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How Can Energy Efficiency Programs Support Building Performance Standards?

October 22, 2020

Washington DC, New York City, Washington State, and St. Louis have recently adopted mandatory building performance standards (BPS) that require many existing commercial buildings (and often multifamily buildings) to significantly reduce their energy use. Several additional cities and states are considering similar standards. This is an exciting trend, but it presents challenges for building owners who must comply.

Fortunately, existing energy efficiency programs can help. In a new topic brief published today, we explore how efficiency programs can best support BPS policies and how city and state officials charged with implementing them can work with regulators so that these policies achieve their objectives of significant energy savings and greenhouse gas emissions reductions.

View the Topic Brief

Energy efficiency programs are now active in all of the U.S. jurisdictions that have either enacted or are seriously considering BPS. We interviewed state and local officials working on BPS implementation, utility and other energy efficiency program administrators, other experts, and some state utility regulators about the role of efficiency programs in BPS implementation. We conclude that energy efficiency programs are critical to help jurisdictions implement BPS because they can educate building owners and provide financial and technical assistance. Utilities and other program administrators have the skill set and resources to support successful BPS implementation; we recommend that utilities and cities/states work together to ensure BPS success.

Regulators need to provide efficiency programs with credit toward their energy savings goals for helping building owners comply with BPS

In many states, legislatures or regulators have established energy savings goals that utilities must meet. For efficiency programs to be able to help with BPS implementation, they’ll need to get proper credit for their work from the regulators overseeing them. In the jurisdictions covered by our research, efficiency programs will receive such savings credit prior to the BPS effective dates. We recommend that efficiency program implementors ramp up their programs prior to required compliance dates to help building owners prepare. Budgets should be adequate to meet expected needs, with a focus on affordable housing and other under-resourced properties (affordable housing in particular needs support, as discussed recently by two colleagues). Program implementers and regulators should work to minimize the possibility that sophisticated building owners will exhaust available program budgets and leave other owners (typically those that are smaller and have limited experience with energy efficiency) stranded without assistance.

We also found broad backing for continuing efficiency program support after initial BPS compliance deadlines to assist building owners who have not yet reached compliance and to encourage savings beyond minimum requirements. Full compliance is unlikely until multiple years after the nominal compliance date. Furthermore, depending on noncompliance penalties, noncompliance could be widespread. In these situations, program incentives will save energy and reduce emissions by helping to upgrade buildings that otherwise would have incurred penalties. In addition, we conclude that after BPS take effect, efficiency programs should continue to earn energy savings credits for improving affordable housing relative to current building conditions, as many of these buildings will be unable to meet BPS requirements without such assistance. For other buildings, a modified baseline should be developed that is between current building conditions and presuming buildings will be in full compliance with BPS requirements.

Overall, we find that if efficiency programs are not involved in BPS implementation and not able to credit their efforts toward their energy savings and other goals, then compliance rates, energy savings, and emissions reductions will be lower, and in some cases BPS policies could be rolled back or weakened.

Next steps toward implementation

BPS administrators (cities and states), with help from efficiency programs, will need to do the following:

  • Bring stakeholders together and develop a common understanding of needs and intents.
  • Educate building owners about the upcoming requirements and provide technical assistance on how best to bring their buildings into compliance.
  • Assess workforce needs for BPS implementation and identify shortfalls and ways to address them.

Energy efficiency programs and their regulators, with help from city and state BPS administrators, will need to lead stakeholders in developing an approach to providing ongoing technical and financial assistance to building owners seeking to comply with BPS.

We recommend that utility regulators decide how programs will receive savings credit well in advance of BPS compliance dates so that city and state officials, building owners, and efficiency program administrators can plan their compliance and implementation activities.

Building performance standards can significantly reduce energy use and will be important for achieving long-term energy and climate goals. Energy efficiency programs will be critical for BPS policies to be successful.

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