HomeMy WebLinkAboutCED Ordinance Amending Green Building Codes____________________________________________________________________________________
FOR CITY CLERK ONLY
Council Meeting: May 20, 2024
Disposition: Waived further reading of the Ordinance and referred to it by title only, and
introduced the Ordinance
Agenda Item: 5.a
Meeting Date: May 20, 2024
SAN RAFAEL CITY COUNCIL AGENDA REPORT
Department: Community Development
Prepared by: Don Jeppson, AIA CBO
Chief Building Official
Cory Bytof
Sustainability Program Manager
City Manager Approval: ______________
TOPIC: ORDINANCE AMENDING GREEN BUILDING CODES
SUBJECT: AN ORDINANCE AMENDING TITLE 12 (BUILDING REGULATIONS) OF THE SAN
RAFAEL MUNICIPAL CODE, BY AMENDING THE CALIFORNIA ENERGY CODE, THE
2022 CALIFORNIA GREEN BUILDING STANDARDS CODE FOR ELECTRIC VEHICLE
CHARGERS, THE 2022 CALIFORNIA MECHANICAL CODE, AND THE 2022
CALIFORNIA PLUMBING CODE; ADDING A NEW CHAPTER 12.360 WITH
ADMINISTRATIVE AND PROGRAM REGULATIONS ON MODEL REACH CODES;
AND ADOPTING FINDINGS OF FACT SUPPORTING THE AMENDMENTS TO THE
CODES.
RECOMMENDATION:
Waive further reading of the Ordinance, refer to it by title only and introduce the Ordinance.
BACKGROUND:
The State of California Code of Regulations Title 24 construction codes are updated and published on a
three-year cycle. The California Building Standards Commission publishes the triennial codes, and State
law mandates that these codes become effective throughout California 180 days after the publication
date. The current cycle of State construction codes became effective on January 1, 2023. Local
jurisdictions are permitted to further amend the published codes to address local climatic, geological, or
topographical conditions. On November 21, 2022, the City Council adopted the Title 24 State Building
Code in its entirety with minor amendments.
Each three-year code cycle, the State also updates the Green Building section of the Title 24 codes and
provides potential Green Building “reach” codes to local jurisdictions that go above the State code. These
reach codes are encouraged to adopt more stringent local amendments to help drive greenhouse gas
(GHG) reductions and inform future State code updates. Often, these more stringent reach codes include
stronger energy and water efficiency requirements, among other things. On December 5, 2022, the City
Council adopted local green building reach codes requiring enhanced electric vehicle charging
requirements for new construction as well as requirements precluding the use of natural gas in new
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2
residential development and precluding natural gas line extensions and expansions in existing residential
properties, among other things. Due to the 9th Circuit decision in the California Restaurant Association
v. City of Berkeley case, staff recommends repealing those portions of the code precluding the use of
gas in new residential development and precluding gas line extensions and expansions in existing
residential properties, among other things. The proposed ordinance reflects these changes.
The State develops “intervening codes” mid-way between the three-year code updates, which typically
have minor adjustments to the codes for various reasons. Those intervening codes automatically go into
effect halfway through the code cycle without any action required by local jurisdictions. However, on
occasion, these intervening codes are more significant, as is the case this year. Staff recommends
updating our local codes to reflect some of those changes since some of them affect the City’s electric
vehicle reach code.
Finally, when the City Council adopted the last round of green building reach codes in 2022, staff was
directed to analyze reach code options for existing buildings since the City is mostly built out and will
need to address emissions from its existing building stock to meet Climate Action Plan goals. Staff has
been researching and developing an existing building renovation reach code with the help of community
members, including representatives from our Planning Commission and Design Review Board.
The proposed ordinance would amend Title 12 of the City’s local Building Standards codes to include
these new reach codes and make minor adjustments to the new State requirements to accommodate the
City’s existing electric vehicle charger requirements, which are in some cases more stringent than the
State. These amendments would also remove the prior natural gas prohibitions in the City’s previous
reach code since a legal challenge occurred in the interim that now precludes such a requirement. This
challenge was to the City of Berkeley in which the 9th Circuit Court determined that Berkeley’s prohibition
on the installation of new gas pipeline connections was preempted by federal law. By extension, this
applies to all local jurisdictions, including San Rafael.
Attachment 1 is the complete ordinance being proposed. Below is a brief summary of each of these code
areas to be amended:
2022 Green Building Standards Code for Electric Vehicle Chargers: The provisions of this
code apply to the installation of electric vehicle charging infrastructure, including equipment,
fixtures, and fittings, including receptacles, charging equipment, software, and load management.
New chapter 12.360 – Single Family Model Reach Code – FlexPath: The provisions of this
new chapter of the code specify additional energy efficiency and renewable energy measures for
additions, alterations, and remodels of Covered Single-Family Projects.
After the introduction of this ordinance and public hearing, the ordinance would return to the City Council
for final adoption at the next regularly scheduled meeting on June 3, 2024. After final adoption, the
ordinance with these code amendments would be effective as soon as approved by the California Energy
Commission, sometime after July 1, 2024, and most likely before September 2024. Building permit
applications filed with the City prior to the effective date would not be subject to these amendments, nor
the gas line prohibitions in the previous reach code.
ANALYSIS:
The staff recommendation requires amendments to four sections of Title 12 of the San Rafael Municipal
Code as described below.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 3
California Mechanical Code and Plumbing Code Amendments.
The purpose of the changes to the California Mechanical and Plumbing Codes is to remove from Title 12
previous amendments prohibiting gas on new construction and limiting gas expansion on existing single-
family dwellings, thereby returning the codes to their base original language and requirements. This
proposed ordinance adds language to Title 12, indicating that the City has no local amendments to the
California Mechanical or Plumbing Codes. This method and format of indicating in Title 12 building codes
that have not been amended specifically helps the community to identify clearly what has been amended
or not amended by the City. This format and method have been used in the last two State code cycles
and has been supported by the community.
California Green Building Code Amendments
The purpose of the changes to the California Green Building Standards Code Amendments is to
incorporate new intervening code requirements for electric vehicle charging infrastructure into our local
electric vehicle charging infrastructure reach codes. Since our local reach codes are more robust in some
cases and we refer applicants to our local code this will make it easier to administer for both applicants
and staff.
California Energy Code Amendments
The purpose of the changes to the California Energy Code is twofold. First, this amendment removes the
City’s prior reach code amendment that disallows gas infrastructure in most new construction and
additional gas infrastructure for existing single-family homes. The second purpose of these changes is to
reduce the greenhouse gas (GHG) emissions associated with the renovation of existing single-family
homes, including town homes and duplexes, by requiring additional energy efficiency measures for
projects over 500 square feet in size. The requirements would apply to larger projects that often trigger
a variety of codes, including mechanical, electrical, and plumbing. These extend far beyond a typical
bathroom or kitchen remodel and instead apply to things like additions and renovations of multiple rooms
in a building. They would also apply to accessory dwelling units (ADUs) but not to junior accessory
dwelling units (JADUs) since ADUs are greater than 500 square feet.
Staff recommend a new approach, called the “Flex Path”, whereby project applicants will have the choice
to select from a table of measures that reduce energy use in buildings. This can be found on page 5 of
the ordinance labeled as Table 12.360A. To comply with this policy, an applicant will identify the required
target score that applies to their home’s construction year at the top of the table. Then, they are free to
install any combination of measures from the table that adds up to that required target score. These
scores were developed with the assistance of two local architects and builders who have served on the
Planning Commission and Design Review Board. The target scores were set to ensure that projects can
meet the totals easily enough without having to choose electrical appliances while also ensuring
significant energy savings and, in most cases, ongoing utility cost savings as well. These cost savings
are demonstrated in Attachment 2, the California Codes and Standards Cost Effectiveness Study. The
Codes and Standards team also developed a Frequently Asked Questions document, which can be found
in Attachment 3.
The proposed new reach code for existing building renovations is similar to those adopted by the County
of Marin and the Towns of Fairfax and San Anselmo, with some differences to better meet the needs of
the City’s residents and building community. For example, San Rafael’s target scores are slightly lower
than those of the County. Also, San Rafael maintains the State-recommended building vintages and
different scores for each, while the County requires the same score regardless of a home’s vintage. In
addition, to capture more projects, the City chose to reduce the square footage threshold from the 750
square feet the County is using to 500 square feet. All of these changes were carefully selected in
consultation with community advisors and the State Codes and Standards Team and were reviewed by
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 4
an ad hoc subcommittee consisting of Councilmembers Bushey and Llorens Gulati. More information on
the policy development, including discussions on co-benefits and social equity, can be found in
Attachment 4.
The Community & Economic Development department approves between 40-60 of these types of
projects annually. It is estimated that enacting these reach codes would reduce emissions from these
buildings by between 10-22% compared to not complying with our reach code. This reach code is
intended as a way to begin to address existing buildings in a moderate fashion with the ability to learn as
it is applied and to be able to enhance the Flex Path with other interventions or increase the target scores
as time goes on. As part of staff’s commitment to equity, flexibility, and accessibility, there are exceptions
built in as well as ways to give credit for energy efficiency measures already completed by applicants in
prior projects. For example, if an applicant installed a solar system in the past several years that meets
the requirements of the table, they would get credit for that. In addition, this Flex Path is seen as a means
to encourage applicants to consider all the ways they can achieve energy and emissions reductions,
including through air sealing, renewable energy installations, and the switch to electrical systems when
appropriate.
Additionally, the ordinance includes a “catch-all” exemption which ensures that any one gas appliance is
not prohibited by the ordinance. If a proposed project effectively results in the preclusion of the use of
an appliance covered by the EPCA, the building official may waive any requirements of the ordinance
causing such effective prohibition.
COMMUNITY ENGAGEMENT:
The City participated in a Steering Committee for a County of Marin-led “model reach code” development
process, which resulted in the current reach code proposal. The Committee engaged and garnered
feedback from individuals from a wide range of industries and organizations through surveys, interviews,
focus groups, and meetings. They received feedback from city, town, and County staff; community-based
organizations including environmental, affordable housing, senior/aging-in-place, and equity priority
advocates; building community members including developers, architects, realtors, contractors, and
Marin Builders Association; utilities including MCE and PG&E; and town and city commission,
subcommittee, and City Council members. In addition, City staff have worked closely with the State
Codes team and two local architects and builders in developing this proposal.
FISCAL IMPACT:
There is no fiscal impact associated with this action.
ENVIRONMENTAL REVIEW:
The proposed ordinance has been determined to be exempt from the California Environmental Quality
Act (CEQA), pursuant to 14 CCR Section 15061(b)(3) since it can be seen with certainty that the adoption
of this Ordinance would not have the potential for causing a significant effect on the environment. (14
Cal. Code Regs. Section 15061(b)(3), ‘general rule’ provision). The Ordinance is also exempt from the
requirements of CEQA pursuant to CEQA Guidelines sections 15307 and 15308 as an action by a
regulatory agency taken to protect the environment and natural resources.
OPTIONS:
The City Council has the following options to consider on this matter:
1. Consider public comment/testimony and introduce the Ordinance for adoption as proposed.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 5
2. Consider public comment/testimony and introduce the Ordinance with amendments as directed
by the Council.
3. Do not introduce the Ordinance and provide alternative directions to staff.
RECOMMENDED ACTION:
Waive further reading of the ordinance, refer to it by title only and introduce the Ordinance.
ATTACHMENTS:
1. Ordinance
2. California Codes and Standards Cost Effectiveness Study
3. FAQs: Single Family FlexPath Reach Codes
4. Policy Snapshot: Building Reach Code Proposal for Existing Construction
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ORDINANCE NO.
AN ORDINANCE OF THE SAN RAFAEL CITY COUNCIL AMENDING TITLE 12 (BUILDING
REGULATIONS) OF THE SAN RAFAEL MUNICIPAL CODE, BY AMENDING THE
CALIFORNIA ENERGY CODE, THE 2022 CALIFORNIA GREEN BUILDING STANDARDS
CODE FOR ELECTRIC VEHICLE CHARGERS, THE 2022 CALIFORNIA MECHANICAL CODE,
AND THE 2022 CALIFORNIA PLUMBING CODE; ADDING A NEW CHAPTER 12.360 WITH
ADMINISTRATIVE AND PROGRAM REGULATIONS ON MODEL REACH CODES; AND
ADOPTING FINDINGS OF FACT SUPPORTING THE AMENDMENTS TO THE CODES.
THE CITY COUNCIL OF THE CITY OF SAN RAFAEL DOES ORDAIN AS FOLLOWS:
DIVISION 1. AMENDMENTS TO TITLE 12 OF THE MUNICIPAL CODE.
Section 1. Repeal Ordinance No. 2022
Ordinance No. 2022 of the San Rafael City Council amending Chapters 12.235, 12.245, and
12.250 of Title 12 of the San Rafael Municipal Code is hereby repealed.
Section 2. Adoption of and Amendments to Construction Codes
Chapters 12.220, 12.235, 12.245, and 12.250 of the San Rafael Municipal Code are hereby
amended to read as follows:
CHAPTER 12.220 – CALIFORNIA ENERGY CODE AMENDMENTS
12.220.010 General. For purpose of this Chapter:
Deleted language from the base code has been stricken through.
Replacement language to the base code has been underlined.
12.220.020 Amendments. The 2022 California Energy Code is amended or modified as
follows:
Amend Section 150.0 to read as follows:
Single-family residential buildings shall comply with the applicable requirements of Sections
150(a) through 150.0(v); in addition, Covered Single Family Projects shall comply with the
applicable requirements of Section 12.360 of the SRMC.
NOTE: The requirements of Sections 150.0(a) through 150.0(v) apply to newly constructed
buildings. Sections 150.2(a) and 150.2(b) specify which requirements of Sections 150.0(a)
through 150.0(v) also apply to additions or alterations, with the exception that Covered Single
Family Projects shall also be required to comply with Section 12.360 of the SRMC.
CHAPTER 12.235 - CALIFORNIA GREEN BUILDING STANDARDS CODE AMENDMENTS
12.235.010 General. For purpose of this Chapter:
2
Deleted language from the base code has been stricken through.
Replacement language to the base code has been underlined.
12.235.020 Amendments. The 2022 California Green Building Standards Code is amended or
modified as follows:
Delete Section 4.106.4.1 and replace in its entirety to read as follows:
4.106.4.1 New One- And Two-Family Dwellings and Town-Houses. For each dwelling
unit, install a 40 ampere 208/240 volt dedicated EV branch circuit, capable of supporting Level
2 EVSE, terminating with a receptacle or an EV charger in close proximity to the vehicle
charging area.
Delete Subsection 4.106.4.1.1 in its entirety.
Subsection 4.106.4.2 [unchanged].
Amend Subsection 4.106.4.2.2 item 1(b) to read as follows (other subsections remains
unchanged):
b. Multifamily parking facilities. Forty (40) Eighty-five (85) percent of the total number of
parking spaces shall be equipped with low power Level 2 EV charging receptacles. EV
charging receptacles required by this section shall be located in at least one assigned
parking space per dwelling unit where assigned parking is provided but need not exceed
forty (40) eighty-five (85) percent of total number of assigned parking spaces provided on
site.
Exception: Areas of parking facilities served by parking lifts, including but not limited
to automated mechanical-access open parking garages as defined in the California
Building Code; or parking facilities otherwise incapable of supporting electric vehicle
charging.
Amend Subsection 4.106.4.2.2 item 2(b) to read as follows (other subsections remains
unchanged):
b. Multifamily parking facilities. Ten (10) Fifteen (15) percent of the total number of parking
spaces shall be equipped with Level 2 EV chargers. At least fifty (50) percent of the
required EV chargers shall be equipped with J1772 connectors. Where common use
parking or unassigned parking is provided, EV chargers shall be located in common use or
unassigned parking areas and shall be available for use by all residents or guests.
CHAPTER 12.245 - CALIFORNIA MECHANICAL CODE AMENDMENTS
12.245.010 No amendments. The 2022 California Mechanical Code is not amended or
modified.
CHAPTER 12.250 - CALIFORNIA PLUMBING CODE AMENDMENTS
12.250.010 No amendments. The 2022 California Plumbing Code is not amended or modified.
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Section 3. Addition of new Chapter 12.360 with administrative and program regulations
on Model Reach Code.
Chapter 12.360 of the San Rafael Municipal Code is hereby added to read as follows:
CHAPTER 12.360 – SINGLE FAMILY MODEL REACH CODE - FLEXPATH
12.360.010 Purpose. The purpose of this chapter is to specify additional energy efficiency
and renewable energy measures for additions, alterations and remodels of Covered Single
Family Projects.
12.360.020 Definitions. For the purpose of this chapter, the following definitions shall
apply:
1. “Single Family Building” shall mean any of the following:
a. Residential building of Occupancy Group R-3 or under the California
Residential Code with two or fewer dwellings.
b. A townhouse.
c. A building of Occupancy Group R-3.1, or
d. A building of Occupancy Group U when located on a residential site.
e. JADUs or ADUs that are not part of multifamily.
2. “Covered Single Family Project” shall mean the addition, alteration, or remodel of a
Single Family Building originally permitted for construction before 2011 that affects a
floor area which exceeds 500 square feet of existing floor area and/or new floor area.
When any changes are made in the building, such as walls, columns, beams or
girders, floor or ceiling joists and coverings (subfloor and drywall), roof rafters, roof
diaphragms, foundations, piles or retaining walls or similar components, the floor area
of all rooms affected by such changes shall be included in computing floor areas for
purposes of applying this definition.
This definition does not apply to project scopes that are solely limited to any of the
following: the replacement and upgrading of residential roof coverings, exterior wall
finishes and/or floor finishes; alterations that add no more than 75 square feet of
fenestration; alterations that add no more than 16 square feet of skylight area with a
maximum U-factor of 0.55 and a maximum SHGC of 0.30; alterations that are limited
to providing access for persons with disabilities; or voluntary state seismic retrofit
program. A Covered Single Family Project shall not include a project that is considered
to be a newly constructed building under the California Energy Code, Title 24, Part 6.
12.360.020 Scope. In addition to all requirements of the California Energy Code applicable
to Single Family Building additions and alterations, the provision of this chapter shall apply to
all Covered Single Family Projects.
12.360.020 Requirements. A Covered Single Family Project shall install a set of measures
based on the building vintage from the Measure Menu in Table 12.360B, to achieve a total
Measure Point Score that is equal to or greater than the Target Score in Table 12.360A. In
addition, all mandatory measures listed in Table 12.360B shall be installed. Installed
measures shall meet the specifications in Table 12.360C.
4
Building vintage is the year in which (1) a building permit for construction of the structure was
submitted, as documented by building department records, or (2) a building permit was issued
for an addition or alteration that satisfied the Performance Standards (California Energy Code,
Title 24, Part 6, Section 150.1(b)) in effect at time of building permit issuance, whichever is
later. Unless otherwise specified, the requirements shall apply to the entire dwelling unit, not
just the additional or altered portion. Measures from the Measure Menu table that already
exist in the home may be counted towards compliance with these requirements. Measures
from the Measure Menu table that are to be installed to satisfy requirements under the
California Energy Code, Title 24, Part 6, may not count towards compliance with these
requirements. Where these requirements conflict with other California Energy Code
requirements, the stricter requirements shall prevail.
Exceptions
1. If the applicant demonstrates that the Energy Budget of the building under the
proposed project would be less than or equal to the Energy Budget of the building
under the proposed project if it included any set of measures that would achieve
compliance under this chapter 12.360. For purposes of this section “Energy Budget”
shall have that meaning set forth in CBC section 100.1(b), as that section may be
amended.
2. Mobile Homes, Manufactured Housing, or Factory-built Housing as defined in Division
13 of the California Health and Safety Code (commencing with Section 17000 of the
Health and Safety Code).
3. Due to conditions specific to the project, if it is technically or economically infeasible to
achieve compliance, the Building Official may reduce the Target Score and/or waive
some or all of the mandatory requirements.
4. A measure that is necessary for compliance is prohibited because of a covenant or
other deed restriction on the property, such as a homeowners association covenant.
5. The Building Official may reclassify the vintage of the building based on existing
conditions.
6. An applicant who resides in the dwelling unit and qualifies as a low-income utility
customer, or is the owner of the dwelling unit which is occupied by a dependent who
qualifies as a low-income utility customer, may comply by either a) installing the duct
sealing measure, the lighting measure and water heating package, or b) installing at
least 1 kW of solar PV that meets the requirements of 2022 Title 24 Reference
Appendix JA11. A low-income utility customer is anyone who is eligible for the
California Alternative Rates for Energy (CARE) or Family Electric Rate Assistance
Program (FERA) program. A Covered Single Family Project that consists solely of
medically necessary improvements or solely of seismic safety improvements.
7. Nothing in this ordinance shall be construed so as to prohibit any one appliance
covered by the Energy Policy and Conservation Act (EPCA) (42 U.S.C. 6292(a).)
Should an applicant establish that this ordinance, as applied, prohibits a covered
appliance in the applicant’s project, the Building Official shall waive that portion of the
ordinance causing such prohibition.
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Table 12.360A
Target Scores, Climate Zone 2
Building Vintage Pre-1978 1978-1991 1992-2010
Target Score 12 8 4
Table 12.360B
Measure Menu, Climate Zone 2
The measures in the Measure Menu shall conform to the specifications in Table 12.360C.
ID Measure Building Vintage
Pre-1978 1978-1991 1992-2010
E1 Lighting Measures Mandatory
E2 Water Heating Package 1 1 1
E3 Air Sealing 2 2 1
E4 Attic Insulation (R-38) 6 2 1
E5 Duct Sealing 6 4 1
E6 New Ducts + Duct Sealing 9 6 2
E7 Windows 5 3 3
E8 Wall Insulation (R-13) 7 -- --
E10 Raised floor insulation (R-19)/(R-30) 8/10 8/9 --
FS1 Heat Pump Water Heater Replacing Gas 12 12 12
FS2 High Eff. Heat Pump Water Heater Replacing
Gas 14 14 14
FS3 Heat Pump Water Heater Replacing Electric 4 4 4
FS4 High Eff. Heat Pump Water Heater Replacing
Electric 6 6 6
FS5 Heat Pump Space Heater 23 18 15
FS6 High Eff. Heat Pump Space Heater 25 19 17
FS7 Dual Fuel Heat Pump Space Heater 20 15 14
FS8 Heat Pump Clothes Dryer 2 2 2
FS9 Induction Cooktop 1 1 1
PV Solar PV 16 15 13
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Table 12.360C
Measure Specifications
ID Energy Measure Specification
Energy Measures
E1 Mandatory - Lighting Measures – Replace all interior and exterior screw-in incandescent,
halogen, and compact fluorescent lamps with LED lamps. Install photocell controls on all
exterior lighting luminaires.
E2 Water Heating Package: Insulate all accessible hot water pipes with pipe insulation a
minimum of ¾ inch thick. This includes insulating the supply pipe leaving the water
heater, piping to faucets underneath sinks, and accessible pipes in attic spaces or
crawlspaces. Upgrade fittings in sinks and showers to meet current California Green
Building Standards Code (Title 24, Part 11) Section 4.303 water efficiency requirements.
Exception: Upgraded fixtures are not required if existing fixtures have rated or measured
flow rates of no more than ten percent greater than 2022 California Green Building
Standards Code (Title 24, Part 11) Section 4.303 water efficiency requirements.
E3 Air Sealing: Seal all accessible cracks, holes, and gaps in the building envelope at walls,
floors, and ceilings. Pay special attention to penetrations including plumbing, electrical,
and mechanical vents, recessed can light luminaires, and windows. Weather-strip doors
if not already present. Verification shall be conducted following a prescriptive checklist
that outlines which building aspects need to be addressed by the permit applicant and
verified by an inspector. Compliance can also be demonstrated with blower door testing
conducted by a certified HERS Rater no more than three years prior to the permit
application date that either: a) shows at least a 30 percent reduction from pre-retrofit
conditions; or b) shows that the number of air changes per hour at 50 Pascals pressure
difference (ACH50) does not exceed ten for Pre-1978 vintage buildings, seven for 1978
to 1991 vintage buildings and five for 1992-2010 vintage buildings. If combustion
appliances are located within the pressure boundary of the building, conduct a
combustion safety test by a professional certified by the Building Performance Institute in
accordance with the ANSI/BPI-1200-S-2017 Standard Practice for Basic Analysis of
Buildings, the Whole House Combustion Appliance Safety Test Procedure for the
Comfortable Home Rebates Program 2020 or the California Community Services and
Development Combustion Appliance Safety Testing Protocol.
E4 R-38 Attic Insulation: Attic insulation shall be installed to achieve a weighted assembly U-
factor of 0.025 or insulation installed at the ceiling level shall have a thermal resistance of
R-38 or greater for the insulation alone. Recessed downlight luminaires in the ceiling
shall be covered with insulation to the same depth as the rest of the ceiling. Luminaires
not rated for insulation contact must be replaced or fitted with a fire-proof cover that
allows for insulation to be installed directly over the cover.
Exception: In buildings where existing R-30 is present and existing recessed downlight
luminaires are not rated for insulation contact, insulation is not required to be installed
over the luminaires.
E5 Duct Sealing: Air seal all space conditioning ductwork to meet the requirements of the
California Energy Code 150.2(b)1E. The duct system must be tested by a HERS Rater
no more than three years prior to the Covered Single Family Project permit application
date to verify the duct sealing and confirm that the requirements have been met. This
measure may not be combined with the New Ducts and Duct Sealing measure in this
Table.
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Exception: Buildings without ductwork or where the ducts are in conditioned space.
E6 New Ducts, R-6 insulation + Duct Sealing: Replace existing space conditioning ductwork
with new R-6 ducts that meet the requirements of 2022 Title 24 Section 150.0(m)11. This
measure may not be combined with the Duct Sealing measure in this Table. To qualify,
a preexisting measure must have been installed no more than three years before the
Covered Single Family Project permit application date.
E7 Windows: Replace at least 50% of existing windows with high performance windows with
an area-weighted average U-factor no greater than 0.30.
E8 R-13 Wall Insulation: Install wall insulation in all exterior walls to achieve a weighted U-
factor of 0.102 or install wall insulation in all exterior wall cavities that shall result in an
installed thermal resistance of R-13 or greater for the insulation alone.
E9 Reserved for future use
E10 R-19 / R-30 Floor Insulation: Raised-floors shall be insulated such that the floor assembly
has an assembly U-factor equal to or less than U-0.037 / U-0.034 or shall be insulated
between wood framing with insulation having an R-value equal to or greater than R-19 /
R30.
Fuel Substitution Measures
FS1 Heat Pump Water Heater (HPWH) Replacing Gas: Replace existing natural gas water
heater with a heat pump water heater.
FS2 High Efficiency Heat Pump Water Heater (HPWH) Replacing Gas: Replace existing
natural gas water heater with heat pump water heater with a Northwest Energy Efficiency
Alliance (NEEA) Tier 3 or higher rating.
FS3 Heat Pump Water Heater (HPWH) Replacing Electric: Replace existing electric
resistance water heater with a heat pump water heater.
FS4 High Efficiency Heat Pump Water Heater (HPWH) Replacing Electric: Replace existing
electric resistance water heater with heat pump water heater with a Northwest Energy
Efficiency Alliance (NEEA) Tier 3 or higher rating.
FS5 Heat Pump Space Heater: Replace all existing gas and electric resistance primary space
heating systems with an electric-only heat pump system.
FS6 High Efficiency Heat Pump Space Heater: Replace all existing gas and electric
resistance primary space heating systems with one of the following:
A. A ducted electric-only heat pump system with a SEER2 rating of 16.5 or greater, an
EER2 rating of 12.48 or greater and an HSPF2 rating of 9.5 or greater; or
B. A ductless mini-split heat pump system with a SEER2 rating of 14.3 or greater, an
EER2 rating of 11.7 or greater and an HSPF2 rating of 7.5 or greater
FS7 Dual Fuel Heat Pump Space Heater: Either
A. Replace all existing gas and electric resistance primary heating systems with a hybrid
gas and electric heat pump system, or
B. Install an electric-heat pump system in tandem with a gas furnace and install controls
to operate the heat pump to use the existing gas furnace for backup heat only.
FS8 Heat Pump Clothes Dryer: Replace existing electric resistance clothes dryer with heat
pump dryer with no resistance element and cap gas line.
FS9 Induction Cooktop: Replace all existing gas and electric resistance stove tops with
inductive stove top and cap the gas line.
Solar PV and Electric-Readiness Measures
PV Solar PV + Electric Ready Pre-Wire: Install a solar PV system that meets the
requirements of California Energy Code Section 150.1(c)14.
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DIVISION 2. FINDINGS.
The San Rafael City Council finds that the scientific evidence has established that natural gas
combustion as well as leakage occurring during natural gas procurement, transportation, storage,
and distribution produce significant greenhouse gas emissions that contribute to global warming,
climate change and sea level rise.
California Health and Safety Code Sections 17958.5, 17958.7, and 18941.5 require that findings
be made in order to change or modify building standards found in the California Building
Standards Code based on local climatic, geologic, or topographic conditions. Therefore, the San
Rafael City Council hereby finds that these changes or modifications to the California Green
Building Standards Code, the California Plumbing Code and the California Mechanical Code as
adopted in Chapter 12.200 of the San Rafael Municipal Code are reasonably necessary because
of the following local climatic, geological, and topographical conditions:
I. Climatic conditions:
a) Most of the annual rainfall in San Rafael occurs during the winter, it receives no
measurable precipitation between May and October. During this time,
temperatures average between 70 and 90 degrees. These conditions eliminate
most of the moisture in the natural vegetation and heavily wooded hillsides. The
area also suffers periodic droughts that can extend the dry periods to other months
of the year. These conditions can be further exacerbated by occasional off-shore
hot, dry, Santa-Ana winds; all of which contribute to an elevated fire hazard.
Further, global warming due to climate change is making these conditions worse,
extending the dry period by a full month in the spring and summer and
exacerbating drought conditions.
b) The seasonal climatic conditions during the late summer and fall create severe fire
hazards to the public health and welfare in the City. The hot, dry weather can result
in wildland fires on the brush covered slopes adjacent to the majority of
neighborhoods west of highway 101.
c) Local amendments to the municipal code pursuant to this ordinance are
reasonably necessary to achieve greenhouse gas emission reductions that
reduces the risks of climate shocks such as wildfires and drought, which will then
reduce risks of physical damage to critical infrastructure, property loss, and loss of
life. In addition, reducing electricity demand and encouraging on-site renewable
energy and emergency backup reduces fire potential and reduces health and
safety impacts to residents during public safety power shut offs.
d) Most of the annual rainfall in San Rafael occurs during the winter, and some
portions of San Rafael are subject to tidal influences, thus there are times that
flooding conditions occur in low-lying areas. Much of San Rafael from downtown
to the Canal, along San Pedro Road and south to the Richmond San Rafael Bridge
are lower than high tide and susceptible to flooding and sea level rise caused by
climate change. San Rafael is expected to experience one foot of additional sea
level rise in the coming decades. Local amendments to the municipal code
9
pursuant to this ordinance are reasonably necessary to achieve greenhouse gas
emission reductions that reduces the risks of flooding due to sea level rise, which
will then reduce risks of physical damage to critical infrastructure, property loss,
and loss of life.
II. Geologic conditions:
a) San Rafael lies near several earthquake faults, including the very active San
Andreas Fault, there are significant potential hazards such as road closures, fires,
collapsed buildings, and isolation of residents requiring assistance.
b) Many areas of the city, including some highly developed industrial and commercial
areas, are located on bay alluvial soils which are subject to liquefaction in the event
of an earthquake.
c) The City includes hillsides with narrow and winding access, which makes timely
response by fire suppression and emergency response vehicles difficult.
d) Local amendments to the municipal code are reasonably necessary to reduce
natural gas use thereby reducing the potential for leaks as well as the potential for
fires caused by leaks during seismic events.
III. Topographic conditions:
a) Much of San Rafael is located in hilly areas, and many of the residential areas are
heavily landscaped, and many exist adjacent to hilly open space areas which are
characterized by dry vegetation and have limited access. In addition, the
steepness of grades located in the hills and canyons results in narrow and winding
roads, and limited water supply, making timely access, rescue and firefighting
activities by emergency providers difficult.
b) The major arterial route between San Francisco and Marin and Sonoma County
areas, Highway 101, bisects the City of San Rafael; should that highway become
impassable, alternative routes via surface streets in San Rafael may cause heavy
traffic congestion, limiting emergency access.
More specifically, the above modified building standards are listed below with the corresponding
climatic, geological, or topographical condition which necessitates the modification.
CEgC Section Numbers Climatic, geological and topographical condition
150.0. Ia, Ib, IIc, IIIa,
CalGreen Section Numbers
4.106.4.1. Ia, Ib, IIc, IIIa,
4.106.4.2.2 1(b) Ia, Ib, IIc, IIIa,
4.106.4.2.2. 2(b) Ia, Ib, IIc, IIIa,
Title 12 Municipal Code
12.360 Ia, Ib, IIc, IIIa,
DIVISION 3. CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA)
10
This Ordinance is exempt from the California Environmental Quality Act (CEQA), pursuant to 14
CCR Section 15061(b)(3), since it can be seen with certainty that the adoption of this Ordinance
would not have potential for causing a significant effect on the environment. (14 Cal. Code Regs.
Section 15061(b)(3), ‘general rule’ provision). The Ordinance is also exempt from the
requirements of CEQA pursuant to CEQA Guidelines sections 15307 and 15308 as an action by
a regulatory agency taken to protect the environment and natural resources.
DIVISION 4. SEVERABILITY.
If any section, subsection, sentence, clause or phrase of this Ordinance is for any reason held to
be invalid, such decision shall not affect the validity of the remaining portion of this Ordinance.
The City Council of the City of San Rafael hereby declares that it would have adopted the
Ordinance and each section, subsection, sentence, clause or phrase thereof, irrespective of the
fact that any one or more sections, subsections, sentences, clauses or phrases shall be declared
invalid.
DIVISION 5. EFFECTIVE DATE OF ORDINANCE.
This Ordinance shall be published once, in full or in summary form, before its final passage, in a
newspaper of general circulation, published and circulated in the City of San Rafael and shall be in
full force and effective thirty (30) days after its adoption, upon approval of the California Energy
Commission or the date of the California Building Standards Commission (CBSC) accepts the
ordinance for filing, whichever is later. If published in summary form, the summary shall also be
published within fifteen (15) days after the adoption, together with the names of those Council
members voting for or against same, in a newspaper of general circulation published and circulated
in the City of San Rafael, County of Marin, State of California.
THE FOREGOING ORDINANCE was first read and introduced at a regular meeting of the San
Rafael City Council on the 20th day of May 2024, and was passed and adopted at a regular
meeting of the San Rafael City Council on the 3rd day of June 2024 by the following vote, to wit:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
______________________________
Kate Colin, Mayor
Attest:
_____________________________
LINDSAY LARA, City Clerk
Prepared by:
Ada Shen, Alea German, Rebecca Evans, & Marc Hoeschele, Frontier Energy, Inc
Misti Bruceri, Misti Bruceri & Associates, LLC
Prepared for:
Kelly Cunningham, Codes and Standards Program, Pacific Gas and Electric
Last modified: 2024/04/25
Revision: 1.0
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades
Executive Summary 2
Legal Notice
This report was prepared by Pacific Gas and Electric Company and
funded by the California utility customers under the auspices of the
California Public Utilities Commission.
Copyright 2024, Pacific Gas and Electric Company. All rights
reserved, except that this document may be used, copied, and
distributed without modification.
Neither PG&E nor any of its employees makes any warranty,
express or implied; or assumes any legal liability or responsibility for
the accuracy, completeness or usefulness of any data, information,
method, product, policy or process disclosed in this document; or
represents that its use will not infringe any privately-owned rights
including, but not limited to, patents, trademarks or copyrights.
Acronym List
2023 PV$ – Present value costs in 2023
ACH50 – Air Changes per Hour at 50 pascals pressure differential
ACM – Alternative Calculation Method
ADU – Accessory Dwelling Unit
AFUE – Annual Fuel Utilization Efficiency
B/C – Lifecycle Benefit-to-Cost Ratio
BEopt – Building Energy Optimization Tool
BSC – Building Standards Commission
CA IOUs – California Investor-Owned Utilities
CASE – Codes and Standards Enhancement
CBECC-Res – Computer program developed by the California Energy
Commission for use in demonstrating compliance with the
California Residential Building Energy Efficiency Standards
CEER – Combined Energy Efficiency Rating
CFI – California Flexible Installation
CFM – Cubic Feet per Minute
CO2 – Carbon Dioxide
CPAU – City of Palo Alto Utilities
CPUC – California Public Utilities Commission
CZ – California Climate Zone
DFHP – Dual Fuel Heat Pump
DHW – Domestic Hot Water
DOE – Department of Energy
DWHR – Drain Water Heat Recovery
EDR – Energy Design Rating
EER – Energy Efficiency Ratio
EF – Energy Factor
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades
Executive Summary 3
GHG – Greenhouse Gas
HERS Rater – Home Energy Rating System Rater
HPA – High Performance Attic
HPSH – Heat Pump Space Heater
HPWH – Heat Pump Water Heater
HSPF – Heating Seasonal Performance Factor
HVAC – Heating, Ventilation, and Air Conditioning
IECC – International Energy Conservation Code
IOU – Investor Owned Utility
kBtu –British thermal unit (x1000)
kWh – Kilowatt Hour
LBNL – Lawrence Berkeley National Laboratory
LCC – Life Cycle Cost
LLAHU – Low Leakage Air Handler Unit
VLLDCS – Verified Low Leakage Ducts in Conditioned Space
LSC – Long-term Systemwide Cost
MF – Multifamily
MSHP – Mini-Split Heat Pump
NEEA – Northwest Energy Efficiency Alliance
NEM – Net Energy Metering
NPV – Net Present Value
NREL – National Renewable Energy Laboratory
PG&E – Pacific Gas and Electric Company
POU – Publicly-Owned-Utilities
PV – Photovoltaic
SCE – Southern California Edison
SDG&E – San Diego Gas and Electric
SEER – Seasonal Energy Efficiency Ratio
SF – Single Family
SMUD – Sacramento Municipal Utility District
SoCalGas – Southern California Gas Company
TDV – Time Dependent Valuation
Therm – Unit for quantity of heat that equals 100,000 British thermal units
Title 24 – Title 24, Part 6
TOU – Time-Of-Use
UEF – Uniform Energy Factor
VCHP – Variable Capacity Heat Pump, Title 24 compliance credit
ZNE – Zero-net Energy
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades
Executive Summary 4
Summary of Revisions
Date Description Reference (page or section)
4/25/2024 Original Release N/A
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades
Executive Summary 5
TABLE OF CONTENTS
Executive Summary .......................................................................................................................................................... 1
1 Introduction ................................................................................................................................................................ 6
2 Methodology and Assumptions ............................................................................................................................... 7
2.1 Analysis for Reach Codes ..................................................................................................................................................... 7
2.1.1 Modeling ....................................................................................................................................................................... 7
2.1.2 Prototype Characteristics .............................................................................................................................................. 7
2.1.3 Cost-Effectiveness Approach ...................................................................................................................................... 10
2.1.4 Utility Rates ................................................................................................................................................................. 11
2.1.5 Measure Cost Data Collection Approach .................................................................................................................... 12
2.2 Measure Details and Cost ................................................................................................................................................... 12
2.2.1 Building Envelope & Duct Measures ........................................................................................................................... 13
2.2.2 PV Measures .............................................................................................................................................................. 14
2.2.3 Equipment Fuel Substitution Measures – Heat Pump Equipment ............................................................................... 15
3 Results ...................................................................................................................................................................... 21
3.1 Cost-Effectiveness Results ................................................................................................................................................. 22
3.1.1 HPSH Measures ......................................................................................................................................................... 22
3.1.2 HPWH Measures ........................................................................................................................................................ 24
3.2 Climate Zone Case Studies ................................................................................................................................................ 26
3.2.1 HPSH Cost-Effectiveness ........................................................................................................................................... 26
3.2.2 HPWH Cost-Effectiveness .......................................................................................................................................... 27
3.2.3 Envelope & Duct Improvement Cost-Effectiveness ..................................................................................................... 28
3.2.4 Sensitivities ................................................................................................................................................................. 29
3.3 Gas Pathways for Heat Pump Replacements ..................................................................................................................... 30
4 Recommendations and Discussion ....................................................................................................................... 32
5 References ............................................................................................................................................................... 36
6 Appendices .............................................................................................................................................................. 37
6.1 Map of California Climate Zones ......................................................................................................................................... 37
6.2 Utility Rate Schedules ......................................................................................................................................................... 38
6.2.1 Pacific Gas & Electric .................................................................................................................................................. 39
6.2.2 Southern California Edison ......................................................................................................................................... 47
6.2.3 Southern California Gas .............................................................................................................................................. 51
6.2.4 San Diego Gas & Electric............................................................................................................................................ 53
6.2.5 City of Palo Alto Utilities .............................................................................................................................................. 63
6.2.6 Sacramento Municipal Utilities District (Electric Only) ................................................................................................. 65
6.2.7 Fuel Escalation Assumptions ...................................................................................................................................... 67
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades
Executive Summary 6
LIST OF TABLES
Table 1. Prototype Characteristics ........................................................................................................................................................ 8
Table 2. Efficiency Characteristics for Three Vintage Cases ................................................................................................................ 9
Table 3. Measure Cost Assumptions – Efficiency & Duct Measures .................................................................................................. 14
Table 4. Measure Descriptions & Cost Assumptions – PV ................................................................................................................. 15
Table 5. Lifetime Analysis Replacement Assumptions for DFHP (Existing Furnace) Scenario .......................................................... 16
Table 6. System Sizing by Climate Zone ............................................................................................................................................ 17
Table 7. Ducted HVAC Measure Cost Assumptions – 4-Ton Electric Replacements ......................................................................... 18
Table 8. Non-Ducted HVAC Measure Cost Assumptions – 4-Ton Electric Replacements ................................................................. 18
Table 9. Water Heating Measure Cost Assumptions – Existing Gas .................................................................................................. 19
Table 10. Water Heating Measure Cost Assumptions – Existing Electric Resistance ........................................................................ 20
Table 11. HPSH CZ 12 [1992-2010] ................................................................................................................................................... 26
Table 12. HPSH CZ 16 [1992-2010] ................................................................................................................................................... 26
Table 13. HPWH CZ 12 [1992-2010] .................................................................................................................................................. 27
Table 14. HPWH CZ 16 [1992-2010] .................................................................................................................................................. 27
Table 15. Envelope and Duct Measures CZ 3 [Pre-1978] .................................................................................................................. 28
Table 16. Envelope and Duct Measures CZ 10 [Pre-1978]................................................................................................................. 28
Table 17. Envelope and Duct Measures CZ 12 [Pre-1978]................................................................................................................. 28
Table 18. Sensitivity Analysis Results for On-Bill NPV Cost-Effectiveness in Climate Zone 12, PG&E .............................................. 29
Table 19. Electric Panel Upgrade Sensitivity for CZ 12 [1992-2010] .................................................................................................. 29
Table 20. PG&E Baseline Territory by Climate Zone .......................................................................................................................... 39
Table 21. PG&E Monthly Gas Rate ($/therm) ..................................................................................................................................... 39
Table 22: SCE Baseline Territory by Climate Zone ............................................................................................................................ 47
Table 23. SoCalGas Baseline Territory by Climate Zone ................................................................................................................... 51
Table 24. SoCalGas Monthly Gas Rate ($/therm) .............................................................................................................................. 51
Table 25. SDG&E Baseline Territory by Climate Zone ....................................................................................................................... 53
Table 26. SDG&E Monthly Gas Rate ($/therm) .................................................................................................................................. 53
Table 27. CPAU Monthly Gas Rate ($/therm) ..................................................................................................................................... 63
Table 28: Real Utility Rate Escalation Rate Assumptions, CPUC En Banc and 2022 TDV Basis ...................................................... 67
Table 29: Real Utility Rate Escalation Rate Assumptions, 2025 LSC Basis ....................................................................................... 68
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades
Executive Summary 7
LIST OF FIGURES
Figure 1: DFHP with Existing Furnace ............................................................................................................................................ 22
Figure 2: Standard Efficiency HPSH ............................................................................................................................................... 22
Figure 3: High Efficiency HPSH ...................................................................................................................................................... 23
Figure 4: Ducted MSHP .................................................................................................................................................................. 23
Figure 5: HPSH + PV ...................................................................................................................................................................... 23
Figure 6: 240V Federal Minimum HPWH ........................................................................................................................................ 24
Figure 7: 240V Market Standard NEEA HPWH .............................................................................................................................. 24
Figure 8: 120V Market Standard NEEA HPWH .............................................................................................................................. 24
Figure 9: 240V Federal Minimum HPWH + PV ............................................................................................................................... 24
Figure 10: R-6 Ducts ....................................................................................................................................................................... 25
Figure 11: 10% Duct Leakage ........................................................................................................................................................ 25
Figure 12: R-13 Wall Insulation ....................................................................................................................................................... 25
Figure 13: R-49 Attic Insulation ....................................................................................................................................................... 25
Figure 14. Heat pump space heater path compared to the air conditioner path. ............................................................................ 31
Figure 15. Heat pump water path compared to gas with solar thermal. .......................................................................................... 31
Figure 16. Map of California climate zones. .................................................................................................................................... 37
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades
Executive Summary 1
California Energy Codes & Standards | A statewide utility program 2024-04-25
Executive Summary
The California Codes and Standards (C&S) Reach Codes program provides technical support to local governments
considering adopting a local ordinance (reach code) intended to support meeting local and/or statewide energy
efficiency and greenhouse gas (GHG) reduction goals. The program facilitates adoption and implementation of the
code when requested by local jurisdictions by providing resources such as cost-effectiveness studies, model language,
sample findings, and other supporting documentation.
This report documents cost-effective measure upgrades in existing single family buildings that exceed the minimum
state requirements. It evaluates efficiency measures such as adding insulation, replacing windows, and duct upgrades,
fuel substitution measures that upgrade space heating and water heating to heat pumps, and solar photovoltaics (PV)
across all 16 California climate zones. A 1,665 square foot single family home prototype with an attached garage was
evaluated in this study.
This analysis used two different metrics to assess the cost-effectiveness of the proposed upgrades. Both
methodologies require estimating and quantifying the incremental costs and energy savings associated with each
energy efficiency measure over a 30-year analysis period. On-Bill cost-effectiveness is a customer-based lifecycle cost
(LCC) approach that values energy based upon estimated site energy usage and customer utility bill savings using
today’s electricity and natural gas utility tariffs. Long-term Systemwide Cost (LSC) is the California Energy
Commission’s LCC methodology for the 2025 Title 24, Part 6 (Title 24) code cycle (previously referred to as Time
Dependent Valuation (TDV)), which is intended to capture the long-term projected cost of energy including costs for
providing energy during peak periods of demand, carbon emissions, grid transmission and distribution impacts. This is
the methodology used by the Energy Commission in evaluating cost-effectiveness for efficiency measures in Title 24
code development.
The following summarizes key results from the study:
Conclusions and Discussion:
1. Envelope measures. Improving envelope performance is very cost-effective in many older homes. In addition
to reducing utility costs, these measures provide many other benefits such as improving occupant comfort and
satisfaction and increasing a home’s ability to maintain temperatures during extreme weather events and
power outages. Below is a discussion of the results of specific measures.
a. Adding attic insulation is cost-effective based on both LSC and On-Bill in many climate zones in homes
with no more than R-19 existing attic insulation levels. Increasing attic insulation from R-30 to R-49
was still found to be cost-effective based on at least one metric in the colder and hotter climates of
Climate Zone 10 (SDG&E territory only) through 16.
b. Insulating existing uninsulated walls is very cost-effective based on both metrics everywhere except
Climate Zones 6 and 7 (in Climate Zone 8 it’s only cost-effective based on LSC).
c. Adding R-19 or R-30 floor insulation is cost-effective based on LSC in the older two vintages (Pre-1978
and 1978-1991) in all CZ except CZ 6-10.
d. Replacing old single pane windows with new high-performance windows has a very high cost and is
typically not done for energy savings alone. However, energy savings are substantial and justify cost-
effectiveness of this measure based on at least one metric in Climate Zones 4, 8 through 12 (PG&E
territory only), and 13 through 16.
e. At time of roof replacement, a cool roof with an aged solar reflectance of 0.25 was found to be cost-
effective in Climate Zones 4, 6 through 12 (PG&E territory only), and 13 through 15. When the roof
deck is replaced during a roof replacement, adding a radiant barrier is low cost and provides
substantial cooling energy savings, and was found to be cost-effective in almost all climate zones and
homes.
2. Duct measures: Many older homes have old, leaky duct systems that should be replaced when they reach the
end of life, typically 20-30 years. In this case, installing new ducts was found to be cost-effective based on at
least one metric (both in most cases) everywhere except mild Climate Zone 7 and Climate Zones 5 and 6 in
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades
Executive Summary 2
California Energy Codes & Standards | A statewide utility program 2024-04-25
the 1978-1991 vintage. If duct systems still have remaining life they should be sealed and tested to meet 10%
leakage or lower; however, duct upgrades alone were only found to be cost-effective for newer homes in
Climate Zones 10 (SDG&E territory only), 11, and 13 through 16. Duct upgrades may be able to be coupled
with other measures to reduce the cost.
3. Heat pump space heating: HPSHs were found to be LSC cost-effective in many cases. The Dual Fuel Heat
Pump (existing furnace) was LSC cost-effective everywhere except Climate Zone 15. The HPSH was LSC
cost-effective everywhere except Climate Zones 8 and 15.
a. Challenges to On-Bill cost-effectiveness include higher first costs and higher first-year utility costs due
to higher electricity tariffs relative to gas tariffs. SMUD and CPAU are two exceptions where first year
utility costs are lower for heat pumps than for gas equipment. Table 11 shows the impact of utility rates
on cost-effectiveness of HPSH where the standard and high efficiency HPSH and the HPSH + PV
measures are cost-effective under SMUD but not PG&E. Even with higher first year utility bills, there
were some cases that still proved On-Bill cost-effective including the DFHP with an existing furnace in
the central valley and northern coastal PG&E territories, the ducted MSHP in the central valley as well
as Climate Zone 14 in SDG&E territory, and the HPSH + PV measure in CZ 3-5 (PGE), 7-11, and 12
(SMUD) – 15.
b. The ductless MSHPs were only found to be cost-effective based on either metric in Climate Zones 1
and 16. Ductless MSHPs have a high incremental cost because it is a more sophisticated system than
the base model of a wall furnace with a window AC unit. However, the ductless MSHP would provide
greater comfort benefits if properly installed to directly condition all habitable spaces (as is required
under the VCHP compliance credit as evaluated in this study) which may be an incentive for a
homeowner to upgrade their system.
c. Higher efficiency equipment lowered utility costs in all cases and improved cost-effectiveness in many
cases, particularly with a ducted MSHP.
4. Heat pump water heating: All the HPWH measures were LSC cost-effective in all climate zones. Most
measures were not On-Bill cost-effective with the exception of the HPWH + PV which was cost-effective On-
Bill in CPAU, SMUD, and SDG&E territories in addition to Climate Zones 11, 13, 14, and 15. The HPWH
measures share many of the same challenges as the HPSH measures to achieving cost-effectiveness
including high first costs and utility rates and assumptions. Table 13 shows the impact of utility rates on cost-
effectiveness where some HPWH measures are cost-effective under SMUD utility rates but are not cost-
effective anywhere under PG&E rates in Climate Zone 12.
a. Various HPWH locations were also explored, however there are some factors outside of cost-
effectiveness that should also be considered.
i. HPWHs in the conditioned space can provide benefits such as free-cooling during the
summer, reduced tank losses, and shorter pipe lengths, and in some cases show improved
cost-effectiveness over garage located HPWHs. However, there are various design
considerations such as noise, comfort concerns, an additional heating load in the winter, and
condensate removal. Ducting the inlet and exhaust air resolves comfort concerns but adds
costs and complexity. Split heat pump water heaters address these concerns, but currently
there are limited products on the market and there is a cost premium relative to the packaged
products.
ii. Since HPWHs extract heat from the air and transfer it to water in the storage tank, they must
have adequate ventilation to operate properly. Otherwise, the space cools down over time,
impacting the HPWH operating efficiency. This is not a problem with garage installations but
needs to be considered for water heaters located in interior or exterior closets. For the 2025
Title 24 code the CEC is proposing that all HPWH installations meet mandatory ventilation
requirements (California Energy Commission, 2023).
5. The contractor surveys revealed overall higher heat pump costs than what has been found in previous
analyses. This could be due to incentive availability raising demand for heat pumps and thereby increasing the
price. This price increase may be temporary and may come down once the market stabilizes. There are also
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades
Executive Summary 3
California Energy Codes & Standards | A statewide utility program 2024-04-25
new initiatives to obtain current costs including the TECH Clean California program 1 that publishes heat pump
data and costs; however, at the time of this analysis, the TECH data did not contain incremental costs because
it only had the heat pump costs but not the gas base case costs.
6. Table 18 shows how CARE rates and escalation rate assumptions will impact cost-effectiveness.
a. Applying CARE rates in the IOU territories has the overall impact to increase utility cost savings for an
all-electric building compared to a code compliant mixed fuel building, improving On-Bill cost-
effectiveness. This is due to the CARE discount on electricity being higher than that on gas. The
reverse occurs with efficiency measures where lower utility rates reduce savings and subsequently
reduce cost-effectiveness.
b. If gas tariffs are assumed to increase substantially over time, in-line with the escalation assumption
from the 2025 LSC development, cost-effectiveness substantially improves for the heat pump
measures over the 30-year analysis period and many cases become cost-effective that were not found
to be cost-effective under the CPUC / 2022 TDV escalation scenario. There is much uncertainty
surrounding future tariff structures as well as escalation values. While it’s clear that gas rates will
increase, how much and how quickly is not known. Future electricity tariff structures are expected to
evolve over time, and the CPUC has an active proceeding to adopt an income-graduated fixed charge
that benefits low-income customers and supports electrification measures for all customers.2 The
CPUC will make a decision in mid-2024 and the new rates are expected to be in place later that year
or in 2025. While the anticipated impact of this rate change is lower volumetric electricity rates, the rate
design is not finalized. While lower volumetric electricity rates provide many benefits, it also will make
building efficiency measures harder to justify as cost-effective due to lower utility bill cost savings.
7. Under NBT, utility cost savings for PV are substantially less than what they were under prior net energy
metering rules (NEM 2.0); however, savings are sufficient to be On-Bill cost-effective in all climate zones
except Climate Zones 1 through 3, 5, and 6.
a. Combining a heat pump with PV allows the additional electricity required by the heat pump to be offset
by the PV system while also increasing on-site utilization of PV generation rather than exporting the
electricity back to the grid at a low rate.
b. While not evaluated in this study, coupling PV with battery systems can be very advantageous under
NBT increasing utility cost savings because of improved on-site utilization of PV generation and fewer
exports to the grid.
Recommendations:
1. There are various approaches for jurisdictions who are interested in reach codes for existing buildings. Some
potential approaches are listed below along with key considerations.
a. Prescriptive measures: Non-preempted measures that are found to be cost-effective may be
prescriptively required in a reach code. One example of this type or ordinance is a cool roof
requirement at time of roof replacement. Another example is requiring specific cost-effective measures
for larger remodels, such as high-performance windows when new windows are installed or duct
sealing and testing when ducts are in an unconditioned space.
b. Replacement equipment: This flavor of reach code sets certain requirements at time of equipment
replacement. This study evaluated space heating and water heating equipment. Where a heat pump
measure was found to be cost-effective based on either LSC or On-Bill, this may serve as the basis of
a reach code given the following considerations.
i. Where reach codes reduce energy usage and are not just fuel switching, cost-effectiveness
calculations are required and must be based on equipment that does not exceed the federal
minimum efficiency requirements.
ii. Where reach codes are established using cost-effectiveness based on LSC, utility bill impacts
and the owner’s first cost should also be reviewed and considered.
1 TECH Public Reporting Home Page (techcleanca.com)
2 https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/electric-costs/demand-response-dr/demand-flexibility-rulemaking
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades
Executive Summary 4
California Energy Codes & Standards | A statewide utility program 2024-04-25
iii. A gas path should also be prescriptively allowed to safely satisfy federal preemption
requirements considering the CRA v. Berkeley case.3 Additional requirements may apply to
the gas path, as described in Section 3.3, as long as the paths are reasonably energy or cost
equivalent.
c. “Flexible Path”, minimum energy savings target: This flexible approach establishes a target for
required energy savings based on a measure or a set of measures that were found to be cost-effective
based on either LSC or On-Bill. A points menu compares various potential upgrades ranging from
efficiency, PV, and fuel substitution measures, based on site or source energy savings. The applicant
must select upgrades that individually or in combination meet the minimum energy savings target. The
maximum target value shown in the Cost-effectiveness Explorer is based on a combination of cost-
effective, non-preempted measures.
2. Equipment replacement ordinances should consider appropriate exceptions for scenarios where it will be
challenging to meet the requirements, such as location of the HPWH, total project cost limitations, or the need
for service panel upgrades that wouldn’t have been required as part of the proposed scope of work in absence
of the reach code.
3. Consider extending relevant proposals made by the CEC for the 2025 Title 24 code (California Energy
Commission, 2023) in ordinances that apply under the 2022 Title 24 code, such as the following:
a. Mandatory ventilation requirements for HPWH installations (Section 110.3(c)7). The cost-effectiveness
analysis can be found in the Multifamily Domestic Hot Water CASE report (Statewide Team, 2023).
b. Requirement for HERS verified refrigerant charge verification for heat pumps in all climate zones
(Table 150.1-A 4). The cost-effectiveness analysis can be found in the Residential HVAC Performance
CASE report (Statewide Team, 2023).
4. When evaluating reach code strategies, the Reach Codes Team recommends that jurisdictions consider
combined benefits of energy efficiency alongside electrification. Efficiency and electrification have symbiotic
benefits and are both critical for decarbonization of buildings. As demand on the electric grid is increased
through electrification, efficiency can reduce the negative impacts of additional electricity demand on the grid,
reducing the need for increased generation and storage capacity, as well as the need to upgrade upstream
transmission and distribution equipment.
5. Education and training can play a critical role in ensuring that heat pumps are installed, commissioned, and
controlled properly to mitigate grid impacts and maximize occupant satisfaction. Below are select
recommended strategies.
a. The Quality Residential HVAC Services Program 5 is an incentive program to train California
contractors in providing quality installation and maintenance while advancing energy-efficient
technologies in the residential HVAC industry. Jurisdictions can market this to local contractors to
increase the penetration of contractors skilled in heat pump design and installation.
b. Educate residents and contractors of available incentives, tax credits, and financing opportunities.
c. Educate contractors on code requirements. Energy Code Ace provides free tools, training, and
resources to help Californians comply with the energy code. Contractors can access interactive
compliance forms, fact sheets, and live and recorded trainings, among other things, on the website:
https://energycodeace.com/. Jurisdictions can reach out to Energy Code Ace directly to discuss
offerings.
6. Health and safety
a. Combustion Appliance Safety and Indoor Air Quality: Implementation of some of the recommended
measures will affect the pressure balance of the home which can subsequently impact the safe
operation of existing combustion appliances as well as indoor air quality. Buildings with older gas
appliances can present serious health and safety problems which may not be addressed in a remodel
3 https://www.publichealthlawcenter.org/sites/default/files/2024-01/CRA-v-Berkeley-Ninth-Circuit-Opinion-Jan2024.pdf
4 This requirement does not show up in the Express Terms for alterations in Section 150.2(b)1F, but the Statewide Reach Codes
Team expects that it will be added to the next release of the proposed code language in the 45-day language as it aligns with the
proposal made by the Codes and Standards Enhancement Team (Statewide CASE Team, 2023).
5 https://qualityhvac.frontierenergy.com/
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades
Executive Summary 5
California Energy Codes & Standards | A statewide utility program 2024-04-25
if the appliances are not being replaced. It is recommended that the building department require
inspection and testing of all combustion appliances located within the pressure boundary of the
building after completion of retrofit work that involves air sealing or insulation measures.
b. Jurisdictions may consider requiring mechanical ventilation in homes where air sealing has been
conducted. In older buildings, outdoor air is typically introduced through leaks in the building envelope.
After air sealing a building, it may be necessary to forcefully bring in fresh outdoor air using supply
and/or exhaust fans to minimize potential issues associated with indoor air quality.
Local jurisdictions may also adopt ordinances that amend different Parts of the California Building Standards Code or
may elect to amend other state or municipal codes. The decision regarding which code to amend will determine the
specific requirements that must be followed for an ordinance to be legally enforceable. For example, reach codes that
amend Part 6 of the CA Building Code and require energy performance beyond state code minimums must
demonstrate the proposed changes are cost-effective and obtain approval from the Energy Commission as well as the
Building Standards Commission (BSC). Amendments to Part 11, such as requirements for increased water efficiency
or electric vehicle infrastructure only require BSC approval. Although a cost-effectiveness study is only required to
amend Part 6 of the CA Building Code, this study provides valuable context for jurisdictions pursuing other ordinance
paths to understand the economic impacts of any policy decision. This study documents the estimated costs, benefits,
energy impacts and greenhouse gas emission reductions that may result from implementing an ordinance based on
the results to help residents, local leadership, and other stakeholders make informed policy decisions.
This report documents the key results and conclusions from the Reach Codes Team analysis. A full dataset of all
results can be downloaded at https://localenergycodes.com/content/resources. Results alongside policy options can
also be explored using the Cost-effectiveness Explorer at https://explorer.localenergycodes.com/. Model ordinance
language and other resources are posted on the C&S Reach Codes Program website at LocalEnergyCodes.com.
Local jurisdictions that are considering adopting an ordinance may contact the program for further technical support at
info@localenergycodes.com.
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades
Introduction 6
California Energy Codes & Standards | A statewide utility program 2024-04-25
1 Introduction
This report documents cost-effective measure upgrades in existing single family buildings that exceed the minimum
state requirements, the 2022 Building Energy Efficiency Standards, effective January 1, 2023. Local jurisdictions in
California may consider adopting local energy ordinances to achieve energy savings beyond what will be accomplished
by enforcing building efficiency requirements that apply statewide. This report was developed in coordination with the
California Statewide Investor-Owned Utilities (IOUs) Codes and Standards Program, key consultants, and engaged
cities—collectively known as the Statewide Reach Codes Team.
The focus of this study is on existing single family buildings and does not apply to low or high-rise multifamily buildings.
Each jurisdiction must establish the appropriate structure and threshold for triggering the proposed requirements.
Some common jurisdictional structures include triggering the requirements at major remodels, additions, or date-certain
(upgrades must be completed by a specific date). Some of these measures could be triggered with a permit for another
specific measure, such as a re-roofing project. The analysis includes scenarios of individual measures and identifies
cost-effective options based on the existing conditions of the building in all 16 California Climate Zones (CZ) (see Cost-
Effectiveness Results for a graphical depiction of climate zone locations).
This report documents the key results and conclusions from the Reach Codes Team analysis. A full dataset of all
results can be downloaded at https://localenergycodes.com/content/resources. Results alongside policy options can
also be explored using the Cost-effectiveness Explorer at https://explorer.localenergycodes.com/.
The California Codes and Standards (C&S) Reach Codes program provides technical support to local governments
considering adopting a local ordinance (reach code) intended to support meeting local and/or statewide energy
efficiency and greenhouse gas reduction goals. The program facilitates adoption and implementation of the code when
requested by local jurisdictions by providing resources such as cost-effectiveness studies, model language, sample
findings, and other supporting documentation.
The California Building Energy Efficiency Standards Title 24, Part 6 (Title 24) (CEC, 2019) is maintained and updated
every three years by two state agencies: the California Energy Commission (the Energy Commission) and the Building
Standards Commission (BSC). In addition to enforcing the code, local jurisdictions have the authority to adopt local
energy efficiency ordinances—or reach codes—that exceed the minimum standards defined by Title 24 (as established
by Public Resources Code Section 25402.1(h)2 and Section 10-106 of the Building Energy Efficiency Standards).
Local jurisdictions must demonstrate that the requirements of the proposed ordinance are cost-effective and do not
result in buildings consuming more energy than is permitted by Title 24. In addition, the jurisdiction must obtain
approval from the Energy Commission and file the ordinance with the BSC for the ordinance to be legally enforceable.
The Department of Energy (DOE) sets minimum efficiency standards for equipment and appliances that are federally
regulated under the National Appliance Energy Conservation Act, including heating, cooling, and water heating
equipment (E-CFR, 2020). Since state and local governments are prohibited from adopting higher minimum efficiencies
than the federal standards require, the focus of this study is to identify and evaluate cost-effective packages that do not
include high efficiency heating, cooling, and water heating equipment. High efficiency appliances are often the easiest
and most affordable measure to increase energy performance. While federal preemption limits reach code mandatory
requirements for covered appliances, in practice, builders may install any package of compliant measures to achieve
the performance requirements.
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades
Methodology and Assumptions 7
California Energy Codes & Standards | A statewide utility program 2024-04-25
2 Methodology and Assumptions
2.1 Analysis for Reach Codes
This section describes the approach to calculating cost-effectiveness including benefits, costs, metrics, and utility rate
selection.
2.1.1 Modeling
The Reach Codes Team performed energy simulations using the 2025 research version of the Residential California
Building Energy Code Compliance software (CBECC). The 2025 version of CBECC was used instead of the 2022
version to take advantage of updated weather files and metrics. Site energy results are similar between CBECC-Res
2022 and 2025; however, the 2025 compliance metrics applies assumptions reflective of an electrified future, such as
high escalation for natural gas retail rates, which favors electric buildings. In addition, in 2025 the weather stations
were changed in Climate Zones 4 and 6 from San Jose to Paso Robles and Torrance to Los Angeles International
Airport, respectively.
Three unique building vintages are considered: pre-1978, 1978-1991, and 1992-2010. The vintages were defined
based on review of historic Title 24 code requirements and defining periods with distinguishing features. Prospective
energy efficiency measures were identified and modeled to determine the projected site energy (therm and kWh),
source energy, GHG emissions, and LSC (long-term systemwide cost) impacts. Annual utility costs were calculated
using hourly data output from CBECC, and current (as of 11/01/2023) electricity and natural gas tariffs for each of the
investor-owned utilities (IOUs) appropriate for that climate zone.
Equivalent CO2 emission reductions were calculated based on outputs from the CBECC-Res simulation software.
Electricity emissions vary by region and by hour of the year. CBECC-Res applies two distinct hourly profiles, one for
Climate Zones 1 through 5 and 11 through 13 and another for Climate Zones 6 through 10 and 14 through 16. Natural
gas emissions do not vary hourly. To compare the mixed-fuel and all-electric cases side-by-side, GHG emissions are
presented as lbs CO2-equivalent (CO2e) emissions.
The Statewide Reach Codes Team designed the analysis approach and selected measures for evaluation based on
the 2019 existing building single family reach code analysis (Statewide Reach Codes Team, 2021) and work to support
the 2025 Title 24 code development cycle as well as from outreach to architects, builders, and engineers.
2.1.2 Prototype Characteristics
The Energy Commission defines building prototypes which it uses to evaluate the cost-effectiveness of proposed
changes to Title 24 requirements. Average home size has steadily increased over time,6 and the Energy Commission
single family new construction prototypes are larger than many existing single family homes across California. For this
analysis, a 1,665 square foot prototype was evaluated. Table 1 describes the basic characteristics of the single family
prototype. Additions are not evaluated in this analysis as they are already addressed in Section 150.2 of Title 24, Part
6. The CEC has proposed changes to the 2025 Energy Code that would remove the allowance of gas space heating
and water heating equipment for additions and instead require additions to follow the same space heating and water
heating equipment requirements as new construction (California Energy Commission, 2023). The proposed
prescriptive requirements for single family new construction homes are heat pump space heaters and water heaters,
with gas equipment only allowed in the performance approach.
6 https://www.census.gov/const/C25Ann/sftotalmedavgsqft.pdf
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades
Methodology and Assumptions 8
California Energy Codes & Standards | A statewide utility program 2024-04-25
Table 1. Prototype Characteristics
Specification
Existing Conditioned Floor Area 1,665 ft2
Num. of Stories 1
Num. of Bedrooms 3
Window-to-Floor Area Ratio 13%
Attached Garage 2-car garage
Three building vintages were evaluated to determine sensitivity of existing building performance on cost-effectiveness
of upgrades. For example, it is widely recognized that adding attic insulation in an older home with no insulation is cost-
effective, however, newer homes will likely have existing attic insulation reducing the cost-effectiveness of an
incremental addition of insulation. The building characteristics for each vintage were determined based on either
prescriptive requirements from Title 24 that were in effect or standard construction practice during that time period.
Homes built under 2001 Title 24 are subject to prescriptive envelope code requirements very similar to homes built
under the 2005 code cycle, which was in effect until January 1, 2010.
Table 2 summarizes the assumptions for each of the three vintages. Additionally, the analysis assumed the following
features when modeling the prototype buildings. Efficiencies were defined by year of the most recent equipment
replacement based on standard equipment lifetimes.
• Individual space conditioning and water heating systems, one per single family building.
• Split-system air conditioner with natural gas furnace.
o Scenarios with an existing natural gas wall furnace without AC were also evaluated.
• Small storage natural gas water heater.
o Scenarios with an existing electric resistance storage water heater were also evaluated.
• Gas cooktop, oven, and clothes dryer.
The methodology applied in the analyses begins with a design that matches the specifications as described in Table 2
for each of the three vintages. Prospective energy efficiency measures were modeled to determine the projected
energy performance and utility cost impacts relative to the baseline vintage. In some cases, where logical, measures
were packaged together.
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades
Methodology and Assumptions 9
California Energy Codes & Standards | A statewide utility program 2024-04-25
Table 2. Efficiency Characteristics for Three Vintage Cases
Building Component Efficiency
Feature
Vintage Case
Pre-1978 1978-1991 1992-2010
Envelope
Exterior Walls 2x4, 16-inch on center wood frame,
R-0a
2x4 16 inch on center wood frame,
R-11
2x4 16 inch on center wood frame,
R-13
Foundation Type & Insulation Uninsulated slab (CZ 2-15)
Raised floor, R-0 (CZ 1 & 16)
Uninsulated slab (CZ 2-15)
Raised floor, R-0 (CZ 1 & 16)
Uninsulated slab (CZ 2-15)
Raised floor, R-19 (CZ 1 & 16)
Ceiling Insulation & Attic Type
Vented attic, R-5 @ ceiling level for CZ
6 & 7,
Vented attic, R-11 @ ceiling level
(all other CZs)
Vented attic, R-19 @ ceiling level Vented attic, R-30 @ ceiling level
Roofing Material & Color Asphalt shingles, dark
(0.10 reflectance, 0.85 emittance)
Asphalt shingles, dark
(0.10 reflectance, 0.85 emittance)
Asphalt shingles, dark
(0.10 reflectance, 0.85 emittance)
Radiant Barrier No No No
Window Type: U-factor/SHGCb Metal, single pane: 1.16/0.76 Metal, dual pane: 0.79/0.70 Vinyl, dual pane Low-E: 0.55/0.40
House Infiltration at 50 Pascals 15 ACH50 10 ACH50 7 ACH50
HVAC Equipment
Heating Efficiency 78 AFUE (assumes 2 replacements) 78 AFUE (assumes 1 replacement) 78 AFUE
Cooling Efficiency 10 SEER (assumes 2 replacements) 10 SEER (assumes 1 replacement) 13 SEER, 11 EER
Duct Location & Details Attic, R-2.1, 30% leakage at 25 Pa Attic, R-2.1, 25% leakage at 25 Pa Attic, R-4.2, 15% leakage at 25 Pa
Whole Building Mechanical
Ventilation None None None
Water Heating Equipment
Water Heater Efficiency 0.575 Energy Factor (assumes 2
replacements)
0.575 Energy Factor (assumes 1
replacement) 0.575 Energy Factor
Water Heater Type 40-gallon gas storage 40-gallon gas storage 40-gallon gas storage
Pipe Insulation None None None
Hot Water Fixtures Standard, non-low flow Standard, non-low flow Standard, non-low flow
a Pre-1978 wall modeled with R-5 cavity insulation to better align wall system performance with monitored field data and not overestimate energy use.
b Window type selections were made based on conversations with window industry expert, Ken Nittler. If a technology was entering the market during the time period (e.g.,
Low-E during 1992-2010 or dual-pane during 1978-1991) that technology was included in the analysis. This provides a conservative assumption for overall building
performance and additional measures may be cost-effective for buildings with lower performing windows, for example buildings with metal single pane windows in the 1978-
1991 vintage.
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades 10 Methodology and Assumptions
California Energy Codes & Standards | A statewide utility program 2024-04-25
2.1.3 Cost-Effectiveness Approach
2.1.3.1 Benefits
This analysis used two different metrics to assess the cost-effectiveness of the proposed upgrades. Both
methodologies require estimating and quantifying the incremental costs and energy savings associated
with each energy efficiency measure. The main difference between the methodologies is the way they value energy
impacts (the numerator in the benefit cost calculation):
Utility Bill Impacts (On-Bill): This customer-based lifecycle cost (LCC) approach values energy based upon
estimated site energy usage and customer utility bill savings using the latest electricity and natural gas utility tariffs
available at the time of writing this report. Total savings are estimated over a 30-year duration and include discounting
of future utility costs, as well as assumed energy cost inflation over time.
Long-term Systemwide Cost (LSC): Formerly known as Time Dependent Valuation (TDV) energy cost savings, LSC
reflects the Energy Commission’s current LCC methodology, which is intended to capture the total value or cost of
energy use over 30 years. This method accounts for the hourly cost of marginal generation, transmission and
distribution, fuel, capacity, losses, and cap-and-trade-based CO2 emissions (California Energy Commission, 2023).
This is the methodology used by the Energy Commission in evaluating cost-effectiveness for efficiency measures in the
2025 Energy Code.
2.1.3.2 Costs
The Reach Codes Team assessed the incremental costs of the measures and packages over a 30-year analysis
period. Incremental costs represent the equipment, installation, replacement, and maintenance costs of the proposed
measure relative to the 2022 Title 24 Standards minimum requirements or standard industry practices. Present value of
replacement cost is included only for measures with lifetimes less than the 30-year evaluation period. In cases where
at the end of the analysis period the measure has useful life remaining, the value of this remaining life is calculated and
credited in the total lifetime cost.
2.1.3.3 Metrics
Cost-effectiveness is presented using net present value (NPV) and benefit-to-cost (B/C) ratio metrics.
NPV: Equation 1 demonstrates how lifetime NPV is calculated. If the NPV of a measure or package is positive, it is
considered cost-effective. A negative value represents a net increase in costs over the 30-year lifetime.
B/C Ratio: This is the ratio of the present value of all benefits to the present value of all costs over 30 years (present
value benefits divided by present value costs). A value of one indicates the NPV of the savings over the life of the
measure is equivalent to the NPV of the lifetime incremental cost of that measure. A value greater than one represents
a positive return on investment. The B/C ratio is calculated according to Equation 2.
Equation 1 𝑁𝑁𝑁𝑁𝑁𝑁=𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝 𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑝𝑝 𝑜𝑜𝑜𝑜 𝑣𝑣𝑙𝑙𝑜𝑜𝑝𝑝𝑝𝑝𝑙𝑙𝑙𝑙𝑝𝑝 𝑏𝑏𝑝𝑝𝑝𝑝𝑝𝑝𝑜𝑜𝑙𝑙𝑝𝑝−𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝 𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑝𝑝 𝑜𝑜𝑜𝑜 𝑣𝑣𝑙𝑙𝑜𝑜𝑝𝑝𝑝𝑝𝑙𝑙𝑙𝑙𝑝𝑝 𝑐𝑐𝑜𝑜𝑝𝑝𝑝𝑝
Equation 2 𝐵𝐵𝑝𝑝𝑝𝑝𝑝𝑝𝑜𝑜𝑙𝑙𝑝𝑝−𝑝𝑝𝑜𝑜−𝐶𝐶𝑜𝑜𝑝𝑝𝑝𝑝 𝑅𝑅𝑣𝑣𝑝𝑝𝑙𝑙𝑜𝑜=𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝 𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑝𝑝 𝑜𝑜𝑜𝑜 𝑣𝑣𝑙𝑙𝑜𝑜𝑝𝑝𝑝𝑝𝑙𝑙𝑙𝑙𝑝𝑝 𝑏𝑏𝑝𝑝𝑝𝑝𝑝𝑝𝑜𝑜𝑙𝑙𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝 𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑝𝑝 𝑜𝑜𝑜𝑜 𝑣𝑣𝑙𝑙𝑜𝑜𝑝𝑝𝑝𝑝𝑙𝑙𝑙𝑙𝑝𝑝 𝑐𝑐𝑜𝑜𝑝𝑝𝑝𝑝
Improving the efficiency of a project often requires an initial incremental investment. In most cases the benefit is
represented by annual On-Bill utility or LSC savings, and the cost is represented by incremental first cost and future
replacement costs. Some packages result in initial construction cost savings relative to the assumed base case
scenario, and either energy cost savings (positive benefits), or increased energy costs (negative benefits). In cases
where both construction costs and energy-related savings are negative, the construction cost savings are treated as
the ‘benefit’ while the increased energy costs are the ‘cost.’ In cases where a measure or package is cost-
effective immediately (i.e., upfront construction cost savings and lifetime energy cost savings), B/C ratio cost-
effectiveness is represented by “>1”.
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades 11 Methodology and Assumptions
California Energy Codes & Standards | A statewide utility program 2024-04-25
The lifetime costs or benefits are calculated according to Equation 3.
Equation 3 𝑁𝑁𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝 𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑝𝑝 𝑜𝑜𝑜𝑜 𝑣𝑣𝑙𝑙𝑜𝑜𝑝𝑝𝑝𝑝𝑙𝑙𝑙𝑙𝑝𝑝 𝑐𝑐𝑜𝑜𝑝𝑝𝑝𝑝 𝑜𝑜𝑝𝑝 𝑏𝑏𝑝𝑝𝑝𝑝𝑝𝑝𝑜𝑜𝑙𝑙𝑝𝑝=�(𝐴𝐴𝑝𝑝𝑝𝑝𝑣𝑣𝑣𝑣𝑣𝑣 𝑐𝑐𝑜𝑜𝑝𝑝𝑝𝑝 𝑜𝑜𝑝𝑝 𝑏𝑏𝑝𝑝𝑝𝑝𝑝𝑝𝑜𝑜𝑙𝑙𝑝𝑝)𝑡𝑡(1 +𝑝𝑝)𝑡𝑡𝑛𝑛
𝑡𝑡=0
Where:
1. n = analysis term in years
2. r = discount rate
The following summarizes the assumptions applied in this analysis to both methodologies.
3. Analysis term of 30 years
4. Real discount rate of three percent
Both base case measures and alternative energy efficiency measures may have different lifetime assumptions which
impact life cycle economics. Future costing of many of the evaluated electrification measures are only based on current
cost assumption, which may be overly conservative as the expected growth in heat pump-based technologies is
growing rapidly and will likely lead to future cost reductions (at least relative to current fossil fueled equipment) as
production volumes increase.
2.1.4 Utility Rates
In coordination with the CA IOU rate team (comprised of representatives from Pacific Gas and Electric (PG&E),
Southern California Edison (SCE) and San Diego Gas and Electric (SDG&E)) and two Publicly-Owned-Utilities (POUs)
(Sacramento Municipal Utility District (SMUD) and City of Palo Alto Utilities (CPAU)), the Reach Codes Team
determined appropriate utility rates for each climate zone to calculate utility costs and determine On-Bill cost-
effectiveness for the proposed measures and packages. The utility tariffs, summarized in Chapter 6.2, were determined
based on the appropriate rate for each case in each territory. Utility rates were applied to each climate zone based on
the predominant IOU serving the population of each zone, with a few climate zones evaluated multiple times under
different utility scenarios. Climate Zones 10 and 14 were evaluated with both SCE for electricity and Southern
California Gas Company (SoCalGas) for gas and SDG&E tariffs for both electricity and gas since each utility has
customers within these climate zones. Climate Zone 5 is evaluated under both PG&E and SoCalGas natural gas rates.
Two POU or municipal utility rates were also evaluated: SMUD in Climate Zone 12 and CPAU in Climate Zone 4.
For cases with onsite generation (i.e. solar photovoltaics (PV)), the approved NBT tariffs were applied along with
monthly service fees and hourly export compensation rates for 2024.7 In December 2022, the California Public Utilities
Commission (CPUC) issued a decision adopting NBT as a successor to NEM 2.0 that went into effect April of 2023 8.
Utility rates are assumed to escalate over time according to the assumptions from the CPUC 2021 En Banc hearings
on utility costs through 2030 (California Public Utilities Commission, 2021a). Escalation rates through the remainder of
the 30-year evaluation period are based on the escalation rate assumptions within the 2022 TDV factors. The
Statewide Natural Gas Residential Average Rate for 2023 through 2030 is projected to be 4.6%. The Electric
Residential Average Rate for PG&E, SCE and SDG&E for 2023 through 2030 is projected to be 1.8%,1.6% and 2.8%
respectively. A second set of escalation rates were also evaluated to demonstrate the impact that utility cost changes
have on cost-effectiveness over time. This utility rate escalation sensitivity analysis, presented in Section 3.2.4, was
based on those used within the 2025 LSC factors (LSC replaces TDV in the 2025 code cycle) which assumed steep
7 Hourly export compensation rates were based on the NBT spreadsheet model created by E3 for the CPUC.
https://www.cpuc.ca.gov/-/media/cpuc-website/divisions/energy-division/documents/net-energy-metering-
nem/nemrevisit/nbt-model--12142022.xlsb
8 https://www.cpuc.ca.gov/nemrevisit
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increases in gas rates in the latter half of the analysis period. See Appendix 6.2.7 Fuel Escalation Assumptions for
details.
Future electricity tariff structures are expected to evolve over time, and the CPUC has an active proceeding to adopt an
income-graduated fixed charge that benefits low-income customers and supports electrification measures.10 These
were not included in this analysis but may be evaluated later in 2024 once the rates are finalized.
2.1.5 Measure Cost Data Collection Approach
To support this effort, a detailed cost study was completed in the summer of 2023 to gather data from a range of
contractors to inform actual installed costs in the areas they provide services. These areas include HVAC, plumbing,
envelope and air-sealing, and PV installation. Home performance contractors were also approached to collect this
data. Collecting this type of data is challenging, both due to contractor reticence to share cost information and due to
the timing of the survey which unfortunately coincided with the summer busy season for most contractors, especially
HVAC installers. With these known challenges, the outreach effort focused on leveraging existing relationships
between the analysis team and contractors to both gain access and provide assurance that all cost data would remain
confidential and aggregated. Contractors that provided feedback were nominally compensated for their time.
The collected cost data was intended to represent recent costs for a “typical” retrofit installation. Each home in which a
contractor does work has different site-specific issues that will likely affect costs. In addition, different jurisdictions have
different levels of building department installation oversight and permit fees. Finally, each contractor typically has a
different manufacturer product line they prefer to install. All these factors will influence installed costs 11.
The most detailed and broad cost request was for the HVAC contractors, as there are a wide range of equipment
replacement scenarios available for an existing ducted gas furnace with central split-system air conditioning. Options
range from a base case scenario (like for like swap out), split-system heat pump replacement, dual fuel heat pumps
(DFHP), ducted mini-split heat pumps, non-ducted mini-splits, etc. For plumbing contractors, a range of scenarios
existed for water heater replacements including like-for-like replacement, HPWHs (in different locations- garage,
indoor), need for electrical upgrade for HPWH installation, need for HPWH ducting, etc. Envelope measures focused
on attic and wall insulation, window replacement, re-roofing (with Cool Roof materials or not), and attic ceiling plane air-
sealing. PV costing included different system sizes, panel upgrades costs, and battery costs. Home performance
contractors were asked to provide as much data as they could on the different measure options. All costing information
requested was intended to represent most recent installations, in an effort to capture current pricing as best as
possible.
The contractors that responded with their cost estimates work in different regions of the state, operate in different
markets with (potentially) different local efficiency incentives, do varying amounts of work based on the size of their
company, target different market demographic sectors, and install different brands of equipment. All these factors will
contribute to price variability. The Team considered applying climate zone specific cost adjustments to reflect some of
these differences, but ultimately decided not to since a climate zone is not a monolithic entity with uniform customer
pricing throughout. The Team recognizes that “zip code” pricing is a reality, but for simplicity, as well as consistency
with Title 24, Part 6 code development costing approaches, applied uniform statewide costs to all measures.
2.2 Measure Details and Cost
This section describes the details of the measures and documents incremental costs. All measure costs were obtained
from the contractor survey unless otherwise noted. All contractor provided costs reflect the cost to the customer and
10 https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/electric-costs/demand-response-dr/demand-
flexibility-rulemaking
11 One HVAC contractor mentioned that equipment brand alone may contribute to a +/-%5 variation in the total bid
cost.
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades 13 Methodology and Assumptions
California Energy Codes & Standards | A statewide utility program 2024-04-25
include equipment, labor, permit fees, and required HERS testing. Additional details of the measures can be found in
Appendix Section Error! Reference source not found..
All measures are evaluated assuming they are not otherwise required by Title 24. For example, duct sealing is required
by code whenever HVAC equipment is altered. For this analysis duct sealing was evaluated for those projects where it
is not already triggered by code (i.e., no changes to the heating or cooling equipment). Where appropriate, measure
requirements align with those defined in Title 24. In some cases, cost-effective measures were identified that exceed
Title 24 requirements, such as attic insulation, cool roofs, and duct sealing.
2.2.1 Building Envelope & Duct Measures
The following are descriptions of each of the efficiency upgrade measures applied in this analysis.
Attic Insulation: Add attic insulation in buildings with vented attic spaces to meet either R-38 or R-49. The pre-1978
vintage assumes an existing condition of R-11, the 1978-1991 vintage assumes an existing condition of R-19, and the
1992-2010 vintage assumes R-30 as the existing insulation level. For pre-1978 vintage homes this measure was also
evaluated to include air sealing of the attic. A 14% leakage reduction was modeled such that 15 ACH50 was reduced
to 12.9 ACH50 in this measure. The costs for this measure include removing existing insulation.
Air Sealing and Weather-stripping: Apply air sealing practices throughout all accessible areas of the building. For
this study, it was assumed that older vintage homes would be leakier than newer buildings and that approximately 30
percent improvement in air leakage is achievable through air sealing of all accessible areas. For modeling purposes, it
was assumed that air sealing can reduce infiltration levels from 15 to ten air changes per hour at 50 Pascals pressure
difference (ACH50) in the oldest vintages (pre-1978), to ten to seven ACH50 for the 1978-1991 vintage, and seven to
five ACH50 in the 1992-2010 vintage.
Cool Roof: For steep slope roofs, install a roofing product rated by the Cool Roof Rating Council (CRRC) with an
aged solar reflectance of 0.20 or 0.25 and thermal emittance of 0.75 or higher. This measure only applies to buildings
that are installing a new roof as part of the scope of the remodel; the cost and energy savings associated with this
upgrade reflects the incremental step between a standard roofing product with one that is CRRC rated with an aged
solar reflectance of 0.20 or 0.25. This is similar to cool roof requirements in 2022 Title 24 Section 150.2(b)1Ii but
assumes a higher solar reflectance.
Radiant Barrier: Add radiant barrier to any existing home vintage. This measure only applies to buildings that are
installing a new roof as part of the scope of the remodel; the cost and energy savings associated with this upgrade
reflects the incremental step between a standard roofing product with one that includes a laminated radiant barrier.
Raised Floor Insulation: In existing homes with raised floors and no insulation (pre-1978 and 1978-1991 vintages),
add R-19 insulation. An upgraded R-30 floor insulation, assuming no current insulation, was evaluated in the pre-1978
and 1978-1991 vintages.
Wall Insulation: Blow-in R-13 wall insulation in existing homes without wall insulation (pre-1978 vintages).
Window Replacement: Replace existing windows with a non-metal dual-pane product, which has a U-factor equal to
0.28 Btu/hour-ft2-°F or lower and a Solar Heat Gain Coefficient (SHGC) equal to 0.23 or lower, except in heating
dominated climates (Climate Zones 1, 3, 5, and 16) where an SHGC of 0.35 was evaluated.
Duct Sealing, New Ducts, and Duct Insulation: Air seal all ductwork to meet the requirements of the 2022 Title 24,
Part 6 Section 150.2(b)1E. For this analysis, final duct leakage values of ten percent (proposed revised leakage rate for
2022 Title 24) was evaluated. The pre-1978 and 1978-1992 vintages assume leaky existing ducts (25-30% leakage).
The 1992-2010 vintage assumes moderately leaky existing ducts (15-20% leakage).
Replacing existing ductwork with entirely new ductwork to meet Sections 150.2(b)1Di and 150.2(b)1Diia of the 2022
Title 24 was also evaluated. This assumed new ducts meet 5% duct leakage and the option of R-6 and R-8 duct
insulation in all climate zones.
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades 14 Methodology and Assumptions
California Energy Codes & Standards | A statewide utility program 2024-04-25
Table 3 summarizes the cost assumptions for the building envelope and HVAC duct improvement measures evaluated.
All the measures in Table 3 assume a 30-year effective useful life.
Table 3. Measure Cost Assumptions – Efficiency & Duct Measures
Measure Performance Level
Incremental Cost –
Single Family Building
Pre 1978 1978 – 1991 1992 - 2010
Wall Insulation R-13 $2,950 N/A N/A
Raised Floor
Insulation
R-19 $3,633 $3,633 N/A
R-30 $4,113 $4,113 $4,113
Attic Insulation R-38 $6,762 $2,555 $1,781
R-49 $7,446 $3,612 $1,827
Air Sealing
10 ACH50 $4,684 N/A N/A
7 ACH50 N/A $4,684 N/A
5 ACH50 N/A N/A $4,684
Cool Roof
0.25 Aged Solar Reflectance
CZs 1-3,5-7,16 $2,407 $2,407 $2,407
0.25 Aged Solar Reflectance
CZs 4, 8-15 $1,203 $1,203 $1,203
Window
U-factor/SHGC
0.28 U-factor. 0.23 SHGC in
CZs 2,4,6-15. $11,463 $11,463 $11,463
0.28 U-factor. 0.35 SHGC in
CZs 1,3,5,26 $11,871 $11,871 $11,871
Radiant Barrier Add Radiant Barrier $893 $893 $893
Duct Sealing 10% nominal airflow $2,590 $2,590 $1,400
All New Duct
System
R-6 ducts;
5% duct leakage $4,808 $4,808 $4,808
R-8 ducts;
5% duct leakage $6,311 $6,311 $6,311
2.2.2 PV Measures
Installation of on-site PV is required in the 2022 Title 24 code for new construction homes, but there are no PV
requirements for additions or alterations to existing buildings. PV was evaluated in CBECC-Res according to the
California Flexible Installation (CFI) 1 assumptions and 98% solar access. To meet CFI eligibility, the requirements of
2022 Reference Appendices JA11.2.2 (California Energy Commission, 2021b) must be met. A 3 kW PV system was
modeled both as a standalone measure as well as coupled with heat pump installations.
The costs for installing PV are summarized in Table 4. They include the first cost to purchase and install the system,
future inverter replacement costs, and annual maintenance costs. Upfront solar PV system costs are estimated from
the contractor surveys to be $4.58/WDC and are reduced by 30 percent to account for the federal income Residential
Clean Energy Credit. The solar panels are estimated to have an effective useful life of 30 years and the inverter 25
years. The inverter replacement cost of $7,000 (future value) is also from the contractor surveys. System maintenance
costs are taken from the 2019 PV CASE Report (California Energy Commission, 2017) and are assumed to be
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades 15 Methodology and Assumptions
California Energy Codes & Standards | A statewide utility program 2024-04-25
$0.31/WDC present value. These costs do not include costs associated with electrical panel upgrades, which will be
necessary in some instances.
Table 4. Measure Descriptions & Cost Assumptions – PV
Measure Performance
Level
Incremental Cost
Pre 1978 1978 – 1991 1992 - 2010
PV 3 kW $9,608
2.2.3 Equipment Fuel Substitution Measures – Heat Pump Equipment
The fuel substitution measures are evaluated as replacements at the end of the life of the existing equipment. This
means the baseline compared against is usually a like-for-like change-out of the natural gas equipment, and the
upgrade is a heat pump.
For most of the space heating and water heating cases, costs for electrical service panel upgrades are not included as
it is assumed many existing homes have the service capacity to support converting one appliance from gas to electric.
For homes with existing air conditioners, any incremental electric capacity necessary to support a heat pump space
heater is marginal. The same applies for homes with existing electric resistance equipment. Section 3.2.4 presents the
impacts for select cases where an upgrade to the electric panel is required.
Heat Pump Space Heating
All the heat pump space heater (HPSH) measures are described below. All were evaluated with HERS verified
refrigerant charge aligned with the proposed code requirements for the 2025 Title 24 code. Dual fuel heat pumps
(DFHPs) were controlled to lockout furnace operation above 35°F.
DFHP (Existing Furnace): Replace existing ducted air conditioner (AC) with an electric heat pump and install controls
to operate the heat pump to use the existing gas furnace for backup heat. A minimum federal efficiency (14.3 SEER2,
11.7 EER2, 7.5 HSPF2) heat pump was evaluated. Savings are compared to a new AC (14.3 SEER2, 11.7 EER2)
alongside the existing furnace (78 AFUE).
DFHP (New Furnace): Replace existing ducted AC and natural gas furnace with an electric heat pump and new gas
furnace plus controls to operate the heat pump and use the new gas furnace for backup heat. A minimum federal
efficiency (14.3 SEER2, 11.7 EER2, 7.5 HSPF2) heat pump and furnace (80 AFUE) were evaluated to replace existing
equipment. Savings are compared to a new ducted AC and natural gas furnace (14.3 SEER2, 11.7 EER2, 80 AFUE).
Heat Pump Space Heater: Replace existing ducted AC and natural gas furnace with an electric heat pump. Minimum
federal efficiency (14.3 SEER2, 11.7 EER2, 7.5 HSPF2) and higher efficiency (17 SEER2, 12.48 EER2, 9.5 HSPF2)
heat pumps were evaluated. Savings are compared to a new ducted natural gas furnace and AC (14.3 SEER2, 11.7
EER2, 80 AFUE).
Ducted Mini-Split Heat Pump (MSHP): Replace existing ducted AC and natural gas furnace with a ducted high
efficiency MSHP (16.5 SEER2, 12.48 EER2, 9.5 HSPF2). Savings are compared to a new ducted AC and natural gas
furnace (14.3 SEER2, 11.7 EER2, 80 AFUE).
Ductless MSHP: In a home without AC, replace existing wall furnace with a ductless MSHP. A standard efficiency unit
meeting minimum federal efficiency standards (14.3 SEER2, 11.7 EER2, 7.5 HSPF2) was evaluated by modeling the
variable capacity heat pump (VCHP) compliance credit in CBECC-Res. A premium, higher efficiency upgrade was also
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades 16 Methodology and Assumptions
California Energy Codes & Standards | A statewide utility program 2024-04-25
evaluated using CBECC-Res’ detailed VCHP model 12 by simulating the performance of a representative high efficiency
product (14.3 SEER2, 11.7 EER2, 7.5 HSPF2). Savings are compared to a new natural gas wall furnace with fan
distribution (75% AFUE) and window AC (9 CEER).
Over the 30-year analysis period, certain changes are assumed when the equipment is replaced that impact both
lifetime costs and energy use. Table 5 presents the lifetime scenario for the DFHP (existing furnace) measure. The
analysis assumed a 20-year effective useful lifetime (EUL) for a furnace, a 15-year EUL for an air conditioner and a 15-
year EUL for a heat pump. Lifetimes are based on the Database for Energy Efficient Resources (DEER) (California
Public Utilities Commission, 2021b). The existing furnace is assumed to be halfway through its EUL at the beginning of
the analysis period. After 10 years when the furnace reaches the end of its life and needs to be replaced, it will be
subject to new federal efficiency standards for residential gas furnaces that go into effect in 2028 requiring 95 AFUE 13.
5 years later the air conditioner reaches the end of its life and is replaced with a new air conditioner.
For the DFHP upgrade case, after 10 years when the furnace fails it’s expected that the furnace will be abandoned in
place since the heat pump serves primary heating and was sized to provide the full design heating load. In this case it
is assumed that the fan motor would be replaced with a new aftermarket unit and would operate another 5 years until
the heat pump fails and is replaced with a new heat pump and air handler.
The other ducted heat pump cases similarly apply a 95 AFUE furnace in the baseline when the furnace reaches its
EUL after 20 years.
Table 5. Lifetime Analysis Replacement Assumptions for DFHP (Existing Furnace) Scenario
Year Baseline Upgrade
0 AC fails, install new AC,
keep existing furnace
AC fails, install new HP,
keep existing furnace
10 Furnace fails, install new
95AFUE furnace
Furnace fails, replace fan
motor
15 AC fails, install new AC HP fails, install new HP
and air handler
Costs were applied based on the system capacity from heating and cooling load calculations in CBECC-Res as
presented in Table 6. Air conditioner nominal capacity was calculated as the CBECC-Res cooling load, rounded up to
the nearest half ton. Heat pump nominal capacity was calculated as the maximum of either the CBECC-Res heating or
cooling load, rounded up to the nearest half ton. In both cases a minimum capacity of 1.5-ton was applied as this
represents the typical smallest available split system heat pump equipment. Load calculations demonstrated that
Climate Zones 2 - 15 were cooling-dominated while Climate Zones 1 and 16 were heating-dominated. In the heating
dominated climate zones the heat pump needed to be upsized relative to an air conditioner that only provides cooling.
12 The detailed VCHP option allows for the user to input detailed specifications based on the published National Energy
Efficiency Partnership (NEEP) manufacturer specific performance data. It is not currently available for compliance
analysis.
13 https://www.energy.gov/articles/doe-finalizes-energy-efficiency-standards-residential-furnaces-save-americans-15-
billion#:~:text=These%20furnace%20efficiency%20standards%20were,heat%20for%20the%20living%20space.
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades 17 Methodology and Assumptions
California Energy Codes & Standards | A statewide utility program 2024-04-25
Table 6. System Sizing by Climate Zone
Climate
Zone
Air Conditioner
Capacity (tons)
Heat Pump
Capacity (tons)
1 1.5 3.0
2 3.5 3.5
3 2.5 2.5
4 3.5 3.5
5 3.0 3.0
6 3.0 3.0
7 3.0 3.0
8 4.0 4.0
9 4.0 4.0
10 4.0 4.0
11 4.5 4.5
12 4.0 4.0
13 4.5 4.5
14 4.0 4.0
15 5.0 5.0
16 3.5 4.0
Table 7 presents estimated first and lifetime costs for the various ducted baseline and heat pump scenarios for 4-ton
equipment. Costs include all material and installation labor including providing new 240 V electrical service to the air
handler location for all new air handler installations and decommissioning of the furnace for the cases where the
furnace is removed. DFHP costs incorporate controls installation and commissioning to ensure the heat pump and the
furnace communicate properly and don’t operate at the same time. Future replacement costs do not include any initial
costs associated with 240V electrical service or furnace decommissioning.
Table 8 presents estimated first and lifetime costs for the ductless baseline and 2 heat pump scenarios, also for 4-ton
heat pump equipment. EULs are based on 20 years for the gas wall furnace, 10 years for the window AC, and 15 years
for the heat pump.14
14 The gas wall furnace and heat pump EULs were based on DEER (California Public Utilities Commission, 2021b).
Gas wall furnace lifetime was assumed to be the same as for central gas furnace equipment. Room air conditioner
EUL was based on the DOE’s latest rulemaking for room air conditioned (Department of Energy, 2023). DOE
determined an average lifetime of 9.3 years, which was rounded up to 10 years for this analysis.
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades 18 Methodology and Assumptions
California Energy Codes & Standards | A statewide utility program 2024-04-25
Table 7. Ducted HVAC Measure Cost Assumptions – 4-Ton Electric Replacements
Case AC + Coil
Gas
Furnace
/AC
DFHP
(Existing
Furnace)
DFHP (New
Furnace)
Min. Eff.
Heat Pump
High Eff.
Heat
Pump
Ducted
MSHP
Base Case - - AC + Coil
Gas
Furnace
/AC
Gas
Furnace
/AC
Gas
Furnace
/AC
Gas
Furnace
/AC
First Cost $10,402 $16,653 $12,362 $20,676 $17,825 $20,802 $18,075
Replacement Cost
(Future Value) $19,365 $19,365 $19,025 $19,025 $16,825 $19,802 $18,075
Replacement Cost
(Present Value) $13,346 $11,639 $12,334 $12,897 $10,800 $12,710 $11,601
Remaining Value
at Year 30 $0 ($1,846) $0 ($1,846) $0 $0 $0
Total Lifecycle
Cost $23,748 $26,446 $24,696 $31,727 $28,625 $33,512 $29,676
Incremental Cost - - $948 $5,281 $2,179 $7,066 $3,230
Table 8. Non-Ducted HVAC Measure Cost Assumptions – 4-Ton Electric Replacements
Wall Furnace
+ Window AC
Min. Eff.
Ductless
MSHP
High Eff.
Ductless
MSHP
First Cost $4,075 $17,412 $21,342
Replacement Cost (Future Value) $4,075 $17,412 $21,342
Replacement Cost (Present Value) $3,365 $11,176 $13,698
Remaining Value at Year 30 ($532) $0 $0
Total Lifecycle Cost $6,908 $28,588 $35,040
Incremental Cost - $21,680 $28,132
Heat Pump Water Heating:
The heat pump water heater (HPWH) measures are described below, and costs are presented in Table 9 and Table
10. The most typical scenario in California is a home with existing natural gas storage tank water heaters. However,
there are also many existing homes with existing electric resistance storage tank water heaters and this work considers
both baselines. This analysis evaluates the following 65-gallon replacement HPWHs:
1. HPWH that meets the federal minimum efficiency requirements of UEF 2.0
2. HPWH that meets the Northwest Energy Efficiency Alliance (NEEA)15 Tier 3 rating (3.45 UEF)
3. HPWH that meets the NEEA Tier 4 rating and that has demand response (DR) or load shifting control
capability (4.02 UEF)
4. 120V HPWH that meets the NEEA Tier 3 rating (3.3 UEF).
15 Based on operational challenges experienced in the past, NEEA established rating test criteria to ensure newly
installed HPWHs perform adequately, especially in colder climates. The NEEA rating requires an Energy Factor
equal to the ENERGY STAR® performance level and includes requirements regarding noise and prioritizing heat
pump use over supplemental electric resistance heating.
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades 19 Methodology and Assumptions
California Energy Codes & Standards | A statewide utility program 2024-04-25
The four cases above were evaluated with the HPWH located within an attached garage. Additionally, three separate
cases for the federal minimum efficiency HPWH were analyzed to consider the impacts of location on performance and
cost-effectiveness. These locations included the following:
1. Exterior closet.
2. Interior closet, no ducting.
3. Interior closet, ducted to the outside.
Additional costs for providing electrical wiring to these locations and for providing ductwork were included. Savings are
compared to a new 50-gallon natural gas storage water heater (UEF 0.63) or a new 50-gallon electric water heater
(UEF 0.92).
For this analysis, a HPWH that just meets the federal minimum efficiency standards of close to 2.0 Uniform Energy
Factor (UEF) was evaluated in order to satisfy preemption requirements. However, the Reach Codes Team is not
aware of any 2.0 UEF products that are available on the market. The lowest UEF reported for certified products in the
Northwest Energy Efficiency Alliance (NEEA)16 database is 2.73. In fact, of the four certification tiers offered by NEEA
for high efficiency HPWHs, those meeting Tier 3 or Tier 4 are the dominant products on the market today. According to
NEEA all major HPWH manufacturers are represented in NEEA’s qualified product list 17 and there are fewer than 10
integrated products certified as Tier 1 or Tier 2, all of which have UEFs greater than 3.0.18 Therefore, in this analysis,
we refer to the NEEA rated HPWH as the “market standard” HPWH.
The HPWH costs for the 120V and NEEA certified units are based on a larger (60 or 65 gallon) HPWH, as most
contractors are upsizing the HPWH tank size relative to an equal volume, but higher capacity gas storage water heater.
Costs include all material and installation labor including providing a new 240 V electrical service to the water heater
location (not needed for the 120V product). Water heating equipment lifetimes are based on DOE’s recent water heater
rulemaking (Department of Energy, 2022) and assume 15-year EULs for both the baseline water heaters and the
HPWHs.19 Future replacement costs for 240V HPWHs do not include any initial costs associated with 240V electrical
service, condensate disposal, etc.
Table 9. Water Heating Measure Cost Assumptions – Existing Gas
Gas
Storage
Water
Heater
240V
Fed.
Min.
HPWH
240V
Market
Std. NEEA
HPWH
240V
Market
Std. NEEA
HPWH +
DR
120V
Market
Std. NEEA
HPWH
240V Fed.
Min.
HPWH,
Exterior
Closet
240V Fed.
Min. HPWH,
Interior
Closet, Not
Ducted
240V Fed.
Min. HPWH,
Interior
Closet,
Ducted
First Cost $2,951 $7,283 $8,144 $8,144 $5,844 $7,702 $7,363 $8,442
Replacement Cost
(Future Value) $2,951 $6,413 $7,274 $7,274 $5,101 $6,413 $6,413 $6,413
Replacement Cost
(Present Value) $1,894 $4,116 $4,669 $4,669 $3,274 $4,116 $4,116 $4,116
Total Lifecycle Cost $4,845 $11,399 $12,813 $12,813 $9,118 $11,818 $11,479 $12,558
Incremental Cost - $6,554 $7,968 $7,968 $4,273 $6,973 $6,634 $7,713
16 Based on operational challenges experienced in the past, NEEA established rating test criteria to ensure newly
installed HPWHs perform adequately, especially in colder climates. The NEEA rating requires products comply with
ENERGY STAR and includes requirements regarding noise and prioritizing heat pump use over supplemental
electric resistance heating.
17 https://neea.org/success-stories/heat-pump-water-heaters
18 As of 12/21/23: https://neea.org/img/documents/residential-unitary-HPWH-qualified-products-list.pdf
19 The recent DOE rulemaking references a lifetime of 14 years for gas storage water heaters and 14.8 years for
electric storage water heaters. 15 years for each was used in this analysis for both types for simplification.
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades 20 Methodology and Assumptions
California Energy Codes & Standards | A statewide utility program 2024-04-25
Table 10 presents similar costs to Table 9, except that the costs assume replacement of an existing 50-gallon electric
storage water heater and does not include the 240 V electrical service cost.
Table 10. Water Heating Measure Cost Assumptions – Existing Electric Resistance
Electric
Storage
Water
Heater
240V
Fed. Min.
HPWH
240V
Market
Std. NEEA
HPWH
240V
Market
Std. NEEA
HPWH +
DR
120V
Market
Std. NEEA
HPWH
240V Fed.
Min.
HPWH,
Exterior
Closet
240V Fed.
Min. HPWH,
Interior
Closet, Not
Ducted
240V Fed.
Min. HPWH,
Interior
Closet,
Ducted
First Cost $2,583 $6,413 $7,274 $7,274 $5,101 $6,413 $6,413 $7,492
Replacement Cost
(Future Value)
$2,583 $6,413 $7,274 $7,274 $5,101 $6,413 $6,413 $6,413
Replacement Cost
(Present Value)
$1,658 $4,116 $4,669 $4,669 $3,274 $4,116 $4,116 $4,116
Total Lifecycle Cost $4,241 $10,529 $11,943 $11,943 $8,375 $10,529 $10,529 $11,608
Incremental Cost - $6,288 $7,702 $7,702 $4,134 $6,288 $6,288 $7,367
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades 21 Results
California Energy Codes & Standards | A statewide utility program 2024-04-25
3 Results
The primary objective of the evaluation is to identify cost-effective energy upgrade measures and packages for existing
single family buildings, to support the design of local ordinances requiring upgrades, which may be triggered by
different events, such as at the time of a significant remodel or at burnout of mechanical equipment. In this report, the
1992-2010 vintage is shown for the equipment measures because it is the most conservative case (lowest loads), while
the pre-1978 vintage is shown for the envelope and duct measures because some of those measures only apply to the
pre-1978 vintage. A full dataset of all results can be downloaded at https://localenergycodes.com/content/resources.
Results alongside policy options can also be explored using the Cost-effectiveness Explorer at
https://explorer.localenergycodes.com/.
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades 22 Results
California Energy Codes & Standards | A statewide utility program 2024-04-25
3.1 Cost-Effectiveness Results
The extensive analysis for this type of report leads to an overwhelming number of scenarios including different base
cases, house vintages, replacement options, and climate zones. To simplify the reporting, the Statewide Reach Codes
Team has relied on graphical representation of select key cases indicating high level measure cost effectiveness from
either an On-Bill perspective, an LSC perspective, both metrics, or neither. Figure 1 through Figure 13 present this
reduced set of results of the LSC and On-Bill cost-effectiveness conclusions across the 16 climate zones. In the cases
where there are multiple utilities serving a single climate zone, an asterisk “*” label is added to separately show the
alternate utility cases. These graphs provide a general sense of the findings. A full dataset of all results can be
downloaded at https://localenergycodes.com/content/resources. Results alongside policy options can also be explored
using the Cost-effectiveness Explorer at https://explorer.localenergycodes.com/.
3.1.1 HPSH Measures
Figure 1 through Figure 5 show the cost-effectiveness of space heating equipment replacement measures for the
1992-2010 vintage including the following cases. The 1992-2010 vintage results are presented here as this is the most
conservative scenario for HPSH measures. In general, where a HPSH measure is cost-effective for a new home it was
also found to be cost-effective for older homes.
• Dual fuel heat pump with existing furnace as backup.
• Standard efficiency ducted central heat pump replacement.
• High efficiency ducted central heat pump replacement.
• Ducted mini-split heat pump replacement.
• Standard efficiency ducted central heat pump replacement with 3kW PV system.
Figure 1: DFHP with Existing Furnace Figure 2: Standard Efficiency HPSH
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades 23 Results
California Energy Codes & Standards | A statewide utility program 2024-04-25
Figure 3: High Efficiency HPSH Figure 4: Ducted MSHP
Figure 5: HPSH + PV
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades 24 Results
California Energy Codes & Standards | A statewide utility program 2024-04-25
3.1.2 HPWH Measures
Figure 6 through Table 11 show the cost-effectiveness of water heater measures for the 1992-2010 vintage including
the following cases. HPWH energy savings and LSC cost-effectiveness is not sensitive to home vintage but rather
depends on the magnitude of hot water loads, which are typically driven by the number of occupants. On-Bill cost-
effectiveness does vary slightly by vintage due to the impact of the electrification tariff relative to the load profile of the
existing home. The impact is largest for the HPWH + PV case where On-Bill cost-effectiveness improves for older
homes or homes with overall higher energy use resulting in less exports to the grid for a fixed size PV system.
• 240V federal minimum HPWH
• 240V market standard NEEA HPWH
• 120V market standard NEEA HPWH
• 240V federal minimum HPWH with 3kW PV
Figure 6: 240V Federal Minimum HPWH Figure 7: 240V Market Standard NEEA HPWH
Figure 8: 120V Market Standard NEEA HPWH Figure 9: 240V Federal Minimum HPWH + PV
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades 25 Results
California Energy Codes & Standards | A statewide utility program 2024-04-25
• Envelope and Duct Measures
Figure 10 through Figure 13 show the cost-effectiveness results of envelope and duct measures for the pre-1978
vintage including the following measures. The pre-1978 vintage is presented as representing the most favorable
existing conditions for cost-effective upgrades. Newer homes with higher performing envelope may still benefit from
these types of upgrade measures, but cost-effectiveness is reduced. Some measures, like R-13 wall insulation, aren’t
applicable to newer homes which would have been constructed originally with insulated walls.
• New R-6 ducts
• 10% duct leakage
• R-13 wall insulation
• R-49 attic insulation
Figure 10: R-6 Ducts Figure 11: 10% Duct Leakage
Figure 12: R-13 Wall Insulation Figure 13: R-49 Attic Insulation
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California Energy Codes & Standards | A statewide utility program 2024-04-25
3.2 Climate Zone Case Studies
To better understand the details of the results, a few climate zones were selected to provide a more detailed
presentation of cost-effectiveness results. Section 3.2.1 through 3.2.3 show the first-year incremental cost, first-year
utility savings, and NPV for a variety of cases. Section 3.2.4 shows the sensitivity of the cost effectiveness results due
to varying utility escalation rates, the impact of CARE rates, future equipment cost assumptions, and the need for
electrical panel upgrades. The climate zones were selected to be representative of areas of significant reach code
activity. Please refer to the Cost-Effectiveness Explorer (Statewide Reach Codes, 2023) or the source dataset for the
full analysis.
3.2.1 HPSH Cost-Effectiveness
Cost-effectiveness of heat pump space heating measures for Climate Zones 12 and 16 is summarized in Table 11 and
Table 12 below. In Climate Zone 12, HPSH measures are cost-effective based on LSC in all cases except the ductless
MSHP cases and are cost-effective On-Bill with SMUD rates in all cases except the DFHP case with a new furnace
and the ductless MSHP cases. These measures are cost-effective On-Bill with PGE for the DFHP with an existing
furnace and ducted MSHP measures. Climate Zone 16 provides an example of HPSH cost-effectiveness in a cold
climate where almost all HPSH measures are cost effective based on LSC but not cost-effective On-Bill.
Table 11. HPSH CZ 12 [1992-2010]
Measure
First
Incremental
Cost
2025 LSC
NPV
PGE SMUD
First-year
Utility
Savings
On-Bill
NPV
First-year
Utility
Savings
On-Bill
NPV
DFHP Existing Furnace $1,960 $7,093 ($19) $1,633 $247 $7,693
DFHP New Furnace $4,023 $3,915 ($34) ($3,134) $234 $2,979
HPSH (Std Efficiency) $1,172 $6,990 ($147) ($2,151) $246 $6,812
HPSH (High Efficiency) $4,149 $5,366 $13 ($3,368) $300 $3,160
Ducted MSHP $1,421 $9,136 $10 $378 $298 $6,951
Ductless MSHP (Std Efficiency) $13,336 ($9,175) $30 ($18,039) $276 ($12,428)
Ductless MSHP (High Efficiency) $17,266 ($6,753) $409 ($15,853) $423 ($15,532)
HPSH + PV $10,780 $5,289 $452 ($59) $885 $9,821
Table 12. HPSH CZ 16 [1992-2010]
Measure
First
Incremental
Cost
2025 LSC
NPV
PGE
First-year
Utility Savings On-Bill NPV
DFHP Existing Furnace $2,397 $7,289 ($116) ($1,891)
DFHP New Furnace $4,757 $2,457 ($133) ($6,322)
HPSH (Std Efficiency) $2,725 $11,142 ($480) ($8,532)
HPSH (High Efficiency) $5,701 $12,099 ($204) ($7,125)
Ducted MSHP $2,155 $16,554 ($221) ($2,853)
Ductless MSHP (Std Efficiency) $13,336 ($134) ($170) ($19,742)
Ductless MSHP (High Efficiency) $17,266 $9,397 $539 ($10,031)
HPSH + PV $12,333 $10,640 $316 ($1,949)
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3.2.2 HPWH Cost-Effectiveness
Cost-effectiveness of heat pump water heating measures for Climate Zones 12 and 16 is summarized in Table 13 and
Table 14 below. This sensitivity study looks at a wider range of HPWH tank locations and whether or not the unit has
ducting for supply and exhaust air. All the HPWH measures in Climate Zones 12 and 16 are cost effective based on
LSC.
Table 13. HPWH CZ 12 [1992-2010]
Measure
First
Incremental
Cost
2025 LSC
NPV
PGE SMUD
First-Year
Utility
Savings
On-Bill
NPV
First-Year
Utility
Savings
On-Bill
NPV
240V Fed. Min. HPWH $4,332 $3,536 ($213) ($8,738) $191 $477
240V Market Std. NEEA
HPWH $5,193 $4,304 ($82) ($7,164) $230 ($56)
240V Market Std. NEEA
HPWH + DR $5,193 $5,536 ($21) ($5,773) $248 $362
120V Market Std. NEEA
HPWH $2,893 $9,730 ($2) ($1,651) $254 $4,203
240V Fed. Min. HPWH
(Exterior Closet) $4,751 $2,834 ($224) ($9,431) $186 ($78)
240V Fed. Min. HPWH
(Interior Closet) $4,413 $3,123 ($71) ($6,138) $188 ($235)
240V Fed. Min. HPWH
(Interior Closet, ducted) $5,492 $3,359 ($202) ($9,505) $205 ($231)
240V Fed. Min. HPWH + PV $13,940 $3,567 $577 ($2,300) $831 $3,486
Table 14. HPWH CZ 16 [1992-2010]
Measure
First
Incremental
Cost
2025 LSC
NPV
PGE
First-Year Utility
Savings On-Bill NPV
240V Fed. Min. HPWH $4,332 $4,186 ($250) ($9,307)
240V Market Std. NEEA HPWH $5,193 $4,088 ($160) ($8,652)
240V Market Std. NEEA HPWH + DR $5,193 $5,653 ($79) ($6,804
120V Market Std. NEEA HPWH $2,893 $10,646 ($13) ($1,602)
240V Fed. Min. HPWH (Exterior Closet) $4,751 $3,317 ($268) ($10,154)
240V Fed. Min. HPWH (Interior Closet) $4,413 $5,004 ($18) ($4,690)
240V Fed. Min. HPWH (Interior Closet,
ducted) $5,492 $4,857 ($202) ($9,174)
240V Fed. Min. HPWH + PV $13,940 $5,049 $620 ($1,043)
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3.2.3 Envelope & Duct Improvement Cost-Effectiveness
Cost-effectiveness of envelope and duct measures for Climate Zones 3, 10, and 12 is summarized in Table 15 through
Table 17.
Table 15. Envelope and Duct Measures CZ 3 [Pre-1978]
Measure
First
Incremental
Cost
2025 LSC
NPV
PG&E
First-year Utility
Savings On-Bill NPV
R-6 Ducts $4,808 $2,851 $188 $463
R-8 Ducts $6,311 $1,747 $198 ($776)
10% Duct Sealing $2,590 $1,956 $104 $397
R-13 Wall Insulation $2,950 $3,476 $144 $1,221
R-38 Attic Insulation $6,762 ($1,567) $127 ($3,178)
R-49 Attic Insulation $7,446 ($1,768) $139 ($3,520)
R-30 Raised Floor Insulation $4,113 $9,008 $224 $2,975
Cool Roof (0.20 Ref) $893 ($2,419) ($18) ($1,811)
Table 16. Envelope and Duct Measures CZ 10 [Pre-1978]
Measure
First
Incremental
Cost
2025 LSC
NPV
SCE/SCG SDGE
First-year
Utility
Savings
On-Bill
NPV
First-
year
Utility
Savings
On-Bill
NPV
R-6 Ducts $4,808 $7,463 $783 $13,168 $1,100 $22,155
R-8 Ducts $6,311 $6,326 $800 $12,076 $1,125 $21,268
10% Duct Sealing $2,590 $3,438 $370 $5,969 $518 $10,166
R-13 Wall Insulation $2,950 $1,795 $179 $1,476 $250 $3,494
R-38 Attic Insulation $6,762 $664 $416 $2,951 $582 $7,654
R-49 Attic Insulation $7,446 $796 $467 $3,435 $655 $8.756
R-30 Raised Floor Insulation $4,113 ($999) ($29) ($4,235) ($46) ($4,687)
Cool Roof (0.20 Ref) $893 $428 $174 $2,647 $246 $4,656
Table 17. Envelope and Duct Measures CZ 12 [Pre-1978]
Measure
First
Incremental
Cost
2025 LSC
NPV
PG&E SMUD
First-year
Utility
Savings
On-Bill
NPV
First-
year
Utility
Savings
On-Bill
NPV
R-6 Ducts $4,808 $11,609 $804 $14,727 $413 $5,816
R-8 Ducts $6,311 $10,722 $828 $13,849 $427 $4,711
10% Duct Sealing $2,590 $6,418 $397 $7,280 $222 $3,281
R-13 Wall Insulation $2,950 $5,774 $262 $4,054 $187 $2,342
R-38 Attic Insulation $6,762 $3,727 $499 $5,461 $261 $19
R-49 Attic Insulation $7,446 $4,092 $552 $6,063 $288 $33
R-30 Raised Floor Insulation $4,113 $5,245 $27 ($1,176) $156 $1,175
Cool Roof (0.20 Ref) $893 ($354) $154 $2,123 $44 ($386)
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3.2.4 Sensitivities
Table 18 shows the On-Bill NPV results of Climate Zone 12 with PG&E utility rates and the impacts of escalation rates, and CARE rates. The “Standard Results”
in Table 18 assumes the escalation rates used in the analysis presented elsewhere in this report. Table 19 shows the impact of electrical panel upgrades. The
“Standard Results” in Table 19 does not assume a panel upgrade is required.
Table 18. Sensitivity Analysis Results for On-Bill NPV Cost-Effectiveness in Climate Zone 12, PG&E
Measure Vintage Standard
Results
2025 LSC
Escalation CARE
DFHP Existing Furnace 1992-2010 $1,063 $8,443 $1,884
DFHP New Furnace 1992-2010 ($6,770) $383 ($5,846)
HPSH (Std Efficiency) 1992-2010 ($2,151) $6,011 ($220)
HPSH (High Efficiency) 1992-2010 ($3,368) $4,987 ($2,721)
Ducted MSHP 1992-2010 $378 $8,729 $1,057
Ductless MSHP (Std Efficiency) 1992-2010 ($18,039) ($10,732) ($17,623)
Ductless MSHP (High Efficiency) 1992-2010 ($15,853) ($8,091) ($18,460)
HPSH + PV 1992-2010 ($59) $8,822 ($1,255)
240V Fed. Min. HPWH 1992-2010 ($8,738) ($2,433) ($6,448)
240V Market Std. NEEA HPWH 1992-2010 ($7,164) ($694) ($5,918)
240V Market Std. NEEA HPWH + DR 1992-2010 ($5,773) $770 (5,014)
120V Market Std. NEEA HPWH 1992-2010 ($1,651) $4,930 (1,038)
240V Fed. Min. HPWH (Exterior Closet) 1992-2010 ($9,431) ($3,184) ($7,055)
240V Fed. Min. HPWH (Interior Closet) 1992-2010 ($6,138) ($1,000) ($5,098)
240V Fed. Min. HPWH (Interior Closet, ducted) 1992-2010 ($9,505) ($2,836) ($7,271)
240V Fed. Min. HPWH + PV 1992-2010 ($2,300) $4,952 ($4,858)
R-6 Ducts Pre-1978 $14,727 $18,685 $8,592
R-8 Ducts Pre-1978 $13,849 $17,990 $7,532
10% Duct Sealing Pre-1978 $7,280 $9,752 $4,294
R-13 Wall Insulation Pre-1978 $4,054 $6,898 $2,196
R-38 Attic Insulation Pre-1978 $5,461 $8,126 $1,668
R-49 Attic Insulation Pre-1978 $6,063 $8,978 $1,864
R-30 Raised Floor Insulation Pre-1978 ($1,776) $2,468 ($1,602)
Cool Roof (0.20 Ref) Pre-1978 $2,123 $1,848 $851
Table 19. Electric Panel Upgrade Sensitivity for CZ 12 [1992-2010]
Measure Standard Results Electric Panel Upgrade
On-Bill NPV LSC NPV On-Bill NPV LSC NPV
HPSH (Std Efficiency) ($2,151) $6,990 ($4,931) $4,210
240V Fed. Min. HPWH ($8,738) $3,536 ($11,624) $756
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades 30 Results
California Energy Codes & Standards | A statewide utility program 2024-04-25
3.3 Gas Pathways for Heat Pump Replacements
Many jurisdictions are exploring policy options to accelerate the decarbonization of existing homes. A recent Ninth
Circuit Court ruling in California Rest. Ass'n v. City of Berkeley 20 invalidated Berkeley’s ordinance banning the
installation of gas infrastructure in new construction. The ruling stated that the ordinance effectively banned covered
products and was preempted by the Energy Policy and Conservation Act (“EPCA”), 42 U.S.C. § 6297(c). Given the
possible impacts of that ruling, the Reach Codes Team analyzed policy options targeting equipment replacements that
allow for the installation of either electric or gas-fueled equipment. These packages include gas equipment combined
with additional efficiency measures resulting in options that are reasonably energy or LSC cost equivalent, to the extent
feasible.
For space heating, the heat pump path is a DFHP (existing furnace).. The gas pathway is a new air conditioner with the
following list of efficiency upgrades:
• 400 cfm/ton system airflow (HERS verified).
• 0.35 W/cfm fan efficacy (HERS verified).
• Refrigerant charge verification (HERS verified).
• R-8 ducts, 5% leakage (HERS verified).
• R-49 (from R-30) attic insulation.
• Air sealing of the ceiling from 7 to 6.5 ACH50.
The two pathways are presented in Figure 14 comparing total LSC energy use relative to the existing home for the
1992-2010 vintage. In most climate zones, the DFHP (existing furnace) path results in higher energy savings, in the
milder climates the air conditioner path saves marginally more energy. A reach code that establishes requirements
when an air conditioner is replaced or installed new, could allow for either a heat pump to be installed or an air
conditioner as long as the performance measures listed above are met. Note that in this analysis a DFHP (existing
furnace) was used; however, a reach code could require a different heat pump measure for the heat pump path. This
approach aligns with the CEC’s proposal for the 2025 Title 24 code cycle for heat pump alterations in single family
homes (California Energy Commission, 2023).
20 California Rest. Ass'n v. City of Berkeley, 65 F.4th 1045 (9th Cir. 2023) amended by 89 F.4th 1094 (9th Cir. 2024).
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades 31 Results
California Energy Codes & Standards | A statewide utility program 2024-04-25
Figure 14. Heat pump space heater path compared to the air conditioner path.
For water heating, the federal minimum HPWH case was used to develop the package. The HPWH was compared to a
new gas storage water heater with a 50% solar thermal backup system.
The two pathways are presented in Figure 15 comparing total LSC energy use relative to the existing home for the
1992-2010 vintage. In all climate zones, the heat pump path results in higher energy savings than the gas path. A
reach code that establishes requirements when a water heater is replaced could allow for either a HPWH to be
installed or a gas water heater in combination with a solar thermal system that meets the solar fraction requirements
listed above.
Figure 15. Heat pump water path compared to gas with solar thermal.
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades 32 Recommendations and Discussion
California Energy Codes & Standards | A statewide utility program 2024-04-25
4 Recommendations and Discussion
This analysis evaluated the feasibility and cost-effectiveness of retrofit measures in California existing homes built
before 2010. The Statewide Reach Codes Team used both On-Bill and LSC-based LCC approaches to evaluate cost-
effectiveness and quantify the energy cost savings associated with energy efficiency measures compared to the
incremental costs associated with the measures.
Conclusions and Discussion:
1. Envelope measures. Improving envelope performance is very cost-effective in many older homes. In addition
to reducing utility costs these measures provide many other benefits such as improving occupant comfort and
satisfaction and increasing a home’s ability to maintain temperatures during extreme weather events and
power outages. Below is a discussion of the results of specific measures.
a. Adding attic insulation is cost effective based on both LSC and On-Bill in many climate zones in homes
with no more than R-19 existing attic insulation levels. Increasing attic insulation from R-30 to R-49
was still found to be cost-effective based on at least one metric in the colder and hotter climates of
Climate Zone 10 (SDG&E territory only) through 16.
b. Insulating existing uninsulated walls is very cost-effective based on both metrics everywhere except
Climate Zones 6 and 7 (in Climate Zone 8 it’s only cost-effective based on LSC).
c. Adding R-19 or R-30 floor insulation is cost-effective based on LSC in the older two vintages (Pre-1978
and 1978-1991) in all climate zones except Climate Zones 6-10.
d. Replacing old single pane windows with new high-performance windows has a very high cost and is
typically not done for energy savings alone. However, energy savings are substantial and justify cost-
effectiveness of this measure based on at least one metric in Climate Zones 4, 8 through 12 (PG&E
territory only), and 13 through 16.
e. At time of roof replacement, a cool roof with an aged solar reflectance of 0.25 was found to be cost-
effective in Climate Zones 4, 6 through 12 (PG&E territory only), and 13 through 15. When the roof
deck is replaced during a roof replacement, adding a radiant barrier is low cost and provides
substantial cooling energy savings to be cost-effective in almost all climate zones and homes.
2. Duct measures: Many older homes have old, leaky duct systems that should be replaced when they reach the
end of life, typically 20-30 years. In this case, installing new ducts was found to be cost-effective based on at
least one metric (both in most cases) everywhere except mild Climate Zone 7 and Climate Zones 5 and 6 in
the 1978-1991 vintage. If duct systems still have remaining life they should be sealed and tested to meet 10%
leakage or lower; however, duct upgrades alone were only found to be cost-effective for newer homes in
Climate Zones 10 (SDG&E territory only), 11, and 13 through 16. Duct upgrades may be able to be coupled
with other measures to reduce the cost.
3. Heat pump space heating: HPSHs were found to be LSC cost-effective in many cases. The DFHP (existing
furnace) was LSC cost-effective everywhere except Climate Zone 15. The HPSH was LSC cost-effective
everywhere except Climate Zones 8 and 15.
a. Challenges to On-Bill cost-effectiveness include higher first costs and higher first-year utility costs due
to higher electricity tariffs relative to gas tariffs. SMUD and CPAU are two exceptions where first year
utility costs are lower for heat pumps than for gas equipment. Table 11 shows the impact of utility rates
on cost-effectiveness of HPSH where the standard and high efficiency HPSH and the HPSH + PV
measures are cost-effective under SMUD but not PG&E. Even with higher first year utility bills, there
were some cases that still proved On-Bill cost-effective including the DFHP with an existing furnace in
the central valley and northern coastal PG&E territories, the ducted MSHP in the central valley as well
as Climate Zone 14 in SDG&E territory, and the HPSH + PV measure in CZ 3-5 (PGE), 7-11, and 12
(SMUD) – 15.
b. The ductless MSHPs, evaluated for homes with existing ductless systems, were only found to be cost-
effective based on either metric in Climate Zones 1 and 16. Ductless MSHPs have a high incremental
cost because it is a more sophisticated system than the base model of a wall furnace with a window
AC unit. However, the ductless MSHP would provide greater comfort benefits if properly installed to
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades 33 Recommendations and Discussion
California Energy Codes & Standards | A statewide utility program 2024-04-25
directly condition all habitable spaces (as is required under the VCHP compliance credit as evaluated
in this study) which may be an incentive for a homeowner to upgrade their system.
c. Higher efficiency equipment lowered utility costs in all cases and improved cost-effectiveness in many
cases, particularly with a ducted MSHP.
4. Heat pump water heating: All the HPWH measures were LSC cost-effective in all climate zones. Most
measures were not On-Bill cost-effective with the exception of the HPWH + PV which was cost-effective On-
Bill in CPAU, SMUD, and SDG&E territories in addition to Climate Zones 11, 13, 14, and 15. The HPWH
measures share many of the same challenges as the HPSH measures to achieving cost-effectiveness
including high first costs and utility rates and assumptions. Table 13 shows the impact of utility rates on cost-
effectiveness where some HPWH measures are cost-effective under SMUD utility rates but are not cost-
effective anywhere under PG&E rates in Climate Zone 12.
a. Various HPWH locations were also explored, however there are some factors outside of cost-
effectiveness that should also be considered.
i. HPWHs in the conditioned space can provide benefits such as free cooling during the
summer, reduced tank losses, and shorter pipe lengths, and in some cases show improved
cost-effectiveness over garage located HPWHs. However, there are various design
considerations such as noise, comfort concerns, and condensate removal. Ducting the inlet
and exhaust air resolves comfort concerns but adds costs and complexity. Split heat pump
water heaters address these concerns, but currently there are limited products on the market
and there is a cost premium relative to the packaged products.
ii. Since HPWHs extract heat from the air and transfer it to water in the storage tank, they must
have adequate ventilation to operate properly. Otherwise, the space cools down over time,
impacting the HPWH operating efficiency. This is not a problem with garage installations but
needs to be considered for water heaters located in interior or exterior closets. For the 2025
Title 24 code the CEC is proposing that all HPWH installations meet mandatory ventilation
requirements (California Energy Commission, 2023).
5. The contractor surveys revealed overall higher heat pump costs than what has been found in previous
analyses. This could be due to incentive availability raising demand for heat pumps and thereby increasing the
price. This price increase may be temporary and may come down once the market stabilizes. There are also
new initiatives to obtain current costs including the TECH Clean California program 21 that publishes heat pump
data and costs; however, at the time of this analysis, the TECH data did not contain incremental costs because
it only had the heat pump costs but not the gas base case costs.
6. Table 18 shows how CARE rates and escalation rate assumptions will impact cost-effectiveness.
a. Applying CARE rates in the IOU territories has the overall impact to increase utility cost savings for an
all-electric building compared to a code compliant mixed fuel building, improving On-Bill cost-
effectiveness. This is due to the CARE discount on electricity being higher than that on gas. The
reverse occurs with efficiency measures where lower utility rates reduce savings and subsequently
reduce cost-effectiveness.
b. If gas tariffs are assumed to increase substantially over time, in-line with the escalation assumption
from the 2025 LSC development, cost-effectiveness substantially improves for the heat pump
measures over the 30-year analysis period and many cases become cost-effective that were not found
to be cost-effective under the CPUC / 2022 TDV escalation scenario. There is much uncertainty
surrounding future tariff structures as well as escalation values. While it’s clear that gas rates will
increase, how much and how quickly is not known. Future electricity tariff structures are expected to
evolve over time, and the CPUC has an active proceeding to adopt an income-graduated fixed charge
that benefits low-income customers and supports electrification measures for all customers.22 The
CPUC will decide in mid-2024 and the new rates are expected to be in place later that year or in 2025.
21 TECH Public Reporting Home Page (techcleanca.com)
22 https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/electric-costs/demand-response-dr/demand-
flexibility-rulemaking
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California Energy Codes & Standards | A statewide utility program 2024-04-25
While the anticipated impact of this rate change is lower volumetric electricity rates, the rate design is
not finalized. While lower volumetric electricity rates provide many benefits, it also will make building
efficiency measures harder to justify as cost-effective due to lower utility bill cost savings.
7. Under NBT, utility cost savings for PV are substantially less than what they were under prior net energy
metering rules (NEM 2.0); however, savings are sufficient to be On-Bill cost-effective in all climate zones
except Climate Zones 1 through 3 and 5 through 6.
a. Combining a heat pump with PV allows the additional electricity required by the heat pump to be offset
by the PV system while also increasing on-site utilization of PV generation rather than exporting the
electricity back to the grid at a low rate.
b. While not evaluated in this study, coupling PV with battery systems can be very advantageous under
NBT increasing utility cost savings because of improved on-site utilization of PV generation and fewer
exports to the grid.
Recommendations:
1. There are various approaches for jurisdictions who are interested in reach codes for existing buildings. Some
potential approaches are listed below along with key considerations.
a. Prescriptive measures: Non-preempted measures that are found to be cost-effective may be
prescriptively required in a reach code. One example of this type or ordinance is a cool roof
requirement at time of roof replacement. Another example is requiring specific cost-effective measures
for larger remodels, such as high-performance windows when new windows are installed or duct
sealing and testing where ducts are in unconditioned space.
b. Replacement equipment: This flavor of reach code sets certain requirements at time of equipment
replacement. This study evaluated space heating and water heating equipment. Where a heat pump
measure was found to be cost-effective based on either LSC or On-Bill, this may serve as the basis of
a reach code given the following considerations.
i. Where reach codes reduce energy usage and are not just fuel switching, cost-effectiveness
calculations are required and must be based on equipment that does not exceed the federal
minimum efficiency requirements.
ii. Where reach codes are established using cost-effectiveness based on LSC, utility bill impacts
and the owner’s first cost should also be reviewed and considered.
iii. A gas path should also be prescriptively allowed to safely satisfy federal preemption
requirements considering the CRA v. Berkeley case.23 Additional requirements may apply to
the gas path, as described in Section 3.3, as long as the paths are reasonably energy or cost
equivalent.
c. “Flexible Path”, minimum energy savings target: This flexible approach establishes a target for
required energy savings based on a measure or a set of measures that were found to be cost-effective
based on either LSC or On-Bill. A points menu compares various potential upgrades ranging from
efficiency, PV, and fuel substitution measures, based on site or source energy savings. The applicant
must select upgrades that individually or in combination meet the minimum energy savings target. The
measures used to set the target should be non-preempted measures.
2. Equipment replacement ordinances should consider appropriate exceptions for scenarios where it will be
challenging to meet the requirements, such as location of the HPWH, total project cost limitations, or the need
for service panel upgrades that wouldn’t have been required as part of the proposed scope of work in absence
of the reach code.
3. Consider extending relevant proposals made by the CEC for the 2025 Title 24 code (California Energy
Commission, 2023) in ordinances that apply under the 2022 Title 24 code, such as the following:
a. Mandatory ventilation requirements for HPWH installations (Section 110.3(c)7).
23 https://www.publichealthlawcenter.org/sites/default/files/2024-01/CRA-v-Berkeley-Ninth-Circuit-Opinion-Jan2024.pdf
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b. Requirement for HERS verified refrigerant charge verification for heat pumps in all climate zones
(Table 150.1-A 24).
4. When evaluating reach code strategies, the Reach Codes Team recommends that jurisdictions consider
combined benefits of energy efficiency alongside electrification. Efficiency and electrification have symbiotic
benefits and are both critical for decarbonization of buildings. As demand on the electric grid is increased
through electrification, efficiency can reduce the negative impacts of additional electricity demand on the grid,
reducing the need for increased generation and storage capacity, as well as the need to upgrade upstream
transmission and distribution equipment.
5. Education and training can play a critical role in ensuring that heat pumps are installed, commissioned, and
controlled properly to mitigate grid impacts and maximize occupant satisfaction. Below are select
recommended strategies.
a. The Quality Residential HVAC Services Program 25 is an incentive program to train California
contractors in providing quality installation and maintenance while advancing energy-efficient
technologies in the residential HVAC industry. Jurisdictions can market this to local contractors to
increase the penetration of contractors skilled in heat pump design and installation.
b. Educate residents and contractors of available incentives, tax credits, and financing opportunities.
c. Educate contractors on code requirements. Energy Code Ace provides free tools, trainings, and
resource to help Californians comply with the energy code. Contractors can access interactive
compliance forms, fact sheets, and live and recorded trainings, among other things, on the website:
https://energycodeace.com/. Jurisdictions can reach out to Energy Code Ace directly to discuss
offerings.
6. Health and safety
a. Combustion Appliance Safety and Indoor Air Quality: Implementation of some of the recommended
measures will affect the pressure balance of the home which can subsequently impact the safe
operation of existing combustion appliances as well as indoor air quality. Buildings with older gas
appliances can present serious health and safety problems which may not be addressed in a remodel
if the appliances are not being replaced. It is recommended that the building department require
inspection and testing of all combustion appliances located within the pressure boundary of the
building after completion of retrofit work that involves air sealing or insulation measures.
b. Jurisdictions may consider requiring mechanical ventilation in homes where air sealing has been
conducted. In older buildings, outdoor air is typically introduced through leaks in the building envelope.
After air sealing a building, it may be necessary to forcefully bring in fresh outdoor air using supply
and/or exhaust fans to minimize potential issues associated with indoor air quality.
24 This requirement does not show up in the Express Terms for alterations in Section 150.2(b)1F, but the Statewide
Reach Codes Team expects that it will be added to the next release of the proposed code language in the 45-day
language as it aligns with the proposal made by the Codes and Standards Enhancement Team (Statewide CASE
Team, 2023).
25 https://qualityhvac.frontierenergy.com/
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades 36 References
California Energy Codes & Standards | A statewide utility program 2024-04-25
5 References
California Energy Commission. (2017). Rooftop Solar PV System. Measure number: 2019-Res-PV-D Prepared by
Energy and Environmental Economics, Inc. Retrieved from
https://efiling.energy.ca.gov/getdocument.aspx?tn=221366
California Energy Commission. (2021b). Final Express Terms for the Proposed Revisions to the 2022 Energy Code
Reference Appendices. Retrieved from https://efiling.energy.ca.gov/Lists/DocketLog.aspx?docketnumber=21-
BSTD-01
California Energy Commission. (2022b). 2022 Reference Appendices for the 202 Building Energy Efficiency Standards.
CEC-400-2022-010-AP. Retrieved from https://www.energy.ca.gov/sites/default/files/2022-08/CEC-400-
2022-010-AP.pdf
California Energy Commission. (2022c, Feb). 2022 Single-Family Residential Alternative Calculation Method Reference
Manual. CEC-400-2022-008-CMF-REV. Retrieved from https://www.energy.ca.gov/publications/2022/2022-
single-family-residential-alternative-calculation-method-reference-manual
California Energy Commission. (2023). 2025 Energy code Hourly Factors. Retrieved from
https://www.energy.ca.gov/files/2025-energy-code-hourly-factors
California Energy Commission. (2023). Draft 2025 Energy Code Express Terms. Retrieved from
https://efiling.energy.ca.gov/GetDocument.aspx?tn=252915&DocumentContentId=88051
California Public Utilities Commission. (2021a). Utility Costs and Affordability of the Grid of the Future: An Evaluation
of Electric Costs, Rates, and Equity Issues Pursuant to P.U. Code Section 913.1. Retrieved from
https://www.cpuc.ca.gov/-/media/cpuc-website/divisions/office-of-governmental-affairs-
division/reports/2021/senate-bill-695-report-2021-and-en-banc-whitepaper_final_04302021.pdf
California Public Utilities Commission. (2021b). Database for Energy-Efficient resources (DEER2021 Update). Retrieved
April 13, 2021, from http://www.deeresources.com/index.php/deer-versions/deer2021
Department of Energy. (2022). Preliminary Analysis Technical Support Document: Energy Efficiency Program for
Consumer Products and Commercial and Industrial Equipment. Retrieved from
https://www.regulations.gov/document/EERE-2017-BT-STD-0019-0018
Department of Energy. (2023). Technical Support Document: Energy Efficiency Program for Consumer Products and
Commercial and Industrial Equipment: Room Air Conditioners. Retrieved from
https://www.regulations.gov/document/EERE-2014-BT-STD-0059-0053
E-CFR. (2020). https://www.ecfr.gov/cgi-
bin/retrieveECFR?gp=&SID=8de751f141aaa1c1c9833b36156faf67&mc=true&n=pt10.3.431&r=PART&ty=HTM
L#se10.3.431_197. Retrieved from Electronic Code of Federal Regulations: https://www.ecfr.gov/cgi-
bin/retrieveECFR?gp=&SID=8de751f141aaa1c1c9833b36156faf67&mc=true&n=pt10.3.431&r=PART&ty=HTM
L#se10.3.431_197
Statewide CASE Team. (2023). Residential HVAC Performance. Codes and Standards Enhancement (CASE) Initiative
2025 California Energy Code. Prepared by Frontier Energy. Retrieved from
https://title24stakeholders.com/wp-content/uploads/2023/11/Revised_2025_T24_Final-CASE-Report-RES-
HVAC-Performance.pdf
Statewide Reach Codes. (2023). Cost Effectiveness Explorer. Retrieved from Cost Effectiveness Explorer:
https://explorer.localenergycodes.com/
Statewide Reach Codes Team. (2021). 2019 Cost-Effectiveness Study: Existing Single Family Residential Buidling
Upgrades. Retrieved from https://localenergycodes.com/content/resources
Cost-Effectiveness Analysis: Existing Single Family Building Upgrades 37 Appendices
California Energy Codes & Standards | A statewide utility program 2024-04-25
6 Appendices
6.1 Map of California Climate Zones
Climate zone geographical boundaries are depicted in Figure 16. The map in Figure 16 along with a zip-code search
directory is available at: https://ww2.energy.ca.gov/maps/renewable/building_climate_zones.html
Figure 16. Map of California climate zones.
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6.2 Utility Rate Schedules
The Reach Codes Team used the CA IOU and POU rate tariffs detailed below to determine the On-Bill savings for
each package. The California Climate Credit was applied for both electricity and natural gas service for the IOUs using
the 2023 credits shows below.26 The credits were applied to reduce the total calculated annual bill, including any fixed
fees or minimum bill amounts.
Electricity rates reflect the most recently approved tariffs. Monthly gas rates were estimated based on recent gas rates
(November 2023) and a curve to reflect how natural gas prices fluctuate with seasonal supply and demand. The
seasonal curve was estimated from monthly residential tariffs between 2014 and 2023 (between 2017 and 2023 for
CPAU). 12-month curves were created from monthly gas rates for each of the ten years (Seven years for CPAU).
These annual curves were then averaged to arrive at an average normalized annual curve. This was conducted
separately for baseline and excess energy rates. Costs used in this analysis were then derived by establishing the
most recent baseline and excess rate from the latest tariff as a reference point (November 2023), and then using the
normalized curve to estimate the cost for the remaining months relative to the reference point rate.
26 https://www.cpuc.ca.gov/industries-and-topics/natural-gas/greenhouse-gas-cap-and-trade-program/california-
climate-credit
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6.2.1 Pacific Gas & Electric
The following pages provide details on the PG&E electricity and natural gas tariffs applied in this study. Table 20
describes the baseline territories that were assumed for each climate zone. A net surplus compensation rate of
$0.07051/ kWh was applied to any net annual electricity generation based on a one-year average of the rates between
December 2022 and November 2023.
Table 20. PG&E Baseline Territory by Climate Zone
Climate
Zone
Baseline
Territory
CZ01 V
CZ02 X
CZ03 T
CZ04 X
CZ05 T
CZ11 R
CZ12 S
CZ13 R
CZ16 Y
The PG&E monthly gas rate in $/therm was applied on a monthly basis according to the rates shown in Table 21.
These rates are based on applying a normalization curve to the November 2023 tariff based on ten years of historical
gas data. Corresponding CARE rates reflect the 20 percent discount per the GL-1 tariff.
Table 21. PG&E Monthly Gas Rate ($/therm)
Month Total Charge
Baseline Excess
January $2.05 $2.43
February $2.08 $2.46
March $1.92 $2.31
April $1.80 $2.20
May $1.77 $2.18
June $1.78 $2.18
July $1.80 $2.20
August $1.85 $2.26
September $1.92 $2.33
October $1.99 $2.40
November $2.06 $2.46
December $2.05 $2.44
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6.2.2 Southern California Edison
The following pages provide details on the SCE electricity tariffs applied in this study. Table 22 describes the baseline
territories that were assumed for each climate zone. A net surplus compensation rate of $ 0.06030/ kWh was applied to
any net annual electricity generation based on a one-year average of the rates between December 2022 and
November 2023
Table 22: SCE Baseline Territory by Climate Zone
Climate
Zone
Baseline
Territory
CZ06 6
CZ08 8
CZ09 9
CZ10 10
CZ14 14
CZ15 15
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6.2.3 Southern California Gas
Following are the SoCalGas natural gas tariffs applied in this study. Table 23 describes the baseline territories that
were assumed for each climate zone.
Table 23. SoCalGas Baseline Territory by Climate Zone
Climate
Zone
Baseline
Territory
CZ05 2
CZ06 1
CZ08 1
CZ09 1
CZ10 1
CZ14 2
CZ15 1
The SoCalGas monthly gas rate in $/therm was applied on a monthly basis according to the rates shown in Table 24.
These rates are based on applying a normalization curve to the November 2023 tariff based on ten years of historical
gas data. Long-term historical natural gas rate data was only available for SoCalGas’ procurement charges.27 The
baseline and excess transmission charges were found to be consistent over the course of a year and applied for the
entire year based on 2023 rates. CARE rates reflect the 20 percent discount per the GR tariff.
Table 24. SoCalGas Monthly Gas Rate ($/therm)
Month Procurement
Charge
Transportation Charge Total Charge
Baseline Excess Baseline Excess
January $0.72 $0.86 $1.31 $1.92 $2.36
February $0.50 $0.86 $1.31 $1.57 $2.02
March $0.44 $0.86 $1.31 $1.48 $1.93
April $0.39 $0.86 $1.31 $1.39 $1.84
May $0.41 $0.86 $1.31 $1.43 $1.87
June $0.46 $0.86 $1.31 $1.49 $1.93
July $0.47 $0.86 $1.31 $1.51 $1.96
August $0.51 $0.86 $1.31 $1.58 $2.03
September $0.46 $0.86 $1.31 $1.52 $1.96
October $0.45 $0.86 $1.31 $1.48 $1.92
November $0.48 $0.86 $1.31 $1.54 $1.99
December $0.57 $0.86 $1.31 $1.63 $2.08
27 The SoCalGas procurement and transmission charges were obtained from the following site:
https://www.socalgas.com/for-your-business/energy-market-services/gas-prices
RES2023.xlsx (live.com)
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6.2.4 San Diego Gas & Electric
Following are the SDG&E electricity and natural gas tariffs applied in this study. Table 25 describes the baseline
territories that were assumed for each climate zone. A net surplus compensation rate of $0.04542/ kWh was applied to
any net annual electricity generation based on a one-year average of the rates between December 2022 and
November 2023.
Table 25. SDG&E Baseline Territory by Climate Zone
Climate
Zone
Baseline
Territory
CZ07 Coastal
CZ10 Inland
CZ14 Mountain
The SDG&E monthly gas rate in $/therm was applied on a monthly basis according to the rates shown in Table
26. These rates are based on applying a normalization curve to the November 2023 tariff based on ten years of
historical gas data. CARE rates reflect the 20 percent discount per the G-CARE tariff.
Table 26. SDG&E Monthly Gas Rate ($/therm)
Month Total Charge
Baseline Excess
January $2.34 $2.63
February $2.28 $2.57
March $2.21 $2.51
April $2.14 $2.45
May $2.18 $2.48
June $2.23 $2.55
July $2.26 $2.57
August $2.32 $2.62
September $2.26 $2.59
October $2.21 $2.55
November $2.24 $2.57
December $2.38 $2.70
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6.2.5 City of Palo Alto Utilities
Following are the CPAU electricity and natural gas tariffs applied in this study. The CPAU monthly gas rate in
$/therm was applied on a monthly basis according to the rates shown in Table 27. These rates are based on applying a
normalization curve to the October 2023 tariff based on seven years of historical gas data. The monthly service charge
applied was $14.01 per month per the November 2023 G-1 tariff.
Table 27. CPAU Monthly Gas Rate ($/therm)
Month G1 Volumetric
Total Baseline G1 Volumetric
Total Excess
January $1.83532 $3.35639
February $1.38055 $2.59947
March $1.32506 $2.47695
April $1.29680 $2.44038
May $1.29511 $2.43804
June $1.32034 $2.45406
July $1.35688 $2.61519
August $1.40696 $2.67944
September $1.42130 $2.70301
October $1.42310 $2.48300
November $1.46286 $2.45547
December $1.62415 $2.62128
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6.2.6 Sacramento Municipal Utilities District (Electric Only)
Following are the SMUD electricity tariffs applied in this study. The rates effective January 2023 were used.
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6.2.7 Fuel Escalation Assumptions
The average annual escalation rates in Table 28 were used in this study. These are based on assumptions from the
CPUC 2021 En Banc hearings on utility costs through 2030 (California Public Utilities Commission, 2021a). Escalation
rates through the remainder of the 30-year evaluation period are based on the escalation rate assumptions within the
2022 TDV factors. No data was available to estimate electricity escalation rates for CPAU and SMUD, therefore
electricity escalation rates for PG&E and statewide natural gas escalation rates were applied. Table 29 presents the
average annual escalation rates used in the utility rate escalation sensitivity analysis shown in Section 3.2.4. Rates
were applied for the same 30-year period and are based on the escalation rate assumptions within the 2025 LSC
factors from 2027 through 2053.28 These rates were developed for electricity use statewide (not utility-specific) and
assume steep increases in gas rates in the latter half of the analysis period. Data was not available for the years 2024,
2025, and 2026 and so the CPUC En Banc assumptions were applied for those years using the average rate across
the three IOUs for statewide electricity escalation.
Table 28: Real Utility Rate Escalation Rate Assumptions, CPUC En Banc and 2022 TDV
Basis
28https://www.energy.ca.gov/files/2025-energy-code-hourly-factors. Actual escalation factors were provided by consultants E3.
Statewide Natural
Gas Residential
Average Rate
(%/year, real)
Electric Residential Average Rate
(%/year, real)
PG&E SCE SDG&E
2024 4.6% 1.8% 1.6% 2.8%
2025 4.6% 1.8% 1.6% 2.8%
2026 4.6% 1.8% 1.6% 2.8%
2027 4.6% 1.8% 1.6% 2.8%
2028 4.6% 1.8% 1.6% 2.8%
2029 4.6% 1.8% 1.6% 2.8%
2030 4.6% 1.8% 1.6% 2.8%
2031 2.0% 0.6% 0.6% 0.6%
2032 2.4% 0.6% 0.6% 0.6%
2033 2.1% 0.6% 0.6% 0.6%
2034 1.9% 0.6% 0.6% 0.6%
2035 1.9% 0.6% 0.6% 0.6%
2036 1.8% 0.6% 0.6% 0.6%
2037 1.7% 0.6% 0.6% 0.6%
2038 1.6% 0.6% 0.6% 0.6%
2039 2.1% 0.6% 0.6% 0.6%
2040 1.6% 0.6% 0.6% 0.6%
2041 2.2% 0.6% 0.6% 0.6%
2042 2.2% 0.6% 0.6% 0.6%
2043 2.3% 0.6% 0.6% 0.6%
2044 2.4% 0.6% 0.6% 0.6%
2045 2.5% 0.6% 0.6% 0.6%
2046 1.5% 0.6% 0.6% 0.6%
2047 1.3% 0.6% 0.6% 0.6%
2048 1.6% 0.6% 0.6% 0.6%
2049 1.3% 0.6% 0.6% 0.6%
2050 1.5% 0.6% 0.6% 0.6%
2051 1.8% 0.6% 0.6% 0.6%
2052 1.8% 0.6% 0.6% 0.6%
2053 1.8% 0.6% 0.6% 0.6%
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Table 29: Real Utility Rate Escalation Rate Assumptions, 2025 LSC Basis
Year
Statewide Natural
Gas Residential
Average Rate
(%/year, real)
Statewide
Electricity
Residential
Average Rate
(%/year, real)
2024 4.6% 2.1%
2025 4.6% 2.1%
2026 4.6% 2.1%
2027 4.2% 0.6%
2028 3.2% 1.9%
2029 3.6% 1.6%
2030 6.6% 1.3%
2031 6.7% 1.0%
2032 7.7% 1.2%
2033 8.2% 1.1%
2034 8.2% 1.1%
2035 8.2% 0.9%
2036 8.2% 1.1%
2037 8.2% 1.1%
2038 8.2% 1.0%
2039 8.2% 1.1%
2040 8.2% 1.1%
2041 8.2% 1.1%
2042 8.2% 1.1%
2043 8.2% 1.1%
2044 8.2% 1.1%
2045 8.2% 1.1%
2046 8.2% 1.1%
2047 3.1% 1.1%
2048 -0.5% 1.1%
2049 -0.6% 1.1%
2050 -0.5% 1.1%
2051 -0.6% 1.1%
2052 -0.6% 1.1%
2053 -0.6% 1.1%
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California Energy Codes & Standards | A statewide utility program 2024-04-25
Get In Touch
The adoption of reach codes can differentiate jurisdictions as efficiency leaders and help accelerate the
adoption of new equipment, technologies, code compliance, and energy savings strategies.
As part of the Statewide Codes & Standards Program, the Reach Codes Subprogram is a resource available to
any local jurisdiction located throughout the state of California.
Our experts develop robust toolkits as well as provide specific technical assistance to local jurisdictions (cities
and counties) considering adopting energy reach codes. These include Cost-effectiveness research and
analysis, model ordinance language and other code development and implementation tools, and specific
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If you are interested in finding out more about local energy reach codes, the Reach Codes Team stands ready
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California Energy Codes & Standards | A statewide utility program 2024-04-25
Please Note:
This template is intended for educational purposes only, without
any express or implied warranty of any kind, including warranties of
accuracy, completeness, or fitness for any particular purpose. You
agree that your use of the template is without any recourse
whatsoever to PG&E, SCE, SDG&E, or their affiliates. The template
is a draft, and anyone using this document should seek the advice
of an attorney to develop appropriate ordinance language to meet
its jurisdiction’s specific needs, as state and local laws may differ.
Please contact the Codes and Standards Reach Codes Team at
info@LocalEnergyCodes.com for additional information.
This program is funded by California utility customers and administered by
Pacific Gas and Electric Company, San Diego Gas & Electric Company (SDG&E®),
and Southern California Edison Company under the auspices of the California
Public Utilities Commission and in support of the California Energy Commission.
1
2022 Single Family FlexPath Model Reach
Code for Existing Buildings
FAQs
May 2024
Q. What do the points represent?
A. The points in the Measure Menu table represent the relative site energy savings
attributable to each measure. Thus, a measure with 4 points would provide twice as
much savings as a measure with only 2 points.
The Target Score represents a user-defined (see below) percentage of the maximum
cost-effective site energy savings, (the sum of points from all retrofit measures that
have been found to be cost-effective). Thus, in the Cost-Effectiveness Explorer if the
Target Score is set at 50% of the maximum score, the required measures would save
about 50% as much energy as the energy savings attributable to installing all cost -
effective measures.
Q. How are the Target Score and Measure Points calculated?
A. The Cost-Effectiveness Explorer calculates the Maximum Target Score and the points
tables, which are available for export. The user (i.e., staff developing the policy) sets the
required Target Score in the Cost Effectiveness Explorer.
Q. What is considered cost-effective?
A. Cost-effectiveness assumes that the bill payer will accrue a positive net-present-value
from the measure. For the scope of this policy, the cost is assumed to be the full retrofit
cost and is not contingent upon a project. Measures that are only cost -effective during
replacements (e.g., appliances and cool roofs) are not part of the set of measures used
to establish the cost-effective ceiling.
Q. Could points be based on GHG reductions?
A. Federal regulations1 require that, among other things, local and state standards to be
based on energy or its equivalent energy cost savings. Site energy savings are generally
proportionate to GHG emissions reductions.
Q. Why are some measures mandatory?
A. Cost-effective measures with very low costs and small savings (i.e., lighting) are
recommended to be mandatory to prevent cream skimming.
Electric readiness is presented as mandatory because there are no directly attributable
energy savings and therefore it cannot be scored relative to the other measures.
Q. How can I tell how much compliance might cost?
A. The cost of compliance will vary based on a) the Target Score, b) the scope of project, c)
the existing conditions of the home, d) measure selection, and e) market conditions. By
1 42 USCode Sec. 6297(f)(3)(F). https://www.govinfo.gov/content/pkg/USCODE-2022-title42/pdf/USCODE-
2022-title42-chap77-subchapIII-partA-sec6297.pdf
2
adjusting the Target Score in the Cost Effectiveness Explorer, the user alters the
measure combinations that satisfy the requirements.
Typical initial measure costs, as reported in the cost-effectiveness study, are presented
below. Costs may vary by climate zone. In addition to the information in the table, the
Cost Effectiveness Explorer produces an estimate of the typical compliance costs for a
range of Target Scores specific to each climate zone and vintage.
Typical Measure Costs – 2,400 Sq. Ft. Home ($)
Pre-1978 1978-1991 1992-2010
Lighting Measures
100 100 100
Water Heating Package
300 300 300
Air sealing
4,700 4,700 4,700
R-38 Attic insulation
6,800 2,600 2,600
R-49 Attic insulation
7,500 3,700 3,700
Duct sealing
2,600 2,600 2,600
New ducts, R-6 insulation + duct sealing
4,900 4,900 4,900
New ducts, R-8 insulation + duct sealing
6,400 6,400 6,400
Windows
11,900 11,900 11,900
Wall Insulation
3,000 na na
R-19 Raised Floor Insulation
3,700 3,700 3,700
R-30 Raised Floor Insulation
4,200 4,200 4,200
Cool roof .20 Solar Reflectance * 900 900 900
Cool roof .25 Solar Reflectance * 1,800 1,800 1,800
Radiant barrier under roof * 900 900 900
Heat pump water heater replacing gas * 4,400 4,400 4,400
High eff. heat pump water heater replacing gas * 5,200 5,200 5,200
Heat pump water heater replacing electric * 3,900 3,900 3,900
High eff. heat pump water heater replacing electric * 4,700 4,700 4,700
Heat pump space heater * 1,100 1,100 1,100
High eff. heat pump space heater * 4,100 4,100 4,100
Dual fuel heat pump space heater * 2,000 2,000 2,000
Heat Pump Clothes Dryer * 400 400 400
Induction Cooktop * 700 700 700
Solar PV (3kW)
9,700 9,700 9,700
* Incremental cost at time of replacement
Q. Why do some measures have points which exceed the Maximum Target Score?
A. The points are based on site energy savings; they do not vary based on the Target Score.
Measures with values that exceed the Target Score save more energy than required.
Q. Can a jurisdiction alter the points and score?
A. Jurisdictions may (and should) alter the Target Score but may not change the measure
points. Users will need documentation supporting the relative energy value of the
measure(s) to alter the measure points.
Q. Can other measures be added to the list?
A. If there is documentation supporting site energy savings, additional measures may be
added. Contact info@LocalEnergyCodes.com to inquire about revisions.
Q. Why do some measures have no points for newer vintages?
A. Certain measures (e.g., windows, wall insulation) were required at the time of
construction in newer vintages and are therefore not eligible for points.
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Q. How would this ordinance be implemented?
A. Specific implementation details will depend upon the triggers, stringency, and scope of
each adopted ordinance. Projects that are required to comply with the ordinance would
be required to install a combination of measures from the menu that meets or excee ds
the Target Score. Permit applicants would submit a supplemental form documenting
that the measures selected and installed meet or exceed the Target Score. Collateral
materials have been developed to assist implementation. These materials include: an
application checklist; air-sealing checklist; and an exceptions form.
Q. What if compliance would be very onerous because only a few measures are
applicable or technically feasible in the home?
A. There is an exception that allows the Building Administrator to adjust the Target Score.
The exception form provides specific values for those measures that were used to set
Target Score, which can be applied as credits. If those measures are deemed to be not
applicable (e.g., ducts in a home with hydronic heating) or infeasible (e.g., PV with
excessive shading), the Administrator may reduce the Target Score by the value of those
measures.
Q. How do the vintages account for code cycles that became effective mid-year?
A. Normally, codes become effective on January 1 of the year following the nominal code
cycle. However, in some cycles the effective date was postponed to midyear. In these
cases, the vintages are rounded down such that a home permitted anytime during that
year is credited with the code effective in the latter half of the year.
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Building Reach Code Proposal for Existing Construction
Policy Snapshot
May 6, 2024
Reach Code Proposal
Every three years the Building codes are updated at the State level and at that time local jurisdictions
are allowed and encouraged to adopt more stringent “reach codes” to help conserve resources and
address climate goals. The City Council adopted a Green Building Reach Codes in November 2022 for
new construction which went into effect January 2023. Included in the reach code were prohibitions
on gas piping for most new construction, a prohibition on extending gas lines or meters for existing
single-family homes, and an increase in electric vehicle charging infrastructure for multifamily buildings
to reduce barriers to adoption of electric vehicles. A recent court decision against the City of Berkeley
has rendered the gas prohibitions in the reach code null and void. However, the electric vehicle
requirements have not been affected and remain in place.
A second part of the reach code process was to identify technical assistance and streamlining
opportunities to remove barriers to electrification and more robust energy efficiency in construction.
Staff worked with two local residents who recently electrified their homes to develop an 8 Steps Guide
to Electrification that has been well-received and promoted by the Marin Builders Association among
others. In addition, staff has been working with partners around the County to develop an
electrification roadmap for longer term transition to electric appliances in response to interest by
residents to electrify. This roadmap, being developed by the County for use countywide, should be
finalized sometime this fall.
Climate Change Action Plan (CCAP) Measures addressed by this proposal
1. Green Building Reach Code (EE-C4)
2. Building and Appliance Electrification (RE-C3)
3. Energy Efficiency Programs (EE-C1)
Green Building Reach Codes have been estimated to contribute between 2.9 – 10.7% of the City’s total
2030 greenhouse gas (GHG) reduction goal. In addition, reduction in energy use saves on energy bills
and reduction of natural gas use in homes contributes to healthier living environments for tenants.
The Issue
Existing buildings make up a large portion of the City’s building stock and GHG emissions. These
buildings will need to be retrofitted to significantly improve their energy efficiency, their appliances
will need to be electrified, or on-site renewable energy such as solar panels will need to be installed to
meet City emission reduction goals. Single family homes make up the majority of San Rafael’s existing
housing stock and will be key in reducing emissions. Targeting emissions in existing buildings is
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complex, as there is no one-size-fits-all policy option. Given this, the Flexible Compliance Path provides
a way to target these emissions in a more equitable and cost-effective way for homeowners.
The Flex Path Proposal
Single-family remodel projects over 500 square feet will be required to comply with the Flexible
Compliance Path, or “Flex Path,” which seeks to increase energy efficiency and encourage
electrification in homes, while homeowners are already making significant changes to their homes, and
without mandating specific requirements.
The Flex Path serves as a menu of energy saving measure options that homeowners can choose from
that the State of California has verified for cost-effectiveness. Each measure has an associated point
value based on site energy savings. The higher the energy savings from implementation, the higher the
score for the measure. The first section of the menu is centered around envelope related efficiency
measures such as insulation, windows, and duct sealing, the next section is heating, venting and air
conditioning (HVAC) and water heating electrification measures, and the third section consists of solar
measures.
Jurisdictions set a “target score” that projects are required to meet, using the points from
implementing measures on the menu. The City has set a target score for each vintage of home in a way
that does not force electrification and would be achievable through multiple combinations of other
measures such as envelope improvements and solar. Each home can choose which measures work
best for their home and budget.
Who will it apply to?
Single family remodel projects over 500 square feet, built before 2010.
How will it work?
When homeowners apply for permits, the Flex Path will be a part of their permit paperwork. The form
will include the Flex Path Table showing measures, target scores, and points, as well as a detailed
description of each measure.
Homeowners will fill in the Flex Path Table for their project. They will note the vintage of their home,
which indicates which target score they need to achieve. Then, they will decide which measures they
want to implement into their project to meet that target score. They will be able to refer to detailed
descriptions of each measure and compare it to the home’s existing conditions. If any measures already
exist in the home, the homeowner will provide documentation of these measures, to show compliance
with those requirements as long as they meet the efficiency standards in each measure category. For
example, if a homeowner installed solar several years ago and it meets the standards in that measure,
they would receive the points toward their target score.
If the homeowner looks at the list of measures and there are none already existing in the home, or if
the total of any existing measures do not add up to meet the target score, the homeowner would then
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decide which measures to implement to reach the target score for their vintage. In some instances
homeowners may also be eligible for exemption from some or all of the requirements based on factors
such as infeasibility or cost burden, which are stipulated in the ordinance.
After implementing their choice of efficiency measures, the homeowner provides documentation of
how they’ve met the target score and the completed Flex Path form to the City to show compliance.
Once they’ve shown compliance or exemption from the Flex Path requirement, homeowners and their
contractors would continue with the rest of the building permit process.
What do we hope to expect?
It is estimated that 40-60 projects per year will be subject to this requirement. The Flex Path gives
project applicants the option to choose energy efficient measures that make the most sense for their
home. Though target scores were selected to be low enough not to require any electrification
measures, most electrification measures have higher point totals and would allow applicants to comply
more quickly than choosing some other measures. Staff will monitor progress and actual projects to
gather data on what happens. After one or two years the City could decide to increase target scores to
encourage more efficiency measures or change the thresholds for compliance to smaller projects.
How much will it cost and how will it be funded?
There will be no cost to the City, however estimated upfront costs for homeowners may range between
$500-$4,000 depending on which measures a project chooses to implement. Most homeowners will
see energy bill savings after implementation. Some homeowners may choose more expensive
measures while others choose lower cost options, and there will be variety in energy bill impacts as
well. The design of the Flex Path is to give homeowners more choices to do what is best for them.
Challenges and Opportunities
Rapid decarbonization will not always be easy to do in all cases. One of the main questions posed at
the outset of this project was how to best meet our GHG reduction goals while also meeting our
housing production and economic development goals, especially as it relates to cost. Exemptions and
exceptions have been built into the proposal to accommodate those occasional cases where it would
be infeasible or prohibitively costly to meet the code. In addition, credits are given to homes that have
already done measures in the Flex Path.
Another question posed had to do with resiliency: How do electric appliances fare during a power
outage, and can the electrical grid handle the increase in demand? Currently many gas appliances
require electricity to operate, meaning in many cases space heating and hot water impacts will be felt
by those in mixed-fuel homes as well. According to PG&E local power distribution has been hardened
and the vast majority of San Rafael is not at threat of a Public Safety Power Shutoff event. Common
power outages are lasting shorter amounts of time than just a few short years ago. California is
investing billions of dollars in grid reliability and backup power to reduce these impacts even further.
Utilities believe the grid will not be compromised with the investments the State and utilities are
making to ensure reliability.
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Economy and Social Equity
For single family homes, duplexes, town homes and ADUs most energy measures are relatively
inexpensive as part of the overall cost of renovation and show on-bill cost savings over time.
Electrification of appliances has less on-bill savings but are not required measures under the Flex Path.
Multifamily housing and commercial projects are not subject to the proposed regulation either. There
are numerous incentives to help offset initial costs of installation for many measures through the
Inflation Reduction Act, utility programs, the Bay Area Regional Energy Network, and the State of
California
With projected increases in extreme heat events, building electrification can provide residents with
highly efficient air conditioning at about ¼ the energy use of typical air conditioners. This is because
heat pump space heaters can reverse the flow of air and provide cool air as well as heat, offering
tenants air conditioning options that were previously out of reach.
Co-Benefits & Potential Unintended Consequences
Two potential unintended consequences of adopting a reach code are additional costs and confusion
for contractors due to hard-to-understand code language and burdensome Building Division
implementation. However, the City of San Rafael’s Building Division demonstrates collaboration and
simplification and was consistently referenced as the easiest to work with in Marin during
engagements with builders and the Marin Builders Association. Other potential unintended
consequences may include the challenges of installing and using new technologies, added time and
associated costs for permitting transformers for larger projects, and the ability to find contractors that
can do the work. The City will continue to work with our regional partners to compile and promote all
the technical assistance and incentives available to owners and contractors for ease of implementation
in the coming year. Electrify Marin and Bay Area Regional Energy Network have been training
contractors and providing incentives to build the capacity necessary to transition to an electric future
and have seen a thousand-fold increase in qualified contractors since 2019.
Co-benefits include resident health and workforce development. Over 40 studies have documented
the negative health effects of having natural gas (methane) in the home, including asthma, increased
deaths and illness. Local workforce programs include MCE’s Workforce, Education and Training
program in conjunction with Strategic Energy Innovations focused on building electrification and
energy efficiency. More workforce programs are being funded and developed across the region and
the City is actively exploring opportunities to enhance them for local residents through our Equitable
Low Carbon Economy project and work with the California/Bay Area Jobs First initiative.
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Sources & References
Climate Change Action Plan Measures
• San Rafael Climate Action Plan Energy Efficiency Measures
• San Rafael Climate Action Plan Renewable Energy Measures
• Marin Climate GHG Inventories
• City of San Rafael 8 Steps Guide to Electrification
• UCLA Report Residential Gas Appliances
• Health Impacts of Natural Gas Stanford Study
• Health Impacts of Natural Gas Meta Analysis
Reach Code Proposal
• Statewide Reach Codes Website
• Single Family Cost Effectiveness Study Updated for 2024
• Cost Effectiveness Explorer for San Rafael Measures
• Marin County Model Reach Code Development
• California Energy Commission Building Decarb and EV Resources
Challenges and Opportunities
• Assessment of Impacts of Electrifying Residential Buildings in California
• BUILD Program for Technical Assistance and Incentives Multifamily
• CPUC Utility Costs and Affordability Evaluation
• Building Decarbonization Practice Guide
• PG&E Public Safety Power Shutoff Map
• MCE Electric Load Planning
Economy and Social Equity
• Low-Rise Residential Cost-Effectiveness Study
• Electrify Marin Rebate Program
• Inflation Reduction Act Fact Sheet
• Inflation Reduction Act Incentives Calculator
• California Eliminates Natural Gas Subsidies
Co-benefits & Potential Unintended Consequences
• Bay Area Regional Energy Network Resources for Public, Government, and Contractors
• San Rafael Equitable Low Carbon Economy Project
• Heat Pumps and Heat Waves, Rocky Mountain Institute*
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• California/Bay Area Jobs First initiative
• MCE Workforce Program
Engagement
• Model Reach Code Development Engagements
• Letter of Support from PG&E for Marin County Model Reach Code