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7.A. - Page 68 of 285 2019 Energy Efficiency Ordinance Cost-effectiveness Study 2.5.2 TDV Lifecycle Cost Cost-effectiveness was also assessed using the Energy Commission's TDV LCC methodology. TDV is a normalized monetary format developed and used by the Energy Commission for comparing electricity and natural gas savings, and it considers the cost of electricity and natural gas consumed during different times of the day and year. The 2019 TDV values are based on long term discounted costs of 30 years for all residential measures. The CBECC-Res simulation software outputs are in terms of TDV kBTUs. The present value of the energy cost savings in dollars is calculated by multiplying the TDV kBTU savings by a net present value (NPV) factor, also developed by the Energy Commission. The NPV factor is $0.173/TDV kBtu for residential buildings. Like the customer B/C ratio, a TDV B/C ratio value of one indicates the savings over the life of the measure are equivalent to the incremental cost of that measure. A value greater than one represents a positive return on investment. The ratio is calculated according to Equation 5. Equation 5 TDV Bene f it — to —Cost Ratio = TDV energy savings * NPV f actor NPV of lifetime incremental cost 2.6 Electrification Evaluation In addition to evaluating upgrades to mixed fuel and all -electric buildings independently that do not result in fuel switching, the Reach Code Team also analyzed the impact on construction costs, utility costs, and TDV when a builder specifies and installs electric appliances instead of the gas appliances typically found in a mixed fuel building. This analysis compared the code compliant mixed fuel prototype, which uses gas for space heating, water heating, cooking, and clothes drying, with the code compliant all -electric prototype. It also compared the all -electric Efficiency & PV Package with the code compliance mixed fuel prototype. In these cases, the relative costs between natural gas and electric appliances, differences between in-house electricity and gas infrastructure and the associated infrastructure costs for providing gas to the building were also included. A variety of sources were reviewed when determining incremental costs. The sources are listed below. • SMUD All -Electric Homes Electrification Case Study (EPRI, 2016) • City of Palo Alto 2019 Title 24 Energy Reach Code Cost-effectiveness Analysis (TRC, 2018) • Building Electrification Market Assessment (E3, 2019) • Decarbonization of Heating Energy Use in California Buildings (Hopkins et al., 2018) • Analysis of the Role of Gas for a Low -Carbon California Future (Navigant, 2008) • Rulemaking No. 15-03-010 An Order Instituting Rulemaking to Identify Disadvantaged Communities in the San Joaquin Valley and Analyze Economically Feasible Options to Increase Access to Affordable Energy in Those Disadvantages Communities (California Public Utilities Commission, 2016) • 2010-2012 W0017 Ex Ante Measure Cost Study: Final Report (Itron, 2014) • Natural gas infrastructure costs provided by utility staff through the Reach Code subprogram • Costs obtained from builders, contractors and developers Incremental costs are presented in Table 6. Values in parentheses represent a lower cost or cost reduction in the electric option relative to mixed fuel. The costs from the available sources varied widely, making it difficult to develop narrow cost estimates for each component. For certain components data is provided with a low to high range as well as what were determined to be typical costs and ultimately applied in this analysis. Two sets of typical costs are presented, one which is applied in the On -Bill cost effectiveness methodology and another applied in the TDV methodology. Details of these differences are explained in the discussion of site gas infrastructure costs in the following pages. 15 © 2019-08-01 320