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Pathways to Market Transformation: The Water-Energy Nexus
Market transformation” is the concept that a market can be substantially changed through some kind of intervention. Intervention can be of many types: policy, regulation, financing, or technology. When transformation is expected to yield significant economic, environmental and/or societal benefits, multiple strategies may be deployed in concert to accelerate transformation.
Such was the case when California embarked upon its Green Building Initiative. In 2004, Governor Schwarzenegger issued an Executive Order directing state agencies to reduce energy use in state-owned buildings 20% by 2015, and encouraging other public entities and the private sector to match the state’s efforts. In 2005, the California Public Utilities Commission (CPUC) approved $230 million in annual energy efficiency incentives to advance the greening of both public and private sector buildings. Assembly Bill 2160 [Lieu, 2006] required development of tools and other actions to facilitate efficient state investment in green building projects. In 2008, the CPUC adopted a long-term energy efficiency strategic plan in which a goal of “Zero Net Energy” was established. Also in 2008, California’s Building Standards Commission (BSC) adopted the California Green Building Standards Code (CALGreen). In 2007, Assembly Bill 1103 [Saldana], a precursor to building labeling, required owners or operators of non-residential buildings to disclose building energy performance to potential buyers and tenants under certain circumstances. It is not an accident that the amount of square footage of Class A Commercial Buildings certified green has increased from about 20% in 2006 to more than 54% today – an impressive gain of 170% in only five years.
The water-energy nexus provides another opportunity for significant transformation. Both in California and throughout the U.S., the water sector is one of the largest users of energy. Similarly, the power sector is one of the largest users of water. Thus the water and power sectors are inevitable partners. Although studies have shown that considerable incremental resource, economic, and environmental benefits could be achieved through integrated management of water and energy resources, a long history of separate investment in and optimization of these resources makes it difficult to harvest the multiple benefit streams that occur at their nexus. Overcoming these types of persistent barriers – moving the market from unrealizable opportunities to a portfolio of boundless possibilities – is precisely the role of transformation.
The path to transformation starts with looking for ways to overcome significant barriers. Maximizing the joint benefits of water and energy will ultimately require new policy and regulatory frameworks that enable optimizing investments across both resources, and potentially also across the multiple utilities, agencies and jurisdictions charged with developing and delivering these resources. In order to do that effectively, new metrics and tools will need to be established that enable evaluating the net costs and benefits of multiple value streams on a fully integrated basis. In addition, traditional energy programs that focus on installing new widgets to change “last year’s” energy requirements will need to be redesigned since water-related energy use fluctuates significantly from one year to the next with changes in hydrology, and the most significant energy benefits are found not in widgets, but in reconfiguring entire systems and operations.
California’s deliberations about how to integrate water-energy opportunities into the state’s energy programs provide a great opportunity to begin that transformation. To get involved, interested parties can monitor CPUC proceeding R.09-11-014 by registering to receive documents. To provide comments, first file a motion with the Administrative Law Judge assigned to this proceeding to request “party status”. See Rule 1.4 of the CPUC’s Rules of Practice and Procedure for more information.Topics: Energy Efficiency, Market Transformation, Sustainability, Water Efficiency, Water Energy Nexus
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