Energy utilities have tried for years to drive the energy-efficiency market forward, with varying rates of success. While there may be a number of reasons why utilities’ programs have not fully moved the needle on the market potential of energy efficiency, one potential solution could lay in better utilization of an otherwise overlooked resource for all program types: contractors.

Today, the primary interaction between utilities and equipment installation contracts is in product training sessions, where the focus is on how to install new energy-efficient products and the quality installation process. However, this training doesn’t provide any incentive for contractors to sell or install energy-efficient products. In fact, the current approach may decentivize contractors from installing energy-efficiency equipment, particularly for energy-intensive commercial, industrial and agricultural customers.

If utilities and Workforce Education and Training (WET) programs educate contractors and provide resources explaining how to be more profitable by installing energy-efficient equipment, utilities may find a valuable ally in their work to achieve the energy-efficiency market transformation pushed by many state regulators.

A broken approach

Many utilities find that programs designed to encourage the installation of energy-efficient equipment among intensive energy users can’t always be implemented economically. The problem here may be in the approach. Under current processes, utilities rely on third-party implementers to identify opportunities for energy savings, coordinate contractors, then verify energy savings after a product has been installed. However, reliance on a third party adds a potentially avoidable administrative cost to these projects, on both the utilities’ and implementers’ part. These added costs lower a specific energy efficiency measure’s benefit-to-cost ratio.

By encouraging contractors to prioritize the appropriate installation of more efficient equipment, utilities get the energy reduction benefit of having this equipment operating in the field without having to pay for intermediaries to verify installation and savings.

And here lies the challenge. Under today’s system, contractors and their distributors see energy efficiency programs as an interference to their business-as-usual sales.

Disrupting business as usual

As a case in point, plumbing contractors generally know how to install a hot water circulation pump, but few contractors are encouraging their customers to install higher-efficiency circulation pumps. A number of reasons may be at play here.

For starters, distributors are not stocking higher-efficiency circulation pumps or related circulation pump accessories because they have little incentive to do so when standard equipment sells without any additional effort on their part. Customers that know they need to replace a component don’t necessarily go to their distributor or contractor asking the right questions about their return on investment. Distributors and contractors aren’t running the calculations necessary to determine the best long-term solution or make a compelling energy cost case to the customer. They’re replacing the equipment with a newer piece of similar equipment that has the lowest upfront cost.

In addition, compared to traditional equipment, high-efficiency pump installation may require additional parts. If the plumber is short by a part, procuring that part and getting back to the site eats into their profit. This need for additional parts also creates a perception of bad design among installers—when in truth the solution is as simple as having a checklist of all the parts necessary to complete the job. Instead, the contractor will more likely prevent the added cost of shopping for additional parts by simply avoiding unfamiliar equipment on the next job.

How utilities and Workforce Education and Training programs can drive change

Identifying these perceptions is a good first step toward encouraging contractors to prioritize energy-efficient equipment installation. The key to changing the process as it stands today is identifying strategies that help contractors be more successful by selling more energy-efficient solutions.

To follow the example noted above, utilities can train contractors on the value of life cycle costs and provide tools to easily calculate benefits of higher efficiency measures. Contractors can then educate customers about the value of prioritizing their investments, and guide those customers to higher-efficient technologies. In addition, utility programs could easily provide installation component lists that can help contractors simplify installation of new equipment.

Utilities have an opportunity to more strategically invest in contractor education, not just on energy efficiency but also on how energy efficient technologies will contribute to their profitability, to the benefit of all parties. While most utilities host training through a trade ally program, these offerings tend to focus on updates to energy efficiency programs, changes to incentives, and reviews of specific technologies. Millions of dollars are spent on industry workforce education and training programs, but few of these programs help drive real market transformation.

Reorienting training around strategies contracting managers can use to increase profitability may be better received by installation contractors. After all, contractors want to ensure that the time their employees spend on energy-efficiency related training will allow the company to recover this investment. Training takes time that could be spent on sales but the right training and resources targeting higher-end equipment sales can help make contractors more profitable. What’s more, by investing in employee knowledge and skill mastery, contractors can better retain their most skilled employees, who in turn continue to push for installation of more efficient equipment.

Creating a new process

As an implementer of third-party programs for utilities, Lincus has seen that utilities need to make some changes to achieve their energy efficiency, demand response and resiliency goals. We have worked with installation contractors long enough to understand their concerns and why they think utilities’ programs are slowing down their sales process. By trying a different approach to this relationship, utilities can remove this barrier.

By prioritizing contractors’ success in installing energy-efficient equipment and technologies, utilities may find they can meet their energy reduction goals without incurring the cost of third- party program implementers performing program administration, marketing outreach, energy audits, coordination of technology installations and verification of energy savings. With training on the best tools for performing utility calculations, better insight into the financial benefits for customers of energy-efficiency upgrades, and resources to simplify the sales process, contractors may prove to be a valuable partner in selling energy efficiency.

If you’re ready to try a new approach, Lincus can help. Contact us today.