March 4, 2016
By Carl Smith
Among his other roles, Commissioner Andrew McAllister leads the California Energy Commission’s efforts in regard to building efficiency. He has over 20 years of technical, programmatic and policy experience in the fields of energy management, efficiency and renewable generation. Before joining the Commission, he worked at the California Center for Sustainable Energy for six years, most recently as managing director and director of policy and strategy. He holds M.S. and PhD degrees from the Energy & Resources Group at UC Berkeley.
What is the role of the California Energy Commission in the state’s energy ecosystem?
The Energy Commission is California’s primary energy policy and planning agency. Sometimes people get us confused with other agencies, or they are unclear about the relative duties. We do long term planning and forecast energy demands. The Energy Commission’s seven core responsibilities are advancing state energy policy, encouraging energy efficiency, certifying thermal power plants, investing in energy innovation, developing renewable energy, transforming transportation and preparing for emergencies. People probably know the Energy Commission best for energy efficiency. We set the building energy efficiency standards and the appliance efficiency standards, which are marque activities in the state of California that drive the national, and sometimes even the global, efficiency discussion around buildings and appliances.
Efficiency is often said to be first in the loading order for greenhouse gas reduction efforts. Why is that?
I should note that efficiency is alongside demand response, which is on the cusp of a little renaissance. Demand response is the modern iteration of load management. Using demand response programs, providers offer incentives to customers who voluntarily modify their energy usage as conditions change on the grid. So-called “DR” can work both ways: for example, customers can reduce consumption during times of system peak demand or they might consume more energy pre-cooling buildings or charging batteries – when inexpensive renewables are readily available. This, along with energy efficiency, can help optimize the utilization of California’s energy system. Going forward it may be that targeted energy efficiency begins to look more like demand response – so it makes a lot of sense that they remain together at the top of the loading order.
Both efficiency and demand response are incredibly cost effective when compared to steel in the ground, large-scale capital projects that are traditionally associated with electricity supply. If you think about socially, the state has lots of activities competing for our resources. The less energy you consume, the less you have to invest to supply the energy you do need. For the renewable portfolio standard we’re going to go to 50 percent [of power from renewable sources]. Fifty percent of a smaller number is a smaller number, and that means less of an investment for society. We can use our resources in other productive activities.
There’s been a lot of groundwork laid, from AB 32 to SB 350, AB 8o2, Prop 39, code upgrades, and more. It would seem that the prospects for progress are better than ever. How does this look from your position?
From the perspective of other states and other countries, we seem to have a perfect storm going on in California. I certainly am thankful to be working here with the tools and conditions I need to make progress. That’s really going to help the state in the long haul, keep us competitive and improve our quality of life. I’m incredibly optimistic. We have a great governor, we have a great legislature, we have a lot of committed people in the agencies and committed residents who keep voting for initiatives like Prop 39. We have an alignment that’s really terrific.
Having said that, I don’t want to underestimate the challenge. We do invest a lot in efficiency and clean transportation infrastructure, in renewable energy. Just on the efficiency side, we probably invest probably $2 billion a year overall if you add up the utility ratepayer-funded programs with Prop 39 and other efforts we have in research and development, et cetera. That may sound like a big number but it looks pretty small in terms of the overall enterprise. That’s likely on the order of a trillion dollars or so, in terms of the investment that’s needed in building stock across California over the long term.
The state will not be able to do all of this on its own. We have to have private capital come in. Our job at the state is to get the things that are within our authority right – the regulations, code and et cetera. We set the rules of the road, but it’s also increasingly important in the modern age to encourage the marketplace and work with the marketplace to ensure that we don’t get in the way of the marketplace, that we create foundational infrastructure or foundational resources that don’t pick winners but allow lots of innovation to happen in the world beyond our walls. By that I mean tools for modeling, data and information resources. Standards do that as well. It is really important to give investors the message that we’re not doing this capriciously, that it’s a long-term commitment that they can count on.
There are huge amounts of capital out there on the sidelines looking for good investments. Lots of investment vehicles are really volatile these days. We’re going to need energy forever, and a reasonable rate of return is enough to draw that capital. We have to have some consistency to reduce the sense of risk. We try to push all of these buttons at once and it’s not always easy!
You mentioned code. Our building efficiency standards are headed toward the goal of zero net energy (ZNE). What were some of the key objectives for the recent revisions?
There are always several; we have a diverse building stock and lots of evolving practices. First of all, the building standards cover new and existing buildings and those are very different. They also cover commercial and residential buildings of all types so there’s some incredible diversity that we have to address.
In the big picture they’re divided into commercial and residential, or residential and non-residential as we call them. On the residential side this last round was one more step towards our goal of ZNE by 2020, so it was very important to significantly improve the energy efficiency aspects in the code so that we have less need for renewables to round things out. If a building is more efficient you have to generate less power. Therefore it’s more capital efficient overall and more affordable for people to buy. Efficiency is really number one. You have to really double down on that and then look at everything else to get to zero. We did a lot of that.
We improved the efficiency of the covered loads – the shell, the mechanical, the lighting – we improved the efficiency of those overall by about 25 or 28 percent. That’s a big step. People come into a house and plug things in, those are not covered so we don’t have authority over many of those. On the residential side we also created some mechanisms to address the self-generation aspect of new buildings, PV solar for example, which is being integrated more holistically within the building design. That’s a big step and that will continue in some form or another as we get closer to ZNE.
On the non-residential side we did less radical things, but I’m actually really proud of the fact that we cleaned up the language that we needed to make more clear and workable for contractors in the world out there in regard to lighting alterations. Lighting upgrades of existing buildings are a huge source of energy efficiency and savings for us. We were hearing that the marketplace was having a little bit of a tough time dealing with the 2013 code. One of my priorities was to clean that up and fix it and I think we did a really good job at that.
SB 350 set a goal of 50 percent improvement in the energy efficiency of all existing buildings in the state. How might that 50 percent improvement be measured?
This is a simple question with kind of a complex answer but I’ll try to be straightforward.
There’s this unfortunate “50 50 50” moniker. We’re not halving the energy consumption of our existing buildings; it’s not clear to me that that it would be good policy to focus on halving the energy consumption. We live in a democracy. People are going to do what they want in their buildings. What we do need to do is harvest the accessible savings that are there. We know that we haven’t yet reached all of the economically and technically feasible energy savings.
California has a history of saving a lot of energy and keeping our per capita consumption flat over time, but we’re going to double that. Doubling of the savings is not a halving of the consumption. The goal is to double the efficiency savings that we’re getting in the state. That’s pretty radical because it is going to reduce the overall absolute quantity of energy that will be consumed in our existing buildings. It will reduce in absolute terms even as the economy and population keeps growing. We are working toward negative growth in net consumption in our buildings; just think about that. It’s never been done before in any scale.
That’s going to be a huge achievement when we do it, but it isn’t cutting energy use in half, it’s reducing it versus what we think we would we would have achieved using the status quo programs.
There are certainly plenty of people who are onboard for these changes, but there are also building owners who are not convinced that investing in efficiency needs to be a priority. What would you say to them?
There is an absolutely positive message. We live in a moment that is so full of innovation and technical marvels that it is improving everyone’s lives. We have the opportunity to save a lot of energy and to reduce the environmental impact of our energy systems at the same time we actually improve people’s lives. It’s not the days of Carter, or “turn your thermostat down and put on a sweater and huddle all cold in your house.” That was the perception of the opponents, and we’re really not there in California. We have a milder climate. We have all sorts of technologies that actually make our lives better.
We have better products and they save energy. The notion of “win-win-win” is a little bit of a cliché at this point, but LED’s are a better product than incandescents. They use a fraction of the energy, they last orders of magnitude longer. Many people prefer them in terms of their light and their dimmability and all that. They are a superior product.
There are many really innovative things happening in building technologies and automation and control that have the potential to save people a lot of money and really put a lot of these things in the background, like an app on your phone. There are a lot of smart people using large data sets and interesting approaches to develop these products. California is an innovation economy. It’s quite spectacular.
Is there any other piece of this puzzle?
One thing that I think the energy sector is perhaps not as focused on as other sectors is the role of good information. We have a sector that is historically a regulated monopoly of one form or another. It’s a natural monopoly, capital-intensive system. Where we are today is that the monopoly is also being implicitly applied to the information about our energy consumption and our energy usage patterns. That information shouldn’t inherently be a monopoly. In order to unlock innovation, the marketplace needs good information and good understanding of what’s actually going on.
We need to solve that problem in order to truly unlock the innovation that’s out there in the world. As I said, there’s lots of capital out there waiting to be invested in our buildings and our energy systems. In order to do the due diligence to evaluate which investments and which products are really going to succeed, we need much better access to data.
Getting the finance, technology, buildings, and energy communities overlapping and speaking the same language will require a pretty significant evolution of their ability to get access to data that can inform their discussions. That’s been a priority of mine and will continue to be so.
How can the outcomes of California’s efforts impact national or international efforts to reduce greenhouse gas emissions?
It’s very important that we achieve our goals. Historically, California has set audacious goals. Then a bunch of smart people get to work on them, and they start to hammer out the barriers, they start to solve the problems, bit by bit, iteration by iteration. It is a matter of technology, and plugging away and learning and intellectual property development and innovation on many different fronts at once.
We break down a problem and we actually do solve it. The rest of the world looks at that and says, “Oh, well actually, gosh of course. It wasn’t that hard,” but it wouldn’t have gotten to that point if California hadn’t done it. It’s a similar situation now. We’ve got our sleeves rolled up and we’re doing it. I think that ability to show the world that process is really critical.
We’ll get the metrics and we’ll decide whether or not we’ve technically reached our goals or fallen a little short — or gone beyond. There are different versions of the pathway. We can’t see them in a crystal ball today, but I’m very confident that we will get there. I think if actually, if you break it down and take it step by step, it’s not going to be as daunting as it might seem from our perspective today.