Fuel Substitution in Energy Efficiency

In the context of energy efficiency programs, fuel substitution measures involve projects where all or a portion of the existing energy use is converted from one CPUC-regulated fuel to another CPUC-regulated fuel. Equipment powered by electricity and/or natural gas fuels and provided by a CPUC-regulated investor-owned utility or a municipal utility are eligible for inclusion in the energy efficiency portfolio as a fuel substitution measure. Fuel substitution measures are distinct from fuel switching measures. Fuel switching measures involve non-utility fuels such as propane or fuel oil.

In order to include a fuel substitution measure in the energy efficiency portfolio, program administrators must demonstrate that the proposed measure passes the Fuel Substitution Test implemented by Decision 19-08-009. The Fuel Substitution Test has two requirements:

  1. The measure shall not increase source energy
  2. The measure shall not harm the environment

For the purpose of passing the Fuel Substitution Test, environmental harm is measured by CO2 emissions. Therefore, to be included in the portfolio, fuel substitution measures must not increase source energy or CO2 emissions compared to the baseline technology. The fuel substitution technical guidance document (linked below) provides more information on the Fuel Substitution Test. 

Decisions 19-08-009 directed Energy Division to produce a technical guidance document for fuel substitution measures. The technical guidance document includes a step-by-step guide for calculating source energy savings and CO2 offsets for fuel substitution measures. The guidance document instructs users on how to demonstrate that measures pass the Fuel Substitution Test and outlines the calculation methodology. Additionally, the guide provides information on cost effectiveness analyses and reporting requirements. The technical guidance document is a living document and will be updated periodically and in conjunction with the Integrated Distributed Energy Resources proceeding (R.14-10-003) and Integrated Resources Planning proceeding (R.16-02-007). 

The Fuel Substitution Test and the technical guidance document are applicable only to fuel substitution measures which are eligible for energy efficiency incentives and included in the program administrator's energy efficiency portfolios. The Building Decarbonization proceeding (R.19-01-011) is considering the BUILD and TECH programs, which will likely include fuel substitution technologies. Fuel Substitution activities undertaken through the Building Decarbonization proceeding are not subject to the Fuel Substitution Test. For more information on the Building Decarbonization proceeding, please visit: https://www.cpuc.ca.gov/buildingdecarb/.

For more information on fuel substitution measures, review Decision 19-08-009 and the technical guidance document linked below. The Fuel Substitution Calculator, also linked below, is an excel based tool used to perform the Fuel Substitution Test calculations.  Both versions of the calculator perform the same calculations and are valid, but v.1.1 includes additional usability for deemed and custom project calculations. The technical guidance document includes a guide for using the Fuel Substitution Calculator.


Fuel Substitution Calculator Update Presentation - 10/13/22

Beta testing of the new draft calculator will occur between 10/13 and 11/14. During this time please email any comments or questions on the draft calculator or its documentation to Travis Holtby (travis.holtby@cpuc.ca.gov) and Michaela Levine (michaela.levine@ethree.com). Once we have received and addressed stakeholder commenters, we will make any necessary edits and publish the new finalized Fuel Substitution Calculator, which is planned for winter 2022.