1. Regional Heat Pump Water Heater Market Transformation Program
Explain roles in the program
My intro
BayREN
StopWaste (EBEW admin role – with CCC)
BAAQMD
Energy Solutions (Brian)
StopWaste is Alameda County, but leading for all of BayREN on this project.
BayREN designs and implements many programs regionally. This fits well with that model – efficiency of scale, covering wider market.
BAAQMD is very interested in reducing GHGs through this program. These funds do not require passing the three prong test.
Regional Heat Pump Water Heater Market Transformation Program
May 2019

2. Growing Momentum for Building Decarbonization
Legislative and regulatory support from state and local government
SB 1477 allocates funding for pilot programs
Residential Heat Pump Water Heaters (HPWH) are win-win
As you know…
MCE is in the business of supplying carbon-free electricity
there is a “buzz” right now
SB 1477 will have the BUILD (new construction) and TECH (existing and new buildings). $50 mill/year for 4 years. Ready to go in 2020.
Win-win: increases electric load (for you), decreases GHGs (for CAPs, jurisdictions, state), saves energy as it is highly efficient

3. Why Focus on HPWH?
Gas WH are largest source of GHGs in residential building stock (16.9 tons avoided over equipment life)
Load building (~$4,500 of new revenue per HPWH installed)
Super energy-efficient technology MOVES heat, doesn’t create heat (300% efficient or COP 3.0)
Equipment wholesale cost is about $600 more compared to natural gas water heater
Offers load management capabilities through built in or retrofit software
Water heating is the single largest opportunity to reduce GHG emissions from the residential sector, as it is the highest GHG emitter. Any questions about the technology or equipment? just in case there is someone in the room who doesn’t want to show their ignorance.
Demand response controls are a possibility – is that of interest to your agency? Storage potential is increased with a HPWH in every home. Using electricity at the optimal time of day.
Source: Energy Star

4. Our Objective
Establish uniform program design that can be supported by local energy providers
Demonstrate Bay Area’s political will to scale up HPWH market
Leverage these early actions to successfully compete for statewide funding in 2020+
Call to Action! We want to invite your participation.
Here is a unified market, which is what exists under PG&E with more or less uniform programs throughout the region. That is what the distributors see.
Helps justify the significant investment needed by distributors to increase stock of product
Distributors and contractors service territories overlap with multiple CCA/MUNI territories
I.e. Contractor training, marketing collateral development
BUT: it could be a fragmented market if each CCA/Publicly Owned Utility does it’s own thing – a nightmare for contractors and suppliers. Scary patchwork.
We’d like to band together to really make a difference.

5. Key Supply Chain Actor
Midstream Actors influence 60% - 90% of all sales
Brian starts here

6. BAAQMD Grant Provides Seed Funding
BayREN team will:
Design single-family midstream incentive
Engage local energy providers (CCAs and POUs)
Engage HPWH supply chain actors
Support workforce education
Homeowner education
Cross-promote with other complementary programs
Layer a HPWH incentive onto BayREN’s Multifamily program
Local Energy Providers:
Funds for incentives and implementation (ongoing)
Note: the grant does NOT include incentives, except for the limited Multifamily installations
Three other grants were given by BAAQMD to regional downstream incentive programs: Marin, San Jose Clean Energy and SVCE.
Turn over to Brian here

7. Cumulative 3-Year Impacts DR Reduction Potential (kW per Event)
Benefits to the Region
Cumulative 3-Year Impacts
Capture Rate
Total Units
Consumption (kWh)
GHG Reduction (Tons)
Revenue ($)
DR Reduction Potential (kW per Event) 5%
5,000
7,000,000
6,500
$1.75 m
500
10%
10,000
14,000,000
13,000
$3.5 m
1,000
25%
25,000
35,000,000
32,500
$8.75 m
2,500
kW reduction is based on 100 watt reduction/unit for 100% of units (average summer reduction based on various studies)  greater reduction potential during winter/spring but less likely that they’ll need to reduce load during these time periods
Assumes: 13-year useful life; $0.25 per kWh retail electricity price; 1.3 tons of avoided GHG per unit; 1,400 kWh annual unit consumption; natural gas baseline

8. Pathway to Launch Program Onboarding & Launch
April/May 2019
July 2019
Program Onboarding & Launch
Program Design & Development
Who else at MCE would we need to speak to to be able to move forward on this incentive program in FY 2019/2020?
What does your budget process look like for next FY?
What are your next steps and when should we check back in with you?
Program potential (# of units, GHG reductions, energy saved)
Engage Market – Manuf & Reps are key
Estimate Program Potential
Present Program & Obtain Feedback
Test & Refine Program Design with Market
Onboard & Train Contractors
Obtain Commitments from PAs
Program Launch
Customer Engagement: Marketing, Education & Outreach
Engage market actors
Estimate program potential
Present program & obtain feedback
Test & refine design with market actors
Obtain commitments from local energy providers
Onboard distributors & contractors
Configure software
Customer ready platform

9. Thank You
Jennifer West

10. Why a Midstream Program?
900% MORE….
Program participation
Energy & GHG impacts
Customer benefits
Customer touchpoints
††PG&E Commercial HVAC
†Efficiency VT HPWH

11. Midstream Incentive Process
5B. Receives “Thank You” packet
CUSTOMER
CONTRACTOR
3. Complete application
5A. Reinvest incentive in stocking, upselling, and trainings
2. Stock, promote, sell and ship eligible equipment
SUPPLIER
1. Engage CEO/GMs; train sales staff; provide marketing materials & support
4. Verify customer & equipment; pay incentive FAST; send customer packet
Implementer

12. Qualified Contractor Marketplace
Facilitate the bid process & steer customers to the best trade allies
652
684
754
Service Marketplace
for Trade Allies
Digital Site Survey
Generates Project Scope
Contractors
Receive Bid Request
Installation Complete
Products Purchased and Installed
Quality Assurance
Complete Close-Out Survey

13. Sample Program Program Services 3-Year Program Overview
Supply chain engagement
Contractor education & training
Turnkey incentive processing
Online contractor marketplace
3-Year Program Overview
Incentive + Implementation Fee (per unit)
$ ,000
Program Goal (Units)
10,000
Program Budget
$ million
3-Year Program Benefits
Avoided GHG Emissions (Tons)
169,000
Lifetime Revenue
$ 45 million
Simple Payback (Year)
5.71
Internal Rate of Return
18%
Cost-effectiveness ($/ton GHG avoided) $
These are all services that Energy Solutions can provide that are outside of the BayREN grant funded program design.
Assumes: 13-year useful life; $0.25 per kWh retail electricity price; 1.3 tons of avoided GHG per unit; 1,400 kWh annual unit consumption; natural gas baseline

14. Distributor Value Proposition: HPWHs
Factor
Electric Resistance
HPWH
Variance
Resale from distributor to customer
$458
$1054
$596
Distributor cost (estimate)
$376
$850
$474
Gross profit per water heater
$82
$204
$122
Gross margin % per water heater
18%
19%
Gross profit generated from
50,000 units / year
$4,100,000
$10,200,000
$6,100,000
Purpose: Reduce GHG emissions with turn to clean electricity
HPWH: proven technology for 20 years, yet small share of market
Success in New England & Northwest market development
Super energy-efficient technology MOVES heat, doesn’t create heat (300% or COP 3.0)
Funding from the BAAQMD to promote this climate-clean equipment
EE funding cannot yet support HPWH incentives (three prong test)
150%