Electric / Gas / Water Summary of White Paper Findings CPUC SWH Workshop August 26, 2008

Electric / Gas / Water

Summary of White Paper Findings

CPUC SWH Workshop

August 26, 2008

Knowledge to Shape Your Future2

Purpose of White Paper

Report on the status of the CCSE SWHPP Identify the extent to which the SWHPP design is similar

to other SWH incentive programs Identify current market barriers in California and how to

address the market barriers Provide information on equipment and installation costs

and identify unique business practices that may help increase cost-effectiveness

Make recommendations on the design of a statewide incentive program

Outline future evaluation analyses as part of enhanced Interim Evaluation Report


Methodology

Analyze application data obtained by CCSE for types of systems installed and associated costs

Interview different groups of market players Program participants and non-participants Contractors throughout California Market Actors (NREL, SRCC, CalSEIA, HISEIA, ODOE) SWH incentive program administrators throughout the U.S. Manufacturers and distributors of SWH equipment



Report status on CCSE SWHPP Identify the extent to which the SWHPP design is similar







SWHPP Relative to Other SWH Incentive Programs


Incentive Structure of SWH Incentive Programs


Summary of Program Administrator Surveys

Key takeaways from interviewing other Program Administrators Equipment and contractor certification provide increased confidence in

SWH systems Inspections are important Build and maintain strong relationships with contractors Program administrators need to be adaptive










Residential Participant Survey Results

Out of the 40 interviewed participants, 19 of them had previously owned a SWH.

Residential participants were primarily motivated by environmental concerns and energy savings to install SWH systems.

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5

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15

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25

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35

Environmental Concerns Energy Savings Payback Period

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Total Pop

SWHBefore

No SWHBefore


Workshop Attendee (Program Non-participant) Survey Results

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5

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20

25

Environmental Concerns Energy Savings Payback Period Other

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30 workshop attendees who elected not to purchase a SWH were also surveyed

Primary reasons for interest in SWH were the same as for participants


Workshop Attendee (Program Non-participant) Survey Results

The most commonly reported factor which would have the greatest influence on the decision to install SWH was a higher rebate

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2

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18

Higher Rebate Higher Energy Prices More Information More KnowledgeableContractor

Better Solar Resource

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SWH Market Barriers

Initial installation cost

Lack of knowledge about the technology

Competition between PV systems, energy efficiency and SWH

Difficulty and expense associated with building permits


Initial Installation Cost

The Problems: SWH has a high initial cost

(average cost is $7,000) The payback for NG is not as fast

as for electric backup systems

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

ICS Glycol Drainback Thermosyphon Recirculation

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n=2n=8 n=8 n=2 n=4

Solutions: Rebate program Zero or low interest loans Advice on the timing of the

installation


Lack of Knowledge about the Technology

The Problems: Most of the general population are completely unaware of SWH

“Right now there is no market for SWH because there is no state or public recognition of the benefits of SWH.”

Some of the general population confuse SWH with PV Builders are reluctant to implement SWH technologies in new

construction

Solutions Statewide marketing campaign Compare and contrast SWH and PV, including costs Explain that SWH can act as a hedge against increasing fuel

costs Education and outreach to builders, building permit inspectors


Competition with PV and Energy Efficiency

The Problems: There is a statewide incentive for PV and energy efficiency

measures but not for SWH“A huge problem is that there are incentives for PV and energy

efficiency but not for SWH and this drives the market away from SWH.” There is limited roof space and money

Solutions Educate public about the benefits of SWH and costs compared

to PV and tankless water heaters Create incentive program for SWH to put it on equal footing with

PV and energy efficiency Need to consider how PV, energy efficiency, and SWH fit

together “There is competition between PV, SWH, and energy efficiency but only to those who do not understand SWH. The three should be done together and be well thought through.”


Obtaining Building Permits

The Problems: Permits are expensive Permits can be difficult to obtain and often require multiple

inspections Every city has different requirements

Solutions: Target training sessions for city and county building permit

inspectors to provide education regarding SWH systems Cities need to have consistent requirements Oregon requires plumbing permits for SWH to be under $100

and the state provides guidance to cities that are not knowledgeable about permitting SWH

In Arizona, permit costs are a percentage of the total project cost










System Cost Components


Contractor Business Characteristics

Business characteristics and practices that may affect SWH system installation or repair costs Portion of business attributed to SWH Variety of system types being installed Number of dedicated sales staff Types of marketing Number of experienced SWH system installers Types of training (manufacturer, on-the-job, conference workshops,

etc.) and frequency of training Installing monitoring equipment


Practices that could Improve Cost-Effectiveness

The small sample of contractors surveyed combined with a variety of business characteristics made it difficult to discern “best practices” for SWH contractors

Practices which could improve SWH cost-effectiveness Installation of cookie-cutter systems Implementation of plug-and-play technologies Increased training of installers Optimized design/install logistics Buying and/or selling in bulk










Recommendations for aSuccessful SWH Incentive Program

Incentive Structure Base incentive on estimated energy savings, but ensure calculation is not too

complicated and that the method is transparent Provide incentives that decline over the life of the program Offer zero or low-interest loans Include an incentive for the replacement of parts of existing SWH under

certain circumstances

Contractor requirements Limit number of additional requirements

“Contractors need to have a state license in order to install systems. It is not necessary for an incentive program to require anything more than what the state law requires.”

Provide a streamlined approval process for qualified contractors in good standing

Equipment requirements Require OG-300 certification for residential and OG-100 certification for

commercial and industrial Prove viability by having technology in commercial operation for at least 1

year










Further Evaluation Work

Interim Evaluation Report Additional survey work needed for Interim Evaluation Report

Manufacturer and distributor interviews Contractor interviews Contractor confidential cost survey Residential/commercial non-participants and residential/commercial customers with

SWH outside of the San Diego area

Additional analysis needed for Interim Evaluation Report Market assessment Business models Cost-effectiveness analysis

Respond to comments from this workshop

Final Program Evaluation Report Performance data Cost-effectiveness analysis Additional participant and non-participant surveys


Contact Information

For anyone who would like to provide input on the program please contact me at:

Heidi Ochsner

Itron, Inc.

[email protected]

360-906-0616

Documents

Electric / Gas / Water Summary of White Paper Findings CPUC SWH Workshop August 26, 2008