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A Perspective on TECH Clean California Incentives

Posted by Charley Cormany, EFCA Executive Director

If you are a contractor in California, you have likely heard about the new Technology and Equipment for Clean Heating (TECH) incentive program.

Funded by proceeds from gas corporations’ greenhouse gas allowances (cap and trade revenues), TECH aims to promote the adoption of near-zero-emissions space and water heating (heat pumps) in existing single and multifamily buildings across the state. Along with its sister program BUILD (which addresses new construction), TECH was rolled out to support SB 1477, Stern, a Senate bill passed in 2018.

Bringing the bill to life was a group effort. Of course, we need to acknowledge the author, Senator Henry Stern (D-Canoga Park). There were many supporters, and the Natural Resources Defense Council (NRDC) deserves special recognition for SB 1477 becoming law, as they pushed for support of SB 1477 early on.

We at Efficiency First California are proud to have played a role in this legislation from the beginning. Our Executive Director (me) testified in support of SB 1477 as an official witness when it was presented to the State Assembly.

However, as you would expect with a program this large and ambitious, there have been some teething pains in the rollout of the TECH program. It hasn’t been smooth sailing for all contractors, and we have heard your frustrations.

At Efficiency First California, we deal with TECH every day. We are the Program Implementor for Sacramento’s Municipal Utility District (SMUD) residential rebate programs. We are currently working with the folks at TECH to integrate their incentives into the SMUD rebate workflow. We support The Switch Is On website with our Clean Energy Connection contractor directory. We are responding to our members’ questions and concerns about TECH. Believe me when I say we are knee-deep in TECH.

So, if that’s the case, what’s our take on the program so far? In this post, I’d like to provide a bit of context and present a perspective on TECH that I doubt you will hear from other sources.

Why these two technologies?

According to the California Public Utilities Commission (CPUC), one-quarter of the state’s greenhouse gas emissions are from buildings. The two biggest culprits are natural gas appliances for space heating, think furnaces and boilers, and natural gas water heaters.

The impacts of thermal loads in buildings are why the TECH incentive program concentrates on two specific technologies–heat pumps for space heating (HPSH) and heat pump water heaters (HPWH). Electric heat pump technology has advanced significantly in the past decade. Widespread adoption of electric heat pumps for space heating and heating water is a significant part of the strategy to reduce our GHG emissions statewide.

The basic structure:

There are multiple aspects to the TECH incentive program that you need to be aware of:

  • TECH provides incentives for residential and multifamily residential projects.
  • It only applies to Heat Pump Space heating and Heat Pump Water Heaters.
  • It is a statewide effort to establish standard incentive levels across the entire state.
  • Your local incentive program determines incentive eligibility. If there is no program, you qualify for Baseline incentives. If you are participating in an existing incentive program, you are eligible for the Enhanced incentives. The TECH Enhanced incentives stack (add-on) to the regional program rebates and offer additional bonus measures.
  • Rolling out a statewide incentives program that stands alone and integrates with existing programs is no small feat.

It’s important to remember that TECH is currently a four-year effort. SB 1477 requires incentives to start paying out in the second of the four years. This structure creates urgency, avoids a long, drawn-out design process, and gets TECH money into the hands of homeowners and contractors as soon as possible.

The last statewide incentive program I was involved with was Energy Upgrade California (EUC). EUC had ten years to get things done and, from most perspectives, was not successful. The designers and implementors of the TECH program are trying to avoid the same mistakes.

That said, you may not appreciate the amount of time required to design and roll out a statewide incentive program in one year. It frequently takes months to get contracts and other agreements in place, and then you get to work on the program itself. It would be hard to get the Baseline version of TECH ready in that time frame, let alone both the Baseline and Enhanced programs. Enhanced incentives must integrate into several existing program designs and workflows, adding to the challenge. Each program is unique, and many have different technical requirements than TECH. Data can be an issue, too, as not all programs collect and track the same data.

Rolling out a statewide incentives program is challenging. Integrating a new program into existing incentives programs is even more complicated. It would be fantastic if the TECH team had this all figured out before the program launched. From a practical standpoint, it’s nearly impossible to consider all the potential variables, and there have been a few bumps in the road. TECH is facing uncharted territory, and there are bound to be some hiccups.

If launching a statewide effort is so hard, why bother?

Imagine you sell heat pumps in California. One of your models qualifies for rebates in Southern California, as it meets a code-required efficiency rating of SEER 14 but isn’t eligible for incentives in another region, like the Bay Area. Which unit do you add to your distribution centers inventory as a manufacturer? Choose the wrong one, and you’ll either not have enough supply or end up sitting on the excess stock. Making things consistent across the entire state reduces confusion and simplifies the process for all involved.

The TECH Clean California statewide incentives are more significant than current incentives in almost all cases. Before TECH, many state regions had no incentives for Heat Pump Water Heaters (HPWH). One program offered $1,000 incentives, and another offered $1,500 incentives. SMUD offered the largest incentive at $2,500.

TECH offers $3,100 statewide minimum – more if you are in an Enhanced region. Bigger incentives mean broader adoption of the technology and fewer greenhouse gas emissions. Establishing consistent, well-funded incentive levels statewide is a great idea.

That might not be much comfort to you if you’ve experienced the difficulties we have heard from contractors. If this has been your experience, I remind you to focus on the end game. Take a deep breath, realize what the folks at TECH are trying to achieve, then reset your expectations.

The initial rollout has faced some challenges – that’s to be expected. TECH is a big beast, and there are bound to be some problems getting things up to speed. There will be issues, unanticipated delays, staffing challenges, unforeseen technical details. Currently, TECH is experiencing all of that, which is not a surprise. Rolling out and supporting incentive programs is not easy. The most confusing and challenging part happens early on, which we see today. We anticipate that things will be working much more smoothly six months down the road.

We support TECH and its intentions

At Efficiency First California, we support TECH and its intent. Electric appliances are the most efficient option. The impacts on society from burning fossil fuels can no longer be denied. Any technology that reduces fossil fuel consumption is a good idea. The TECH incentives are rich, and they are promoting the right technologies.

The people behind TECH are doing the right thing and are committed and sincere. They listen to contractors and other stakeholders, are open to suggestions and are pragmatic. I am confident they will get it sorted out in the long run.

Are you looking for more details?

Want to learn more about the TECH incentives? Use this link to overview the program structure and links to other related documents. Want to read a bit more about it? Here is a recent blog by the Natural Resources Defense Council (NRDC) – it is well written and full of details.

Want to sign up?

Are you a contractor and want to enroll in TECH? We have a great deal for you. The Clean Energy Connection (CEC) is a contractor directory developed and maintained by Efficiency First California. It’s free for contractors and customers. We have developed a combined enrollment form that enrolls you in the Clean Energy Connection and TECH with a single online application.

All you need to do is click the box at the bottom regarding TECH and fill out the form.

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