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SR-510-006 (6) . . ~-:- j) S/~-C06 TO: Mayor and Clty Council NOV 1 1 1980 58 FROM: Robert B1 umberg NOV 2 5 1980 DATE: November 10. 1980 SUBJECT: Agenda Item 5D Attached is the Summary to the Santa Monlca Municipal Solar and Conservatlon Utility Report. . . s/o-oo~ SANTA MONICA MUNICIPAL SOLAR AND CONSERVATION UTILITY THE RESIDENTIAL SECTOR: OCTOBER 1980 SUMHARY This report studies the feasibility of a municipal energy program which would actlvate the conservation and solar energy potentlal In Santa Monica's residential sector. The energy program would util1ze the lnherent strengths of local government to overcome existlng barriers to conservation and solar energy resources. A set of services to accomplish this would be unlfled withln a Santa Monica Municlpal Solar and Conservation Utility. BACKGROUND (CHAPTER II) Local condltions WhlCh influence the design of a Santa Monlca Munlclpal Solar and Conservation Utll1ty include: o Populatlons 80~ renter; o Large low- and moderate-income population; o 45,539 total dwelling unlts, 35,086 multi-famlly rental units, 7804 s1ngle-family homes; o Mild weather condltlons, annual average temperature of 62oF; o ReSldentlal sector accounts for 53.1% of total Clty natural gas and electric consumption; o Space heatlng comprises only 21.6~ of residentlal end-use due to mlld weather, whlle water heatlng accounts for 43.4% of end-use; and o Utllity gas and electric prices escalatlng rapidly and will contlnue to rise. Conc1usions that can be drawn from thlS reVlew of local condltlons are that a Santa Monlca ~uniclpal Solar and Conservatlon Utillty should: NO~ 2 ~Io -.!J- ~ NOV 1 1 1980 . . o Focus on multl-family sector; o Emphasize special needs of low- and moderate-income populatlon; o Prloritize solar and conservation optlons lmpacting water heating energy needs. COST EFFECTIVENESS AND XARKET POTENTIAL OF CONSERVATION AND SOLAR WATER HEATING (CHAPTER III) Conservation and solar energy can supply a substantial portion of Santa Mon;ca1s residential energy needs at a lower cost to the consumer than tradlt;onal energy fuels. Through wldespread lmplementation of seven basic conservation measures~ total energy consumption in Santa Monlca's resldential sector can be reduced by 14.3%. The measures are easily lnstalled, entail no structural modlf;- catlons to the bUlldlng, and require no change in consumer behavior patterns. They are: o Hot water tank thermostat setback o Hot water tank insulation o Hot water plpe lnsulation o Low flow showerhead o Ceiling insulation o Weatherstrlpping and caulking o Replace incandescent llght bulbs wlth fluorescents City-wide energy and dollar savings and the portion which would be realized by each resldent;al customer group (single family homeowner, multl- famlly owner, multifaml1y resldent) are estimated as follows: _':;.1- """":. ____~~--:_ . . TABLE IILI CONSER-VATION ~tARKET POTENTIAL CITY OF SA~TA ~CNICA RESIDENTIAL SECTOR Energy Savings Potent,al Sav,ngs (Mlllion BTU's) 1980 S,ngle Fa:r,ly Multifam,ly (Resident,al) 150,700 211,073 S 529.462 775.670 ~ult,family (Owner) 65,5.17 40270.14 TOTAL 427,320 $1. 707,176 1979 Resldent1al Consumpt,on 2,987,516 (M,ll,on BTUrs) Potential Sav,ngs 427.320 (Mill,on BTU's) Percent Sav,ngs 14.3"; 1979 Consu~pt'on per Owe 11, ng (45539 dlve 11, ngs) 65.6 (41ll1on BTU1s) Number of dwell,ngs that could be served by conserved energy 6514 Dwell' n9S ~~~-~- +--~--- . . From the perspective of the consumer, the conservation measures are extremely cost effectlve; the utility bill savings repay installation costs withln three years in almost all cases. Maximum implementation of solar water heating, the most cost effective and feasible solar applicatlon in a bUllt environ~ent, can supply an addi- tlonal 7.8% of residential energy requlrements in Santa Monica. The Culifornia Energy Commission estimates that solar water heating systems could serve 60% of the existing single family dwelllngs and 30% of the eXlstlng multifamily dwellings in thlS area. The savings which would result are prese~ted below: M~RKET POTENTIAL OF SOLAR WATER HEATING RETROFIT Existing Solar Energy Savlngs Potential Savings Dwellings Penetration (Hill ion BTU's) 1980 Swgl,e Fa1"'J11y, - Gas 7,024 4,214 82 , 173 $ 213,650 El ectri c 780 468 5,932 85,192 I. t.tul tifarli 1 y Gas 32,715 9,815 133,975 468,912 Electric 3,635 1,090 9,670 232,388 TOTAL 44,153a 15,587 231,750 $1,000,142 Reduct1cn 1n 1979 ReSldential sector energy consumptlon: 7.8%. . . Results from a recent Energy Commiss1on study show that solar water heat1ng is more cost effectlve on a llfe-cycle baS1S than rellance on convent1onal fuels. Solar water retrof1t 1S found to be especially cost effective in multlfamlly housing. Dlsplacement of natural gas and electriclty through maX1mum feaslble imple~entatlon of conservation and solar water heatIng 1n Santa non1ca's res1dentlal sector amounts to the equivalent of 108~OOO barrels of 011 annually. FIrst year saVln~s to residents at 1980 pr1ces would be $2.7 m1lllon. UTILITY PROGRAMS (CHAPTER IV) Two utlllty programs Intended to assIst residential customers employ solar water heatIng and consersatlon measures promIse to have a maJor Impact on the des1gn of a Santa Mon1ca MSCU: 011-42 and the Resldentlal Conser- vatlon Serv1ce. Summary of 011-42' o ~andated by state Publlc Utllities Comm1ssion; o Requires state's investor-owned utllities to offer $132 millIon 1n solar water heater financ1ng over the next three years; o FinanCIng from Soeal Gas wlll be: --6% long-term loan for single-fam1ly homeowners; --ut1llty credlts (rebates). 520.00 a ~onth for 48 months for slngle-famlly homeowners; --utIlIty credlts of 58.00 a month per unIt for 36 months for multI-family owners. --syste~ purchases for small number of low-lncome owners. o FinanCIng from SoCal Edison wlll be: --utlllty credIts indexed to the prlce of electrlclty for slngle-famlly homeowners. . . Slgnlflcant for Santa Mon1ca's program is the absence of dlrect financlng for multl-famlly property owners, and the program1s first-corne, first-served basis. A Santa Monlca MSCU could: . Promote 011-42 flnanclng among residents; . Negotlate w1th local lenders to facllltate loans for 011-42 utll1ty credlt rec1plents; . Provide direct flnanclng for property owners rece1vlng ut1l1ty credlts; . Negot1ate wlth the utl11ties and the cpue to secure Santa Monlc'a pro rata share of 011-42 financlng. Summary of Resldentlal Conservat1on Servlce . Mandated by Congress; . Requlres ut1l1t~es to offer residentlal customers on-slte energy audlt upon request; . . Cal1forn1a Plan for RCS def1nes el191ble customer as single-famlly homeowner, mult1-fam1ly property owner, and tenants in bU1ldlngs of four unlts or less, . Cal1forn13 Plan encourages utlllt1es to contract w1th local governments and commun1ty groups to provide RCS. An evaluation of the Californ1a RCS shows that 1) convent1onal energy aud1ts do not produce hlgh rate of conservat1on actions on part of consumer; 2) Ca 1 iforni aRCS def; n1 ti on of "e 11 gl b 1 e eus tomer" excl udes major1 ty of Santa Monica residents., Santa Monlca has several opt1ons in participat1ng 1n the lmplementatlon of the ReS. o Cooperate w1th and promote the ut11ities. ReS; o Contract w1th the utll1ties to provide the ReS. o Support local communltj orga~lzat1ons 1n contracting wlth the ut1l1t1es to prov1de the ReS. . . PROGRAM COMPONE~TS (CHAPTER V) The component services from which to fashion a resident1al energy program Include: Information, the energy audit, finance, installation and consumer protection. For each component, barriers speclfic to Santa Monica's resldent,al sector are: . Information There is a need for a centralized, credible source of energy infor~at'on for the indlv,dual consu~e~. Ra~ld chcnge in energy po11cy and program, in both the prIvate and public sector, and the growing and sometimes confl'ctlng volume of energy informatlon creates uncer~alnty ,n cons~mer att1tudes and con- sumer declsion-mak1ng. . Audit . The role or the trad1tional energy audit In conser- vation programs has been called Into question. Energy audlts alone do not seem to produce a hIgh rate of conservation actions on the part of the con- sumer As an alternative, the audit can be coupled with 1mmed,ate Installation of simple. hIghly cost effective retrof1t measures 1n a single slte-v'Slt. The l~m1ne~t lmplementat10n of a Resldent1al Con- servatlon Service audit program by the utlllt,es makes this a prlor'ty quest1on. In add1tlon, the exclus10n of tenants ,n buildings of f1ve un1ts or more (a major,ty of Santa ~onlca residents) as lIe 1191 ab 1 e cus tamers II for the ReS presents a seri ous dilerrma to the C1ty'S conservation efforts. . Flnance The lac~ of adequate financIng for solar and conser- vation retrofits remains a pr,mary barrier to the Widespread ut1l,zat,on of these al~ernative energy sources. ~hlle OII-42 Drovldes some relIef for the solar market. d,rect flnanclng for the multi-family sector IS not Included in th,s progra~. Cash out- of-pocket and the conventional ho~e ,mprovement loan . . are currently the only means of financing conser- vat10n measures. . Installation No businesses currently ex1st which speciallze in the lnstallatlDn of energy conservation measures. The solar 1ndustry remains somewhat unstable, though a core of reputable firms have e~erged over the past few years. . Consumer Protection Lack of consumer conf;de~ce in the solar and con- servation market cont1nues to be an obstacle. The consumer needs actlve gUidance and protection 1n the relatively new solar and conservation market- place. While so~e statewide programs have begun to address thlS prcb1em, consu~er protection also requires progra~s at the regional and local levels. Local government has the capacity to overcome ~ost. if not all, of these barriers. The CltylS credibil1ty within the community and its access to capital are the means for shaping a bold municipal energy pragra~. Two prograrrroatlc alternatives are presented in thiS sectiOn: the Fac1litatlon Mocel and the Direct SerVice Model. Both models provide the cOMmunity with a package of serVlces designed to overcome the maln obstacles to solar and conservation energy utilization by the City's residentlal sec- tor . . VI.1 FACILITATIon P.10DEL The obJectlve of the FaCilitation Model is to simol1fy and exnedlte the consumer's ent~y into the solar and conservation market. Three baSiC serVices are ce~trallzed under the ~SCU to accomDlish this: ;nfor~ation, financing, and consumer orotection. The Facllitation ~odel places maXimum reliance on utilities and private buslnesses for the provlsion of energy audit and installation services. As the name imolies, the FaCilitation Model can be characterized as a marketi~g approach. The ~SCU will develop programs to overcome market deficiencies hi~dering solar and conservation ,mplementat1on 1n the reSidential sector, specifically, (I) adequate and readily available financing, and (2) consumer protection. Figure VI.1 describes the flow of ,nformatlon and services between the const1tuent MSCU programs under the Facl1itat,on Model and the ~tilitles, Santa ~onlca's reSidential sector, and pr,vate firms. Table VI.3 lists the start-up and major ongOing actlvities ,n which the MSCU would engage. The co~ponents of tre Facllitatlon ~odel, which have bee~ delineated l~ the preceding chapter. are summarized below. Info matl on . An information Bank will be mairtaired to provide t~e consurrer 'In th the most up-to-date i nformatlon cn CCrr'.mer- clally avaIlable solar and conservation energy systems and technologies, available flnanclng {utlllty, MSCU, conventlonal}, State and Federal Tax policies, etc . Consumer education will be conducted through wor~shoDs, distributlon of dO-It-yourself and general informatlon kits, and targetted mal lings. ~ :i !!i 1l1~ -L rW ""z _-(1) 2l ;! l:) ~ z~ (f) ~ tii uJ ::E:::i 1 >- t- :J i= :J ~ F ~ c:::...J .q:L:JW U ell Cl _zo < r- 60::: u ........ ..,..u .,.. >- ~ 0- OZ :::=-' w z2 0 c:: <m ::J ~ <r!- t:-= t!:l < ~~ ...... zc:::t: .::: I.l- <(<:...J ({) (/)...J- OU mLE ...J a: u z ~ :i: 0:: W a: :> ~ " ~ :> z <t :::; en '0 ~ us c::: CL.w~ cu~ o~c ~z u: \ v \L.I U Z <:. z u. 1'~ I~ :< c:: c 1.1.. ~ zl ~ 2[- wD!- ~::::~ c::l 0:<01 C!:CJ) c.:! 2 (i,) uJttJ :::. a.'1 r::~ ~ wo- r2 I-~ :> gj CJ) (f)U~ . \L. ~ 0 Z ZCl) - QWii'! 4: ~u I zC cr3~5 \ en -:E ..JS a; <: ... w g >\>) c:: I.IJ :> en~ Z o::U >- 0 0< I- ..... .....lJ.. ::iO< u:> _ <<: 4:~ 0:: ~cnr.::I-C::::::: c)1-0:> I- 0 :J(/)I.J...ozQ I- w::::izco- U _<tu<t W ([) ....S2 o~ i.:JO c::::Z _UJ c...J ...J ffi ~ ...J ~'l!:: <( -- ::E ~- <. cn8G z Q:> >- (f) I-ul-w ~(;)::::i!d -...:: ->- 0-1-c:: &: u.. ::l 1:..1 oa1<J) ~ I ~~~ u... Z ""'" ou'! .= i=ln <iW l-"""""U) :::l: ::l t:..l 0:: a o u o~:..I u.a: u.~ ~5 ~ (J) ------ z fn C :: ~ ~<t u. -~ l:: o <~ o z~ ::: i:i: CL. -L ~ (I) ~') oJ 0:. t=::! 0 ~f5~~ 5~ E w:E ~ z JO qj::W o::qU f-~a: z~~ WOO UlL.(f) ~ -1 <( I- Z W o (r) W Ct: <( u! 51 :2: ~I Z <( U1 c50 zz i: :J en..J ~~;!~~ :t:C": eo v ~c::: ell c:; >-1.IJC!lu... I-~I-:::)Jl.. -2 tn<t o:>z wu<(zz C::lio<<i U ...J 5:: 6' g. .r1.I~' -..----"-' . . . The ~SCU will promote energy programs and SerY1CeS that will beneflt resldents. . MSCU lnfor~atlon serVlces will provide the communlty with an ldent1fiable, aecessible and credlble source of energy lnfonnatlon. Finance The nucleus of the Facilitation Model is a MSCU Direct Lending and F1nance Progra~. It will include dlrect lendlng, small conservation grants, and a modified conventional loan program. By select,vely applYIng financ,al incentives the MSCU will attempt to activate the residential solar and con- servation ~ar~et. The Direct Lending apd rinance Program. which is co~on to both the Dlrect Service anc Facilitation Models, is descrlbed In-depth in Section VI.3. The rationale for a municipal finance prograQ includes: . Solar and conservat1or loans can be made at below- market Interest rates while allowing the City to recover its funes. . Loan terr;s and condit1ons can be designed whlch Will prove attractlve to varlOUS market segments wlthln the COf11llU01 ty . . Subs1dles can be effectively extended to low and moderate irco~e residents, who are the most vulner- able to rlslng fuel costs. . Special procedures can be developed to encourage sol<1i~ and conservatlon enel'gy investments in the multi-family sector. The finance program wlll allow the MSCU to ma~imlze the availablillty of eXlstlng subsidies (e.g., 011-42, Solar and Conservatlon Sank) to Santa MOnlCJ'S property o~ners Property owners receivlng MSCU finanCing wlll also be assur"ed the full benef1ts of State and FederJl tax credlts. In addltlon to dlrect flnanclng, the MSCU Will develop, along wlth local lend- 1ng Institutions, finance pac~ages WhlCh enlarge the role of lnstltutlonal . . lenders ,n solar and conservatIon flnanclng. Consumer Protectlon Consumer protectlon serVlces wlll allow Santa Monicals residents to proceed in conf,dep,ce with alternative energy investments. . El1gicll1ty criteria wl11 be established and mainta~ned for particl~ating contractors and manufacturers. Quality parts and servicing will thus be assured to MSCU custoDers. (The el1gibi1ity program could be ccnducted in conJunction with nelghborlng citles.) . Access to State programs, lncluding warranty assurance, will be provided. . Post-installation lnspections would be perfor~ed ty trained bUlldlng lnspectors. . Where ap~ropriate, the MSCU would medlate consu~er-con- tractor or consumer-manufacturer disputes. . Infor~ation about orivate fir~s, obtained through ~SCU operatio~s, will be evaluated and made aVcl1able to con- su~ers. . . VI.2 DIRECT SERVICE MODEL Under the Dlrect Servlce Model the MSCU provldes resldents wlth energy auclts and) upon request) installatlon of baslc conservatlon measures in addltion to the services offered In the Facilltation Model (lnfor~tlon, finance, and consumer protection). As with the ~acl1ltatlon ~oGel) the MSCU ~11l not lnstall solar water heating systems. The maJo~ advantage afforded the MSCU by the Direct Service Model 1S that services can be coordinated and offered to the residential custo~er at the tlme of the site - ViSlt. In this model the MSCU would contract wlth the utilities to perform the Resicertial Conservatlon Service energy audit. Following, or as part of the audit, ir.s~211atlon of basic conservation ffieasures woulc be per- forr;ed. Since contract fees obtalned from the util1tles would cover the cost of conducting the audit, custor.ers would pay only the lncremental lnstallation charges When desired, flnanc1ng ~ould be arrcr.ged at the tlme of the audit/lnstallation. F1gure VI.2 deplcts the lnteractlon between utillties) Santa ~onlca's resldentlal sector and the MSCU in the Direct Servlce Model. There are several rab Dlla 1 es fer 1 ntegratl ng the vari ous '.lSC:J serVl (:2S lnto a "one-step" appnBch: . The Clty can set and ach~eve speclflc goals for reductlon of energy consu:;jptlon througls an act' 'Ie aud,t and ln~tallatlon serVlce. The context of an energy JUdlt and tile dlrect personal contact that lt entillls ~'1111 allo';J the nscu to lnd,v1duallze lts servlces on a case-by-case baSIS. . Installation fees can be minlm1zed through (1) bulk purchase of rlatonal".) and (2) reCGV2nr:g Jdif;1:1IStl'Jtiv~ and ov~rhead costs through RCS contract monlCS obtalned from the utilIties. . The Clty wo~ld Install a package of highly cost effec- <t C\l~ Z _0 >::E ~<t ::::>1- C)Z -<J: 1.L..r.n -:'~_-__.o- -~, . -~---- - - >- I- :J I- ::::> z o I- ~ .J a: W w 8 ~ ::E o u w u > e:: w CI) I- u w a: o o z <r e::: <t: .J o en .J a: u z => :E . c:r u z 0::> ::Eo U) ;:!~ z <( if) Z oz j::O ~j:: a::ot w-J f/)-J zt! om uz 81 g l <t z u. z o ~ < :!: c: o LL. ~ '> Zen Oz 1=0 otU(f) -J UJ ..Joe::: ~-::> ~V)(() U)<t<r. zalw -cD::=: V1 0::: o ~ LUU ~<t -- ot 0: >1- -z 0:0 o..u ZZ _00 ....I=i= ~<( a::o:.J <clLl-J -J(f)~ ~5(f) u~ VII- u- IrCl ::> < (f) UJ I- -J ~ ::> w w VI ~ -J Ul C o ..... :E Z I o - - > ~ t: ~ -J ::> U C) it u: VI <C w :E ~ . z~ e~ ~I.LJ gC) O:::Z ~~ zo :r: O-J !::: U-J ~ uO _LL. ~ (/}UJ u~<(-J C::;:OlXlQ) cr::> lL <( I- <t 0 .J Z - o (I) <t uu~:;; Oz 0:- 1-0 I-u> - ~~ j~ ;i~ ~_ ::> a::o: :J>c(Cf)}-a:w _ 0 I- _ _ W ,^ I- c:: m .... C Ll.. u, ::Jll..~~::>w~ <(o:u C\I o ~ ::l U m ::E 0: o I- U w (f) c::r <.) Z o ~ <! I- Z c:r en o z < Ir <C ..J o tI)(I) a:: wO 1-1- <(U 0::<( 00: 0:1- R:5 c(U It) . . tive conservation measures, as determined ,by ~he audit. No busInesses currently offer a similar servIce. . The C1ty can maIntain quality control over audits and installatIons at the point of servIce, rather than through exter~al regulation. . The City has greater self-interest in actIvely market- ing and imple~enting energy audits and conservation installatIons than the utilities. The additional services included in the Direct Service Model are SUM- marized beloH. Enerov Jludit __ .....J The MSCU will contract with Soeal Gas and the Edison Company to per- fOrTI the ReSldentlal Conservation Service Audit. A Housedoctor format would be employed, co~blnlng installation at the ti~e of the audit. In the nu~tl-fanlly sectcr, ten1nt partlcl~atlon would be gaIned through on- prem1se wor<shops, owner or manager participation WIll be important durl~g the bUIldIng aud1t to secure lnvolve~ent for installation and financing decislons. The audlt would also determ1ne the feasibIlity and cost effec- tlveness of solar retroflt,and conservation retrofits which requlre struc- tural alterations to t~e bU11dlOg F1ndings would be d1scussed with the reS1oe1t1al property owner and referrals to approprlate contractors glven Installation Upcn approval by the propet ty O"Jllc:r or man~ser the ~,lSCU \-1111 Install .' baSl c conser'Ja tl on neasun:s In d'iJe 111 ngs and cowmon areas (mul tl-fannly) wfllci] have been asccrtJ.ined througtl a pno}~ aud1t to be cost effect1\:e. 3: w ...... M> . c:: .....W :7> o w -1:2: C:l< -.d:: a:: J-CJ o c:: 0.. V') W (!) Z ...... o (!) z o ...... J- ...... :> ...... 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