Two-Way AC policy is particularly advantageous given the upcoming Air District Zero NOx requirements. If a con- stituent's air conditioner breaks before 2029 and is replaced with a standard AC which only provides cooling, they will need to purchase a Zero NOx alternative when their furnace eventually breaks after 2029. Conversely, adopting a Two-Way AC policy in preparation for these requirements would ensure that all air conditioner replace- ments in the next few years have two-way heating and cooling ca- pabilities. This would prevent homeowners from needing to install an additional furnace with savings of up to $10,000 (Appendix C).

Implementation Steps and Timeline
Staff is in the process of evaluating reach code approaches while ensuring compliance with AB 130.

Staff will conduct engagement with the community and
contractors, evaluate cost-effectiveness studies, and present at a City Council study session prior to ordinance development.

28. Peninsula Clean Energy. 2025. 0% financing & rebates. Available: https://www.peninsula- cleanenergy.com/residential/financing/
29Electrify San Mateo Sustainable Building Strategy
Policy 2b – Flex Path Reach
Code at Time of Renovation
Policy Description
Under the Flex Path policy the City will require additional energy efficiency or electrification actions at time of renovation. The Flex Path policy requires new renovations over a specific dollar amount to complete an efficiency checklist and includes one to two cost ef- fective and energy saving approaches in their project. The flex path policies do not ban gas and provide flexible pathways for building owners to meet the decarbonization requirements. Flex Path op- tions include items like:

Installing a heat pump water heater
Installing additional insulation
Using higher efficiency windows
Installing a heat pump HVAC unit
Duct sealing
Cool roof
Floor insulation
Each project would be provided a complete list of demonstrated cost savings approaches to choose from. Projects would select the most applicable and feasible approaches for their project (hence the Flex Path name). For example, a bedroom remodel would likely not elect to install a cool roof but may upgrade their floor or wall insula- tion while a major remodel may elect to install a heat pump water heater to take advantage of rebates from Peninsula Clean Energy.

The final list of measures and the thresholds for project inclusion (cost of permit, sq. ft. of project, etc..) would be determined in the final ordinance language.

Electric Infrastructure Impacts
Since this policy provides many options for compliance, many of which do not require electrification, the impacts on electricity infra- structure are assumed to be low. However, conducting pre-wiring at a minimum during renovation is a great way to save money over time and prepare for upcoming Air District rules.

GHG EMISSIONS REDUCTIONS – 730 MT CO 2e per year by 2030 Policy Cost
The Flex Path reach code is also cost-effective. By providing a range of retrofits and upgrades that building owners can choose from, this policy allows each project owner to pick the most cost-effective and efficient options. Based on a conducted cost analysis conducted by the Local Codes and Standards team, each check list item would need to be demonstrated to have cost savings over the lifespan of the upgrade. Costs range from approximately $300 to $4,000 and represent a small portion of the overall project costs. To be included in the final list each project would need to have a positive return on investment, meaning that it saves money overall during the life of the project. Furthermore, many homeowners may receive addition- al savings through incentives provided by PCE, the State (Tech rebates) or the Inflation Reduction Act. While the overall costs are expected to be low, the City will also work to develop a hardship exemption clause in the ordinance language out of an abundance of caution.

Implementation Steps and Timeline
Staff is in the process of evaluating reach code approaches while ensuring compliance with AB 130.

Staff will conduct engagement with the community and
contractors, evaluate cost-effectiveness studies, and present at a City Council study session prior to ordinance development.

Electrify San Mateo Sustainable Building Strategy
30 POLICY 3 – ZERO NOX

STANDARDS
Based on community feedback and City Council direction, Zero NOx standards were not selected to be pursued at this time. This policy is already being pursued by the Bay Area Air District and will begin phasing in for covered appliances like water heaters in 2027. The costs as well as uncertainty around electric infrastructure upgrades like panels and services was too great a concern to speed up the timeline for electrification. Community members are still urged to follow the guidance in Section 6 Community Electrification Re- sources, to make a plan as these requirements roll out. 31Electrify San Mateo Sustainable Building Strategy
POLICY 4 - BUILDING

PERFORMANCE STANDARDS
Policy 4 creates new standards for buildings (Building Performance Standards) aimed at increasing energy efficiency, and eventually, decarbonizing large buildings as a phased efficiency-focused ap- proach. In comparison to relatively homogonous single-family and small residential buildings, commercial and large multifamily build- ings can be highly variable in their systems and needs. Commercial and large multifamily building heating and cooling systems are also frequently oversized, meaning replacing existing gas equipment in a like for like manner with electric equipment is not economical.

Process loads also vary significantly across multifamily and non-res- idential building types. For these reasons, decarbonizing large buildings necessitates a flexible approach where building managers can first make strides towards understanding their buildings and cost-effective opportunities before committing to a specific ap- proach. Typically, a BPS Program is implemented in phases where buildings first report energy use for several years (benchmarking), then perform a retro-commissioning process to identify opportuni- ties before finally reducing emissions below an established thresh- old (performance standard).

Phase I: Benchmarking (Years 1-2): This initial phase establishes a building’s energy performance baseline by comparing
its energy use intensity (EUI) to similar buildings. Covered Buildings (buildings and properties with buildings totaling the specified size threshold or larger) report their annual energy usage in Energy Star Portfolio Manager. The data collected in the benchmarking phase improves building manager and City understanding of building energy usage and will inform GHG- emissions performance standards. Benchmarking also identifies underperforming facilities and prioritizes improvements, with studies showing benchmarked buildings achieve average
annual energy savings of 2.4 percent. 29

29. National Association of State Energy Officials. 2025. Benchmarking and Building Performance Standards. Available: https://www.naseo.org/issues/buildings/benchmarking Phase II: Retro-commissioning (Years 3-4): Retro-commissioning is a process through which a building’s energy consuming systems are analyzed for efficiency and proper operation. The retro-commissioning process serves two primary purposes.

The first is to uncover inefficient operations, increase energy efficiency, and save building owners money. The second is to identify cost-effective opportunities to reduce building GHG emissions through electrification and energy efficiency.

Phase III: Performance Standard (Year 4+): Jurisdictions set phased energy or emissions targets for GHG reductions over time on a square feet basis. The targets are based on data collected from the benchmarking phase and can be met
through a variety of retrofits, such as upgrades, electrification, or renewable energy adoption. The most cost-efficient retrofits for each building were identified in the retro-commissioning phase.

Standards often allow flexible compliance paths, such as achieving specific EUI thresholds or offsetting emissions via clean energy investments.

Electric Infrastructure Impacts
This policy does not establish specific requirements and therefore, specific infrastructure impacts cannot be identified. The phased-in approach of this program has been designed so that buildings own- ers can collect the necessary data to more thoroughly understand their buildings prior to any project requirements. The City will work to understand the costs of increasing commercial building energy efficiency prior to setting thresholds in Phase III.

GHG EMISSIONS REDUCTIONS – Variable based on Performance Standards Set in Phase III.

Electrify San Mateo Sustainable Building Strategy 32
P olicy Cost
The cost of decarbonizing buildings under a Building Performance Standard (BPS) policy varies significantly based on factors such as building age, equipment types, and energy end uses. This variabil- ity necessitates a flexible, performance-based approach, allowing owners to prioritize cost-effective solutions tailored to their assets.

The BPS framework’s phased implementation mitigates financial burdens:

Benchmarking identifies inefficiencies (e.g., leaks, malfunctioning systems) and establishes a baseline for improvement.

Benchmarking reporting costs approximately $3,000 annually.

Retro-commissioning pinpoints low-cost operational optimizations (e.g., HVAC adjustments, controls recalibration), which typically yield 16 percent energy savings at an average cost of $0.30/sq. ft., often with payback periods under two years.

Performance standards are deferred for 4+ years post-
benchmarking, enabling strategic capital planning for
equipment replacements and system upgrades.

Electrification of commercial building electric retrofits will likely have to be paired with a suite of demand management, energy efficiency, or renewable energy projects to make building electrification economical for building owners. Specific cost- effective system upgrades include heat pump rooftop package units, which are the most promising electrification solution for commercial building electrification, offering a replicable model for a 1:1 equipment swap-out. 30
Implementation Steps and Timeline
Staff will conduct additional engagement with multifamily property and commercial building owners.

Analyze available commercial performance data from the CEC Staff will present a workplan to City Council prior to ordinance development.

30. Rocky Mountain Institute. 2022. Medium-Size Commercial Retrofits. Available: https://rmi.org/ insight/economics-of-electrifying-buildings-medium-size-commercial-retrofits/ 33Electrify San Mateo Sustainable Building Strategy
POLICY 5 - MUNICIPAL

ELECTRIC-FIRST POLICY
Policy Description
This policy establishes a mechanism for local government renova- tions to go electric first. The policy ensures financial and feasibility data is being collected for municipal facilities that will allow the City to compare costs to electrify versus replacing with gas equipment.

This policy has a limited reach as it only applies to municipal build- ings and GHG reductions potential would depend on the rate of equipment failure and availability of replacements. However, it demonstrates City leadership on hard-to-electrify existing buildings that mirror the commercial sector. Several other cities have adopted similar municipal electrification policies. Residents were largely in favor of this policy as it would not incur any costs to the community.

Electric Infrastructure Impacts
Electric infrastructure impacts from this policy are expected to be variable from low impact to potentially high impact. While some appliances may be simple to electrify, others such as boilers or pool heaters may require significant upgrades to City owned facilities and local grid infrastructure. The City will address these challenges on a case-by-case basis.

GHG EMISSIONS REDUCTIONS – 146 MT CO 2e per year by 2030 Policy Cost
This policy enables the City to conduct a comprehensive feasibility assessment to evaluate the cost differentials between electrification and gas equipment replacement for municipal facilities. By incorpo- rating exemptions for projects demonstrating technical or financial infeasibility, the policy ensures a targeted approach to identifying the most cost-effective energy upgrades, consistent with method- ologies applied to commercial buildings. Implementation costs will vary based on building-specific factors, including system age, infra- structure readiness, and operational requirements.

As these facilities are City-owned, the municipality retains full decision-making authority over capital expenditures, eliminating potential equity concerns that might arise in privately owned hous- ing or commercial properties. Furthermore, since many City owned facilities are used by the public such as libraries or park properties, creating healthier and more comfortable spaces while lowering operational costs provide an equity benefit to the community. These costs can be offset with grants, loans, and other incentives provided by Peninsula Clean Energy as well as the State and other sources.

Implementation Steps and Timeline
Staff will work to develop a policy and provide an update to City Council in Spring of 2026.

Staff will develop a reasonable cost exemption threshold based on lifecycle costs.

Staff will maintain a database of project costs, hurdles, and successes for use in understanding other electrification policies.

Electrify San Mateo Sustainable Building Strategy
34 6.

COMMUNITY

ELECTRIFICATION

RESOURCES
The City of San Mateo has access to an extensive
support program provided by Peninsula Clean
Energy. Peninsula Clean Energy provides a
customizable home upgrade support service
that can walk you through the electrification
process whether it’s due to a program identified
in the Policy Pathways Section or through a
voluntary action to improve your health, lower
your bills, and help address climate change. The
Home Upgrade Service can help connect you
to rebates and incentives, provide one-on-one
support and professional expertise to guide
your decisions, and even connect you to trusted
contractors.

In addition to support, PCE also provides
zero interest loans, unique incentives just
for Peninsula Clean Energy customers, and
electrification specific rates. There are also
special programs including direct installation
of electric appliances for low- and median-
income homeowners. These support systems
can make building electrification easier and
less expensive.

Visit Peninsula Clean Energy to choose your
level of support today.

Making a plan to electrify can help you plan around future upgrades and avoid costly or challenging emergency repairs. Knowing what appliances you have that run gas, the size/space available on your panel, and the age/expect- ed lifespan of each appliance can help you minimize stress and maximize savings. Peninsula Clean Energy can help you walk through these steps:

1. Understand your electricity system – What size panel do you have? If your panel is smaller than 100amps or you have outdated or unsafe elec- trical systems (knob and tube or a Zinsco panel) you may want to start planning to replace it. If you have a 100amp panel, but no space, you can add a sub-panel instead of replacing the full panel.

2. Consider “Retrofit Ready” appliances – If your panel is out of space or you want to save money on running a new 240V circuit (the wires that to go the outlet) you can opt for a 120V version which plugs into any outlet.

There are even new induction stoves that utilize a battery to deliver high temperatures quickly without needing to upgrade your wiring.

3. Plan out your appliance replacements – How old are your appliances? Water heaters tend to last around 10 years and furnaces 18 years. If have an appliance that is already questionable, that it’s a good time to start thinking about upgrading to a heat pump.

Electrify San Mateo Sustainable Building Strategy 33

4. Get quotes – Work with Peninsula Clean Energy to find a con- tractor and get quotes to complete your work. Try and get at least 3 quotes before moving forward. The data shows a wide range of costs for similar projects based on contractor experi- ence. Peninsula Clean Energy can provide average costs and help you understand the quotes.

5. Identify your rebates – Work with Peninsula Clean Energy or The Switch is On to see what rebates you qualify for.

6. Consider solar + storage – Adding solar and storage could pro- vide significant savings in conjunction with an all-electric home.

While the cost of these systems is high, financing can provide on-bill savings from day one.

While the Policy Pathways Section outlines key policies the City can enact to help target the most cost effective and feasible electrifica- tion opportunities, these policies alone will not reach San Mateo’s GHG reduction targets. It will be up to the community to make the decisions that will help reduce the impacts of climate change.

Over 42 percent of nationwide GHG emissions are the result of just a handful of kitchen table decisions. What water heater you have might not be noticeable in the temperature of your water, but the emissions benefits of electrification can be significant. These volun- tary resources can fill the gap between the City’s identified policies and the climate action goals we need to achieve in order to address climate change.
36Electrify San Mateo Sustainable Building Strategy

APPENDIX A
Building Inventory and Market Study

Rincon Consultants, Inc.
66 Franklin Street, Suite 300
Oakland, California 94607
510-834-4455

www.rinconcons ultan ts.com
July 21, 2025
Project No: 23-14014
Andrea Chow, Sustainability Analyst
City of San Mateo
City Manager’s Office
330 West 20th Avenue
San Mateo, California 94403
Via email: [email protected]
Subject: Building Inventory and Market Segmentation Memorandum (Task 1) Building for the Future – City of San Mateo Sustainable Buildings Strategy (Version 2*)
*Version 2 applies updated PCE Incentives (- $1,000 from previous memo) as of 08.24.2023 to electrification marginal costs, and cost savings listed in this memo Dear Ms. Chow:

To develop an equitable, implementable, and effective Sustainable Building Strategy (SBS), the City of San Mateo (City) first needs to understand the existing building stock and energy usage and develop estimates for the various costs associated with building electrification .1 Part of this analysis includes investigating the up-front appliance costs2 for electrification, the cost of other upgrades that may be required to convert energy usage in buildings from gas to electricity, the financial incentives currently available for this work, as well as existing conditions of the building stock within the City and other practical opportunities or barriers to electrification of existing buildings. To answer questions about up-front costs, available incentives, existing conditions, and other opportunities and barriers, in collaboration with the City, Rincon co mpleted a meta-analysis of existing cost studies and reviewed several electrification project case studies which have been completed within the City and County of San Mateo. This memo summarizes the information gathered from these reviews and case studies.

This memo is intended to be used in developing education al materials for the community and informing future policy development. Data in this report was summarized from existing sources, some of which are not specific to the City of San Mateo. However, the findings are of sufficient scale and accuracy to help guide this process but not intended as an accurate interpretation of the final cost of electrification for any one building in the City. This memo includes the following pieces of analysis , which is organized according to San Mateo building stock categories: Single -Family Homes and Low - Rise Multifamily and High-Rise Multifamily and Nonresidential Building Costs. • Part 1: Residential Building Segmentation Analysis
o Building Stock
o Building Vintage
o Appliance and Fuel Source Analysis

1 Building electrification refers to the replacement of gas-fired equipment or appliances in a building with electric equipment or appliances. 2 Up-front costs include the cost to buy a new appliance and have it installed by qualified personnel. Up-front costs include additional costs that may come with other upgrades needed to make installation of the new appliance possible (e.g., installation of new wiring to install an electric stove, where there was previously only a gas hookup).

City of San Mateo
Building Inventory and Market Segmentation Memorandum (Task 1) Building for the Future – City of San Mateo Sustainable Buildings Strategy (Version 2) 2 • Part 2: High-Rise Multifamily and Commercial Building Segmentation Analysis o Building Stock
o Building Vintage
o Appliance and Fuel Source Analysis
• Part 3: Residential and Commercial Buildings Electrification Cost Analysis o Upfront Residential Costs
– Incentives for Electrification
– Gas-for-Gas Scenario
– Gas-to-Electric Scenario
– Gas-to-Electric Scenario (marginal costs)
– Costs to Electrify Scenario (marginal costs- incentives) – Commercial Building Cost Analysis
o Description of Building Electrification Costs Overview – Single-Family Electrification Cost Discussion
– Baseline Scenario: Gas to Gas Appliance Replacement
– Electrification Scenario: Gas to Electric
– Electrification Incentives Overview
– Electrification Scenario + Incentives
– Applicability to low-rise multifamily
o High-Rise Multifamily and Nonresidential Buildings Electrification Cost Discussion – Cost Considerations
– Package Unit Opportunity
– Current Incentives
o On Bill Costs
This memorandum’s costs and building energy usage will be updated to reflect the current data as additional information becomes more available through project development. Once finalized, this memo will also serve as a technical appendix to the final Sustainable Buildings Strategy.

Part 1: Residential Building Segmentation Analysis
Single-Family Homes and Low-Rise Multifamily Building Segmentation Analysis For this analysis, single-family homes and low rise (3 stories and under) multifamily are discussed together. This is because they generally utilize similar equipment and share similar costs for electrification. These building types include single -family, duplex, townhouse, rowhouse, and parcels with multiple single unit/duplex buildings. Commercial and high rise (over 3 stor ies) buildings are discussed in a later section.

City of San Mateo
Building Inventory and Market Segmentation Memorandum (Task 1) Building for the Future – City of San Mateo Sustainable Buildings Strategy (Version 2) 3 Significance of Building Vintage
Building vintage3 can be used to provide a sense of the technologies employed in a particular building.

While vintage does not tell us if updates have been made, it does provide some idea of potential hurdles that might be faced when completing electrification work. Based on anecdotal evidence, buildings constructed after 1970 are more likely to have electric panels of 100 amps or more instead of lower amp panels or fuse boxes which may require upgrades and may impede electrification work.

A significant number (70%) of San Mateo’s single -family homes were built before 1970 and could potentially need panel upgrades or other electrical work prior to full electrification as shown in Figure 1.

However, progress on and availability of circuit sharing technologies and retrofit ready (120 volt) heat pump products continues to lower the number of buildings which require panel upgrades. Adding an electric vehicle (EV) also increases the chance of needing a panel or service upgrade which should be considered when looking at whole home electrification.

Building Segmentation Analysis
According to the parcel data obtained from San Mateo County, there are approximately 19,350 single- family residential buildings within the City of San Mateo. The years in which they were built (building vintage) are included in Figure 1.

Figure 1 Number of Single-Family Residential Buildings Built by Year in the City of San Mateo

Data Source: San Mateo County Parcel Data

3 Building vintage refers to the age (‘vintage’) of the building, based on the approximate date it was built. 27 16,897
2,281
145
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2,000
4,000
6,000
8,000
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12,000
14,000
16,000
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Unknown 1969 or earlier 1970 to 2009 2010 or newer
Number of Buildings
Year Built
City of San Mateo
Building Inventory and Market Segmentation Memorandum (Task 1) Building for the Future – City of San Mateo Sustainable Buildings Strategy (Version 2) 4 In addition, there are approximately 2,305 multifamily buildings. The breakdown of buildings by type is included in Figure 2. No building vintage data for multifamily buildings was available at the time of drafting this report.

Figure 2 Multifamily Housing in the City of San Mateo

Data Source: San Mateo County Parcel Data
Appliance and Fuel Source Analysis
To better understand where natural gas is being used in San Mateo’s buildings, an appliance fuel source analysis was completed using existing data provided by PCE. The data provided by PCE leveraged the Residential Appliance Saturation Survey (RASS) for Climate Zone 3 for most appliance types with the exception of heating fuel source.
4 Heating fuel source data was based on the American
Community Survey which utilizes specific San Mateo County Data.5 Heating system types were pulled from the RASS Study but normalized using American Community Survey (ACS) fuel source data which is more specific to San Mateo County. This normalization process weighted fuel types more heavily towards the ACS results for fuel types but utilizes the relevant equipment types from the RASS. This data is not specific to the City of San Mateo but provides a good understanding of the fuel and appliance types common in the region. Based on this analysis, most gas consumption in residential buildings comes from space and water heating, as shown in Figure 3.

4 The California Residential Appliance Saturation Study (RASS) is a comprehensive look at residential energy use. The California Energy Commission (CEC) manages the study, which is based on the California Home Energy Survey. The survey collects information from residents about appliances, heating and cooling equipment, electric vehicles, and energy. 5 The American Community Survey (ACS) detailed population and housing information and is intended to helps local officials, community leaders, and businesses understand the changes taking place in their communities. 1,182
60 162
632
269
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200
400
600
800
1,000
1,200
1,400
Duplex Triplex Fourplex Five or more units Other
Number of Buildings
City of San Mateo
Building Inventory and Market Segmentation Memorandum (Task 1) Building for the Future – City of San Mateo Sustainable Buildings Strategy (Version 2) 5 Figure 3 2019 California Residential End Use Survey Gas Consumption

Data Source: California End Use Survey (CEUS)
Water Heating Fuel Types
In San Mateo County the vast majority of water heaters run on natural gas (though most gas water heaters also require electricity to operate) as shown in Figure 4.6 Multifamily buildings have the largest percentage of electric water heating. A small percentage of buildings within the county also run on bottled gas (propane), but these buildings are likely to be in the unincorporated areas away from natural gas infrastructure.

Figure 4 Water Heater Fuel Types by Building Type in San Mateo County

Data Source: Residential Appliance Saturation Survey (RASS)

6 https://www.schnellerair.com/blog/shower-during-power-outage/ 0%
20%
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60%
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Single family owned Single family rented Multifamily rent Multifamily condo Mobile homes Percent Adoption by Appliance Type
Gas Water Heater Electric Water Heater Bottled Gas Water Heater City of San Mateo
Building Inventory and Market Segmentation Memorandum (Task 1) Building for the Future – City of San Mateo Sustainable Buildings Strategy (Version 2) 6 As shown in Figure 5, most of the water heaters in San Mateo County are standard gas fired water heaters, especially in single-family homes. Whole house tankless gas water heaters are the next most common followed by standard electric resistance water heaters , tankless electric varieties and heat pumps. Different types of water heaters will have different space and cost impacts on operations. This detail will likely be building specific. However, standard gas tank water heaters are most common and can be replaced by heat pump tank water heaters in most scenarios.

Figure 5 Water Heater System Counts by Building Type in San Mateo County

Data Source: Residential Appliance Saturation Survey (RASS) Furnace Types
Space heating is the second largest gas consumption device in residential buildings. Space heating in San Mateo County sees a much broader use of electric appliances especially in multifamily rentals and multifamily condos, as shown in Figure 6. Single-family owned and rented buildings still use gas most commonly. Some wood and propane use is seen within the County, but is most likely in the unincorporated regions.
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Single-family owned Single-family rented Multifamily rent Multifamily condo Mobile homes Number of Appliances
Standard tank gas water heater Whole house tankless gas water heater Standard tank electric water heater Heat pump electric water heater Whole house tankless electric water heater Point of use tankless electric water heater Standard tank propane water heater Whole house tankless propane water heater City of San Mateo
Building Inventory and Market Segmentation Memorandum (Task 1) Building for the Future – City of San Mateo Sustainable Buildings Strategy (Version 2) 7 Figure 6 Space Heating Fuel Types by Building Type in San Mateo County

Data Source: Residential Appliance Saturation Survey (RASS) As shown in Figure 7, central gas furnaces are the most common space heating system type in the County, driven primarily by single -family buildings. Currently, most electric space heating is electric resistance in both single and multifamily buildings. Different types of furnaces will have different space and cost impacts on operations. This detail will likely be building specific. However, central gas furnaces are most common and can be replaced by central air source heat pumps in most scenarios.

These heat pumps also provide air conditioning.

Figure 7 Space Heating System Counts by Building Type in San Mateo County

Data Source: Residential Appliance Saturation Survey (RASS) 0%
10%
20%
30%
40%
50%
60%
70%
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Single family owned Single family rented Multifamily rent Multifamily condo Mobile homes Percent Adoption by Appliance Type
Utility gas Electricity Propane Wood
0 100,000
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Single-family owned Single-family rented Multifamily rented Multifamily condo Mobile homes Number of Appliances
Central gas furnace Floor/wall gas furnace Other gas heating Electric resistance Central electric furnace Heat pump
Other electric heating Propane Wood
City of San Mateo
Building Inventory and Market Segmentation Memorandum (Task 1) Building for the Future – City of San Mateo Sustainable Buildings Strategy (Version 2) 8 Air Conditioning Prevalence and Type
Most residential buildings in San Mateo County do not have air conditioning. Those that do, mostly single-family owned homes, use central air conditioning. The lack of air conditioning within the County is important to note as projected increases in temperatures related to climate change may increase the need for air conditioning installations as a resilience measure. This represents an important opportunity for buildings to use a “two -way” air-conditioning system or heat pump. When considering the cost of both a furnace and air conditioner, a heat pump is significantly less expensive (see cost analysis below).

Figure 8 Air Conditioning System Counts by Building Type in San Mateo County

Data Source: Residential Appliance Saturation Survey (RASS) Stove Types
Within San Mateo County, gas and propane (bottled gas) fueled units make up approximately 60% of all stoves while electric units make up the remaining 40% as shown in Figure 9. Electric stoves are most common in multifamily rental units.
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Single-family owned Single-family rented Multifamily rent Multifamily condo Mobile homes Number of Buildings with Air Conditioning Types
Central air conditioning only Central evaporative cooler only Room air conditioning only Multiple air conditioning types No air conditioning
City of San Mateo
Building Inventory and Market Segmentation Memorandum (Task 1) Building for the Future – City of San Mateo Sustainable Buildings Strategy (Version 2) 9 Figure 9 Stoves Fuel Type by Building Type in San Mateo County

Data Source: Residential Appliance Saturation Survey (RASS) Figure 10 shows the total number of residential stoves in San Mateo County by fuel type and building type. Gas stoves are most common in single -family units while multifamily units tend to use electric stoves.

Figure 10 Stove Counts by Building Type in San Mateo County

Data Source: Residential Appliance Saturation Survey (RASS) 0%
20%
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Single family owned Single family rented Multifamily rent Multifamily condo Mobile homes Percent Adoption by Appliance Type
Natural Gas Electricity Bottled Gas
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Single-family owned Single-family rented Multifamily rent Multifamily condo Mobile homes Number of Appliances
Natural gas Electricity
City of San Mateo
Building Inventory and Market Segmentation Memorandum (Task 1) Building for the Future – City of San Mateo Sustainable Buildings Strategy (Version 2) 10 Clothes Dryer Types
Most residential buildings in San Mateo County have a clothes dryer with dryers being most common in single-family units. Electric clothes dryers make up nearly 40% of all dryer use , while only 27% are gas. The remaining 34% of units do not have a dryer on site according to the RASS data.

Figure 11 Clothes Dryer Counts by Building Type in San Mateo County

Data Source: Residential Appliance Saturation Survey (RASS) Pools
Approximately 849 residential buildings (4%) have pools within the City of San Mateo , according to PCE. Pools in the City of San Mateo are likely to be heated using gas.

Part 2: High-Rise Multifamily and Commercial Building
Segmentation Analysis
Commercial Buildings and High-Rise Multifamily Building Segmentation Analysis
Total commercial buildings (1,244 individual buildings) segregated by type based on San Mateo County parcel data are shown in Figure 12. The most common commercial building type in San Mateo is office followed by retail. Mixed use, auto sales, and warehouses make up the next most common building by total count.
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Single-family owned Single-family rented Multifamily rent Multifamily condo Mobile homes Number of Appliances
Natural gas Electricity No dryer
City of San Mateo
Building Inventory and Market Segmentation Memorandum (Task 1) Building for the Future – City of San Mateo Sustainable Buildings Strategy (Version 2) 11 Figure 12 Commercial Buildings by Type in the City of San Mateo

Data Source: San Mateo County Parcel Data
Data on commercial building energy usage by appliance/end use specific to San Mateo or San Mateo County was not available at the time of this memorandum’s analysis. However, the California Energy Commission published the 2006 California Commercial End -Use Survey (CEUS) which details statewide commercial energy use. An updated 2018-2022 CEUS is likely to be released soon, though it is currently delayed due to COVID- 19 related impacts. Therefore, the 2016 CEUS is the most up- to- date information available on California’s commercial building energy consumption. CEUS filters results by utility which allows for some refinement , compared to the statewide results. The PG&E results are summarized below. The full report is no longer on the CEC website, but can be found here. 7 Within the PG&E service area there are just under 2 billion square feet of commercial floor space. The building types with the largest floor area are miscellaneous with 23%, large offices with 15% and retail with 14%. Total natural gas usage from these buildings is estimated at 565 Million therms per year with three building types representing over 54% of total natural gas usage: restaurants (21%) miscellaneous (20%) and health (13%). To tal electricity and gas usage by end use are shown in Figure 13 and Figure 14, respectively.

7 https://planning.lacity.org/eir/CrossroadsHwd/deir/files/references/C19.pdf 291
268
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84 51 50 39 45 42
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City of San Mateo
Building Inventory and Market Segmentation Memorandum (Task 1) Building for the Future – City of San Mateo Sustainable Buildings Strategy (Version 2) 12 Figure 13 Commercial Electricity by End Use (2006 CEUS) Figure 14 Commercial Gas Consumption by End Use

28.9%

14.8%

12.4% 12.4%

8.2%

5.9% 5.2% 4.6% 3.8%

1.8% 0.9% 0.8% 0.3%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%
Space Heating, 44%
Water Heating, 30%
Cooking, 20%
Process, 5%
Miscellaneous, 1% Cooling, 1%
Space Heating Water Heating Cooking Process Miscellaneous Cooling City of San Mateo
Building Inventory and Market Segmentation Memorandum (Task 1) Building for the Future – City of San Mateo Sustainable Buildings Strategy (Version 2) 13 As shown in the figures above, gas is the predominant energy source for commercial space and water heating with less than 1% of all electricity being used for commercial water heating and less than 2% of electricity being used for space heating.

Commercial Space and Water Heating Types
The CEUS does not provide energy consumption by type of space and water heating equipment.

However, PCE did provide data on equipment prevalence for commercial buildings based on Commercial End-Use Survey (CEUS). Commercial H eating Ventilation and, A ir Conditioning (HVAC) equipment types for San Mateo County are included in Figure 15. The majority of HVAC equipment are packaged single zone (SZ) furnaces with cooling, which are also the easiest to electrify.

Figure 15 Commercial Space Heating Equipment Prevalence by Type in San Mateo County (PCE)

Data Source: PCE 2035 Decarbonization Plan
PCE also provided information on commercial water heating. Water heating equipment is broken down into five categories with a mix of both gas and electric appliances being present in commercial buildings within the County. Most of these systems are natural gas tank water heaters , as shown in Figure 16.

City of San Mateo
Building Inventory and Market Segmentation Memorandum (Task 1) Building for the Future – City of San Mateo Sustainable Buildings Strategy (Version 2) 14 Figure 16 Commercial Water Heating Equipment Prevalence by Type in San Mateo County (PCE)

Data Source: PCE 2035 Decarbonization Plan
Part 3: Residential and Commercial Buildings Electrification Cost Analysis
Electrification Up-Front Costs - Single-Family and Low-Rise Multifamily Buildings Up-front costs include the costs to purchase an appliance, install it, and make it operational. Up -front costs to electrify were analyzed using the most recent and location specific data available. Third party vetted sources from local government and community choice aggregator (CCA) reports and data sets specific to the City and County of San Mateo were used for most data sources. Sources for each data set used in the analysis are summarized in Table 1 below.

For most up-front costs, median install values were selected to inform the cost analysis. Using median costs helped remove outlier quotes from contractors, which would have influenced the average value.

Quotes for some equipment , such as HVAC units, could vary by as much as $15,000 for the same project.

Where there are exceptions to this data filtering process, due to missing data, data substitution methods will be clarified in the relevant cell of the analysis. 3% 5% 5% 5%
16%
25% 25%
7% 5%
25%
11% 5%
5%
21% 35%12%
10% 10%
13%
15%
10%
12%
69% 60% 60%
75% 80%
60% 68%
48%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Electric tankless Electric tank Natural gas boiler Natural gas tankless Natural gas tank City of San Mateo
Building Inventory and Market Segmentation Memorandum (Task 1) Building for the Future – City of San Mateo Sustainable Buildings Strategy (Version 2) 15 Table 1 Data Sources Analyzed for Single-Family Cost Analysis Author/Source Source Description Analysis Use and Considerations Peninsula Clean Energy
(PCE)
2035 Decarbonization Feasibility
Analysis & Plan: Complete Analysis and
Draft Plan (September 2022)
8 Electric and gas appliance installation costs,
including wiring, appliance cost, labor, and
markup.

Commercial rooftop package unit cost data.

Josie Gaillard & Tom Kabat
via funding from BayREN &
County of San Mateo Office
of Sustainability
Decarbonizing Single-Family Homes
(January 2023)
9 Single-Family Home Decarbonization
Case Study: San Mateo 1-Story Home
(March 2023)10
Electric and gas appliance installation costs
(all-cost inclusive), based on specific
equipment and models, bids for 10 homes
under consideration as part of cumulative
case study.

One City of San Mateo Single-Family Home
case study analyzed.

BayREN Contractor Install
Dataset
BayREN Contractor-Input Raw Data for
Electric Appliance Installation (Excel),
filtered for most recent year input (2022)
This raw data source was also used to inform
the PCE 2035 Decarbonization Feasibility
Analysis and Plan
TECH Clean California
Install Dataset
TECH Clean California Install Dataset-
Input Raw Data for Electric Appliance
Installation (Excel), filtered for most
recent year input (2022)
This raw data source was also used to inform
the PCE 2035 Decarbonization Feasibility
Analysis and Plan
Note: Existing datasets and reports did not cover the cost of air conditioning (both appliance and installation), which was found using desktop research (Angie’s List), filtering for location-specific costs11 Low Rise Multifamily Applicability
In general, the costs for single -family homes and the costs per unit for low rise multifamily homes (3 stories and under) will be similar. Low rise multifamily homes tend to use similar equipment and one piece of equipment (such as a hot water heater or furnace can serve one or multiple units). In some low-rise multifamily units there may be a single larger piece of equipment shared between multiple units (an example would be an 80 gallon hot water heater being used by both units in a duplex).

Therefore, the per unit costs for electrification in Table 3 are assumed to be conservative for multifamily buildings which use residential (as opposed to commercial) sized equipment. High rise multifamily homes (over 3 stories) look more like commercial buildings with a wide variety of equipment and the potential for larger centralized systems, which will be described further in High- Rise Multifamily and Nonresidential Building Costs.

8 https://www.peninsulacleanenergy.com/wp-content/uploads/2022/01/2022.09-BOD-2035-Decarb-Plan-Complete-Analysis-Draft-Plan-

1.pdf
9 https://www.smcsustainability.org/wp-content/uploads/Decarbonizing-Single-Family-Homes.pdf 10 https://www.smcsustainability.org/energy-water/decarbonizing-homes/cost-plans/ 11 https://www.angi.com/articles/how-much-does-installing-new-ac-cost.htm City of San Mateo
Building Inventory and Market Segmentation Memorandum (Task 1) Building for the Future – City of San Mateo Sustainable Buildings Strategy (Version 2) 16 Up-Front Costs for Electrification
• Key Figure Highlight. Whole home electrification could be less expensive for building owners in San Mateo than replacing appliances with gas once rebates are included. o Full-home appliance replacement with new gas appliances: $11,012 - $18,51212 o Before incentives: Full-home appliance replacement with new electric appliances 13 marginal cost: $13,291- $20,93614
o After incentives: Full-home appliance (no AC) replacement with new electric appliances marginal cost: +$709 in cost savings – $4,83615 and get the benefit of air conditioning. o After incentives: Homes with AC + Furnace that need replacing could save up to $2,665 To understand the up -front costs of electrification, Rincon gathered data through existing analysis described in Table 1 to determine the cost to install new gas appliances as well as new electric appliances. These costs were all-inclusive, incorporating wiring upgrades, labor costs, appliance costs, permitting, and contractor markup.

Rincon assumed that in an electrification scenario for a home, switching any gas appliances to an electric appliance would only occur if the gas appliance no longer functioned or was due for replacement (‘burnout’), for other consumer preference reasons (ex. public health, climate consciousness), or was voluntarily upgraded to a modern electric option. Because of this electrify on replacement scenario, Rincon further determined the marginal cost of the electrification scenario by comparing:
• Gas to gas “like for like” scenario- an old gas appliance is replaced with a new similar gas appliance.
• Gas to electric “electrification” scenario - an old gas appliance is replaced with a new similar electric appliance.

The marginal cost is the difference between the electrification scenario, and the gas to gas, or “like for like” scenario. By focusing on the time of replacement the cost of electrification is the difference between a standard gas replacement and an electric upgrade. While some building owners may opt to replace their appliances before burnout in order to gain the benefits of electrification (improved air quality, lower GHG emissions, bill savings) most people are expected to wait until burnout to replace their appliances. Therefore, while both gross and marginal costs are included in this memo randum, the marginal cost described in detail in Table 7 should be the focus for determining cost effectiveness.

In reviewing the San Mateo existing data, there were four key factors that determine costs for home electrification that were apparent in the literature and data:
• Avoiding panel upgrades through a watt diet
16, panel management, or home electrification plan
could result in significant savings ($3,700) for home electrification, though building owners may want to consider that installing future charging capacity for an electric vehicle may necessitate a panel upgrade anyway.17

12 Low scenario does not include AC, high scenario does include AC (in addition to a gas powered furnace) 13 Also known as ‘electrification’
14 This scenario does not include air conditioning, which would subtract $7,500 from both scenarios as a heat pump would displace the need to install an AC in addition to a gas fired furnace. 15 Low scenario = Total costs with no panel upgrade with low-cost HVAC scenario and no AC, median HVAC scenario 16 Watt Diet refers to the practice of minimizing the peak electricity demand through smart chargers and other technology to avoid a panel upgrade.
17 https://www.smcsustainability.org/energy/decarbonizing-homes/ City of San Mateo
Building Inventory and Market Segmentation Memorandum (Task 1) Building for the Future – City of San Mateo Sustainable Buildings Strategy (Version 2) 17 • HVAC appliance costs and HVAC installation costs made up the largest single cost of electrifying a building. The cost range for HVAC installation was also the largest with quotes for the same HVAC system ranging by as much as $15,000 . This variability emphasizes the need to get multiple quotes is very important.18
• The large cost range for HVAC equipment necessitated the Project Team running both a low -cost and median cost for electric heat pump HVAC System, which had a $3,944 difference between scenarios.
• Labor costs and quotes from contractors are likely the most expensive and variable factor in home electrification, not appliance cost.19
Electrification Scenario: Gas to Gas “Like for Like” Upfront Costs In the gas ‘like for like’ scenario (base case), where it is assumed that the building owner replaces existing natural gas appliances with new gas- fired appliances, the typical whole -home cost in San Mateo, without air conditioning20 is $11,012. Once costs for air conditioning are added in, the total projected cost to replace all appliances that run on gas plus an AC is $18,512. This analysis demonstrates the amount of money that building owners would spend as a baseline if they planned on replacing their appliances.

These costs describe all up-front costs for installation, appliance, and labor, by taking the average of collected median values for appliance types, while aggregating appliance types by end use (with the exception of AC, described in the note below Table 2).

Table 2 Like-for-Like Scenario: Replace Gas Appliances with Similar, New Gas Appliances (Total Costs)
Appliance, Install, Wiring End Use Median/Average Cost (All Data) Gas-fired water heater Water Heating $2,800
Gas-fired HVAC system Space Heating $6,132
AC (keep existing furnace) * Space Cooling $7,500
Gas-fired dryer Clothes Drying $925
Gas-fired stove Cooking $1,155
Whole-Home Cost w/o AC $11,012
Whole-Home+ AC $18,512
* Note: Existing datasets and reports did not cover the cost of air conditioning, which was found using desktop research (Angie’s List), filtering for location-specific costs by zip code, refers to central air conditioner.21 The air conditioner (AC) uses electricity not gas to operate.

18 PCE 2035 Decarb Plan Analysis
19 https://www.peninsulacleanenergy.com/wp-content/uploads/2022/01/2022.01.13-CAC-2035-Decarb-Feasibility-Plan.pdf 20 According to the 2035 Peninsula Clean Energy Decarbonization Analysis, only 25% of homes in San Mateo County have Air Conditioning, with central air conditioning being the most common type of air conditioner. 21 https://www.angi.com/articles/how-much-does-installing-new-ac-cost.htm City of San Mateo
Building Inventory and Market Segmentation Memorandum (Task 1) Building for the Future – City of San Mateo Sustainable Buildings Strategy (Version 2) 18 Electrification Scenario: Gas to Electric – No Incentives Applied Upfront Cost In the gas to electric scenario (electric scenario) where it is assumed that the building owner replaces existing natural gas appliances with new electric appliances, the total whole-home electrification cost to replace all gas-powered appliances with all-electric, with no incentives or rebates applied, is:

Assuming that home electrification does not require an electric panel upgrade22:
• $24,303-$28,248
Assuming that home electrification does require an electric panel upgrade (particularly for homes with electric panels less than 100 amps):
• $28,003-$31,948
The difference between both electric panel scenarios described above is the difference between the ‘low’ and ‘median’ heat pump scenario, which was broken out to detail the significant difference in installation bids for electric heat pump HVAC systems. This discrepancy in installation bids from contractors stems from home-specific needs for ductwork upgrades, locations to house HVAC systems, and labor costs which are highly variable depending on the contractor. These two scenarios show that installation costs for HVAC and the potential need for an electric panel upgrade are two of the largest influencers of cost in home electrification for the City of San Mateo.

These costs can be significantly or partially offset by stacked federal and local incentives as described in the Current Incentives f or Electrification section below . Whole home costs for replacing gas appliances with electric with no incentives applied are shown below in Table 3.

Table 3 Electrification Scenario: Cost to Replace Gas Appliances with Electric Appliances (No Incentives, Total Costs)
Appliance, Install, Wiring* End Use
Median/Average
Cost (All Data)
Electric heat pump water heater Water Heating $6,000
Electric heat pump HVAC system (heating and cooling) Space Heating/Cooling - Median Scenario
$17,910
Space Heating/Cooling- Low Scenario $13,965
Electric dryer Clothes Drying $1,963
Electric stove Cooking $2,375
Panel Upgrade (Only if needed) Electrical (additional one-time costs) $3,700 Low Cost HVAC Scenario: Whole-Home Cost (w/o panel upgrade) $24,303 Low Cost HVAC Scenario: Whole-Home Cost (+ panel upgrade) $28,003 Median Cost HVAC Scenario: Whole-Home Cost (w/o panel upgrade) $28,248 Median Cost HVAC Scenario: Whole-Home Cost (+ panel upgrade) $31,948

22 As discussed in the BayREN Decarbonizing Single-Family Homes Case Study, potentially costly electric panel upgrades are frequently recommended by contractors without first understanding the many potential avenues to avoid this cost through maximum usage of existing service capacity. The amp cutoff for electric panel upgrade is widely understood to be 100 amps or higher- a building with below 100 amps likely will need a panel upgrade to accommodate all-electric appliances. The BayREN Decarbonization Case Study recommends several ways for “panel optimization”, including making a whole home electrification plan, and investing in circuit sharing and pausing infrastructure instead of a panel upgrade.

City of San Mateo
Building Inventory and Market Segmentation Memorandum (Task 1) Building for the Future – City of San Mateo Sustainable Buildings Strategy (Version 2) 19 Electrification Scenario: Marginal Costs (Difference Between Gas and Electric Install Costs)
‘Marginal costs’ for electrification are at the core of this analysis as they describe the cost difference between the assumed investment needed to replace a gas appliance that would happen during ‘burnout’ or equipment upgrade with all-electric technologies. Put simply, marginal costs describe how much more expensive it would be to go all-electric, rather than replace non-functioning appliances with gas. Zeroing out this difference between electric and gas install costs would mean that electrifying does not increase the cost burden on building owners in San Mateo when compared to the baseline ‘gas for gas’ replacement , addressing a key cost and equity hurdle for developing existing building electrification policies.

Assuming that the home electrification scenario replaced a combined furnace and AC with a heat pump23 , the marginal cost to electrify (without incentives) would range from:
• $5,791-$9,736
Assuming that the home electrification scenario does not have AC/does not want AC , and also does not require a panel upgrade, marginal costs to electrify before rebates would range from:
• $13,291-$17,236
o This cost range for both scenarios is based on the install difference between low and median heat pump HVAC systems
o If an electric panel upgrade was added, $3,700 would be added to each cost range scenario Marginal costs for replacing gas appliances with electric, with no incentives applied are shown below in Table 4 by appliance type and end use, and with different full- home electrification scenarios with and without air conditioning cost savings, panel upgrades, and low and median cost heat pump scenarios included in Table 5.

Table 4 Electrification Scenario Marginal Costs (Appliance Level) Appliance End Use
Median/
Average Cost
Electric heat pump water heater Water Heating $3,200
Without AC: Electric heat pump HVAC system Space Heating/Cooling: Median Cost Scenario
$11,778
Space Heating/Cooling: Low-Cost Scenario $7,833
With AC: Electric heat pump HVAC system (heating and
cooling; replaces need for additional AC)
Space Heating/ Cooling $(7,500)
Electric dryer Clothes Drying $1,038
Electric stove Cooking $1,220
Additional One-Time Costs: Panel Upgrade $3,700

23 This would entail subtracting out the additional cost of replacing an AC, as a heat pump provides both heating a cooling functions, functionally displacing the need to replace both a gas-powered furnace and an air conditioner under the ‘like for like’ scenario City of San Mateo
Building Inventory and Market Segmentation Memorandum (Task 1) Building for the Future – City of San Mateo Sustainable Buildings Strategy (Version 2) 20 Table 5 Full-Home Electrification (Replace All Appliances with Electric) Marginal Cost Scenarios
Scenario Cost
Full-Home Electrification (Replace all Appliances with Electric) Marginal Cost – No AC Cost Savings

Low-Cost Heat Pump (HP) HVAC Scenarios – No AC
Full-home electrification (w/o AC or panel Upgrade) $13,291 Full-home electrification marginal cost (w/o AC with Panel upgrade) $16,991 Median-Cost Heat Pump (HP) HVAC Scenarios – No AC
Full-home electrification marginal cost (w/o AC or panel upgrade) $17,236 Full-home electrification marginal cost (w/o AC with Panel upgrade) $20,936 Full-Home Electrification (Replace All Appliances with Electric) Marginal Cost – With AC Cost Savings

Full-home electrification, with AC, no panel upgrade, low cost HP $5,791 Full-home electrification, with AC, no panel upgrade, median cost HP $9,736 Full-home electrification, with AC, panel upgrade, low cost HP $9,491 Full-home electrification, with AA, panel upgrade, median cost HP $13,436 Current Incentives for Electrification
Depending on project availability, current appliance electrification incentives available through the Inflation Reduction Act (IRA), Peninsula Clean Energy (PCE), BayREN, TECH Clean California when combined make building owners eligible for $2 1,600 in rebates, which are summarized in Table 6.

Incentives take the form of both rebates and tax incentives. Tax incentives through the IRA require the building owner to have some tax burden to reduce.

Data for existing rebates were collected from most recent online sources on existing federal- level (IRA24), local (PCE25, BayREN26, TECH Clean California27) sources of home electrification rebates.

24 https://www.rewiringamerica.org/IRAguide
25 https://www.peninsulacleanenergy.com/residential-programs/ 26 https://www.bayren.org/articles-tools-tips/electrification 27 https://switchison.org/
City of San Mateo
Building Inventory and Market Segmentation Memorandum (Task 1) Building for the Future – City of San Mateo Sustainable Buildings Strategy (Version 2) 21 Table 6 Current Incentives (as of August 2023)
Appliance End Use
$ Rebate/Tax
Credit* Available Funder Notes
Electric heat pump water heater Water Heating $3,000 PCE Stackable with other incentives, but most cannot exceed cost of projects; All PCE- capped at $14,000 $1,000 BayREN All BayREN- capped at $7750
$2,000* IRA Max for IRA 30% heat pump water heater tax incentive ($2000) max, must have paid taxes in calendar year. Additional low-middle income IRA incentives are upcoming but not included here.

Heat Pump Water Heater Total Stackable Rebates and Tax Credits Available $6,000 HVAC System Space Heating/Cooling $3,500 PCE Stackable with other incentives, but most cannot exceed cost of projects $1,000 BayREN

$2,000* IRA Tax Credit, same as description for electric heat pump water heater $1,000 Tech Single-family incentives of $1,000 for new heat pump HVAC systems, with up to two incentivized systems per home for a total of $2,000; must be a TECH-enrolled contractor; project must be a non-heat pump to heat pump installation; no new construction, retrofits only; equipment must be AHRI matched systems; equipment must meet Title 24 code minimum standards.

HVAC System Total Stackable Rebates and Tax Credits Available $7,500 Electric dryer Clothes Drying $250 BayREN Specifies heat pump clothes dryer Electric Dryer Total Stackable Rebates and Tax Credits Available $250 Induction Stove Cooking $250 BayREN Specifies Induction Range Induction Stove Total Stackable Rebates and Tax Credits Available $250 Additional One-Time Costs - Panel and New Circuits $1,500 PCE $600* IRA Tax credit for panel upgrades- available in conjunction with other home upgrades (ex. weatherization, electrification, solar) Electric Panel Total Stackable Rebates and Tax Credits Available $2,100 Total electric home rebates available All-systems $5,500 Tech Single-family - Each single-family property (includes duplex, townhomes, and manufactured homes) must install heat pump space heating, heat pump water heating, electric or induction cooking, and an electric dryer.

Electric Panel Total Stackable Rebates and Tax Credits Available $5,500 Total Electrification Incentives (Rebates + Tax Credits) Available $21,600 Total Electrification Rebates Available $ $17,000
Total Electrification IRA Tax Credits Available $* $4,600 *While rebates can be applied upfront by either the building owner or contractor, depending on the incentive program, IRA tax credits can be deducted from total taxes owed, meaning that the building owner would have to wait until tax season to receive the full cost reduction to electrify

City of San Mateo
Building Inventory and Market Segmentation Memorandum (Task 1) Building for the Future – City of San Mateo Sustainable Buildings Strategy (Version 2) 22 Federal Electrification Incentives under the Inflation Reduction Act (IRA) & the High Efficiency Electric Home Rebate Act28
The IRA was signed into law on August 2022, ushering in significant federal policy support and funding for building decarbonization. The High Efficiency Electric Home Rebate Act (HEEHRA) is the official name of the IRA’s rebate program for electric home technology including heat pumps, electrical wiring, and induction stoves, which will be available starting in 2023. Low -income households up to 80% of Area Median Income (AMI) can access 100% of upfront discount incentives, while moderate -income households from 80-150% AMI can access up to 50% of the upfront discount, in addition to tax credits that vary based on household income. Total HEEHRA discounts are capped at $14,000 across all electrification projects.

Cost reductions under HEEHRA are not included in this analysis as details are still developing and the incentives may not be available to everyone, as City of San Mateo building owners are generally classified as high income . However, for low and moderate- income households up to 150% of AMI in San Mateo, IRA incentives may further increase the effectiveness of local electrification incentives available via PCE and BayREN, and help to close the gap for appliances where subsidies don’t always zero-out marginal costs, like HVAC systems, dryers, and induction ranges.

Electrification Upfront Costs with Incentives Applied
In the final piece of the cost analysis, we have applied the rebates described in Table 6 to the marginal costs described in Table 4 to see if rebates and tax incentives can make electric technologies the same, or less costly than the gas scenario . For this analysis, the referenced $5,500 total home electrification rebate provided by Energy Smart Homes California was not applied since it requires a complete home electrification project at one time. Since this analysis focuses on time of replacement, this rebate was not applied to the analysis.

The analysis shows that with the low -cost scenario for HVAC applied , in a house without AC, when all incentives are stacked, total costs without a panel upgrade, electrification could save building owners in San Mateo $709. If a home has both a furnace and AC to replace, fully electrifying would save $2,665 in marginal costs even with a panel upgrade , since one heat pump would replace two appliances.

On the high end of the marginal costs + incentives range, electrifying a home without AC, with a panel upgrade, under the Median HVAC cost analysis scenario, would be $4,836 more expensive than a gas- for-gas scenario. These results are summarized in Table 7.

PCE Zero Percent Loans
In addition to these re bates, PCE offers up to $10,000 in zero percent loans to electrify gas water heaters, gas heaters/furnaces, panel upgrades, and efficiency upgrades (insulation, air sealing, duct replacements, and smart thermostats). These loans allow PCE-customers who are property owners to borrow up to $10,000 in 0% APR loans to electrify with a 2-10 year payback period.29

28 https://www.rewiringamerica.org/IRAguide
29 https://www.peninsulacleanenergy.com/zero/
City of San Mateo
Building Inventory and Market Segmentation Memorandum (Task 1) Building for the Future – City of San Mateo Sustainable Buildings Strategy (Version 2) 23 Table 7 Electrification Marginal Up-Front Costs + Incentives* Appliance
Cost
Estimate
Combined
Incentives
Total Marginal Cost
with Incentives
Electrification Scenario Marginal Cost with Peninsula Clean Energy, BayREN, IRA Incentives Electric heat pump water heater $3,200 $(6,000) $(2,800) Without AC-Low Cost HVAC $7,833 $(7,500) $333
Without AC- HVAC system $11,778 $(7,500) $4,278
With AC- HVAC System $4,278 $(7,500) $(3,222)
Electric dryer $1,038 $(250) $788
Electric stove $1,220 $(250) $970
Additional One-Time Costs - Panel and New Circuits $3,700 $(2,100) $1,600 Total Costs No Panel Upgrade Low Cost HVAC No AC $(709) Total Costs No Panel Upgrade Median HVAC no AC $3,236
Total Costs with Panel Upgrade Median HVAC w/o AC $4,836 Total Costs and Panel Upgrade Median HVAC with AC $(2,665) *Note that IRA incentives take the form of tax credits, while other rebates can be applied upfront by the building owner or contractor after completing program documentation requirements. Please refer to Table 6 for a full summary of rebates and incentives by funder.

High-Rise Multifamily and Nonresidential Building Costs To better understand costs and other constraints related to multifamily and nonresidential building electrification, Rincon reviewed best-available existing resources on this topic, namely, the PCE 2035 Decarbonization Plan (2022), and The Rocky Mountain Institute The Economics of Electrifying Buildings: Medium Size Commercial Retrofits (2022) 30. This document review is also supplemented by original contractor interviews conducted by Rincon for the upcoming Sacramento Electric Buildings Strategy (2022 ). Though not strictly City of San Mateo specific, the technical considerations of challenges to electrify oversized buildings are consistent between Sacramento and San Mateo, so are referenced here as recent region- specific resources for commercial electrification in Northern California.

Electrification Up-Front Costs and Other Considerations While single-family and low rise multifamily residential buildings tend to use similar equipment and operate in similar ways, commercial buildings and high-rise multifamily buildings tend to be highly variable. In original research conducted by Rincon for the City of Sacramento in the summer of 2022, all interviewees31 communicated that larger multifamily and nonresidential buildings are more complicated to electrify than single -family homes and estimating costs is typically only possible on a project-by-project basis. This is because for most larger buildings, replacing a gas system with a similarly sized electric system is cost-prohibitive and therefore, often requires building re-engineering to determine appliance replacement and sizing options. For this reason, a detailed cost analysis for larger multifamily and commercial buildings was not developed and included here. Smaller buildings

30 https://rmi.org/insight/economics-of-electrifying-buildings-medium-size-commercial-retrofits/ 31 To better understand costs and other constraints related to multifamily and nonresidential building electrification, Rincon conducted interviews with three energy engineering consultants working on large building decarbonization in Sacramento. Five additional interviewees were identified through the City’s contact network to speak to this topic, including energy managers and directors of UC Davis Health. Sacramento Municipal Utility District, Brighton Energy, Association for Energy Affordability, TRC Companies.

City of San Mateo
Building Inventory and Market Segmentation Memorandum (Task 1) Building for the Future – City of San Mateo Sustainable Buildings Strategy (Version 2) 24 with domestic-sized space and water heating end uses, such as small to medium-sized retail or service buildings, have similar electrification costs as seen for single-family homes.

However, some equipment types are similar across building types and the cost to electrify can be more readily analyzed at a high level . The PCE analysis notes that packaged commercial HVAC equipment, namely, packaged Single Zone (SZ) Gas Furnace with Cooling, are easy to electrify, as existing building 2-way A/C ordinances can cover most units without the requirement for incentives. The PCE Analysis also notes that the Packaged SZ Gas Furnace with Cooling offers a sizable opportunity to electrify, with 5,441 Packaged SZ Gas Furnace with Cooling units across the County of San Mateo as shown below in Figure 17. Because of the relative cost parity and ease of adoption, there is already uptake of all- electric packaged SZ heat pumps, accounting for nearly 20% of analyzed existing commercial HVAC Equipment, as shown previously in Figure 15.

Figure 17 PCE 2035 Decarbonization Plan Commercial HVAC Equipment Analysis

PCE analyzed commercial rooftop packaged unit c osts, finding that rooftop heat pumps are nearly identical to gas- fired rooftop packaged units, even without additional incentives, as shown below in Figure 18. This indicates that local policy and potential new incentives to retrofit using heat pump RTUs could be an impactful and cost effective strategy to achieve widespread commercial building electrification.

City of San Mateo
Building Inventory and Market Segmentation Memorandum (Task 1) Building for the Future – City of San Mateo Sustainable Buildings Strategy (Version 2) 25 Figure 18 PCE 2035 Decarbonization Plan Commercial Rooftop Package Unit Cost Analysis

The Rocky Mountain Institute (RMI) ‘The Economics of Electrifying Buildings: Medium-Size Commercial Retrofits’ Report notes that local policy, or expectations of new local building electrification policies, will be a key driver in advancing commercial energy electrification, as portfolio o wners will want to avoid stranded assets unless they undertake electrification. The RMI report focused on the electrification of HVAC systems from rooftop units (RTUS) with Heat Pump Rooftop Package Units (RTUs), on a prototypical 50,000 sq ft office building.

The RMI report modeled 5 cases to assess the economics of RTU retrofits: Case 1: No electrification, Case 2: Partial electrification, Case 3: Full electrification, Case 4: efficient electrification, Case 5:
efficient electrification + demand management, Ca se 6: Efficient electrification + demand management and PV. These cases, found that in the cases of more temperate climates like Las Vegas and Seattle, building owners could achieve either neutral or positive 20-year net present value through full electrif ication (Seattle), or with full electrification with demand management and solar photovoltaics (Las Vegas), as shown in Figure 19.

City of San Mateo
Building Inventory and Market Segmentation Memorandum (Task 1) Building for the Future – City of San Mateo Sustainable Buildings Strategy (Version 2) 26 Figure 19 RMI Report Exhibit 3: the 20-year Net Present Value of Each Case by City32

The results from the RMI study have three important San -Mateo-relevant takeaways, which is that 1) electrification policy, with electrification-specific prescriptive language for commercial building owners will be critical in actually electrifying commercial buildings, and 2) electrification of commercial building electric retrofits will likely have to be paired with a suite of demand management, energy efficiency, or renewable energy projects in order to make building electrification economical for buildin g owners, and 3) heat pump rooftop package units are the most promising electrification solution for commercial building electrification, offering a replicable model for a 1:1 equipment swap-out.

Case Studies
In addition to the PCE analysis, Rincon identified all- electric retrofit case study projects related to offices, schools, and restaurants. Schools (primary and secondary), restaurants (full-service and quick- service), and hospitals represent large commercial gas users in the City of San Mateo. Case studies were pulled from The Redwood Energy Pocket Guide to All- Electric Retrofits,33 the William J Worthen (WJW) Foundation Building Decarbonization Practice Guide Volume 5 ,34 and the California State University (CalState) Decarbonization Framework,35 and summarized here. Rincon will continue to look for more resources in these areas as the project progresses.

32 Page 20 of: https://rmi.org/insight/economics-of-electrifying-buildings-medium-size-commercial-retrofits/ 33 Redwood Energy. June 2022. A Pocket Guide to All-Electric Retrofits of Commercial Buildings. 34 William J Worthen Foundation. March 2022. The Building Decarbonization Practice Guide Volume 5: All-Electric Residential + Commercial Kitchens.
35 CalState Office of the Chancellor. 2022. CSU Decarbonization Framework.

City of San Mateo
Building Inventory and Market Segmentation Memorandum (Task 1) Building for the Future – City of San Mateo Sustainable Buildings Strategy (Version 2) 27 Office
IMMIX LAW OFFICE, PORTLAND, OR (11,615 SQUARE FEET; ALL-ELECTRIC RETROFIT) The building utilizes a highly efficient dedicated outside air system (DOAS) with heat recovery ventilation (HRV) for their HVAC system, which separates heating and cooling from the ventilation system to allow for optimal control of each of these critical building functions. The new HVAC system is comprised of a 16-ton Mitsubishi variable refrigerant flow (VRF) and four Ventacity VS1000RT HRVs.

The HVAC system heats and cools 30 office spaces, five conference rooms, a lunchroom, exercise room, two restrooms, and open common spaces. The project resulted in increased occupant comfort, improved indoor air quality, lower energy bills (between $300 to $700 per month to heat, cool, and ventilate the building), saved roof space, and precise temperature and humidity control. The building has seen a 63% reduction in energy usage.
36 100 AVENUE OF THE AMERICAS, MANHATTAN, NY (>20,000 SQUARE FEET; ALL-ELECTRIC RETROFIT) This building was retrofit ted to meet a ll winter space heating needed for exterior offices with waste heat from the air conditioning in the interior core of the building during the winter through an all-electric multizone heat pump HVAC system. Multizone systems are best for larger (20,000 squa re feet or more), more diverse buildings. While only 6% of HVAC systems in California are multizone systems that could be replaced with multizone heat pump technology, these buildings represent 37% to 75% of the GHG emissions from all buildings. They are technically complex to design and require highly skilled installers but also represent the largest GHG reduction opportunities. 37 SONOMA CLEAN POWER HEADQUARTERS, SANTA ROSA, CA (15,000 SQUARE FEET; ALL-ELECTRIC RETROFIT) The building was originally built in 1979 in Downtown Santa Rosa and retrofitted with all new insulation, all-new windows, all-new siding, and all-new mechanical systems. As part of the retrofit, the building installed Daikin rooftop units with variable air volume delivery and thermofusers at the zone level. The project also included its own microgrid and electric vehicle charging, which required an electrical service upgrade.
38 School

CALIFORNIA STATE UNIVERSITY, CALIFORNIA
The CSU Chancellor’s Office released a building decarbonization framework for the CSU system, which includes tools to evaluate central plan equipment, thermal overlap calculations for each campus, and a life cycle cost calculation tool for different decarbonization strategies. The framework provides all 23 campuses with a technical roadmap for replacing fossil fuel infrastructure with clean, electrified alternatives. The associated heat recovery potential and natural gas reduction at each campus was analyzed. The Sacramento CSU campus currently uses 78,164 million British Thermal Units per hour (MBTU) for cooling and 52,739 MBTU for heating. The heat recovery potential estimated for the building after adding thermal energy storage on site is 64% and the estimated natural gas reduction potential is 422,000 therms.
39 36 Redwood Energy. June 2022. A Pocket Guide to All-Electric Retrofits of Commercial Buildings. 37 Redwood Energy. June 2022. A Pocket Guide to All-Electric Retrofits of Commercial Buildings. 38 Redwood Energy. June 2022. A Pocket Guide to All-Electric Retrofits of Commercial Buildings. 39 CalState Office of the Chancellor. 2022. CSU Decarbonization Framework.

City of San Mateo
Building Inventory and Market Segmentation Memorandum (Task 1) Building for the Future – City of San Mateo Sustainable Buildings Strategy (Version 2) 28 CHATHAM UNIVERSITY EDEN HALL CAMPUS, PITTSBURGH, PA (ALL-ELECTRIC NEW CONSTRUCTION) The campus is the world’s first fully self- sustained and zero net energy (ZNE) university campus. The campus includes 46 geothermal wells, an on -campus water treatment site, and a 40 -acre farm. The campus kitchen was designed based on extensive energy analysis focusing on commercial kitchen equipment and HVAC systems. The analysis showed that induction equipment would reduce total kitchen energy consumption by over 50% compared to a traditional gas kitchen. The campus also installed demand-based exhaust hoods with integrated heat recovery, a geo-exchange heat pump, and radiant heating and cooling systems for a low-energy HVAC system. The facility operates with an energy usage of approximately 60% below the typical full-service restaurant. 40 Restaurant
OYSTERMAN SEAFOOD BAR & KITCHEN, LONDON, ENGLAND; RETROFIT (INDUCTION UNITS) The restaurant switched from gas to induction units, which allowed the restaurant to serve guests at a significantly faster rate. Gas ranges and fryers are half as efficient at transferring heat as electric ranges and fryers (35% vs. 75%), and electric ranges boil water twice as fast as gas ranges. Electric kitchens, therefore, use half or less as much heat to cook food and require half as much air conditioning. Electric equipment also takes less space to do the same amount of cooking, making it easier for a kitchen to expand its cooking capacity. In addition to these benefits, Oysterman also experienced fewer chef burns with their induction burners and found cleaning to be much easier, ultimately reducing staff turnover.
41 BENIHANA JAPANESE STEAK HOUSE, VARIOUS LOCATIONS, U.S.; RETROFIT (INDUCTION GRILL) The first Benihana steakhouse was started in New York City in 1964 and has since grown to 116 restaurants. Benihana performs teppanyaki cooking on steel grills. Recently the restaurant chain converted its gas teppan grills to electric resistance and induction grills, which can cook meats faster, hotter, and more efficiently than gas while reducing the risk of uncontrolled fires. 42 HOTEL MARCEL, NEW HAVEN, CT; NEW ALL-ELECTRIC CONSTRUCTION The hotel has an all -electric commercial kitchen, which uses induction, including an induction wok setup.43 Induction woks are not common in American commercial kitchens, however, they are becoming increasingly popular in Mainland China, Taiwan, Hong Kong, and Macau. Many commercial options exist on the market for induction cookers that can accommodate concave pans (such as woks). 15 million induction cookstoves were sold in Mainland China in 2020, with a growth of nearly 4% from the previous year.
44 MICROSOFT REDMOND CAMPUS CAFETERIA, REDMOND, WA; NEW ALL-ELECTRIC CONSTRUCTION The Microsoft Redmond Campus serves over 12,000 meals a day in 77,000 square feet of all-electric kitchens. The project had to overcome barriers such as equipment availability, throughput

40 William J Worthen Foundation. March 2022. The Building Decarbonization Practice Guide Volume 5: All-Electric Residential + Commercial Kitchens.
41 Redwood Energy. June 2022. A Pocket Guide to All-Electric Retrofits of Commercial Buildings. 42 Redwood Energy. June 2022. A Pocket Guide to All-Electric Retrofits of Commercial Buildings. 43 Business Wire article, accessed at: https://www.businesswire.com/news/home/20220420005918/en/The-First-Anticipated-Net-Zero- Hotel-and-First-Passive-House-Certified-Hotel-in-the-US-Slated-to-Open-This-Spring 44 HKTDC Market Research, accessed at: https://research.hktdc.com/en/article/MzA3OTE4MTUw City of San Mateo
Building Inventory and Market Segmentation Memorandum (Task 1) Building for the Future – City of San Mateo Sustainable Buildings Strategy (Version 2) 29 considerations, and station design. Microsoft has noted a positive response from the industry in the past few years enabling the transition for them.45
High-Rise Multifamily

BAYVIEW TOWER, SEATTLE, WA
The 100 unit high rise multifamily building was retrofit to be all electric using the Origin heat pump water heater system that provides all needed water heating components (heat pump, storage tank, valves, controls, etc..) on one skid to maximize ease of installation. The system is expected to reduce energy use by 59%. 46

ELIZABETH JAMES HOUSE, SEATTLE, WA
Elizabeth James House is a four story, 60 unit low income senior apartment building built in 1968.

This project had a central plan of four ECO2 heat pumps, with three existing 120 gallon tanks in a series swing configuration. In addition, the system kept the three electric water he aters, and a 175 gallon swing tank was installed.
29 Recommendations from Interviewees
As part of the interview process for previous work with the City of Sacramento , Rincon asked contractors what recommendations they have for the City or utility provider for reducing barriers to electrification in the City. While some of these recommendations may be specific to the City of Sacramento, many of these recommendations hold for the City of San Mateo, to account for the viewpoint of contractors and building developers dealing with complex commercial building stock.

These recommendations included:
• Alleviate the burden on the customer for upgrading older, last- mile equipment such as transformers and services . Having to upgrade this equipment can kill a project. SMUD (in San Mateo, PG&E) could identify transformers that are already at peak capacity and deal with them pro-actively, or identify grant funds to help cover these costs. • More workforce training and work with the unions is needed to prepare the workforce for electrification work.
• Encourage projects to build -in more hot water storage to help avoid an increased peak electrical load.
• Develop policy to avoid over -estimation of panel needs , which can trigger larger -scale electrical upgrades that are prohibitively expensive. Default calculations on equipment tend to overestimate peak load and using real data from a building instead can help avoid ballooning expenses. • Adjusted rate structures could be an incentive for early electrification adopters, since this would help guarantee on-bill savings in many cases. Peak demand for commercial customers currently sets their billing rate. Many customers are on the edge of hitting their peak demand charge and electrification would bump them into a higher tier, creating a disincentive to electrify. A specific commercial electrification rate with a discount would help remove this barrier. This suggestion item would require coordination with PCE.

45 William J Worthen Foundation. March 2022. The Building Decarbonization Practice Guide Volume 5: All-Electric Residential + Commercial Kitchens.
46 https://www.redwoodenergy.net/publications/redwood-energys-pocket-guide-to-all-electric-commercial-retrofits City of San Mateo
Building Inventory and Market Segmentation Memorandum (Task 1) Building for the Future – City of San Mateo Sustainable Buildings Strategy (Version 2) 30 • Expedited permits could create an incentive for commercial customers to electrify, especially on smaller jobs. Ideally, the permit could be filled out online over -the-counter with a simple set of questions with a permit turn-around rate of 24 hours.
• A building performance standards approach could work well for commercial buildings. San Francisco’s program is recommended as a model. San Francisco’s program is self-reporting but is validated. Buildings over 10,000 square feet are required to complete a level 1 audit; buildings over 50,000 square feet are required to complete a level 2 audit, and reporting requirement is every five years. Setting up the reporting system online with simple report requirements and very low rigor at the start would help get the most buildings into the system. • Releasing a building performance standards program under something other than an electrification strategy may be the best tactic. This approach could appear more feasible, and avoid misunderstandings on potential for mandatory upgrades.

Current Incentives
Current electrification programs and rebates are available for commercial and multifamily buildings in the City of San Mateo from PCE, TECH, and BayREN are summarized in Table 8. All residential appliance incentives described in Table 6 should also apply to multifamily residents if the applicant for rebates is also the owner of the apartment, in the case of PCE Incentives.47

47 https://www.peninsulacleanenergy.com/wp-content/uploads/2022/09/Peninsula-Clean-Energy-Appliance-Rebates-Terms- Conditions_10.01.22.pdf
City of San Mateo
Building Inventory and Market Segmentation Memorandum (Task 1) Building for the Future – City of San Mateo Sustainable Buildings Strategy (Version 2) 31 Table 8 Current Incentives and Programs for Commercial Buildings (as of August 2023) Description Amount/Type Details
Commercial Building Incentives
Data Connect (PCE) Technical assistance Access or share PCE Data Connect platform to analyze facility energy data, access data to
help calculate energy carbon footprint. Could
be useful for future building performance
standard work.

Technical Design Assistance (PCE) Technical Assistance Free project assistance for all-electric buildings with TRC via AllElectricDesign.org
Inflation Reduction Act (IRA) Commercial
Buildings Tax Credit
Tax Credit Tax credit for energy efficiency based on
square footage (Tax Credit 179D)
Multifamily Building Incentives
TECH Heat Pump HVAC Systems Serving
Multiple Apartments
$1,000/unit HP HVAC equipment serving multiple
apartments
TECH Common area HPWH rebate $1,800/ system Split or packaged rooftop/ multi/position heat pump (ducted or ductless)
TECH Electrical panel upgrade $1,400/ apartment
receiving electrical upgrade
Undersized apartment electrical
infrastructure is upgraded as part of an
apartment’s HPWH or HP HVAC Installation
BayREN Common Area HVAC $1,000/equipment Common area heat pump HVAC BayREN Laundry/Common Area Heat
Pump Water Heater
$1,000/equipment Common area laundry or heat pump water heater
BayREN Heat Pump Pool Heater $1,500/pool
BayREN Subpanel Upgrade $1,000/apt served
BayREN Central/common area panel
upgrade
$5,000/property
Source : https://www.peninsulacleanenergy.com/commercial-programs/, https://techcleanca.com/incentives/multifamily- information/, https://www.bayren.org/multifamily-p roperty-owners/building-improvements On-Bill Costs
On-bill costs are another important piece of the overall economics of electrification. Understanding on- bill costs requires more complex modeling due to the change in electricity pricing during a day/season as well as the many different electricity rates that are available. However, Peninsula Clean Energy and Silicon Valley Clean Energy partnered to complete an in-depth analysis of their customers cost savings before and after electrification. The results of the analysis show that on average customers save between $20-$30 on their bills after electrification. These savings are driven primarily by heat pump HVAC and water heating.48 This is shown in Figure 20.

48 Bill Impacts of Home Electrification Study - Feb 2025 City of San Mateo
Building Inventory and Market Segmentation Memorandum (Task 1) Building for the Future – City of San Mateo Sustainable Buildings Strategy (Version 2) 32 Figure 20 Average On-bill Savings for Peninsula Clean Energy Customers

In addition, Peninsula Clean Energy conducted case studies on real buildings which they had electrified in the City of San Mateo. Of those buildings one saved $11 per month on their energy bills and the other saved $42 per month. It is also important to note that these buildings did not have air conditioning before the switch. The results of these two case studies as well as several more from across the peninsula are included below in Figure 21.

Figure 21 Cost Savings After Electrification Case Studies from Peninsula Clean Energy

APPENDIX B
Community Engagement Summary

Rincon Consultants, Inc.
66 Franklin Street, Suite 300
Oakland, California 94607
510-834-4455

www.rinconcons ultan ts.com
June 16, 2025
Andrea Chow, Sustainability Analyst
City of San Mateo
330 West 20th Avenue
San Mateo, California 94403
Via email: [email protected]
Subject: Summary of Conducted Community Engagement for Electrify City of San Mateo A major component of the Electrify San Mateo: Sustainable Buildings Strategy is a robust community engagement process. This project aims to create an actionable roadmap with steps for City of San Mateo to electrify buildings based on effectiveness and equity criteria, cost -effectiveness, best available science and data, and community feedback. Community outreach and public input are fundamental to shaping effective, equitable, and successful decarbonization policies . This memorandum summarizes the engagement conducted by both City staff and Rincon Consultants between Spring 2023 and Spring 2025.

Executive Summary of all Outreach
Outreach has been conducted in two phases to understand community priorities, concerns, and needed support for successful policy implementation. During Phase I of engagement, the City presented at multiple meetings to gather feedback on the equity and effectiveness criteria and educate the community about costs and benefits of building electrification. This included a meeting with the Sustainability and Infrastructure Commission, a City Council meeting, five General Plan Town Hall meetings, and an online survey. After Phase I of engagement, the initial suite of policy pathways was narrowed down to five policy pathways to advance existing building electrification within San Mateo. Phase II of engagement aimed at further refining these priority policies for inclusion within the final Electrify San Mateo: Sustainable Buildings Strategy. During Phase II, the community engagement efforts included an in-person workshop and an additional virtual workshop for community members which focused on the five policy pathway s, a virtual info rmation session on Building Performance Standards for commercial building owners, presentations at City Commissions and community and stakeholder meetings, and an online survey.

Throughout the community engagement process, there have been polarized responses to building electrification. While most constituents care about addressing the c limate crisis and agree that the City should pursue existing building electrification in some form, many residents also expressed concerns.

The primary constituent values identified during Phase I and Phase II engagement that are motivating building electrification included:
• Urgent need to address the climate crisis is a priority issue • Health and air quality benefits of building decarbonization • Need for local action and the City to act now
• Availability of electric equipment incentives and rebates to support property owners The primary concerns identified during Phase I and Phase II engagement included:

City of San Mateo
Summary of Conducted Community Engagement
2 • Upfront costs of electric equipment
• On-bill or operational costs of electric equipment
• Installation and electrical infrastructure challenges • Grid reliability and resilience
• Lack of education surrounding electrification
In general, the results of the community outreach conducted by the City point to a general desire to address climate change and decarbonize buildings tempered by concerns about cost and feasibility.

Based on these findings, a focus on poli cies that support decarbonization when cost effective and efficient while providing flexible alternatives for particularly challenging cases should be prioritized.

Below is a detailed summary of outcomes and themes from each engagement event. A record of public comments and photos is listed at the end of this memorandum.

Community Engagement Phase I: Community Concerns and Values During Phase I of engagement, the City held multiple events to gather feedback on the equity and effectiveness criteria and educate the community about costs and benefits of building electrification.

The goal of this phase was to both provide information to the community on what building electrification is and why the City is pursuing it, as well as learn about the core values and concerns the community has around upgrading their homes and businesses. This included a meeting with the Sustainability and Infrastructure Commission, a meeting with the Equity and Inclusion Task Force, a City Council meeting, five General Plan Town Hall meetings, and an online survey.

General Plan Town Hall Meetings
In Fall of 2023, five General Plan Town Hall meetings were held to solicit feedback on the City’s General Plan Update. The General Plan Town Hall events were in- person events located throughout the community, one event in each of San Mateo’s five districts. At each outreach event , doors opened at 5:30 pm to allow attendees to view poster boards (example at end of memorandum) on various topics (circulation, land use, safety, noise, etc.) with a formal presentation on the Draft General Plan at 7:00 pm. An average of 60 community members attended each event.

The project team had a poster board summarizing the Sustainable Buildings Strategy project effort .

Community members were very engaged at the Sustainable Buildings Strategy poster board . Staff received a mix of both supportive feedback for working on electrification requirements as well as concerns about costs related to electrification.

Diversity Equity and Inclusion Task Force Presentation
On September 22, 2023, presented to the City’s Diversity Equity and Inclusion Task Force. Feedback from the Task Force included: the need to include education, data, and storytelling in outreach. The Task Force’s biggest concerns regarding electrification were related to the electric power outages and costs to homeowners. The Task Force also helped identify follow up opportunities for partnerships and project outreach.

Sustainability and Infrastructure Commission Meeting
At the September 13, 2023 Sustainability and Infrastructure Commission meeting, staff and the consultant team presented the building inventory and market segmentation analysis as well as City of San Mateo
Summary of Conducted Community Engagement
3 building electrification cost analysis. Over 120 written public comments were submitted for the item with the majority in support of decarbonization. 24 verbal comments were also provided at the meeting. Proponents of decarbonization support electrification policy efforts to reduce gas use in the community to combat climate change , improve air quality, and improve health . Proponents also encouraged the leveraging of incentives and rebates for electrification. 1 For those opposed, the
number one concern about electrification is the costs to the property owner. Other concerns include power outages, growth of the grid to accommodate future electric buildings, and passed on costs to renters.

Survey
The project team also launched an online survey to assess community priorities for building electrification that was open December 2023 through January 10, 2024. Results of the online survey were shared at the January 16, 2024 City Council Study Session. A summary of the survey results is included below. The survey had a total of 194 respondents from a wide range of socioeconomic backgrounds as shown in Figure 1 and Figure 2 .

Figure 1 Household Income of Survey Respondents

1 San Mateo, City of. 2023. Public Comments Submitted for the August 9, 2023 SIC Meeting. Available:
https://sanmateo.primegov.com/Portal/viewer?id=9062&type=2.

City of San Mateo
Summary of Conducted Community Engagement
4 Figure 2 Race of Survey Respondents

The Phase I survey primarily focused on what priorities and concerns the community had relating to buildings and building decarbonization. As shown in Figure 3, affordable energy costs was the highest- ranking quality for San Mateo Buildings, followed by a tie between Health and Safety and Resilience.

Climate and sustainability ranked fourth followed by Modern Appliances and Functionality.

Respondents also provided feedback on their biggest concerns regarding building electrification in San Mateo. Figure 4 shows that increasing energy bills was the largest concern relating to building electrification. This concern was followed by concern over increased housing/rent costs as the second most common concern. Respondents also ranked difficulty in accessing reba tes (3 rd) and building
electrification ignoring other more pressing building issues (4 th) as primary issues that would need to be addressed.

City of San Mateo
Summary of Conducted Community Engagement
5 Figure 3 Survey Respondents Most Important Building Qualities

City of San Mateo
Summary of Conducted Community Engagement
6 Figure 4 Concerns Relating to Building Electrification in San Mateo

These survey results highlighted major concerns of building electrification of both upfront and on -bill cost, reliability concerns, and challenges accessing the funding and financing opportunities meant to decrease the cost of electrification. These topics were carried through into Phase II of outreach as the project team worked to refine the policy options based on community feedback.

City of San Mateo
Summary of Conducted Community Engagement
7 City Council Meeting
In January of 2024, Rincon Consultants and City staff provided a presentation to City Council on the Phase I results. The presentation focused on the results of the building segmentation analysis, cost analysis, engagement to date, and initial policy recommendations. During t his meeting five policy options were provided for City Council feedback including:

1. Continue adopted reach codes and focus on outreach and incentives (Business as Usual)

2. Explore and adopt new reach codes to encourage and require electrification

3. Require electric equipment upon replacement ahead of the Bay Area Air District’s Zero NO x requirements

4. Establish Building Performance Standards for commercial buildings

5. Adopt an electric-first policy for City facilities
City Council provided feedback which included direction for City Staff to continue exploring the feasibility, cost, and community support for each of the five options.

Community Engagement Phase II: Policy Pathways Feedback Following direction from City Council, City staff with support from Rincon Consultants, conducted additional outreach on the five policy strategies presented to City Council during Phase I. Phase II outreach events included an in-person community workshop , virtual community workshop , virtual meeting with commercial building owners, presentations to community and developer groups, and several upcoming Commission meetings. A second survey was also developed and distributed through these and other City channels. The second survey was developed to get more detailed information about support for/concern around the five policy pathways.

Each community meeting and survey was advertised to the community through multiple avenues including the City’s social media channels, e -newsletter, and at City events, and to individuals who attended prior events.

The following sections detail the feedback received from the community during each engagement opportunity.

In-Person Community Feedback Meeting
Feedback Meeting Summary
The in -person community feedback meeting was advertised to the community through multiple avenues including the City’s social media channels , City e-newsletter, and direct emails . There were 20 attendees.

The in-person community feedback meeting took place on March 5 th, 2025 from 7:00 p.m. to 8 :00 p.m. at the San Mateo Public Library. The goals of the meeting were for participants to:
1) Understand the definition and importance of existing building electrification in the context of climate change and the City of San Mateo’s climate goals 2) Note an overview and timeline of the City of San Mateo Sustainable Buildings Strategy 3) Recognize previously shared concerns and solutions about existing building electrification 4) Be introduced to the five policy options and how each would impact the community City of San Mateo
Summary of Conducted Community Engagement
8 5) Share community feedback on the policy options through a n interactive “Sailboat” Activity and Voting Activity
A total of 2 5 community members attended the feedback meeting. City of San Mateo Sustainability Analyst, Andrea Chow, began the meeting and introduced Ryan Gardener, Director of Climate Action and Adaptation at Rincon Consultants, who gave a 25-minute presentation on goals one through four described above. Community members had the opportunity to ask questions a various points during the presentation.

After the presentation, community members were split into three groups to participate in the Sailboat Activity facilitated by a City or Rincon staff member. Each group contained a variety of members including industry professionals like contractors, climate activists, students, and renters and homeowners who have electrified portions of their own homes. The Sailboat Activity helped community members brainstorm electrification challenges and support solutions to help the City achieve its decarbonization goals. The activity featured a poster board with a sailboat heading for an island while being supported by wind and held back by an anchor. The island represents the City’s decarbonization goals, the anchor represents barriers and challenges keeping the City from achieving its goals, and the wind represents various policy and support solutions to help the City reach its goals. Using post -it notes, p articipants were asked to first brainstorm various “anchors” or barriers to success. Then, participants were asked to brainstorm various solutions, or “wind”, to overcome such “anchors”. The activity lasted approximately 25 minutes.

After the Sailboat Activity, community members were asked to participate in a final Voting Activity where they used post-its on a large posterboard to vote for as many of the five policy options that they would support the City adopt. There was also a “do nothing” option where participants could show that they did not support any electrification policy. Any community member who voted and left their email on a post-it was entered into a raffle for the chance to win one $50 visa gift card.

Key results from each activity are included below, and a full record of all activity responses and photos are included in the Appendix.

Sailboat Activity Themes
Between the three groups, participants shared 30 “anchor” comments and 41 “wind” comments.

Overall, the main concerns in the “anchor” category included costs, lack of education, grid reliability, equity, supply issues, and resistant social factors. The main support requested in the “wind” category included cost savings, education and outreach, grid reliability, equity programs, adequate supply, and a changing market. Below is a summary of comments in each section.

Anchor Comments
1) Cost
a. Unexpected upgrades
b. Expensive quotes
c. Speed of installation
d. $52,000 to fully electrify and $30k to $40k in rebates e. Uncertainty of federal incentives
2) Lack of Education
f. Complicated topic
g. Confusing software
City of San Mateo
Summary of Conducted Community Engagement
9 h. Confusing permitting process
i. Lack of communication between City departments
3) Grid Reliability
j. Unexpected utility shut offs
k. Demand response software
l. Emergencies
4) Equity
m. Unclear how renters fit into electrification
n. Concerns with mandates
5) Supply issues
o. Equipment availability
p. Contractor availability
6) Social factors: people and industries are resistant/ have a fear of change q. Loss of aesthetics (fireplaces, etc.)
r. Perception of convenience/ procrastination
s. Too many setup variations (space, house layout)
Wind Comments
1) Cost Savings
a. We need incentives – Credits & Rebates, lower interest loans and On bill loans (PG&E) b. We need to waive city building permit fees for electric upgrades c. Operation Cost – Gas, Water, Heater is more expensive d. Cost of Rebuilding after disaster is way more
e. Solar + Batteries + All Electric = Lower energy costs f. Better health – Lower medical bills
2) Education/ Outreach Programs
g. Home Tours – Peer to Peer Education (led by non-profits) h. Collaborate and share solutions with other jurisdiction (like Cupertino or San Carlos) i. Need a “Vision” to strive for and rally behind
j. Volunteer Advisor Program
k. Residential education on AC & Heat Pumps
l. Collaboration between contractors, City, residents, and non-profits m. Targeted marketing to those who already have solar/ those who installed an appliance 10 years back
n. Contractor training
o. Communications tool to consider upgrade costs specific to home insulation, wiring return flow ducts
p. Education about climate benefits, health benefits, safety benefits q. Electrification Starter Pack
City of San Mateo
Summary of Conducted Community Engagement
10 r. Peninsula Clean Energy Help Desk
s. Advertising/ signage for electrified homes with QR code to more resources t. Need data about what works and what hasn’t
3) Grid reliability
u. Solar + Batteries + All Electric = Resiliency
4) Equity Programs
v. Support for renters
w. Credits people of color
x. 0% interest rate or community fund for people with low income 5) Supply chain
y. Need guaranteed supply of the incentivized electrified appliances z. Need service availability
6) Social factors: changing market
aa. When the electric appliances perform better, they will be more attractive than gas bb. Gas exposure causes health problems
cc. Green homes
Voting Activity Results
There was support for the following policy options:
1) Business as Usual: 0 supporters
2) Reach Codes for Renovations: 9 supporters
3) Zero NOx Equipment: 14 supporters
4) Commercial Building Performance Standard: 11 supporters 5) Municipal Electric First Policy: 11 supporters
6) Do Nothing: 0 supporters
Virtual Community Feedback Meeting
Feedback Meeting Summary
The virtual community feedback meeting took place on March 13 th, 2025 from 12:00 p.m. to 1:00 p.m. via Zoom to provide an alternative time to the in -person meeting for community members to actively engage with the policy feedback process. The goals and meeting format were the same as the in-person event. 11community members participated in the virtual feedback meeting.

Andrea Chow and Ryan Gardner facilitated the meeting. After the 25-minute presentation, community members participated in the same Sailboat Activity as the in -person meeting but in a virtual format.

Participants remained in one large group using the engagement software Mural. Community members could enter comments into the Mural board themselves or leave comments in the chat or unmute themselves and leave verbal comments for Rincon staff to add onto the Mural board on their behalf.

After the Sailboat Activity, community members were asked to take an exit poll to vote for as many of the five policy options that they would support the City adopt. There was also a “do nothing” option City of San Mateo
Summary of Conducted Community Engagement
11 where participants could show that they did not support any electrification policy. Any community member who voted was entered into a raffle for the chance to win one $50 visa gift card.

Key results from the virtual Sailboat Activity and exit poll are included below, and a full record of all activity responses, meeting chat, and photos are included in the Appendix.

Sailboat Activity Themes
Participants shared 9 “anchor” comments and 12 “wind” comments. Overall, the main concerns in the “anchor” category included costs, lack of education, grid reliability, technology and engineering challenges, equity, and legislative red tape. The main support requested in the “wind” category included cost savings, education, equity, and technology solutions. Below is a summary of comments in each section.

Anchor Comments
1) Cost
a. Large percentage of buildings that cannot replace at end of life at a reasonable cost 2) Lack of education
b. Lack of information and support for implementation
c. Lack of cohesive city support for resident transitions 3) Grid reliability
d. power outages/ need grid resiliency
4) Technology and engineering challenges
e. lack of drop-in products (40G small diameter water heater will not be available for another few years)
f. difficult targets are multifamily homes in City of San Mateo are not well suited for heat pump upgrades. Electrical power is an issue, as requirements for engineered solutions 5) Equity
g. Rent increases in multifamily
6) Legislative red tape
h. PG&E policies against solar
Wind Comments
1) Cost savings
a. Start with low hanging fruit
b. must identify easy targets where building envelope is more important than heat pumps 2) Education
c. Peer coaching
d. Collaboration with San Mateo County Heat Pump Advocates e. Need info on total GHG reductions for each option
f. Work together with manufacturers of electric equipment City of San Mateo
Summary of Conducted Community Engagement
12 g. Watt diets
h. Learn form other Bay Area cities
3) Equity
i. Tie incentives to renter protections
j. exemptions for difficult cases
4) Technology solutions
k. Saddle mounts and "copper" battery powered stoves
Exit Poll Results
Of the five people voted and entered their emails, there was support for the following policy options:
1) Business as Usual: 2 supporters
2) Reach Codes for Renovations: 3 supporters
3) Zero NOx Equipment: 0 supporters
4) Commercial Building Performance Standard: 2 supporters 5) Municipal Electric First Policy: 1 supporters
6) Do Nothing: 1 supporters
San Mateo United Homeowners Association Feedback Meeting Feedback Meeting Summary
The San Mateo United Homeowners Association (SMUHA) meets regularly to coordinate efforts between neighborhood and homeowner associations. The project team presented at the March 20 th meeting at 7pm. There were 10 attendees.

Results and Themes
Similar to other feedback, most attendees voiced concern about the potential costs to property owners and the potential for costs to be passed on to renters. There was discussion of grid resilience and PG&E power safety shut offs. Most attendees were opposed to the City moving too quickly on building electrification policy.

Commercial Building Performance Standard Information Session Feedback Meeting Summary
The virtual Commercial BPS Information Session was advertised to building owners with buildings above 50,000 square feet through email. City staff spoke at the Chamber of Commerce Public Policy Group and Chamber of Commerce Developers Roundtable to promote this event. The City and Rincon Consultants created a BPS 1- pager explaining the relevance of the policy to distribute to building owners (available at end of this memorandum).

The virtual Commercial BPS Information Session took place on April 10 th, 2025 from 10:00 a.m. to
11:00 a.m. over zoom. The goals of the meeting were for participants to:

City of San Mateo
Summary of Conducted Community Engagement
13 1) Learn about the importance of a Building Performance Standard in the context of the City’s climate goals and legislation advancing a BPS across the state
2) Note an overview and timeline of the City of San Mateo Sustainable Buildings Strategy 3) Learn about the phased implementation process of a Building Performance Standard 4) Share feedback, concerns, and ask questions about the policy A total of six building owners attended the information session . City of San Mateo Sustainability Analyst, Andrea Chow, began the meeting and introduced Ryan Gardener, Director of Climate Action and Adaptation at Rincon Consultants, who gave a 25-minute presentation on goals one through three described above. After the presentation, building owners had the opportunity to share feedback , concerns, and ask questions about a potential BPS.

Key results from the discussion are included below, and a full record of all activity responses and photos are included in the Appendix.

Results and Themes
Overall participants were thankful for the event as they were able to learn valuable information and share their feedback and desires for implementation of the policy. Several building owners from both retail and multi-family backgrounds shared insights as to how a BPS might affect them and the ways in which the policy thresholds could be structured to make implementation more successful. The main comments included:
1) Setting a threshold based on an average of all commercial buildings (comparing old buildings to all-electric, new construction) could skew the threshold to require old buildings to convert to all - electric which could be financially infeasible. One idea provided by an attendee was to set an individual threshold where buildings must reduce their emissions compared to their own historical emissions rather than meet a City or building type average. 2) Converting to electric appliances also creates a possible space issue as electric rooms are increasingly taking up more space and old buildings may not have room for it. Relocating equipment due to space limitations poses increased engineering and financial burdens. 3) For new construction that must meet the recent Title 24 requirements, can there be a vintage threshold to avoid unnecessary financial and time burden for buildings that are already well - performing.
4) For landlords with complicated tenant and lease structures , landlords would need City support to navigate conversations with tenants and financial responsibility.

Survey
Survey Summary
An online survey was created to collect community feedback from those who were unable to participate in any of the other engagement events. It was shared broadly through City email listservs, social media, and during City events including the State of the City event. The survey was also advertised at the end of every engagement meeting so participants could share it with their networks.

The Phase II survey aimed to gauge support for the five polic y pathways while being brief and accessible. The survey provided a background on the project and its importance, defined the five policy options, and asked community members which of the policies they would support. Respondents could City of San Mateo
Summary of Conducted Community Engagement
14 choose options “Do not support”, “Neutral”, “Support”, or “Not sure.” Respondents also had the opportunity to leave other feedback in a comment box.

Results and Themes
The survey had a total of 217 respondents from a wide range of socioeconomic backgrounds as shown in Figure 5and Figure 6.

Figure 5 Household Income of Survey Respondents

City of San Mateo
Summary of Conducted Community Engagement
15 Figure 6 Race of Survey Respondents

Of the five policy pathways, support for each policy was polarized with large percentages of constituents supporting and opposing each policy. The results of e ach policy are seen in Figure 7 through Figure 11 below. Although answers were polarized, a majority of constituents supported policy options 1, 2, 4, and 5. Policy option 3 was the only policy that had a majority “do not support” vote at

47.47% versus a 43.78% support vote.

City of San Mateo
Summary of Conducted Community Engagement
16 Figure 7 Policy Option 1 Survey Results

City of San Mateo
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17 Figure 8 Policy Option 2 Survey Results

City of San Mateo
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18 Figure 9 Policy Option 3 Survey Results

City of San Mateo
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19 Figure 10 Policy Option 4 Survey Results

City of San Mateo
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20 Figure 11 Policy Option 5 Survey Results

Senior Advisory Commission
Feedback Meeting Summary
The project team presented to the Senior Advisory Commission on May 12, 2025. The Commissioners did not provide a formal policy recommendation and provided general feedback on the policy pathways. In general, the Commissioners agreed with the need to address climate through building decarbonization and electrification, but had reservations around requirements which could result in high upfront costs (specifically Policy Option 3) for those on fixed incomes.

Results and Themes
• Most commissioners not supportive of Policy Option 3 due to the potentially high upfront costs • Lots of discussion about upfront costs and concern for community members on a fixed income • General understanding and support of project goal and need to electrify • Some interest and discussion in Policy Option 4, one commissioner pointed out how this was adopted in a lot of other cities
• Support of pursuing policy options along with providing resources and programs to help homeowners transition
• Noted need for technical support especially for older folks with less understanding of new technologies

City of San Mateo
Summary of Conducted Community Engagement
21 • Commissioners were happy to see support options from Peninsula Clean Energy • Two commissioners voiced support for Policy Option 1, 2, and 5

Sustainability and Infrastructure Commission
Feedback Meeting Summary
The project team presented to the Sustainability and Infrastructure Commission on May 14, 2025.

The Commission’s policy recommendation supported Policy Options 1, 2, 4, and 5 with consideration of additional engagement and/or hardship exemptions where needed.

Results and Themes
• Discussion of greenhouse gas emission impact of different measures • Discussion of City funds and other programs/resources to support homeowners in electrification transition noted support for other programs like sewer lateral replacements • Need for programs like PCE concierge services to support transition • Some interest in Policy Option 3 but worried about compliance and concern for timeline • Concerns over Policy 2 and 3 were primarily tied to potential for high costs in edge cases. • Interest in hardship exemption language in future ordinances to help with cases that are hard- to-electrify
• Some commissioners noted the need to phase in Policy 4 to ensure the City understands the costs/feasibility of commercial electrification
• Discussion of compliance challenges
Community Relations Commission
Feedback Meeting Summary
The project team presented to the Community Relations Commission on May 21 that included five Commissioners. The Commissioners made a unanimous motion to support all five policy pathways.

Results and Themes
• Commissioner discussion of engagement and messaging about current resources, programs, and rebates. Pointed out how some community members do not access information online resources and the need for in-person presentations and other channels • Commissioner discussion of language access to resources and programs and the need for different programs based on income-level
• Discussion of contractor workforce transition
• All commissioners supportive of the need for existing building decarbonization policies and commissioners made a motion to support all five policy pathways City of San Mateo
Summary of Conducted Community Engagement
22 Final City Council Feedback
Feedback Meeting Summary
The project team presented to City Council on June 16th with a summary of the project including all findings of the analysis as well as a summary of the feedback collected during the engagement process.

The Co uncil Members provided feedback and direction on the policies to be included in the final Sustainable Buildings Strategy.

Results and Themes
• Council members were unanimously supportive of Policy 1. • Council members were generally supportive of Policy 2, with the caveat that hardship exemptions were provided in the case that an electrification project was too costly. • Council members were generally unsupportive of Policy 3. This was due to the potentially high cost of some electrification projects.
• Council members were generally supportive of Policy 4. However, many council members stressed the importance of additional engagement and continued analysis as the program was developed in order to fully understand the impacts to building owners. • Council members were unanimously supportive of Policy 5. Council members noted the importance of managing costs to the City as well as collecting data/knowledge around the electrification process that could be leveraged for other programs.

Attachments
Attachment 1 General Plan Town Hall Meetings Poster Board Attachment 2 In-person Feedback Meeting photos, comments, and voting board Attachment 3 Virtual Feedback Meeting Mural Board
Attachment 4 Building Performance Standard Marketing One Pager

Attachment 1
General Plan Town Hall Meetings Poster Board
City of San Mateo
Summary of Conducted Community Engagement
1-1

Attachment 2
In-person Feedback Meeting photos, comments, and voting board City of San Mateo
Summary of Conducted Community Engagement
2-1

City of San Mateo
Summary of Conducted Community Engagement
2-2

City of San Mateo
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2-3

City of San Mateo
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2-4

Attachment 3
Virtual Feedback Meeting Mural Board, exit poll, and comments City of San Mateo
Summary of Conducted Community Engagement
3-1

Attachment 4
Building Performance Standard Marketing One Pager
City of San Mateo
Summary of Conducted Community Engagement
4-1

APPENDIX C
Proposed Policy Summary

Rincon Consultants, Inc.
66 Franklin Street, Suite 300
Oakland, California 94607
510-834-4455

www.rinconcons ultan ts.com
June 16, 2025

Andrea Chow, Sustainability Analyst
City of San Mateo
330 West 20th Avenue
San Mateo, California 94403
Via email: [email protected]
Subject: Electrify San Mateo: Existing Building Electrification Policy Pathways Analysis In the City of San Mateo (City), the residential and commercial built environment make up 38 percent of greenhouse gas (GHG) emissions. To achieve emissions reduction targets consistent with state goals and the City’s Climate Action Plan , the City must decarbonize its residential and commercial buildings. This is strengthened by the 2022 City Council priority to “Establish policies to decarbonize existing buildings and infrastructure and eliminate methane gas use by 2030.” The decarbonization or electrification of buildings refers to the transition from gas equipment to carbon -free electric equipment for space and water heating, clothes drying, cooking and more.  Decarbonization can also focus on increasing energy efficiency and the use of renewable energy. In San Mateo, Peninsula Clean Energy (PCE) provides electricity that is 50% renewable and virtually 100% carbon free and is committed to delivering 100% renewable and carbon free electricity by 2025. The City has already passed a New Construction Reach Code aimed at decarbonizing new buildings, however, electrifying existing buildings offers the largest opportunity and most cost -effective strategy for GHG emission reductions.

In May 2023, the City, with the help of Rincon Consultants Inc. (Rincon), began developing the Building for the Future: City of San Mateo Sustainable Buildings Strategy project as a part of the larger Electrify San Mateo initiative. The goal of this project is to develop a long- term strategy document to electrify San Mateo’s existing building stock, including policies and actions for both residential and nonresidential buildings. This report provides Rincon’s final policy findings which are based on the cumulative technical analysis and community feedback completed to date.

Project Timeline and Overview
The City of San Mateo and Rincon began the initial research for this project in the Summer of 2023.

The initial analysis included building segmentation analysis and a n electrification cost study. Rincon also conducted research on the current best practices and a wide range of feasible policy options being deployed by other cities around the country. The project timeline is shown below in Figure 1.

City of San Mateo
Electrify San Mateo: Policy Pathways Analysis
2 Figure 1 Project Timeline to Date

Community Outreach (Phase I)
During the first phase of community outreach, the City aimed to understand the goals and concerns of the community as they relate to San Mateo’s buildings and decarbonization. Through the initial round of engagement, the City identified affordability, health and safety, resilience, and climate as the primary goals of the community. The largest concerns related to building electrification were the potential for higher costs, increased energy bills, and a difficult installation process. Based on this feedback and direction from City Council, the initial policy scan list was narrowed down to five potential policy directions.

Policy Pathways
The results from the Phase 1 of outreach helped narrow the initial policy scan into a list of five policy pathways, which were presented to City Council in January of 2024. These policies were chosen based on the GHG reductions potential as well as cost-effectiveness. The five policy pathways include

1. Continue adopted reach codes and focus on outreach and incentives (Business as Usual)

2. Explore and adopt new reach codes to encourage and require electrification

3. Require electric equipment upon replacement ahead of the Bay Area Air District’s ( BAAD) 1 Zero
NOx requirements

4. Establish Building Performance Standards for commercial buildings

5. Adopt an electric-first policy for City facilities

1 The Bay Area Air Quality Management District (BAAQMD) changed their name to the Bay Area Air District (BAAD) in 2025.

City of San Mateo
Electrify San Mateo: Policy Pathways Analysis
3 City Council provided feedback which included direction for City staff to continue exploring the feasibility, cost, and community support for each of the five options.

Community Outreach (Phase II)
In the second phase of community outreach (see Engagement Summary Memo for detailed results), the City aimed to get specific feedback about the five policy pathways. Phase II outreach events included both in -person and virtual workshops , presentations to the Senior Advisory Commission, Sustainability and Infrastructure Commission, and Community Relations Commission, as well as a second online feedback survey. Feedback received from Phase II of outreach is incorporated into an analysis of each policy pathway in the following sections.

Addressing Community Concerns
Throughout the community engagement process, there have been polarized responses to building electrification. While most constituents care about addressing the Climate Crisis and agree that the City should pursue existing building electrification in some form, many residents also expressed concerns. The primary concerns identified during Phase I and Phase II engagement included:
• Upfront costs of electric equipment
• On-bill or operational costs of electric equipment
• Installation and electrical infrastructure challenges • Grid reliability and resilience
• Lack of education surrounding electrification (addressed in Policy Option 1) Each of the pathways balance the City’s climate goals and the roughly half of respondents who strongly support building electrification with the concerns voiced during the engagement process in different ways. Each primary community concern is addressed below and further covered in the policy summaries.

Upfront Costs of Electrical Equipment
For many building owners, making the switch from natural gas to electric appliances results in higher upfront costs without additional incentives or rebates. While rebates can cover up to 100% of these costs, rebates are not always available. However, not installing electric equipment when it is most cost effective can have significant cost impacts in the future. Therefore, the City has identified flexible policies that allow building owners t o choose electrification or other cost- effective strategies. Each policy below provides additional details of the upfront costs and savings.

On-Bill or Operational Costs
Ongoing operational costs (how much our monthly energy bills are) were another concern regarding building electrification. However, recent studies by Peninsula Clean Energy show that the cost savings from building electrification are increasing as natural gas rate increases outpace electricity rates.

Average savings (when using electric rates like e- elec) were $29 per household per month after electrifying both water and space heaters. These savings are demonstrated in Figure 3.

City of San Mateo
Electrify San Mateo: Policy Pathways Analysis
4 Figure 2 Average Monthly Bill Savings from Electrification

Installation and Electrical Infrastructure Challenges
While most electric appliance upgrades are relatively simple, some buildings present difficult edge cases. Some buildings may not have sufficient space or electrical infrastructure to easily upgrade.

Upgrading electric panels and service lines can take months to complete. While all-building owners are encouraged to make a plan for electrification over time, many of the policies avoid these challenges by providing flexible paths to compliance or focusing on specific appliances which do not have these challenges. For example, the flex-path retrofit policy provides many options including insulation and other cost-effective efficiency upgrades at the time of major renovation. The AC to heat pump policy avoids these challenges because the heat pump upgrade uses the same electrical circuit as an AC, eliminating the need for upgrades. Grid Reliability and Resilience Grid Reliability and Resilience
Grid reliability and resilience concerns arose due to the perception that increased electrical use would put strain on the grid and that electricity was less reliable than gas. However, it has been nearly 20 years since California had a power outage due to lack of electricity. 2 Furthermore, the utilities, the

2 https://www.baaqmd.gov/~/media/files/community-health/building-appliance-implementation/grid-impacts-final- pdf.pdf?rev=14a3ea4d46704d19a48cf03e3984c90e&sc_lang=en

City of San Mateo
Electrify San Mateo: Policy Pathways Analysis
5 CPUC, and the CEC, are all planning for increased electricity usage over time. The CEC now assumes a 27% increase in peak demand by 20 35 due to electrification of buildings and vehicles and is expanding the grid to meet that demand. Furthermore, neither gas water heaters nor most furnaces work without electricity, meaning gas appliances are no more resilient to power outages than their electric upgrades. Therefore, the policies identified below focus on these appliances.

Policy Findings Summary
To analyze the feasibility and benefits of each policy pathway, Rincon provided a description of each pathway, pro’s and con’s, precedent legislation in other cities and the state, GHG reductions potential, community feedback, cost-effectiveness, and equity considerations. Based on the detailed analysis in the Policy Analysis section , the following summary highlights the major takeaways of the five policy pathways.

1. Business as usual: The City could continue with adopting reach codes for new construction and expand outreach, education, and incentives. In the past, the City adopted local building code amendments to require more sustainable new construction than the State code. To continue to surpass State co de, the City could consider other new construction reach codes including a n energy performance or Zero NO x reach code. This approach has a limited impact because new construction accounts for a fraction of San Mateo’s development . However, this approach is already in place , cost saving up front and over time, and received community support based on our engagement efforts. There are no policy-related additional costs to building owners unless they voluntarily decide to electrify. A Zero NOx approach would save an estimated 1,770 MT CO 2e per year by 2030 while a performance approach would save 20 MT CO2e per year by 2030.

2. Reach codes for renovations: This approach would include the evaluation of additional reach codes to encourage and/or require electrification during renovations or at time of replacement for select appliances (air conditioners). New reach codes would vary depending on the updated State codes. One example of a reach code during renovations is requiring the installation of a two-way heat pump when an air conditioner (AC) is installed. A Two-way AC time of replacement reach code could help residents save money by installing a single heat pump, rather than an AC and furnace, ahead of upcoming Bay Area Air District ( BAAD) regulation which essentially mandates electric furnaces starting in 2029. The incremental cost of installing a heat pump instead of a traditional AC is the sam e (from $1 ,000 savings to $1 ,000 cost) and is covered by a $1 ,500 PCE rebate.

Installing a heat pump today is alignment with future Air District regulations and thus could also save a building owner money when their furnace needs replacement. Reach codes during renovations also help encourage electrification at an opportune time when a property owner is already considering home improvements. Another policy example is a Flex Path reach code which would require additional energy efficiency or electrification actions at time of renovation or replacement of certain appliances. The upfront costs of electrification improvements can vary depending on the project and unique circumstances of your home. These policies target the most cost-effective time to electrify and provide a variety of pathways for compliance. Cost-effectiveness studies must be completed to validate any adopted reach codes. Past studies have shown utility savings over time make electric equipment upgrades cost -effective compared to gas equipment replacements. Additionally, the Flex Path reach code allows residents to find the most cost - effective retrofit for their unique situation . Two-Way AC reach code would reduce emissions by 2,200 MT CO
2e per year by 2030, while the Flex Path reach code would reduce emissions by approximately 730 MT CO2e per year by 2030.

3. Require electric equipment upon replacement ahead of BAAD Zero NOx requirements: BAAD adopted zero nitrogen oxides ( NOx) standards that will prohibit the sale and installation of gas water heaters starting in 2027 and gas furnaces in 2029 in the nine -county Bay Area. A local City of San Mateo
Electrify San Mateo: Policy Pathways Analysis
6 ordinance ahead of these milestones would require the replacement of gas appliances with zero NOx versions when they fail or are voluntarily upgraded. This policy would have the most significant impact on greenhouse gas reductions with the ability to reduce emissions an average of 9,700 MT CO2e per year by 2030. However, this policy could incur large installation costs for residents in some cases which was the number one concern documented during both phases of community engagement. Due to the polarized community feedback, with some constituents being unsupportive of mandates that increase costs, it may be difficult to garner public buy in for a Zero NOx Equipment Requirement policy. This policy prioritizes GHG emissions reductions but does not address the community’s major concerns over costs and difficult installations.

4. Building Performance Standards for commercial buildings: This pathway would establish a new set of policy standards for commercial buildings aimed at increasing energy efficiency, and eventually, electrifying commercial buildings as a phased approach. This is a well -established policy mechanism that has been adopted by many local governments across the country and builds off of AB 802 benchmarking requirements mandated by the state for buildings larger than 50,000 SF. This approach can be customizable and l ead to incremental reductions in energy use but not necessarily electrification. The flexibility of this policy and phased approach allows for building owners to plan for appliance replacement and decarbonize buildings in the most efficient way for each unique situation. Commercial building space makes up over 39 million square feet within the City and is a significant contributor to GHG emissions. However, due to the phased approach, this policy would likely not lead to significant GHG reductions before 2030 . However, it could have significant reductions before 2045 as the thresholds are calculated and implemented . The development and operation of such a local program would necessitate significant staff time, so choosing a threshold that maximizes square footage covered while minimizing the number of building owners affected is crucial . Although this policy received majority community support, equity for renters is also a significant concern and guardrails would need to be set in place to avoid exacerbating the housing crisis especially for multifamily properties.

5. Electric first policy for City facilities: This policy establishes a mechanism for local government renovations to go electric first. The policy ensures financial and feasibility data is being collected for municipal facilities that will allow the City to compare costs to electrify versus replacin g with gas equipment. This policy has a limited reach as it only applies to municipal buildings and GHG reductions potential would depend on the rate of equipment failure and availability of replacements. However, it demonstrates City leadership on hard-to-electrify existing buildings that mirror the commercial sector. Several other cities have adopted similar municipal electrification policies. Residents were largely in favor of this policy as it would not incur any costs to the community. The City’s municipal buildings are estimated to generate approximately 586 MT CO 2e
per year of natural gas emis sions, this policy was estimated to be able to reduce this by 25% by 2030 for an estimated savings of 146 MT CO2e.

Policy Analysis
Policy Option 1: Continue adopted reach codes and focus on outreach and incentives (Business as Usual)
Description
Policy Option 1 continues to implement the City’s adopted reach codes and identifies opportunities to incentivize the electrification process using education, outreach, and connecting the community to rebates and technical support. The City’s adopted reach code requires energy compliance margins for new buildings will be effective through December 31, 2025, the end of the code cycle.

As part of this
City of San Mateo
Electrify San Mateo: Policy Pathways Analysis
7 policy option, the City would investigate options around continuing the new building electrification reach code through either an updated performance standard which complies with the 2025 building code, or a zero NO
x standard for new buildings.

This option would also use staff time to conduct additional engagement and connect homeowners to incentives and technical information regarding building electrification. It would also promote existing programming and incentives run by partners (e.g. PCE) to assist in a voluntary shift towards electrification while preparing the community to electrify space and water heating end uses in advance of upcoming BAAD (previously BAAQMD) Zero NO
x requirements. For example, this option could include
an education campaign to encourage homeowners to prewire for water heaters and furnaces, so they are ready to make the switch once their appliance burns out. Another example incentive would be waiving permit costs for electric equipment upgrades.

Policy Pros
• Policy already in place/ has received community support • No policy-related additional costs to building owners unless they voluntarily opt-in • Allows community to prepare for upcoming BA AD requirements through City -led outreach and education
• Allows community to prepare for upcoming requirements through electric-readiness requirements Policy Cons
• Limited impact and reach: The adopted reach codes do not affect the existing building stock • Relies on engagement to reach community members which can be difficult • Outreach and education programs on their own are extremely variable in their effectiveness.

Investment of staff time and city resources into outreach may not achieve substantial shifts in behavior that will be required to decarbonize buildings, even with major outreach campaigns. • Education and outreach campaigns can be very time/resource intensive with minimal programmatic results and unlikely to result in widespread behavior changes above baseline Greenhouse Gas Reductions Potential
New construction reach codes have varying GHG reduction potential. For example, a new construction zero NOx requirement could save up to 1,770 MT CO2e per year by 2030 if all new buildings were built without natural gas. An energy performance reach code for new construction would lead to approximately 20 MT CO2e GHG reductions due to the stringency of the 2025 building code, however, precise reductions potential is unknown because the flexible nature of the pathway does not always guarantee electrification.

As mentioned above, education and outreach and sharing incentives with residents is an important tool for the successful implementation of electrification policy but are not substantial enough to gauge GHG emissions on their own. It is difficult to predict what impact these voluntary programs would have on overall electrification rates, however, they are expected to be lower than the policy requirements identified in the other policy pathways.

Community Feedback
Across engagement events, t his approach received broad community support . In the community survey, responses were 50% of respondents supporting this policy option, 11% neutral, and 38% do not support. At the in-person community event, many community members expressed that the City has City of San Mateo
Electrify San Mateo: Policy Pathways Analysis
8 not done enough in terms of electrification policy beyond new construction and that a “business as usual” approach is not sufficient to meet the City’s climate goals. Those opposed to this approach are opposed to any local building electrification policy and recommend reliance on regional and state regulations. The Senior Advisory Commission, Sustainability and Infrastructure Commission , and Community Relations Commission were supportive of this policy pathway.

Cost Effectiveness and Equity Considerations
This policy approach would continue to incentivize all-electric new construction and direct the City to expand outreach efforts with the community to increase voluntary existing building electrification. New Construction reach codes have been shown to save money. Research from the New Buildings Institute (NBI) highlights that all -electric homes save between $7,500 and $8,200 in construction costs compared to mixed -fuel homes.4 These cost savings are primarily due to avoiding installing fees for natural gas infrastructure like gas meters and pipelines . These homes also save money over time especially when paired with heat pumps and solar. Outreach, education, and sharing incentives incur no cost to community members and can help connect people to resources that will lessen costs for electrification. The City will need to provide adequate staff time to support building electrification engagement and other programs like peer-to-peer home tours for this approach to be effective. These engagement activities, when paired with other strategies listed below, can help the community feel more comfortable and informed on the benefits of electrification.

Policy Findings
The adoption of reach codes while expanding education, outreach, and incentives to promote building electrification have been critical pathways for the City of San Mateo to support decarbonization to date. This approach is supportive of the other policy options because expanding education and engagement can potentially increas e the number of cost-effective voluntary projects and expand community understanding of new technologies and regulations (like the upcoming Air District’s Zero NOx rules). The community expressed the need education campaigns like helping to facilitate peer - to-peer home tours and partnering with larger County initiatives like PCE’s helpdesk to ensure residents are receiving the guidance they need on their electrification journey. While this policy offers several benefits, it is important to acknowledge that this approach alone will not be sufficient to meet the City's climate goals. .

Policy Option 2: Reach Codes for Renovations
Description
Option 2 would include the evaluation of additional reach codes to encourage and/or require electrification. Reach codes are typically evaluated on a three -year cycle in alignment with the new Building Code. New reach codes options would vary depending on the updated Energy Code and Green Building Code. The City’s adopted reach codes apply to residential remodels. The City could consider a variety of reach codes that apply to different building types and/or equipment. The City focused on two priority existing building reach codes include a Two-Way Air Conditioning (AC) reach code or a Flexible Path reach code. These policies could be adopted individually or both adopted to complement

4 NBI. 2022. New Study on Electrification Costs Shows Benefits to Building Owners and Society. https://newbuildings.org/new-study-on- electrification-costs-shows-benefits-to-building-owners-and-society/ City of San Mateo
Electrify San Mateo: Policy Pathways Analysis
9 each other. Other reach codes which were not covered with the community but may be important in the future are time of sale requirements similar to the policy adopted by the City of Berkeley.5 Policy Option 2a: Two-Way Air Conditioning Reach Code
The Two-Way AC reach code would require all new air conditioning units to provide both heating and cooling through the installation of a two-way heat pump. A two -way heat pump is a versatile HVAC system that can both heat and cool a building by reversing the flow of refrigerant within the system. In heating mode, it extracts heat from an external source, such as outdoor air or the ground, and transfers it indoors. In cooling mode, it reverses the process, removing heat from inside the building and releasing it outside. This dual functionality eliminates the need for separate heating and cooling systems which can save building owners money in the long term. Two-way heat pumps run completely off electricity and heat and cool spaces with high efficiency, making them a great way to reduce emissions coming from homes.

Policy Option 2b: Flex Path Reach Code
Under the flex path policies, the City could adopt one or more policies that require additional energy efficiency or electrification actions at time of renovation or replacement of certain appliances. One example would be an energy efficiency checklist in which renovation projects over $75,000 must include two cost effective energy efficient improvements in their project. The flex path policies do not ban gas and provide flexible pathways for building owners to meet the decarbonization requirements.

Policy Pros:
• The City has experience exploring, adopting and implementing reach codes • Two-Way AC is a cost-efficient and simple solution
• Flex path offers variety of compliance pathways to reduce emissions and building owners could find the most cost-efficient pathways for their homes
Policy Cons:
• Community and builder resistance to new regulations.
• Further analysis needed, dependent on reach code adopted.

Other Cities and Legislative Drivers
In May 2023, the Bay Area Air Quality Management District, now the Bay Area Air District (BAAD) adopted zero nitrogen oxides (NOx) standards that will prohibit the sale of gas water heaters starting in 2027 and gas furnaces in 2029 in the nine -county Bay Area. These standards are the most ambitious in the country and outpace the state’s goal of banning the sale of new gas furnaces and water heaters throughout the state starting in 2030. These policy efforts drive California closer to the ambitious climate g oal of carbon neutrality by 2045. Reach codes during renovations present an opportunity to ensure that the City’s residential building stock is prepared for this upcoming mandate.

Two-Way AC policies are relatively new, so no jurisdiction has yet to officially adopt this reach code, but many are expected to in the 2025 building cycle. The “Flex Path” reach code style is more common with several jurisdictions who have adopted this policy listed below:

5 https://berkeleyca.gov/sites/default/files/documents/2025-04-15-Amendments-to-the-BESO.pdf City of San Mateo
Electrify San Mateo: Policy Pathways Analysis
10 • City of San Rafael (Adopted 2024): San Rafael has adopted a "Flex Path" for single family remodels over 500 square feet. This policy requires homeowners to choose from a menu of energy- saving measures, such as insulation upgrades, HVAC improvements, or solar installations, to meet a target score based on their home's vintage. The program is designed to encourage energy efficiency and e lectrification while allowing homeowners to select measures that best suit their needs and budget.
• City of San Luis Obispo (Adopted 2024): Starting January 1, 2025, single family major additions or alterations must install a set of energy efficiency measures to achieve a target score from a weighted menu of measures. Projects that include a new electrical panel and service upgrade to 200A shall include electric readiness components.
• Town of Corte Madera (Adopted 2024): Single family additions or alterations greater than 750 square feet of floor area shall install a set of measures to achieve a target score from a weighted menu of measures; which varies based on building vintage. Projects that include a laundry room or kitchen remodel, or an electrical service panel u pgrade, must also install electric readiness measures.

Greenhouse Gas Reductions Potential
The Two-Way AC reach code would reduce emissions by 2,200 MT CO2e per year by 2030. Two-way heat pumps tend to be two to four times more efficient than both one -way air conditioners and traditional heating sources, leading to large potential GHG reductions.7 While the Flex Path reach code would reduce emissions by approximately 7 30 MT CO2e per year by 2030 . The Flex Path reductions are lower since they only capture remodels over a certain size which occur at a lower rate than other appliance replacements.

Community Feedback
Across community engagement events, constituents were supportive of this policy approach.

Community members recognized the importance of electrifying during planned renovation projects. In the community survey, responses were mixed with 49% respondents supporting this policy option, 6% neutral and 45% do not support . Multiple constituents expressed a desire for an exception for edge cases that are financially or spatially infeasible. Those opposed are concerned about upfront costs or are generally opposed t o all local building electrification policy. The Sustainability and Infrastructure Commission and Community Relations Commission were supportive of this policy pathway.

Cost Effectiveness and Equity Considerations
Although the Two-Way AC policy would mandate installation of a two -way heat pump at time of replacement, this retrofit is highly cost -effective as it can both cool and heat a space, effectively replacing both a central air conditioner and furnace within a home. This reduces the need for separate furnace replacements. Implementing a Two- Way AC policy is particu larly advantageous given the upcoming BAAD Zero NOx requirements.

If a constituent's air conditioner breaks before 2029 and is replaced with a gas HVAC system, they will need to purchase an electric furnace when their furnace eventually breaks after the 2029 BAAD Zero NOx implementation date. Conversely, adopting a Two -Way AC policy in preparation for these requirements would ensure that all air conditioner replacements in the next few years have two- way

7 Canary Media. A new bill could speed up American electrification by 20 years. https://www.canarymedia.com/articles/heat-pumps/a- new-bill-could-speed-up-american-electrification-by-20-years City of San Mateo
Electrify San Mateo: Policy Pathways Analysis
11 heating and cooling capabilities and comply with BAAD’s ruling. This would prevent homeowners from installing outdated gas appliances for heating and cooling, which could be replaced by a single heat pump.

Additionally, the difference between a central AC and a two-way heat pump is essentially zero (from a $1,000 savings to a $1,000 cost) especially after the applied $1,500 rebate from Peninsula Clean Energy. Peninsula Clean Energy (PCE) also offers o n-bill financing through the Zero Percent Loan program
8 to cover the up-front costs of installing a heat pump, which leads to utility bill savings over time due to appliance efficiency. This financing model can be particularly advantageous for low-income tenants who might not have access to traditional financing options. It removes the need for credit checks and upfront payments, making energy efficiency upgrades more accessible . Additionally, on - bill financing can be an effective way for tenants and landlords to manage payment responsibilities for energy efficiency upgrades . Tenants could enjoy the benefits of lower utility costs, without being tied to a load if they move (because the payment is tied to the meter rather than a person) and the landlord can improve their building without needing to pay an upfront cost. 9 A Flex Path reach code is also cost-effective by providing a range of retrofits and upgrades that building owners can choose from, allowing them to pick the most cost-effective and efficient options. Based on a conducted cost analysis conducted by the Local Codes and Standards team, each check list item would need to be demonstrated to have cost savings over the lifespan of the upgrade. Figure 3 shows some of the cost-effective strategies for the City of San Mateo based on the 2022 Title 24 Building Code. Heat pumps provide the most cost -effective solutions, often paying back in 6- 7 years.

Furthermore, many homeowners may receive additional savings through incentives provided by PCE, the State (Tech rebates) or the Inflation Reduction Act.

Figure 3 Cost Effective Existing Building Upgrades (Cost Effectiveness Explorer)

Both the Two-Way AC and Flex Path policies emphasize cost -efficient solutions for both the short and long term, ensuring that the City maintains equitable and sustainable practices.

8 Peninsula Clean Energy. 2025. 0% financing & rebates. Available: https://www.peninsulacleanenergy.com/residential/financing/ 9 United States Department of Energy. Issue Brief: Low-income Energy Efficiency Financing through On-Bill Tariff Programs. Available: IB L-I EE Financing through On-Bill Tariffs_Final_0.pdf

City of San Mateo
Electrify San Mateo: Policy Pathways Analysis
12 Policy Findings
Both a Two-Way AC policy and Flex Path policy promote cost -efficient and equitable solutions for building decarbonization. Implementing these policies would help the City achieve meaningful greenhouse gas reductions, get closer to climate goals, prepare the community for future regulations, and support residents in making energy -efficient upgrades. Both of these policies fit with the community feedback received by pursuing climate action and decarbonization policies but being sensitive to cost impacts, the need for flexibility, and reliability/resilience.

Policy Option 3: Require electric equipment upon replacement ahead of BAAD’s Zero NOx requirements
Description
BAAD will require zero NOx (currently the only options for Zero NOx appliances are all -electric) appliances for water heating by 2027 and space heating by 2029. This policy bans the sale of qualifying NO
x -emitting appliances in the Bay Area, requiring all-electric appliances when covered gas appliances are replaced. Option 3 has the greatest potential to achieve GHG reductions and the goals outlined in the City’s CAP by moving faster than the 2027 and 2029 timelines outlined by BAAD.

However, it could also result in higher upfront costs especially for space heating. Under this policy the City would adopt and implement a local version of the BAAD zero N0x threshold ahead of the current schedule to require all new space and water heating to have zero NO x emissions, and therefore, zero GHG emissions.

This ‘time of replacement’ ordinance would require the replacement of gas water heaters and space heaters with zero NO x versions when they fail or are voluntarily upgraded. This approach maximizes the lifespan of the existing gas appliances and reduces the cost of complian ce as the increased cost would only be the difference between a gas appliance and the upgraded electric appliance . Focusing on time-of-replacement is the most cost-effective approach for the building owner. Furthermore, since these appliances may function for dozens of years, it also is the timeliest option to replace gas appliances with electric -run appliances instead of locking in emissions from natural -gas appliances which could potentially continue to operate past the City’s target for carbon neutrality.

Policy Pros:
• Community and workforce prepared for 2027 and 2029 BAAD requirements • On-bill savings for homes that go all-electric
• Largest GHG emissions reduction potential
Policy Cons:
• Higher upfront costs for residents for home electrification • Uncertainty of incentives
• Some homes may face electrical upg rades (panels or service lines) that increase costs and lengthen timelines for replacement
Other Cities and Legislative Drivers
The BAAD requirements will be implemented in 2027 and 2029 and getting ahead of the ruling offers an opportunity to have the highest GHG impact. Currently, there are no jurisdictions who have adopted this policy for existing buildings. .

City of San Mateo
Electrify San Mateo: Policy Pathways Analysis
13 Greenhouse Gas Reductions Potential
A zero NOx equipment requirement policy would have the most significant impact on greenhouse gas reductions with the ability to reduce emissions an average of 9,700 MT CO2e per year by 2030 assuming a zero NO x policy was put in place for water heating and space heating in 2026 for residential/small commercial appliances and 2028 for larger commercial appliances.

Community Feedback
Feedback on this policy was largely unfavorable . In the community survey, 44% of respondents supported this policy option , 5% neutral, and 48% do not support . Those opposed were concerned about getting ahead of the Air District’s schedule and challenges with compliance and enforcement.

Those who support this approach emphasize that this approach has the greatest GHG reduction potential. The Community Relations Commission was supportive of this policy pathway.

Cost Effectiveness and Equity Considerations
Based on the initial cost study conducted for this project, a zero NOx policy median-cost scenario could increase water heating incremental costs by $3,200 and space heating incremental costs by $11,778 before rebates. However, between state, local, and federal incentives high income households could see an overall cost savings for water heaters and incremental costs of $ 5,878 dollars for space heating. When also considering the avoided cost of an AC unit (once it breaks down) from installing a two-way heat pump that acts as a furnace and an AC unit, then the incremental costs in a median-cost scenario for space heating would be $ 4,278 before rebates and incur cost savings with rebates.

Similar conclusions were found in a nother cost study done for BAAD. 10 However, many of the incentives originally modeled for this analysis have changed or have uncertain futures, especially at the federal level.

Similarly to Policy Option 2, residents could utilize on-bill financing from PCE to cover up-front costs of electric water heater or space heating appliances , utilizing a zero percent interest loan and repaying that installation cost over time via their utility bill. 8 The PCE program fosters equitable installation of electric equipment and allows renters to enjoy the same energy savings as homeowners. However, the availability of rebates and incentives is volatile which could impact the cost-effectiveness of an electric- appliance mandate.

Policy Findings
A Zero NOx Equipment Requirements policy would achieve the highest greenhouse gas emissions reduction , mandating electric heat pump water heaters and furnaces ahead of the BAAD requirement.

This policy offers a significant opportunity to reduce GHG emissions and capture appliance replacements over the next four years before BAAD’s mandate is fully implemented. Implementing this policy could potentially save residents money depending on the availability of rebates on water and space heating appliances. However, there are cases in which this policy could result in increased upfront costs for homeowners, whic h was the biggest concern identified in Phase II of engagement .

The changing rebate landscape also makes it difficult to understand how costs will change over time.

Due to the polarized community feedback, with some constituents being unsupportive of mandates, it may be difficult to garner public buy in for a Zero NOx Equipment Requirement policy.

10 BAAD. 2024. Installation Costs for Zero-NOx Space and Water Heating Appliances. Available:
https://www.baaqmd.gov/~/media/files/community-health/building-appliance-implementation/task1_electrificationcosts- pdf.pdf?rev=3cb66a09f3094f94b35fa7fc90cfd4ec&sc_lang=en City of San Mateo
Electrify San Mateo: Policy Pathways Analysis
14 Policy Option 4: Commercial Building Performance Standards Description
Option 4 introduces new policy standards for commercial buildings (Building Performance Standards) aimed at increasing energy efficiency, and eventually, decarbonizing commercial buildings as a phased efficiency-focused approach. In comparison to relatively homogonous residential buildings, commercial buildings can be highly variable in their systems and needs. Commercial building heating and cooling systems are also frequently oversized, meaning replacing existing gas equipment in a like for like manner with electric equipment is not economical. Process loads also vary significantly across commercial building types. For these reasons, decarbonizing commercial buildings necessitates a flexible approach where building managers can first make strides towards understanding their buildings and cost-effective opportunities before committing to a specific approach. Typically, a BPS Program is implemented in phases where buildings first report energy use for several years (benchmarking), then perform a retro -commissioning process to identify opportunitie s before finally reducing emissions below an established threshold (performance standard). • Phase I: Benchmarking (Years 1-2): This initial phase establishes a building’s energy performance baseline by comparing its energy use intensity (EUI) to similar buildings. Covered Buildings (buildings and properties with buildings totaling the specified size threshold or larger) report their annual energy usage in Energy Star Portfolio Manager. The data collected in the benchmarking phase improves building manager and City understanding of building energy usage and will inform GHG-emissions performance sta ndards. Benchmarking also identifies underperforming facilities and prioritizes improvements, with studies showing benchmarked buildings achieve average annual energy savings of 2.4 percent.
11 • Phase II: Retro-commissioning (Years 3-4): Retro-commissioning is a process through which a building’s energy consuming systems are analyzed for efficiency and proper operation. The retro - commissioning process serves two primary purposes. The first is to uncover inefficient operations, increase en ergy efficiency, and save building owners money. The second is to identify cost - effective opportunities to reduce building GHG emissions through electrification and energy efficiency.
• Phase III: Performance Standard (Year 4+): Jurisdictions set phased energy or emissions targets for GHG reductions over time on a square feet basis. The targets are based on data collected from the benchmarking phase and can be met through a variety of retrofits, such as upgrades, electrification, or renewable energy adoption. The most cost -efficient retrofits for each building were identified in the retro-commissioning phase. Standards often allow flexible compliance paths, such as achieving specific EUI thresholds or offsetting emissions via clean energy investments.

Policy Pros:
• BPS approach addresses a high degree of variability in commercial building types by focusing on performance-based requirements
• Phased approach allows for structured guidance for facility managers, uncovering cost savings over time
• Focuses on worst performing buildings first

11 National Association of State Energy Officials. 2025. Benchmarking and Building Performance Standards. Available:
https://www.naseo.org/issues/buildings/benchmarking
City of San Mateo
Electrify San Mateo: Policy Pathways Analysis
15 • Reduces pressure on harder to electrify equipment types (e.g. gas stoves) through phased approach, longer runway for electric equipment to become widely available and cost -effective on- market
• Robust programming examples from Cities who have already implemented • Tiers off of existing State energy disclosure laws (AB 802) Policy Cons:
• Necessitates new staff time and staff members to implement and track BPS • Does not guarantee all-electric end usage in short term until phased retro commissioning phase, potentially missing some appliances that could be electrified • Limited building stock reach, best suited to large commercial buildings (for example buildings >25,000 sq ft)
• Possibility to have equity implications from increased rents in multifamily if tenant protections are not integrated into the policy
Other Cities and Legislative Drivers
Commercial Building Performance Standards are already mandated by California’s statewide building energy benchmarking and public disclosure law (AB 802 ), which require owners of commercial and multifamily buildings 50,000 square feet or larger to annually benchmark and report their whole - building energy usage to the California Energy Commission . A City BPS could implement the same threshold as the state or have a more stringent threshold including buildings with a smaller square footage.
• Compared to other policy approaches listed here, building performance standards are a well - established policy mechanism that has been adopted by many local governments including the City of San Jose, City of San Francisco, and City of Brisbane. 13City of Brisbane Building
Efficiency Program passed in 2019, requires annual energy and water benchmarking and reporting, and compliance with Beyond requirements to show that they are high performing, or improving performance for commercial buildings 10,000 SF and larger. 14 • City of San Jose’s Energy and Water Building Performance Ordinance passed in 2018 and requires commercial and multifamily buildings above 20,000 square feet to annually benchmark and report their energy and water usage. Beginning in 2023, building have been required to meet energy and water efficiency standards on a rolling five-year basis.15 • Greenhouse Gas Reductions Potential
Commercial building space makes up over 39 million square feet within the City with 44 percent and 30 percent coming from space and water heating respectively. The building performance standard would likely not result in significant GHG emissions reductions before 2030 due to the phased in nature of the program. However, 83,660 MT CO
2e were generated by commercial buildings in 20 19
These emissions could be reduced by 2045 depending on the final thresholds adopted by the City.17

14 https://www.brisbaneca.org/bbep
15 https://www.sanjoseca.gov/your-government/departments-offices/environmental-services/climate-smart-san-jos/energy-and-water- building-performance-ordinance
17 City of San Mateo Climate Action Plan (Page 41) https://www.cityofsanmateo.org/DocumentCenter/View/93755/Climate-Action-Plan- 2024-Update?bidId=
City of San Mateo
Electrify San Mateo: Policy Pathways Analysis
16 Community Feedback
Across engagement events, community members were supportive of a BPS policy. In the community survey, approximately 58% of respondents were supportive of a BPS policy, 12% neutral, and 29% do not support . The Senior Advisory Commission, Sustainability and Infrastructure Commission, and Community Relations Commission were supportive of this policy pathway.

During our direct outreach to building owners, respondents understood the importance of a BPS policy and made suggestions of how to set thresholds to be most efficient and minimize unnecessary costs like setting individual reductions targets measured against a buildings own emissions rather than a City average and including a vintage threshold to exclude new buildings which are already more efficient. Building owners also shared that limited physical space for electric equipment upgrades and complicated tenant lease structures would be challenges to implementation t hat building owners would need guidance navigating.

Cost Effectiveness and Equity Considerations
The cost of decarbonizing buildings under a Building Performance Standard (BPS) policy varies significantly based on factors such as building age, equipment types, and energy end uses. This variability necessitates a flexible, performance -based approach, allowing owners to prioritize cost - effective solutions tailored to their assets. The BPS framework’s phased implementation mitigates financial burdens:
• Benchmarking identifies inefficiencies (e.g., leaks, malfunctioning systems) and establishes a baseline for improvement. Benchmarking reporting costs approximately $3,000 annually. • Retro-commissioning pinpoints low -cost operational optimizations (e.g., HVAC adjustments, controls recalibration), which typically yield 16% energy savings at an average cost of $0.30/sq. ft., often with payback periods under two years.
• Performance standards are deferred for 4+ years post -benchmarking, enabling strategic capital planning for equipment replacements and system upgrades.

Electrification of commercial building electric retrofits will likely have to be paired with a suite of demand management, energy efficiency, or renewable energy projects in order to make building electrification economical for building owners. Specific cost -effective system upgrades include heat pump rooftop package units, which are the most promising electrification solution for commercial building electrification, offering a replicable model for a 1:1 equipment swap-out. 18 Analysis from PCE
found that for these easy to electrify units (packaged/split units with both heating and cooling) the marginal costs to upgrade to an all -electric packaged or split heat pump system were found to be negligible as shown in 3.

18 Rocky Mountain Institute. 2022. Medium-Size Commercial Retrofits. Available: https://rmi.org/insight/economics-of-electrifying- buildings-medium-size-commercial-retrofits/
City of San Mateo
Electrify San Mateo: Policy Pathways Analysis
17 Figure 4 PCE 2035 Decarbonization Plan Rooftop Package Unit Marginal Cost Analysis

Equity is addressed by allowing building -specific compliance pathways and avoiding prescriptive mandates that could disproportionately burden older or under -resourced properties. There are additional equity implications when considering multifamily housing which could exacerbate disparities and lead to rent increases if not properly designed. Key considerations for equitable BPS implementation include anti- displacement measures fo r buildings that receive any City subsidy, incentive, or funding. Equity implications and design measures for multifamily are still being investigated. Due to the phased in nature of this program, those considerations can be addressed over time, but before thresholds for reductions are finalized (year 4+).

Policy Findings
A BPS policy builds on state legislation and addresses a large source of emissions reductions. There is overall community support and flexible and cost -efficient implementation. However, a BPS policy obligates a significant amount of staff time. Therefore, for efficient implementation, the City could set a threshold that would maximize the captured square footage while minimizing the number of impacted building owners. A threshold that initially only applies to buildings greater than 50,000 square feet (which are already mandated to report benchmarking data under AB 802) would ensure the City’s building stock is complying with state law and allow the City to understand the benchmarking process without a significant staff burden.

Policy Option 5: Municipal Electric First Policy
Description
This policy establishes a mechanism for local government renovations to go ‘electric first’. This means that new appliance purchases, renovations, and replacements should prioritize using all -electric equipment. This policy would also allow for technical and cost infeasibility on a project -level when an all-electric alternative is either not available or deemed infeasible due to cost . The main purpose of

City of San Mateo
Electrify San Mateo: Policy Pathways Analysis
18 the policy is to position the City as the leader in decarbonization within the community as well as prepare City facilities for upcoming requirements. The City would also learn best practices through this approach which it can share with the community and electrified city facilities would serve as demonstration buildings to highlight the comfort, health, and safety benefits of going all-electric.

Policy Pros:
• Demonstrates City leadership in building electrification • Availability of significant local government incentives to electrify through Peninsula Clean Energy’s Gov BE and Willdan GK12 program
• Existing resources available through County of San Mateo including staff report, model code language, and case studies
• Prepares City for future requirements while incentives are available • Lower operating costs
Policy Cons:
• Limited reach as policy only covers municipal buildings Other Cities and Legislative Drivers
Some other jurisdictions who have implemented this policy include:
• City of Mountain View: Municipal Green Building Policy (2020): requires analysis of opportunities for electrification upon major upgrade of City- owned buildings, and develops a minimum of LEED Gold for new construction.
19 • City of San Diego: Zero Emissions Municipal Buildings and Operations Policy (2022): any time a natural gas burning system is being replaced, requires the new equipment to be electric. 20 Greenhouse Gas Reductions Potential
In 2005 municipal natural gas use was 86,096 therms which equates to approximately 586 MT CO2e annually after accounting for natural gas leakage . If fully implemented, the electric first policy would aim to reduce these emissions over time as equipment needed replacement. The total reductions by 2030 and 2045 would depend on the availability of all -electric replacements and the rate of equipment failure.

Community Feedback
Across community engagement events, there was broad support for this policy option. In the community survey, approximately 60 % of respondents were supportive of this policy option , 15% neutral, and 24% do not support. Multiple constituents and building owners expressed a desire for the City to better understand the permitting process and technical implications, which would be achieved if the City led first by example. The Senior Advisory Commission, Sustainability and Infrastructure Commission, and Community Relations Commission were supportive of this policy pathway.

19 https://www.mountainview.gov/home/showpublisheddocument/790/637940944813700000 20 https://www.sandiego.gov/sites/default/files/zero_emissions_municipal_buildings_operations_policy.pdf City of San Mateo
Electrify San Mateo: Policy Pathways Analysis
19 Cost Effectiveness and Equity Considerations
This policy enables the City to conduct a comprehensive feasibility assessment to evaluate the cost differentials between electrification and gas equipment replacement for municipal facilities. By incorporating exemptions for projects demonstrating technic al or financial infeasibility, the policy ensures a targeted approach to identifying the most cost -effective energy upgrades, consistent with methodologies applied to commercial buildings. Implementation costs will vary based on building - specific factors, including system age, infrastructure readiness, and operational requirements.

As these facilities are City -owned, the municipality retains full decision -making authority over capital expenditures, eliminating potential equity concerns that might arise in privately owned housing or commercial properties. Furthermore, since many City owned facilities are used by the public such as libraries or park properties, creating healthier and more comfortable spaces while lowering operational costs provide an equity benefit to the community. This approach ensures alignment with both fiscal responsibility and the City’s broader decarbonization objectives.

Policy Findings
The adoption of a Municipal Electric First Policy establishes a process to systematically evaluate electrification opportunities during renovations and new projects for City- owned facilities. This policy aligns with the City’s climate goals while providing data- driven insights into cost and feasibility , enabling informed decision- making for future building decarbonization efforts. Furthermore, the municipal electrification first policy saw general support throughout the community engagement process.

San Mateo City CouncilJuly 28, 2025

San Mateo City Council
July 28, 2025