Since 2007, the energy efficiency industry in Colorado has overcome genuine challenges and undergone tremendous growth in jobs, energy savings and economic development. This development can largely be attributed to state-level policy, federal program support, and collaborative efforts between local industry, utilities and government. A recent Energy Efficiency Business Coalition (EEBC) “State of the State” report identifies these interactions, lessons learned and opportunities for the future. In the recent past, energy efficiency businesses have transformed the market through innovative product development and improved installation standards. Energy efficiency speaks to how much energy is actually being used as intended. Explained a different way, energy efficiency means doing the most with a limited amount of supply, and wasting the least amount of energy in the process. Industry stakeholders focus on energy efficiency in the final, end-user stage in the built environment. These energy saving solutions are provided for home, commercial and industrial energy users.
The energy efficiency industry is a multifaceted, interdisciplinary industry, made up of various segments of other, “traditional” industries. While it includes newer professions, such as energy auditors and modeling and control technologists, it also includes HVAC, window and insulation contractors installing high efficiency products. Moreover, the supply chain bringing those high-efficiency goods to market includes manufacturers, distributors and sales representatives. Finally, those organizations and parties responsible for administrating and managing energy efficiency programs, so-called demand side management and demand response implementers, are also included.
The first major development for energy efficiency was the implementation of an Energy Efficiency Resource Standard (EERS) for investor-owned utilities. Enacted in 2007, House Bill 07-1037 mandated demand side management programs for the two electric and six natural gas investor-owned utilities in Colorado. Over the years, utilities such as Xcel Energy and Black Hills Energy have learned to benefit from the shareholder incentives that were approved by the Public Utilities Commission (PUC). Xcel Energy’s and Black Hills Energy’s electricity demand side management programs have saved 814 gigawatt hours, with a peak reduction of 209.9 megawatts, yielding a net economic benefit of $646 million (compiled by Xcel Energy, 2012). The regulated natural gas utilities include Xcel Energy, Black Hills Energy, SourceGas, Atmos Energy, Colorado Natural Gas Corporation and Eastern Colorado Utilities.
The efforts of energy efficiency businesses and utilities were given a boost of support from the American Recovery and Reinvestment Act (ARRA). In particular, the Better Buildings Neighborhood Programs trained contractors on installation practices and educated consumers about energy efficiency through energy audits. These programs have led to more than $10.7 million of investments in energy efficiency projects by home and business owners. Different program models, including financing solutions and concierge services, were launched in Boulder, Denver, Garfield, Eagle, Pitkin and Gunnison counties.
Based on the lessons learned related to the interaction of the private market with policy and programs, EEBC’s “State of the State” report identifies opportunities for continued collaboration among industry stakeholders. These stakeholders should continue the growing market transformation by promoting consumer demand and quality services. Program sustainability—removing a patchwork of standards and aligning benefits for all stakeholders—has been identified as a path to move the industry forward in the near term.
The proposed initiatives aim to make business easier while supporting and growing strong energy efficiency programs for businesses; upholding excellent standards for safety, quality and professionalism; and facilitating collaboration between actors in the energy efficiency industry.
Create long-term cost effective initiatives
It is inevitable that the boom of direct government funding for the energy efficiency industry will subside. But the momentum built and lessons learned will help to continue the growth of the industry through continued cost effective initiatives, driven by the private and public sectors. All actors will need to plan to adapt to the following principles to keep programs and products cost-effective.
Cost-effective programs can continue—by understanding the regional markets to utilizing existing networks for industry-wide communication and quality management. Furthermore, major actors in supporting energy saving and job creating programs, including utilities and counties, can work together to coordinate marketing efforts and contractor engagement.
Additionally, increased participation in energy efficiency programs by municipal and cooperative utilities in Colorado would help the industry scale and become efficient in their own business processes. EEBC’s “Leaders and Laggards” scorecard identifies the segmented and varied investments by utilities and counties across the state.
Implement statewide standards
It is clear that the segmented nature of the building sector including policies, building types and consumer motivations provide a challenge to rapidly scaling the industry. National programs may provide an outline, but do not provide an enforced standard for installation, technology or business practices. To reach critical mass, the actors must increase the size of programs and common standards beyond local jurisdictions. This growth can happen by making the economic case for energy efficiency, linking building departments and implementing quality assurance for retrofits.
This, again, goes back to the need for cross-sector collaboration between businesses, utilities and governments, but also speaks to setting standards to define the services and products provided by the innovative industry providers. An accepted standard for quality will help to create consistency for consumers to trust the products, while a quality assurance process will help energy efficiency businesses adopt standards. That said, when considering best practices for quality assurance, the cost to the business for licensing and other quality assurance measures should be considered as the industry continues to offer energy efficiency solutions.
Establish the value in energy efficiency
In the current risk-averse economic climate many business leaders and private individuals are hesitant to adopt new and innovative products. To help build more confidence for consumers to invest in energy efficiency solutions, the value must be established through a better understanding of energy costs, acknowledgement of real estate prices, and overcoming barriers related to building ownership and occupancy. With proper transparency and valuation for energy efficiency measures, both the building occupants and owners will drive demand. But, in the near term, building owners should be taught about the benefits of energy efficiency, including the expenses of replacing equipment rather than performing preventative maintenance for energy efficiency and system efficacy.
Specifically, providing transparency of energy data would be a market-driven solution to increase the adoption of energy efficiency. Energy bills are confusing and ineffective in increasing consumer knowledge. Energy costs are most often communicated to consumers monthly, after the energy has been consumed. Sometimes, often in businesses, the energy user is not paying the bill, and there is little awareness of actual energy costs. Real-time energy consumption data and comparisons across similar building types should be provided to building occupants. Additionally, energy usage data need to be readily accessible, in a standard format for energy efficiency professionals to quickly identify energy concerns.
With clear goals for the next several years, EEBC will continue to drive adoption of quality and sustainable energy efficiency efforts in Colorado. We welcome policy-makers and utilities to join us in efforts to leverage EEBC’s unique place in the market and broad knowledge of demand side management to help realize these goals.
About the Energy Efficiency Business Coalition
The EEBC was formed in 2007 to provide organized support for the numerous businesses that are involved in the manufacturing, distribution, installation, sales and marketing of energy efficiency technologies and services. The EEBC is the only organization in the nation whose primary focus is to increase the business potential of the energy efficiency industry at the local level. The member-funded coalition works with utilities and municipalities to develop effective energy efficiency policies and programs that support the business objectives of our members and the growth of the industry.
EEBC’s “State of the State” report aims to identify the current state and past five years of successes of the energy efficiency industry in Colorado, and then outline tangible action items for the industry to continue to succeed.