Dive Brief:

• California energy regulators are crafting a pilot program to provide building owners and developers with incentives to deploy technologies that reduce greenhouse gas emissions as well as customer bills in new residential buildings.

• The Building Initiative for Low-Emissions Development (BUILD) program is "one of our major clean energy initiatives," Clifford Rechtschaffen, commissioner at the California Public Utilities Commission (CPUC), said at a joint agency workshop Monday. The pilot will also have a strong focus on equity, "given the economic dislocation and the economic disparities laid bare by COVID," he added.

• The California Energy Commission (CEC) intends to provide the CPUC with an implementation plan for the program on July 24, with a launch scheduled for the second quarter of 2021.

Dive Insight:

The CPUC outlined the general framework for the BUILD pilot, along with an accompanying initiative called the Technology and Equipment for Clean Heating (TECH) initiative, in a decision issued in April. While BUILD is aimed at incentivizing the deployment of near-zero emission technologies in new residential buildings, TECH is focused on promoting cleaner heating equipment in both new and existing residential buildings. State legislators have allocated a total of $200 million over a four-year period to implement the programs.

The BUILD program could play an important role in California’s broader decarbonization goals, regulators indicated at the workshop. Around a quarter of the state’s greenhouse gas emissions are estimated to come from its buildings. 

The CEC is in charge of administering the pilot and is tasked with providing incentives to new residential housing that’s "at a minimum, all-electric, given the state’s policy commitment to a zero-GHG electricity supply by 2045 and the risk of locking in new natural gas assets that could be unused or underutilized before the end of their life," as per the CPUC’s April decision. For the first two years, the incentives will be reserved for developers of low-income residential housing. 

"I think this is actually the start of something big. It’s not the biggest program that we’ve ever run in the state… but it is, I think, a structure that we will find ways to build on going forward for the coming years and decades," Andrew McAllister, CEC commissioner, said.

CPUC Commissioner Liane Randolph concurred, saying that the program "presents a huge opportunity to try to understand how we can decarbonize the building sector and ensure that low-income residents have the opportunity to participate in these programs…."

One aspect that regulators could consider putting more emphasis on is using the available project dollars to achieve scale, according to Peter Turnbull, principal and owner of energy consulting firm Peter Turnbull & Associates. Based on recent housing statistics, around 200,000 single-family and 200,000 multi-family homes could be built in California in the next four years, he said at the workshop. 

"If you just do some back of the envelope calculations, the $200 million [budget] over four years isn’t going to do a whole lot. That’s not a reason not to do the program, that’s not a reason to cry wolf, but it is a reason to say… we should devote measurement resources to establish the trajectory that needs to happen with new construction," he told Utility Dive. 

The issue is compounded by the high prices of California housing units, he added.

"If a ten-unit building costs $5 million, what’s a meaningful incentive for them to go full electric?" he asked. 

Regulators don't have any illusions about capturing 100% of the market, Abhilasha Wadhwa, senior analyst with the CPUC, said at the workshop.

"Our biggest concern… has been that the initial barriers and even the lack of awareness that builders may have in the marketplace currently need to be removed," she said, adding, "If we show those incremental successes now, there may be a better opportunity for us to seek additional funding from the legislature as we try to scale this up to the 2045 goals."

Stakeholders can submit public comments on the workshop to the CEC by June 29.