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Santa Barbara Joins Cities in California Banning Natural Gas:

Last month on July 20th, 2021, the City Council in Santa Barbara voted to ban natural gas in newly constructed buildings. Going all electric sounds like a good thing, right? Except, workers in the construction industry worry how this will affect them. After all, they cannot understand the extent of impact this may have on businesses current operations. Nonetheless, protecting the environment from greenhouse gases is for the greater good and now we all must adjust. Droughts, wildfires, and natural disasters are increasing threats in California. Natural gas in commercial and residential buildings attributes to about 40% of Santa Barbara’s emissions and 25% statewide. Santa Barbara joins nearly fifty cities in California that have gone electric. These kinds of changes are sure to continue as California reaches towards Zero-Net emissions by 2035. All we can do is stay updated so we can acclimate. 

What is the Economic Impact? Resolving Contractors Myths About Electrification:

If business as usual will be affected for you, try not to panic. In fact, fully electrified buildings can be more affordable to build new. Nobody is requiring gas to be banned in existing homes. Rather, builders can bypass the additional costs of installing natural-gas lines and meters. As for energy itself, increased energy efficiency neutralizes electricity costs. Most new homes today are built with electric heating/cooling and appliances already. Electric heat pumps, stoves, ovens, and water heaters are more efficient than their natural gas counterparts. Comparatively, this equipment isn’t much more costly. An electric heat pump is often cheaper to install than a gas furnace! Don’t forget simple solutions such as fireplaces and geothermal home designs. Luckily, builders can take advantage of temperate weather in Santa Barbara. Ultimately, natural gas has become obsolete. 

Also, there are options to providing newly constructed homes with energy. Take solar panels, for example. Since January 1st, 2020, most new homes in California are required to have solar panels installed, anyways. Builders must design solar space based on square footage and climate. Newsom stated that communities with solar panels “are more resilient to power outages, have increased value, and save the property owner more than $15,000 in energy costs over 30 years.” Even if efficient equipment is more expensive than their gas counterparts, builders will also be able to sell these efficient homes at higher value. Plus, new homeowners’ savings outweigh the initial costs. Alternatively, building developers can design community solar projects, as opposed to individual solar panel systems. Although, they would need approval from both the California Clean Energy Commission (CEC) and the local utility company.

Programs Supporting Natural Gas Ban:

If you are still worried, be aware that local and state governments have plans to help subsidize these changes. There are many programs offered to help businesses adjust. For instance, the Department of Planning and Development for the City of Santa Barbara offers a smart build program. They offer free advice from local professionals in the construction industry, as well as incentives. See a complete list of county specific Property Tax Programs.

On the other hand, the California Public Utilities Commission is launching programs offering millions to support electrification. See the table provided below by CPUC for some of their various options. 

Program                               Technology Type   Sector.        Budget                  Description                                                                 Implementation Status

                                                                                             (millions)

Building Initiative for Low emissions Development (BUILD) Program

HPWH
HP HVAC
HP Dryer Induction Stove

Residential

$80

This program will provide incentives to builders to construct all-electric homes. Program funding is pending CPUC adoption.

D.20-03-027 adopted rules andfebFe

program budget of $80 million. Energy Division and CEC staff are developing a program implementation plan.

Technology and Equipment for Clean Heating (TECH) Initiative

HPWH HP HVAC

Residential

$120

This program will provide incentives to HP technology to encourages sales and adoption. Funding is pending CPUC adoption.

D.20-03-027 adopted rules and a program budget of $120 million. Energy Division will issue a program implementer RFP soon.

Self-Generation Incentive Program (SGIP)

HPWH

Residential & Commercial

$44.6

This program will provide incentives for HPWHs, and eligibility requirements of (grid- enabled or not) are forthcoming.

The CPUC hosted a Part 1 workshopon3/19/2020. A Part 2 workshop is scheduled for 5/7/2020. Slides are available athttps://www.cpuc.ca.gov/sgip/

SCE’s ESABuilding Electrification Pilot

(2021 – 2026)

HPWH
HP HVAC
HP Dryer Induction Stove

Residential

$47.5

This program focuses on electrifying existing ESAP eligible buildings is pending CPUC approval.

A.19-11-004. A Proposed Decision is scheduled for issuance in Winter 2020.

SCE’s ESABuilding Electrification New Construction Pilot

HPWH
HP HVAC
HP Dryer Induction Stove

Residential

$21

This program focuses on encouraging the electrification of new low-income buildings. Funding is pending CPUC approval.

A.19-11-004. A Proposed Decision is scheduled for issuance in Winter 2020.

MCE’s Low- Income Tenant and Families (LIFT) 2.0 Program

HPWHs HP HVAC

Residential (Multi- family)

$10.6

This whole building multifamily program would focus on energy efficiency and fuel substitution measures installation in qualifying low-income properties.

A.19-11-007. A Proposed Decision is scheduled for issuance in Winter 2020.

SCE Smart Water Heater Program

HPWHs

Residential & Commercial (Small)

$15

This proposed program will will cover all costs for the installation of grid-enabled controls on HPWHs to enable energy storage.

A.20-03-004

Pending Commission approval. Program planning will commence in 2022.

Total CPUC Potential Program Incentive Funding through 2024 – $435 Million

Incentives (Rebates and Credits):

Tax credits and rebates are also a part of incentives. Space and water heaters qualify for billions of dollars in rebates under California Energy Commission’s energy efficiency programs. Architectures built through December 31, 2021, are approved to receive up to two thousand dollars in tax credits for achieving efficiency standards (per dwelling unit). Another two thousand dollars can be awarded to builders for meeting special requirements specifically in manufactured homes. Of course, the IRS requires certification of efficiency before rewarding the Home Energy Rating System Federal Tax Credit (45L). Renewable energy tax credits are available for fuel cells, small wind turbines, solar panels, and geothermal heat pumps, thanks to the Consolidated Appropriations Act of 2021

On a State level, there is an Investment Tax Credit that offers 10%-30% on renewable energy costs for eligible builders and owners. Plus, loans and grants are viable through California’s Energy Conservation Act of 2001. It doesn’t end there. PG&E is accepting applications for their ReMAT Feed-In Tariff. Recently amended, this senate bills allows renewable energy customers to enter into wholesale electric energy contracts. Bottom line is, don’t be too worried unless you’re a natural gas company. They push the narrative that banning natural gas will be burdensome on the economy and consumers. We must question these assumptions by looking at the larger picture. As a whole, California is making investments towards a smarter more affordable future. 

Exemptions to Natural Gas Ban:

The natural gas ban for new construction takes effect on January 1st, 2022. Meaning, it applies to any permits for pulled from this date onwards. “New construction” includes alterations to existing structures that require more than 75% teardown. However, there are exemptions in this stage. The natural gas ban in new construction does not apply when there is no electricity hookup available at the location. Some commercial instances are exempt such as restaurants, clean rooms, and labs. Lastly, attached granny flats are exempt. 

BarrierEnergy is Here to Help: natural gas ban

BarrierEnergy stays on top of code changes to help you prepare as an owner, builder, architect, or engineer. We are a Santa Barbara local business in the Energy Rating industry. Firstly, we have over a decade of experience to offer consultation. On top of that, we provide certifications for energy efficiency compliance that qualify builders for tax stimulus. Did you know that projects registered with CHEERS are automatically evaluated for energy savings eligibility? We are highly familiar with using the CHEERS (California Home Energy Efficiency Rating Services) database.

Contact us if you are interested in receiving available tax credits. We hope you enjoyed this post and subscribed to our newsletter!

 

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