What SB350 Means for Utilities in California and Beyond

November 9, 2015 By Austin Whitman

Austin Whitman

California’s next big energy law has arrived. Years in the making, the Clean Energy and Pollution Reduction Act of 2015, also known as SB350, was officially passed last month to drastically reduce the state’s greenhouse gas emissions. The bill assures that energy efficiency and renewable energy will be a mainstay of California’s energy strategy and economy for years to come and clears the way toward significant savings opportunities for the state’s energy customers.

By treating energy efficiency and renewable energy as two parts of the clean energy equation, SB350 uniquely and smartly presents a single, coordinated roadmap to simultaneously decrease energy consumption, cut costs and reduce greenhouse gas emissions. This roadmap hands utilities a central coordinating role, outlining the ways in which they should lead their customers toward greater reliance on energy efficiency and renewables. Compared to other state policies around the United States, SB350 sets unusually ambitious, but achievable, long-range targets and puts utilities on point to meet them.

The policy will set in motion a number of data-driven improvements to the way energy efficiency savings are achieved. For instance, instead of looking at energy efficiency’s total impact over the course of a year, utilities will need to explore how energy efficiency measures save energy and reduce demand hour-by-hour. And while utilities will continue to pursue all cost-effective energy savings for electricity and natural gas, they also have to explore new methods for measuring savings based on actual energy consumption, as opposed to standardized estimates. In this way, utilities will make better use of meter data and analytics to improve the results and create more value from energy efficiency.

To do this successfully, utility companies must tap a wide range of tools and programs including energy assessments, building benchmarking, energy rating schemes, cost-effective energy efficiency improvements, public and private sector energy efficiency financing options and public outreach and education efforts — all of which will be improved through analytics and enhanced, intelligence-based targeting. Having regulatory support for expanded investment in these and other customer-focused services will enable utilities to provide even more value to customers through the transition.

Already, many leading utilities use customer intelligence technology to become trusted advisors to customers. By combining advanced meter data analytics and customer profiles, these utilities are able to distinguish between individual customers, tailor their recommendations and track the impacts of energy efficiency and clean energy down to individual buildings.

This approach is key for the post-SB350 rollout. Changes can be evaluated at the portfolio level to provide better intelligence about progress toward long-range SB350 goals. Using data to provide building-specific insights helps customers make smarter energy choices and introduces numerous system benefits, such as lower peak load, increased operational efficiencies and reduced capital investments.

While meeting the ambitious goals of SB350 presents huge opportunities for California and the future of energy efficiency, it will take work. Doubling energy efficiency demands close collaboration and coordination between utilities and customers. Fortunately, utilities will be engaging customers in new and expanded ways, with a goal of bringing them sound and balanced guidance that expands and optimizes their energy choices. Compliance with the energy efficiency and renewable energy goals set out in SB350 will transform the electric system through cost-effective investment in energy efficient and clean energy technologies, creating a low-carbon and highly efficient California.

Austin Whitman is the director of regulatory affairs at FirstFuel Software, where he helps clients use technology to meet strategic and regulatory needs, advocating for  smart energy policy. Prior to FirstFuel, he worked in energy consulting, finance and technology. He has an MBA and MEM from Yale University. 

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