Palo Alto’s Bold Proposal to Boost Home Electrification | A new shade of green | Sherry Listgarten

Six years ago, Palo Alto set a goal to reduce the city’s emissions to 80% below 1990 levels by 2030. At the time, emissions were already 35% lower than 1990 with cleaner electricity. But since then, progress has been slow.

In 2019, our emissions were 38% lower than 1990 levels. They were much lower in 2020, but most of this effect was due to temporary changes related to the pandemic. The city estimates that emissions would have been about 42% lower than 1990 levels without the pandemic. Source: Palo Alto 2020 Greenhouse Gas Emissions Inventory
In particular, we have been slow to electrify our homes. For six years the city offered us rebates for installing heat pump water heaters, and for six years we largely ignored that offer. But making this change is still one of the simplest, most cost-effective steps we can take to reduce emissions from our buildings.

This disconnect between climate ambition and results has been frustrating for city council and conservationists. With new analysis in hand confirming that we would need to electrify approximately 1,000 water heaters each year to meet our emissions target, our sustainability staff worked with community advisors to take the reins and craft a proposal that goes way beyond beyond discounts, with the goal of making this Switch as easy and affordable as possible.

The proposal includes:
– Turnkey installation by a contractor supervised by the city.
– $1500 upfront fee (similar to a gas water heater) (1)
– $1,200 in additional charges, either paid up front or via $20/month on the electric bill (0% interest for five years). This cost will be partially or even fully offset by tax credits and bill savings. (2)

Interested residents need only call the Home Efficiency Genie of Palo Alto, who will visit the home, determine the best options, and provide a written report. Customers who want to go ahead can then sign an agreement and schedule the installation. Equipment has a 12-year warranty and labor has a 1-year warranty, although the city is considering a 5-year option for labor.

Owners who want to use their own contractor can do so and will receive a $2,300 rebate, down from $1,200 today. Tenants are also encouraged to participate. About 20% of homes in Palo Alto are rented. Tenants will receive documentation from the city to help them discuss with their landlords the possibility of upgrading to an HPWH.

This robust plan aims to make change as easy, affordable and satisfying as possible for residents. But the proponents are aiming for well over 1,000 water heaters in that first year.

A year of rapid adoption of HPWH will allow the city to gain experience with building electrification, develop promising on-bill financing options, attract contractors to the area, and educate residents the need and feasibility of electrifying their homes. This, along with cost improvements due to increased competition and scale, will hopefully allow for an expansion of the program at a lower cost, as well as a similar pilot project tackling space heating. The 1,000 heat pump water heater installations will also provide the city with the information and experience to draft a requirement that water heaters be replaced with HPWHs in the event of failure.

Two aspects of the plan that the report focuses on are network capacity and cost. Network capacity should not be an issue with this deployment. Since HPWHs have a relatively low power consumption of 300 to 400 watts most of the time, similar to that of a desktop computer, they are expected to have minimal impact on the power distribution system. . By promoting this water heater change first, the city is able to advance its network modernization efforts while making good progress on emissions. Yes, the city can walk and chew gum at the same time!

Costs for this program are higher than the city had hoped, but staff have identified relevant funding sources to cover the planned expenditures of $7.4 million, which include cost and materials, electrical work, necessary assessment and follow-up visits. (3) Residents will pay approximately $1.7 million in initial payments (the $1,500). Another $1.2 million will come from revenue the City has already received from the sale of cap and trade allowances that are issued to our gas utility for energy efficiency and electrification. The final $4.5 million will come from the utility’s electrical special projects reserve, which now has a balance of $29.6 million. (4) This fund will be repaid over time (with interest) from residents’ monthly $20 payments, revenue from additional electricity sold, and revenue from a public benefits fee that the utility collects for energy efficiency and other purposes. . (5)

I find this proposal comprehensive and compelling, offering great help to Palo Altans who want to reduce emissions from their homes. I spoke with many people who would jump on this offer. The city is taking its climate goals seriously, acting on the cost impact analysis it has done, and applying what it has learned from the programs it and other cities have offered to date. Recognizing their experience that rebates are not enough to drive rapid adoption of these devices, the proposal offers turnkey installation by a licensed contractor at a fixed price, with a low upfront cost and zero percent financing on invoice. It allocates substantial funds from relevant sources to support the rapid electrification of water heating and eventually space heating in residential buildings. It doesn’t get much better than that. I think the City can legitimately say “We did our best”. with this program, if the Council approves it.

On Tuesday, September 27 at 7:30 p.m., City Council will discuss this proposal. I hope many of you will listen and speak up, or send a note to city council with your thoughts. This is an ambitious proposal and a great opportunity for us to start reducing emissions from our buildings.

Notes and References
1. Households with justified income will be able to obtain one free of charge.

2. Heat pump water heaters use much less energy than gas water heaters and the total energy bill will be lower once installed. Total savings are greater for households that use more hot water. A home that burns about one therm of gas in a gas storage water heater each day could save more than $20/month at Palo Alto’s low electricity rate of $0.20/kWh. (A gas therm costs about $2. One therm equals about 30 kWh. If the heat pump water heater is 5 times more efficient than the gas version, it will only use about 6 kWh, which would only cost $1.20/day.pump water heaters emit approximately 3.7 times more energy than they consume, while many gas water heaters waste energy, emitting about 0.7 times more energy than they consume, so the heat pump is 3.7 / 0.7 = 5.3 times more efficient.)

3. Unusual expenses such as panel upgrades or water heater relocations will be additional costs to the customer.

4. The staff report explains, “The Electrical Special Projects Reserve was created in 2015 from the Calaveras Reserve, a reserve fund created in the late 1990s to offset potential stranded costs of California’s transition. towards a competitive electricity market. These stranded costs did not materialize and the Board changed the name to the Electric Special Projects Reserve, which was intended to fund innovative utility projects.

5. The staff report explains, “Public benefit funds come from a charge that Public Utilities Code 385 requires local electric utilities to collect from customers, which can be used to fund utility services. cost-effective demand-side management to promote energy efficiency, low-income programs, research and development, and renewable energy. Due to Palo Alto’s low electric rates and the efficiency of heat pump water heaters compared to their gas counterpart.

Current climate data (August 2022)
Global impacts, US impacts, CO2 metric, climate dashboard

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