Energy Efficiency

California has a long history of leading on energy efficiency—from adopting the first-in-the-nation appliance efficiency standards (Title 20) in the 1970s to the first standards on battery chargers in 2012. Energy efficiency has long-been prioritized in the state, and as California looks to transition away from fossil fuels and toward greater utilization of clean electricity sources, there is also increasing momentum to electrify buildings, homes, and transportation.

At the federal level, the Biden administration has turned its attention to the decarbonization of the building sector, acknowledging that along with electrifying the transportation sector, building decarbonization will be key to address the impacts of climate change. Efficient use of electricity in particular will become increasingly important as California looks to meet climate and clean energy goals. Since 1990, California has more than doubled its energy efficiency (inflation-adjusted GDP relative to energy consumption). However, in recent years, energy consumption has ticked upward after years of decline, particularly in petroleum consumption for the transportation sector and natural gas consumption for the commercial and residential sectors.

Please note that data for 2020 at the state level is not yet available, therefore, it is not feasible to draw definite observations and trends on how the COVID-19 pandemic has affected the key points discussed in this chapter. However, it is within reason to postulate that energy consumption in California had declined notably in 2020. Nationwide, U.S. energy consumption fell 7% in 2020 compared to 2019; one may expect a similar level of energy consumption decrease in California as well. Nationwide, the transportation sector leads with a 15% drop in energy consumption primarily due to a large share of the workforce working from home. Surprisingly, in spite of the stay-at-home orders, energy consumption declined 1% in the residential sector. These national level findings should also hold for California.

Energy Productivity
  • In 2018, California generated $3.85 of GDP (inflation-adjusted) for every 10,000 British Thermal Units (BTU) of energy consumed, double the national average of $1.92/10,000 BTU of energy consumed.

  • California has continuously outperformed the rest of the U.S. in terms of energy efficiency gains as a share of GDP produced—averaging a 2.8 percent compounded average growth rate (CAGR) between 2008 and 2018, double the 1.4 percent CAGR recorded for the rest of the U.S.

Energy Intensity
  • Energy intensity (energy consumption relative to GDP) decreased by 1.7 percent from 2017 to 2018. The transportation sector leads with a 2.6 percent drop, followed by a 1.7 percent decrease in the industrial sector.

  • Although transportation has the largest year-over-year drop, it has the smallest drop (-9.4%) between 2013 to 2018 out of the four sectors (commercial, industrial, residential and transportation), due to an increase of 10.6 percent in total consumption in the sector over that time period.

Energy Consumption
  • California’s total statewide energy consumption was 5.9 percent higher in 2018 than in 1990, but energy consumption per capita declined 19.6 percent.

  • Energy consumption has been rising faster in California than the rest of the U.S. in recent years despite California’s population growing at a slower pace. From 2014 to 2018, total energy consumption increased 5.6 percent in California and 2.7 percent in the rest of the U.S. But these trends do vary by sector: between 2017 and 2018, Industrial, Commercial and Transport energy consumption increased by 1.3, 2.5 and 0.4 percentage points respectively, while power sector consumption decreased by 9.2 points.

  • Renewable energy is the fastest growing for both electricity and non-electricity consumption in California, growing 45.5 percent and 89.3 percent, respectively, from 2008 to 2018.

  • After years of declining energy consumption in California, it has gradually increased since 2014 mostly due to an increase in petroleum (excluding fuel ethanol) non-electricity generating purposes.

  • Total natural gas consumption was 4.0 percent lower in 2019 than in 2000, while total electricity consumption increased by 6.2 percent during the same period. The population increased 16.2 percent during the same period.

  • Although total natural gas consumption has gradually increased in recent years (+7.3% from 2014 to 2019), electricity consumption has decreased slightly (-1.4%) during the same period, indicating that electrification is lagging in California, especially in the residential sector.

  • By sector, commercial (since 2014; +15.3%), industrial (since 2009; +19.8%) and residential (since 2014; +17.8%) all have had sustained increases in natural gas consumption.

Electricity and Energy Consumption Comparisons
  • In 2019, California (6.34 megawatt-hours) had the lowest per capita electricity consumption among the fifty states. In 2018, California (199.63 million BTU) had the second lowest per capita energy consumption, which includes electricity consumption, among the fifty states behind Rhode Island.

  • Per-capita electricity and energy consumption fell at similar paces in California during the most recent ten years that data are available: -9.8 percent for per-capita electricity consumption from 2009 to 2019 and -9.6 percent for per-capita energy consumption from 2008 to 2018.

  • Within the most recent five years, however, California’s per capita electricity consumption decreased 6.9 percent between 2014 and 2019, yet its per capita energy consumption actually rose 1.3 percent between 2013 and 2018.

Electricity and Energy Bills Comparisons
  • California’s electricity bill as a percentage of GDP was 1.35 percent in 2019, down from 1.42 percent in 2018. On the other hand, California’s energy expenditure as a percent of GDP was 4.47 percent in 2018, up from 4.23 percent in 2017.

  • Although California has some of the highest electricity costs per kilowatt-hour in the U.S., it had the fourth lowest electricity bill as percentage of GDP (1.35%) in 2019—behind New York (1.18%), Washington (1.19%) and Utah (1.33%)—driven by low electricity consumption thanks to the state’s extensive energy efficiency programs and policies that have decreased per capita growth in electricity demand. California had the third lowest energy expenditure as a percent of GDP after New York (3.61%) and Washington (4.30%) in 2018.

  • In 2019, California’s average monthly commercial electricity bill was 42.7 percent higher than the U.S. Furthermore, California’s edge over the U.S. in having a lower average residential sector electricity bill has diminished notably—from 18.2 percent lower in 2009 to 11.8 percent lower in 2019, due in part to increasing rates driven by wildfire costs and other factors.

Energy Transition in Residential Buildings
  • From 2008 to 2019, California added just under one million occupied housing units; homes where electricity is the primary heating fuel accounted for 63.4 percent of the increase in occupied housing units.

  • In California, 2019 marked the first year when more than 100,000 homes were fueled by solar energy.

  • From 2018 to 2019, homes that use electricity or solar energy as the primary heating fuel was the fastest rising fuel group among both owner-occupied households (+24.8%) and renter-occupied households (+25.3%) compared to all other fuel types.

  • Renter-occupied units (36.5%) are about twice as likely to be powered by electricity than owner-occupied units (18.4%).

  • As of May 2021, forty cities and counties had adopted local ordinances exceeding the current (2019) energy code, demonstrating increased commitment to energy efficiency and clean energy generation. But only one jurisdiction (Los Gatos) has adopted ordinance that requires pre-wiring for battery storage. New building code standards adopted by the California Energy Commission and up for approval in December 2021 could improve statewide adoption of electric building technologies in newly constructed homes starting in 2023.