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What’s New for California’s Clean Energy Shift

TECH heat pump water heater incentives

Customer response to the TECH Clean California single-family market rate incentives for heat pump water heaters has been highly positive since launching in late October 2023. Demand was so high that the program paused new incentive reservations for single-family market rate incentives in the PG&E electric service and SMUD service areas by early February. Budgets for single-family equity incentives remain available throughout the state, and TECH noted that they have “…set aside a portion of the budget which will be released at a later date, likely with reduced incentive levels in certain regions.

While there is growing customer demand for heat pump water heaters and these types of incentives, contractors are challenged to plan for and respond to fluctuations in incentive availability. Aligning with program requirements for incentives takes contractors’ investment in qualifying equipment and staff training, and contractors need stable, reliable returns on those investments. There is a clear need for longer-term funding for these types of incentives.

Utility electric line extension subsidies

Starting July 1, California will eliminate the last remaining utility subsidies for new construction of buildings that use natural gas. The December 14 decision by the California Public Utilities Commission (CPUC) eliminates electric line extension subsidies for new construction buildings that use natural gas and/or propane in addition to electricity. With this decision, California is further disincentivizing the use of natural gas in new construction by removing all subsidies associated with the extension of new gas. The CPUC also aims to protect vulnerable communities from future gas rate increases and potentially lower rents due to the lower cost of all-electric new construction compared with mixed-fuel construction. In September, 2022, EFCA’s Advocacy Update covered the CPUC decision to eliminate all ratepayer subsidies for extending natural gas line infrastructure. While these decisions won’t end mixed-fuel new construction, eliminating these subsidies encourages developers to concentrate on constructing all-electric buildings and homes.

Building decarbonization legislation

Ten building decarbonization-related bills have been introduced into the state legislature so far this cycle. In particular, one bill addresses the challenges contractors face from outdated health and safety codes discouraging some customers from electrifying their homes. State Senator Josh Becker introduced SB 1095, which aims to ensure California homeowners can opt for cozier and healthier homes without dealing with issues like legal ambiguities or delays in installation approvals. The bill cleans up outdated building and safety code language inhibiting or delaying home electrification in cases involving Home Owner Associations (HOA’s) and in mobile and manufactured homes.