California’s Statewide Market Development Initiative Kicks Off

On Thursday, August 12^th, Energy Solutions unveiled the implementation strategy for California’s $120 million statewide market development plan for heat pump space and water heaters. The program, known as the Technology and Equipment for Clean Heating (TECH) Initiative aims to drive the market adoption of low-emissions space and water heating technologies for existing single and multifamily homes across California. TECH was developed as part of Senate Bill 1477 and is funded by California gas corporation ratepayers under the auspices of the California Public Utilities Commission.

On the initiative’s first public stakeholder meeting, Energy Solutions, the third-party program administrator, detailed a multi-pronged approach spanning incentives, pilot programs, consumer education, workforce development, and data reporting. Here’s what is in store for California’s heat pump market:

Incentives

The program focuses on layering incentives on top of existing programs in order to capitalize on existing momentum. TECH will roll out heat-pump water heater (HPWH) incentives this fall across Southern California Edison, Pacific Gas and Electric, and BayREN territory, followed by a statewide launch in December 2021. Local incentives will total $2,000 per HPWH when combined with existing incentives. Incentive levels are not set for the statewide launch but will be intended to align with the forthcoming HPWH incentives in the self-generation incentive program (see CPUC Proceeding 20-05-012). TECH is also developing targeted multi-family and low-income HPWH incentive offerings. Incentives for HVAC heat pumps will launch in 2022 following a similar strategy of initially targeting areas with existing local incentives.

Consumer Education

Energy Solutions revealed a multi-year statewide marketing campaign dubbed “The Switch is On” with the goal of encouraging consumers to swap out their gas-powered appliances for electric alternatives. The campaign has officially launched with a website and will be expanding to paid media, an ambassador program, expert guides to electrification, and web tools for both customers and contractors. The campaign is funded through a combination of the TECH program (focused on HVAC heat pumps and hot water heaters), and individual partners (targeting a broader consumer electrification message).

Workforce Education and Training

TECH will be providing training and technical support for contractor firms and service staff to help them integrate electrification into their core business model. The program will include targeted training for multi-family retrofits and for contractors in low-income areas. In addition, TECH is offering up to 3,000 free HPWHs to contractor firms for training purposes.

Pilots

1. Tariffed On-Bill Investment: TECH will partner with a utility to offer a tariffed on-bill financing program to expand low- & moderate-income customers’ access to financing
2. Supporting Low-Income Programs: TECH will collaborate with existing low-income energy efficiency or home upgrade programs to provide data analysis, incentives and other support to test and identify best practices.
3. Supporting Heat Pump Adoption in Multifamily Housing: TECH will provide deep technical support in designing building systems, as well as measurement and verification after installation, to decrease property owners’ perceived risk of electrifying.
4. Heat Pump Water Heater Load Shifting: TECH will engage contractors and offer additional financial incentives to enable water heater demand response functionality.
5. Streamlining Installation and Permitting: TECH will work with a government partner to develop and test a single-day permit process for heat pump conversion projects.
6. Customer Targeting: TECH will identify customers for whom heat pumps offer the most compelling value proposition and develop scalable strategies to persuade these customers to make the switch.

Quick Start Grants

In addition to the six pilot programs, TECH is soliciting applications for grants of $50,000 to $250,000 for innovative projects that can quickly accelerate the market. The solicitation opens September 1^st with applications due by October 1^st. TECH expects to award six to twelve grants in year one.

Data Reporting

Energy Solutions will be launching a public reporting site in Q2 2022 to track the progress of the program and inform California’s long-term building decarbonization framework. In addition, an annual analysis will quantify avoided costs, greenhouse gas savings, impacts on the electrical grid, and customer bill impacts. Energy Solutions indicated that the site would be modeled off the California Solar Initiative’s public reporting site.

More information, as well as a recording of the stakeholder meeting, is available on the program website.