Building Decarbonization Market Characterization

Decarbonization of California’s energy mix is a critical step towards reducing the state’s carbon footprint. Southern California Edison engaged a team led by Evergreen Economics to conduct a market study to provide recommendations to support its efforts to decarbonize California’s buildings. The study was intended to serve as a critical step towards meeting decarbonization goals in SCE’s commercial sector by characterizing the market size and potential for addressing California building decarbonization goals through building electrification (BE) and by identifying the potential drivers and barriers for building decarbonization across different building types and operators.

Specific research objectives that the study addressed included:

• Estimating the current and potential market size for decarbonization (i.e., greenhouse gas [GHG] emissions reductions) in commercial buildings;
• Assessing current costs, energy and GHG impacts, and market saturation of technologies that support building decarbonization;
• Conducting building simulation modeling and analysis on the top most promising commercial building types;
• Identifying drivers and barriers to decarbonizing SCE’s commercial market;
• Providing recommendations for near-term actions to begin to advance building decarbonization in SCE’s commercial sector; and
• Identifying potential market allies that programs may partner with in achieving GHG mitigation goals.

The market characterization included data analytics, building simulation modeling, and primary research. The data analytics component included review of secondary data to estimate market size for building electrification, and costs and energy and GHG savings associated with technologies that support building decarbonization in both new construction and existing buildings. The top five most promising building segments were selected on which to focus building simulation and primary research efforts: restaurants, health, lodging, multifamily, and schools.

Building simulation modeling focused on customer load profiles, rates, and the economics around decarbonization (from a net energy bills and lifecycle cost perspective as well as grid impacts). The primary research included web surveys and in-depth interviews with various customer and market actor segments to explore barriers and drivers to supplying and installing BE measures.

Evergreen assessed the potential and feasibility of building decarbonization—specifically BE—by commercial building segment. The Evergreen team found that retrofit hotels and new construction fast food restaurants have the highest potential carbon emissions benefits from electrification, with only small increases in utility bills of 1 to 6 percent. The worst candidates for electrification were found to be new construction hotels.