Energy Efficiency, Net Zero & Customer Affordability

Utilities lead energy efficiency and conservation initiatives and programs in their respective jurisdictions across Canada, with a focus on customer affordability and customer experience.

Overview

All levels of Government across Canada, and globally, are promoting Energy Efficiency as key to achieving Net Zero by 2050 because of the cost effectiveness, contributing to the rebuilding of the economy and creates good jobs, while helping customers save money on their energy bills.

Energy Efficiency is at the top of the Federal Government’s updated Climate Plan, A Healthy Environment and a Healthy Economy and is key to achieving Net Zero by 2050. Energy Efficiency is also aligned with “Building back Better: A Plan to Fight the COVID-19 Recession”, creating clean energy jobs and helping Canadians to reduce their energy bills.

Energy Efficiency and affordability were highlighted in Budget 2021: A Recovery Plan for Jobs, Growth, and Resilience. The major announcement is the $40,000 in interest-free loans to upgrade 200,000 homes across Canada, in addition to the focus on supporting low-income homeowners and renters including co-operatives and not-for-profit owned housing. This program is aimed at helping families save costs on their energy bills while helping to reduce their carbon footprint, in addition to contributing to job creation.

The Federal Government’s Climate Plan recognizes “the need to retrofit the vast majority of Canada’s buildings and homes” and states that the Government will work with provinces and territories to adopt a net-zero energy-ready model building code by 2030.” To reach Canada’s 2030 emissions target, we must reduce 44 million tons of CO2 in buildings. The plan targets 312 Mt of GHG reductions by 2030, of which 44 Mt are estimated to come from buildings, 104 Mt from oil and gas, 47 Mt from electricity, 46 Mt from heavy industry, and 12 Mt from transportation.

On May 27, 2021, the Government launched the Canada Greener Homes Grant which aims to provide an investment of $2.6 billion over seven years to help up to 700,000 homeowners improve energy efficiency and reduce energy bills. The announcement stated that homeowners could receive grants of up to $5,000 to make energy efficient retrofits to their primary residences, and up to $600 to help with the cost of home energy evaluations.

For decades, utilities have led energy efficiency and conservation initiatives and programs in their respective jurisdictions. Electricity Canada’s Centre of Excellence showcases some of these initiatives, including Saint John Energy’s Home Heat Saver program which uses thermal images of Saint John Energy’s customers’ rooftops to help them identify the areas in which their home is losing the most heat and the way to fix it. This program allows customers to view a colour-coded Heat Loss Map of their home, allowing them to pinpoint areas that experience the most heat loss. Customers can then compare their home to their neighbourhood and city average. Saint John Energy encourages those with high ratings to consider home upgrades and connects them with money-saving rebate programs.

Saint John Energy focuses on helping their customers make informed decisions to improve their energy efficiency. Similar projects show homeowners are 5x more likely to make improved changes after using their Heat Loss Map. The Home Heat Saver will improve energy literacy in the community and help customers stop paying for unused heat.

Given the various energy efficiency incentive and program offerings for both residential and commercial customers, the risk for utilities are as follows:

  1. New programs will compete with and/or claim credit for savings achieved. For example, if a large building replaces a chiller and the owner is getting funding from various program sources, how do utilities determine where the savings are coming from? Utilities need to rationalize spending and measure results of their energy efficiency and conservation programs to regulators, and therefore need to have an accurate picture of costs and savings of these programs

  2. Application processes to claim energy efficiency savings and rebates are becoming very complicated and onerous, thereby hindering the achievement of goals set out by these program(s) and the overall goal of reaching net zero.

  3. Risk of wasting ratepayer and taxpayer money due to duplication and program stacking.

Shifting to a Greener Economy

The cheapest energy is the energy that is not consumed. Energy efficiency savings of 2,037 PJ in 2017 were equivalent to end user savings of $44 billion.1 Energy efficiency measures are universal, effective, and low cost compared to other options, which helps to mitigate costs being passed onto the customer. Additionally, it is the lowest risk option compared to others such as the build out of large generation or transmission projects.

Customer sentiment is growing in support of shifting to a greener economy. Electricity Canada’s 2020 National Residential Customer survey shows that around 3-in-5 or 61% support electrification, the highest in BC with 68%. In addition to these important shifts, improvements in customer perceptions of price and value of electricity are also rising which further supports Canada’s overall net zero commitments and goals.

Oracle’s global research presented to the Electricity Canada Customer Council on April 21, 2021, demonstrated that 47% of respondents in Canada stated that energy efficiency was important for decarbonization, but also for economic benefit. However, the research also indicated that there is a significant increase in the debt and delinquency in energy bills globally - an increase of 8 to 9 times in bills not being paid. Startingly, Generation Z (18-24 age group) is the group that is bearing the biggest burden of the number of customers not able to pay their bills. In Canada, 27% of Gen. Z customers stated that they have had to reduce spending on essentials to pay energy bills.

Affordability is important when discussing climate change and reaching net zero targets, the burden of new debt is now resting on Generation Z and can directly affect how fast we decarbonize the economy. When asked if COVID-19 has changed perceptions of climate change, 83% of Gen. Z stated that their carbon footprint has become more important in the last 12 months. The initial upfront costs in implementing home energy efficiency retrofits and upgrades are a barrier, however, utilities can play a crucial role in helping their customers understand where they can go to get services economically installed and where to access the multitude of energy efficiency grant and rebate programs available across Canada.

Carbon Pricing and Energy Efficiency

Canada’s Climate Plan includes a plan to increase the price of carbon $15 per year after 2023 to $170 per tonne in 2030. It has been proven that carbon pricing schemes aids efficiency, in addition to incentive programs, policies, and codes and standards.

The Regional Greenhouse Gas Initiative (RGGI) is the first mandatory market-based program in the United States to reduce greenhouse gas emissions. RGGI is a cooperative effort among Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont, and Virginia to cap and reduce CO2 emissions from the power sector. These states sell nearly all CO2 allowances through auctions and invest proceeds in energy efficiency, renewable energy, and other consumer benefit programs. These programs are spurring innovation in the transition to a cleaner economy and creating green jobs in the RGGI states.2

Evaluations of the programs showed lowered customer bills, lowered wholesale prices and the creation of jobs. 50% of the proceeds go directly to helping to reduce bills and helping low- and moderate-income households and communities. In addition, overall emissions have been reduced, half of the reductions are attributed to RGGI, in addition to other policies and programs in the region.

In Canada, Efficiency One in Nova Scotia is on track to contribute 50% of 2020 emissions reduction targets for Nova Scotia's electricity sector, while saving Nova Scotians $475 million on power bills in 2017 alone.3

The carbon price will make energy efficiency solutions more attractive, and revenues from carbon pricing can be used to expand existing energy efficiency programs and create new ones. In Canada, proceeds from the industrial carbon pricing system will start to be collected in the spring of 2021, and the federal government will launch a call for proposals for industrial projects. The current method of using the backstop funds will likely need to evolve to reach new savings opportunities that might be missed through the current application-based approach.4

Programs like FCM’s Community Efficiency Financing Initiative helps support local programs that help Canadians retrofit their homes to higher energy standards. The initiative encourages innovation and programs that are within a local context and focus on local priorities. Programs for low-rise residential properties may build on approaches such as Property Assessed Clean Energy (PACE) and utility on-bill financing.5 As we electrify and decarbonize our economy, it is important to provide universal access to energy efficiency services and weatherization programs.

Regional uniqueness and provincial and territorial needs will determine the path to decarbonization in Canada. The Institute for Climate Choices report states that, ‘some parts of the economy can reach net zero relying entirely on solutions that are available today, while others will require the advancement of technologies still in early stages of development’. With enhanced energy efficiency measures however, all provinces and territories can reach net zero targets more easily.

The various Energy Efficiency programs offered by federal, provincial and territorial governments, major Canadian municipalities and major electric and gas utilities and companies in Canada are housed in Natural Resources Canada’s directory: https://oee.nrcan.gc.ca/corporate/statistics/neud/dpa/policy_e/programs.cfm

Canada’s National Energy Code

Energy codes are recognized as one of the most cost-effective tools for achieving energy efficiency in buildings. Codes are prepared by the Federal Government in consultation with the provinces, industry, and experts, however the adoption and enforcement are provincial and territorial responsibilities.

The building code was updated in 2020, along with the National Energy Code for Buildings (NECB). The updated Climate Plan states that there is a need to retrofit the vast majority of Canada’s buildings and homes and states that the Government will work with provinces and territories to adopt a net-zero energy-ready model building code by 2030.

Achieving Net Zero by 2050 is ambitious, complex and will require strategic policy action to help stimulate broader technology uptake, in addition to targeted program support. An example of this is Net Zero Energy Homes; homes that produce at least as much energy as they consume on an annual basis. Net-Zero energy homes are technically feasible, but not yet scalable or affordable for the average homebuyer. The costs are falling however, and net-zero energy homes may eventually become common.6

The Affordable, Replicable and Marketable Net Zero Ready Multiple Unit Residential Buildings project led by the Canadian Home Builder’s Association with Natural Resources Canada’s support will build up to seven demonstration buildings (over 100 residential units) across four provinces, covering all major Canadian climate zones. The homes will be net-zero and affordable, with the following benefits:

  • Shifted consumer spending from utility expenses to investment in home equity
  • Reduced energy bills
  • More comfortable homes with less drafts and cold/hot spots
  • Improved indoor air quality due to improved ventilation and balanced humidity
  • A quieter home with reduced infiltration of outside noise pollution
  • More resilient homes during times of extreme weather events
  • Homes with a negligible negative impact on the environment
  • Increased resale value

Energy Efficiency Standards Development and Implementation

Standards support federal energy efficiency legislation and regulations and support market transformation by raising the bar on products weeding out poor performers, the Energy Star Program is an example.

Electricity Canada works with members, the federal government and the Canadian Standards Association to guide and fund standard development and publication of energy efficiency standards solutions related to demand side management and conservation and climate change mitigation.

Currently, standards are being developed and include the following:

  • Thermal Bridging Methodology - development of a new standard to define a consistent methodology to estimate the energy impact of thermal bridging on building envelope heat loss and heat gain.
  • Energy Modelling Guide –provide methods for modellers that result in an ‘as accurate as possible’ energy model. This goal can best be achieved if the guideline is a ‘living document,’ changing and growing as increasing amounts of information and better modelling methods become available.
  • Energy performance rating for large and single packaged vertical ACs and HPs -update the standard to reflect reference to the latest AHRI and ASHRAE standards as well as the 2023 efficiency metrics and add the efficiency requirements that are not included in the C-746 standard.
  • Energy Performance of Electric Vehicles Battery Charger (Electric Vehicle Supply Equipment) –quantify the steady-state operational energy performance of DC Fast Charging equipment for various modes of operation under various temperature and loading conditions. The scope is to cover only AC three-phase (less than 700V) powered EVSE for DCFC between 20 kW and 350 kW of rated output power.

Sources

1https://www.nrcan.gc.ca/science-data/data-analysis/energy-data-analysis/energy-facts/energy-and-greenhouse-gas-emissions-ghgs/20063

2https://www.rggi.org/

3What We Do - Efficiency One

4https://www.efficiencycanada.org/blog-16-ways-climate-plan-advances-energy-efficiency/

5https://fcm.ca/en/programs/green-municipal-fund/community-efficiency-financing

6https://www.nrcan.gc.ca/science-data/data-analysis/energy-data-analysis/energy-facts/energy-and-greenhouse-gas-emissions-ghgs/20063