A New Type of Incentive Program in California...Why This is Important for All Contractors

August 5, 2022 Tonia Hoy

Grid reliability and energy efficiency measures are now more important than ever. From coast-to-coast, power outages are rising, with grid reliability threatening communities from Los Angeles to New York City and even the Midwest, where the risk is the highest.

In California, there were 25,281 grid blackouts in 2019 versus 20,598 in 2018 (a 23% increase YOY). In addition, California forecasted a 4.4 GW electric capacity shortfall for 2022. In response to the blackouts and energy supply shortfall, California's Governor Gavin Newsom proposed an Emergency Proclamation with upwards of $150 million      in funding for the next two years to accelerate the adoption of demand response and energy efficiency measures.

With this funding, the California Public Utilities Commission (CPUC) passed a new Market Access program model that would improve summer grid reliability by providing consistent power with fewer disruptions.

The Market Access program requirements, set forth by CPUC, state that the programs that participate should:

  • Pay for performance         
  • Provide measurable peak savings
  • Be open to any aggregator that meets standard eligibility requirements
  • Pay incentives based on value delivered to the grid
  • Measure impacts using smart utility meters already installed on buildings

Recurve is ideally positioned to meet these requirements with their performance based FLEXmarket program model launched and enrolling projects since 2021. Several of California's utilities and community choice aggregators have already tapped Recurve to implement their Market Access programs in 2022 and beyond. Unlike traditional deemed programs, Recurve's Market Access program pays aggregators for actual changes in energy consumption measured at the meter, with premiums for energy savings over peak summer hours (4-9 pm).

Because incentives payout based on metered performance, a wide variety of measure types and strategies can create value for an aggregator. The possibilities are limitless, from load shifting and behavioral changes to infrastructure investments like efficient HVAC and lighting systems. For example, a lighting project delivering 100,000 kWh in annual savings would earn around $65,000, depending on performance. Unlike single demand-response or energy efficiency rebates, this program pays aggregators for the metered savings of load shifting and energy savings they achieve on specific projects.

Once site eligibility is established, aggregators can forecast incentive values based on their prospective project's expected energy savings. Participating aggregators will also get the added benefit of tracking the energy savings performance of every project they submit to the program, enabling continued business model optimization and measure improvement.

Why is this important for all contractors?

Market Access programs will prove lucrative to participating companies whose projects can deliver actual savings measured at the meter. Unlike traditional rebate programs, there is no predetermined incentive cap - the more savings a project provides, specifically over peak times, the more it will earn for the aggregator.

As we move into the future, this novel performance-based approach to incentivizing demand response will unlock an immense amount of energy use reduction, cost savings, and, ultimately, grid reliability for customers across the country. Additionally, comparable data will validate successes, allowing companies to scale production and market projects to end users.

California is setting a precedent by using actual, calculated results of demand response and energy efficiency measures at the meter, which will be replicated across the rest of the country, replacing traditional rebate programs, and accelerating the energy efficiency transition.

Acuity Brands wants to partner with you to help your company become more profitable and win more business. Acuity Brands has a product portfolio that is built for today (in the form of lighting fixtures, retrofit kits, and wireless controls) to help you unlock the savings this program, and other rebate programs can generate, through implementing a lighting retrofit. In addition, we have a product portfolio that is ready for tomorrow (in the form of network lighting controls) that enables you to unlock additional energy savings in the future.

Please visit our wide range of sustainable products and services on our website. Also, to stay current on the latest product news and industry information, please sign up for our monthly Contractor Corner newsletter today.

I look forward to continuing to bring you strategic topics, like the Recurve performance-based market asset program, that will help you win more jobs and grow your business!

David Errigo, Director of Renovation Sales

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