What California’s Proposed Building Performance Standard Signals for Energy Management

Published August 31, 2026

California is considering a new approach to managing the energy performance of large existing buildings. The state’s draft Building Energy Performance Strategy, developed under Senate Bill 48, would build on California’s existing benchmarking programme and establish a framework for long-term performance standards. The proposal recommends targets extending to 2045, with interim compliance checkpoints every five years, while also introducing alternative compliance pathways and measures intended to address tenant impacts. The strategy remains a draft and is subject to public feedback, but its direction is significant for building owners and facility managers. It suggests a shift from periodically reporting energy data toward using that information to track performance over time and support operational and investment decisions. This matters in California, where residential and commercial buildings consume more than 70% of the state’s electricity and more than 50% of its gas.

From Energy Benchmarking to Long-Term Performance

California already requires certain large commercial and multifamily buildings to report benchmarking information annually. The existing programme applies to commercial buildings larger than 50,000 square feet and multifamily residential buildings larger than 50,000 square feet with at least 17 utility accounts. Benchmarking gives owners and policymakers a clearer picture of how buildings consume energy and how their performance changes over time. However, collecting data does not necessarily ensure that energy performance improves.

Senate Bill 48 directed the California Energy Commission to develop a strategy for using statewide benchmarking data to track and manage energy use and greenhouse gas emissions in covered buildings.

One of the most significant proposed changes is the introduction of a long-term performance framework. Rather than treating compliance as a single deadline, the strategy recommends targets extending to 2045, with interim checkpoints every five years. The proposed approach would give building owners a longer planning horizon while also requiring progress to be measured along the way. The strategy recommends using metrics including site Energy Use Intensity, or EUI, and onsite greenhouse gas intensity.

This distinction is important. Benchmarking primarily establishes visibility into past performance. A building performance standard uses that information as the basis for setting expectations about future performance. For owners and operators, this could increase the importance of understanding not only annual energy totals but also whether a building is moving consistently toward a longer-term target.

What the Draft Strategy Introduces

The draft strategy does more than recommend long-term energy targets. It also addresses how a statewide building performance framework could account for the practical differences between properties.

A central element is flexibility in compliance. Buildings vary widely in age, design, occupancy, equipment, ownership structure and financial circumstances. A hospital, office building and multifamily property may all face different constraints when making energy improvements. The strategy therefore recommends alternative compliance pathways and mechanisms that could allow owners to demonstrate progress through approaches better suited to their circumstances.

The proposal also considers portfolio-level compliance options. For organisations managing multiple properties, this could create opportunities to plan improvements across a broader building portfolio rather than viewing every property in complete isolation. The strategy also discusses building performance action plans for properties facing particular barriers.

Another major component is the focus on tenant protections. Building performance improvements can create challenges when the costs of upgrades and the benefits of lower energy bills are distributed between different parties. This is often described as the split incentive problem. A building owner may pay for an efficiency upgrade while a tenant receives the resulting reduction in utility costs, reducing the owner’s direct financial incentive to invest.

The draft strategy considers approaches such as green leases and other mechanisms that could better align incentives between owners and tenants. It also discusses protecting low-income tenants and small businesses from potential negative impacts associated with building upgrades. The Facilities Dive article also highlights recommendations to reinvest certain penalties into building performance improvements in low-income communities.

These elements demonstrate that the proposed standard is attempting to address implementation as well as performance targets. The technical challenge of reducing energy use is only one part of managing existing buildings at scale. Ownership structures, tenant relationships and investment constraints can also determine whether improvements are achievable.

Why Continuous Energy Visibility Could Become More Important

A five-year compliance checkpoint may sound relatively infrequent, but managing building performance over a multi-decade trajectory requires much more regular visibility into energy use. Waiting until the end of a compliance period to assess performance could leave building owners with limited time to identify problems or adjust their strategy.

This is where the proposed direction has broader implications for energy management. Annual benchmarking can show whether a building consumed more or less energy than the previous year. More frequent data can help operators understand why consumption is changing.

For example, continuous or regular energy monitoring can help identify:

Unexpected increases in electricity or gas consumption
Changes in building operating hours
Equipment performing outside expected ranges
Differences between properties in a portfolio
Seasonal changes in energy demand
The impact of efficiency upgrades over time
Opportunities to reduce peak demand

The last point may become increasingly important. The California draft strategy recommends exploring future demand-management metrics, including coincident peak demand. If such metrics are incorporated into future building performance standards, building owners may need to consider when energy is consumed in addition to how much energy is consumed.

This could have implications for operational strategies such as load shifting, demand response, battery storage and the scheduling of energy-intensive equipment. A building that reduces annual energy consumption may still create challenges for the electricity system if a large share of its demand occurs during periods of grid stress.

California has not yet finalised how demand-management metrics would be incorporated. However, their inclusion in the discussion reflects a broader evolution in energy management. As electricity systems become more dependent on variable renewable generation and increasingly electrified building loads, the timing of consumption may become a more relevant measure of building performance.

What California’s Proposal Could Signal for Building Energy Management

California’s draft strategy should not be interpreted as a prediction that identical building performance standards will emerge everywhere. Building regulations are shaped by local energy systems, climate conditions, building stock and policy priorities. The proposal is also still in development and has received feedback from industry groups, local governments and other stakeholders.

However, the strategy illustrates a broader direction in how building energy performance can be managed. Energy disclosure and benchmarking provide an important foundation, but performance-based approaches require organisations to connect data with measurable improvement over time.

The proposed combination of long-term targets, five-year milestones and flexible compliance pathways could also influence how building owners approach investment planning. Rather than responding to a single compliance deadline, organisations may need to develop longer-term strategies that prioritise upgrades, evaluate capital requirements and monitor whether expected energy savings are actually being achieved.

For facility managers, this increases the value of having accessible and reliable energy data across buildings and systems. Data can support compliance reporting, but it can also inform decisions about maintenance, operational changes and capital investments. The more performance expectations become outcome-based, the more important it may become to identify energy trends before they become long-term problems.

California’s proposal also recognises that building performance cannot be managed through a single metric or a uniform compliance model. Site energy use, onsite emissions, tenant-controlled loads and potentially peak demand all represent different dimensions of building performance. Managing these factors requires a clearer understanding of how energy is being used across a property or portfolio.

In conclusion, California’s draft Building Energy Performance Strategy represents a potential next step beyond traditional energy benchmarking. Its proposed 2045 targets, five-year compliance checkpoints, alternative pathways and tenant protections show an effort to create a long-term framework that accounts for the diversity of existing buildings. The possible future inclusion of demand-management metrics adds another dimension by recognising that the timing of energy use may also matter. While the strategy remains subject to further discussion and development, it offers a useful example of how building energy policy may increasingly focus on continuous performance rather than periodic reporting. For building owners and operators, that direction could make regular energy visibility and long-term performance tracking an increasingly important part of energy management.