Energy efficiency programs: same design, different results – Part 1
Why do similar energy efficiency program designs produce different results in different utility service territories? We posed this question in a blog last August, in the midst of an evaluation of Massachusetts’ commercial and industrial (C&I) energy efficiency programs. While the evaluation was focused on outcome metrics—energy savings, customer participation, cost of saved energy—DNV GL took the opportunity to delve more deeply into the data to identify what we call “firmographic” differences (e.g., customer size, sector), and how and why these differences led to variations in outcomes. Exploring these differences will help to improve program design and delivery and do more thoughtful benchmarking of program performance.
It turns out, in a mature energy efficiency market such as Massachusetts, high volumes of energy savings are still being captured from traditional energy efficiency end uses targets such as lighting and HVAC. Furthermore, large C&I customers represent the largest share of statewide energy savings, while small and medium C&I customers provide somewhat smaller portions of the total.
Large customers are important to driving big savings…
Large accounts are clearly vital for the achievement of savings goals. Despite making up less than 1% of billed accounts, large accounts represented the highest volume of electricity consumption (39%) and matched savings (49%). Massachusetts’ large Program Administrators (PAs) had more consumption tied up in large accounts than smaller PAs, which led to greater savings from large accounts, often from very large (“whale”) projects, such as combined heat and power installations. The large PAs have greater resources and formalized processes for serving large customers than the smaller PAs: they have sophisticated market segmentation and multiple sales teams dedicated to specific customer types (i.e., hospitals, schools, or manufacturers), and also used memorandums of understanding to drive multi-year participation with large customers. In contrast, the small PAs have closer relationships with their large customers that lead to deeper knowledge of those customers.
…but don’t forget about small and medium customers
In comprising over 99% of accounts and 61% of energy consumption, and with only 51% of matched savings generated by small and medium customers, it behooves PAs to find ways of increasing participation by these customers. Barriers to small and medium enterprises (SME) participation and savings from efficiency programs are common in other states as well. There are a number of reasons why this is the case, but generally, C&I programs are tailored for large enterprises because of scale and savings opportunities. Identifying cost-effective projects for SMEs can be more challenging than for large customers. Market segmentation and tailored program delivery can focus more attention on the SME market.
Program administrators should be encouraged by these findings. Opportunities for cost-effective savings are still pervasive in a mature market like Massachusetts. The development of a robust program portfolio that serves all segments of the market is critical, whether PAs are just getting started or are years into program implementation. Savings are out there, just waiting to be discovered.
This blog was co-authored by DNV GL’s Shawn Bodmann and Max Neubauer .
 Matched savings are those savings that are limited to firms for which the PAs provided data on peak demand. Customers without peak demand data are excluded from matched savings.