Investor-owned utilities’ (IOUs) commercial and industrial customers have made significant strides in their adoption of some energy-efficient solutions. Lighting and packaged HVAC systems have been tested, proven and often are easy to install. However, progress has been much slower when it comes to adopting other commercially available advanced technologies that could be driving far greater reductions in energy usage.
Utilities that want to improve their energy conservation efforts might find success in encouraging program implementers to change their current approach to driving progress in energy efficiency improvements. When program implementers focus on pre-vetting and installing more impactful energy-efficient technologies across a range of markets, rather than prioritizing market-specific energy conservation goals, utilities may see steeper reductions in energy use across their territories.
Challenges of a sector-focused energy program
Today’s third-party implemented energy-efficiency programs are designed to target utility customers within a specific market segment and encourage them to plan for improvements by performing an energy audit. Upon completion of this lengthy, often expensive audit, customers are persuaded to move forward with a range of suggested upgrades, to varying degrees of success.
Over 19 years of practice, Lincus has found that this approach has not had a significant impact on commercial and industrial customers’ adoption of advanced technologies. Moreover, this current sector-focused approach is plagued by lengthy project implementation timeframes and ongoing program costs. The problem stems in part from the process of creating a unique solution for each customer. Implementers may identify opportunities for reducing a customer’s energy usage only to find there is no utility-approved product to meet that need. In some cases, the approved product applications processes prove to be in the utility programs’ best interest rather than the customers.
On a typical site evaluation an implementer might go to a customer’s site, perform an energy audit, recommend a technology replacement solution, and then seek approval from the utility to offer customers incentives for installing a specific technology. Flipping this script has the potential to reduce the length and cost of this process, among other benefits. By first scouring the technology industry for advanced yet underutilized solutions, pre-vetting them with utilities, and then recommending several pre-vetted technologies to those customers that might most benefit from their installation provides a potentially more effective strategy for driving adoption of technologies poised to make the biggest impact on energy use. It also eliminates the cost of comprehensive energy audits that may or may not lead to recommended installations.
Another challenge to the traditional technology implementation approach is that it creates silos between sector-focused implementers. This leads to gaps in knowledge around the shared benefits of underutilized advanced technologies. Implementers running separate energy-efficiency programs for a utility’s commercial and industrial sector clients respectively are not able to share knowledge around the benefits of, for example, boiler systems that would have essentially the same impact on clients in each of these sectors. This lack of knowledge transfer slows the broader installation of such technologies.
Connecting manufacturers, distributors and customers
Making this switch, to introduce impactful yet underutilized technologies to those customers that can best benefit from them, all without the cost of a full energy audit or a sector specific program, depends upon greater coordination between utilities and advanced technology equipment manufacturers, contractors, and design-build firms.
In our interviews with industrial customers, Lincus has learned that manufacturers, distributors and contractors play a critical role in driving customers’ decisions around progressive technology investment. Beyond simply understanding the energy benefits, these key partners are able to provide a holistic overview of productivity and other non-energy related benefits that can tip the commercial or industrial decision-maker in favor of a specific technology solution.
An advanced technology-based focus to energy efficiency aims to help utilities move in this new direction. This marketing approach to energy efficiency would evaluate potential advanced technologies and then work with manufacturers to prepare information and training that will support distributors, wholesalers, and contractors in driving sales for underutilized advanced technology.
This work across the value chain is particularly critical as distributors and contractors have little incentive to sell new technologies under current approaches. Distributors tend to stock equipment that sells easily based on the complexity of the technology and low upfront costs. This behavior creates an inadvertent market barrier for the broader installation of underutilized higher-efficiency products. Customers must request a more efficient alternative, and then distributors must special order this equipment—additional steps that rarely happen without appropriate education and incentive. And because distributors want to sell the equipment already in stock, they are in fact incentivized to convince customers and contractors to accept what they currently have on-hand.
As a partner in advanced technology sales and distribution, energy efficiency program implementers may be able to better drive the wide-scale energy reductions utilities are seeking.
A new approach to energy efficiency progress
Advanced technology manufacturers and utilities want to achieve the same goal: reduce energy usage across a wide range of market sectors. These groups have been separately challenged with driving cost-effective progress on energy reduction. Third-party energy efficiency program implementers already link these two groups, and today stand in a strong position to help both utilities and manufacturers drive more energy efficiency installations across a wide range of market segments. The only thing standing in the way is rigid commitment to business as usual.
If you’re ready to change how you drive implementation of energy efficiency solutions, Lincus can help. Contact us today.