This article was originally published in the June 2019 issue of Strategies, AESP's exclusive monthly magazine for members.
By Michael Turns
Increasing baselinesRising baselines present significant challenges to the implementation of cost-effective energy efficiency programs, especially Residential New Construction (RNC) programs. While RNC programs offer significant and long-lasting energy savings, their cost-effectiveness is often hampered by cost tests that curtail measure lives and incorporate savings from only one fuel. This discussion focuses on RNC opportunities, but similar opportunities exist in nonresidential sectors.
RNC program baselines are typically based on a combination of state-adopted energy code and federal minimum appliance and lighting standards. The International Energy Conservation Code (IECC), a national model energy code, typically serves as the basis for building thermal envelope and duct system efficiencies while federal standards govern HVAC and major appliances. Lighting baselines are a mix of energy code requirements for high-efficacy lighting and federal efficiency standards (EISA). In many cases, states make their own amendments to the model code, which are then also included in the baseline. Less commonly, the baseline is based on industry standard practices.
Between 2006 and 2012, the IECC went through a period of rapid advancement with each three-year code cycle bringing an efficiency increase of around 15 percent. This resulted in an RNC baseline that is roughly 30 percent more efficient than a decade ago. These efficiency increases came mainly from greatly reduced limits on building envelope and duct leakage, but improvements in envelope insulation, windows, and lighting also contributed to the change. At the same time, the Energy Independence and Security Act (EISA) of 2017 has increased the lighting savings baseline by 25 percent and could eliminate lighting savings altogether unless proposed EISA rollbacks take effect.
With these advancements, the easy-to-obtain RNC savings have largely been wiped out. But, as states adopt more efficient energy codes, they might not be reaping the intended savings. Energy code compliance can be very inconsistent as code enforcement usually occurs at the level of the local municipality or county. This results in widely divergent enforcement and compliance and the realization of only a fraction of the anticipated savings. This gap presents opportunities for utilities and program implementers to provide services that result in real savings.
A Novel Approach to Achieving Savings
A seminal paper1 written by a team led by The Cadmus Group on behalf of the Northeast Energy Efficiency Partnerships (NEEP), describes an innovative program type where utilities claim savings for providing energy code training, outreach, technical assistance, and other compliance support activities. The basic premise is that energy code compliance is less than 100 percent and that services provided by utilities and their implementers can improve compliance and yield measurable energy savings. The paper describes a general method for utility attribution that involves executing a baseline assessment of energy code compliance, engaging in compliance improvement activities, and performing a post-intervention assessment. Strategies for determining the resulting energy savings include direct empirical measurement, indirect estimation, and expert judgement.
Savings PotentialThe U.S. Department of Energy’s (DOE) Building Energy Codes Program has made significant investments in proving this concept. Most recently, DOE invested $6 million to execute parallel energy code assessments and support programs in eight states – a project called the DOE Residential Energy Code Field Study2. For this project, implementers performed compliance assessments in accordance with a DOE/Pacific Northwest National Laboratories (PNNL) protocol involving data collection on a broad array of energy code features from homes under construction or recently completed. PNNL then analyzed the data on eight key measures to estimate the statewide energy savings potential. In addition, the initial assessments provided actionable information to target training and outreach efforts to construction and code enforcement professionals.
The final analyses are still underway, but the baseline study reports from the eight states describe first-year statewide savings potentials with a median value of $1.5 million. For a sense of scale, the statewide electricity savings potential in Pennsylvania is equal to 1.7 times the combined annual electricity savings goals for the state’s utility-run RNC programs. Furthermore, the measures included in the analyses generally have long lifetimes (for example, Massachusetts and Arizona assign a 20-year measure life to their energy codes programs).
Energy Code Compliance Support
Once a state or region has performed a baseline compliance assessment, an implementer steps in to improve compliance through training, outreach, and other support. Utilities and program implementers are energy code compliance enablers, not enforcers. Programs typically include a combination of classroom and online training, fact sheets, field guides, plan review and inspection checklists, performance testing verification forms, technical assistance hotlines/emails, and custom technical assistance. These activities also represent a tremendous opportunity for cross-promotion of RNC programs.
Evaluation and Attribution
Following the implementation of a compliance support program, the utility’s evaluator or other entity performs a follow-up compliance assessment, often including field data collection. (This evaluation may also be used as the baseline for the next round of code support activities.) Ideally, these assessments occur on a three-year cycle in conjunction with a state’s adoption of the next version of the model energy code. Once the post-intervention assessment is complete, the evaluator estimates the energy savings, usually through energy modeling based on field-collected data. This represents the gross savings, but multiple factors contribute to improvements in code compliance, including concurrent non-program training activities and the natural evolution of markets over time. Net savings are determined via expert judgment (e.g. Delphi panels) or assigned based on a negotiated attribution factor.
Energy Codes and Standards Adoption Support
Another common aspect of energy codes programs involves support of the adoption of more efficient energy codes and state appliance standards. Utilities participate in public energy codes and standards development processes and provide a variety of technical assistance including analyses of feasibility, costs, and benefits of proposed standards.
Cost-Effectiveness
Energy codes programs can be among the most cost-effective in a utility’s portfolio. In 2016, the Statewide Codes and Standards Program accounted for more than half the SoCalGas gas and electric portfolio savings at 2.2 percent of the total portfolio cost3. The main reason for the low cost is that direct incentives are not required. Typically, the only costs are for program administration, marketing, and evaluation with savings applied across the entire volume of new construction in a utility’s territory.
Energy Code Compliance Programs in Action
Compliance Programs
Several states lead the country in terms of utility attribution for energy code compliance support. In Massachusetts and Rhode Island, the Program Administrators (PAs) have received electric and gas savings attribution for their Codes and Standards Compliance and Support Initiative. The 2018 statewide residential and commercial savings attributed to the PAs was approximately 8,700 MWh and 980,000 therms. Now in its second phase, the initiative’s training programs and webinars have seen over 3,000 attendees in the last 18 months. Attendees of each training event complete post-training evaluation surveys, which are used by evaluators (along with other information) to perform process assessments and attribute savings. Training slides and webinar recordings are archived on the program website along with guides, fact sheets, checklists, answers to frequently-asked-questions, and a technical assistance hotline number and email address.
In California, the Investor Owned Utilities (IOUs) implement the Statewide Codes and Standards Program, which includes the Compliance Improvement (CI) subprogram4. Savings are not specifically attributed to the CI subprogram, but the broader program (described below) does receive savings attribution.
In addition, several Illinois utilities are currently funding a statewide energy code compliance collaborative, a baseline residential energy code field study, and have included a potential energy compliance training program in their 2018-2020 filings. Other states with utility or other program sponsors supporting energy code compliance include (but are not limited to) New York and the Northwestern states of Idaho, Montana, Oregon, and Washington.
Adoption Programs
California and Arizona lead in terms of utility-attributed savings from energy code adoption support. In California, the Statewide Codes and Standards Program includes five subprograms: Building Codes Advocacy, Appliance Standards Advocacy, Compliance Improvement, Reach Codes, and Planning and Coordination. In terms of energy code adoption support, the Building Codes Advocacy subprogram seeks to change national model codes and targets improvements to its Title 24 Building Energy Efficiency Standards. The utilities’ activities include developing code enhancement proposals and participating in public rulemaking processes to advance the energy code. In 2013-2014, the California utilities claimed a whopping net savings of 1,117,000 MWh and 9,900,000 therms with a budget of $28 million5. This equates to a cost of $0.02/kWh and $0.58/therm.
Arizona’s Electric Energy Efficiency Standards allow for utilities to claim up to one-third of the energy savings resulting from energy codes as quantified through a measurement and evaluation study. Arizona is a “home rule” state where local jurisdictions are responsible for adopting new energy codes, so Arizona Public Service (APS) works with the local jurisdictions to support the adoption of the most recent model codes. In 2016, APS claimed 4,539 MWh in net annual savings (after applying the 1/3 attribution rate) and 2.3 MW of demand savings6.
The Massachusetts PAs recently are also poised to claim savings from energy codes and standards adoption support with their 2019-2021 Three-Year Plan including “support for the development of enhanced energy codes and product standards at the state and national levels.” This constitutes an expansion of their compliance initiative and will include efforts to “advance the adoption of progressively more efficient energy codes, including stretch codes, and efficiency standards for appliances and equipment.”
In the Pacific Northwest, several utilities help fund the Northwest Energy Efficiency Alliance (NEEA) whose program portfolio includes an energy codes program with the stated goals of advancing the adoption and implementation of increasingly efficient energy codes and standards to lock in long-term savings. In this case, the utilities do not receive savings attribution but fund the program as what is often characterized as a market transformation effort.
Regulatory Frameworks to Enable Codes Programs
To fully enable utility-sponsored energy code compliance and adoption programs, there must be a supportive regulatory environment. This could come in the form of legislation that specifically allows utilities to claim savings from codes activities or enables implementation of market transformation programs. Or, public utility commissions or equivalent regulatory bodies may be able to amend or clarify regulations to explicitly allow for codes programs. Finally, in some cases, utilities may get approval for codes programs through their normal energy efficiency plan filing processes.
One common hurdle to acceptance of codes programs is the perspective that the energy code is the law (which it is), so ratepayer funds should not be used to support what is already required. In the real world however, numerous studies demonstrate that energy code compliance is lacking, resulting in lost energy savings opportunities. Another challenge is the difficultly measuring, quantifying, and attributing savings from codes programs. While these are indeed challenges, there are established and documented protocols for measuring energy code compliance and compliance changes over time, along with associated savings.
Next Steps
As of this writing, 19 states have completed or initiated a baseline energy code compliance assessment using the DOE/PPNL field study methodology. Several others periodically assess compliance using similar methods. Utilities and program sponsors interested in exploring codes opportunities should review the results of these studies and speak with codes program evaluators or implementers to assess the savings potential and cost-effectiveness of an energy codes program. Utilities should also explore the potential for resource acquisition or market transformation codes programs that operate in tandem with their new construction programs. As the easy energy savings opportunities disappear due to rising baselines, utilities should examine the potential of energy codes programs to yield high savings at a low cost.
Michael Turns is the Director of Energy Codes and New Construction Programs at Performance Systems Development (PSD). He manages PSD's activities as the lead vendor for the Massachusetts Codes and Standards Compliance and Support Initiative and was the principal investigator for U.S. DOE-funded Pennsylvania Residential Energy Code Field Study. He can be reached at mturns@psdconsulting.com
